<PAGE>
SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of the Securities Exchange Act of
1934
Filed by the Registrant [X]
Filed by a Party other than the Registrant [_]
Check the appropriate box: [_] Confidential, for Use of the
Commission Only (as permitted by
Rule 14a-6(e)(2))
[_] Preliminary Proxy Statement
[X] Definitive Proxy Statement
[_] Definitive Additional Materials
[_] Soliciting Material Pursuant to (S)240.14a-11(c) or (S)240.14a-12
LaSalle Partners Incorporated
(Name of Registrant as Specified In Its Charter)
LaSalle Partners Incorporated
(Name of Person(s) Filing Proxy Statement)
Payment of Filing Fee (check the appropriate box):
[_] No fee required.
[_] Fee computed on table below per Exchange Act Rules 14a-6(i)(4) and 0-11.
(1) Title of each class of securities to which transaction applies:
Jones Lang Wootton ordinary shares; J.L.W. (Scotland) Corporate
ordinary shares; Slaneyglen Company ordinary shares; J.L.W. Supply
Company ordinary shares; Jones Lang Wootton USA Inc. common stock and
Series A Preferred Stock; JLW Continuation, Ltd. ordinary shares; JLW
Asia Holdings Limited class A shares and B shares; JLW Transact
(Thailand) Co. Limited ordinary and preference shares; JLW Transact Pte
Ltd. ordinary shares and preference shares; JLW Transact Limited class
A shares; JLW Pacific Limited class A shares; JLW Australia Pty Limited
class A, B, C and D shares; Jones Lang Wootton Transact Pty Ltd. class
A shares; Jones Lang Wootton Transact (Qld) Pty Limited ordinary
shares; Jones Lang Wootton Transact (Vic) Pty Limited class A shares
and B shares; and Jones Lang Wootton Holdings Limited ordinary shares.
(2) Aggregate number of securities to which transaction applies:
N/A
(3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (set forth the amount on which the
filing fee is calculated and state how it was determined):
N/A
(4) Proposed maximum aggregate value of transaction:
$93,533,009*
(5) Total fee paid:
$18,707 (1/50 of 1% of line (4)) (Fee paid by wire transfer on November
25, 1998).
[X] Fee paid previously.
[_] Check box if any part of the fee is offset as provided by Exchange Act
Rule 0-11(a)(2) and identify the filing for which the offsetting fee was
paid previously. Identify the previous filing by registration statement
number, or the Form or Schedule and the date of its filing.
(1) Amount Previously Paid:
(2) Form, Schedule or Registration Statement No.:
(3) Filing Party:
(4) Date Filed:
Notes:
*Based upon the sum of (i) the book value of the businesses being acquired and
(ii) the $5,852,009 cash consideration issuable as if the transactions
described herein had closed on November 20, 1998, in accordance with
Exchange Act Rules 14a-b(i)(4) and 0-11 and (iii) the cash consideration to
be paid for the businesses being acquired.
<PAGE>
LASALLE PARTNERS INCORPORATED
200 EAST RANDOLPH DRIVE
CHICAGO, ILLINOIS 60601
February 4, 1999
Dear Stockholder:
Enclosed are a Notice of Special Meeting, a Proxy Statement and a proxy card
in connection with a Special Meeting of Stockholders of LaSalle Partners
Incorporated ("LaSalle Partners") to be held on Wednesday, March 10, 1999, in
the Indiana Room on Lower Level 1 of the Amoco Building, 200 East Randolph
Drive, Chicago, Illinois 60601, commencing at 4:00 p.m., local time. At the
Special Meeting you will be asked to consider and vote upon the issuance of an
aggregate of up to 14,254,116 shares of common stock, par value $.01 per
share, of LaSalle Partners (the "Share Issuance") in connection with its
acquisition of the property and asset management, advisory and other real
estate businesses operated by a series of partnerships and corporations in
Europe, Asia, Australia, North America and New Zealand under the name "Jones
Lang Wootton" or "JLW" (the "JLW Businesses"). In addition, stockholders are
being asked to consider and vote upon (i) an amendment to the LaSalle Partners
Articles of Amendment and Restatement to change the name of LaSalle Partners
to "Jones Lang LaSalle Incorporated" (the "Charter Amendment") and (ii) 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").
Details of the acquisition of the JLW Businesses and other important
information concerning the JLW Businesses, LaSalle Partners and the matters to
be considered at the Special Meeting are set forth in the accompanying Proxy
Statement. We encourage you to read this document carefully, in its entirety.
In addition, you may obtain additional information about LaSalle Partners from
documents filed with the Securities and Exchange Commission.
Morgan Stanley & Co. Incorporated, LaSalle Partners' financial advisor in
connection with the acquisition of the JLW Businesses, has rendered an opinion
to the Board of Directors of LaSalle Partners that, as of the date of such
opinion, and subject to the conditions set forth in the opinion, the
consideration to be paid by LaSalle Partners pursuant to the purchase
agreements relating to the acquisition in the aggregate was fair from a
financial point of view to LaSalle Partners.
After careful consideration, your Board of Directors has unanimously
approved the transactions contemplated by this Proxy Statement and recommends
that the stockholders vote FOR the Share Issuance, the Charter Amendment and
the Stock Plan Amendment.
Your vote is important. To assure your representation at the Special
Meeting, please complete, sign and date the enclosed proxy card and return it
in the enclosed white prepaid envelope marked "Proxy." This will allow your
shares to be voted whether or not you attend the Special Meeting. If you
attend the Special Meeting in person, you may, if you wish, vote personally on
all matters brought before the Special Meeting even if you have previously
returned your proxy.
Sincerely,
Stuart L. Scott
Chairman of the Board
and Chief Executive Officer
<PAGE>
LASALLE PARTNERS INCORPORATED
200 EAST RANDOLPH DRIVE
CHICAGO, ILLINOIS 60601
----------------
NOTICE OF SPECIAL MEETING OF STOCKHOLDERS
TO BE HELD MARCH 10, 1999
----------------
A Special Meeting of Stockholders of LaSalle Partners Incorporated, a
Maryland corporation ("LaSalle Partners"), will be held on Wednesday, March
10, 1999, in the Indiana Room on Lower Level 1 of the Amoco Building, 200 East
Randolph Drive, Chicago, Illinois 60601, commencing at 4:00 p.m., local time,
for the following purposes:
1. To approve the issuance of up to 14,254,116 shares of common stock,
par value $.01 per share, of LaSalle Partners (the "Share Issuance") in
connection with its acquisition of the property and asset management,
advisory and other real estate businesses operated by a series of
partnerships and corporations in Europe, Asia, Australia, North America and
New Zealand under the name "Jones Lang Wootton" or "JLW" (such acquisition
and the transactions associated therewith being referred to herein as the
"Transactions");
2. To approve 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");
3. To approve 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"); and
4. To transact such other business as may properly be brought before the
Special Meeting or any adjournment or postponement of the Special Meeting.
The approval of the Share Issuance, the Charter Amendment and the Stock Plan
Amendment are conditions to the consummation of the Transactions. A
description of the Transactions, the businesses to be acquired and other
important matters relating to the business to be conducted at the Special
Meeting are described in the attached Proxy Statement, which you are urged to
read carefully.
The LaSalle Partners Board of Directors has fixed the close of business on
January 25, 1999 as the record date for the determination of stockholders
entitled to notice of and to vote at the Special Meeting.
By Order of the Board of Directors
William E. Sullivan
Executive Vice President, Chief
Financial Officer and Secretary
Chicago, Illinois
February 4, 1999
Your vote is important.
Whether or not you plan to attend the Special Meeting, please complete, sign
and date the enclosed proxy card and return it promptly in the enclosed
envelope.
<PAGE>
LASALLE PARTNERS INCORPORATED
----------------
PROXY STATEMENT
----------------
This Proxy Statement is being furnished to holders of common stock, par
value $.01 per share, of LaSalle Partners Incorporated, a Maryland corporation
("LaSalle Partners"), in connection with the solicitation of proxies by the
Board of Directors of LaSalle Partners for use at a special meeting of
stockholders of LaSalle Partners to be held on Wednesday, March 10, 1999, in
the Indiana Room on Lower Level 1 of the Amoco Building, 200 East Randolph
Drive, Chicago, Illinois 60601, commencing at 4:00 p.m., local time, and at
any adjournment or postponement thereof.
LaSalle Partners is proposing to acquire the property and asset management,
advisory and other real estate businesses (the "JLW Businesses") operated by a
series of partnerships and corporations in Europe, Asia, Australia, North
America and New Zealand under the name "Jones Lang Wootton" or "JLW" (the "JLW
Companies") for the following consideration: (i) up to 14,254,116 shares of
LaSalle Partners common stock, (ii) an amount of cash equal to the value of
111,084 shares of LaSalle Partners common stock (based on the average closing
price of LaSalle Partners common stock as reported on the composite
transactions tape of the New York Stock Exchange for the five trading days
immediately preceding and including the date that the JLW Companies undertake
a reorganization of their ownership structure immediately prior to the closing
of the acquisition) and (iii) $2.7 million in cash. The JLW Companies are,
directly or indirectly (through corporations or trusts), owned by
approximately 189 equity owners who are all currently partners or employees.
In connection with the acquisition, the direct and indirect beneficial
ownership of the JLW Companies will be expanded to include a total of 339
persons (the "JLW Shareholders"), 325 of which are former or current partners
or employees of the JLW Companies. References herein to "Jones Lang LaSalle"
mean the combined entity comprising LaSalle Partners and the JLW Companies
following the closing.
12,481,792 of the shares and all of the cash consideration to be issued or
paid in connection with the acquisition will be issued or paid to or for the
account of the JLW Shareholders. The remaining 1,772,324 shares will be placed
in an irrevocable trust principally for issuance to key employees of the JLW
Companies that are not equity owners in order to recognize such employees as
major contributors to the JLW Businesses and to incentivize such employees to
remain with Jones Lang LaSalle following the closing. The shares placed in the
trust will be allocated on three dates, the date of the closing, December 31,
1999 and December 31, 2000, principally to persons who are employed by Jones
Lang LaSalle on such dates. A portion of these shares will be subject to
vesting conditions.
Following the acquisition, JLW Shareholders will own up to approximately 47%
of the outstanding shares of LaSalle Partners common stock. As a condition to
the acquisition, each JLW Shareholder and certain employee stockholders of
LaSalle Partners (which persons collectively will own approximately 69% of the
outstanding shares following the closing) have entered into a separate
stockholder agreement with LaSalle Partners which contains provisions which
could have the effect of delaying, deferring or preventing a change of control
of Jones Lang LaSalle which is opposed by the Jones Lang LaSalle board of
directors and causing the election of directors nominated by Jones Lang
LaSalle's board of directors.
Because the number of shares of LaSalle Partners common stock to be issued
in connection with the acquisition exceeds 20% of the issued and outstanding
shares of LaSalle Partners common stock, stockholders of LaSalle Partners must
approve the issuance in order to comply with the rules of the New York Stock
Exchange. Approval of the share issuance and a related proposal to increase
the number of shares issuable under the LaSalle Partners 1997 Stock Award and
Incentive Plan to 4,160,000 from 2,215,000, each of which is a condition to
the consummation of the acquisition, requires the affirmative vote of the
holders of a majority of the votes cast on each proposal, provided that the
shares of LaSalle Partners common stock represented at the special meeting
constitute over 50% of all shares of LaSalle Partners common stock issued and
outstanding on January 25, 1999, the record date relating to such meeting.
Approval of a proposal to change the name of LaSalle Partners to "Jones Lang
LaSalle Incorporated" at the time of the closing, which is also a condition to
the consummation of the acquisition, requires the affirmative vote of the
holders of a majority of the shares of LaSalle Partners common stock issued
and outstanding on the record date. Each employee director of LaSalle Partners
on October 21, 1998 (the date of the execution of the purchase agreements
relating to the acquisition), has executed and delivered to the
representatives of the JLW Companies an irrevocable proxy to vote all of the
shares of LaSalle Partners common stock beneficially owned by such director in
favor of the share issuance, the charter amendment and the stock plan
amendment. As a consequence, the affirmative vote of 21.5% of the votes cast
on each proposal is assured.
Following the acquisition, LaSalle Partners common stock will continue to be
listed on the New York Stock Exchange, but the trading symbol will be changed
from "LAP" to "JLL."
See "Risk Factors" beginning on page 24 for risk factors that should be
considered by LaSalle Partners stockholders in connection with their vote.
See "Glossary of Certain Defined Terms" beginning on page G-1 for
definitions of certain terms used in this Proxy Statement.
This Proxy Statement and the accompanying form of proxy are first being
mailed to LaSalle Partners stockholders on or about February 8, 1999.
The date of this Proxy Statement is February 4, 1999.
<PAGE>
TABLE OF CONTENTS
<TABLE>
<CAPTION>
Page
----
<S> <C>
SUMMARY.................................................................. 1
INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE.......................... 23
RISK FACTORS............................................................. 24
THE SPECIAL MEETING...................................................... 28
General; Time, Date and Place.......................................... 28
Matters to be Considered at the Special Meeting........................ 28
Record Date; Stockholders Entitled to Vote; Vote Required.............. 28
Proxies................................................................ 29
THE TRANSACTIONS......................................................... 30
Description of the Transactions ....................................... 30
Consideration.......................................................... 36
Background of the Transactions......................................... 37
Reasons for the Transactions; Recommendation of the LaSalle Partners
Board of Directors.................................................... 40
Opinion of LaSalle Partners' Financial Advisor......................... 43
Interests of Certain Persons in the Acquisition........................ 46
Directors and Executive Officers Following the Acquisition............. 46
Regulatory Approvals................................................... 50
Federal Income Tax Consequences of the Acquisition..................... 51
Stock Exchange Listing................................................. 51
Anticipated Accounting Treatment....................................... 51
Anticipated Impact on Operating Results, Liquidity and Capital
Resources............................................................. 54
Absence of Appraisal Rights............................................ 54
THE PURCHASE AGREEMENTS.................................................. 55
THE INDEMNITY AND ESCROW AGREEMENT....................................... 69
THE STOCKHOLDER AGREEMENTS............................................... 73
BUSINESS OF LASALLE PARTNERS............................................. 76
BUSINESS OF THE JLW COMPANIES............................................ 77
UNAUDITED PRO FORMA CONSOLIDATED FINANCIAL STATEMENTS.................... 87
SELECTED HISTORICAL AND PRO FORMA FINANCIAL DATA OF LASALLE PARTNERS..... 108
SELECTED FINANCIAL DATA OF THE JLW COMPANIES............................. 110
JLW MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS OF THE JLW COMPANIES.............................. 120
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT OF LASALLE
PARTNERS................................................................ 155
COMPARATIVE PER SHARE DATA............................................... 157
MARKET PRICE AND DIVIDEND INFORMATION.................................... 159
AMENDMENT TO THE ARTICLES OF AMENDMENT AND RESTATEMENT OF LASALLE
PARTNERS................................................................ 160
AMENDMENT TO 1997 STOCK AWARD AND INCENTIVE PLAN......................... 160
WHERE TO FIND MORE INFORMATION........................................... 163
GLOSSARY OF CERTAIN DEFINED TERMS........................................ G-1
INDEX TO FINANCIAL STATEMENTS............................................ F-1
</TABLE>
i
<PAGE>
<TABLE>
<C> <S> <C>
ANNEX A -- Opinion of Morgan Stanley & Co. Incorporated................. A-1
ANNEX B -- Purchase and Sale Agreement (Europe/USA) by and among LaSalle
Partners Incorporated, the Jones Lang Wootton entities listed
therein, the persons named as "Management Shareholders" on
the signature pages thereto and the "Shareholders" and
"Related JLW Owners" who have executed a Purchase and Sale
Joinder Agreement (Europe/USA), dated as of October 21,
1998......................................................... B-1
ANNEX C -- Purchase and Sale Agreement (Asia) by and among LaSalle
Partners Incorporated, JLLINT, Inc., JLLIP, Inc., the Jones
Lang Wootton Entities Listed therein, the Persons named as
"Management Shareholders" on the signature pages thereto and
the "Shareholders" and "Related JLW Owners" who have executed
a Purchase and Sale Joinder Agreement (Asia), dated as of
October 21, 1998............................................. C-1
ANNEX D -- Purchase and Sale Agreement (Australasia) by and among
LaSalle Partners Incorporated, JLLINT, Inc., LPI (Australia)
Holdings Pty Limited, the Jones Lang Wootton entities listed
therein, the Persons named as "Management Shareholders" on
the signature pages thereto and the "Shareholders" and
"Related JLW Owners" who have executed a Purchase and Sale
Joinder Agreement (Australasia), dated as of October 21,
1998......................................................... D-1
ANNEX E -- Indemnity and Escrow Agreement............................... E-1
ANNEX F -- Form of Stockholder Agreement................................ F-1
ANNEX G -- Second Amended and Restated Bylaws of Jones Lang LaSalle
Incorporated................................................. G-1
ANNEX H -- Articles of Amendment to the Articles of Amendment and
Restatement of LaSalle Partners Incorporated................. H-1
</TABLE>
ii
<PAGE>
SUMMARY
The following is a summary of certain information contained elsewhere in
this Proxy Statement. Reference is made to, and this Summary is qualified in
its entirety by, the more detailed information contained elsewhere in this
Proxy Statement, the Annexes hereto and the materials incorporated by
reference herein. LaSalle Partners stockholders are urged to read this Proxy
Statement, the Annexes hereto, and the materials incorporated by reference
herein in their entirety. Unless defined herein, capitalized terms used in
this summary have the respective meanings ascribed to them in the Glossary of
Certain Defined Terms included in this Proxy Statement. Unless the context
otherwise requires, references to LaSalle Partners shall include its
respective subsidiaries and references to the JLW Companies shall include
substantially all the various partnerships and corporations which operate
property and asset management, advisory and other real estate related
businesses in Europe, Asia, Australia, North America and New Zealand under the
name "Jones Lang Wootton" or "JLW." References to Jones Lang LaSalle mean the
combined entity comprising LaSalle Partners and the JLW Companies following
the Closing. Unless otherwise noted, all references to "$" are to the currency
of the United States.
The Companies
LaSalle Partners Incorporated (page 76)
200 East Randolph Drive
Chicago, Illinois 60601
(312)782-5800
LaSalle Partners, founded in 1968, is a leading full-service real estate
firm that provides real estate property management services, corporate and fi-
nancial services and investment management services to corporations and other
real estate owners and investors worldwide. LaSalle Partners has grown by ex-
panding both its client base and its range of services and products in antici-
pation of client needs. By offering a broad range of real estate products and
services, and through its extensive knowledge of domestic and international
real estate markets, LaSalle Partners is able to serve as a single source pro-
vider of solutions for its clients' full range of real estate needs. LaSalle
Partners is headquartered in Chicago, Illinois, and maintains corporate of-
fices in 10 United States cities and eight international offices. LaSalle
Partners also maintains over 300 property and satellite offices throughout the
United States.
In October 1998, LaSalle Partners acquired the worldwide commercial property
management and leasing, facilities management and project management opera-
tions 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"). 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 busi-
nesses of LaSalle Partners. The combined business has approximately 400 mil-
lion square feet under management, making it the largest real estate manage-
ment services company in the United States based on total square feet under
management, according to Commercial Property News' August 1998 "Top Property
Managers Survey."
LaSalle Partners paid Lend Lease approximately $180 million in cash for the
Compass Businesses and incurred capitalizable transaction costs of approxi-
mately $4.1 million. There are also provisions for an additional payment of up
to $77.5 million from LaSalle Partners to Lend Lease over five years in the
event that revenues generated by LaSalle Partners from Lend Lease and its af-
filiates reach certain revenue targets. LaSalle Partners anticipates incurring
approximately $10.3 million in after-tax transition expenses in connection
with the acquisition of the Compass Businesses, which will be charged against
earnings primarily in 1998 and the first half of 1999.
The JLW Companies (page 77)
22 Hanover Square
London W1A 2BN
England
44-171-493-6040
The JLW Companies provide a wide range of real estate advisory, transac-
tional and asset management services to a broad variety of local, national and
international clients in many industrial and service
1
<PAGE>
business areas and in both the private and public sectors. These services
cover many types of commercial real estate, including hotel, industrial, of-
fice and retail property. At August 1, 1998, the JLW Companies had an aggre-
gate of over 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.
The JLW Companies operate their businesses in four distinct geographical re-
gions (each a "Region"): Europe, Asia, Australia and New Zealand ("Australa-
sia"), and North America. However, substantially independent ownership struc-
tures exist among and within the Regions. As a result of these separate owner-
ship groups, historical financial reporting has been presented for each group:
the JLW Businesses in Europe (which includes the JLW Businesses in North Amer-
ica 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"). In order to coordinate the worldwide activities of
the JLW Companies and ensure consistent standards of service across regions
despite having different owners in each Region, in 1997 the JLW Companies
formed an International Board comprised of representatives of each of the Re-
gions (the "International Board"). Prior to the formation of the International
Board, similar functions were filled by a committee comprised of representa-
tives of the JLW Companies. Financial information and a discussion of results
of operations for each ownership 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 Proxy Statement. See "The Transactions--Description of the
Transactions" for a chart which provides an overview of the ownership struc-
ture of the JLW Companies and the Regions.
Immediately prior to the closing (the "Closing") of the acquisition of the
JLW Companies (the "Acquisition"), the JLW Companies will undertake a reorga-
nization of their ownership structure principally to facilitate the Acquisi-
tion under applicable law and to expand the ownership of the JLW Companies to
include non-owner employees who have made significant contributions to the JLW
Businesses (the "Integration") . The Acquisition and the Integration are re-
ferred to herein as the "Transactions."
The Transactions (page 30)
LaSalle Partners is proposing to acquire the JLW Companies for up to
14,254,116 shares of LaSalle Partners common stock (approximately 47% of the
outstanding shares following the Closing) and approximately $6.2 million in
cash. The JLW Companies are owned, directly or indirectly (through
corporations or trusts), by approximately 189 equity owners who are all former
or current partners or employees. In connection with the Acquisition, the
ownership of the JLW Companies will be expanded to include a total of 339 JLW
Shareholders, 325 of which are currently partners or employees. 12,481,792 of
the shares to be issued in connection with the Acquisition (the "Consideration
Shares") and all of the cash consideration to be paid in connection with the
Acquisition will be issued or paid to or for the account of the JLW
Shareholders. The remaining 1,772,324 shares ("ESOT Shares") will be placed in
an irrevocable trust (the "ESOT") principally for issuance to key employees of
the JLW Companies that are not equity owners in order to recognize such
employees as major contributors to the JLW Businesses and to incentivize such
employees to remain with Jones Lang LaSalle following the Closing. These
shares will be allocated at the Closing and on December 31, 1999 and 2000,
principally to employees of Jones Lang LaSalle on such dates. A portion of
these shares will be subject to vesting conditions.
The consideration to be paid for the JLW Companies was negotiated on an
aggregate basis for the JLW Companies by representatives of the International
Board. The allocation of the consideration among the owners of the various JLW
Companies was determined by negotiations by and among the owners of the JLW
Companies in each of the Regions. The Acquisition is being effected pursuant
to three separate purchase agreements (the "Purchase Agreements"), one for
each of Europe and North America, Asia, and Australia and New Zealand.
2
<PAGE>
Of the shares of LaSalle Partners common stock to be issued to each JLW
Shareholder: (i) a portion will be held by an escrow agent selected by LaSalle
Partners and the JLW Companies and will either be returned to LaSalle Partners
or issued to the JLW Shareholders following the determination of the net worth
of the JLW Companies as of Closing (the "Adjustment Shares"); (ii) a portion
will be held by the same escrow agent to support the indemnification obliga-
tions of the JLW Shareholder (the "Indemnification Shares") under an indemnity
and escrow agreement; and (iii) another portion will be held by a separate es-
crow agent and will be subject to forfeiture by the JLW Shareholder if the JLW
Shareholder leaves the employ of Jones Lang LaSalle under certain circumstances
(the "Forfeiture Shares"). The remaining portion of the shares issuable to a
JLW Shareholder will be issued to such shareholder at Closing (the "Initial
Distribution Shares").
The aggregate consideration payable in connection with the Acquisition is
predicated on the JLW Companies having an aggregate net worth of $40 million,
subject to adjustment based on the date of the Closing. The number of shares
deliverable will be reduced to the extent that the JLW Companies do not have
the required net worth. The Adjustment Shares will be placed in escrow to fa-
cilitate their surrender in such event. See "The Purchase Agreements--Consider-
ation Adjustment."
When agreeing that the ESOT should be established, the JLW Shareholders
determined that the recipients of the ESOT Shares should be treated on a
similar basis as the JLW Shareholders. As a result, a portion of the shares
issuable to the ESOT will be Adjustment Shares and a portion will be
Indemnification Shares.
The following table presents the aggregate number of Initial Distribution
Shares, Adjustment Shares, Indemnification Shares and Forfeiture Shares to be
issued to all JLW Shareholders and the number of shares to be placed in the
ESOT:
<TABLE>
<CAPTION>
Type of Shares Number
-------------- ---------
<S> <C>
Initial Distribution
Shares................. 6,611,102
Adjustment Shares....... 1,241,683(1)
Indemnification Shares.. 750,000(2)
Forfeiture Shares....... 4,079,890
ESOT Shares............. 1,772,324(3)
</TABLE>
- --------
(1) Includes 108,895 ESOT Shares.
(2) Includes 91,988 ESOT Shares.
(3) Includes 108,895 of the Adjustment Shares and 91,988 of the Indemnification
Shares.
The Special Meeting (page 28)
LaSalle Partners will hold a special meeting of its stockholders on Wednes-
day, March 10, 1999, at 4:00 p.m., local time, in the Indiana Room on Lower
Level 1 of the Amoco Building, 200 East Randolph Drive, Chicago, Illinois 60601
(the "Special Meeting"). The close of business on January 25, 1999 is the rec-
ord date (the "Record Date") for the Special Meeting. Only LaSalle Partners
stockholders on the Record Date are entitled to notice of and to vote at the
Special Meeting. On the Record Date, there were 16,264,176 shares of LaSalle
Partners common stock issued and outstanding. Each share of LaSalle Partners
common stock will be entitled to one vote on each matter to be acted upon at
the Special Meeting. At the Special Meeting, LaSalle Partners stockholders will
consider and vote upon (i) the issuance of the 12,481,792 Consideration Shares
and 1,772,324 ESOT Shares (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" at the time of the Clos-
ing (the "Charter Amendment"), (iii) an amendment to the LaSalle Partners 1997
Stock Award and Incentive Plan to increase the number of shares issuable there-
under to 4,160,000 from 2,215,000 (the "Stock Plan Amendment") and (iv) such
other business as may properly be brought before the Special Meeting and any
adjournment or postponement thereof. Approval of the Share Issuance and the
Stock Plan Amendment, each of which is a condition to the consummation of the
Transactions, each requires the affirmative vote of the holders of a majority
of the votes cast on each proposal, provided that the shares of LaSalle Part-
ners common stock present at the Special Meeting constitute over 50% of all
shares of LaSalle Partners common stock issued and outstanding on the Record
Date. Approval of the Charter Amendment, which is also a condition to the con-
summation of the Transactions, requires the affirmative vote of the holders of
a majority of the shares of LaSalle Partners common stock issued and outstand-
ing on the Record Date.
3
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Each employee director of LaSalle Partners on October 21, 1998 (the date of
the execution of the Purchase Agreements), has executed and delivered to the
representatives of the JLW Companies an irrevocable proxy to vote all of the
shares of LaSalle Partners common stock beneficially owned by such director in
favor of the Share Issuance, the Charter Amendment and the Stock Plan
Amendment. As a consequence, the affirmative vote of 21.5% of the votes cast on
each proposal is assured.
All shares of LaSalle Partners common stock which are entitled to vote and
are represented at the Special Meeting by properly executed proxies will be
voted at the Special Meeting in accordance with the instructions indicated on
such proxies or, if no indication is made with respect to a proposal, in accor-
dance with the recommendations of the LaSalle Partners board of directors set
forth in this Proxy Statement.
Reasons for the Transactions; Recommendation of the LaSalle Partners Board of
Directors (page 40)
The LaSalle Partners board of directors believes that the terms of the Acqui-
sition are fair to and in the best interests of LaSalle Partners and its stock-
holders. The LaSalle Partners board of directors has unanimously approved the
Share Issuance, the Charter Amendment and the Stock Plan Amendment and recom-
mends a vote FOR approval of each such proposal. The LaSalle Partners board of
directors believes that the Acquisition will result in significant opportuni-
ties for revenue growth by strengthening LaSalle Partners' product and service
offerings and broadening LaSalle Partners' geographic market coverage, thereby
enhancing Jones Lang LaSalle's ability to attract and retain clients and com-
pete in the global real estate services market. Synergistic cost savings asso-
ciated with combining offices, reducing infrastructure functions common to the
JLW Companies and LaSalle Partners such as accounting, human resources and in-
formation technology, and taking advantage of the buying power of the combined
company are also expected. The LaSalle Partners board also believes that the
Acquisition will give the combined company a greater opportunity to service
multinational clients, access capital, make investments and market its invest-
ment management services worldwide than LaSalle Partners would have alone.
The Acquisition does, however, entail significant risks, which are described
in "Risk Factors." These risks include, among others, the potential that the
Acquisition will not result in the anticipated benefits, that the process of
integrating the operations of the JLW Companies will require the expenditure of
significant management time and considerable expense and may not be successful,
that key employees of Jones Lang LaSalle will leave, and that increasing the
international operations of LaSalle Partners will expose it to risks not cur-
rently faced by its predominantly United States based operations. In addition,
although the stockholder agreements and corporate governance provisions being
adopted in connection with the Acquisition are intended to provide appropriate
representation on the Jones Lang LaSalle board of directors for the LaSalle
Partners stockholders and the JLW Shareholders during a transitional period of
approximately four years, such agreements and provisions could have the effect
of discouraging others from attempting to acquire Jones Lang LaSalle, delaying,
deferring or preventing a change of control which is opposed by the Jones Lang
LaSalle board of directors and causing the election of directors nominated by
the Jones Lang LaSalle board. In addition, as a result of the anticipated ac-
counting treatment to be applied to the Acquisition, the acquisition-related
compensation expense, although a non-cash charge, will cause Jones Lang LaSalle
to report losses for 1999 and 2000, which could negatively affect the trading
price of LaSalle Partners common stock.
Interests of Certain Persons in the Acquisition (page 46)
In considering the recommendation of the LaSalle Partners board of directors
regarding approval of the Share Issuance, the Charter Amendment and the Stock
Plan Amendment, LaSalle Partners stockholders should be aware of interests
which certain officers and directors of LaSalle Partners have in the
Acquisition which may be different from the interests of LaSalle Partners
stockholders generally. Certain members of the LaSalle Partners board of
directors will be members of the Jones Lang LaSalle board of directors and
certain executive officers of LaSalle Partners will continue as executive
officers of Jones Lang LaSalle following the Closing.
4
<PAGE>
Opinion of LaSalle Partners' Financial Advisor (page 43)
In deciding to approve the Acquisition, the LaSalle Partners board of direc-
tors considered the opinion of its financial advisor, Morgan Stanley & Co.
Incorporated ("Morgan Stanley"), that, as of the date of such opinion, and
subject to the conditions set forth in the opinion, the consideration to be
paid by LaSalle Partners pursuant to the Purchase Agreements in the aggregate
was fair from a financial point of view to LaSalle Partners. The full text of
the written opinion of Morgan Stanley, which sets forth assumptions made, mat-
ters considered and limitations on the review undertaken, is attached hereto
as Annex A and is incorporated herein by reference. LaSalle Partners stock-
holders should read the Morgan Stanley opinion in its entirety.
LaSalle Partners has agreed to pay Morgan Stanley a fee, conditional upon
consummation of the Acquisition, of $1,500,000 and to indemnify Morgan Stanley
for liabilities and expenses arising out of the engagement of Morgan Stanley
and certain matters in connection therewith, including liabilities under fed-
eral securities laws.
Conditions to the Transactions (page 65)
The respective obligations of the parties to complete the Transactions are
subject to the satisfaction or waiver of certain conditions on or before the
date of the commencement of the Integration (the "Integration Commencement
Date") or, as specified, the date of the Closing (the "Closing Date"),
including the following:
. no court or other governmental order prohibiting the consummation of any
of the Transactions being effective;
. all material governmental and third-party filings, consents and approvals
having been obtained or made;
. the Share Issuance, Charter Amendment and Stock Plan Amendment having
been approved by the requisite vote of LaSalle Partners stockholders
entitled to vote at the Special Meeting;
. the obligations of certain of the JLW Companies to indemnify the partners
of JLW England, JLW Scotland and JLW Ireland, the partnerships which own
the JLW Companies operating in Europe and North America, Scotland and
Ireland, respectively, having been guaranteed by a subsidiary of LaSalle
Partners with net assets in excess of $10 million;
. except as otherwise agreed by LaSalle Partners, amounts owed by the JLW
Shareholders, 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 (the
"Related Parties"), to any JLW Company being acquired by LaSalle Partners
having been paid in full; and
. since June 30, 1998, there having been no material adverse effect or any
individual or cumulative event that is reasonably likely to result in a
material adverse effect on the JLW Companies taken as a whole or LaSalle
Partners.
All conditions to the Acquisition are waivable. To the extent that material
conditions to the Acquisition are waived, LaSalle Partners intends to
resolicit stockholders.
Termination of the Purchase Agreements (page 67)
The representatives of the JLW Companies and LaSalle Partners can agree to
terminate the three separate purchase agreements without completing the
Transactions, and either such representatives or LaSalle Partners can
terminate the Purchase Agreements if, among other things, any of the following
occurs:
. the Closing has not occurred on or before March 31, 1999, unless such
failure is caused by the party seeking to terminate a Purchase Agreement;
. the Closing has not occurred on or before September 30, 1999, regardless
of whether the party seeking to terminate is in breach of a Purchase
Agreement;
. any court of competent jurisdiction permanently prohibits the
Transactions;
5
<PAGE>
. there has been a material breach of any of the terms of a Purchase
Agreement, which breach is not cured within 60 days following written
notice (provided that the terminating party is not then in material
breach of any of the terms contained in such Purchase Agreement); or
. the LaSalle Partners stockholders do not approve, or revoke or rescind
approval of the Share Issuance, Charter Amendment or Stock Plan
Amendment.
In addition, the representatives of the JLW Companies can terminate the
Purchase Agreements in the event the LaSalle Partners board of directors has
not approved and recommended the Transactions, or has withdrawn or modified in
a manner adverse to the JLW Companies and certain of their affiliates its
approval or recommendation of the Acquisition or has failed to call and hold
the Special Meeting as required by the Purchase Agreements.
Termination Fees and Expenses (page 68)
If the Purchase Agreements are terminated because (i) the LaSalle Partners
stockholders do not approve the Share Issuance, Charter Amendment and Stock
Plan Amendment or (ii) the LaSalle Partners board of directors has not
approved and recommended, or has withdrawn or modified in a manner adverse to
the JLW Companies its approval or recommendation of the Acquisition, LaSalle
Partners will be obligated to pay to the JLW Companies a termination fee of
$12 million.
Directors, Senior Officers and Employees of Jones Lang LaSalle (pages 46 and
62)
Pursuant to the Purchase Agreements, LaSalle Partners will amend its Amended
and Restated Bylaws as set forth in the attached Annex G (the "Amended
Bylaws"). The Amended Bylaws provide that 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"), the Jones Lang LaSalle board of directors will be
composed of 14 directors. As of the Closing, seven of such directors (the
"LaSalle Partners Directors") will be designated by LaSalle Partners and seven
of such directors will be designated by the JLW Companies (the "JLW
Directors"). Four of the LaSalle Partners Directors and four of the JLW
Directors will be executive officers of LaSalle Partners and the JLW
Companies, respectively, and the remaining three LaSalle Partners Directors
and three JLW Directors will be independent directors. During the Transition
Period, at least three of the LaSalle Partners Directors and three of the JLW
Directors must be independent. In addition, during the Transition Period, a
committee composed of LaSalle Partners Directors, at least two of which must
be independent directors (the "LaSalle Partners Nominating Committee") will
have the right to fill vacancies caused by the removal, death, retirement or
resignation of a LaSalle Partners Director or, if a LaSalle Partners Director
fails to stand for reelection, to designate a person as the nominee of the
board to fill such position. A committee composed of JLW Directors, at least
two of which must be independent directors (the "JLW Nominating Committee"),
will have the same rights with respect to the JLW Directors. The LaSalle
Partners board of directors has the power to adopt the Amended Bylaws without
stockholder approval and has approved the Amended Bylaws to be effective upon
the Closing.
The initial JLW Directors will be Mr. Christopher A. Peacock, Mr. Michael J.
Smith, Mr. Peter H.T. Lee, Mr. Clive J. Pickford, each of whom is an executive
officer of the JLW Companies, and Professor Henri-Claude de Bettignies, Mr.
Derek A. Higgs and Dr. David K.P. Li, who will be independent directors. The
initial LaSalle Partners Directors will be Mr. Stuart L. Scott, Mr. Robert C.
Spoerri, Mr. M.G. Rose, Mr. Daniel W. Cummings, Mr. Darryl Hartley-Leonard,
Mr. Thomas C. Theobald and Mr. John R. Walter, each of whom is an existing
director of LaSalle Partners.
Approximately 69% of LaSalle Partners common stock issued and outstanding
immediately after the Acquisition will initially be held by employees of Jones
Lang LaSalle who are bound by the stockholder agreements described herein
under the captions "--Stockholder Agreements; DEL Stockholder Agreements" and
"The Stockholder Agreements." As long as holders of a majority of the issued
and outstanding shares of LaSalle Partners common stock continue to be bound
by such agreements, persons nominated by the LaSalle
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<PAGE>
Partners Nominating Committee and JLW Nominating Committee will be elected to
the Jones Lang LaSalle board of directors.
For a period of at least two years immediately following the Closing, Mr.
Stuart L. Scott, the current Chairman of the Board of Directors and Chief
Executive Officer of LaSalle Partners, will serve as Chairman of the Board of
Directors and Chief Executive Officer of Jones Lang LaSalle and Mr.
Christopher A. Peacock, the current Chief Executive Officer of the
International Board will serve as President, Deputy Chief Executive Officer
and Chief Operating Officer of Jones Lang LaSalle. It is expected that Mr.
Michael J. Smith, currently Chairman of the International Board, will become
Jones Lang LaSalle's Deputy Chairman and Mr. William E. Sullivan, currently
Executive Vice President and Chief Financial Officer of LaSalle Partners, will
continue in that position with Jones Lang LaSalle.
Regulatory Approvals (page 50)
The consummation of the Acquisition requires, among other things, the
expiration or termination of the applicable waiting periods under the Hart-
Scott-Rodino Antitrust Improvements Act of 1976, as amended (the "HSR Act").
Anticipated Accounting Treatment (page 51)
As a general matter, the accounting treatment for the Consideration Shares
issued and/or cash paid to a JLW Shareholder will be dependent on whether such
JLW Shareholder owned, directly or indirectly, an interest in the JLW Compa-
nies prior to the Integration (each such shareholder, a "Current JLW Owner")
or whether such JLW Shareholder received such interest as part of the Integra-
tion or in anticipation of the Acquisition (each such shareholder, a "New JLW
Owner"). The accounting treatment will also depend on whether the share issued
is an Initial Distribution Share, Indemnification Share, Adjustment Share,
Forfeiture Share or ESOT Share (and whether such ESOT Share is subject to
vesting).
The issuance of shares of LaSalle Partners common stock and cash payments to
the JLW Shareholders and the ESOT will be accounted for in part as purchase
consideration under APB Opinion No. 16, "Business Combinations" ("APB Opinion
No. 16") and in part as compensation expense under APB Opinion No. 25, "Ac-
counting for Stock Issued to Employees" ("APB Opinion No. 25"). Of the
14,254,116 total shares to be issued, 7,578,385 shares, or 53%, will be ac-
counted for under purchase accounting in accordance with APB Opinion No. 16
and 6,675,731 shares, or 47%, will be accounted for as compensation expense
under APB Opinion No. 25.
Based on a closing stock price of $31.50, as reported on the New York Stock
Exchange, Inc. ("NYSE") composite tape on January 29, 1999 (a date just prior
to the distribution of this Proxy Statement), the value of the shares subject
to purchase accounting would be $238.7 million. This consideration, together
with an anticipated cash payment of $5.8 million and any capitalizable trans-
action costs, will be allocated to the identifiable assets and liabilities be-
ing acquired. Any excess purchase price will be allocated to goodwill and am-
ortized to expense over an estimated useful life of 40 years.
Of the shares subject to accounting under APB Opinion No. 25, 5,113,193
shares will be treated as a fixed compensation award and 1,562,538 shares will
be treated as a variable compensation award. For the fixed award, the value of
the shares issued will be based on the stock price on the date of issuance and
will not be subject to change. For the variable award, the value of the shares
will also initially be based on the stock price on the date of issuance; how-
ever, the value will be adjusted on a quarterly basis to reflect changes in
the stock price until such time as the contingencies related to the shares are
removed.
The aggregate compensation expense of both the fixed and variable awards of
shares which are not subject to forfeiture or vesting provisions will be re-
corded as compensation expense on the date of issuance or, with respect to
ESOT Shares, allocation (i.e., at Closing, December 31, 1999 or December 31,
2000). The value of shares subject to forfeiture or vesting provisions will be
recorded as deferred compensation in the balance sheet on the date of issuance
or with respect to ESOT Shares, allocation, and amortized to expense in accor-
dance with such provisions, but in no event later than December 31, 2000.
7
<PAGE>
LaSalle Partners expects to incur compensation expense associated with the
issuance of shares totaling approximately $117.3 million and $93.4 million in
the years ended December 31, 1999 and 2000, respectively, assuming that the
JLW Companies have the required net worth at Closing. Included in the total
estimated compensation expense of $210.7 million is expense of $49.2 million
which will be subject to fluctuation based on quarterly changes in the price
of LaSalle Partners common stock. Management anticipates that this
compensation expense, $210.3 million of which represents a non-cash charge,
will cause Jones Lang LaSalle to report operating losses for these periods.
See "The Transactions--Anticipated Accounting Treatment" on page 51 and "Un-
audited Pro Forma Consolidated Financial Statements--Jones Lang LaSalle" on
page 87.
Absence of Appraisal Rights (page 54)
LaSalle Partners stockholders will not be entitled to appraisal rights under
the Maryland General Corporation Law ("MGCL") in connection with the Acquisi-
tion.
Stockholder Agreements; DEL Stockholder Agreements (page 73)
As a condition to the Acquisition, each JLW Shareholder has entered into a
separate Stockholder Agreement with LaSalle Partners which will become effec-
tive upon the Closing (collectively, the "Stockholder Agreements"). In addi-
tion, in the cases where the JLW Shareholder is not a natural person, the em-
ployee of the JLW Companies who owns or holds an interest in such JLW Share-
holder (such employee, a "Related JLW Owner") has entered into a Stockholder
Agreement along with such JLW Shareholder. Unless otherwise agreed, the term
of such Stockholder Agreements will commence upon the Closing and will termi-
nate on the earlier of (a) the first business day immediately following the
fifth annual meeting of stockholders of Jones Lang LaSalle following the Clos-
ing Date and (b) June 1, 2003.
The Stockholder Agreements are intended to provide, among other things, ap-
propriate representation on the Jones Lang LaSalle board of directors for the
LaSalle Partners stockholders and the JLW Shareholders during a transitional
period of approximately four years, as well as to ensure compliance with
United States securities laws. Pursuant to the Stockholder Agreements, each
JLW Shareholder and Related JLW Owner has:
. agreed to standstill covenants and covenants restricting activities affect-
ing the management or corporate control of Jones Lang LaSalle;
. agreed not to sell, except pursuant to limited exceptions, any Considera-
tion Shares during the period commencing on the Closing Date and ending one
year from the Closing Date (the "No Sale Period"), and to more limited re-
strictions on the transferability of Consideration Shares after the No Sale
Period; and
. agreed to vote all shares of LaSalle Partners common stock owned by such
JLW Shareholder and Related JLW Owner in favor of persons nominated by the
Jones Lang LaSalle board of directors and in accordance with the recommen-
dation of the Jones Lang LaSalle board of directors on stockholder propos-
als and matters involving a sale or merger of Jones Lang LaSalle which such
board has recommended against approving.
Each current director, officer and employee of LaSalle Partners or any
subsidiary of LaSalle Partners (a "LaSalle Partners Employee Stockholder") who
is a former partner of DEL-LPL Limited Partnership ("DEL-LPL") and DEL-LPAML
Limited Partnership ("DEL-LPAML" and, together with DEL-LPL, the "Employee
Partnerships"), has entered into an agreement (a "DEL Stockholder Agreement"),
that contains all the stockholder covenants and voting provisions contained in
the Stockholder Agreements. The DEL Stockholder Agreements also contain
transfer restrictions with respect to shares of LaSalle Partners common stock
owned by LaSalle Partners Employee Stockholders. Prior to their dissolution,
which was effective June 30, 1998, the Employee Partnerships were the entities
through which the employee owners of LaSalle Partners prior to its initial
public offering held their equity interests in LaSalle Partners. The Employee
Partnerships received approximately seven million shares of LaSalle Partners
common stock in connection with the incorporation of LaSalle Partners, which
shares were distributed to the
8
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beneficial owners as a result of the dissolution. The Employee Partnerships
were dissolved to permit, among other things, the employee owners to hold their
equity interests in LaSalle Partners directly. The DEL Stockholder Agreements
were required by the JLW Shareholders as a condition to their agreement to
enter into the Stockholder Agreements.
As a result of the Stockholder Agreements and DEL Stockholder Agreements, as
long as persons who are parties or otherwise subject to such agreements own or
control a majority of the issued and outstanding shares of LaSalle Partners
common stock entitled to vote, all director nominees of the Jones Lang LaSalle
board of directors will be elected, all sale or merger transactions opposed by
the board will not be approved and all stockholder proposals will be decided in
accordance with the board's recommendation. Following the Closing, it is
expected that approximately 69% of LaSalle Partners' outstanding common stock
will initially be owned by employees of Jones Lang LaSalle who are subject to
the Stockholder Agreements and the DEL Stockholder Agreements. Approximately
47% of the issued and outstanding shares of LaSalle Partners common stock will
be owned by the JLW Shareholders and approximately 22% of the issued and
outstanding shares will be owned by the LaSalle Partners Employee Stockholders.
The Indemnity and Escrow
Agreement (page 69)
Each JLW Shareholder and Related JLW Owner, if applicable, has entered into
an Indemnity and Escrow Agreement which will become effective upon the Closing
(the "Escrow Agreement"). The Escrow Agreement sets forth the obligations of
each JLW Shareholder and Related JLW Owner, if applicable, to indemnify and
hold harmless LaSalle Partners and its subsidiaries (other than the JLW
Companies) and their respective directors, officers, employees and agents
(collectively, the "Indemnified Persons") against certain losses and expenses.
The Escrow Agreement is intended to provide LaSalle Partners with economic
protection against certain liabilities specified in the Escrow Agreement,
subject to the limitations set forth therein.
Pursuant to the Purchase Agreements, the Adjustment Shares and the
Indemnification Shares will be placed in escrow pursuant to the Escrow
Agreement. In addition, the Forfeiture Shares issuable to the JLW Shareholders
who own the JLW Companies operating in Asia (the "JLW Asia Companies") will be
delivered to an escrow agent to secure indemnification obligations relating to
the ownership of the shares of the JLW Asia Companies. The escrow arrangements
are being used to reduce the administrative burden and difficulty of recovering
shares once they have been distributed.
Amendment to the Articles of Amendment and Restatement of LaSalle Partners
(page 160)
The Purchase Agreements provide that, as part of the Acquisition, LaSalle
Partners will amend its Articles of Amendment and Restatement (the "LaSalle
Partners Charter") to change the name of LaSalle Partners to "Jones Lang
LaSalle Incorporated."
The proposed form of amendment to the LaSalle Partners Charter is attached as
Annex H.
Approval of the Charter Amendment requires the affirmative vote of the
holders of a majority of the shares of LaSalle Partners common stock
outstanding on the Record Date, and is a condition to the consummation of the
Acquisition. The LaSalle Partners board of directors believes that the name
"Jones Lang LaSalle" will more accurately reflect the combined company upon
consummation of the Acquisition.
Amendment to 1997 Stock Award and Incentive Plan (page 160)
Under the terms of the Purchase Agreements, the consummation of the Acquisi-
tion is conditioned upon the increase in common stock authorized under the 1997
Stock Award and Incentive Plan (the "1997 Plan") to 4,160,000 from 2,215,000
shares being approved by LaSalle Partners stockholders. Accordingly, the
LaSalle Partners board of directors has approved the Stock Plan Amendment to
increase the number of shares of LaSalle Partners authorized for granting of
awards thereunder from 2,215,000 to 4,160,000 shares. As of January 29, 1999,
options to acquire and stock bonuses covering approximately
9
<PAGE>
1,756,037 shares of LaSalle Partners common stock had been granted under the
1997 Stock Award and Incentive Plan and 458,963 shares of LaSalle Partners
common stock remained available for future awards. During the period from June
30, 1998 to the third anniversary of the Closing Date, to the extent that
LaSalle Partners issues or grants stock options to its employees employed
prior to June 30, 1998, it will be obligated to issue or grant an equivalent
number of stock options to employees of Jones Lang LaSalle or any subsidiary
thereof who were employees of the JLW Companies immediately prior to the Clos-
ing Date. See "The Purchase Agreements--Stock Options." LaSalle Partners re-
lies on the use of equity awards to attract and retain qualified personnel
with the abilities to further its growth. LaSalle Partners believes that the
continued use of stock options is an important means of providing appropriate
incentives to employees of Jones Lang LaSalle who are necessary for the future
success of Jones Lang LaSalle and for the realization of the potential bene-
fits of the Acquisition. As a result of its growth, including through the Ac-
quisition and the acquisition of the Compass Businesses, LaSalle Partners be-
lieves that additional shares will be needed for issuance under the 1997 Plan.
Accordingly, the LaSalle Partners board of directors recommends approval of
the Stock Plan Amendment.
Approval of the Stock Plan Amendment by LaSalle Partners stockholders is a
condition to the Acquisition. Such approval requires the affirmative vote of
the holders of a majority of the votes cast on such proposal, provided that
the shares of LaSalle Partners common stock represented at the Special Meeting
constitute over 50% of all shares of LaSalle Partners common stock issued and
outstanding on the Record Date.
Cautionary Statement Concerning Forward-Looking Statements
Certain statements contained or incorporated by reference in this Proxy
Statement 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, 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 (filed
October 22, 1998), (ix) the LaSalle Partners Current Report on Form 8-K, dated
October 22, 1998 (filed December 9, 1998), 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, (x) this Proxy Statement under the captions "Risk
Factors," "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 (xi) other reports filed by LaSalle
Partners with the United States Securities and Exchange Commission (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.
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Summary Historical and Pro Forma Financial Data of LaSalle Partners
The following table sets forth, for the periods and as of the dates
indicated, summary financial and other data on a historical consolidated and
combined basis of LaSalle Partners. The summary financial data as of December
31, 1997 and 1996 and for each of the years in the three-year period ended
December 31, 1997 have been derived from the consolidated and combined
financial statements of LaSalle Partners and the predecessors of LaSalle
Partners (the "Predecessor Partnerships") audited by KPMG LLP, independent
auditors, included in the LaSalle Partners 10-K and incorporated herein by
reference. The summary financial data as of December 31, 1995, 1994 and 1993
and for the years ended December 31, 1994 and 1993 have been derived from the
Predecessor Partnerships' Combined Financial Statements audited by KPMG LLP,
not incorporated by reference herein. The summary financial data as of
September 30, 1998 and for the nine months ended September 30, 1998 and 1997
have been derived from LaSalle Partners' and the Predecessor Partnerships'
unaudited consolidated and combined financial statements, included in the
LaSalle Partners Third Quarter 10-Q and incorporated herein by reference. Such
financial statements include all adjustments, consisting of normal recurring
adjustments, which LaSalle Partners considers necessary for a fair presentation
of its financial position and results of operations for these periods. The
summary pro forma financial data have been derived from the Unaudited Pro Forma
Consolidated Financial Statements, included elsewhere herein. Operating results
for the nine months ended September 30, 1998 are not necessarily indicative of
results that may be expected for the entire year. The information set forth
below should be read in conjunction with: the consolidated financial statements
of LaSalle Partners, and the notes thereto, and "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 and incorporated herein by reference; the unaudited pro forma financial
statements contained in the LaSalle Partners October 1 Current Report and
incorporated herein by reference; the Unaudited Pro Forma Consolidated
Financial Statements, included elsewhere in this Proxy Statement and "The
Transactions--Consideration."
11
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Summary Historical and Pro Forma Financial Data
LaSalle Partners Incorporated
(in thousands, except share data)
<TABLE>
<CAPTION>
Nine Months Ended September 30, Year Ended December 31,
---------------------------------- ---------------------------------------------------------------
1998 1997
Pro Pro
Forma(1) 1998 1997 Forma(1) 1997 1996 1995 1994 1993
----------- ----------- -------- ----------- ----------- -------- -------- -------- -------
(unaudited) (unaudited)
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Statement of
Operations Data:
Total revenue..... $ 585,567 $ 190,109 $141,482 $ 753,799 $ 224,773 $159,453 $138,618 $116,698 $95,491
Total operating
expenses......... 613,462 175,009 129,600 794,566 189,659 132,552 118,502 98,683 78,478
----------- ----------- -------- ----------- ----------- -------- -------- -------- -------
Operating income
(loss)........... $ (27,895) $ 15,100 $ 11,882 $ (40,767) $ 35,114 $ 26,901 $ 20,116 $ 18,015 $17,013
Interest expense.. 11,024 992 3,859 14,536 3,995 5,730 3,806 5,159 5,257
----------- ----------- -------- ----------- ----------- -------- -------- -------- -------
Earnings (loss)
before provision
for income
taxes............ (38,919) 14,108 8,023 (55,303) 31,119 21,171 16,310 12,856 11,756
Net provision for
income taxes..... 10,357 5,432 (1,808) 16,017 5,279 1,207 505 554 300
Minority
interest......... 818 -- -- 549 -- -- -- -- --
----------- ----------- -------- ----------- ----------- -------- -------- -------- -------
Net earnings
(loss)........... $ (50,094) $ 8,676 $ 9,831 $ (71,869) $ 25,840 $ 19,964 $ 15,805 $ 12,302 $11,456
=========== =========== ======== =========== =========== ======== ======== ======== =======
Basic earnings
(loss) per common
share(2)......... $ (2.09) $ 0.54 $ (3.02) $ 1.50
=========== =========== =========== ===========
Basic weighted
average shares
outstanding...... 23,953,470 16,210,340 23,781,904 16,200,000
=========== =========== =========== ===========
Diluted earnings
(loss) per common
share(2)......... $ (2.09) $ 0.53 $ (3.02) $ 1.49
=========== =========== =========== ===========
Diluted weighted
average shares
outstanding(3)... 23,953,470 16,403,225 23,781,904 16,329,613
=========== =========== =========== ===========
Other Data:
Adjusted
EBITDA(4)........ $ 69,403 $ 23,277 $ 18,377 $ 108,574 $ 44,207 $ 32,317 $ 24,356 $ 20,866 $19,544
Cash flows
provided by (used
in)
operating
activities....... $ 17,252 $ 18,302 $ 17,136 $ 61,288 $ 40,577 $ 13,964 $ 13,553 $ 24,628 $ 4,837
Cash flows
provided by (used
in) investing
activities....... $ (62,719) $ (62,355) $ (5,346) $ (200,396) $ (14,126) $(32,478) $ (5,706) $ (4,885) $(2,738)
Cash flows
provided by (used
in) financing
activities....... $ (5,275) $ 28,442 $ (2,894) $ 66,734 $ (3,128) $ 17,189 $(12,365) $(12,028) $(6,758)
</TABLE>
<TABLE>
<CAPTION>
At September 30, At December 31,
----------------- --------------------------------------------
1998
Pro
Forma(5) 1998 1997 1996 1995 1994 1993
-------- -------- -------- -------- -------- -------- --------
(unaudited)
<S> <C> <C> <C> <C> <C> <C> <C>
Balance Sheet Data:
Cash and cash
equivalents............ $ 25,064 $ 15,214 $ 30,660 $ 7,207 $ 8,322 $ 12,840 $ 5,125
Total assets............ 941,955 252,877 219,887 156,614 115,001 107,055 84,512
Long-term debt.......... 208,442 28,442 -- 55,551 40,805 41,028 56,619
Total liabilities....... 504,454 95,844 72,990 132,367 100,004 93,898 99,801
Total
partners'/stockholders'
equity................. 437,501 157,033 146,897 24,247 14,997 13,157 (15,289)
</TABLE>
- -------
(1) Pro forma to give effect to the combination of the JLW Companies, the
Transactions and the acquisition of the Compass Businesses as though they
had occurred on January 1, 1997. Adjustments, among other things, give
effect to new market-based compensation packages for certain partners of
the English, Scottish and Irish partnerships which own or operate the JLW
Businesses in Europe and North America, Scotland and Ireland, respectively,
and certain employees of the JLW Businesses and includes a base salary and
target bonus in replacement of previously received profits distributions
and/or dividends. Reference is made to the LaSalle Partners October 1
Current Report incorporated herein by reference for a complete description
of the pro forma presentation and related adjustments for LaSalle Partners
for the year ended December 31, 1997.
(2) Basic and diluted earnings per common share were calculated based on
earnings for the period from conversion to corporate form, July 22, 1997,
through December 31, 1997. No earnings per share have been reflected for
the periods prior to July 22, 1997.
(3) Neither any Forfeiture Shares, Indemnification Shares, ESOT Adjustment
Shares, ESOT Indemnification Shares or ESOT Shares subject to vesting
(where such ESOT Shares have been allocated from the ESOT) nor options on
LaSalle Partners common stock issued in connection with the acquisition of
the Compass Businesses were included in the diluted weighted average shares
outstanding for the pro forma nine months ended September 30, 1998 or for
the year ended December 31, 1997 because, due to operating losses,
inclusion of such common stock equivalents would be anti-dilutive.
(4) Adjusted EBITDA represents earnings before interest expense, income taxes,
depreciation and amortization, and merger-related nonrecurring charges.
Merger-related nonrecurring charges, including the compensation expense
recorded in accordance with APB Opinion No. 25 related to shares of LaSalle
Partners common stock to be issued or cash paid, if applicable, to New JLW
Owners or to the ESOT and Forfeiture Shares to be issued to the Current JLW
Owners, are substantially noncash charges incurred in connection with the
Acquisition, similar to amortization expense on intangible assets and
goodwill. Management believes that Adjusted EBITDA is useful to investors
as a measure of operating performance, cash generation and ability to
service debt. However, Adjusted EBITDA should not be considered as an
alternative either to: (i) earnings (determined in accordance with US
GAAP); (ii) operating cash flow (determined in accordance with US GAAP); or
(iii) liquidity.
(5) Pro forma to give effect to the combination of the JLW Companies, the
Transactions and the acquisition of the Compass Businesses as though they
had occurred on September 30, 1998. The adjustments, among other things,
give effect to new market-based compensation packages for certain partners
of the JLW Partnerships and employees of the JLW Companies and includes a
base salary and target bonus in replacement of previously received profits
distributions and/or dividends.
12
<PAGE>
Summary Financial Data of the JLW Companies
Summary Financial Data--The JLW Europe Group
The following table sets forth, for the periods and as of the dates
indicated, summary financial and other data on a historical consolidated basis
of the JLW Europe Group in accordance with US GAAP. The summary financial data
as of December 31, 1997 and 1996 and for each of the years in the three-year
period ended December 31, 1997 have been derived from the consolidated
financial statements of Jones Lang Wootton, the English partnership ("JLW
England"), and its subsidiaries audited by Deloitte & Touche, independent
auditors, included elsewhere herein. The summary financial data as of December
31, 1995 have been derived from the unaudited consolidated financial statements
of JLW England and its subsidiaries not included herein. Summary financial data
as of December 31, 1994 and 1993 and for the years ended December 31, 1994 and
1993 are not included herein because countries within the region had different
year ends, were not subject to statutory audit requirements and, therefore, did
not prepare accounts in accordance with US GAAP for those years, and did not
require a consolidation of the regional results to be performed. In certain
countries, in accordance with local document retention practices, the financial
data have not been retained. Accordingly, complete financial data for 1993 and
1994 are not available to permit the presentation of historical financial
statements on a comparable basis for such periods. The summary financial data
as of September 30, 1998 and for the nine months ended September 30, 1998 and
1997 have been derived from unaudited consolidated financial statements of JLW
England and its subsidiaries also included elsewhere herein. Such financial
statements include all adjustments, consisting of normal recurring adjustments,
which JLW England considers necessary for a fair presentation of the financial
position and results of operations for these periods. Operating results for the
nine months ended September 30, 1998 are not necessarily indicative of results
that may be expected for the entire year. The information set forth below
should be read together with the "Unaudited Pro Forma Consolidated Financial
Statements," "JLW Management's Discussion and Analysis of Financial Condition
and Results of Operations of the JLW Companies" and the financial statements
and the notes thereto of JLW England and its subsidiaries, all included
elsewhere herein.
13
<PAGE>
Summary Historical Financial Data
The JLW Europe Group
(in thousands)
<TABLE>
<CAPTION>
Nine Months Ended
September 30, Year Ended December 31,
------------------ ----------------------------
1998 1997 1997 1996 1995
-------- -------- -------- -------- --------
(unaudited)
<S> <C> <C> <C> <C> <C>
Statement of Operations
Data:
Total revenue............... $227,793 $171,072 $258,982 $217,437 $196,422
Total operating expenses
(1)........................ 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
======== ======== ======== ======== ========
Other Data:
Adjusted EBITDA (2)......... $ 47,660 $ 32,976 $ 46,706 $ 38,344 $ 25,207
Cash flows provided by
operating activities....... $ 25,360 $ 31,400 $ 47,034 $ 30,964 $ 24,958
Cash flows used in investing
activities................. $ (4,947) $ (7,043) $ (8,634) $ (6,122) $ (8,859)
Cash flows used in financing
activities................. $(22,443) $(21,835) $(31,223) $(25,882) $ (9,182)
</TABLE>
<TABLE>
<CAPTION>
At December 31,
----------------------------
At September 30, 1998 1997 1996 1995
--------------------- -------- -------- ----------
(unaudited) (unaudited)
<S> <C> <C> <C> <C> <C>
Balance Sheet Data:
Cash and cash
equivalents............ $ 19,885 $ 21,242 $ 14,844 $ 14,987
Total assets............ 154,972 134,802 125,244 108,251
Long-term debt.......... -- -- -- --
Total liabilities and
minority interest...... 93,474 75,966 74,411 68,888
Total partners'
capital/stockholders'
equity................. 61,498 58,836 50,833 39,363
</TABLE>
- --------
(1) The compensation of the partners of JLW England is reflected as profit
distributions rather than included in compensation expense. Had
compensation expense been so included, net earnings would have been lower
by approximately $19.7 million, $14.0 million, and $18.6 million for the
nine months ended September 30, 1998 and 1997 and for the year ended
December 31, 1997, respectively. Estimates of comparable market
compensation amounts for the years ended December 31, 1996 and 1995 are not
available due to changes in applicable personnel and various employment
markets throughout the region and the lack of available market remuneration
data for those periods. The compensation for other senior executives of the
rest of the JLW Europe Group is included in compensation expense because
these amounts were paid as salary and bonuses.
(2) Adjusted EBITDA represents earnings before interest expense, income taxes,
depreciation and amortization, and merger-related nonrecurring charges.
Merger-related nonrecurring charges represent professional fees for legal,
advisory and financial services which are directly associated with the
Integration and the Transactions. Management believes that Adjusted EBITDA
is useful to investors as a measure of operating performance, cash
generation and ability to service debt. However, Adjusted EBITDA should not
be considered as an alternative either to: (i) earnings (determined in
accordance with US GAAP); (ii) operating cash flow (determined in
accordance with US GAAP); or (iii) liquidity.
14
<PAGE>
Summary Financial Data--The JLW Scotland Group
The following table sets forth, for the periods and as of the dates
indicated, summary financial and other data on a historical consolidated basis
of the JLW Scotland Group in accordance with US GAAP. The summary financial
data as of December 31, 1997 and 1996 and for each of the years in the three-
year period ended December 31, 1997 have been derived from the consolidated
financial statements of Jones Lang Wootton--Scotland and its subsidiary
undertaking audited by Ernst & Young, independent auditors, included elsewhere
herein. The summary financial data as of December 31, 1995 have been derived
from the consolidated financial statements of Jones Lang Wootton, the Scottish
Partnership ("JLW Scotland") and its subsidiary undertaking not included
herein. Summary financial data as of December 31, 1994 and 1993 and for the
years ended December 31, 1994 and 1993 are not included herein because the JLW
Scotland Group, which previously had an April 30 year end, included a
partnership which was not subject to statutory audit requirements, did not
prepare accounts in accordance with US GAAP for those years and did not require
a consolidation of the results to be performed. It is not possible to recreate
financial statements which comply with US GAAP as of and for the years ended
December 31, 1993 and 1994 as the supporting books and records would not permit
the presentation of historical financial statements on a comparable basis for
such periods. The summary financial data as of September 30, 1998 and for the
nine months ended September 30, 1998 and 1997 have been derived from unaudited
consolidated financial statements of JLW Scotland and its subsidiary
undertaking also included elsewhere herein. Such financial statements include
all adjustments, consisting of normal recurring adjustments, which JLW Scotland
considers necessary for a fair presentation of the financial position and
results of operations for these periods. Operating results for the nine months
ended September 30, 1998 are not necessarily indicative of results that may be
expected for the entire year. The information set forth below should be read
together with the "Unaudited Pro Forma Consolidated Financial Statements," "JLW
Management's Discussion and Analysis of Financial Condition and Results of
Operations of the JLW Companies," and the financial statements and the notes
thereto of JLW Scotland and its subsidiary undertaking, all included elsewhere
herein.
15
<PAGE>
Summary Historical Financial Data
The JLW Scotland Group
(in thousands)
<TABLE>
<CAPTION>
Nine Months
Ended September
30, Year Ended December 31,
---------------- -------------------------
1998 1997 1997 1996 1995
------- ------- ------- ------- -------
(unaudited)
<S> <C> <C> <C> <C> <C>
Statement of Operations Data:
Total revenue.................... $ 6,783 $ 6,474 $ 9,242 $ 5,761 $ 5,018
Total operating expenses (1)..... 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
======= ======= ======= ======= =======
Other Data:
Adjusted EBITDA (2).............. $ 3,514 $ 3,945 $ 5,402 $ 2,358 $ 1,926
Cash flows provided by operating
activities...................... $ 3,347 $ 3,395 $ 4,538 $ 2,480 $ 1,626
Cash flows used in investing
activities...................... $ (464) $ (153) $ (231) $ (295) $ (172)
Cash flows used in financing
activities...................... $(2,624) $(1,847) $(2,291) $(1,590) $(1,846)
</TABLE>
<TABLE>
<CAPTION>
At At December 31,
September 30, --------------------
1998 1997 1996 1995
------------- ------ ------ ------
(unaudited)
<S> <C> <C> <C> <C>
Balance Sheet Data:
Cash and cash equivalents.................. $2,992 $2,642 $ 662 $ 18
Total assets............................... 6,894 6,111 3,137 1,972
Long-term debt............................. -- -- -- --
Total liabilities.......................... 1,675 1,447 1,041 636
Total partners' capital/stockholders'
equity.................................... 5,219 4,664 2,096 1,336
</TABLE>
- --------
(1) The compensation of the partners of the JLW Scotland Group is reflected as
profit distributions rather than included in compensation expense. Had
compensation expense been so included, net earnings would have been lower
by approximately $1.9 million, $2.2 million, and $2.9 million for the nine
months ended September 30, 1998 and 1997 and for the year ended December
31, 1997, respectively. Estimates of comparable market compensation amounts
for the years ended December 31, 1996 and 1995 are not available due to
changes in applicable personnel and various employment markets throughout
the region and the lack of available market remuneration data for those
periods.
(2) Adjusted EBITDA represents earnings before interest expense, income taxes,
depreciation and amortization, and merger-related nonrecurring charges.
Merger-related nonrecurring charges represent professional fees for legal,
advisory and financial services which are directly associated with the
Integration and the Transactions. Management believes that Adjusted EBITDA
is useful to investors as a measure of operating performance, cash
generation and ability to service debt. However, Adjusted EBITDA should not
be considered as an alternative either to: (i) earnings (determined in
accordance with US GAAP); (ii) operating cash flow (determined in
accordance with US GAAP); or (iii) liquidity.
16
<PAGE>
Summary Financial Data--The JLW Ireland Group
The following table sets forth, for the periods and as of the dates
indicated, summary financial and other data on a historical combined basis of
the JLW Ireland Group in accordance with US GAAP. The summary financial data as
of December 31, 1997 and 1996 and for each of the years in the three-year
period ended December 31, 1997 have been derived from the combined financial
statements of Jones Lang Wootton-Irish Practice audited by Deloitte & Touche,
independent auditors, included elsewhere herein. The summary financial data as
of December 31, 1995 have been derived from the unaudited combined financial
statements of Jones Lang Wootton-Irish Practice not included herein. Summary
financial data as of December 31, 1994 and 1993 and for the years ended
December 31, 1994 and 1993 are not included herein because, as a partnership,
the JLW Ireland Group previously had an April 30 year end, was not subject to
audit requirements and therefore did not prepare accounts in accordance with US
GAAP for those years. It is not possible to recreate financial statements which
comply with US GAAP as of and for the years ended December 31, 1993 and 1994,
as the books and supporting records of the JLW Ireland Group do not provide
sufficient detail to permit the presentation of historical financial statements
on a comparable basis for such periods. The summary financial data as of
September 30, 1998 and for the nine months ended September 30, 1998 and 1997
have been derived from unaudited combined financial statements of Jones Lang
Wootton, the Irish partnership ("JLW Ireland"), also included elsewhere herein.
Such financial statements include all adjustments, consisting of normal
recurring adjustments, which JLW Ireland considers necessary for a fair
presentation of the financial position and results of operations for these
periods. Operating results for the nine months ended September 30, 1998 are not
necessarily indicative of results that may be expected for the entire year. The
information set forth below should be read together with the "Unaudited Pro
Forma Consolidated Financial Statements," "JLW Management's Discussion and
Analysis of Financial Condition and Results of Operations of the JLW
Companies," and the financial statements and the notes thereto of JLW Ireland,
all included elsewhere herein.
17
<PAGE>
Summary Historical Financial Data
The JLW Ireland Group
(in thousands)
<TABLE>
<CAPTION>
Nine Months
Ended September
30, Year Ended December 31,
---------------- -------------------------
1998 1997 1997 1996 1995
------- ------- ------- ------- -------
(unaudited)
<S> <C> <C> <C> <C> <C>
Statement of Operations Data:
Total revenue.................... $ 8,701 $ 6,305 $ 9,301 $ 9,487 $ 6,953
Total operating expenses (1)..... 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
======= ======= ======= ======= =======
Other Data:
Adjusted EBITDA (2).............. $ 4,907 $ 2,728 $ 4,456 $ 4,507 $ 2,040
Cash flows provided by operating
activities...................... $ 3,730 $ 2,368 $ 3,542 $ 4,795 $ 2,358
Cash flows used in investing
activities...................... $ (52) $ (467) $ (477) $ (88) $ (392)
Cash flows used in financing
activities...................... $(2,595) $(2,401) $(3,425) $(3,568) $(1,956)
</TABLE>
<TABLE>
<CAPTION>
At December 31,
At September ------------------------
30, 1998 1997 1996 1995
------------ ------ ------ ----------
(unaudited) (unaudited)
<S> <C> <C> <C> <C>
Balance Sheet Data:
Cash and cash equivalents.............. $1,852 $ 676 $1,211 $ 17
Total assets........................... 7,785 5,228 5,562 3,725
Long-term debt......................... -- -- -- --
Total liabilities...................... 2,693 1,807 2,228 2,107
Total partners' capital/stockholders'
equity................................ 5,092 3,421 3,334 1,618
</TABLE>
- --------
(1) The compensation of the partners of the JLW Ireland Group is reflected as
profit distributions rather than included in compensation expense. Had
compensation expense been so included, net earnings would have been lower
by approximately $2.2 million, $1.8 million, and $2.4 million for the nine
months ended September 30, 1998 and 1997 and for the year ended December
31, 1997, respectively. Estimates of comparable market compensation amounts
for the years ended December 31, 1996 and 1995 are not available due to
changes in applicable personnel and various employment markets throughout
the region and the lack of available market remuneration data for those
periods.
(2) Adjusted EBITDA represents earnings before interest expense, income taxes,
depreciation and amortization, and merger-related nonrecurring charges.
Merger-related nonrecurring charges represent professional fees for legal,
advisory and financial services which are directly associated with the
Integration and the Transactions. Management believes that Adjusted EBITDA
is useful to investors as a measure of operating performance, cash
generation and ability to service debt. However, Adjusted EBITDA should not
be considered as an alternative either to: (i) earnings (determined in
accordance with US GAAP); (ii) operating cash flow (determined in
accordance with US GAAP); or (iii) liquidity.
18
<PAGE>
Summary Financial Data--The JLW Asia Group
The following table sets forth, for the periods and as of the dates
indicated, summary financial and other data on a historical consolidated basis
of the JLW Asia Group in accordance with US GAAP. The summary financial data as
of December 31, 1997 and 1996 and for each of the years in the three-year
period ended December 31, 1997 have been derived from the consolidated
financial statements of JLW Asia Holdings Limited and subsidiaries audited by
KPMG, independent auditors, included elsewhere herein. The summary financial
data as of December 31, 1995 have been derived from the consolidated financial
statements of JLW Asia Holdings Limited not included herein. Summary financial
data as of December 31, 1994 and 1993 and for the years ended December 31, 1994
and 1993 are not included herein because the JLW Companies in Asia had
different year ends, did not require a consolidation of the regional results to
be performed and, in certain cases, were not subject to statutory audit
requirements and, therefore, the JLW Asia Group did not prepare accounts in
accordance with US GAAP. In certain countries, in accordance with local
document retention practices, the financial data have not been retained.
Accordingly, complete financial data for 1993 and 1994 are not available to
permit the presentation of historical financial statements on a comparable
basis for such periods. The summary financial data as of September 30, 1998 and
for the nine months ended September 30, 1998 and 1997 have been derived from
unaudited consolidated financial statements of JLW Asia Holdings Limited and
subsidiaries also included elsewhere herein. Such financial statements include
all adjustments, consisting of normal recurring adjustments, which the
directors of JLW Asia Holdings Limited consider necessary for a fair
presentation of the financial position and results of operations for these
periods. Operating results for the nine months ended September 30, 1998 are not
necessarily indicative of results that may be expected for the entire year. The
information set forth below should be read together with the "Unaudited Pro
Forma Consolidated Financial Statements," "JLW Management's Discussion and
Analysis of Financial Condition and Results of Operations of the JLW
Companies," and the JLW Asia Holdings Limited and subsidiaries financial
statements and the notes thereto, all included elsewhere herein.
19
<PAGE>
Summary Historical Financial Data
The JLW Asia Group
(in thousands)
<TABLE>
<CAPTION>
Nine Months
Ended
September 30, Year Ended December 31,
---------------- ---------------------------
1998 1997 1997 1996 1995
------- ------- -------- ------- --------
(unaudited)
<S> <C> <C> <C> <C> <C>
Statement of Operations Data:
Total revenue.................. $41,881 $57,355 $ 76,010 $62,281 $ 59,718
Total operating expenses (1)... 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 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
======= ======= ======== ======= ========
Other Data:
Adjusted EBITDA (2)............ $ 4,523 $11,253 $ 15,399 $12,955 $ 10,678
Cash flows provided by (used
in) operating activities...... $(3,625) $10,977 $ 20,021 $ 7,347 $ 10,044
Cash flows used in investing
activities.................... $ (290) $ (272) $ (424) $(1,085) $ (142)
Cash flows used in financing
activities.................... $(1,091) $(9,313) $(17,309) $(8,286) $(13,210)
</TABLE>
<TABLE>
<CAPTION>
At December 31,
-----------------------
At September 30, 1998 1997 1996 1995
--------------------- ------- ------- -------
(unaudited)
<S> <C> <C> <C> <C>
Balance Sheet Data:
Cash and cash equivalents........ $ 3,584 $ 8,544 $ 5,730 $ 7,782
Total assets..................... 32,778 34,245 39,649 36,579
Long-term debt................... -- -- -- --
Total liabilities................ 22,146 20,613 22,363 20,991
Total stockholders' equity....... 10,632 13,632 17,286 15,588
</TABLE>
- --------
(1) The compensation for owners represents a combination of salary and bonus,
which is reflected in compensation expense. In addition, owners receive
dividends representing distributions of the JLW Asia Group's profits. Had
the portion of such dividends representing compensation been included as
compensation, net earnings would have been lower by approximately $.3
million, $5.4 million, and $7.2 million for the nine months ended September
30, 1998 and 1997 and for the year ended December 31, 1997, respectively.
Note that the JLW Asia Group established the new market remuneration
packages effective January 1, 1998, with the exception of the operations in
Indonesia, which were not wholly owned in 1998, resulting in a lower pro
forma adjustment in 1998 as compared to the prior year periods. Estimates
of comparable market compensation amounts for the years ended December 31,
1996 and 1995 are not available due to changes in applicable personnel and
various employment markets throughout the region and the lack of available
market remuneration data for those periods.
(2) Adjusted EBITDA represents earnings before interest expense, income taxes,
depreciation and amortization, and merger-related nonrecurring charges.
Merger-related nonrecurring charges represent professional fees for legal,
advisory and financial services which are directly associated with the
Integration and the Transactions. Management believes that Adjusted EBITDA
is useful to investors as a measure of operating performance, cash
generation and ability to service debt. However, Adjusted EBITDA should not
be considered as an alternative either to: (i) earnings (determined in
accordance with US GAAP); (ii) operating cash flow (determined in
accordance with US GAAP); or (iii) liquidity.
20
<PAGE>
Summary Financial Data--The JLW Australasia Group
The following table sets forth, for the periods and as of the dates
indicated, summary financial and other data on a historical combined basis of
the JLW Australasia Group in accordance with US GAAP. The summary financial
data as of December 31, 1997 and for each of the years in the three-year period
ended December 31, 1997 have been derived from the combined financial
statements of the JLW Australasia Group audited by Ernst & Young, independent
auditors, included elsewhere herein. The summary financial data as of December
31, 1995 have been derived from the unaudited combined financial statements of
the JLW Australasia Group, not included herein. The summary financial data as
of September 30, 1998 and for the nine months ended September 30, 1998 and 1997
have been derived from unaudited combined financial statements of the JLW
Australasia Group also included elsewhere herein. Such financial statements
include all adjustments, consisting of normal recurring adjustments, which the
directors of JLW Australasia Group consider necessary for a fair presentation
of the financial position and results of operations for these periods.
Operating results for the nine months ended September 30, 1998 are not
necessarily indicative of results that may be expected for the entire year. The
information set forth below should be read together with the "Unaudited Pro
Forma Consolidated Financial Statements," "JLW Management's Discussion and
Analysis of Financial Condition and Results of Operations of the JLW
Companies," and the JLW Australasia Group financial statements and the notes
thereto, all included elsewhere herein.
21
<PAGE>
Summary Historical Financial Data
The JLW Australasia Group
(in thousands)
<TABLE>
<CAPTION>
Nine Months
Ended
September 30, Year Ended December 31,
---------------- -------------------------
1998 1997 1997 1996 1995
------- ------- ------- ------- -------
(unaudited)
<S> <C> <C> <C> <C> <C>
Statement of Operations Data:
Total revenue.................... $41,072 $44,564 $62,449 $61,604 $59,334
Total operating expenses (1)..... 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
======= ======= ======= ======= =======
Other Data:
Adjusted EBITDA (2).............. $ 5,210 $ 5,404 $10,672 $ 6,669 $ 3,357
Cash flows provided by (used in)
operating activities............ $(1,555) $ 6,258 $ 9,269 $ 5,329 $(1,837)
Cash flows provided by (used in)
investing activities............ $ 202 $ (268) $ (663) $ (678) $(1,579)
Cash flows provided by (used in)
financing activities............ $(2,366) $(8,933) $(7,830) $(1,708) $ (141)
</TABLE>
<TABLE>
<CAPTION>
At December 31,
---------------------------
At September 30, 1998 1997 1996 1995
--------------------- ------- ------- -----------
(unaudited) (unaudited)
<S> <C> <C> <C> <C> <C>
Balance Sheet Data:
Cash and cash
equivalents............ $ -- $ 3,719 $ 2,943 $ --
Total assets............ 18,856 20,940 23,475 22,603
Long-term debt.......... -- -- -- --
Total liabilities....... 13,616 15,330 17,486 18,970
Total partners'
capital/stockholders'
equity................. 5,240 5,610 5,989 3,633
</TABLE>
- --------
(1) The compensation for owners and senior executives represents a combination
of salary, benefits and (in the case of senior executives) profit share,
which are reflected in compensation expense. In addition, owners receive
dividends representing distributions of the group's profits. Had the
portion of such dividends representing compensation been included as
compensation, net earnings would have been lower by approximately $.7
million, $3.2 million, and $4.2 million for the nine months ended September
30, 1998 and 1997 and for the year ended December 31, 1997, respectively.
Note that the JLW Australasia Group established the new market remuneration
packages effective January 1, 1998, with the exception of discretionary
bonus, resulting in a lower pro forma adjustment for 1998 as compared to
the prior year periods. Estimates of comparable market compensation amounts
for the years ended December 31, 1996 and 1995 are not available due to
changes in applicable personnel and various employment markets throughout
the region and the lack of available market remuneration data for those
periods.
(2) Adjusted EBITDA represents earnings before interest expense, income taxes,
depreciation and amortization, and merger-related nonrecurring charges.
Merger-related nonrecurring charges represent professional fees for legal,
advisory and financial services which are directly associated with the
Integration and the Transactions. Management believes that Adjusted EBITDA
is useful to investors as a measure of operating performance, cash
generation and ability to service debt. However, Adjusted EBITDA should not
be considered as an alternative either to: (i) earnings (determined in
accordance with US GAAP); (ii) operating cash flow (determined in
accordance with US GAAP); or (iii) liquidity.
22
<PAGE>
INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE
The SEC allows LaSalle Partners to "incorporate by reference" information
into this Proxy Statement, which means that LaSalle Partners can disclose
important information by referring to another document filed separately with
the SEC. Any statement incorporated by reference shall be deemed to be
modified or superseded for purposes of this Proxy Statement to the extent that
a statement contained herein or in any other subsequently filed document which
also is or is deemed to be incorporated by reference herein modifies or
supersedes such statement. Any such modified or superseded statement shall be
deemed to constitute a part of this Proxy Statement.
The following documents, which have been filed with the SEC by LaSalle
Partners (SEC File No. 001-13145) pursuant to the Securities Exchange Act of
1934, as amended (the "Exchange Act"), are incorporated by reference in this
Proxy Statement:
(1) Annual Report on Form 10-K for the fiscal year ended December 31,
1997.
(2) Quarterly Report on Form 10-Q for the fiscal quarter ended March 31,
1998.
(3) Quarterly Report on Form 10-Q for the fiscal quarter ended June 30,
1998.
(4) Quarterly Report on Form 10-Q for the fiscal quarter ended September
30, 1998.
(5) Current Reports on Form 8-K, dated August 31, 1998, October 1, 1998
and October 22, 1998.
(6) Proxy Statement relating to the 1998 Annual Meeting of Stockholders,
dated March 31, 1998.
(7) All documents subsequently filed by LaSalle Partners pursuant to
Section 13(a), 13(c), 14 or 15(d) of the Exchange Act prior to the Special
Meeting or any adjournment or postponement thereof. See "Where to Find More
Information."
Documents incorporated by reference into this Proxy Statement (not including
exhibits to such documents other than exhibits specifically incorporated by
reference into such documents) will be sent to any person, including any
beneficial owner of LaSalle Partners common stock to whom this Proxy Statement
is delivered, without charge, upon written or oral request, by first class
mail within one business day of receipt of such request. Requests for such
documents should be directed to LaSalle Partners Incorporated, Investor
Relations, 200 East Randolph Drive, Chicago, Illinois 60601, Telephone Number
(312) 782-5800.
23
<PAGE>
RISK FACTORS
LASALLE PARTNERS MAY NOT SUCCESSFULLY INTEGRATE THE BUSINESS OPERATIONS OF,
OR REALIZE THE BENEFITS FROM, THE TRANSACTIONS. The success of the Acquisition
will depend upon a number of factors, most importantly the ability of Jones
Lang LaSalle to realize expected synergies from the combined operations of
LaSalle Partners and the JLW Companies. The integration of the JLW Companies
with LaSalle Partners may place a significant burden on management. Such
integration is subject to a number of risks, including, among others, loss of
key personnel of LaSalle Partners and the JLW Companies, the difficulty
associated with assimilating the broad and geographically dispersed personnel
and operations of the JLW Companies, the disruption of LaSalle Partners'
ongoing business and acquisition strategy, and the difficulty in maintaining
uniform standards, controls, procedures and policies. No assurance can be
given that the anticipated benefits from the Acquisition will be realized or
that Jones Lang LaSalle will be able to integrate the two businesses
successfully. Failure of Jones Lang LaSalle to integrate the two businesses
successfully could have a material adverse effect on Jones Lang LaSalle's
business and results of operations.
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 corporations have been paid to the owners and key employees
as profit distributions, bonuses or dividends, according to the business
structure and tax regime in which the businesses operate. Following the
Acquisition, owners and key employees of the JLW Companies will receive
market-based compensation packages similar to those of current LaSalle
Partners employees. While most of these former owners and employees of the JLW
Companies will have significant equity interests in Jones Lang LaSalle, their
actual compensation will in certain circumstances be lower. As a result, there
can be no assurance that the compensation structure put in place following the
Closing will provide the same performance incentives as existed prior to
Closing. Furthermore, although the vesting requirements of the Forfeiture
Shares and the ESOT Shares are intended in part to incent JLW Shareholders and
other key employees of the JLW Companies to remain with Jones Lang LaSalle,
there can be no assurance that they will be effective.
LASALLE PARTNERS' BUSINESS, OPERATING RESULTS AND FINANCIAL CONDITION WILL
BE SUBJECT TO NEW RISKS RESULTING FROM INCREASED INTERNATIONAL OPERATIONS. The
combination of the JLW Companies with LaSalle Partners will create an entity
with significantly greater international exposure than that of either LaSalle
Partners or the JLW Companies prior to the combination. After giving pro forma
effect to the Transactions and the acquisition of the Compass Businesses,
Jones Lang LaSalle would have derived approximately 55.8% and 54.1% of its
total revenue from sales outside the United States in the fiscal year ended
December 31, 1997 and the nine months ended September 30, 1998, respectively.
After giving pro forma effect to the Transactions and the acquisition of the
Compass Businesses, as of September 30, 1998, Jones Lang LaSalle would have
had operations in 34 countries, utilizing the services of approximately 2,600
employees in the United States and 3,800 employees in other countries
(excluding, in both cases, on-site personnel responsible for the maintenance
of properties on behalf of clients). International operations are subject to a
number of risks, including political instability, greater difficulty in
accounts receivable collections in certain geographic regions, unexpected
changes in regulatory requirements, currency restrictions, delays and tariffs,
difficulties and costs of staffing and managing international operations,
potentially adverse tax consequences, share ownership restrictions on foreign
operations, currency fluctuations, the burdens of complying with multiple,
potentially conflicting laws and the impact of business cycles and economic
instability. There can be no assurance that such risks or the geographic, time
zone, language and cultural differences between Jones Lang LaSalle's
international personnel and operations or the expense of and resources
expended in managing a global business will not result in problems that could
materially adversely affect Jones Lang LaSalle's business, operating results
and financial condition.
After giving pro forma effect to the Acquisition and the acquisition of the
Compass Businesses, Jones Lang LaSalle would have generated 46.7% of its
revenue in the United States, 36.6% in Europe, 8.6% in Australasia and 8.1% in
Asia for the nine months ended September 30, 1998 compared to 45.0% in the
United States, 33.1% in Europe, 12.2% in Asia and 9.7% in Australia for the
year ended December 31, 1997. It is expected that Jones Lang LaSalle will
commit additional resources to expanding worldwide sales and marketing
activities,
24
<PAGE>
globalizing service offerings and products in selected markets and developing
local sales and support channels. The failure of such efforts could materially
adversely affect Jones Lang LaSalle's sales. Jones Lang LaSalle may also
experience an operating loss in one or more regions of the world for one or
more periods, which could have a material adverse effect on Jones Lang
LaSalle's business, operating results and financial condition. Jones Lang
LaSalle's ability to manage such operational fluctuations and to maintain
adequate long-term strategies in the face of such developments will be
critical to Jones Lang LaSalle's continued growth and profitability.
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."
The Asian Crisis reduced Asian economic growth in 1998 and, as economic
growth is generally a significant factor affecting property markets, demand
for property in Asia is generally weaker than in recent years. It is unlikely
that a recovery will occur in the Asian 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. A worsening of the Asian Crisis
or its expansion to different Regions could have a material adverse effect on
Jones Lang LaSalle's business, operating results and financial condition. See
"JLW Management's Discussion and Analysis of Financial Condition and Results
of Operations of the JLW Companies."
In addition, the Australasian real estate markets, while mature by world
standards, are characterized by their relative lack of depth. The lack of a
fully comprehensive domestic industrial infrastructure (thus requiring imports
of many manufactured goods such as motor vehicles and industrial equipment),
together with a heavily resource based economy (for example, Australia derives
7% and 10% of its annual export earnings solely from coal and metal ores,
respectively) means that the real economy is significantly influenced by
external economic events and developments. This gives rise to a somewhat
higher level of exposure to economic and financial volatility. The Australian
real estate markets are correspondingly small and prone to external
influences. Sydney and Melbourne, the primary commercial centers, for example,
have a total office market stock of some 64.6 million and 53.8 million square
feet respectively. Retail and industrial markets operate in similar proportion
and with a parallel degree of international exposure. Thus, the economic
performance of the JLW Australasia Group is significantly dependent on
international trading conditions, particularly in primary industries and
commodities. Weakness and/or volatility in these areas can sharply impact the
condition of the real estate markets and, thereby, result in a material
adverse effect on the JLW Australasia Group and on Jones Lang LaSalle's
business, operating results and financial condition.
EXPOSURE TO CURRENCY LOSSES FROM CURRENCY FLUCTUATIONS COULD RESULT FROM THE
TRANSACTIONS. To date, LaSalle Partners' revenue from non-United States
operations has primarily been denominated in US Dollars. To date, the
respective JLW Companies' revenue and expenses have primarily been earned and
incurred, and distributions and dividends to the partners and shareholders of
the JLW Companies have been made, in the currency of the location where the
operations generating the revenue and expenses have occurred. Therefore, the
exposure of LaSalle Partners and the respective JLW Companies to exchange rate
fluctuations has been limited. For the twelve months ended December 31, 1997,
on a pro forma basis (excluding compensation expense relating to the
Transactions), 29% of Jones Lang LaSalle's net earnings would have been
denominated in US Dollars and 71% would have been denominated in other
currencies. As a result, fluctuations in the value of the US Dollar relative
to the other currencies in which Jones Lang LaSalle will generate earnings
could materially adversely affect its business, operating results and
financial condition. Fluctuations in currencies relative to the US Dollar will
affect period-to-period comparisons of Jones Lang LaSalle's reported results
of operations. Due to the constantly changing currency exposures to which
Jones Lang LaSalle will be subject and the volatility of currency exchange
rates, there can be no assurance that Jones Lang LaSalle will not experience
currency losses
25
<PAGE>
in the future, nor can LaSalle Partners predict the effect of exchange rate
fluctuations upon future operating results. LaSalle Partners and the
respective JLW Companies have in the past undertaken hedging transactions only
on a limited basis because neither company has historically engaged in a
significant amount of cross border transactions which would require the use of
such instruments. The management of Jones Lang LaSalle will evaluate the
capital requirements on a global basis. In the future, certain currency
hedging instruments may be used, including foreign currency forward contracts,
purchased currency options where applicable and borrowings in foreign
currency. Economic risks associated with these hedging instruments include
unexpected fluctuations in interest rates impacting Jones Lang LaSalle's
future buying power for purchasing foreign currencies and unexpected changes
in the timing and collection of funds related to the hedging instruments, both
of which can cause hedging instruments to be ineffective. An ineffective
hedging instrument may expose Jones Lang LaSalle to currency losses, which
would have an adverse effect on Jones Lang LaSalle's financial condition and
results of operations. There can be no assurance that such hedging will be
effective. See "JLW Management's Discussion and Analysis of Financial
Condition and Results of Operations of the JLW Companies."
REAL ESTATE SERVICES MARKETS ARE HIGHLY COMPETITIVE. Jones Lang LaSalle will
compete across a variety of business disciplines within the commercial real
estate industry, including investment management, tenant representation,
corporate facility management, construction and development management,
property management, leasing, valuation and investment banking. Each of these
business disciplines is highly competitive on an international, national and
local level. Depending on the industry segment, Jones Lang LaSalle will face
competition from other real estate service providers, institutional lenders,
insurance companies, investment banking firms, investment managers and
accounting firms. Many of Jones Lang LaSalle's competitors will be local or
regional firms which will be substantially smaller than Jones Lang LaSalle on
an overall basis; however, they may be substantially larger on a local or
regional basis. Jones Lang LaSalle will also be subject to competition from
other large international firms. In general, with respect to each of Jones
Lang LaSalle's business disciplines, there can be no assurance that Jones Lang
LaSalle will be able to continue to compete effectively, will be able to
maintain current fee or margin levels or arrangements or will not encounter
increased competition.
THE STOCKHOLDER AGREEMENTS, THE DEL STOCKHOLDER AGREEMENTS, THE CHARTER AND
THE AMENDED BYLAWS OF JONES LANG LASALLE AND THE MARYLAND GENERAL CORPORATE
LAW COULD DELAY, DEFER OR PREVENT A CHANGE OF CONTROL. The Stockholder
Agreements, the DEL Stockholder Agreements and the LaSalle Partners Charter and
Amended Bylaws of Jones Lang LaSalle will include provisions that may delay,
defer or prevent a takeover attempt that may be in the best interest of
stockholders of Jones Lang LaSalle. The Stockholder Agreements and the DEL
Stockholder Agreements require each JLW Shareholder and Related JLW Owner and
each LaSalle Partners Employee Stockholder (collectively, the "Jones Lang
LaSalle Employee Stockholders") to vote all shares of LaSalle Partners common
stock owned or controlled by such stockholder (a) for persons nominated by the
Jones Lang LaSalle board of directors pursuant to the Amended Bylaws and (b) in
accordance with the recommendations of a majority of the Jones Lang LaSalle
board of directors on all matters (i) submitted to the vote of the stockholders
of Jones Lang LaSalle which have been proposed by any stockholder as to which
the Jones Lang LaSalle board of directors has recommended against approving or
(ii) relating to any merger, sale of all or substantially all of Jones Lang
LaSalle's assets, or any similar transactions as to which the Jones Lang LaSalle
board of directors has recommended against approving. As a result, during the
term of the Stockholder Agreements and the DEL Stockholder Agreements, as long
as persons who hold a majority of the issued and outstanding common stock of
Jones Lang LaSalle continue to be bound by these agreements, the Jones Lang
LaSalle board of directors will be composed of individuals nominated in
accordance with the procedures set forth in the Amended Bylaws and LaSalle
Partners stockholders will have a limited influence on the outcome of votes of
the stockholders of Jones Lang LaSalle on the matters covered by such
agreements. The Jones Lang LaSalle Employee Stockholders will hold approximately
69% of the issued and outstanding LaSalle Partners common stock at Closing. See
"The Stockholder Agreements--Voting Provisions."
In addition, pursuant to the charter of Jones Lang LaSalle, Jones Lang
LaSalle will have a classified board of directors, pursuant to which directors
will be divided into three classes, with three-year staggered terms. The
classified board provision could increase the likelihood that, in the event an
outside party acquired a controlling block of Jones Lang LaSalle's capital
stock or initiated a proxy contest, incumbent directors nevertheless would
26
<PAGE>
retain their positions for a substantial period, which may have the effect of
discouraging, delaying or preventing a change in control of Jones Lang
LaSalle. In addition, the charter of Jones Lang LaSalle and the Amended Bylaws
provide for (i) the ability of the Jones Lang LaSalle board of directors to
establish one or more classes and series of capital stock including the
ability to issue up to 10,000,000 shares of preferred stock, and to determine
the price, rights, preferences and privileges of such capital stock without
any further stockholder approval; (ii) a requirement that any stockholder
action taken without a meeting be pursuant to unanimous written consent; and
(iii) certain advance notice procedures for Jones Lang LaSalle stockholders
nominating candidates for election to the Jones Lang LaSalle board of
directors.
Under the MGCL, certain "Business Combinations" (including a merger,
consolidation, share exchange or, in certain circumstances, an asset transfer
or issuance or reclassification of equity securities) between a Maryland
corporation and any person who beneficially owns 10% or more of the voting
power of the corporation's shares or an affiliate of the corporation who, at
any time within the two-year period prior to the date in question, was the
beneficial owner of 10% or more of the voting power of the then-outstanding
voting stock of the corporation (an "Interested Stockholder") or an affiliate
thereof are prohibited for five years after the most recent date on which the
Interested Stockholder became an Interested Stockholder. Thereafter, any such
Business Combination must be recommended by the board of directors of such
corporation and approved by the affirmative vote of at least (i) 80% of the
votes entitled to be cast by holders of outstanding voting shares of the
corporation and (ii) 66 2/3% of the votes entitled to be cast by holders of
outstanding voting shares of the corporation other than shares held by the
Interested Stockholder with whom the Business Combination is to be effected,
unless, among other things, the corporation's stockholders receive a minimum
price (as defined in the MGCL) for theirs shares and the consideration is
received in cash or in the same form as previously paid by the Interested
Stockholder for its shares. Pursuant to the MGCL, these provisions also do not
apply to Business Combinations which are approved or exempted by the board of
directors of the corporation prior to the time that the Interested Stockholder
becomes an Interested Stockholder.
The provisions of the agreements described above, as well as the LaSalle
Partners Charter, the Amended Bylaws and the MGCL, could discourage bids for
LaSalle Partners common stock as well as adversely affect the market price of
LaSalle Partners common stock.
POTENTIAL NEGATIVE EFFECTS OF FAILURE TO CONSUMMATE THE TRANSACTIONS. The
consummation of the Transactions is subject to the satisfaction or waiver of a
number of conditions, many of which are beyond the control of the parties to
the Purchase Agreements, including approval of the Share Issuance, the Charter
Amendment and the Stock Plan Amendment by LaSalle Partners stockholders. See
"The Purchase Agreements--Conditions to the Transactions." In addition, the
parties to the Transactions may terminate the Purchase Agreements under
certain circumstances. See "The Purchase Agreements--Termination of the
Purchase Agreements." As a result, there can be no assurance that the
Transactions will be completed on the terms set forth in the Purchase
Agreements, if at all. If the Transactions are not completed, the trading
price of LaSalle Partners common stock could decline. In addition, costs
incurred in connection with the Transactions, currently estimated at $8.0
million, and the termination fee of $12 million, if payable, would negatively
impact results from operations. See "The Purchase Agreements--Termination Fees
and Expenses."
OPERATING LOSSES REFLECTING NON-CASH CHARGES FOR ACQUISITION-RELATED
COMPENSATION EXPENSE COULD AFFECT TRADING PRICE. LaSalle Partners expects to
incur compensation expense associated with the issuance of shares totaling
approximately $117.3 million and $93.4 million in the years ended December 31,
1999 and 2000, respectively, as a result of the accounting treatment applied
to the Acquisition, assuming that the JLW Companies have the required net
worth at Closing. See "The Transactions--Anticipated Impact on Operating
Results, Liquidity and Capital Resources." Included in the total estimated
compensation expense of $210.7 million is expense of $49.2 million, which will
be subject to fluctuation based on quarterly changes in the price of LaSalle
Partners common stock. Management anticipates that this compensation expense,
$210.3 million of which represents a non-cash charge, will cause Jones Lang
LaSalle to report operating losses for these periods.
27
<PAGE>
THE SPECIAL MEETING
General; Time, Date and Place
This Proxy Statement is being furnished to LaSalle Partners stockholders in
connection with the solicitation of proxies by the LaSalle Partners board of
directors for use at the Special Meeting to be held on Wednesday, March 10,
1999, in the Indiana Room on Lower Level 1 of the Amoco Building, 200 East
Randolph Drive, Chicago, Illinois 60601, commencing at 4:00 p.m., local time,
and at any adjournment or postponement thereof. This Proxy Statement and the
accompanying form of proxy are first being mailed to LaSalle Partners
stockholders on or about February 8, 1999.
Matters to be Considered at the Special Meeting
At the Special Meeting, LaSalle Partners stockholders will consider and vote
upon the following:
. a proposal to approve the Share Issuance;
. a proposal to approve the Charter Amendment to change the name of LaSalle
Partners to "Jones Lang LaSalle Incorporated;"
. a proposal to approve the Stock Plan Amendment to increase the number of
shares issuable under the LaSalle Partners 1997 Stock Award and Incentive
Plan to 4,160,000 from 2,215,000; and
. such other business as may properly be brought before the Special Meeting
or any adjournment or postponement of the Special Meeting.
The proposals to approve the Share Issuance, the Charter Amendment and the
Stock Plan Amendment may be viewed as substantially analogous to a proposal to
approve the Transactions because approval by LaSalle Partners stockholders of
such proposals is a condition to the obligation of each of LaSalle Partners
and the JLW Companies to consummate the Transactions.
Record Date; Stockholders Entitled to Vote; Vote Required
LaSalle Partners stockholders of record at the close of business on the
Record Date, January 25, 1999, are entitled to notice of and to vote at the
Special Meeting and any adjournment or postponement thereof. On the Record
Date, there were issued and outstanding 16,264,176 shares of LaSalle Partners
common stock held by approximately 2,800 beneficial owners. Each holder of
record of shares of LaSalle Partners common stock on the Record Date is
entitled to one vote per share with respect to each matter to be voted on at
the Special Meeting, which may be cast either in person or by properly
executed proxy.
Approval of the Share Issuance and the Stock Plan Amendment each requires
the affirmative vote of the holders of a majority of the votes cast on such
proposal, provided that the shares of LaSalle Partners common stock present at
the Special Meeting constitute over 50% of all shares of LaSalle Partners
common stock outstanding on the Record Date. Approval of the Share Issuance is
required by the rules of the NYSE because shares of LaSalle Partners common
stock are traded on the NYSE and the number of shares proposed to be issued in
the Share Issuance exceeds 20% of the issued and outstanding shares of LaSalle
Partners common stock. Approval of the Charter Amendment requires the
affirmative vote of the holders of a majority of the shares of LaSalle
Partners common stock outstanding on the Record Date.
The presence, in person or by properly executed proxy, of the holders of a
majority of the outstanding shares of LaSalle Partners common stock is
necessary to constitute a quorum at the Special Meeting. Shares of LaSalle
Partners common stock represented in person or by properly executed proxy will
be counted for the purpose of determining whether a quorum is present at the
Special Meeting. Shares which abstain from voting as to a particular matter
will be treated as shares that are present and entitled to vote at the Special
Meeting for purposes of determining whether a quorum exists, but will not be
counted as votes cast on such matter. If a broker or nominee holding shares in
"street name" indicates on a proxy that it does not have discretionary
authority to vote as to a particular matter ("broker non-votes"), those shares
will be treated as present and entitled to vote at
28
<PAGE>
the Special Meeting for purposes of determining whether a quorum exists, but
will not be counted as votes cast on such matter. Accordingly, in determining
whether the Share Issuance and the Stock Plan Amendment have received the
requisite number of affirmative votes, abstentions and broker non-votes will
have no effect on the voting on such proposals. In determining whether the
Charter Amendment has received the requisite number of affirmative votes,
abstentions and broker non-votes will have the same effect as a vote against
the Charter Amendment.
Pursuant to the Purchase Agreements, each person that was both a director
and an employee of LaSalle Partners on October 21, 1998 (the date of the
execution of the Purchase Agreements), has executed and delivered to the
representatives of the JLW Companies an irrevocable proxy to vote all of the
shares of LaSalle Partners common stock beneficially owned by such director in
favor of the Share Issuance, the Charter Amendment and the Stock Plan
Amendment. As a consequence, the affirmative vote of 21.5% of the votes cast
on each proposal is assured. See "Security Ownership of Certain Beneficial
Owners and Management of LaSalle Partners."
Proxies
All shares of LaSalle Partners common stock which are entitled to vote and
are represented at the Special Meeting by properly executed proxies received
prior to or at the Special Meeting, and which have not been revoked, will be
voted at the Special Meeting in accordance with the instructions indicated on
such proxies. If no instructions are indicated (other than in the case of
broker non-votes) such proxies will be voted for approval of the Share
Issuance, for approval of the Charter Amendment and for approval of the Stock
Plan Amendment.
If any other matters are properly presented for consideration at the Special
Meeting (including, without limitation, for the purpose of soliciting
additional proxies or allowing additional time for the satisfaction of
conditions to the Transactions), the persons named in the enclosed proxy card
and acting thereunder will have discretion to vote on such matters in
accordance with their best judgment.
Any proxy given pursuant to this solicitation may be revoked by the person
giving it at any time before it is voted. Proxies may be revoked by (i) filing
with the Secretary of LaSalle Partners at the address on the enclosed white
return envelope marked "Proxy," at or before the taking of the vote at the
Special Meeting, a written notice of revocation bearing a later date than the
proxy, (ii) duly executing a later-dated proxy relating to the same shares and
delivering it to the address on the enclosed white return envelope marked
"Proxy" before the taking of the vote at the Special Meeting or (iii)
attending the Special Meeting and providing the Secretary of LaSalle Partners
at such meeting a written notice stating that you are revoking your proxy, in
which case you may vote in person. Notice of revocation or subsequent proxy
should be sent to LaSalle Partners, 200 East Randolph Drive, Chicago, Illinois
60601, Attention: Secretary, or hand-delivered to the Secretary of LaSalle
Partners, at or before the taking of the vote at the Special Meeting.
Facsimiles will not be accepted.
The costs of soliciting proxies will be paid by LaSalle Partners. LaSalle
Partners has retained Morrow & Co., Inc. (the "Proxy Solicitor") to aid in the
solicitation of proxies at a fee of $5,000 plus expenses. In addition to
solicitation by use of the mails, proxies may be solicited by directors,
officers and employees of LaSalle Partners and representatives of the Proxy
Solicitor in person or by telephone, telegram or other means of communication.
Such directors, officers and employees of LaSalle Partners will not be
additionally compensated, but may be reimbursed for reasonable out-of-pocket
expenses in connection with such solicitation. Arrangements will also be made
with custodians, nominees and fiduciaries for the forwarding of proxy
solicitation materials to beneficial owners of shares held of record by such
custodians, nominees and fiduciaries, and LaSalle Partners will reimburse such
custodians, nominees and fiduciaries for reasonable expenses incurred in
connection therewith.
29
<PAGE>
THE TRANSACTIONS
Description of the Transactions
General. The JLW Companies operate their businesses in four distinct
geographical regions: Europe, Asia, Australasia and North America. However,
there are independent ownership structures between and within the regions. JLW
England owns the JLW Businesses operating in Europe (except for Scotland and
the Republic of Ireland) and North America, JLW Scotland owns the JLW
Businesses operating in Scotland and 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
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 a group of senior executives
thereof (the "Transact Beneficiaries").
The following chart illustrates the existing ownership structure of JLW
Companies by region:
30
<PAGE>
[CHART OF OWNERSHIP OF JLW COMPANIES PRIOR TO INTEGRATION APPEARS HERE]
(1) Trust is for the benefit of a group of the JLW England partners.
(2) JLW Holdings owns an interest in Transact Thailand through its 49% equity
interest in JLW (Thailand) Ltd. (not shown), which owns 51% of the shares
in Transact Thailand. Two Thai entities that are not part of the JLW
Companies' ownership structure control the 51% of the equity of JLW
(Thailand) Ltd. that is not owned by JLW Holdings and thereby own a 26.01%
indirect interest in Transact Thailand.
(3) JLW Australia has a 35% interest in Benbridge (AUS).
31
<PAGE>
The transaction structure is principally the result of the ownership
structure of the JLW Companies. While the JLW Businesses are operated on an
international basis with oversight by the International Board, the JLW
Companies are comprised of a series of partnerships and corporations which are
owned on a regional basis by separate and distinct ownership groups, either
directly or indirectly, through partnerships, corporations or trusts. As such,
separate Purchase Agreements are required. In order to effect the Acquisition,
the JLW Companies were required to undertake to effect the Integration prior
to Closing. The purpose of the Integration is principally to convert JLW
England, JLW Scotland and JLW Ireland into corporate form so that the
ownership interests therein can be more easily acquired under applicable law.
As part of the overall Integration, the JLW Companies will expand their
ownership to include non-owner employees who have made significant
contributions to the JLW Businesses. The Integration will also be implemented
by the JLW Companies to reallocate ownership interests among the JLW
Shareholders. The Acquisition was negotiated by the management of LaSalle
Partners and representatives of the International Board and was predicated on
LaSalle Partners acquiring all of the JLW Companies. The consideration to be
paid for the JLW Companies was negotiated on an aggregate basis for the JLW
Companies by representatives of the International Board. The allocation of the
consideration among the owners of the various JLW Companies was determined by
negotiations by and among the owners of the JLW Companies in each of the
Regions.
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:
. two European executives of the JLW Companies who are not currently
partners of JLW England, a group of former partners of JLW England and
widows of former partners of JLW England have subscribed for shares in a
recently formed corporation, Salta Limited ("NewCo 4"), and will at
Integration 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 a limited number of 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 two European executives of the JLW Companies who are
not currently partners of JLW England 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 a group of 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 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, NewCo2, NewCo3,
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<PAGE>
JLW USA, JLW Supply and JLW Continuation from the owners thereof. The
Europe/USA Integration was devised by the JLW Companies to distribute
ownership interests in the JLW Companies on an equitable basis among the
current partners of JLW England, JLW Scotland and JLW Ireland and the key
employees who are not existing partners thereof. The number of Consideration
Shares issuable to each such employee in connection with the Acquisition was
determined with reference to the equity interest that such person is to
acquire through the Integration.
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. 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.
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."
Diagram A below illustrates the ownership of the JLW Companies in Europe and
North America immediately after the Integration. Diagram B below illustrates
the ownership of the JLW Companies immediately after the Acquisition.
33
<PAGE>
Diagram A
[CHART OF JLW COMPANIES IN EUROPE AND NORTH AMERICA
IMMEDIATELY FOLLOWING THE INTEGRATION APPEARS HERE]
34
<PAGE>
Diagram B
[CHART OF OWNERSHIP OF JLW COMPANIES IMMEDIATELY AFTER THE CLOSING APPEARS HERE]
35
<PAGE>
Consideration
General. LaSalle Partners will deliver, or cause to be delivered, as set
forth below, (i) up to 14,254,116 shares (including ESOT Shares) of LaSalle
Partners common stock (subject to reduction pursuant to a post-closing net
worth adjustment as set forth 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 Five-Day Average Closing Price) and (iii) $2.7 million in cash.
Assuming the net worth requirements are met and that the average closing price
of LaSalle Partners common stock as reported on the composite transaction tape
of the NYSE for the five trading days immediately preceding and including the
date of the commencement of the Integration (the "Five Day Average Closing
Price") is equal to $31.50 (the closing price of LaSalle Partners common stock
on January 29, 1999, a date just prior to the distribution of this Proxy
Statement), approximately 12,481,792 Consideration Shares and $6.2 million in
cash consideration would be issued or paid to or for the account of the JLW
Shareholders in exchange for their interests in the JLW Companies and
approximately 1,772,324 ESOT Shares would be issued to the ESOT. The
14,254,116 shares issuable in the Acquisition would represent approximately
47% of the shares of LaSalle Partners common stock issued and outstanding
immediately following the Closing.
Assuming the foregoing, the consideration will be paid as follows (in
thousands except share data):
<TABLE>
<CAPTION>
Shares of Percentage of
LaSalle Partners Value of Cash Total
Common Stock Shares Consideration Value Consideration
---------------- -------- ------------- -------- -------------
<S> <C> <C> <C> <C> <C>
NewCo 1, JLW Supply, JLW
USA and JLW
Continuation........... 6,451,022 $203,207 $2,053 $205,260 45.1%
NewCo 2................. 264,508 8,332 84 8,416 1.8
NewCo 3................. 508,009 16,002 162 16,164 3.6
JLW Asia Group.......... 3,770,793 118,780 1,200 119,980 26.3
JLW Australasia Group... 1,487,460 46,856 2,700 49,556 10.9
---------- -------- ------ -------- -----
Total................ 12,481,792 $393,177 $6,199 $399,376 87.7%
ESOT.................... 1,772,324 55,828 -- 55,828 12.3%
---------- -------- ------ -------- -----
Grand Total............ 14,254,116 $449,005 $6,199 $455,204 100.0%
========== ======== ====== ======== =====
</TABLE>
Pursuant to the Purchase Agreements, 50% of the first 35,700 Consideration
Shares and 20% of any additional Consideration Shares issuable to each JLW
Shareholder will be Forfeiture Shares and will be placed in escrow and subject
to forfeiture in the event of the cessation of employment of such JLW
Shareholder or, if applicable, its Related JLW Owner under certain
circumstances; provided, that the Forfeiture Shares allocated to the direct
and indirect beneficial owners of the JLW Asia Parent Companies (the "JLW Asia
Shareholders") will instead be deposited with the Indemnity Escrow Agent under
the Escrow Agreement to secure certain specific indemnification obligations of
the JLW Asia Shareholders pursuant to the Escrow Agreement. In addition, a
portion of each JLW Shareholder's Consideration Shares and a portion of the
ESOT Shares will be placed in escrow (i) to facilitate the post-closing net
worth consideration adjustment (an aggregate of 1,241,683 Adjustment Shares)
and (ii) to secure the JLW Shareholders' indemnification obligations under the
Escrow Agreement (an aggregate of 750,000 Indemnification Shares). The
remaining Consideration Shares (an aggregate of 6,611,102 Initial Distribution
Shares) will be issued directly to the JLW Shareholders 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 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
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<PAGE>
stock. The convertible notes issued to the JLW Australasia Shareholders and
JLW Australia Parent will be redeemed for LaSalle Partners common stock on 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 Indemnification Shares and 108,895 ESOT Adjustment
Shares will be deposited in escrow as Indemnification Shares and Adjustment
Shares, respectively, on behalf of the ESOT with the Indemnity Escrow Agent.
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. The
ESOT Shares will be placed in trust principally for issuance to key employees
of the JLW Companies that are not equity owners in order to recognize such
employees as major contributors to the JLW Businesses and to incentivize such
employees to remain with Jones Lang LaSalle following the Closing. Subject to
the terms of the ESOT, the ESOT Shares received by the ESOT Trustee will be
allocated by the Shareholders' Representatives over a period immediately
following the Closing and ending December 31, 2000 principally to employees of
Jones Lang LaSalle. ESOT Shares will be allocated as follows: 915,542 shares
at Closing, 246,415 shares on December 31, 1999 and 610,367 shares on December
31, 2000. A portion of these shares will be subject to vesting conditions,
very similar to the forfeiture provisions which apply to a portion of the
shares allocated to the JLW Shareholders. See "The Purchase Agreements--
Employee Trusts."
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. The
forfeiture provisions are intended to penalize persons deemed "Bad Leavers,"
as described below, who leave the employ of Jones Lang LaSalle prior to
December 31, 2000, and reward JLW Shareholders and Related JLW Owners who
remain. Forfeited shares will be redistributed to JLW Shareholders, or, if
applicable, Related JLW Owners, other than such persons which are deemed "Bad
Leavers," when the forfeiture provisions lapse, on a pro rata basis (on the
basis of the number of Forfeiture Shares originally issuable to such remaining
shareholders).
As soon as practicable, in cases of death and disability giving rise to
cessation of employment, or in December 2000 in all other cases, the
Shareholders' Representatives will determine whether any JLW Shareholder or
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. 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 Jones Lang LaSalle board of
directors, or (iii) the dissolution of Jones Lang LaSalle.
Background of the Transactions
LaSalle Partners' business strategy has been devised to address three
emerging related trends in the commercial real estate services industry, (i)
the globalization of real estate capital sources and investment opportunities
and the international expansion of many of LaSalle Partners' existing and
potential clients, (ii) the consolidation among service providers,
particularly among property management service providers, driven by economies
of scale and the increasing desire of clients to use a smaller number of
providers capable of providing service over multiple geographic areas and
(iii) the outsourcing of professional real estate services to firms that
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<PAGE>
can provide integrated services across many geographic markets. Over the past
five years, LaSalle Partners management has evaluated whether organic growth
or growth through acquisitions or a combination was the most effective means
to address these trends. While LaSalle Partners has historically relied
principally upon organic growth and will continue to expand its operations
internally, LaSalle Partners management has concluded that, given the time,
costs and risks associated with developing a high quality global service
delivery capability and the objective of participating in the industry
consolidation, management should attempt to identify established global and
domestic service providers with similar reputations for quality and
performance as potential acquisition candidates. Accordingly, LaSalle Partners
has from time to time considered numerous transactions, including a business
combination with the JLW Companies. This strategy led to the acquisition of
the Galbreath Company in 1997 and the acquisition of the Compass Businesses in
1998. Early discussions with management of the JLW Companies led to
representatives of LaSalle Partners making a presentation to the significant
equity holders of the JLW Companies in February 1997 in Zurich, Switzerland.
In early December 1997, certain members of the management of LaSalle
Partners and the JLW Companies had discussions regarding, among other things,
the financial terms and structure of a potential business combination between
LaSalle Partners and the JLW Companies. During these discussions, management
of the JLW Companies indicated that representatives of the Regions had reached
agreement on the relative value of each Region and expressed their interest in
pursuing a joint transaction with LaSalle Partners. In order to further
discussions, summary financial information was provided to LaSalle Partners.
After management review of the financial information, Mr. Stuart Scott, the
Chairman and Chief Executive Officer of LaSalle Partners, informed Mr.
Christopher Peacock, the Chief Executive of the International Board, that
based on the summary information, LaSalle Partners was prepared to discuss a
stock transaction representing up to fifty percent of LaSalle Partners'
outstanding common stock on a post-transaction basis.
At a meeting of the LaSalle Partners board of directors held on December 11,
1997, Mr. Scott, described LaSalle Partners' need for and management's
potential approaches to international expansion, including through a process
of internal expansion, a combination with a large real estate services
provider capable of giving LaSalle Partners an immediate global service
capability and an intermediate approach in which LaSalle Partners would make a
series of acquisitions of companies that had substantial operations in key
regional centers. Mr. Scott then discussed related developments, including the
termination of discussions with a major international acquisition candidate
and recent discussions with management of the JLW Companies. A representative
of William Blair & Company ("William Blair"), which routinely provides
financial advice to LaSalle Partners regarding potential acquisitions,
attended the meeting and presented certain preliminary financial and other
information to the LaSalle Partners board of directors regarding a potential
business combination with the JLW Companies.
By late December 1997, the economic climate in Asia had deteriorated
dramatically, leading to a break in discussions while management of the JLW
Companies assessed the potential impact on the operations of the JLW
Companies.
On January 29, 1998, the LaSalle Partners board of directors met with Mr.
Michael Smith, Chairman of the International Board and Mr. Peacock. During
such meeting, Messrs. Smith and Peacock and the LaSalle Partners board of
directors discussed, among other things, the merits of a business combination
between LaSalle Partners and the JLW Companies. At a meeting of the LaSalle
Partners board of directors held on January 30, 1998, Mr. Peacock made a
presentation regarding the JLW Companies which included a discussion of
organizational structure and business objectives and a discussion of the
economic situation in Asia. At this meeting, there was an extended discussion
among Mr. Peacock, Mr. Smith and the LaSalle Partners board of directors
regarding certain issues related to the consummation of a potential business
combination between LaSalle Partners and the JLW Companies, including issues
surrounding the management of a global business. Following the discussions
with Mr. Peacock and Mr. Smith, the LaSalle Partners board of directors
discussed a number of issues relating to a potential combination with the JLW
Companies, including integration issues, cultural compatibility, the views of
management and corporate governance issues.
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<PAGE>
In late March, representatives of the JLW Companies provided information
relating to the Asian economic situation and met with representatives of
LaSalle Partners to review such information. In early April, Mr. Scott and Mr.
William Sullivan, the Chief Financial Officer of LaSalle Partners, met with
Messrs. Smith and Peacock and other members of the International Board after
which the parties agreed to restructure the potential transaction to include
an earn out component based on the operating results of the JLW Companies on a
combined basis.
During May 1998, LaSalle Partners and the JLW Companies commenced their
formal due diligence investigations of the JLW Companies and LaSalle Partners,
respectively. At a meeting of the LaSalle Partners board of directors held on
May 21, 1998, Mr. Sullivan and Mr. Robert Spoerri, the Chief Operating Officer
of LaSalle Partners, made presentations relating to a potential business
combination with the JLW Companies, including the business rationale for the
Acquisition and financial information relating to the JLW Companies, and
described the discussions that had taken place in March and April. The LaSalle
Partners board of directors discussed, among other things, valuation
approaches for the JLW Companies, the potential composition of the post-
combination board of directors and the operation of LaSalle Partners following
a transaction, including the roles to be assumed by certain members of
executive management and the location of the headquarters. In May 1998,
LaSalle Partners retained Morgan Stanley to advise LaSalle Partners. On June
4, 1998, LaSalle Partners and certain of the JLW Companies executed a
confidentiality agreement containing a three-year standstill provision and a
60-day mutual exclusivity provision. On June 17, 1998, LaSalle Partners issued
a press release confirming that LaSalle Partners and the JLW Companies were
engaged in preliminary discussions regarding a potential business combination.
At a meeting of the LaSalle Partners board of directors held on July 9,
1998, Mr. Sullivan briefed the LaSalle Partners board of directors on the
status of the negotiations and the changes in structure which included the
elimination of the earn out component. Management also described the potential
need to restructure the acquisition of the equity interests of the JLW England
partners to include a significant cash component. At the meeting,
representatives of Morgan Stanley and William Blair responded to board
members' questions with respect to the status of negotiations. At a meeting of
the LaSalle Partners board of directors held on July 27, 1998, Messrs. Scott
and Sullivan updated the board on the status of the negotiations and due
diligence with the JLW Companies and the then proposed terms of the
Transactions. At the meeting, a representative of Skadden, Arps, Slate,
Meagher & Flom (Illinois), LaSalle Partners' legal counsel, advised the board
of directors of their fiduciary duties and obligations in connection with
their consideration of the Transactions. At the meeting, members of management
also provided business and financial information regarding the JLW Companies,
including potential synergies between the businesses, and described changes in
the structure of the proposed business combination from the structure last
presented to the board. On July 27, the Audit Committee of the LaSalle
Partners board of directors also met with LaSalle Partners' independent public
accountants and discussed various audit and financial reporting matters
relating to the proposed combination. At a meeting of the LaSalle Partners
board of directors held on August 20, 1998, Mr. Sullivan and other members of
the management of LaSalle Partners again briefed the board regarding the
status of the transaction with the JLW Companies.
On September 3, 1998, the LaSalle Partners board of directors met to discuss
the status of the Transactions. At the meeting, representatives of William
Blair provided the board of directors with a presentation which detailed the
rationale for the combination, described the key financial terms of the
Transactions as of the date of the meeting and presented a preliminary
valuation analysis of the JLW Companies. Mr. Sullivan then explained the
anticipated accounting treatment for the Transactions. Following extensive
discussion with the board, Mr. Sullivan and Mr. Spoerri provided an overview
of LaSalle Partners' business and operational due diligence findings. At the
meeting, LaSalle Partners' accounting, tax, legal and financial advisors also
informed the LaSalle Partners board of directors of the results of their
respective due diligence investigations of the JLW Companies. At the
conclusion of these presentations, the board of directors, following extensive
discussion, authorized management to continue negotiations with the JLW
Companies.
During the period from June 1998 through October 21, 1998, LaSalle Partners
and representatives of the owners of the JLW Companies, and their respective
financial advisors, legal counsel and accountants, met on
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<PAGE>
numerous occasions to negotiate the terms and structure of the Transactions,
including the Integration, and the terms of the related agreements, including
the amount and type of consideration, the terms of the Purchase Agreements and
the related agreements, the purchase price adjustment, and the terms of the
ESOT, including applicable forfeiture terms and vesting conditions, and
corporate governance.
On October 12, the LaSalle Partners board of directors met to continue its
review of the Transactions. Mr. Scott, Mr. Sullivan and members of LaSalle
Partners management explained changes to the structure of the transaction
since the September 3 meeting and presented certain financial information
regarding Jones Lang LaSalle following the Transactions. Representatives of
Morgan Stanley and William Blair then presented a detailed analysis of the
financial terms of the proposed Transactions and Morgan Stanley presented an
opinion, as of the date of the meeting, as to the fairness to LaSalle
Partners, from a financial point of view, of the aggregate consideration to be
paid in the Transactions. A representative of Skadden, Arps, Slate, Meagher &
Flom (Illinois) provided a detailed description of the material terms of the
Purchase Agreements, the Stockholder Agreements, the Escrow Agreement and
related transaction agreements as well as the remaining open issues. Following
the presentations and discussions among the LaSalle Partners board of
directors and LaSalle Partners' legal and financial advisors, the board
authorized management to complete negotiations with the JLW Companies, subject
to final board approval.
At the meeting of the LaSalle Partners board of directors held on October
21, 1998, management of LaSalle Partners presented the final terms of the
Transactions and a representative of Skadden, Arps, Slate, Meagher & Flom
(Illinois) described the material changes to the Purchase Agreements,
Stockholder Agreements, Escrow Agreement and related transaction agreements
since the October 12 meeting; Morgan Stanley and William Blair updated their
financial analysis from the October 12 meeting; and Morgan Stanley brought
down its opinion to the LaSalle Partners board of directors, which opinion was
subsequently confirmed in writing (the "Morgan Stanley Opinion"), that, as of
October 21, 1998, and subject to the factors and assumptions set forth
therein, the aggregate consideration to be paid in connection with the
Acquisition was fair to LaSalle Partners from a financial point of view.
Following a discussion of the Acquisition and the presentations made, the
LaSalle Partners board of directors unanimously approved the Acquisition,
including the Share Issuance, the Charter Amendment and the Stock Plan
Amendment, and unanimously recommended that the holders of LaSalle Partners
common stock vote to approve the Share Issuance, the Charter Amendment and the
Stock Plan Amendment.
Reasons for the Transactions; Recommendation of the LaSalle Partners Board of
Directors
The LaSalle Partners board of directors has unanimously approved the Share
Issuance, the Charter Amendment and the Stock Plan Amendment and recommends a
vote FOR approval of each such proposal. Pursuant to the Purchase Agreements,
each person that was both a director and an employee of LaSalle Partners on
October 21, 1998 (the date of the execution of the Purchase Agreements), has
executed and delivered to the representatives of the JLW Companies an
irrevocable proxy to vote all of the shares of LaSalle Partners common stock
beneficially owned by such director in favor of the Share Issuance, the
Charter Amendment and the Stock Plan Amendment. As a consequence, the
affirmative vote of 21.5% of the votes cast on each proposal is assured. See
"Security Ownership of Certain Beneficial Owners and Management of LaSalle
Partners."
The LaSalle Partners board of directors believes that the terms of the
Acquisition are fair to and in the best interests of LaSalle Partners and its
stockholders. The LaSalle Partners board of directors believes that the
Acquisition represents a unique strategic opportunity for LaSalle Partners to
combine its businesses with similar businesses having a complementary
geographical presence, and believes that Jones Lang LaSalle will be well
positioned to meet the increasingly global needs of clients. The board of
directors believes that Jones Lang LaSalle will have greater financial
strength, operational efficiencies, earning power and growth potential than
LaSalle Partners would have on its own. The board of directors has identified
a number of potential benefits of the Acquisition which it believes will
contribute to the success of Jones Lang LaSalle, including the following:
. Synergies of Jones Lang LaSalle. The LaSalle Partners board of directors
considered the opportunities presented by the combination of two
profitable and well regarded institutions. The LaSalle Partners board
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<PAGE>
of directors believes that the Acquisition will result in significant
opportunities for revenue growth and cost savings by strengthening LaSalle
Partners' product and service offerings and LaSalle Partners' geographic
market coverage, thereby enhancing Jones Lang LaSalle's ability to attract
and retain clients and compete in the global real estate services market.
Synergistic cost savings associated with combining offices, reducing
infrastructure functions common to the JLW Companies and LaSalle Partners
such as accounting, human resources and information technology and taking
advantage of the buying power of the combined company are also expected.
. Broadening International Presence. The Acquisition positions Jones Lang
LaSalle to take advantage of the trend toward globalization of real
estate services and investment opportunities, with Jones Lang LaSalle
having a greater opportunity than LaSalle Partners individually to
service multinational clients, access capital, make investments and
market its investment management services worldwide.
. Similar Competitive Advantages. The LaSalle Partners board of directors
believes that LaSalle Partners and the JLW Companies have similar
competitive advantages which have established them as among the leading
real estate services and investment management firms in their respective
markets. These advantages include (i) a client-driven focus which has
enabled LaSalle Partners and the JLW Companies to develop long-term
relationships with owners and users of real estate, (ii) a significant
level of employee ownership, (iii) a wide range of high quality,
complementary services, (iv) geographic reach, (v) name recognition and
(vi) a reputation for quality services.
. Geographic Diversification. As a result of the Acquisition, LaSalle
Partners will be more geographically diverse and less dependent on and
subject to the United States economy and real estate markets.
. Employees. A strong management team for the combined company coupled with
significant employee ownership should enable Jones Lang LaSalle to
successfully integrate the JLW Companies and execute their combined
business strategy.
The LaSalle Partners board of directors weighed these advantages and
opportunities against the following risks associated with the Acquisition:
. Accounting Treatment. As a result of the anticipated accounting treatment
to be applied to the Acquisition, the acquisition-related compensation
expense, although a non-cash charge, will cause Jones Lang LaSalle to
report losses for 1999 and 2000, which could negatively affect the
trading price of LaSalle Partners common stock.
. Integration of Business Operations. Integration of business operations of
LaSalle Partners and the JLW Companies, in addition to requiring the
expenditure of significant management time and considerable expense,
involves the risk of loss of key personnel. Failure to integrate the two
businesses successfully could prevent the synergies and benefits sought
in the Acquisition from being fully achieved.
. Increased International Operations. Jones Lang LaSalle will have
significantly greater international exposure than LaSalle Partners prior
to the Acquisition, giving rise to a variety of risks associated with
international operations not currently faced by LaSalle Partners,
including the possibility of losses from currency fluctuations.
. Impact of Stockholder Agreements and Bylaw Amendments. The Stockholder
Agreements, the DEL Stockholder Agreements and the Amended Bylaws include
provisions that may delay, defer or prevent a change of control of Jones
Lang LaSalle.
. Possible Failure to Consummate the Transactions. If the Transactions are
not completed, the trading price of LaSalle Partners common stock could
decline and costs incurred in connection with the Transactions would
negatively impact results from operations.
For a more complete description of each of the risk factors associated with
the Transactions, see "Risk Factors."
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<PAGE>
In reaching its decision to approve the Transactions, the LaSalle Partners
board of directors also considered a number of additional factors, including
the following:
. the current economic, financial and business environment generally and
the present and anticipated environment in the real estate service, asset
management and advisory business in particular, including the strategic
options available to LaSalle Partners and the effects on LaSalle Partners
of potential further consolidation within the industry;
. the judgment, advice and analysis of LaSalle Partners' management with
respect to the strategic, financial and operational benefits of the
Acquisition, based in part on the business, financial, accounting and
legal due diligence investigations performed with respect to the JLW
Companies, as well as the board's own knowledge of LaSalle Partners, the
JLW Companies and their respective businesses;
. the number of shares of LaSalle Partners common stock to be issued to JLW
Shareholders and the ESOT in the Acquisition and the percentage ownership
of Jones Lang LaSalle represented thereby;
. the forfeiture provisions and vesting requirements applicable to certain
of the shares to be issued in the Acquisition which reduce the risk that
Jones Lang LaSalle will lose key employees during the two year period
following the Closing and thereby promote the sucessful integration of
LaSalle Partners and the JLW Companies;
. the extent to which the provisions of the Stockholder Agreements limit
the JLW Shareholders' ability to act as a group to exercise control of
Jones Lang LaSalle;
. the financial condition, results of operations, businesses and prospects
of LaSalle Partners and the JLW Companies, including, but not limited to,
information with respect to LaSalle Partners' recent and historical stock
prices and LaSalle Partners' and the JLW Companies' respective earnings
performance;
. the financial analyses presented by Morgan Stanley and William Blair and
the opinion of Morgan Stanley that, as of October 21, 1998, and based
upon and subject to the assumptions made, matters considered and
limitations on the review undertaken, in each case as set forth in the
opinion of Morgan Stanley, the consideration to be paid by LaSalle
Partners pursuant to the Purchase Agreements in the aggregate was fair
from a financial point of view to LaSalle Partners.
. the express terms and conditions of the Purchase Agreements, the
Stockholder Agreements, the DEL Stockholder Agreements, the Escrow
Agreement and the various other agreements and documents to be entered
into in connection with the Acquisition, which were viewed by the LaSalle
Partners board of directors as providing an equitable basis for the
Acquisition from the standpoint of LaSalle Partners;
. the proposed corporate governance arrangements with respect to the board
of directors and management of Jones Lang LaSalle following the
Acquisition (see "--Directors and Executive Officers Following the
Acquisition");
. the likelihood of the Transactions being approved by the appropriate
regulatory authorities (see "--Regulatory Approvals"); and
. the $12 million termination fee potentially payable by LaSalle Partners
to the JLW Companies in the event of termination of the Purchase
Agreements under certain circumstances.
The foregoing discussion of the information and factors considered by the
LaSalle Partners' board of directors is not intended to be exhaustive but is
believed to include all material factors considered. In view of the variety of
factors considered, the LaSalle Partners board did not consider it practical
to and did not quantify or otherwise assign relative weights to the factors it
considered in reaching its determination and different directors may have
attached different importance to different factors. On balance, however, after
weighing the benefits, risks and other factors described above, the LaSalle
Partners board of directors concluded that the Acquisition was fair to and in
the best interests of LaSalle Partners stockholders.
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<PAGE>
Opinion of LaSalle Partners' Financial Advisor
In May 1998, LaSalle Partners retained Morgan Stanley to act as its
financial advisor in connection with the potential combination with the JLW
Companies. At the October 12 and 21, 1998 meetings of the LaSalle Partners
board of directors, Morgan Stanley rendered to the board an oral opinion that,
as of such dates and based upon and subject to the various considerations set
forth in its opinion, the consideration to be paid by LaSalle Partners
pursuant to the Purchase Agreements in the aggregate was fair from a financial
point of view to LaSalle Partners. Morgan Stanley subsequently confirmed its
oral opinion by delivery to LaSalle Partners of its written opinion dated as
of October 21, 1998. It is not contemplated that Morgan Stanley will update or
amend its fairness opinion. However, in the event of a material amendment to
the Purchase Agreements, such an update or amendment may be sought. Such a
decision would be made in connection with such amendment.
THE FULL TEXT OF THE WRITTEN OPINION OF MORGAN STANLEY DATED OCTOBER 21,
1998 WHICH SETS FORTH, AMONG OTHER THINGS, ASSUMPTIONS MADE, PROCEDURES
FOLLOWED, MATTERS CONSIDERED, AND LIMITATIONS ON THE SCOPE OF REVIEW BY MORGAN
STANLEY IN RENDERING ITS OPINION, IS ATTACHED AS ANNEX A TO THIS PROXY
STATEMENT. MORGAN STANLEY'S OPINION IS DIRECTED TO THE LASALLE PARTNERS BOARD
OF DIRECTORS AND THE FAIRNESS OF THE CONSIDERATION PAID BY LASALLE PARTNERS
PURSUANT TO THE PURCHASE AGREEMENTS IN THE AGGREGATE FROM A FINANCIAL POINT OF
VIEW AND IT DOES NOT ADDRESS ANY OTHER ASPECT OF THE TRANSACTIONS NOR DOES IT
CONSTITUTE A RECOMMENDATION AS TO HOW LASALLE PARTNERS STOCKHOLDERS SHOULD
VOTE AT THE SPECIAL MEETING. THE SUMMARY OF THE OPINION OF MORGAN STANLEY SET
FORTH IN THIS PROXY STATEMENT IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO THE
FULL TEXT OF SUCH OPINION. LASALLE PARTNERS STOCKHOLDERS ARE URGED TO, AND
SHOULD, READ MORGAN STANLEY'S OPINION CAREFULLY AND IN ITS ENTIRETY.
In rendering its opinion, Morgan Stanley, among other things: (i) reviewed
certain publicly available financial statements and other information of
LaSalle Partners; (ii) reviewed certain internal financial statements and
other financial and operating data concerning the JLW Companies prepared by
the management of the JLW Companies; (iii) analyzed certain financial
projections prepared by the management of LaSalle Partners and the JLW
Companies; (iv) discussed the past and current operations and financial
condition and the prospects of the JLW Companies with senior executives of the
JLW Companies; (v) analyzed certain internal financial statements and other
financial operating data concerning LaSalle Partners prepared by the
management of LaSalle Partners; (vi) discussed the past and current operations
and financial condition and the prospects of LaSalle Partners with senior
executives of LaSalle Partners, and analyzed the pro forma impact of the
Acquisition on LaSalle Partners' earnings per share, consolidated
capitalization and financial ratios; (vii) compared the financial performance
of LaSalle Partners and the prices and trading activity of its common stock
with that of certain other comparable publicly traded companies and their
securities; (viii) reviewed the financial terms, to the extent publicly
available, of certain comparable acquisition transactions; (ix) participated
in discussions among representatives of LaSalle Partners and its financial and
legal advisors; (x) reviewed the Purchase Agreements and certain related
documents; and (xi) performed such other analyses and considered such other
factors as Morgan Stanley deemed appropriate. LaSalle Partners did not impose
any restrictions or limitations upon Morgan Stanley with respect to the
investigations made or the procedures followed by Morgan Stanley in rendering
its opinion.
In rendering its October 21, 1998 opinion, Morgan Stanley assumed and relied
upon without independent verification the accuracy and completeness of the
information reviewed by Morgan Stanley for the purposes of its opinion. With
respect to the financial projections, Morgan Stanley assumed that they were
reasonably prepared on bases reflecting the best currently available estimates
and judgments of the future financial performances of LaSalle Partners and the
JLW Companies (including LaSalle Partners' estimate of transaction costs
associated with the Transactions and potential cost savings through the
combined operations). Morgan Stanley did not make any independent valuation or
appraisal of the assets or liabilities of LaSalle Partners or the JLW
Companies, nor was Morgan Stanley furnished with any such appraisals. In
addition, Morgan Stanley assumed the Acquisition
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<PAGE>
will be consummated in accordance with the terms set forth in the Purchase
Agreements. Morgan Stanley's opinion is necessarily based on financial,
economic, market and other conditions as in effect on, and the information
made available to it as of, October 21, 1998.
The following is a brief summary of certain analyses performed by Morgan
Stanley in connection with the rendering of its October 21, 1998 opinion.
LaSalle Partners Common Stock Performance. Morgan Stanley's analysis of
performance of LaSalle Partners common stock consisted of a historical
analysis of closing prices and trading volumes from July 17, 1997 to October
19, 1998. During this period, based on closing prices on the NYSE, the price
of LaSalle Partners common stock achieved a high of $48.00 per share and a low
of $21.94 per share. LaSalle Partners common stock closed at a price of $28.50
per share on October 19, 1998.
Comparable Company Analysis. Comparable company analysis examines a
company's trading performance relative to a group of publicly traded peers.
Morgan Stanley performed a comparable public company trading analysis pursuant
to which it compared certain publicly available financial and operating data
projections of future financial performance and market statistics (based upon
closing stock prices on October 19, 1998) of LaSalle Partners, CB Richard
Ellis Services, Insignia Financial Group (before the spin-off of Insignia/ESG
Holdings) and Trammell Crow (collectively, the "Selected Comparable
Companies"). Historical financial information used in connection with the
ratios provided below with respect to the Selected Comparable Companies was as
of the date of the most recent financial statements publicly available for
each company. Morgan Stanley compared (i) the closing stock prices as a
multiple of estimated 1998 and 1999 earnings per share ("EPS") and (ii) the
aggregate value (consisting of market capitalization plus total debt,
preferred stock and minority interest less cash and marketable securities) as
a multiple of estimated 1998 and 1999 earnings before interest, taxes,
depreciation and amortization ("EBITDA") (provided by analyst research, Morgan
Stanley research and management of LaSalle Partners). EPS estimates for the
Selected Comparable Companies were median estimates provided by Institutional
Brokers Estimates System ("IBES"), except with respect to LaSalle Partners,
which was pro forma for the Compass Acquisition.
For the Selected Comparable Companies, such analysis indicated: (i) median
price to estimated 1998 EPS multiple of 15.9x, (ii) median price to estimated
1999 EPS multiple of 13.9x, (iii) median aggregate value to estimated 1998
EBITDA multiple of 8.1x and (iv) median aggregate value to estimated 1999
EBITDA multiple of 7.4x. Using the financial information and projections
provided by management of the JLW Companies and LaSalle Partners, Morgan
Stanley derived an implied equity value range of the JLW Companies upon
application of the financial multiples from the Selected Comparable Companies.
This analysis indicated that the implied equity value of the JLW Companies
ranged from $390 million to $525 million.
No company utilized as a comparison in the comparable companies analysis is
identical to the JLW Companies. In evaluating the Selected Comparable
Companies, Morgan Stanley made judgments and assumptions with regard to
industry performance, general business, economic, market and financial
conditions and other matters, many of which are beyond the control of the JLW
Companies, such as the impact of competition on the JLW Companies and the
industry generally, industry growth and the absence of any adverse material
change in the financial condition and prospects of the JLW Companies or the
industry or in the financial markets in general.
Comparable Transaction Analysis. Using publicly available information,
Morgan Stanley performed an analysis of selected transactions (collectively,
the "JLW Companies Comparable Transactions") from 1994 to 1998 and for each
transaction calculated the aggregate value as a multiple of last twelve
months' revenues and EBITDA. Such analysis indicated that the median aggregate
value as a multiple of last twelve months' revenues and EBITDA, respectively,
was (i) 1.2x and (ii) 9.1x. Using the financial information provided by
management of LaSalle Partners and the JLW Companies and an aggregate value as
a multiple of the last twelve months' revenues and EBITDA, respectively,
ranging from (i) 1.0x to 1.4x and (ii) 8.0x to 10.0x, Morgan Stanley derived
an implied equity value of the JLW Companies upon application of the financial
multiples from the JLW
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<PAGE>
Companies Comparable Transactions. This analysis indicated that the implied
equity value of the JLW Companies ranged from $440 million to $550 million.
No transaction utilized as a comparison in the comparable transaction
analysis is identical to the Acquisition. In evaluating the precedent
transactions, Morgan Stanley made judgments and assumptions with regard to
industry performance, general business, economic, market and financial
conditions and other matters, many of which are beyond the control of the JLW
Companies, such as the impact of competition on the JLW Companies and the
industry generally, industry growth and the absence of any material adverse
change in the financial condition and prospects of the JLW Companies or the
industry or in the financial markets in general. Mathematical analysis (such
as determining the average or median) is not in itself a meaningful method of
using comparable transaction data.
Discounted Cash Flow Analysis. Morgan Stanley conducted a discounted cash
flow analysis of the JLW Companies for the fiscal years ended 1998 through
2007 to estimate the present value of the stand-alone unlevered free cash
flows that the JLW Companies are expected to generate if the JLW Companies
perform in accordance with scenarios based upon certain financial forecasts.
The discounted cash flow analysis for the JLW Companies was based upon certain
discussions with management of the JLW Companies as well as upon certain
financial projections prepared by management of the JLW Companies. Unlevered
free cash flows of the JLW Companies were calculated as net income plus
depreciation and amortization plus deferred tax plus minority interest plus
other noncash expenses plus after-tax net interest expense less investment in
working capital less capital expenditures less other noncash income. Morgan
Stanley calculated terminal values for the JLW Companies by applying a range
of EBITDA multiples of 6.0x to 8.0x. The unlevered free cash flow streams and
terminal values were then discounted to the present using a range of discount
rates from 12.0% to 14.0%. The discount rate ranges were selected based upon
weighted average cost of capital analysis of the Selected Comparable Companies
with adjustments made to the JLW Companies' specific risk. This analysis,
which did not consider any benefits derived from combining LaSalle Partners
and the JLW Companies, indicated that the implied equity value of the JLW
Companies ranged from $490 million to $640 million.
Summary Contribution Analysis. Morgan Stanley analyzed and compared the
respective and projected contribution of revenues, EBITDA and net income for
the JLW Companies and LaSalle Partners in 1998 and 1999. The analysis
indicated that LaSalle Partners would contribute 45.2% and 44.4%, in 1998 and
1999, respectively, to combined revenue, 60.5% and 56.4% in 1998 and 1999,
respectively, to combined EBITDA and 54.5% and 48.8% in 1998 and 1999,
respectively, to combined net income.
The preparation of a fairness opinion is a complex process and is not
necessarily susceptible to a partial analysis or summary description. In
arriving at its opinion, Morgan Stanley considered the results of all of its
analyses as a whole and did not attribute any particular weight to any
particular analysis or factor considered by it. Furthermore, selecting any
portions of Morgan Stanley's analyses, without consideration of all analyses,
would create an incomplete view of the process underlying its opinion. In
addition, Morgan Stanley may have deemed various assumptions more or less
probable than other assumptions, so that the range of valuations resulting for
any particular analysis described above should not be taken to be Morgan
Stanley's view of the actual value of the JLW Companies. Morgan Stanley did
not consider the results of any such analysis to be inconsistent with its
fairness opinion.
In performing its analyses, Morgan Stanley made numerous assumptions with
respect to industry performance, general business and economic conditions and
other matters, many of which are beyond the control of LaSalle Partners or the
JLW Companies. The analyses performed by Morgan Stanley are not necessarily
indicative of actual values, which may be significantly more or less favorable
than suggested by such analyses. Such analyses were prepared solely as part of
Morgan Stanley's analysis of the fairness of the consideration paid by LaSalle
Partners pursuant to the Purchase Agreements in the aggregate from a financial
point of view to LaSalle Partners. The analyses were provided to the LaSalle
Partners board of directors in connection with the delivery of the Morgan
Stanley oral opinion. The analyses do not purport to be appraisals or to
reflect the prices at which the JLW Companies might actually be sold. In
addition, as described above, the Morgan Stanley opinion
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<PAGE>
and presentation to the LaSalle Partners board of directors were among the
many factors taken into consideration by the LaSalle Partners board of
directors in making its determination to approve the Acquisition. The
consideration paid by LaSalle Partners pursuant to the Purchase Agreements in
the aggregate was determined through negotiations between LaSalle Partners and
representatives of the International Board of the JLW Companies and was
approved by the LaSalle Partners board of directors.
LaSalle Partners retained Morgan Stanley based upon its experience and
expertise. Morgan Stanley is an internationally recognized investment banking
and financial advisory firm. Morgan Stanley, as part of its investment banking
business, is continuously engaged in the valuation of businesses and
securities in connection with mergers and acquisitions, negotiated
underwriting, competitive bidding, secondary distributions of listed and
unlisted securities, private placements and valuations for corporate and other
purposes. Morgan Stanley is a full-service provider of securities trading and
brokerage activities, as well as investment banking and financial advisory
services. In the ordinary course of its trading and brokerage activities,
Morgan Stanley or its affiliates may at any time hold long or short positions,
and may trade or otherwise effect transactions, for its own account or the
account of customers, in securities of LaSalle Partners. In the past, Morgan
Stanley and its affiliates have provided financial advisory services to
LaSalle Partners and have received customary fees for the rendering of these
services.
Pursuant to a letter agreement dated as of May 27, 1998, LaSalle Partners
has agreed to pay Morgan Stanley a fee, conditional upon consummation of the
Acquisition, of $1,500,000. LaSalle Partners has agreed to reimburse Morgan
Stanley for its expenses, including reasonable fees and expenses of its
counsel, and to indemnify Morgan Stanley for liabilities and expenses arising
out of the engagement of Morgan Stanley and certain matters in connection
therewith, including liabilities under federal securities laws.
Interests of Certain Persons in the Acquisition
In considering the recommendation of the LaSalle Partners board of directors
regarding approval of the Share Issuance, the Charter Amendment and the Stock
Plan Amendment, LaSalle Partners stockholders should be aware of interests
which certain officers and directors of LaSalle Partners have in the
Acquisition which may be different from the interests of LaSalle Partners
stockholders generally. Certain members of the LaSalle Partners board of
directors will be members of the Jones Lang LaSalle board of directors and
certain executive officers of LaSalle Partners will continue as executive
officers of Jones Lang LaSalle following the Closing. See "--Directors and
Executive Officers Following the Acquisition."
Directors and Executive Officers Following the Acquisition
Directors. During the Transition Period, the Jones Lang LaSalle board of
directors will be composed of 14 directors. As of the Closing, seven of such
directors will be LaSalle Partners Directors and seven of such directors will
be JLW Directors, provided, that at least three of the LaSalle Partners
Directors and three of the JLW Directors must be independent directors. 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 be Messrs. Christopher A. Peacock,
Michael J. Smith, Peter H. T. Lee, Clive J. Pickford, Henri-Claude de
Bettignies, Derek A. Higgs and David K.P. Li. The current members of the
LaSalle Partners board of directors 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."
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The directors appointed to serve on the Jones Lang LaSalle board of
directors currently hold the following positions with LaSalle Partners or the
JLW Companies:
<TABLE>
<CAPTION>
Name Age Position
- ---- --- --------
<S> <C> <C>
Stuart L. Scott......... 60 Chairman of the Board of Directors,
Chief Executive Officer and Director of LaSalle Partners
Robert C. Spoerri....... 50 President, Chief Operating Officer
and Director of LaSalle Partners
Daniel W. Cummings...... 45 Co-President--LaSalle Advisors Capital Management, Inc.
and Director of LaSalle Partners
M.G. Rose............... 59 President, Tenant Representation Division--
LaSalle Partners Corporate & Financial Services, Inc.
and Director of LaSalle Partners
Darryl Hartley-Leonard.. 53 Director of LaSalle Partners
Thomas C. Theobald...... 62 Director of LaSalle Partners
John R. Walter.......... 51 Director of LaSalle Partners
<CAPTION>
Name Age Position
- ---- --- --------
<S> <C> <C>
Christopher A. Peacock.. 53 Chief Executive Officer of the International Board
Michael J. Smith........ 58 International Chairman of the JLW Companies
Clive J. Pickford....... 53 Chairman of JLW England and European Chairman
of the JLW Companies
Peter H. T. Lee......... 52 Chairman of the JLW Companies in Asia and Joint
Chairman of the JLW Companies in the Asia-Pacific Region
Henri-Claude de 60
Bettignies.............
David K.P. Li........... 58
Derek A. Higgs.......... 54
</TABLE>
Executive Officers. The executive officers of Jones Lang LaSalle following
the Acquisition are expected to include the individuals from LaSalle Partners
and the JLW Companies set forth below. The remaining executive officers are
expected to be named at or before the Closing:
<TABLE>
<CAPTION>
Position with Jones Lang LaSalle
Name Age Immediately Following the Closing
- ---- --- ---------------------------------
<S> <C> <C>
Stuart L. Scott......... 60 Chairman of the Board of Directors and Chief Executive Officer
Christopher A. Peacock.. 53 President, Deputy Chief Executive Officer
and Chief Operating Officer
Michael J. Smith........ 58 Deputy Chairman
William E. Sullivan..... 44 Executive Vice President, Chief Financial
Officer and Secretary
</TABLE>
Biographical Information. Set forth below is certain biographical
information with respect to the directors appointed to serve on the Jones Lang
LaSalle board of directors and the expected executive officers of Jones Lang
LaSalle at the Closing:
Daniel W. Cummings. Mr. Cummings has been a director of LaSalle Partners
since its incorporation, and a Co-President of LaSalle Advisors Capital
Management, Inc., an operating subsidiary of LaSalle Partners, since April
1997. Mr. Cummings was a Managing Director and Co-President of LaSalle
Advisors Limited Partnership, a subsidiary of one of the Predecessor
Partnerships, from November 1994 through December 1997. From January
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1992 to November 1994, Mr. Cummings was a Managing Director--Portfolio
Management of LaSalle Advisors Limited Partnership. Mr. Cummings originally
joined LaSalle Partners in 1979. He holds a B.A. from Dartmouth College and an
M.B.A. from the University of Chicago.
Darryl Hartley-Leonard. Mr. Hartley-Leonard has been a director of LaSalle
Partners since the closing of the initial public offering of LaSalle Partners
in July 1997. Mr. Hartley-Leonard is Chairman and Chief Executive Officer of
PGI, an event production agency, Chairman and Partner of Metropolitan Hotel
Corporation, a hotel company in the long-term stay/suite hotel business
directed at the upscale market, a founding partner of H-LK Partners, a hotel
development and management company, and Chairman and Partner of Cohabaco Cigar
Co., a nationwide cigar distribution company. Mr. Hartley-Leonard retired as
Chairman of the Board of Hyatt Hotels Corporation ("Hyatt") after a 32 year
career with Hyatt and its diversified affiliates. From 1994 to 1996, he served
as Chairman of the Board of Directors of Hyatt and from 1986 to 1994, he
served as Chief Executive Officer/Chief Operating Officer of Hyatt. Mr.
Hartley-Leonard also serves on the board of directors of Brookdale Living
Communities, Inc., a provider of senior and assisted living services, The
United States Committee for UNICEF and Evanston Northwestern Healthcare. Mr.
Hartley-Leonard holds a B.A. degree from Blackpool Lancashire College of
Lancaster University and an honorary doctorate of business administration from
Johnson and Wales University.
M.G. Rose. Mr. Rose has been a director of LaSalle Partners since its
incorporation, and President, Tenant Representation Division of LaSalle
Partners Corporate & Financial Services, Inc., an operating subsidiary of
LaSalle Partners, since April 1997. Mr. Rose was a Managing Director and
President of the Tenant Representation Group of the Predecessor Partnerships
from September 1983 through December 1997. He originally joined LaSalle
Partners in 1978. Mr. Rose holds a mechanical engineering degree from the
University of Cincinnati.
Stuart L. Scott. Mr. Scott has been Chairman of the Board of Directors and
Chief Executive Officer of LaSalle Partners since its incorporation, and was
Chief Executive Officer and Chairman of the Management Committee of each of
the Predecessor Partnerships from December 1992 until 1997. Prior to December
1992, Mr. Scott was President of the Predecessor Partnerships for more than 15
years and Co-Chairman of the Management Committee from January 1990 to
December 1992. Mr. Scott originally joined LaSalle Partners in 1973. He is a
member of the board of directors of Hartmarx Corporation, a clothing
manufacturing company. He holds a B.A. from Hamilton College and a J.D. from
Northwestern University.
Robert C. Spoerri. Mr. Spoerri has been President, Chief Operating Officer
and a director of LaSalle Partners since its incorporation, and was Chief
Operating Officer and Vice-Chairman of the Management Committee of the
Predecessor Partnerships from January 1994 until 1997. Mr. Spoerri was a Co-
Director of the Asset Management group of the Predecessor Partnerships from
January 1990 to December 1993 and the Director of the Property Management and
Leasing Group of the Predecessor Partnerships from January 1980 to December
1989. Mr. Spoerri originally joined LaSalle Partners in 1977. He holds a B.S.
from Indiana University and an M.B.A. from Harvard University.
William E. Sullivan. Mr. Sullivan has been Executive Vice President, Chief
Financial Officer, Secretary and a director of LaSalle Partners since its
incorporation, and was Executive Vice President and Chief Financial Officer of
the Predecessor Partnerships beginning in February 1997. From September 1995
to February 1997, Mr. Sullivan was a Managing Director of the Special Projects
Group of the Predecessor Partnerships. From January 1992 to September 1995,
Mr. Sullivan was a Senior Vice President of the Special Projects Group. Mr.
Sullivan originally joined LaSalle Partners in 1984. He holds a B.S.B.A. from
Georgetown University and an M.M. from Northwestern University.
Thomas C. Theobald. Mr. Theobald has been a director of LaSalle Partners
since the closing of the initial public offering of LaSalle Partners in July
1997. Mr. Theobald has served as a Managing Director at William Blair Capital
Partners since September 1994. From July 1987 to August 1994, Mr. Theobald was
Chairman of Continental Bank Corporation. He currently serves on the board of
directors of: Xerox Corporation, a
48
<PAGE>
manufacturer of document processing products and systems; Anixter
International, a supplier of electrical apparatus and equipment; Stein Roe
Funds, an income trust fund and investment trust fund manager; LaSalle U.S.
Realty Income & Growth Fund, Inc., a REIT; and US Timberlands LLC, an owner of
forest lands. He is also a trustee of Mutual of New York (MONY), a life
insurance company. Mr. Theobald holds an A.B. degree from the College of the
Holy Cross and an M.B.A. degree from Harvard University.
John R. Walter. Mr. Walter has been a director of LaSalle Partners since
September 1997. Mr. Walter is the retired President and Chief Operating Officer
of AT&T Corporation (November 1996 through July 1997). Prior thereto, Mr.
Walter worked for R.R. Donnelley & Sons Company for 27 years, serving as
Chairman and Chief Executive Officer from 1989 to October 1996 and as President
from 1987 to 1991. He serves as a director of Abbott Laboratories, Dayton
Hudson Corporation and Deere & Company. Mr. Walter is a member of the
International Advisory Council, Singapore Economic Development Board, and a
trustee of the Orchestral Association and Northwestern University. He holds a
B.S. from Miami University of Ohio.
Christopher A. Peacock. Mr. Peacock has been the International Chief
Executive Officer of the JLW Companies since September 1997, having previously
been the European Chief Executive Officer since June 1996. From November 1992
to June 1996, Mr. Peacock served concurrently as Managing Partner for the
Continent of Europe and as Chairman of Leasing and Agency in England. He became
a member of the JLW Companies' Executive Board for the Continent of Europe in
June 1985. Mr. Peacock originally joined JLW England as an employee in 1972 and
was made a partner in 1974. Mr. Peacock is a Fellow of the Royal Institution of
Chartered Surveyors and a board member of The British Council of Offices. He
was educated at Wellington College, Berkshire, England.
Michael J. Smith. Mr. Smith has been the International Chairman of the JLW
Companies since October 1997. From May 1995 to October 1997, Mr. Smith was
Chairman and Chief Executive Officer of the JLW Companies in Australasia and
Joint Chairman of the JLW Companies in the Asia-Pacific region. He became a
member of the Executive Board of the JLW Companies in Australasia in 1990 and
served as Chairman of JLW Advisory Services Pty Ltd. from January 1994 to May
1995. From January 1990 to December 1994, Mr. Smith was Joint Managing Director
of the JLW Company in Victoria, Australia. He is a Fellow of the Australian
Property Institute and of the Australian Institute of Company Directors.
Peter H. T. Lee. Mr. Lee has been the Chairman of the JLW Companies in Asia
and the Joint-Chairman of the JLW Companies in the Asia-Pacific region since
April 1995. He was appointed to the JLW Companies' Executive Committee in Hong
Kong and Asia in 1994. Mr. Lee originally joined the JLW Companies in 1977 as
Marketing Executive in the Commercial Agency Department of the JLW Companies'
offices in Hong Kong.
Clive J. Pickford. Mr. Pickford has been Chairman of JLW England since
January 1991 and European Chairman of the JLW Companies since January 1993. He
joined JLW England as an employee in 1963. In addition, he has served as
Chairman of the JLW Companies' European Retail Division since January 1998.
From January 1994 to December 1997, Mr. Pickford was Chairman of the JLW
Companies' European Hotels Division. Mr. Pickford is a non-Executive Director
of the United Kingdom Atomic Energy Authority and a Fellow of the Royal
Institution of Chartered Surveyors.
Professor Henri-Claude de Bettignies. Professor de Bettignies joined the
European Institute of Business Administration, Fontainebleau, France ("INSEAD")
in 1967 as an Assistant Professor and became a Full Professor in 1975. Since
1988, he has held a joint professorship at the Stanford University Graduate
School of Business. Professor de Bettignies started and developed INSEAD's
activities in Japan and the Asia Pacific region which led to the creation in
1980 of the Euro-Asia Centre, of which he was the Director General until 1988.
At INSEAD and Stanford, he teaches courses on international management, ethics
and Japan and the Asia Pacific region. He has created and directs several
executive programs organized in Asia and Europe, including AVIRA, a program for
CEOs held in Europe, the United States and Asia. He serves as a consultant to a
number of major organizations and has published five books and over 50 articles
in business and professional journals. Professor de Bettignies was educated at
the Sorbonne (Licence es Lettres), the Catholic University of Paris (EPP) and
the Harvard Business School (ITP).
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<PAGE>
Mr. Derek A. Higgs. Mr. Higgs has been Chairman of Prudential Portfolio
Managers Limited and a Director of Prudential Corporation plc since January
1996. He was employed by S.G. Warburg & Co. Ltd. from 1972 until 1996, serving
as a Director beginning in 1979, Head of Global Corporate Finance beginning in
1986 and Chairman beginning in 1994. Mr. Higgs is a member of the Financial
Reporting Council of the UK, Deputy Chairman of the Institutional Fund
Managers Association and a Trustee of The Architecture Foundation. He is a
Chartered Accountant and holds a Bachelor of Arts degree from Bristol
University.
Dr. David K.P. Li. Dr. Li is the Chairman and Chief Executive Officer of The
Bank of East Asia, Limited, a bank headquartered in Hong Kong. Dr. Li joined
The Bank of East Asia, Limited in 1969 and was elected Chief Executive Officer
in 1981, Deputy Chairman in 1995 and Chairman in 1997. He is a director of The
Bank of East Asia, Limited, Dow Jones & Company, Inc., Campbell Soup Company,
Hong Kong Telecommunications Limited, The Hong Kong & China Gas Company
Limited, Sime Darby Berhad, South China Morning Post (Holdings) Limited and
Atlas Air, Inc. Dr. Li holds an M.A. in Economics and Law and an honorary
degree of Doctor of Law from The University of Cambridge.
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 of directors.
As used herein, "entire Jones Lang LaSalle board of directors" 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 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
Jones Lang LaSalle board of directors.
During the Transition Period, the affirmative vote of at least 75% of the
entire Jones Lang LaSalle board of directors 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.
Regulatory Approvals
Under the HSR Act and the rules promulgated thereunder by Department of
Justice (the "DOJ") and the Federal Trade Commission (the "FTC"), the
Transactions may not be consummated unless certain information has been
furnished to the DOJ and the FTC and a required waiting period has expired or
been terminated. The DOJ and the FTC frequently scrutinize the legality under
the antitrust laws of business combinations similar to the Transactions. At
any time before or after the Closing, the DOJ or the FTC could take such
action under the
50
<PAGE>
antitrust laws as it deems necessary or desirable in the public interest,
including seeking to enjoin the Transactions or seeking divestiture of
substantial assets of LaSalle Partners or the JLW Companies or their
subsidiaries. Private parties and state attorneys general may also bring an
action under the antitrust laws under certain circumstances. There can be no
assurance that a challenge to the Transactions on antitrust grounds will not
be made or, if such a challenge is made, of a favorable result.
On January 19, 1999, LaSalle Partners and the JLW Companies submitted the
required Pre-Merger Notification and Report Forms with the DOJ and the FTC
under the HSR Act. Under the HSR Act, the DOJ or the FTC may issue a request
for additional information prior to the waiting period ending February 18,
1999 (subject to earlier termination), which waiting period may be extended as
a result of the request. Only one request for additional information may be
issued. Thereafter, the waiting period may be extended only by court order or
the consent of the parties. Consummation of the Transactions is subject to the
expiration or termination of all applicable waiting periods under the HSR Act
and no action having been instituted by the DOJ or the FTC that is not
withdrawn or terminated prior to the Closing.
Based on available information, LaSalle Partners believes that the
Transactions can be effected in compliance with all material laws of all
applicable jurisdictions. However, no assurances can be given that a
jurisdiction will not attempt to impose conditions (including the divestiture
of assets) on the operations of LaSalle Partners or the JLW Companies or that
might otherwise have a material adverse effect on LaSalle Partners, the JLW
Companies or Jones Lang LaSalle.
The obligations of LaSalle Partners and the JLW Companies to consummate the
Transactions are conditioned upon, among other things, there being no
effective injunction, writ, preliminary restraining order or any order of any
nature by any court or other authority of competent jurisdiction directing
that the Transactions not be consummated as provided in the Purchase
Agreements.
Federal Income Tax Consequences of the Acquisition
There are no federal income tax consequences to LaSalle Partners
stockholders as a result of the Acquisition.
Stock Exchange Listing
It is a condition to the consummation of the Transactions that the
Consideration Shares will have been approved for listing on the NYSE, subject
to official notice of issuance.
Anticipated Accounting Treatment
As a general matter, the accounting treatment for the Consideration Shares
issued and/or cash paid to a JLW Shareholder will be dependent on whether such
JLW Shareholder is a Current JLW Owner or a New JLW Owner. The accounting
treatment will also depend on whether the share issued is an Initial
Distribution Share, Indemnification Share, Adjustment Share, Forfeiture Share
or ESOT Share (and whether such ESOT Share is subject to vesting).
The anticipated accounting treatment for the issuance of shares of LaSalle
Partners common stock and cash payments to the JLW Shareholders and the ESOT
is pursuant to both APB Opinion No. 16 and APB Opinion No. 25 as illustrated
in the table below. For all consideration issued or paid to the Current JLW
Owners, except for Forfeiture Shares, the consideration will be accounted for
using the purchase method of accounting in accordance with APB Opinion No. 16.
The value of the aggregate consideration and any capitalizable transaction
costs will be allocated to identifiable assets and liabilities being acquired
and the excess allocated to goodwill which will be amortized over its
estimated useful life of 40 years.
The issuance of Adjustment Shares and Indemnification Shares to New JLW
Owners and the ESOT and certain Forfeiture Shares being placed in the
indemnity escrow will be accounted for as a variable stock award plan under
APB Opinion No. 25. Jones Lang LaSalle will incur compensation expense for
these shares, the amount of which will be measured at Closing or, with respect
to the Adjustment Shares and Indemnification Shares issued to the ESOT, when
they are allocated to employees. The amount of compensation cost will be based
on the market price of Jones Lang LaSalle common stock on the measurement
date. To the extent any of these shares are subject to forfeiture or vesting,
the compensation costs will be recognized as expense over the
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<PAGE>
forfeiture or vesting period. The compensation cost related to all other of
these shares will be charged to expense immediately at their initial
measurement dates. The amount of compensation cost will be adjusted at the end
of each quarter until the final number of shares to be issued is known. The
amount of the quarterly adjustment will be based on the change in the stock
price from the preceding quarter.
All remaining consideration issued or paid to the JLW Shareholders and the
ESOT will be accounted for as a fixed stock award plan under APB Opinion No.
25. Jones Lang LaSalle will incur compensation expense for remaining
consideration, the amount of which will be measured at Closing, or with
respect to ESOT Shares, when they are allocated to employees. The amount of
compensation cost will be based on the market price of Jones Lang LaSalle
common stock on the measurement dates. To the extent any of these shares are
subject to forfeiture or vesting, the related compensation costs will be
recognized over the forfeiture or vesting period. The compensation costs
related to all other of these shares as well as cash consideration will be
charged to expense immediately at their measurement dates. Compensation costs
related to shares that are forfeited will be adjusted upon reallocation on
December 31, 2000, based on the change in stock price on such date and the
date compensation expense was initially recorded.
As a result of the above-described adjustments to compensation expense,
Jones Lang LaSalle's reported results of operations will be subject to
quarterly fluctuations based on its stock price.
Shares subject to forfeiture are amortized into compensation expense from
the date of issuance (i.e. Closing or December 31, 1999) through December 31,
2000. Total ESOT Shares of 1,772,324 include 525,332 shares, assuming the net
worth requirements are met, to be allocated from the ESOT at Closing or on
December 31, 1999 which are subject to vesting through December 31, 2000.
Accordingly, the value of those shares is amortized into compensation expense
over the vesting period.
Assuming that the closing net worth requirements are met and that the Five
Day Average Closing Price will be $31.50 (the closing price of LaSalle
Partners common stock on January 29, 1999, a date just prior to the
distribution of this Proxy Statement), the value of the 14,254,116 shares
would be approximately $449.0 million and the cash consideration would be
approximately $6.2 million, for a total consideration of approximately $455.2
million. Of such shares to be issued, 7,578,385 shares valued at $238.7
million and $5.8 million in cash, for a total of $244.5 million of the
consideration to be paid for the JLW Companies, will be accounted for under
the purchase method of accounting in accordance with APB Opinion No. 16 and
6,675,731 shares valued at $210.3 million and $0.4 million in cash, for a
total of $210.7 million, will be accounted for as compensation in accordance
with APB Opinion No. 25.
As a result, LaSalle Partners expects to incur compensation expense
associated with the issuance of shares totalling approximately $117.3 million
and $93.4 million in the years ended December 31, 1999 and 2000, respectively,
assuming that the JLW Companies have the required net worth at Closing.
Included in the total estimated compensation expense of $210.7 million is
expense of $49.2 million which will be subject to fluctuation based on
quarterly changes in the price of LaSalle Partners common stock. Management
anticipates that this compensation expense, $210.3 million of which represents
a non-cash charge, will cause Jones Lang LaSalle to report operating losses
for these periods.
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<PAGE>
The following table summarizes the accounting treatment for the
consideration to be issued or paid for the JLW Companies (in thousands, except
share data):
<TABLE>
<CAPTION>
Total Share Current New
Share Type Consideration JLW Owners JLW Owners ESOT
---------- ------------- ----------- ---------- ----------
<S> <C> <C> <C> <C>
Number of Shares--
Non-Restricted(1)....... 7,657,211 5,961,761 A 649,341 B 1,046,109 B
Shares subject to
forfeiture or
vesting(2):
Issued to JLW Asia
Shareholders(3)...... 1,187,479 891,706 C 295,773 C --
All others............ 3,417,743 2,613,892 B 278,519 B 525,332 B
Adjustment(4)........... 1,241,683 1,031,908 A 100,880 C 108,895 C
Indemnification(5)...... 750,000 584,716 A 73,296 C 91,988 C
----------- ----------- ---------- ----------
Total Shares(6)..... 14,254,116 11,083,983 1,397,809 1,772,324
=========== =========== ========== ==========
Cash Share
Equivalent......... 111,084 96,949 A 14,135 B --
=========== =========== ========== ==========
Accounting Value--
Non-Restricted(7)....... $ 241,202 $ 187,795 A $ 20,454 B $ 32,953 B
Shares subject to
forfeiture or
vesting(2):
Issued to JLW Asia
Shareholders(3)...... 37,406 28,089 C 9,317 C --
All others............ 107,659 82,338 B 8,773 B 16,548 B
Adjustment(7)........... 39,113 32,505 A 3,178 C 3,430 C
Indemnification(7)...... 23,625 18,419 A 2,309 C 2,897 C
----------- ----------- ---------- ----------
Total Shares(6)..... 449,005 349,146 44,031 55,828
=========== =========== ========== ==========
Cash Shares............. $ 3,499 $ 3,054 A $ 445 B $ --
Cash Payment to JLW
Australasia............ 2,700 2,700 A -- --
----------- ----------- ---------- ----------
Cash Consideration.. $ 6,199 $ 5,754 $ 445 $ --
=========== =========== ========== ==========
Total
Consideration...... $ 455,204 $ 354,900 $ 44,476 $ 55,828
=========== =========== ========== ==========
</TABLE>
<TABLE>
<CAPTION>
Value
------------------------------------------------
Compensation Expense
Recognition Period
-----------------------
Shares Shares Cash Total Closing 1999 2000
---------- -------- ------ -------- ------- ------- -------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Accounting Treatment
APB Opinion No. 16--
Business Combination... A 7,578,385 53% $238,719 $5,754 $244,473
APB Opinion No. 25--
Stock Issued to
Employees:
Fixed Plan............. B 5,113,193 36% 161,066 445 161,511 $32,691 $56,652 $72,168
Variable Plan.......... C 1,562,538 11% 49,220 -- 49,220 8,068 19,965 21,187
---------- -------- ------ -------- ------- ------- -------
14,254,116 $449,005 $6,199 $455,204 $40,759 $76,617 $93,355
========== ======== ====== ======== ======= ======= =======
</TABLE>
- --------
(A) Accounted for using purchase accounting under APB Opinion No. 16.
(B) Accounted for using fixed plan compensation accounting under APB Opinion
No. 25.
(C) Accounted for using variable plan compensation accounting under APB
Opinion No. 25.
(1) Includes the Initial Distribution Shares and ESOT Shares which are not
Indemnification Shares or Adjustment Shares and are not subject to
vesting.
(2) Includes the Forfeiture Shares and allocated ESOT Shares which are subject
to vesting.
(3) Includes Forfeiture Shares to be issued to Current JLW Owners and New JLW
Owners of the JLW Asia Companies which will be deposited with the
Indemnity Escrow Agent at Closing.
(4) Includes Adjustment Shares.
(5) Includes Indemnification Shares.
(6) Assumes the JLW Companies' net worth requirements are met.
(7) Represents the value of these shares at $31.50 which was the closing price
on January 29, 1999 (a date just prior to the distribution of this Proxy
Statement).
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<PAGE>
Anticipated Impact on Operating Results, Liquidity and Capital Resources
As previously discussed under "--Anticipated Accounting Treatment," LaSalle
Partners expects to incur compensation expense associated with the issuance of
shares totaling approximately $117.3 million and $93.4 million in the years
ended December 31, 1999 and 2000, respectively, assuming the JLW Companies
have the required net worth at Closing. Included in the total estimated
compensation expense of $210.7 million is expense of $49.2 million which will
be subject to fluctuation based on quarterly changes in the price of LaSalle
Partners common stock. Management anticipates that this compensation expense,
$210.3 million of which represents a non-cash charge, will cause Jones Lang
LaSalle to report operating losses for these periods. LaSalle Partners does
not anticipate that these compensation charges will be incurred subsequent to
2000.
LaSalle Partners management anticipates that significant one time charges
will be incurred at Closing and during the first year following the Closing
related to the costs of the Transactions. In addition, Jones Lang LaSalle will
increase its level of capital expenditures related primarily to integrating
office facilities and systems. The extent of the necessary capital
requirements are currently being compiled and analyzed for approval by the
board of directors, subject to the resulting evaluation of the probable
economic and competitive benefits to be gained from specific integration
activities. In conjunction with expanding its Investment Management business
on a global scale, LaSalle Partners anticipates that it will increase its
level of co-investment activity in certain regions over time. Management of
LaSalle Partners believes that cash flows generated from operations and
available borrowings on the current credit facilities will be sufficient to
cover these capital requirements.
Absence of Appraisal Rights
LaSalle Partners stockholders will not be entitled to appraisal rights under
the MGCL in connection with the Transactions.
54
<PAGE>
THE PURCHASE AGREEMENTS
The following summary of certain terms of the Purchase Agreements is
qualified in its entirety by reference to the Purchase Agreements, included as
Annexes B-D herewith. LaSalle Partners stockholders are urged to read each
Purchase Agreement delivered herewith in its entirety. All capitalized terms
used in this section but not defined shall have the meanings ascribed to them
in the applicable Purchase Agreement or the Glossary of Certain Defined Terms.
Consideration
At the Closing, 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 consideration adjustments
described below), (ii) cash consideration in an amount 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) $2.7 million in cash.
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 in-
terests in the JLW Companies and distributed as provided in the Purchase
Agreements. See "The Transactions--Consideration." The remaining 1,772,324
shares will be issued to or for the account of the ESOT.
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 Integration has not been commenced (the "Integration
Commencement") until after January 15, 1999. In order to facilitate the return
of shares as a result of the net worth consideration adjustments, if required,
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, 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.
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<PAGE>
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 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
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Initial Distribution Shares so surrendered (based on a per share 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 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.
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
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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 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 the Purchase
Agreements, (iv) other tax liabilities 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 and their respective subsidiaries and (ii) any
out-of-pocket fees and expenses of a type described in clause (v) above,
whether accrued or prevously 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 senior 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 the shares of the JLW Companies 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
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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 relating to the shares of
LaSalle Partners common stock to be issued in connection with the Transactions
(the "Offering Circular"), previously delivered to the JLW Shareholders, or
this Proxy Statement; (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; (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 this
Proxy Statement (excluding information included herein or therein that relates
to any JLW Shareholder, JLW Seller or JLW Company); and (xix) the approval of
the Transactions by the LaSalle Partners board of directors 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 attached as Annex
C to this Proxy Statement (the "JLW Asia Purchase Agreement") and the Purchase
Agreement relating to the JLW Australasia Companies attached as Annex D to
this Proxy Statement (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 the shares of the JLW Companies; (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.
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
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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 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").
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." As required by the Purchase Agreements, this Proxy
Statement includes the approval and recommendation of the LaSalle Partners
board of directors in favor of the Proposed Actions, and unless the LaSalle
Partners board of directors modifies or withdraws such recommendation, LaSalle
Partners is 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 of directors
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 of directors determines to withdraw or modify
its recommendation, (ii) the LaSalle Partners board of directors reasonably
concludes in good faith, based on advice from its outside counsel, that the
failure to make such withdrawal or
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modification would violate the fiduciary duties of the LaSalle Partners board
of directors 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 of directors 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.
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
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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 of directors 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 of directors 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 of directors 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 of directors based on the advice of
outside counsel, is required under applicable law.
Directors and Executive Officers of Jones Lang LaSalle
Directors. During the Transition Period, the Jones Lang LaSalle board of
directors will be composed of 14 directors. As of the Closing, seven of such
directors will be LaSalle Partners Directors and seven of such directors will
be JLW Directors, provided, that at least three of the LaSalle Partners
Directors and three of the JLW Directors must be Independent Directors. The
initial LaSalle 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, Mr. Michael J. Smith, Mr. Peter H.T. Lee
and Mr. Clive J. Pickford. The initial JLW Independent Directors will be
Professor Henri-Claude de Bettignies, Mr. Derek A. Higgs and Dr. David K.P.
Li.
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 of directors 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 of directors will be constituted of
an equal number of LaSalle Partners Directors (who will be selected by the
LaSalle Partners Nominating Committee) and JLW Directors (who will be selected
by the JLW Nominating Committee).
The number of directors comprising the full Jones Lang LaSalle board of
directors 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 of directors. 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 of directors, 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.
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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 of directors with respect to the
designation of persons as the nominees of such board for election to, or
designating persons to fill vacancies on, such 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.
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 of directors, becomes disqualified, resigns,
retires, dies or otherwise cannot continue to serve as a member of such 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 such board, the JLW
Nominating Committee will have the exclusive authority on behalf of the entire
Jones Lang LaSalle board of directors 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 of directors 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 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 of directors.
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
of directors 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 of directors, becomes
disqualified, resigns, retires, dies or otherwise cannot continue to serve as
a member of such 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 of directors to designate a person
to fill such vacancy and will jointly,
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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.
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 of directors. 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 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
Jones Lang LaSalle board of directors.
During the Transition Period, the affirmative vote of at least 75% of the
entire Jones Lang LaSalle board of directors 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 will be Harris Trust and Savings Bank. 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
and Jones Lang LaSalle or their designees and will execute, in its capacity as
trustee, a stockholder agreement which contains comparable provisions to the
Stockholder Agreement, 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 other shares of LaSalle Partners common stock that are
voted in respect of such matter.
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 allocated to each Region
or countries within a Region and (ii) restrictions on timing and amount of
allocations and distributions referred to below. Without LaSalle Partners'
consent (which will not be
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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 or to any former employee.
Allocations may only be made by the ESOT Trustee (following written
instructions from the Shareholders' Representatives and Jones Lang LaSalle) 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 agreements relating to the
ESOT Shares 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, 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
Transactions or seeking to obtain in connection with 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 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, 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 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
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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.
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 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 Related Party
having been paid in full; (vii) on the Integration Commencement Date, since
June 30, 1998, there having been no JLW Material Adverse Effect; (viii)
certain annuity schemes 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 having been paid, discharged or satisfied in full.
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 and the
Integration Agreements to the satisfaction or waiver on or before the
Integration Commencement Date or the Closing Date, as specified,
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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 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 the Integration Commencement Date, since
June 30, 1998, there having been no LaSalle Partners Material Adverse Effect;
(viii) the JLW Directors having been elected to the Jones Lang LaSalle board
of directors (and the only other directors on the Jones Lang LaSalle board of
directors 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; (ix) the obligations of certain of the JLW Companies to
indemnify the partners of JLW England, JLW, JLW Scotland and JLW Ireland,
having been guaranteed by a subsidiary of LaSalle Partners with net assets in
excess of $10 million; and (x) the Amended Bylaws having been adopted and not
rescinded, modified or amended.
All conditions to the Acquisition are waivable. To the extent that material
conditions to the Transactions are waived, LaSalle Partners intends to
resolicit stockholders.
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
Company, JLW Seller, Management Shareholder, 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 Companies, JLW Sellers and Management Shareholders, 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; (g) by the Sellers'
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Representatives, if the LaSalle Partners board of directors has not approved
and recommended, or withdrawn or modified in a manner adverse to the JLW
Companies its approval or recommendation of the Acquisition or failed to call
and hold the Special Meeting; or (h) by LaSalle Partners or the Sellers'
Representatives, if a put right or call right relating to the equity interests
of the JLW Parent Companies has not been exercised during the Exercise Period.
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 separate
Joinder Agreements.
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 of directors 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
Acquisition, 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. All conditions to the
Acquisition are waivable. To the extent that material conditions to the
Acquisition are waived, LaSalle Partners intends to resolicit stockholders.
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THE INDEMNITY AND ESCROW AGREEMENT
The following summary of certain terms of the Escrow Agreement is qualified
in its entirety by reference to the Escrow Agreement included as Annex E
herewith. LaSalle Partners Stockholders are urged to read the Escrow Agreement
in its entirety. All capitalized terms used in this section but not defined
shall have the meanings ascribed to them in the Escrow Agreement or the
Glossary of Certain Defined Terms.
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 Indemnity Escrow Agent have entered 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 consideration adjustments. In addition, LaSalle Partners will deposit
the Forfeiture Shares issuable to the JLW Shareholders who own the JLW Asia
Parent Companies with the Indemnity Escrow Agent to secure indemnification
obligations relating to the ownership of the shares of the JLW Asia Companies.
The Escrow Agreement is intended to provide LaSalle Partners with economic
protection against the liabilities specified in the Escrow Agreement, subject
to the limitations set forth therein. The escrow arrangements are being used
to reduce the administrative burden and difficulty of reclaiming shares once
they have been distributed.
Indemnity
During the term of the Escrow Agreement, 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 director 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");
. 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");
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. 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 the
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");
and
. all expenses incurred in connection with enforcing arbitrator awards
pursuant to the Escrow Agreement ("Indemnification Expenses").
A group of 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").
A group of 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 ("Retired Partners' Deed Claim").
A group of JLW Shareholders (and Related JLW Owners) specified in the Escrow
Agreement severally (but jointly and severally between each such 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
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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
Shareholder, 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 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 "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 per share.
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 be
expected to have a JLW Material Adverse Effect. No minimum claim amount
applies to any other claims for indemnification.
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.
The Indemnified Persons are not required to make a claim against the Escrow
Fund with respect to any claim other than a 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
Forfeiture Shares of the JLW Asia Shareholders 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.
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Voting
The Indemnity 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.
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THE STOCKHOLDER AGREEMENTS
The following summary of certain terms of the Stockholder Agreements is
qualified in its entirety by reference to the form of Stockholder Agreement
included as Annex F herewith. LaSalle Partners Stockholders are urged to read
the form of Stockholder Agreement in its entirety. All capitalized terms used
in this section and not defined shall have the meanings ascribed to them in
the Stockholder Agreements or the Glossary of Certain Defined Terms.
General
As a condition and inducement to LaSalle Partners' willingness to enter into
the Purchase Agreements, each JLW Shareholder has entered into a separate
Stockholder Agreement with LaSalle Partners. In the cases where the JLW
Shareholder is not a natural person, the Related JLW Owner has entered into a
Stockholder Agreement along with such JLW Shareholder. Unless otherwise
agreed, the term of the Stockholder Agreements will commence upon the Closing
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 Closing Date and
(ii) June 1, 2003. The Stockholder Agreements are intended to provide
appropriate representation on the Jones Lang LaSalle board of directors for
the LaSalle Partners stockholders and the JLW Shareholders during a
transitional period of approximately four years, as well as to ensure
compliance with United States securities laws.
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 and entity
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 of directors; (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 or entity in connection
with any of the foregoing.
Transfer Restrictions
The Stockholder Agreements impose various restrictions on the sale,
assignment, pledge, hypothecation, encumbrance, gift or other disposition or
other transfer of Consideration Shares. Both during and after 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.
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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 of directors 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 of
directors; (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, entity
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.
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 of directors 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 of directors 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 of directors has recommended against approving. See "Risk
Factors--The Stockholder Agreements, the DEL Stockholder Agreements, the
Charter and the Amended Bylaws of Jones Lang LaSalle and the Maryland General
Corporate Law Could Delay, Defer or Prevent a Change of Control."
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 for its own account or for the account
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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
Each LaSalle Partners Employee Stockholder has executed a DEL Stockholder
Agreement that contains all the stockholder covenants, as well as the voting
and registration rights provisions, contained in the Stockholder Agreements.
The DEL Stockholder Agreements were required by the JLW Shareholders as a
condition to their agreement to enter into the Stockholder Agreements.
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 of directors 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.
As a result of the Stockholder Agreements and DEL Stockholder Agreements, as
long as persons who are parties or otherwise subject to such agreements own or
control a majority of the issued and outstanding shares of LaSalle Partners
common stock entitled to vote, all director nominees of the Jones Lang LaSalle
board of directors will be elected, all sale or merger transactions opposed by
the board will not be approved and all stockholder proposals will be decided
in accordance with the board's recommendation. Following the Closing, it is
expected that approximately 69% of LaSalle Partners' outstanding common stock
will initially be owned by employees of Jones Lang LaSalle who are subject to
the Stockholder Agreements and the DEL Stockholder Agreements. Approximately
47% of the issued and outstanding shares of LaSalle Partners common stock will
be owned by the JLW Shareholders and approximately 22% of the issued and
outstanding shares will be owned by the LaSalle Partners Employee
Stockholders.
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BUSINESS OF LASALLE PARTNERS
LaSalle Partners, founded in 1968, is a leading full-service real estate
firm that provides real estate property management services, corporate and
financial services and investment management services to corporations and
other real estate owners and investors worldwide. LaSalle Partners has grown
by expanding both its client base and its range of services and products in
anticipation of client needs. By offering a broad range of real estate
products and services, and through its extensive knowledge of domestic and
international real estate markets, LaSalle Partners is able to serve as a
single source provider of solutions for its clients' full range of real estate
needs. LaSalle Partners is headquartered in Chicago, Illinois, and maintains
corporate offices in 10 United States cities and eight international offices.
LaSalle Partners also maintains over 300 property and satellite offices
throughout the United States.
In October 1998, LaSalle Partners acquired the worldwide commercial property
management and leasing, facilities management and project management
operations and United States retail property management operation of Lend
Lease conducted through the Compass Businesses. The Compass Businesses have
been combined with LPMS, an operating subsidiary of LaSalle Partners
conducting the property management and leasing and facilities management
businesses of LaSalle Partners. The combined business has approximately 400
million square feet under management, making it the largest real estate
management services company in the United States based on total square feet
under management, according to Commercial Property News' August 1998 "Top
Property Managers Survey."
LaSalle Partners paid Lend Lease approximately $180 million in cash for the
Compass Businesses and incurred capitalizable transaction costs of
approximately $4.1 million. There are also provisions for an additional
payment of up to $77.5 million from LaSalle Partners to Lend Lease over five
years in the event revenues generated by LaSalle Partners from Lend Lease and
its affiliates reach certain targets. LaSalle Partners anticipates incurring
approximately $10.3 million in after-tax transition expenses in connection
with the acquisition of the Compass Businesses, which will be charged against
earnings primarily in 1998 and the first half of 1999.
The discussion of the business of LaSalle Partners is contained in Item 1 of
the LaSalle Partners 10-K and is incorporated by reference in this Proxy
Statement.
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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 over 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.
The JLW Companies operate their businesses in four distinct geographical
Regions: Europe, Asia, Australasia and North America. However, substantially
independent ownership structures exist among and within the Regions. As a
result of these separate ownership groups, historical financial reporting has
been presented for each group: 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. In order to coordinate the worldwide activities of the JLW
Companies and ensure consistent standards of service across regions despite
having different owners in each Region, in 1997 the JLW Companies formed the
International Board. Prior to the formation of the International Board, similar
functions were filled by a committee comprised of representatives of the JLW
Companies. Financial information and a discussion of results of operations for
each ownership 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
Proxy Statement. See "The Transactions--Description of the Transactions" for a
chart which shows the structure of the JLW Companies and the Regions. 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.
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.
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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 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.
Services
The following is an overview of the principal services provided by the JLW
Companies. These services can be classified into three general categories,
advice ("Advisory"), market transactions ("Markets") or asset management
("Asset Management") as follows (although, historically, the JLW Companies have
not reported their financial results based on such categories):
Advisory Markets
.Valuation/appraisal .Property sales and acquisitions
.Investment management .Agency leasing for landlords
.Corporate real estate services .Tenant leasing
.Finance
.Consulting and research
Asset Management
.Property management
.Facilities management
.Project management
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.
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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.
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,
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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.
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.
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
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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.
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.
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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.
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,
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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.
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 Kingdom
.Ireland
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:
<TABLE>
<CAPTION>
Number of
1997 Revenue Number of Employees and
(in Offices Partners
Country millions) (1) (1)(2)
------- ------------ --------- -------------
<S> <C> <C> <C>
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 14 260
---- --- -----
Total fee based service revenue... 223 -- --
Interest income..................... 2 -- --
Other revenue....................... 5 -- --
---- --- -----
Total............................. $230 42 1,981
==== === =====
</TABLE>
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<PAGE>
- --------
(1) At August 1, 1998.
(2) Number of employees excludes approximately 370 on-site personnel whose
salaries are 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 420 employees (excluding approximately 77 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, 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
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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.
Countries
The JLW Companies in the principal countries in the Asia Region have
approximately the following revenue, number of offices and employees:
<TABLE>
<CAPTION>
1997 Revenue Number of
(in Offices Number of
Country millions) (1) Employees (1)(2)
------- ------------ --------- ----------------
<S> <C> <C> <C> <C> <C>
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
==== === ===
</TABLE>
- --------
(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 $62.5 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.
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
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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:
<TABLE>
<CAPTION>
1997 Revenue Number of Number of
Country (in millions) Offices (1)(2) Employees (1)(2)
------- ------------- -------------- ----------------
<S> <C> <C> <C>
Australia................. $57 13 575
New Zealand .............. 3 2 37
--- --- ---
Total fee based service
revenue................ 60 -- --
Other income.............. 2 -- --
--- --- ---
Total................... $62 15 612
=== === ===
</TABLE>
- --------
(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.
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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
Compass Businesses and the JLW Companies. 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 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 part of the Integration or in anticipation
of the Acquisition; and (iii) the ESOT during 1999 and 2000. A portion of the
ESOT Shares will be subject to certain vesting and other requirements.
Assuming the net worth requirements are met and that the Five Day Average
Closing Price will be $31.50 (the closing price of LaSalle Partners common
stock on January 29, 1999, a date just prior to the distribution of this Proxy
Statement), approximately 11,083,983 shares and $5.8 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.
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.
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The anticipated accounting treatment for the Transactions is guided by both
APB Opinion No. 16 and APB Opinion No. 25 as illustrated in the table below (in
thousands, except share data).
<TABLE>
<CAPTION>
Total Share Current New JLW
Share Type Consideration JLW Owners Owners ESOT
- ---------- ------------- ----------- --------- ---------
<S> <C> <C> <C> <C>
Number of Shares--
Non-Restricted(1)......... 7,657,211 5,961,761 A 649,341 B 1,046,109 B
Shares subject to
forfeiture or vesting(2):
Issued to JLW Asia
Shareholders(3)........ 1,187,479 891,706 C 295,773 C --
All others.............. 3,417,743 2,613,892 B 278,519 B 525,332 B
Adjustment(4)............. 1,241,683 1,031,908 A 100,880 C 108,895 C
Indemnification(5)........ 750,000 584,716 A 73,296 C 91,988 C
---------- ----------- --------- ---------
Total Shares(6)....... 14,254,116 11,083,983 1,397,809 1,772,324
Pro forma net worth
adjustment(7)............ (601,411) (500,667)A (53,871)C (46,873)C
---------- ----------- --------- ---------
Pro forma Total
Shares............... 13,652,705 10,583,316 1,343,938 1,725,451
========== =========== ========= =========
Cash Share
Equivalent........... 111,084 96,949 A 14,135 B --
========== =========== ========= =========
Accounting Value--
Non-Restricted(8)......... $ 241,202 $ 187,795 A $ 20,454 B $ 32,953 B
Shares subject to
forfeiture or vesting(2):
Issued to JLW Asia
Shareholders(3)........ 37,406 28,089 C 9,317 C --
All others.............. 107,659 82,338 B 8,773 B 16,548 B
Adjustment(8)............. 39,113 32,505 A 3,178 C 3,430 C
Indemnification(8)........ 23,625 18,419 A 2,309 C 2,897 C
---------- ----------- --------- ---------
Total Shares(6)....... 449,005 349,146 44,031 55,828
Pro forma net worth
adjustment(7)............ (18,944) (15,771)A (1,697)C (1,476)C
Difference as a result of
purchase accounting(9)... (83,305) (83,305)A -- --
---------- ----------- --------- ---------
Pro forma Total
Shares............... $ 346,756 $ 250,070 $ 42,334 $ 54,352
========== =========== ========= =========
Cash Shares............... $ 3,499 $ 3,054 A $ 445 B $ --
Cash Payment to JLW
Australia................ 2,700 2,700 A -- --
---------- ----------- --------- ---------
Cash Consideration.... $ 6,199 $ 5,754 $ 445 $ --
========== =========== ========= =========
Total Consideration... $ 352,955 $ 255,824 $ 42,779 $ 54,352
========== =========== ========= =========
</TABLE>
<TABLE>
<CAPTION>
Value
---------------------------------------------------------------
Compensation Expense
Recognition Period
-----------------------
Shares Shares Cash Total Closing 1999 2000
---------- -------- ------ -------- ------- ------- -------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Accounting Treatment
APB Opinion No. 16--
Business Combination... A 7,077,718 52% $139,643 $5,754 $145,397
APB Opinion No. 25--
Stock Issued to
Employees:
FIXED PLAN B
Issue date:
Closing................ 4,366,294 137,539 445 137,984 $32,691 $53,059 $52,234
December 31, 1999...... 215,375 6,784 -- 6,784 -- 3,593 3,191
December 31, 2000...... 531,524 16,743 -- 16,743 -- -- 16,743
---------- -------- ------ -------- ------- ------- -------
5,113,193 37% 161,066 445 161,511 32,691 56,652 72,168
VARIABLE PLAN C
Issue date:
Closing................ 1,376,240 43,352 -- 43,352 5,732 18,917 18,703
December 31, 1999...... 31,040 978 -- 978 -- 978 --
December 31, 2000...... 54,514 1,717 -- 1,717 -- -- 1,717
---------- -------- ------ -------- ------- ------- -------
1,461,794 11% 46,047 -- 46,047 5,732 19,895 20,420
---------- -------- ------ -------- ------- ------- -------
13,652,705 $346,756 $6,199 $352,955 $38,423 $76,547 $92,588
========== ======== ====== ======== ======= ======= =======
</TABLE>
88
<PAGE>
NOTE: As noted in the following pro forma for the year ended December 31,
1997, LaSalle Partners anticipates that it will incur compensation
expense of $114.9 million which represents the sum of the compensation
expense recognized at Closing ($38.4 million) and during 1999 ($76.5
million) reflected above.
On a pro forma basis for the nine months ended September 30, 1998, LaSalle
Partners anticipates that it will incur compensation expense totaling
$55.6 million which represents 75% of the compensation expense to be
recognized evenly over the four quarters during 2000 on shares issued at
Closing ($52.2 million for the fixed stock award; $18.7 million for the
variable stock award) and at December 31, 1999 ($3.2 million under the
fixed stock award). Note that compensation expense associated with shares
to be issued at December 31, 2000 are not included in the pro forma
expense for the period ended September 30, 1998 as they will not yet have
been issued.
- --------
(A) Accounted for using purchase accounting under APB Opinion No. 16.
(B) Accounted for using fixed plan compensation accounting under APB Opinion
No. 25.
(C) Accounted for using variable plan compensation accounting under APB
Opinion No. 25.
(1) Includes the Initial Distribution Shares and ESOT Shares which are not
Indemnification Shares or Adjustment Shares and are not subject to
vesting.
(2) Includes the Forfeiture Shares and ESOT Shares which are subject to
vesting.
(3) Includes Forfeiture Shares to be issued to Current JLW Owners and New JLW
Owners of the JLW Asia Companies which will be deposited with the
Indemnity Escrow Agent at Closing.
(4) Includes Adjustment Shares.
(5) Includes Indemnification Shares.
(6) Assumes the net worth requirements are met.
(7) Represents Adjustment Shares to be returned to LaSalle Partners from the
Escrow Fund based on the net worth adjustment calculated on a pro forma
basis as of September 30, 1998.
(8) Represents the value of these shares at $31.50 which was the closing price
on January 29, 1999 (a date just prior to the distribution of this Proxy
Statement).
(9) Represents the difference between the value of the shares reflected in the
table above compared to the value used under APB Opinion No. 16 which
represents the average price of LaSalle Partners common stock of $24.66
per share for the five day period that includes the two trading days
immediately preceding, the trading day of, and the two trading days
immediately following the date of substantial completion of negotiations
regarding the principal financial terms of the Acquisition (October 9,
1998) discounted at a rate of 20%, to account for transferability
restrictions applicable to such shares.
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 at a rate of 20% 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
89
<PAGE>
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.
For purposes of the pro forma financial statements included herein, all
compensation expense has been calculated based on the closing price of $31.50
per share of LaSalle Partners common stock on January 29, 1999 (a date just
prior to the distribution of this Proxy Statement). The actual amount of
compensation expense recorded will vary depending on the price per share of
LaSalle Partners common stock on the applicable measurement date.
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 $31.50 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 for each reporting group at
September 30, 1998, included elsewhere herein, the Adjustment Shares to
be returned to LaSalle Partners pursuant to the net worth adjustments
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 and ESOT Shares
subject to vesting deemed to be related to a Bad Leaver will be
reallocated among the remaining JLW Shareholders or from the ESOT. 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 and ESOT
Shares subject to vesting 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.
. 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 as a variable stock award plan.
Accordingly, the compensation expense associated with those 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. The value of the 750,000 Indemnification Shares is anticipated to
be adjusted quarterly from the Closing date through the 450th day
following Closing. The 1,241,683 Adjustment Shares are subject to the
closing balance sheet net worth requirement and will be adjusted
quarterly through the date the closing balance sheet is agreed upon by
the parties. For purposes of the pro forma financial statements included
herein, the closing price per share of LaSalle Partners common stock on
January 29, 1999 has been used and held constant; therefore, no
adjustments to compensation expense have been assumed.
90
<PAGE>
. 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 as 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 the
closing stock price on January 29, 1999. Accordingly, no adjustments have
been made for changes in stock price for the pro forma periods.
The total shares subject to variable plan accounting aggregated 1,418,683 or
approximately 10% of the total shares issued and approximately 22% of the
total shares subject to compensation accounting treatment.
On a pro forma basis for Jones Lang LaSalle, the basic and diluted losses
per common share were $(2.09) and $(3.02) 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 $55.6 million and
$114.9 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 Transactions (like amounts incurred during 1997 were
immaterial). Excluding these merger-related nonrecurring costs, pro forma
diluted earnings per share of Jones Lang LaSalle would have been $.62 and
$1.19, respectively, for the nine months ended September 30, 1998 and the year
ended December 31, 1997, based on diluted weighted average shares outstanding
giving effect to (i) outstanding shares of LaSalle Partners common stock; (ii)
dilutive options outstanding issued to LaSalle Partners employees, including
options issued to former employees of the Compass Businesses; and (iii)
14,254,116 shares of LaSalle Partners common stock anticipated to be issued in
connection with the Acquisition.
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 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.
91
<PAGE>
The following table provides the historical shares outstanding of LaSalle
Partners common stock and the pro forma equivalent number of shares expected
to be issued related to the Acquisition:
<TABLE>
<CAPTION>
September 30,
1998
-------------
<S> <C>
LaSalle Partners Historical................................ 16,230,358
Total Consideration Shares(1).............................. 14,254,116
Unallocated ESOT Shares(2)................................. (856,782)
----------
Pro Forma Equivalent--Jones Lang LaSalle(1)................ 29,627,692
Pro forma net worth adjustment(3).......................... (601,411)
Adjustment Shares included in Unallocated ESOT Shares(2)... 24,329
----------
Pro Forma Equivalent--Jones Lang LaSalle................... 29,050,610
==========
</TABLE>
- --------
(1) Assumes the net worth requirements are met.
(2) Represents ESOT Shares to be allocated at December 31, 1999 (246,415) and
December 31, 2000 (610,367) and includes 24,329 Adjustment Shares.
(3) Represents Adjustment Shares to be returned to Jones Lang LaSalle from the
Escrow based on the pro forma net worth calculation as of September 30,
1998.
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 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.
92
<PAGE>
Unaudited Pro Forma Jones Lang LaSalle Consolidated Statement of Earnings
Nine Months Ended September 30, 1998
(in thousands, except per share data)
<TABLE>
<CAPTION>
The Compass Businesses Pro Forma JLW Companies Pro Forma
Historical ----------------------- LaSalle ----------------------- Jones Lang
LaSalle Historical Acquisition Partners Pro Forma Acquisition LaSalle
Partners(1) Combined(1) Adjustments Combined Combined(2) Adjustments Consolidated
----------- ----------- ----------- ---------- ----------- ----------- ------------
<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,
administrative and
other.................. 50,057 20,203 -- 70,260 104,090 -- 174,350
Merger-related
nonrecurring charges... -- -- -- -- 15,290 55,596 (3) 70,886
Depreciation and
amortization........... 8,177 13,813 (12,627)(4) 15,314 9,475 2,441 (5) 27,230
5,951 (6) -- -- --
---------- -------- ------- ---------- -------- -------- ----------
Total operating
expenses............... 175,009 70,298 (6,676) 238,631 316,794 58,037 613,462
---------- -------- ------- ---------- -------- -------- ----------
Operating income
(loss)................. 15,100 (8,913) 6,676 12,863 17,279 (58,037) (27,895)
Interest expense........ 992 5,700 (5,700)(7) 10,129 895 11,024
9,137 (8)
---------- -------- ------- ---------- -------- -------- ----------
Net earnings (loss)
before provision
(benefit) for income
taxes.................. 14,108 (14,613) 3,239 2,734 16,384 (58,037) (38,919)
Provision (benefit) for
income taxes............ 5,432 (3,970) (390)(9) 1,072 11,086 (10)(10)
-- -- -- -- -- (1,791)(11) 10,357
Minority interest....... -- -- -- -- 818 -- 818
---------- -------- ------- ---------- -------- -------- ----------
Net earnings (loss).... $ 8,676 $(10,643) $ 3,629 $ 1,662 $ 4,480 $(56,236) $ (50,094)
========== ======== ======= ========== ======== ======== ==========
Basic earnings (loss)
per common share........ $ 0.54 $ 0.10 $ (2.09)
========== ========== ==========
Basic weighted average
shares outstanding...... 16,210,340 16,210,340 23,953,470 (12)
========== ========== ==========
Diluted earnings (loss)
per common share........ $ 0.53 $ 0.10 (2.09)
========== ========== ==========
Diluted weighted average
shares outstanding...... 16,403,225 16,410,161 (13) 23,953,470 (14)
========== ========== ==========
</TABLE>
93
<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 Acquisition attributable to the Initial Distribution
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 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. LaSalle Partners considered a number of
factors in estimating the useful life of goodwill, including the
substantial operating history of the JLW Companies, their global market
presence, the significance and duration of their client relationships, the
significant barriers to entry into the global real estate professional
services business and the uniqueness and geographic diversity of the JLW
Companies' global infrastructure.
(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%.
(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 7,102,858
weighted average Initial Distribution Shares and 640,272 Adjustment
Shares assumed to be issued in connection with the Acquisition.
(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.
94
<PAGE>
Unaudited Pro Forma Jones Lang LaSalle Consolidated Statement of Earnings
Year Ended December 31, 1997
(in thousands, except per share data)
<TABLE>
<CAPTION>
The Compass Businesses JLW Companies
----------------------- --------------------
Pro Forma Pro Pro Forma
Pro Forma LaSalle Forma Jones Lang
LaSalle Pro Forma Acquisition Partners Combined Acquisition LaSalle
Partners(1) Combined(2) Adjustments Combined (3) Adjustments Consolidated
----------- ----------- ----------- ---------- -------- ----------- ------------
<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,
administrative and
other.................. 61,367 23,251 -- 84,618 155,197 -- 239,815
Merger-related
nonrecurring charges... -- -- -- -- -- 114,970 (4) 114,970
Depreciation and
amortization........... 9,756 10,772 (9,094)(5) 19,368 12,297 3,255 (6) 34,920
7,934 (7)
---------- ------- ------- ---------- -------- --------- ----------
Total operating
expenses............... 198,333 80,076 (1,160) 277,249 399,092 118,225 794,566
---------- ------- ------- ---------- -------- --------- ----------
Operating income
(loss).................. 34,651 4,728 1,160 40,539 36,919 (118,225) (40,767)
Interest expense........ 1,000 3,825 (3,825)(8) 13,100 1,436 -- 14,536
12,100 (9)
---------- ------- ------- ---------- -------- --------- ----------
Net earnings (loss)
before provision
(benefit) for income
taxes.................. 33,651 903 (7,115) 27,439 35,483 (118,225) (55,303)
Provision (benefit) for
income taxes............ 12,956 1,689 (3,889)(10) 10,756 12,419 (502)(11)
-- -- -- -- -- (6,656)(12) 16,017
Minority interest....... -- -- -- -- 549 -- 549
---------- ------- ------- ---------- -------- --------- ----------
Net earnings (loss)..... $ 20,695 $ (786) $(3,226) $ 16,683 $ 22,515 $(111,067) $ (71,869)
========== ======= ======= ========== ======== ========= ==========
Basic earnings (loss)
per common share........ $ 1.28 $ 1.03 $ (3.02)
========== ========== ==========
Basic weighted average
shares outstanding...... 16,200,000 16,200,000 23,781,904 (13)
========== ========== ==========
Diluted earnings (loss)
per common share........ $ 1.27 $ 1.02 $ (3.02)
========== ========== ==========
Diluted weighted average
shares
outstanding............. 16,329,555 16,337,102 (14) 23,781,904 (15)
========== ========== ==========
</TABLE>
95
<PAGE>
Notes to Unaudited Pro Forma Jones Lang LaSalle
Consolidated Statement of Earnings
For the Year Ended December 31, 1997
(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 Proxy Statement.
(4) The adjustment gives effect to aggregate compensation expense incurred in
connection with the Acquisition 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 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. LaSalle Partners considered a number of
factors in estimating the useful life of goodwill, including the
substantial operating history of the JLW Companies, their global market
presence, the significance and duration of their client relationships, the
significant barriers to entry into the global real estate professional
services business and the uniqueness and geographic diversity of the JLW
Companies' global infrastructure.
(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.
(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%.
96
<PAGE>
(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 6,941,632
weighted average Initial Distribution Shares and 640,272 Adjustment
Shares assumed will be issued in connection with the Acquisition.
(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.
97
<PAGE>
Unaudited Pro Forma Jones Lang LaSalle Consolidated Balance Sheet
As of September 30, 1998
(in thousands)
<TABLE>
<CAPTION>
The Compass Businesses JLW Companies Pro Forma
Historical ----------------------- Pro Forma ----------------------- Jones Lang
LaSalle Historical Acquisition LaSalle Partners Pro Forma Acquisition LaSalle
Partners(1) Combined(1) Adjustments Combined Combined(2) Adjustments Consolidated
----------- ----------- ----------- ---------------- ----------- ----------- ------------
<S> <C> <C> <C> <C> <C> <C> <C>
Assets
Current assets
Cash and cash $ 15,214 $ 9,684 $ 825 (3) $ 25,723 $ 5,540 $ (5,754)(4) $ 25,064
equivalents........... (445)(5)
Trade receivables, 69,616 12,645 (355)(3) 81,906 88,900 -- 170,806
net...................
Due from affiliate..... -- 113 (113)(3) -- -- -- --
Notes receivable....... 16,144 -- -- 16,144 -- -- 16,144
Other receivables...... 6,489 -- -- 6,489 30,374 -- 36,863
Prepaid expenses....... 2,006 504 (504)(6) 2,006 8,317 -- 10,323
Other assets........... -- -- 948 (6) 948 -- -- 948
Deferred tax benefit... 5,104 -- 3,488 (6) 8,592 1,513 -- 10,105
-------- -------- --------- -------- -------- -------- --------
Total current assets... 114,573 22,946 4,289 141,808 134,644 (6,199) 270,253
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 of
amortization........... 53,120 121,162 176,315 (6) 229,435 4,000 130,200 (7) 363,635
(121,162)(6)
Investment in Compass
Businesses............. -- -- (184,075)(6) -- -- -- --
184,075 (8)
Investment in JLW
Businesses............. -- -- -- -- -- 157,898 (4) --
(157,898)(7)
Investments 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 taxes... -- 6,314 (6,314)(6) -- 5,904 5,283 (7) 11,187
Deferred compensation... -- -- -- -- -- 142,913 (5) 142,913
Prepaid pension asset... -- -- -- -- 9,247 13,600 (7) 22,847
Other assets, net....... 2,845 3,777 (3,227)(6) 3,395 2,320 -- 5,715
-------- -------- --------- -------- -------- -------- --------
Total assets........... $252,877 $158,304 $ 49,901 $461,082 $195,076 $285,797 $941,955
======== ======== ========= ======== ======== ======== ========
Liabilities and stockholders' equity
Current liabilities
Accounts payable and
accrued liabilities... $ 27,150 $ 6,471 $ 2,806 (6) $ 40,822 $ 84,778 $ 12,500 (4) $139,310
4,075 (8) 1,210 (7)
320 (3)
Accrued compensation... 32,822 5,202 5,334 (6) 43,443 4,613 10,192 (7) 58,248
85 (3)
Due to parent.......... -- 1,996 (1,996)(3) -- -- -- --
Income taxes payable... -- -- -- -- 5,111 -- 5,111
Other liabilities...... 6,296 3,225 750 (6) 10,208 41,370 2,500 (7) 54,078
(63)(3)
Current maturities of
long-term debt........ -- 102,000 (102,000)(3) -- 16,305 -- 16,305
-------- -------- --------- -------- -------- -------- --------
Total current
liabilities........... 66,268 118,894 (90,689) 94,473 152,177 26,402 273,052
Long-term credit
facility............... 28,442 180,000 (8) 208,442 -- -- 208,442
Deferred tax liability.. -- -- -- -- 3,768 5,168 (7) 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 31,570 504,454
Stockholders' equity
Common stock........... 162 3 (3)(6) 162 -- 71 (4) 298
65 (5)
Additional paid-in
capital............... 122,696 52,695 104,011 (3) 122,696 -- 139,573 (4) 443,102
(156,706)(6) 180,833 (5)
Unallocated ESOT
shares................ -- -- -- -- -- (8)(5) (8)
Retained earnings
(deficit)............. 33,003 (13,288) 13,288 (6) 33,003 -- (38,422)(5) (5,419)
Foreign exchange
translation reserve... -- -- -- -- (1,644) 1,644 (7) --
Predecessor's partners'
capital............... -- -- -- -- 27,885 (27,885)(7) --
Accumulated other
comprehensive income.. 1,172 -- -- 1,172 -- (1,644)(7) (472)
-------- -------- --------- -------- -------- -------- --------
Total stockholders'
equity................ 157,033 39,410 (39,410) 157,033 26,241 254,227 437,501
-------- -------- --------- -------- -------- -------- --------
Total liabilities and
stockholders' equity.. $252,877 $158,304 $ 49,901 $461,082 $195,076 $285,797 $941,955
======== ======== ========= ======== ======== ======== ========
</TABLE>
98
<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 ($157.9 million,
including transaction-related costs of $12.5 million). The value of the
aggregate consideration is comprised of $5.8 million in cash and 7,077,718
shares of LaSalle Partners Common Stock, including 5,961,761 Initial
Distribution Shares, 584,716 Indemnification Shares and 531,241 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 $157.9 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 of and the two trading days immediately following the date
of substantial completion of negotiations regarding the principal
financial terms of the Acquisition (October 9, 1998), discounted at a rate
of 20% or $35.1 million for transferability restrictions applicable to
such shares.
(5) The adjustment gives effect to the issuance of shares of LaSalle Partners
common stock and payment of cash, in accordance with the following table,
which are accounted for as compensation expense or deferred compensation
in accordance with APB Opinion No. 25 at Closing (in thousands, except
share data):
<TABLE>
<CAPTION>
Shares Value
--------- -------------
<S> <C> <C>
Deferred Compensation:
Shares subject to forfeiture or vesting:
Current JLW Owners............................. 3,505,598 $ 110,427
New JLW Owners................................. 574,292 18,090
ESOT........................................... 424,046 13,357
ESOT Indemnification Shares subject to one year
vesting......................................... 3,653 115
ESOT Shares subject to one year vesting.......... 29,330 924
--------- -------------
Deferred compensation shares..................... 4,536,919 $ 142,913
========= =============
Compensation Expense at Closing:
Non-Restricted Shares:
New JLW Owners................................. 649,341 $ 20,454
ESOT........................................... 392,107 12,351
Adjustment Shares:
New JLW Owners................................. 47,009 1,481
Indemnification Shares:
New JLW Owners................................. 73,296 2,309
ESOT........................................... 43,862 1,382
--------- -------------
1,205,615 37,977
Cash shares--New JLW Owners...................... 14,135 445
--------- -------------
Retained earnings................................ 1,219,750 $ 38,422
========= =============
Total capital.................................... 5,742,534 $ 180,890
========= =============
</TABLE>
99
<PAGE>
Shares subject to forfeiture are amortized into compensation expense from
the date of issuance (i.e. Closing or December 31, 1999) through December
31, 2000. Total ESOT Shares of 1,772,324 include 525,332 shares, assuming
the net worth requirements are met, to be allocated from the ESOT at
Closing or on December 31, 1999 which are subject to vesting through
December 31, 2000. For purposes of the pro forma financial statements, only
424,046 shares are to be issued at Closing. The value of those shares is
amortized to compensation expense over the vesting period.
(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.
(7) These adjustments give effect to the allocation of the portion of the
consideration accounted for as purchase price under APB Opinion No. 16
($157.9 million, including transaction related costs of $12.5 million),
and to identifiable assets and liabilities at their estimated fair values.
The excess purchase price of $130.2 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 considered
a number of factors in estimating the useful life of goodwill, including
the substantial operating history of the JLW Companies, their global
market presence, the significance and duration of their client
relationships, the significant barriers to entry into the global real
estate professional services business and the uniqueness and geographic
diversity of the JLW Companies' global infrastructure.
(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.
100
<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.
101
<PAGE>
Unaudited Pro Forma JLW Companies Combined Statement of Earnings
Nine Months Ended September 30, 1998
(in thousands)
<TABLE>
<CAPTION>
Historical JLW (1)
---------------------------------------------- Combination Pro Forma
JLW JLW and JLW
JLW Australasia Asia JLW JLW Integration Companies
England Companies Group Scotland Ireland Total Adjustments Combined
-------- ----------- ------- -------- ------- -------- ----------- ---------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Revenue:
Fee-based services..... $221,074 $39,462 $40,850 $6,587 $8,663 $316,636 $ 8,664 (2) $325,300
Interest income........ 1,745 25 72 123 38 2,003 365 (2) 2,368
Other income........... 4,974 1,585 959 73 -- 7,591 (62)(2) 6,405
(1,124)(3)
-------- ------- ------- ------ ------ -------- -------- --------
Total revenue.......... 227,793 41,072 41,881 6,783 8,701 326,230 7,843 334,073
Operating expenses:
Compensation and
benefits.............. 116,186 17,128 23,311 1,995 2,429 161,049 2,312 (2) 187,939
24,578 (4)
Operating,
administrative and
other................. 62,670 18,734 14,047 1,274 1,365 98,090 4,720 (2) 104,090
1,280 (3)
Merger-related
nonrecurring
charges(6)............ 8,315 2,509 3,331 219 575 14,949 341 (2) 15,290
Depreciation and
amortization.......... 6,085 919 1,440 208 252 8,904 571 (2) 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
Interest expense........ 484 82 194 7 38 805 90 (2) 895
-------- ------- ------- ------ ------ -------- -------- --------
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 income
taxes.................. 1,485 1,522 654 25 65 3,751 414 (2) 11,086
6,921 (5)
Minority interest....... 1,277 -- -- -- -- 1,277 (459)(2) 818
-------- ------- ------- ------ ------ -------- -------- --------
Net earnings (loss).... $ 31,291 $ 178 $(1,096) $3,055 $3,977 $ 37,405 $(32,925) $ 4,480
======== ======= ======= ====== ====== ======== ======== ========
</TABLE>
102
<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. These
packages are represented by agreements with certain senior executives that
previously received their compensation in the form of profits
distributions and/or dividends and provide for a base salary and
discretionary bonus based on individual and company performance. Included
in the pro forma adjustment is approximately $13.4 million and $11.4
million, respectively, for salary and target bonuses under the new
agreements.
(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.
103
<PAGE>
Unaudited Pro Forma JLW Companies Combined Statement of Earnings
Year Ended December 31, 1997
(in thousands)
<TABLE>
<CAPTION>
Historical JLW (1)
--------------------------------------------------------- Combination Pro Forma
JLW and JLW
JLW Australasia JLW Asia JLW JLW Integration Companies
England Companies Group Scotland Ireland Total Adjustments Combined
--------- ----------- -------- -------- ------- --------- ----------- ---------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Revenue:
Fee-based services..... $ 252,895 $ 60,522 $ 73,843 $ 9,042 $ 9,223 $ 405,525 $ 23,244 (2) $ 428,769
Interest income........ 1,532 150 293 102 78 2,155 347 (2) 2,502
Other income........... 4,555 1,777 1,874 98 -- 8,304 (2,427)(2) 4,740
(1,137)(3)
--------- -------- -------- ------- ------- --------- --------- ---------
Total revenue.......... 258,982 62,449 76,010 9,242 9,301 415,984 20,027 436,011
Operating expenses:
Compensation and
benefits.............. 122,709 23,337 35,872 2,301 3,110 187,329 35,081 (4) 231,598
9,188 (2)
Operating,
administrative and
other................. 88,117 28,440 24,739 1,539 1,735 144,570 13,059 (2) 155,197
(2,432)(3)
Depreciation and
amortization.......... 7,854 1,340 1,841 284 353 11,672 625 (2) 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
Interest expense........ 649 340 225 12 60 1,286 150 (2) 1,436
--------- -------- -------- ------- ------- --------- --------- ---------
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 income
taxes.................. 3,493 2,918 2,195 46 80 8,732 1,054 (2) 12,419
2,633 (5)
Minority interest....... 1,450 -- -- -- -- 1,450 (901)(2) 549
--------- -------- -------- ------- ------- --------- --------- ---------
Net earnings (loss).... $ 34,710 $ 6,074 $ 11,138 $ 5,060 $ 3,963 $ 60,945 $ (38,430) $ 22,515
========= ======== ======== ======= ======= ========= ========= =========
</TABLE>
104
<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. These
packages are represented by agreements with certain senior executives that
previously received their compensation in the form of profits
distributions and/or dividends and provide for a base salary and
discretionary bonus based on individual and company performance. Included
in the pro forma adjustment is approximately $23.8 million and $11.4
million, respectively, for salary and target bonuses under the new
agreements.
(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%.
105
<PAGE>
Unaudited Pro Forma JLW Companies Combined Balance Sheet
As of September 30, 1998
(in thousands)
<TABLE>
<CAPTION>
Historical JLW(1)
-------------------------------------------------------- Combination Pro Forma
JLW JLW and JLW
JLW Australasia Asia JLW JLW Integration Companies
England Companies Group Scotland Ireland Total Adjustments Combined
-------- ----------- ------- -------- ------- -------- ----------- ---------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Assets
Current assets:
Cash and cash
equivalents........... $ 19,885 $ -- $ 3,584 $2,992 $1,852 $ 28,313 $ 5,540 (2) $ 5,540
(28,313)(4)
Trade receivables,
net................... 64,655 12,944 11,332 2,362 3,584 94,877 (1,997)(2) 88,900
(3,980)(3)
Other receivables...... 17,334 1,824 10,644 185 -- 29,987 387 (2) 30,374
Prepaid expenses....... 5,039 178 2,014 204 236 7,671 646 (2) 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
depreciation........... 21,871 1,336 4,785 1,151 1,004 30,147 1,747 (2) 31,894
Intangibles resulting
from business
acquisitions net of
amortization........... 3,989 11 -- -- -- 4,000 -- 4,000
Investments in real
estate ventures........ 350 500 419 -- -- 1,269 (448)(2) 821
Long-term receivables,
net.................... 6,246 -- -- -- -- 6,246 -- 6,246
Deferred tax asset...... 3,943 1,886 -- -- -- 5,829 75 (2) 5,904
Prepaid pension asset... 9,247 -- -- -- -- 9,247 -- 9,247
Other assets, net....... 1,036 41 -- -- 1,109 2,186 134 (2) 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 liabilities... $ 42,135 $ 6,778 $ 3,773 $ 718 $1,491 $ 54,895 $ 3,134 (2) $ 84,778
(3,537)(3)
30,286 (4)
Accrued compensation... -- -- -- -- 502 502 4,111 (4) 4,613
Taxation............... 1,953 1,181 806 61 -- 4,001 1,110 (2) 5,111
Other liabilities...... 24,397 4,467 10,600 747 117 40,328 1,042 (2) 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 liability.. 3,110 64 231 -- 355 3,760 8 (2) 3,768
Other long-term
liabilities............ 7,837 967 2,634 -- 156 11,594 435 (2) 12,029
Minority interest....... 2,219 -- -- -- -- 2,219 (1,358)(2) 861
-------- ------- ------- ------ ------ -------- -------- --------
Total liabilities...... 93,474 13,616 22,146 1,675 2,693 133,604 35,231 168,835
Partners' capital
JLW predecessor
capital................ 61,552 6,797 10,632 5,062 5,169 89,212 350 (2) 27,885
922 (3)
(62,599)(4)
JLW foreign exchange
translation reserve.... (54) (1,557) -- 157 (77) (1,531) (106)(2) (1,644)
(7)(3)
-------- ------- ------- ------ ------ -------- -------- --------
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>
106
<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.
107
<PAGE>
SELECTED HISTORICAL AND PRO FORMA FINANCIAL DATA OF LASALLE PARTNERS
The following table sets forth, for the periods and as of the dates
indicated, selected financial and other data on a historical consolidated and
combined basis of LaSalle Partners. The selected financial data as of December
31, 1997 and 1996 and for each of the years in the three-year period ended
December 31, 1997 have been derived from the consolidated and combined
financial statements of the Predecessor Partnerships audited by KPMG LLP,
independent auditors, included in the LaSalle Partners 10-K and incorporated
herein by reference. The selected financial data as of December 31, 1995, 1994
and 1993 and for the years ended December 31, 1994 and 1993 have been derived
from the Predecessor Partnerships' Combined Financial Statements audited by
KPMG LLP, not incorporated by reference herein. The selected financial data as
of September 30, 1998 and for the nine months ended September 30, 1998 and
1997 have been derived from LaSalle Partners' and the Predecessor
Partnerships' unaudited consolidated and combined financial statements,
included in the LaSalle Partners Third Quarter 10-Q and incorporated herein by
reference. Such financial statements include all adjustments, consisting of
normal recurring adjustments, which LaSalle Partners considers necessary for a
fair presentation of its financial position and results of operations for
these periods. The selected pro forma financial data have been derived from
the Unaudited Pro Forma Consolidated Financial Statements, included elsewhere
herein. Operating results for the nine months ended September 30, 1998 are not
necessarily indicative of results that may be expected for the entire year.
The information set forth below should be read in conjunction with: the
consolidated financial statements of LaSalle Partners, and the notes thereto,
and "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 and incorporated herein by reference;
the unaudited pro forma financial statements contained in the LaSalle Partners
October 1 Current Report and incorporated herein by reference; and the
Unaudited Pro Forma Consolidated Financial Statements, included elsewhere in
this Proxy Statement.
108
<PAGE>
Selected Historical and Pro Forma Financial Data
LaSalle Partners Incorporated
(in thousands, except share data)
<TABLE>
<CAPTION>
Nine Months Ended September 30, Year Ended December 31,
---------------------------------- -------------------------------------------------------------
1998 1997
Pro Pro
Forma(1) 1998 1997 Forma(1) 1997 1996 1995 1994 1993
----------- ----------- -------- ---------- ---------- -------- -------- -------- -------
(unaudited) (unaudited)
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Statement of
Operations Data:
Total revenue....... $ 585,567 $ 190,109 $141,482 $ 753,799 $ 224,773 $159,453 $138,618 $116,698 $95,491
Total operating
expenses........... 613,462 175,009 129,600 794,566 189,659 132,552 118,502 98,683 78,478
----------- ----------- -------- ---------- ---------- -------- -------- -------- -------
Operating income
(loss)............. $ (27,895) $ 15,100 $ 11,882 $ (40,767) $ 35,114 $ 26,901 $ 20,116 $ 18,015 $17,013
Interest expense.... 11,024 992 3,859 14,536 3,995 5,730 3,806 5,159 5,257
----------- ----------- -------- ---------- ---------- -------- -------- -------- -------
Earnings (loss)
before provision
for income taxes... (38,919) 14,108 8,023 (55,303) 31,119 21,171 16,310 12,856 11,756
Net provision for
income taxes....... 10,357 5,432 (1,808) 16,017 5,279 1,207 505 554 300
Minority interest... 818 -- -- 549 -- -- -- -- --
----------- ----------- -------- ---------- ---------- -------- -------- -------- -------
Net earnings
(loss)............. $ (50,094) $ 8,676 $ 9,831 $ (71,869) $ 25,840 $ 19,964 $ 15,805 $ 12,302 $11,456
=========== =========== ======== ========== ========== ======== ======== ======== =======
Basic earnings
(loss) per common
share(2)........... $ (2.09) $ 0.54 $ (3.02) $ 1.50
=========== =========== ========== ==========
Basic weighted
average shares
outstanding........ 23,953,470 16,210,340 23,781,904 16,200,000
=========== =========== ========== ==========
Diluted earnings
(loss) per common
share(2)........... $ (2.09) $ 0.53 $ (3.02) $ 1.49
=========== =========== ========== ==========
Diluted weighted
average shares
outstanding(3)..... 23,953,470 16,403,225 23,781,904 16,329,613
=========== =========== ========== ==========
Other Data:
Adjusted EBITDA(4).. $ 69,403 $ 23,277 $ 18,377 $ 108,574 $ 44,207 $ 32,317 $ 24,356 $ 20,866 $19,544
Cash flows provided
by (used in)
operating
activities......... 17,252 $ 18,302 $ 17,136 $ 61,288 $ 40,577 $ 13,964 $ 13,553 $ 24,628 $ 4,837
Cash flows provided
by (used in)
investing
activities......... $ (62,719) $ (62,355) $ (5,346) $ (200,396) $ (14,126) $(32,478) $ (5,706) $ (4,885) $(2,738)
Cash flows provided
by (used in)
financing
activities......... $ (5,275) $ 28,442 $ (2,894) $ 66,734 $ (3,128) $ 17,189 $(12,365) $(12,028) $(6,758)
</TABLE>
<TABLE>
<CAPTION>
At September 30, At December 31,
----------------- --------------------------------------------
1998
Pro
Forma(5) 1998 1997 1996 1995 1994 1993
-------- -------- -------- -------- -------- -------- --------
(unaudited)
<S> <C> <C> <C> <C> <C> <C> <C>
Balance Sheet Data:
Cash and cash
equivalents............ $ 25,064 $ 15,214 $ 30,660 $ 7,207 $ 8,322 $ 12,840 $ 5,125
Total assets............ 941,955 252,877 219,887 156,614 115,001 107,055 84,512
Long-term debt.......... 208,442 28,442 -- 55,551 40,805 41,028 56,619
Total liabilities....... 504,454 95,844 72,990 132,367 100,004 93,898 99,801
Total
partners'/stockholders'
equity................. 437,501 157,033 146,897 24,247 14,997 13,157 (15,289)
</TABLE>
- -------
(1) Pro forma to give effect to the combination of the JLW Companies, the
Transactions and the acquisition of the Compass Businesses as though they
had occurred on January 1, 1997. Adjustments, among other things, give
effect to new market-based compensation packages for certain partners of
the JLW Partnerships and certain employees of the JLW Businesses and
includes a base salary and target bonus in replacement of previously
received profits distributions and/or dividends. Reference is made to the
LaSalle Partners October 1 Current Report incorporated herein by reference
for a complete description of the pro forma presentation and related
adjustments for LaSalle Partners for the year ended December 31, 1997.
(2) Basic and diluted earnings per common share were calculated based on
earnings for the period from conversion to corporate form, July 22, 1997,
through December 31, 1997. No earnings per share have been reflected for
the periods prior to July 22, 1997.
(3) Neither any Forfeiture Shares, Indemnification Shares, ESOT Adjustment
Shares, ESOT Indemnification Shares or ESOT Shares subject to vesting
(where such ESOT Shares have been allocated from the ESOT) nor options on
LaSalle Partners Common Stock issued in connection with the acquisition of
the Compass Businesses were included in the diluted weighted average
shares outstanding for the pro forma nine months ended September 30, 1998
or for the year ended December 31, 1997 because, due to operating losses,
inclusion of such common stock equivalents would be anti-dilutive.
(4) Adjusted EBITDA represents earnings before interest expense, income taxes,
depreciation and amortization, and merger-related nonrecurring common
stock charges. Merger-related nonrecurring charges, including the
compensation expense recorded in accordance with APB Opinion No. 25
related to shares of LaSalle Partners common stock to be issued or cash
paid, if applicable, to New JLW Owners or to the ESOT and Forfeiture
Shares to be issued to the Current JLW Owners, are substantially noncash
charges incurred in connection with the Acquisition, similar to
amortization expense on intangible assets and goodwill. Management
believes that Adjusted EBITDA is useful to investors as a measure of
operating performance, cash generation and ability to service debt.
Adjusted EBITDA should not be considered as an alternative either to: (i)
earnings (determined in accordance with US GAAP); (ii) operating cash flow
(determined in accordance with US GAAP); or (iii) liquidity.
(5) Pro forma to give effect to the combination of the JLW Companies, the
Transactions and the acquisition of the Compass Businesses as though they
had occurred on September 30, 1998. The adjustments, among other things,
give effect to new market-based compensation packages for certain partners
of the JLW Partnerships and employees of the JLW Companies and includes a
base salary and target bonus in replacement of previously received profits
distributions and/or dividends.
109
<PAGE>
SELECTED FINANCIAL DATA OF THE JLW COMPANIES
Selected Financial Data--The JLW Europe Group
The following table sets forth, for the periods and as of the dates
indicated, selected financial and other data on a historical consolidated
basis of the JLW Europe Group in accordance with US GAAP. The selected
financial data as of December 31, 1997 and 1996 and for each of the years in
the three-year period ended December 31, 1997 have been derived from the
consolidated financial statements of JLW England and its subsidiaries audited
by Deloitte & Touche, independent auditors, included elsewhere herein. The
selected financial data as of December 31, 1995 have been derived from the
unaudited consolidated financial statements of JLW England and its
subsidiaries not included herein. Selected financial data as of December 31,
1994 and 1993 and for the years ended December 31, 1994 and 1993 are not
included herein because countries within the region had different year ends,
were not subject to statutory audit requirements and, therefore, did not
prepare accounts in accordance with US GAAP for those years, and did not
require a consolidation of the regional results to be performed. In certain
countries, in accordance with local document retention practices, the
financial data have not been retained. Accordingly, complete financial data
for 1993 and 1994 are not available to permit the presentation of historical
financial statements on a comparable basis for such periods. The selected
financial data as of September 30, 1998 and for the nine months ended
September 30, 1998 and 1997 have been derived from unaudited consolidated
financial statements of JLW England and its subsidiaries also included
elsewhere herein. Such financial statements include all adjustments,
consisting of normal recurring adjustments, which JLW England considers
necessary for a fair presentation of the financial position and results of
operations for these periods. Operating results for the nine months ended
September 30, 1998 are not necessarily indicative of results that may be
expected for the entire year. The information set forth below should be read
together with the "Unaudited Pro Forma Consolidated Financial Statements,"
"JLW Management's Discussion and Analysis of Financial Condition and Results
of Operations of the JLW Companies" and the financial statements and the notes
thereto of JLW England and its subsidiaries, all included elsewhere herein.
110
<PAGE>
Selected Historical Financial Data
The JLW Europe Group
(in thousands)
<TABLE>
<CAPTION>
Nine Months Ended
September 30, Year Ended December 31,
------------------ ----------------------------
1998 1997 1997 1996 1995
-------- -------- -------- -------- --------
(unaudited)
<S> <C> <C> <C> <C> <C>
Statement of Operations
Data:
Total revenue............... $227,793 $171,072 $258,982 $217,437 $196,422
Total operating expenses
(1)........................ 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
======== ======== ======== ======== ========
Other Data:
Adjusted EBITDA (2)......... $ 47,660 $ 32,976 $ 46,706 $ 38,344 $ 25,207
Cash flows provided by
operating activities....... $ 25,360 $ 31,400 $ 47,034 $ 30,964 $ 24,958
Cash flows used in investing
activities................. $ (4,947) $ (7,043) $ (8,634) $ (6,122) $ (8,859)
Cash flows used in financing
activities................. $(22,443) $(21,835) $(31,223) $(25,882) $ (9,182)
</TABLE>
<TABLE>
<CAPTION>
At December 31,
----------------------------
At September 30, 1998 1997 1996 1995
--------------------- -------- -------- ----------
(unaudited) (unaudited)
<S> <C> <C> <C> <C> <C>
Balance Sheet Data:
Cash and cash
equivalents............ $ 19,885 $ 21,242 $ 14,844 $ 14,987
Total assets............ 154,972 134,802 125,244 108,251
Long-term debt.......... -- -- -- --
Total liabilities and
minority interest...... 93,474 75,966 74,411 68,888
Total partners'
capital/stockholders'
equity................. 61,498 58,836 50,833 39,363
</TABLE>
- --------
(1) The compensation of the partners of JLW England is reflected as profit
distributions rather than included in compensation expense. Had
compensation expense been so included, net earnings would have been lower
by approximately $19.7 million, $14.0 million, and $18.6 million for the
nine months ended September 30, 1998 and 1997 and for the year ended
December 31, 1997, respectively. Estimates of comparable market
compensation amounts for the years ended December 31, 1996 and 1995 are not
available due to changes in applicable personnel and various employment
markets throughout the region and the lack of available market remuneration
data for those periods. The compensation for other senior executives of the
rest of the JLW Europe Group is included in compensation expense because
these amounts were paid as salary and bonuses.
(2) Adjusted EBITDA represents earnings before interest expense, income taxes,
depreciation and amortization, and merger-related nonrecurring charges.
Merger-related nonrecurring charges represent professional fees for legal,
advisory and financial services which are directly associated with the
Integration and the Transactions. Management believes that Adjusted EBITDA
is useful to investors as a measure of operating performance, cash
generation and ability to service debt. However, Adjusted EBITDA should not
be considered as an alternative either to: (i) earnings (determined in
accordance with US GAAP); (ii) operating cash flow (determined in
accordance with US GAAP); or (iii) liquidity.
111
<PAGE>
Selected Financial Data--The JLW Scotland Group
The following table sets forth, for the periods and as of the dates
indicated, selected financial and other data on a historical consolidated
basis of the JLW Scotland Group in accordance with US GAAP. The selected
financial data as of December 31, 1997 and 1996 and for each of the years in
the three-year period ended December 31, 1997 have been derived from the
consolidated financial statements of JLW Scotland and its subsidiary
undertaking audited by Ernst & Young, independent auditors, included elsewhere
herein. The selected financial data as of December 31, 1995 have been derived
from the consolidated financial statements of JLW Scotland and its subsidiary
undertaking not included herein. Selected financial data as of December 31,
1994 and 1993 and for the years ended December 31, 1994 and 1993 are not
included herein because the JLW Scotland Group, which previously had an April
30 year end, included a partnership which was not subject to statutory audit
requirements, did not prepare accounts in accordance with US GAAP for those
years and did not require a consolidation of the results to be performed. It
is not possible to recreate financial statements which comply with US GAAP as
of and for the years ended December 31, 1993 and 1994 as the supporting books
and records would not permit the presentation of historical financial
statements on a comparable basis for such periods. The selected financial data
as of September 30, 1998 and for the nine months ended September 30, 1998 and
1997 have been derived from unaudited consolidated financial statements of JLW
Scotland and its subsidiary undertaking also included elsewhere herein. Such
financial statements include all adjustments, consisting of normal recurring
adjustments, which JLW Scotland considers necessary for a fair presentation of
the financial position and results of operations for these periods. Operating
results for the nine months ended September 30, 1998 are not necessarily
indicative of results that may be expected for the entire year. The
information set forth below should be read together with the "Unaudited Pro
Forma Consolidated Financial Statements," "JLW Management's Discussion and
Analysis of Financial Condition and Results of Operations of the JLW
Companies," and the financial statements and the notes thereto of JLW Scotland
and its subsidiary undertaking, all included elsewhere herein.
112
<PAGE>
Selected Historical Financial Data
The JLW Scotland Group
(in thousands)
<TABLE>
<CAPTION>
Nine Months
Ended September
30, Year Ended December 31,
---------------- -------------------------
1998 1997 1997 1996 1995
------- ------- ------- ------- -------
(unaudited)
<S> <C> <C> <C> <C> <C>
Statement of Operations Data:
Total revenue.................... $ 6,783 $ 6,474 $ 9,242 $ 5,761 $ 5,018
Total operating expenses (1)..... 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
======= ======= ======= ======= =======
Other Data:
Adjusted EBITDA (2).............. $ 3,514 $ 3,945 $ 5,402 $ 2,358 $ 1,926
Cash flows provided by operating
activities...................... $ 3,347 $ 3,395 $ 4,538 $ 2,480 $ 1,626
Cash flows used in investing
activities...................... $ (464) $ (153) $ (231) $ (295) $ (172)
Cash flows used in financing
activities...................... $(2,624) $(1,847) $(2,291) $(1,590) $(1,846)
</TABLE>
<TABLE>
<CAPTION>
At At December 31,
September 30, --------------------
1998 1997 1996 1995
------------- ------ ------ ------
(unaudited)
<S> <C> <C> <C> <C>
Balance Sheet Data:
Cash and cash equivalents.................. $2,992 $2,642 $ 662 $ 18
Total assets............................... 6,894 6,111 3,137 1,972
Long-term debt............................. -- -- -- --
Total liabilities.......................... 1,675 1,447 1,041 636
Total partners' capital/stockholders'
equity.................................... 5,219 4,664 2,096 1,336
</TABLE>
- --------
(1) The compensation of the partners of the JLW Scotland Group is reflected as
profit distributions rather than included in compensation expense. Had
compensation expense been so included, net earnings would have been lower
by approximately $1.9 million, $2.2 million, and $2.9 million for the nine
months ended September 30, 1998 and 1997 and for the year ended December
31, 1997, respectively. Estimates of comparable market compensation
amounts for the years ended December 31, 1996 and 1995 are not available
due to changes in applicable personnel and various employment markets
throughout the region and the lack of available market remuneration data
for those periods.
(2) Adjusted EBITDA represents earnings before interest expense, income taxes,
depreciation and amortization, and merger-related nonrecurring charges.
Merger-related nonrecurring charges represent professional fees for legal,
advisory and financial services which are directly associated with the
Integration and the Transactions. Management believes that Adjusted EBITDA
is useful to investors as a measure of operating performance, cash
generation and ability to service debt. However, Adjusted EBITDA should
not be considered as an alternative either to: (i) earnings (determined in
accordance with US GAAP); (ii) operating cash flow (determined in
accordance with US GAAP); or (iii) liquidity.
113
<PAGE>
Selected Financial Data--The JLW Ireland Group
The following table sets forth, for the periods and as of the dates
indicated, selected financial and other data on a historical combined basis of
the JLW Ireland Group in accordance with US GAAP. The selected financial data
as of December 31, 1997 and 1996 and for each of the years in the three-year
period ended December 31, 1997 have been derived from the combined financial
statements of JLW Ireland audited by Deloitte & Touche, independent auditors,
included elsewhere herein. The selected financial data as of December 31, 1995
have been derived from the unaudited combined financial statements of JLW
Ireland not included herein. Selected financial data as of December 31, 1994
and 1993 and for the years ended December 31, 1994 and 1993 are not included
herein because, as a partnership, the JLW Ireland Group previously had an
April 30 year end, was not subject to audit requirements and therefore did not
prepare accounts in accordance with US GAAP for those years. It is not
possible to recreate financial statements which comply with US GAAP as of and
for the years ended December 31, 1993 and 1994, as the books and supporting
records of the JLW Ireland Group do not provide sufficient detail to permit
the presentation of historical financial statements on a comparable basis for
such periods. The selected financial data as of September 30, 1998 and for the
nine months ended September 30, 1998 and 1997 have been derived from unaudited
combined financial statements of JLW Ireland also included elsewhere herein.
Such financial statements include all adjustments, consisting of normal
recurring adjustments, which JLW Ireland considers necessary for a fair
presentation of the financial position and results of operations for these
periods. Operating results for the nine months ended September 30, 1998 are
not necessarily indicative of results that may be expected for the entire
year. The information set forth below should be read together with the
"Unaudited Pro Forma Consolidated Financial Statements," "JLW Management's
Discussion and Analysis of Financial Condition and Results of Operations of
the JLW Companies," and the financial statements and the notes thereto of JLW
Ireland, all included elsewhere herein.
114
<PAGE>
Selected Historical Financial Data
The JLW Ireland Group
(in thousands)
<TABLE>
<CAPTION>
Nine Months
Ended September
30, Year Ended December 31,
---------------- -------------------------
1998 1997 1997 1996 1995
------- ------- ------- ------- -------
(unaudited)
<S> <C> <C> <C> <C> <C>
Statement of Operations Data:
Total revenue.................... $ 8,701 $ 6,305 $ 9,301 $ 9,487 $ 6,953
Total operating expenses (1)..... 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
======= ======= ======= ======= =======
Other Data:
Adjusted EBITDA (2).............. $ 4,907 $ 2,728 $ 4,456 $ 4,507 $ 2,040
Cash flows provided by operating
activities...................... $ 3,730 $ 2,368 $ 3,542 $ 4,795 $ 2,358
Cash flows used in investing
activities...................... $ (52) $ (467) $ (477) $ (88) $ (392)
Cash flows used in financing
activities...................... $(2,595) $(2,401) $(3,425) $(3,568) $(1,956)
</TABLE>
<TABLE>
<CAPTION>
At December 31,
At September ------------------------
30, 1998 1997 1996 1995
------------ ------ ------ ----------
(unaudited) (unaudited)
<S> <C> <C> <C> <C>
Balance Sheet Data:
Cash and cash equivalents.............. $1,852 $ 676 $1,211 $ 17
Total assets........................... 7,785 5,228 5,562 3,725
Long-term debt......................... -- -- -- --
Total liabilities...................... 2,693 1,807 2,228 2,107
Total partners' capital/stockholders'
equity................................ 5,092 3,421 3,334 1,618
</TABLE>
- --------
(1) The compensation of the partners of the JLW Ireland Group is reflected as
profit distributions rather than included in compensation expense. Had
compensation expense been so included, net earnings would have been lower
by approximately $2.2 million, $1.8 million, and $2.4 million for the nine
months ended September 30, 1998 and 1997 and for the year ended December
31, 1997, respectively. Estimates of comparable market compensation
amounts for the years ended December 31, 1996 and 1995 are not available
due to changes in applicable personnel and various employment markets
throughout the region and the lack of available market remuneration data
for those periods.
(2) Adjusted EBITDA represents earnings before interest expense, income taxes,
depreciation and amortization, and merger-related nonrecurring charges.
Merger-related nonrecurring charges represent professional fees for legal,
advisory and financial services which are directly associated with the
Integration and the Transactions. Management believes that Adjusted EBITDA
is useful to investors as a measure of operating performance, cash
generation and ability to service debt. However, Adjusted EBITDA should
not be considered as an alternative either to: (i) earnings (determined in
accordance with US GAAP); (ii) operating cash flow (determined in
accordance with US GAAP); or (iii) liquidity.
115
<PAGE>
Selected Financial Data--The JLW Asia Group
The following table sets forth, for the periods and as of the dates
indicated, selected financial and other data on a historical consolidated
basis of the JLW Asia Group in accordance with US GAAP. The selected financial
data as of December 31, 1997 and 1996 and for each of the years in the three-
year period ended December 31, 1997 have been derived from the consolidated
financial statements of JLW Asia Holdings Limited and subsidiaries audited by
KPMG, independent auditors, included elsewhere herein. The selected financial
data as of December 31, 1995 have been derived from the consolidated financial
statements of JLW Asia Holdings Limited not included herein. Selected
financial data as of December 31, 1994 and 1993 and for the years ended
December 31, 1994 and 1993 are not included herein because countries within
the region had different year ends, did not require a consolidation of the
regional results to be performed and, in certain cases, were not subject to
statutory audit requirements and, therefore, the JLW Asia Group did not
prepare accounts in accordance with US GAAP. In certain countries, in
accordance with local document retention practices, the financial data have
not been retained. Accordingly, complete financial data for 1993 and 1994 are
not available to permit the presentation of historical financial statements on
a comparable basis for such periods. The selected financial data as of
September 30, 1998 and for the nine months ended September 30, 1998 and 1997
have been derived from unaudited consolidated financial statements of JLW Asia
Holdings Limited and subsidiaries also included elsewhere herein. Such
financial statements include all adjustments, consisting of normal recurring
adjustments, which the directors of JLW Asia Holdings Limited consider
necessary for a fair presentation of the financial position and results of
operations for these periods. Operating results for the nine months ended
September 30, 1998 are not necessarily indicative of results that may be
expected for the entire year. The information set forth below should be read
together with the "Unaudited Pro Forma Consolidated Financial Statements,"
"JLW Management's Discussion and Analysis of Financial Condition and Results
of Operations of the JLW Companies," and the JLW Asia Holdings Limited and
subsidiaries financial statements and the notes thereto, all included
elsewhere herein.
116
<PAGE>
Selected Historical Financial Data
The JLW Asia Group
(in thousands)
<TABLE>
<CAPTION>
Nine Months
Ended
September 30, Year Ended December 31,
---------------- ---------------------------
1998 1997 1997 1996 1995
------- ------- -------- ------- --------
(unaudited)
<S> <C> <C> <C> <C> <C>
Statement of Operations Data:
Total revenue.................. $41,881 $57,355 $ 76,010 $62,281 $ 59,718
Total operating expenses (1)... 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 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
======= ======= ======== ======= ========
Other Data:
Adjusted EBITDA (2)............ $ 4,523 $11,253 $ 15,399 $12,955 $ 10,678
Cash flows provided by (used
in) operating activities...... $(3,625) $10,977 $ 20,021 $ 7,347 $ 10,044
Cash flows used in investing
activities.................... $ (290) $ (272) $ (424) $(1,085) $ (142)
Cash flows used in financing
activities.................... $(1,091) $(9,313) $(17,309) $(8,286) $(13,210)
</TABLE>
<TABLE>
<CAPTION>
At December 31,
-----------------------
At September 30, 1998 1997 1996 1995
--------------------- ------- ------- -------
(unaudited)
<S> <C> <C> <C> <C>
Balance Sheet Data:
Cash and cash equivalents........ $ 3,584 $ 8,544 $ 5,730 $ 7,782
Total assets..................... 32,778 34,245 39,649 36,579
Long-term debt................... -- -- -- --
Total liabilities................ 22,146 20,613 22,363 20,991
Total stockholders' equity....... 10,632 13,632 17,286 15,588
</TABLE>
- --------
(1) The compensation for owners represents a combination of salary and bonus,
which is reflected in compensation expense. In addition, owners receive
dividends representing distributions of the JLW Asia Group's profits. Had
the portion of such dividends representing compensation been included as
compensation, net earnings would have been lower by approximately $.3
million, $5.4 million, and $7.2 million for the nine months ended
September 30, 1998 and 1997 and for the year ended December 31, 1997,
respectively. Note that the JLW Asia Group established the new market
remuneration packages effective January 1, 1998, with the exception of the
operations in Indonesia, which were not wholly owned in 1998, resulting in
a lower pro forma adjustment in 1998 as compared to the prior year
periods. Estimates of comparable market compensation amounts for the years
ended December 31, 1996 and 1995 are not available due to changes in
applicable personnel and various employment markets throughout the region
and the lack of available market remuneration data for those periods.
(2) Adjusted EBITDA represents earnings before interest expense, income taxes,
depreciation and amortization, and merger-related nonrecurring charges.
Merger-related nonrecurring charges represent professional fees for legal,
advisory and financial services which are directly associated with the
Integration and the Transactions. Management believes that Adjusted EBITDA
is useful to investors as a measure of operating performance, cash
generation and ability to service debt. However, Adjusted EBITDA should
not be considered as an alternative either to: (i) earnings (determined in
accordance with US GAAP); (ii) operating cash flow (determined in
accordance with US GAAP); or (iii) liquidity.
117
<PAGE>
Selected Financial Data--The JLW Australasia Group
The following table sets forth, for the periods and as of the dates
indicated, selected financial and other data on a historical combined basis of
the JLW Australasia Group in accordance with US GAAP. The selected financial
data as of December 31, 1997 and for each of the years in the three-year
period ended December 31, 1997 have been derived from the combined financial
statements of the JLW Australasia Group audited by Ernst & Young, independent
auditors, included elsewhere herein. The selected financial data as of
December 31, 1995 have been derived from the unaudited combined financial
statements of the JLW Australasia Group, not included herein. The selected
financial data as of September 30, 1998 and for the nine months ended
September 30, 1998 and 1997 have been derived from unaudited combined
financial statements of the JLW Australasia Group also included elsewhere
herein. Such financial statements include all adjustments, consisting of
normal recurring adjustments, which the directors of JLW Australasia Group
consider necessary for a fair presentation of the financial position and
results of operations for these periods. Operating results for the nine months
ended September 30, 1998 are not necessarily indicative of results that may be
expected for the entire year. The information set forth below should be read
together with the "Unaudited Pro Forma Consolidated Financial Statements,"
"JLW Management's Discussion and Analysis of Financial Condition and Results
of Operations of the JLW Companies," and the JLW Australasia Group financial
statements and the notes thereto, all included elsewhere herein.
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Selected Historical Financial Data
The JLW Australasia Group
(in thousands)
<TABLE>
<CAPTION>
Nine Months
Ended
September 30, Year Ended December 31,
---------------- -------------------------
1998 1997 1997 1996 1995
------- ------- ------- ------- -------
(unaudited)
<S> <C> <C> <C> <C> <C>
Statement of Operations Data:
Total revenue.................... $41,072 $44,564 $62,449 $61,604 $59,334
Total operating expenses (1)..... 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
======= ======= ======= ======= =======
Other Data:
Adjusted EBITDA (2).............. $ 5,210 $ 5,404 $10,672 $ 6,669 $ 3,357
Cash flows provided by (used in)
operating activities............ $(1,555) $ 6,258 $ 9,269 $ 5,329 $(1,837)
Cash flows provided by (used in)
investing activities............ $ 202 $ (268) $ (663) $ (678) $(1,579)
Cash flows provided by (used in)
financing activities............ $(2,366) $(8,933) $(7,830) $(1,708) $ (141)
</TABLE>
<TABLE>
<CAPTION>
At December 31,
---------------------------
At September 30, 1998 1997 1996 1995
--------------------- ------- ------- -----------
(unaudited) (unaudited)
<S> <C> <C> <C> <C> <C>
Balance Sheet Data:
Cash and cash
equivalents............ $ -- $ 3,719 $ 2,943 $ --
Total assets............ 18,856 20,940 23,475 22,603
Long-term debt.......... -- -- -- --
Total liabilities....... 13,616 15,330 17,486 18,970
Total partners'
capital/stockholders'
equity................. 5,240 5,610 5,989 3,633
</TABLE>
- --------
(1) The compensation for owners and senior executives represents a combination
of salary, benefits and (in the case of senior executives) profit share,
which are reflected in compensation expense. In addition, owners receive
dividends representing distributions of the group's profits. Had the
portion of such dividends representing compensation been included as
compensation, net earnings would have been lower by approximately $.7
million, $3.2 million, and $4.2 million for the nine months ended
September 30, 1998 and 1997 and for the year ended December 31, 1997,
respectively. Note that the JLW Australasia Group established the new
market remuneration packages effective January 1, 1998, with the exception
of discretionary bonus, resulting in a lower pro forma adjustment for 1998
as compared to the prior year periods. Estimates of comparable market
compensation amounts for the years ended December 31, 1996 and 1995 are
not available due to changes in applicable personnel and various
employment markets throughout the region and the lack of available market
remuneration data for those periods.
(2) Adjusted EBITDA represents earnings before interest expense, income taxes,
depreciation and amortization, and merger-related nonrecurring charges.
Merger-related nonrecurring charges represent professional fees for legal,
advisory and financial services which are directly associated with the
Integration and the Transactions. Management believes that Adjusted EBITDA
is useful to investors as a measure of operating performance, cash
generation and ability to service debt. However, Adjusted EBITDA should
not be considered as an alternative either to: (i) earnings (determined in
accordance with US GAAP); (ii) operating cash flow (determined in
accordance with US GAAP); or (iii) liquidity.
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<PAGE>
JLW MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF
OPERATIONS OF THE JLW COMPANIES
THE JLW COMPANIES--OVERVIEW
General
The JLW Companies operate their businesses in four distinct geographical
Regions: Europe, Asia, Australasia and North America. However, substantially
independent ownership structures exist among and within the Regions. As a
result of these separate ownership groups, historical financial reporting has
been presented for each group: 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. In
order to coordinate the worldwide activities of the JLW Companies and ensure
consistent standards of service across regions despite having different owners
in each Region, in 1997 the JLW Companies formed the International Board.
Prior to the formation of the International Board, similar functions were
filled by a committee comprised of representatives of the JLW Companies. See
"The Transactions--Description of the Transactions" for a chart which shows
the ownership structure of the JLW Companies and the Regions.
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
Transactions 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 of the JLW Companies, the JLW Companies have
incurred charges related to financial and legal services, including
structuring advice and shareholder documentation. In addition, as a result of
the Transactions, the JLW Companies have incurred charges related to legal,
financial and advisory services, including, but not limited to, legal reviews,
fairness opinions, due diligence services and audit and financial statement
reviews. For the nine months ended September 30, 1998, the JLW Companies
incurred charges of $15.3 million (including $0.3 million charged to the
Transact Companies which are accounted for under the equity method of
accounting) related to these professional services. Such charges have been
allocated among the Regions based on the allocation used to divide the equity
ownership of the JLW Companies among the Regions as part of the Integration.
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
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<PAGE>
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 Proxy Statement 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 conversion to the Euro is not expected to have a material
impact on the revenues, expenses or net income of the JLW Companies. Due to
the nature of the services provided by the JLW Companies, the conversion to
the Euro is also not expected to have material competitive or pricing
implications to the operations of the JLW Companies nor does management
believe that significant or material contracts exist which will be adversely
affected by the introduction of the Euro. Although no assurance can be given,
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" is the result of computer programs and systems having
been designed and developed to use two digits, rather than four, to define the
applicable year. Therefore, these computer programs and systems may recognize
a date using "00" as the year 1900 rather than the year 2000. This could
result in system failure or miscalculations causing disruptions of operations,
including among other things, temporary inability to process transactions, pay
invoices or engage in similar normal business activities. In recognition of
the importance of computer programs and systems to the JLW Companies,
procedures have been introduced on a global and local basis to ensure that the
systems are substantially Year 2000 compliant.
On a global basis, the JLW Companies have implemented the "JLW Office for
the Year 2000" program, which is managed by a senior executive from the JLW
Europe Group. The program is dedicated to managing the global compliance
process for initial awareness and risk assessment phases through the
renovation, validation and implementation phases. On a local basis, the JLW
Companies in each country have been responsible for managing their own
information technology ("IT") requirements and for the implementation of
policies and procedures to ensure that IT systems will be Year 2000 compliant.
The JLW Companies, both locally and on a global basis, have substantially
completed the awareness and risk assessment phase of the program.
In conducting the assessment phase, the JLW Companies have identified those
elements of their systems which require renovation or replacement. The IT risk
assessment reveals that within the JLW Companies there are a total of 206
software applications of which 47 are categorized as business critical. Of
these critical systems, the global IT risks assessment exercise has found nine
software applications to be "non Year 2000 compliant."
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<PAGE>
As a result of the JLW Companies' existing strategy of performing regular
system upgrades and replacements to meet the evolving needs of the business,
the JLW Companies in each country anticipate having completed implementation
of Year 2000 compliant systems for critical business systems, data
communications and telecommunication equipment by mid-year 1999.
The JLW Companies anticipate total costs relating to the programs and phases
previously described to be approximately $1.3 million. Of these costs, $1.2
million are operating expenses, including $0.5 million associated with the
administration of the "JLW Office for the Year 2000" program and $0.7 million
to upgrade accounting systems, testing and other matters. The remaining costs
include $0.1 million of capital expenditures, primarily representing upgrades
which provide operational benefits above and beyond Year 2000.
The ability of third parties with whom the JLW Companies transact business
to address their Year 2000 issues is beyond the JLW Companies' control. 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. At this time, the JLW Companies are in the process of
reviewing the Year 2000 compliance of its major suppliers.
Based upon an assessment of the risks involved, personnel have also been
appointed (in connection with the Year 2000 program) to oversee Year 2000
compliance activity with respect to management of client properties, in
addition to the JLW Companies' own facilities. Subject to landlord agreement,
each JLW Company office which manages property has therefore drafted plans to
undertake initial risk assessments and Year 2000 impact audits of managed
properties. These assessments are being carried out by JLW staff and outside
engineers as necessary.
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.
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
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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."
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."
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<PAGE>
RESULTS OF OPERATIONS
The information below is presented in accordance with US GAAP.
The JLW Europe Group
<TABLE>
<CAPTION>
Nine Months Ended
September 30, Year Ended December 31,
----------------- --------------------------
1998 1997 1997 1996 1995
-------- -------- -------- -------- --------
(in thousands)
<S> <C> <C> <C> <C> <C>
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
======== ======== ======== ======== ========
</TABLE>
- --------
(1) Operating expenses for the nine months ended September 30, 1998 include
costs related to the Integration and the Transactions totaling $8.3
million.
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 active
property investment and leasing markets in which JLW Europe operates as well
as 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
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<PAGE>
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. Also, the increase in revenues was attributable to the
acquisition of new business from major English and overseas institutional and
development company clients and an increase in utilization of its retail
management services. JLW England was successful in expanding acquisition and
sales business throughout the United Kingdom for local and international
occupiers and real estate investors. Retail, residential and industrial
activities in particular were expanded. JLW England also invested increased
funds for its pension fund clients, increased merger and acquisition services
and increased the number of its consulting assignments. JLW England now has an
increased client base and quality staff in position to expand property
services to its client base in the future.
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 and more active property markets in most of
continental Europe. In particular, the property investment markets in France,
Holland and Spain was positively impacted by an increase in acquisition
activity by domestic and foreign investors which was driven by expectations of
retail growth and lower interest rates.
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.
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%.
125
<PAGE>
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. JLW England
expanded its staff particularly in the property management area, to service
additional management contracts obtained from companies outsourcing their
property management operations and to expand services offered to the
residential, industrial and retail sectors. Staff providing Pan European
services to international investors and multi-national occupiers of real
estate in Europe were also increased to meet client requirements.
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. This decrease is largely as a result of a higher proportion of
transactions completed during the nine months ended September 30, 1998
compared to 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.
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 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.
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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
primarily due to the strength of certain property investment and leasing
markets, particularly in England, Spain and North America, as well as 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. During 1997, JLW England benefited from a
reorganization of its operations by refocusing resources and employees with
specific skills to expand business with tenants, investors and property
company clients. JLW England was also successful in expanding the volume of
sales, acquisition and leasing activities for domestic and international
owners, investors and tenants across all commercial real estate sectors in
Europe.
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.
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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 & Co., 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
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. JLW England increased information technology expenditures by
expanding the use of network computers to all staff and investing in a new
property management system. These expenditures enabled JLW England to operate
more efficiently through improved work processes. The investment and leasing
groups operating across geographic borders were expanded in response to
increased client needs positioning JLW Europe to service an increased client
base of cross border investors and multi-national companies operating in
Europe. JLW England's allocation of these costs increased accordingly.
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.
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%,
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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%. Continued improvements in the
English property market compared to Continental Europe and North America was
greater in 1997 than 1996 resulting in the increased operating income of JLW
England.
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 gradually recovering property markets as well as 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%.
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.
JLW England increased revenues by expanding services offered to United Kingdom
clients by opening a new office in Manchester and expanding its offices in
Leeds and Birmingham (which had been opened the previous year). JLW England
also expanded services offered to the retail, corporate real estate and public
sectors.
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
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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. Cost increases were
carefully controlled and efficiencies were achieved by revising working
processes and increased use of information technology systems.
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.
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)%.
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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.
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.
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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. The JLW Europe Group has total credit facilities of $33.1
million of which $11.8 million was outstanding at September 30, 1998. At
September 30, 1998, there were no long term debt obligations. JLW Europe
expects the existing credit facilities to be sufficient to meet its short term
operating requirements.
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.
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."
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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 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.
The JLW Scotland Group
<TABLE>
<CAPTION>
Nine Months
Ended Year Ended December
September 30, 31,
------------- --------------------
1998 1997 1997 1996 1995
------ ------ ------ ------ ------
(in thousands)
<S> <C> <C> <C> <C> <C>
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
====== ====== ====== ====== ======
</TABLE>
- --------
(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.
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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.
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.
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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.
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. At year
end 1995, the JLW Scotland Group had nominal borrowings of $50,000. These
borrowings were held on a short term basis only, and, at all times since, the
JLW Scotland Group has maintained a positive net cash position.
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.
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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 with the Clydesdale Bank PLC. This facility is due for renewal on
June 8, 1999 and bears interest at 2% over the Bank's Base Rate, subject to a
minimum rate of 6% per annum. Borrowings in excess of the agreed facility bear
interest at 5% per annum over the Bank's Base Rate, subject to a minimum rate
of 9% per annum.
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.
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.
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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.
The JLW Ireland Group
<TABLE>
<CAPTION>
Nine Months
Ended Year Ended December
September 30, 31,
------------- --------------------
1998 1997 1997 1996 1995
------ ------ ------ ------ ------
(in thousands)
<S> <C> <C> <C> <C> <C>
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
====== ====== ====== ====== ======
</TABLE>
- --------
(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.
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<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.
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<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.
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
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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%.
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.
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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 herein 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.
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.
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<PAGE>
The information below is presented in accordance with US GAAP.
RESULTS OF OPERATIONS
The JLW Asia Group
<TABLE>
<CAPTION>
Nine Months
Ended September
30, Year Ended December 31,
---------------- -----------------------
1998 1997 1997 1996 1995
------- ------- ------- ------- -------
(in thousands)
<S> <C> <C> <C> <C> <C>
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
======= ======= ======= ======= =======
</TABLE>
- --------
(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.
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. Declining prices, high interest rates and tight bank
liquidity led to significantly reduced sales and leasing volume, which led to
lower commission and other transactional based revenue. The hardest hit was
the investment market where sales commissions decreased by $2.8 million.
Office rents declined over the period and falling demand as a result of the
economic slow down caused office leasing revenue to drop by $4.5 million.
Retail leasing dropped by $1.2 million, reflecting the weak consumer market.
Offsetting these declines, were increased revenues related to janitorial
projects associated with the new Hong Kong international airport by $1.4
million and added facility management assignments resulting in an increase in
revenue of $1.1 million.
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<PAGE>
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. There was a significant decline in
foreign investor interest in real estate in Singapore leading to a $4.2
million decrease in commission revenue from investment property sales and
acquisitions. Another area affected by the Asian Crisis was the residential
market where revenue was down by $0.5 million as a result of declining prices
and transactions.
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.
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).
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<PAGE>
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. Investment sales and acquisition commissions increased
$1.6 million. In early 1997, the Hong Kong office concluded the sale of the
Hong Kong Marriott Hotel, its biggest hotel transaction ever, contributing
$1.5 million to revenue. Two retail outlets dealing with luxury residential
properties were opened in the same year, adding over $1.0 million to the
office's revenue. Facility management capabilities were also introduced during
1997. The property management portfolio continued to expand, from 206
buildings covering 38.2 million square feet in 1996 to 214 buildings covering
40.9 million square feet in 1997, which resulted in increased revenue of $1.5
million over 1996.
Operating revenue in Singapore increased by $0.5 million, or 3.1%, to $16.6
million in 1997 from $16.1 million in 1996. The 1997 results 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 currency also caused a degree of uncertainty in the
market and negatively impacted business volume. As a result, commissions from
acquisitions of overseas properties decreased by $0.6 million. Fewer
residential projects were launched for sales by the developers in 1997,
leading to a reduction of $1.7 million in revenue in this area of business.
Two significant investment sales concluded in 1997 were primarily responsible
for a $4.1 million increase in commission income over 1996.
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
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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.
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.
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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. The number of buildings under management increased from
164 to 206 or from 32.5 million square feet to 38.2 million square feet
between 1995 and 1996 which led to a $0.7 million increase in revenue.
Cleaning contracts related to property management services had a full year of
activity in 1996 increasing revenue by $0.9 million.
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. Fewer
residential properties were available for sale and, as a result, commissions
from residential sales decreased by $0.9 million from 1995. Additionally, fees
from investment sales increased by $0.6 million.
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.
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.
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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.
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.
The JLW Asia Group had short-term credit facilities of $5.0 million of which
$2.3 million was outstanding at September 30, 1998. The facilities are
renewable annually and bear variable rates of interest based on a spread
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of 1% over the best lending rate available in the local market. At September
30, 1998, the JLW Asia Group had a liability to its retired owners of $5.7
million, which it intends to fund prior to Closing using a combination of
operating cash flow, short term borrowings from other regions and existing
credit facilities. Over the long term, as a result of the change in ownership
structure, the JLW Asia Group is expected to retain a larger percentage of its
cash generated from operations such that capital expenditure is expected to be
financed from operations with the remainder sourced from longer-term
borrowings as needed.
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.
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
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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.
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.
The JLW Australasia Group
<TABLE>
<CAPTION>
Nine Months
Ended September
30, Year Ended December 31,
--------------- -----------------------
1998 1997 1997 1996 1995
------- ------- ------- ------- -------
(in thousands)
<S> <C> <C> <C> <C> <C>
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
======= ======= ======= ======= =======
</TABLE>
- --------
(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.
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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 government
development project in Victoria. This development project accounted for 59.8%
of the increase in operating revenue in local currency over the prior year
period. 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.
The overall economic environment in 1998 remained relatively unchanged for
Australia's commercial real estate markets, with low inflation, low interest
rates and a high level of economic growth. Facility management outsourcing
continued to grow, particularly with the major banks and some government
departments.
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-
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taxable dividends received from JLW Singapore in the nine months ended
September 30, 1997 compared to no dividends received in the nine months ended
September 30, 1998.
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 the
positive economic outlook for Australia as inflation continued to be one of the
lowest of all developed industrial countries in 1997 and a continuation of
improving real estate markets resulted in increased development activity,
particularly in the industrial markets. An increase in companies moving toward
outsourcing their facility management functions resulted in increased
facilities management assignments in the property management markets,
particularly in the Government Sector, contributed to a 23.1% increase in
income in the corporate property management division. In addition, low levels
of construction activity combined with continuing demand for office space
helped reduce vacancy rates in most markets and stimulated rental growth
thereby positively impacting lease renewal income in corporate property
management and adversely impacting the office leasing division. The investment
markets continued to be strong in terms of sales volume resulting in higher
volumes of investment sales and property management assignments. Furthermore,
with the continued strength of the shopping center management portfolio and the
investment markets, income from sales of shopping centers increased by 47.4%.
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.
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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.
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. In addition, the office leasing market
maintained a positive balance of overall demand, with virtually no new supply
to the market. This allowed vacancy rates to continue to decline while rental
values slightly increased towards the end of 1996, thereby contributing to an
increase in the property management lease renewal income.
Demand for industrial real estate was stable. Restructuring of the shopping
center division's management and a stronger business focus from a state to
national operation contributed to a 10% increase in retail property management
income and a 25% increase in retail sales and leasing income. This
restructuring resulted in the JLW Companies in Australia being much more
competitive in obtaining new business assignments. The JLW Companies in
Australia also continued its successful strategy of becoming one of the
leading shopping center managers. Furthermore, this restructuring contributed
to a stronger management portfolio and reputation as one of the leading
shopping center specialists.
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.
152
<PAGE>
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 in the
short-term 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.
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 in the
short-term 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.
153
<PAGE>
As of September 30, 1998, the JLW Australasia Group banking facilities
included credit facilities, guarantees and finance leasing lines aggregating
$7.0 million. All facilities are cross collateralized and secured by
substantially all the assets of the JLW Australasia Group. The facilities are
subject to certain financial and operating covenants and generally bear
interest at market rates.
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 $2.4 million of borrowings were repaid. In 1995, in
order to finance its operations, the JLW Australasia Group utilised 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.
154
<PAGE>
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL
OWNERS AND MANAGEMENT OF LASALLE PARTNERS
The following table sets forth certain information concerning the beneficial
ownership of LaSalle Partners common stock, which are the only outstanding
voting securities and equity securities of LaSalle Partners, as of January 25,
1999 (except where otherwise noted), by: (i) each director of LaSalle
Partners; (ii) each of the executive officers of LaSalle Partners named in the
Summary Compensation Table in LaSalle Partners' Proxy Statement for its 1998
Annual Meeting of Stockholders; (iii) the directors and executive officers of
LaSalle Partners as a group; and (iv) each person who is known to LaSalle
Partners to have been the beneficial owner of more than five percent of
LaSalle Partners common stock. Unless otherwise indicated in the footnotes,
all of such interests are owned directly, and the indicated person or entity
has sole voting and dispositive power.
<TABLE>
<CAPTION>
Percentage of Percentage of
Number of Outstanding Outstanding
Shares of Shares Before Shares After
Common Stock Giving Effect Giving Effect
Beneficially to the to the
Name and Address (1) Owned Acquisition Acquisition (2)
-------------------- ------------ ------------- ---------------
<S> <C> <C> <C>
The Dai-ichi Mutual Life Insurance
Company (3)....................... 2,199,162 13.5% 7.2%
Lizanne Galbreath (4).............. 1,187,278 7.3% 3.9%
Stuart L. Scott (5)(6)............. 767,649 4.7% 2.5%
Robert C. Spoerri (5)(7)........... 567,540 3.5% 1.9%
William E. Sullivan (5)(8)......... 114,832 * *
Daniel W. Cummings (5)(9).......... 210,797 1.3% *
Charles K. Esler (5)(10)........... 206,743 1.3% *
M.G. Rose (5)(11).................. 447,879 2.8% 1.5%
Lynn C. Thurber (5)(12)............ 161,269 1.0% *
Earl E. Webb (5)(13)............... 135,911 * *
Darry L. Hartley-Leonard (14)...... 18,077 * *
Thomas C. Theobald (15)............ 23,947 * *
John R. Walter (16)................ 25,577 * *
All directors and executive
officers as a group (11 persons)
(17).............................. 2,372,479 16.4% 8.8%
</TABLE>
- --------
*Less than 1%.
(1) Unless otherwise indicated, the address of each person or entity is c/o
LaSalle Partners Incorporated, 200 East Randolph Drive, Chicago, Illinois
60601.
(2) Assumes that 30,518,292 shares of LaSalle Partners common stock will be
outstanding following consummation of the Acquisition, based on the
16,264,176 shares of LaSalle Partners common stock outstanding as of
January 25, 1999 and an aggregate of 14,254,116 shares of LaSalle Partners
common stock to be issued to the JLW Shareholders and the ESOT.
(3) Information with respect to beneficial ownership of The Dai-ichi Mutual
Life Insurance Company is included herein in reliance on a Schedule 13G,
dated February 10, 1998, filed with the SEC reporting ownership as of
December 31, 1997. According to the Schedule 13G, The Dai-ichi Mutual Life
Insurance Company owns 100% of the outstanding shares of capital stock of
Dai-ichi Life Property Holdings, Inc., which in turn owns 100% of the
outstanding shares of capital stock of Dai-ichi Life Investment
Properties, Inc., which in turn owns 100% of the outstanding shares of
capital stock of DSA-LSPL, Inc. and DSA-LSAM, Inc. DSA-LSPL, Inc. owns
directly 1,869,288 shares of LaSalle Partners common stock, and DSA-LSAM,
Inc. owns directly 329,874 shares of LaSalle Partners common stock. The
address of The Dai-ichi Mutual Life Insurance Company is 13-1 Yurakucho,
1-chome, Tokyo, Japan 100.
(4) Ms. Galbreath holds 399,790 shares of LaSalle Partners common stock
directly. The 1,168,528 shares reported in the table above consist of the
shares of LaSalle Partners common stock she owns directly, the 475,000
shares of LaSalle Partners common stock owned by Galbreath Holdings, LLC,
the 293,738 shares of LaSalle Partners common stock held by Lizanne
Galbreath, and her successors in trust, as Trustee of the 1997 Grantor
Retained Annuity Trust created by Lizanne Galbreath Megrue, dated June 18,
1997, and the 18,750 shares which Ms. Galbreath had the right to acquire
through stock options granted under the 1997 Plan exercisable within 60
days of January 25, 1999. Ms. Galbreath owns, either directly or through a
trust, a 45.0% interest in, and is the managing member of, Galbreath
Holdings, LLC. Because Ms. Galbreath is the managing member of Galbreath
Holdings, LLC, Ms. Galbreath might be deemed to be the beneficial owner of
all shares of LaSalle Partners common stock owned by Galbreath Holdings,
LLC for purposes of Rule 13d-3 of the Exchange Act. Ms. Galbreath
disclaims beneficial ownership of such shares of LaSalle Partners common
stock, except to the extent of her ownership interests in Galbreath
Holdings, LLC. The address of Galbreath Holdings, LLC is 180 East Broad
Street, Columbus, Ohio 43215.
- --------
(footnotes continued on following page)
155
<PAGE>
(5) Shares are owned directly and by corporations of which the reporting
person is the sole stockholder.
(6) Includes 56,250 shares which Mr. Scott had the right to acquire through
stock options granted under the 1997 Plan exercisable within 60 days of
January 25, 1999.
(7) Incudes 56,250 shares which Mr. Spoerri had the right to acquire through
stock options granted under the 1997 Plan exercisable within 60 days of
January 25, 1999.
(8) Includes 37,500 shares which Mr. Sullivan had the right to acquire
through stock options granted under the 1997 Plan exercisable within 60
days of January 25, 1999. Children of Mr. Sullivan own 400 shares of
LaSalle Partners common stock. Mr. Sullivan disclaims beneficial
ownership of the shares of LaSalle Partners common stock owned by his
children.
(9) Includes 28,125 shares which Mr. Cummings had the right to acquire
through stock options granted under the 1997 Plan exercisable within 60
days of January 25, 1999.
(10) Includes 28,125 shares which Mr. Esler had the right to acquire through
stock options granted under the 1997 Plan exercisable within 60 days of
January 25, 1999.
(11) Includes 28,125 shares which Mr. Rose had the right to acquire through
stock options granted under the 1997 Plan exercisable within 60 days of
January 25, 1999.
(12) Includes 28,125 shares which Ms. Thurber had the right to acquire through
stock options granted under the 1997 Plan exercisable within 60 days of
January 25, 1999.
(13) Includes 37,500 shares which Mr. Webb had the right to acquire through
stock options granted under the 1997 Plan exercisable within 60 days of
January 25, 1999.
(14) Mr. Hartley-Leonard holds 5,000 shares of LaSalle Partners common stock
directly and 12,077 shares of LaSalle Partners common stock through an
IRA trust. The shares shown also include 1,000 shares which Mr. Hartley-
Leonard had the right to acquire through stock options granted under the
1997 Plan exercisable within 60 days of January 25, 1999.
(15) Includes 1,000 shares which Mr. Theobald had the right to acquire through
stock options granted under the 1997 Plan exercisable within 60 days of
January 25, 1999.
(16) Mr. Walter holds 24,577 shares of LaSalle Partners common stock as
trustee of a trust for the benefit of himself, his spouse and others. The
shares shown also include 1,000 shares which Mr. Walter had the right to
acquire through stock options granted under the 1997 Plan exercisable
within 60 days of January 25, 1999.
(17) See footnotes (5) through (16) above.
156
<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.
<TABLE>
<CAPTION>
Nine Months Year
Ended Ended
September 30, December 31,
1998 1997
------------- ------------
<S> <C> <C>
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)........................................ $(6.68) $(11.68)
====== =======
Diluted (10)..................................... $(6.68) $(11.68)
====== =======
</TABLE>
- --------
(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.
(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.
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<PAGE>
(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 7,743,130 and 7,581,904 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.
<TABLE>
<CAPTION>
September 30, December 31,
1998 1997
------------- ------------
<S> <C> <C>
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).................. $21.88 N/A
======
</TABLE>
- --------
(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 and
allocated from the ESOT at Closing 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 12,820,252 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 consideration 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.
158
<PAGE>
MARKET PRICE AND DIVIDEND INFORMATION
LaSalle Partners common stock is listed for trading on the NYSE under the
symbol "LAP." As of September 30, 1998, there were approximately 3,000
beneficial holders of LaSalle Partners common stock. Trading of LaSalle
Partners common stock began on July 17, 1997. The following table sets forth
the high and low sales prices of LaSalle Partners common stock as reported on
the NYSE composite tape for the quarters indicated.
<TABLE>
<CAPTION>
High Low
------ ------
<S> <C> <C>
Fiscal year ended December 31, 1997:
Third Quarter (July 17 through September 30)................... $36.69 $27.13
Fourth Quarter................................................. $38.56 $28.50
Fiscal year ending December 31, 1998:
First Quarter.................................................. $36.44 $30.50
Second Quarter................................................. $48.00 $31.38
Third Quarter.................................................. $44.50 $32.69
Fourth Quarter................................................. $32.69 $21.94
Fiscal year ending December 31, 1999:
First Quarter (through February 3, 1999 )...................... $32.38 $31.13
</TABLE>
LaSalle Partners has not paid cash dividends on the LaSalle Partners common
stock to date. LaSalle Partners expects to retain its earnings to support the
expansion of its business and, therefore, not to pay cash dividends for the
foreseeable future. Any payment of future dividends and the amounts thereof
will be at the discretion of the Jones Lang LaSalle board of directors and
will depend upon Jones Lang LaSalle's financial condition, earnings and other
factors deemed relevant by the Jones Lang LaSalle board of directors.
There is no public trading market, United States or foreign, for any
securities of the JLW Companies.
159
<PAGE>
AMENDMENT TO THE ARTICLES OF AMENDMENT
AND RESTATEMENT OF LASALLE PARTNERS
Under the terms of the Purchase Agreements, the consummation of the
Acquisition is conditioned upon LaSalle Partners changing its name to "Jones
Lang LaSalle Incorporated." In order to change its name, LaSalle Partners must
amend its corporate charter. Accordingly, the LaSalle Partners board of
directors proposes to change the name of LaSalle Partners to "Jones Lang
LaSalle Incorporated" if the Share Issuance is approved and the Acquisition is
consummated. Approval of the Charter Amendment requires the affirmative vote
of the holders of a majority of the shares of LaSalle Partners common stock
outstanding on the Record Date.
The LaSalle Partners board of directors believes that the name "Jones Lang
LaSalle Incorporated" will more accurately reflect the combined company upon
consummation of the Acquisition.
The LaSalle Partners board of directors recommends that you vote FOR
approval of the Charter Amendment.
AMENDMENT TO 1997 STOCK AWARD AND INCENTIVE PLAN
In order to promote the success of LaSalle Partners' business in the best
interests of its stockholders by providing incentives to those individuals who
are or will be responsible for such success, LaSalle Partners adopted the 1997
Plan in connection with the initial public offering of the LaSalle Partners
common stock. In December, 1997, the LaSalle Partners board of directors
amended the plan to provide for elective options to be paid to non-employee
directors in lieu of other compensation.
The 1997 Plan provides for the granting of stock options ("Options"),
including "incentive stock options" ("ISOs") within the meaning of Section 422
of the Internal Revenue Code of 1986, as amended (the "Code") and non-
qualified stock options ("NQSOs"). Options granted under the 1997 Plan may be
accompanied by stock appreciation rights ("SARs") or limited stock
appreciation rights ("Limited SARs"), or both ("Rights"). Rights may also be
granted independently of Options. The 1997 Plan also provides for the granting
of restricted stock ("Restricted Stock") and restricted stock units
("Restricted Stock Units"), dividend equivalents ("Dividend Equivalents"),
performance shares and other stock- and cash-based awards ("Performance
Awards").
Under the terms of the Purchase Agreements, the consummation of the
Acquisition is conditioned upon the increase in common stock authorized under
the 1997 Plan to 4,160,000 from 2,215,000 shares being approved by LaSalle
Partners stockholders. Accordingly, the LaSalle Partners board of directors
has approved the Stock Plan Amendment to increase the number of shares of
LaSalle Partners common stock authorized for granting of awards thereunder
from 2,215,000 to 4,160,000 shares. As of January 29, 1999, options to acquire
and stock bonuses covering approximately 1,756,037 shares of LaSalle Partners
common stock had been granted under the 1997 Plan and 458,963 shares of
LaSalle Partners common stock remained available for future awards. LaSalle
Partners currently has approximately 16,264,176 shares outstanding, and if the
Share Issuance is approved and the Transactions are consummated, will have
approximately 30,518,292 shares outstanding. During the period from June 30,
1998 to the third anniversary of the Closing Date, to the extent that LaSalle
Partners issues or grants stock options to its employees employed prior to
June 30, 1998, it will be obligated to issue or grant an equivalent number of
stock options to employees of Jones Lang LaSalle or any subsidiary thereof who
were employees of the JLW Companies immediately prior to the Closing Date. See
"The Purchase Agreements--Stock Options." LaSalle Partners relies on the use
of equity awards to attract and retain qualified personnel with the abilities
to further its growth. LaSalle Partners believes that the continued use of
stock options is an important means of providing appropriate incentives to
employees of Jones Lang LaSalle who are necessary for the future success of
Jones Lang LaSalle and for the realization of the potential benefits of the
Acquisition. As a result of its growth, including through the Acquisition and
the acquisition of the Compass Businesses, LaSalle Partners believes that
additional shares will be needed for issuance under the 1997 Plan.
Accordingly, the LaSalle Partners board of directors recommends approval of
the Stock Plan Amendment.
Grants may be made to any non-employee director, employee or any independent
contractor of LaSalle Partners or its direct and indirect subsidiaries and
affiliates who is determined by the compensation committee of
160
<PAGE>
the LaSalle Partners board of directors (the "Compensation Committee") to be
eligible for participation, consistent with the purpose of the 1997 Plan;
provided that ISOs may only be granted to employees of LaSalle Partners and
its subsidiaries. The Compensation Committee is currently comprised of Thomas
C. Theobald and John R. Walter. Following the Closing, the Compensation
Committee will be composed of an equal number of LaSalle Partners Independent
Directors and JLW Independent Directors. Subject to the terms of the 1997
Plan, the Compensation Committee has the right to grant awards to eligible
recipients and to determine the terms and conditions of agreements governing
awards ("Award Agreements"), including the vesting schedule and exercise price
of such awards, and the effect, if any, of a change in control of LaSalle
Partners on such awards.
Options will vest and become exercisable over the exercise period, at such
times and upon such conditions, including amount and manner of payment of the
exercise price, as the Compensation Committee determines and sets forth in the
Award Agreement. The Compensation Committee may accelerate the exercisability
of any outstanding Option at such time and under such circumstances as it
deems appropriate. Options that are not exercised within 10 years from the
date of grant, however, will expire without value. Options are exercisable
during the optionee's lifetime only by the optionee. The Award Agreements
contain provisions regarding the exercise of Options following termination of
employment with or service to LaSalle Partners, including terminations due to
the death, disability or retirement of an award recipient.
Future grants to be made under the 1997 Plan will be authorized by the
Compensation Committee in its sole discretion. For this reason, it is not
possible to determine the benefits or amounts that will be received by any
particular employees or group of employees in the future.
Federal Income Tax Consequences.
Set forth below is a discussion of the principal United States federal
income tax consequences of Options (including ISOs and NQSOs), SARs Limited
SARs, Restricted Stock, Restricted Stock Units, Dividend Equivalents and
Performance Awards that may be granted pursuant to the 1997 Plan. This
discussion is based on an analysis of the Code as currently in effect,
existing laws, judicial decisions, administrative rulings and regulations, and
proposed regulations, all of which are subject to change.
Options
ISOs. No taxable income will be realized by an option holder upon the grant
or exercise of an ISO. If shares are issued to an option holder pursuant to
the exercise of an ISO granted under the 1997 Plan and if a disqualifying
disposition of such shares is not made by such option holder (i.e., no
disposition is made within two years after the date of grant or within one
year after the receipt of such shares by such option holder), then (i) upon
sale of such shares, any amount realized in excess of the exercise price of
the ISO will be taxed to such option holder as a long-term capital gain and
any loss sustained will be a long-term capital loss and (ii) no deduction will
be allowed to LaSalle Partners. However, if shares acquired upon the exercise
of an ISO are disposed of prior to the expiration of either holding period
described above, generally (x) the option holder will realize ordinary income
in the year of disposition in an amount equal to the excess (if any) of the
fair market value of the shares at the time of exercise (or, if less, the
amount realized on the disposition of the shares), over the exercise price
thereof, and (y) LaSalle Partners will be entitled to deduct an amount equal
to such income. Any additional gain recognized by the option holder upon a
disposition of such shares prior to the expiration of the holding period
described above will be taxed as a short-term or long-term capital gain, as
the case may be, and will not result in any deduction by LaSalle Partners.
If an ISO is exercised at a time when it no longer qualifies as an ISO, such
option will be treated as a NQSO. Subject to certain exceptions, an ISO
generally will not be eligible for the federal income tax treatment described
above if it is exercised more than three months following termination of
employment.
NQSOs. In general, a grantee will not be subject to tax at the time a NQSO
is granted. Upon exercise of a NQSO where the exercise price is paid in cash,
the grantee generally must include in ordinary income at the time of exercise
an amount equal to the excess, if any, of the fair market value of the LaSalle
Partners common stock at the time of exercise over the exercise price, and
will have a tax basis in such shares equal to the cash paid upon exercise plus
the amount taxable as ordinary income to the grantee.
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LaSalle Partners generally will be entitled to a deduction in the amount of
a grantee's ordinary income at the time such income is recognized by the
grantee upon the exercise of a NQSO. Income and payroll taxes are required to
be withheld on the amount of ordinary income resulting from the exercise of a
NQSO.
SARs and Limited SARs
A grant of SARs or Limited SARs has no federal income tax consequences at
the time of such grant. Upon the exercise of SARs or Limited SARs (other than
a free standing right that is a Limited SAR), the amount of any cash and the
fair market value as of the date of exercise of any shares of the LaSalle
Partners common stock received is taxable to the grantee as ordinary income.
With respect to a free standing right that is a Limited SAR, however, a
grantee should be required to include as taxable income on the date of a
change in control an amount equal to the amount of cash that could be received
upon the exercise of the Limited SAR, even if the Limited SAR is not exercised
until a date subsequent to the change in control date. LaSalle Partners will
generally be entitled to a deduction at the same time and in an amount equal
to the amount included in the grantee's income.
Restricted Stock/Restricted Stock Units
A grantee will not recognize income, and LaSalle Partners will not be
entitled to a deduction, upon the grant of Restricted Stock. Unless the next
sentence applies, a grantee generally must include in ordinary income the fair
market value of Restricted Stock at the time such Restricted Stock is no
longer subject to a substantial risk of forfeiture ("Forfeiture Period")
within the meaning of Section 83 of the Code including, in the case of an
insider, potential liability under Section 16(b) of the Exchange Act), and
such grantee's tax basis in such shares will be equal to their fair market
value.
LaSalle Partners generally will be entitled to a deduction in the amount of
an employee's ordinary income at the time such income is recognized as
described above. Income and payroll taxes are required to be withheld on the
amount of ordinary income resulting from the Restricted Stock.
Dividend Equivalents
A grantee will not be taxed upon the grant of a Dividend Equivalent, but
will instead recognize ordinary income in an amount equal to the value of the
Dividend Equivalent at the time the Dividend Equivalent becomes payable to the
grantee. LaSalle Partners will be entitled to a deduction at such time and in
such amount as the grantee recognizes ordinary income with respect to the
Dividend Equivalent.
Performance Awards
A grantee will not recognize income, and LaSalle Partners will not be
entitled to a deduction, upon the grant of a Performance Award. Unless the
next sentence applies, a grantee generally must include in ordinary income the
fair market value of the cash, shares of LaSalle Partners common stock, other
award or other property received by him upon realization to the Performance
Award, and such grantee's tax basis in any such shares, award or other
property will be equal to such fair market value.
LaSalle Partners generally will be entitled to a deduction in the amount of
the grantee's ordinary income at the time income is recognized as described
above. Income and payroll taxes are required to be withheld on the amount of
the ordinary income resulting from the Performance Award.
Approval of the Stock Plan Amendment requires the affirmative vote of the
holders of a majority of the votes cast on such proposal, provided that the
shares of LaSalle Partners common stock present at the meeting constitutes
over 50% of all shares of LaSalle Partners common stock outstanding on the
Record Date.
The LaSalle Partners board of directors recommends that LaSalle Partners
stockholders vote FOR approval of the Stock Plan Amendment increasing the
number of shares of LaSalle Partners common stock that may be issued
thereunder to 4,160,000 from 2,215,000.
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WHERE TO FIND MORE INFORMATION
LaSalle Partners is subject to the informational requirements of the
Exchange Act and, in accordance therewith, files periodic reports and other
information with the SEC. Such reports and other information may be inspected
and copied at the public reference facilities maintained by the SEC at Room
1024, Judiciary Plaza, 450 Fifth Street, N.W., Washington, D.C. 20549 and at
the regional offices of the SEC located at 7 World Trade Center, New York, New
York 10007 and 500 West Madison Street, Suite 1400, Chicago, Illinois 60661.
Copies of all or any part of such materials also may be obtained from the
Public Reference Section of the SEC at 450 Fifth Street, N.W., Washington,
D.C. 20549 at prescribed rates. The SEC also maintains a Website that contains
reports, proxy and information statements and other materials that are filed
through the SEC's Electronic Data Gathering, Analysis and Retrieval (EDGAR)
system. This Web site can be accessed at http://www.sec.gov. In addition,
reports, proxy statements and other information concerning LaSalle Partners
may be inspected at the offices of the NYSE, 20 Broad Street, New York, New
York 10005.
If you have more questions about the Transactions, you should contact:
LaSalle Partners Incorporated
200 East Randolph Drive
Chicago, Illinois 60601
Attention: Corporate Secretary
(312) 782-5800
If you would like additional copies of the Proxy Statement, you should
contact:
Morrow & Co., Inc.
(212) 754-8000
445 Park Avenue, Fifth Floor
New York, New York 10022
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GLOSSARY OF CERTAIN DEFINED TERMS
The following defined terms are used in this Proxy Statement:
"1997 Plan" means LaSalle Partners' 1997 Stock Award and Incentive Plan.
"Acquisition" means the exchange of cash and LaSalle Partners common stock
for the direct or indirect equity interests in the JLW Companies.
"Adjustment Shares" means an aggregate of 1,241,683 Consideration Shares and
ESOT Shares to be placed in escrow and returned to LaSalle Partners or issued
to JLW Shareholders following the determination of whether the JLW Companies
had the required net worth at Closing.
"Agreed Generally Accepted Accounting Principles" means certain accounting
principles agreed upon pursuant to the Purchase Agreements.
"Amended Bylaws" means the proposed form of amended and restated bylaws of
Jones Lang LaSalle, attached as Annex H to this Proxy Statement.
"Australasia" means Australia and New Zealand.
"Bad Leaver" means, pursuant to the SCCA, 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, in each case as determined by the Shareholders' Representatives
pursuant to the SCCA.
"Benbridge (AUS)" means Benbridge Australia Pty Limited, a company organized
under the laws of New South Wales, which, together with Benbridge (NZ), holds
the shares of JLW Australasia Transact in trust for the Transact
Beneficiaries.
"Benbridge (NZ)" means Benbridge NZ Limited, a company organized under the
laws of New Zealand, which, together with Benbridge (AUS), holds the shares of
JLW Australasia Transact in trust for the Transact Beneficiaries.
"Benbridge Singapore" means Benbridge Singapore Pte Limited, a company
organized under the laws of Singapore, which holds the shares of JLW Asia
Transact in trust for the Transact Beneficiaries.
"Charter Amendment" means an amendment to the LaSalle Partners Articles of
Amendment and Restatement to change the name of LaSalle Partners to "Jones
Lang LaSalle Incorporated" at the time of the Closing.
"Closing" means the consummation of the Acquisition.
"Closing Date" means the date of the Closing.
"Code" means the Internal Revenue Code of 1986, as amended.
"Compass Acquisition" means the acquisition of the Compass Businesses in
October 1998.
"Compass Businesses" means the worldwide commercial property management and
leasing, facilities management and project management operations and United
States retail property management operations of Lend Lease conducted through
Compass Management and Leasing, Inc. and certain affiliates, acquired by
LaSalle Partners in October 1998.
"Consideration Shares" means 12,481,792 shares of LaSalle Partners common
stock to be issued to or for the account of direct and indirect beneficial
owners of the JLW Companies in exchange for their interests in the JLW
Companies pursuant to the Purchase Agreements.
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"Continental European Currencies" means the German Mark, Dutch Guilder,
French Franc and Belgian Franc.
"Continuing Affiliates" means certain subsidiaries that are being retained
by the JLW Asia Sellers or the JLW Australasia Sellers.
"Convertible Notes" means convertible notes to be issued to the JLW
Australasia Sellers and the JLW Australasia Shareholders pursuant to the JLW
Australasia Purchase Agreement and redeemed for an aggregate of 1,487,460
shares of LaSalle Partners common stock at the Closing. They are the means by
which the JLW Shareholders of the JLW Australasia Companies will receive their
Consideration Shares.
"Covenant Period" means the period commencing on the Closing Date and ending
on the Termination Date.
"Current JLW Owners" means JLW Shareholders that have, directly or
indirectly, an interest in the JLW Companies prior to the Integration.
"DEL-LPAML" means DEL-LPAML Limited Partnership, a dissolved limited
partnership which was composed of LaSalle Partners' current and former
employees, and which, together with DEL-LPL, was an entity through which the
employee owners of LaSalle Partners prior to its initial public offering held
their equity interests in LaSalle Partners.
"DEL-LPL" means DEL-LPL Limited Partnership, a dissolved limited partnership
which was composed of LaSalle Partners' current and former employees, and
which, together with DEL-LPAML, was an entity through which the employee
owners of LaSalle Partners prior to its initial public offering held their
equity interests in LaSalle Partners.
"DEL Stockholder Agreement" means an agreement entered into by each LaSalle
Partners Employee Stockholder with LaSalle Partners as a condition to Closing
pursuant to the Purchase Agreements.
"Employee Partnerships" means, collectively, DEL-LPL and DEL-LPAML which
prior to dissolution effective June 30, 1998 held approximately seven million
shares of LaSalle Partners common stock.
"Escrow Agreement" means the Indemnity and Escrow Agreement, which will
become effective upon the Closing Date, entered into by each JLW Shareholder
and Related JLW Owner, if applicable, LaSalle Partners and the Indemnity
Escrow Agent.
"Escrow Fund" means the Indemnification Shares together with any
distributions, other than cash dividends, with respect to such Indemnification
Shares held pursuant to the Escrow Agreement.
"ESOT" means an irrevocable trust established for the benefit of certain
current and former employees of the JLW Companies and certain related parties.
"ESOT Adjustment Shares" means 108,895 ESOT Shares to be deposited in escrow
as Adjustment Shares on behalf of the ESOT.
"ESOT Beneficiaries" means current and former employees of the JLW
Companies.
"ESOT Indemnification Shares" means 91,988 ESOT Shares to be deposited in
escrow as Indemnification Shares on behalf of the ESOT.
"ESOT Shares" means 1,772,324 shares of LaSalle Partners common stock to be
placed in the ESOT and, subject to certain vesting requirements, allocated
during the period following the Closing and ending on December 31, 2000.
"ESOT Trustee" means the trustee for the ESOT.
"Exchange Act" means the Securities Exchange Act of 1934, as amended.
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"Five Day Average Closing Price" means the average closing price of LaSalle
Partners common stock as reported on the composite transactions tape of the
NYSE for the five trading days immediately preceding and including the
Integration Commencement Date.
"Forfeiture Shares" means 50% of the first 35,700 Consideration Shares and
20% of any additional Consideration Shares allocated to each JLW Shareholder,
to be placed in escrow pursuant to the Purchase Agreements and subject to
forfeiture in the event that a JLW Shareholder (or Related JLW Owner) ceases
to be employed by Jones Lang LaSalle and is deemed a Bad Leaver by the
Shareholders' Representatives pursuant to the SCCA.
"Forfeiture Shares Escrow Agent" means the escrow agent appointed to hold
the Forfeiture Shares pursuant to the SCCA.
"Galbreath" means The Galbreath Company.
"HSR Act" means the Hart-Scott-Rodino Antitrust Improvements Act of 1976, as
amended.
"Indemnification Shares" means an aggregate of 750,000 Consideration Shares
and ESOT Shares to be placed in escrow to secure the indemnification
obligations of the JLW Shareholders.
"Indemnified Persons" means LaSalle Partners and its subsidiaries (other
than the JLW Companies) and their respective directors, officers, employees
and agents.
"Indemnity Escrow Agent" means the escrow agent to be appointed pursuant to
the Escrow Agreement.
"Independent Directors" means members of the Jones Lang LaSalle board of
directors who are persons other than past or present employees or executive
officers of LaSalle Partners or the JLW Companies and certain affiliates of
such persons.
"Initial Distribution Shares" means the Consideration Shares to be issued
directly to the JLW Shareholders at Closing.
"Integration" means transactions to be undertaken by certain of the JLW
Companies to reorganize their ownership structure, principally to facilitate
their acquisition by LaSalle Partners and to expand their ownership to include
non-owner employees who have made significant contributions to the JLW
Businesses.
"Integration Commencement" means commencement of the Integration.
"Integration Commencement Date" means the date of the Integration
Commencement.
"International Board" means the governing body composed of representatives
of each of the Regions formed to coordinate the worldwide activities of the
JLW Companies.
"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 Acquisition.
"JLW Asia Companies" means the JLW Companies operating in Asia.
"JLW Asia Group" means the JLW Asia Companies (excluding JLW Pacific and its
subsidiaries).
"JLW Asia Parent Companies" means, collectively, JLW Pacific, JLW Holdings,
Transact Thailand, Transact Singapore and Transact HK, the JLW Asia Companies
whose shares will be directly acquired by LaSalle Partners.
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"JLW Asia Purchase Agreement" means the Purchase Agreement relating to the
JLW Asia Companies, attached as Annex C to this Proxy Statement.
"JLW Asia Sellers" means, collectively, Procon and Benbridge Singapore.
"JLW Asia Shareholders" means the direct and indirect beneficial owners of
the JLW Asia Parent Companies.
"JLW Asia Transact" means, collectively, Transact Thailand, Transact
Singapore and Transact HK, which comprise the international hotel-related real
estate and services businesses of the JLW Companies in Asia.
"JLW Australasia Companies" means the JLW Companies in Australasia
(excluding JLW Australasia Transact).
"JLW Australasia Group" means the JLW Companies in Australasia.
"JLW Australasia Parent Companies" means, collectively, JLW Australia, JLW
(NZ) Holdings, Transact (NZ), Transact (NSW), Transact (Vic) and Transact
(Qld), the JLW Australasia Companies whose shares will be directly acquired by
LaSalle Partners.
"JLW Australasia Purchase Agreement" means the Purchase Agreement relating
to the JLW Australasia Companies, attached as Annex D to this Proxy Statement.
"JLW Australasia Sellers" means, collectively, JLW Australia Parent,
Benbridge (AUS), JLW (NZ) Holdings Parent and Benbridge (NZ).
"JLW Australasia Shareholders" means the direct and indirect beneficial
owners of the JLW Australasia Parent Companies.
"JLW Australasia Transact" means, collectively, Transact NZ, Transact
(N.S.W.), Transact (Vic) and Transact (Qld), which comprise the international
hotel-related real estate and services businesses of the JLW Companies in
Australasia.
"JLW Australia" means JLW Australia Pty Limited, a company organized under
the laws of the Australian Capital Territory, which is one of the JLW
Australasia Parent Companies.
"JLW Australia Parent" means JLW Holdings Pty Limited, a company organized
under the laws of the Australian Capital Territory, which owns the shares of
JLW Australia.
"JLW Businesses" means the real estate advising, transactional, asset
management and other real estate businesses operated by the JLW Companies in
Europe, Asia, Australia, North America and New Zealand under the name "Jones
Lang Wootton" or "JLW."
"JLW Companies" means a series of partnerships and corporations which
operate the JLW Businesses.
"JLW Continuation" means JLW Continuation Ltd., an English corporation which
is a partner in JLW England.
"JLW Directors" means seven directors of Jones Lang LaSalle designated by
the JLW Companies as of the Closing.
"JLW Employee Directors" means four executive officers of the JLW Companies
to be included among the JLW Directors.
"JLW Employees" means the partners, officers and employees of the JLW
Companies immediately prior to the Closing.
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"JLW England" means the English partnership that owns the JLW Companies
operating in England.
"JLW England Companies" means, collectively, NewCo 1, JLW Supply, JLW USA,
JLW Continuation and their subsidiaries.
"JLW England Shareholders" means the shareholders of the JLW England
Companies.
"JLW Europe Group" means the JLW Companies in Europe (including the JLW
Companies in North America but excluding the JLW Companies in Scotland and the
Republic of Ireland).
"JLW Europe/USA Parent Companies" means, collectively, NewCo 1, NewCo 2,
NewCo 3, JLW USA, JLW Supply and JLW Continuation, the JLW Companies that are
a part of the JLW Europe Group and whose shares will be directly acquired by
LaSalle Partners.
"JLW Holdings" means JLW Asia Holdings Limited, a company organized under
the laws of the Cook Islands, which is one of the JLW Asia Parent Companies.
"JLW Independent Directors" means three Independent Directors to be included
among the JLW Directors.
"JLW Ireland" means the Irish partnership that owns the JLW Companies
operating in the Republic of Ireland.
"JLW Ireland Group" means the JLW Companies in the Republic of Ireland.
"JLW Ireland Shareholders" means the shareholders of NewCo 3.
"JLW Malaysia" means the separately owned company which operates under the
"Jones Lang Wootton" name in Malaysia.
"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.
"JLW Nominating Committee" means a committee of the Jones Lang LaSalle board
of directors made up of employees of the JLW Companies prior to the closing of
the Transactions and their designees, provided that at least two members of
such committee shall be Independent Directors.
"JLW (NZ) Holdings" means Jones Lang Wootton Holdings Limited, a company
organized under the laws of New Zealand, which is one of the JLW Australasia
Parent Companies.
"JLW (NZ) Holdings Parent" means JLW (New Zealand) Holdings Pty Limited, a
company organized under the laws of New Zealand, which is owned by senior
executives of the JLW Companies in New Zealand and which owns the shares of
JLW (NZ) Holdings.
"JLW Pacific" means JLW Pacific Limited, a company organized under the laws
of the Cook Islands, which is one of the JLW Asia Parent Companies.
"JLW Parent Companies" means the JLW Companies whose equity interests are
being directly acquired by LaSalle Partners.
"JLW Partnerships" means, collectively, JLW England, JLW Scotland and JLW
Ireland.
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"JLW Scotland" means the Scottish partnership that owns the JLW Companies
operating in Scotland.
"JLW Scotland Group" means the JLW Companies in Scotland.
"JLW Scotland Shareholders" means the shareholders of NewCo 2.
"JLW Sellers" means, collectively, the JLW Partnerships, the JLW Asia
Sellers and the JLW Australasia Sellers.
"JLW Shareholders" means the direct and indirect beneficial owners of the
JLW Companies who will receive Consideration Shares pursuant to the Purchase
Agreements.
"JLW Supply" means JLW Supply Company, a company organized under the laws of
England, which is the holding company for the continental European operations
of the JLW Companies and which is one of the JLW Parent Companies.
"JLW Transact" means, collectively, JLW Australasia Transact and JLW Asia
Transact, the international hotel-related real estate and services businesses
of the JLW Companies.
"JLW USA" means Jones Lang Wootton USA Inc., a Delaware corporation which is
the holding company for the United States operations of the JLW Companies and
which is one of the JLW Parent Companies.
"Joinder Agreements" means the agreements pursuant to which the JLW
Shareholders are deemed to become parties to the Purchase Agreements.
"Jones Lang LaSalle" means the combined entity comprising LaSalle Partners
and the JLW Companies following the Closing.
"Jones Lang LaSalle Employee Stockholders" means, collectively, each JLW
Shareholder and Related JLW Owner and each LaSalle Partners Employee
Stockholder.
"LaSalle Partners 10-K" means the LaSalle Partners Annual Report on Form 10-
K for the year ended December 31, 1997.
"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 Acquisition.
"LaSalle Partners Charter" means LaSalle Partners' Articles of Amendment and
Restatement.
"LaSalle Partners Directors" means the seven directors of Jones Lang LaSalle
designated by LaSalle Partners as of the Closing.
"LaSalle Partners Employee Directors" means four executive officers of
LaSalle Partners to be included among the LaSalle Partners Directors.
"LaSalle Partners Employee Stockholder" means a current director, officer or
employee of LaSalle Partners or any subsidiary of LaSalle Partners who is a
former partner of DEL-LPL and DEL-LPAML.
"LaSalle Partners Employees" means officers or employees of LaSalle Partners
immediately prior to the Closing.
"LaSalle Partners First Quarter 10-Q" means the LaSalle Partners Quarterly
Report on Form 10-Q for the quarter ended March 31, 1998.
"LaSalle Partners Independent Directors" means three Independent Directors
to be included among the LaSalle Partners Directors.
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"LaSalle Partners Nominating Committee" means a committee of the Jones Lang
LaSalle board of directors made up of employees of LaSalle Partners prior to
the Closing and their designees, provided that at least two members of such
committee shall be Independent Directors.
"LaSalle Partners October 1 Current Report" means the LaSalle Partners
Current Report on Form 8-K, dated October 1, 1998.
"LaSalle Partners Second Quarter 10-Q" means the LaSalle Partners Quarterly
Report on Form 10-Q for the quarter ended June 30, 1998.
"LaSalle Partners Third Quarter 10-Q" means the LaSalle Partners Quarterly
Report on Form 10-Q for the quarter ended September 30, 1998.
"Lend Lease" means Lend Lease Corporation Limited, the company from which
LaSalle Partners purchased the Compass Businesses.
"LPMS" means LaSalle Partners Management Services, Inc., a LaSalle Partners
operating subsidiary which conducts its property management and leasing,
facilities management and development management businesses.
"Management Shareholders" means certain JLW Shareholders who are also
members of management.
"MGCL" means the Maryland General Corporation Law.
"New JLW Owners" means JLW Shareholders that receive, directly or
indirectly, an interest in the JLW Companies as part of the Integration or in
anticipation of the Acquisition.
"NewCo 1" means Jones Lang Wooton, a company organized under the laws of
England, which is one of the JLW Europe/USA Parent Companies.
"NewCo 2" means JLW (Scotland) Corporate, a company organized under the laws
of Scotland, which is one of the JLW Europe/USA Parent Companies.
"NewCo 3" means Slaneyglen Company, a company organized under the laws of
Eire, which is one of the JLW Europe/USA Parent Companies.
"NewCo 4" means Salta Limited, a company organized under the laws of
England, which is to be used as a means of subscribing for shares in NewCo 1
as part of the Integration.
"No Sale Period" means the period commencing on the Closing Date and ending
one year from the Closing Date.
"Nominating Committees" means, collectively, the LaSalle Partners Nominating
Committee and the JLW Nominating Committee.
"NYSE" means the New York Stock Exchange, Inc.
"Predecessor Partnerships" means the partnerships which, prior to their
incorporation as LaSalle Partners Incorporated, conducted the business of
LaSalle Partners.
"Procon" means Procon International Limited, a company organized under the
laws of the Cook Islands, which serves as the trustee of the Procon Trust.
"Procon Trust" means the trust in which the shares of JLW Pacific and JLW
Holdings (the two holding companies of the JLW Asia Companies) are held for
the benefit of certain senior executives of the JLW Asia Companies.
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"Proposed Actions" means, collectively, the Share Issuance, the Charter
Amendment and the Stock Plan Amendment.
"Proxy Solicitor" means Morrow & Co., Inc.
"Purchase Agreements" means three separate purchase agreements, dated as of
October 21, 1998, as amended, entered into by, among others, LaSalle Partners
and certain of its subsidiaries and the JLW Shareholders.
"Record Date" means the close of business on January 25, 1999, the date on
which the shareholders entitled to receive notice of and to vote at the
special meeting will be determined.
"Region" means any one of the four distinct geographical regions
(Australasia, Europe, Asia and North America) in which the JLW Companies
operate their businesses.
"Related JLW Owner" means, in the cases where a JLW Shareholder is not a
natural person, the employee of the JLW Companies who owns or holds an
interest in such JLW Shareholder.
"Related Parties" means the JLW Shareholders, 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.
"SCCA" means the Sellers' Contribution and Coordination Agreement executed
by the JLW Shareholders, which, among other things, contains the provisions
governing the forfeiture of the 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.
"SEC" means the United States Securities and Exchange Commission.
"Securities Act" means the Securities Act of 1933, as amended.
"Sellers' Representatives" means the representatives of the JLW Sellers.
"Share Issuance" means the issuance of up to 14,254,116 shares of LaSalle
Partners common stock in connection with the Acquisition.
"Shareholders' Representatives" means representatives of the JLW
Shareholders designated pursuant to the SCCA.
"Stock Plan Amendment" means 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.
"Stockholder Agreements" means the Stockholder Agreements which will become
effective upon the Closing and have been entered into by each JLW Shareholder
and, if applicable, Related JLW Owner, and LaSalle Partners.
"Technical Services Agreement" means an agreement with PT Procon Indah
pursuant to which the JLW Asia Companies earn revenue in Indonesia.
"Termination Date" means the 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 Closing and (ii) June 1,
2003.
"Transact Beneficiaries" means certain beneficiaries, including the senior
executives of JLW Transact, for whom the shares of JLW Transact are held in
trust.
G-8
<PAGE>
"Transact HK" means JLW Transact Limited, a company organized under the laws
of Hong Kong, which is one of the JLW Asia Parent Companies.
"Transact (N.S.W.)" means Jones Lang Wootton Transact Pty Ltd., a
corporation organized under the laws of New Zealand, which is one of the JLW
Australasia Parent Companies.
"Transact NZ" means JLW Transact Limited, a corporation organized under the
laws of New Zealand, which is one of the JLW Australasia Parent Companies.
"Transact (Qld)" means Jones Lang Wootton Transact (Qld) Pty Limited, a
corporation organized under the laws of Queensland, which is one of the JLW
Australasia Parent Companies.
"Transact Singapore" means JLW Transact Pte Limited, a company organized
under the laws of Singapore, which is one of the JLW Asia Parent Companies.
"Transact Thailand" means JLW Transact (Thailand) Co. Limited, a company
organized under the laws of Thailand, which is one of the JLW Asia Parent
Companies.
"Transact (Vic)" means Jones Lang Wootton Transact (Vic) Pty Ltd, a company
organized under the laws of Victoria, which is one of the JLW Australasia
Parent Companies.
"Transactions" means the Integration and the Acquisition.
"Transfer Agent" means the transfer agent and registrar for LaSalle Partners
common stock.
"Transition Period" means the period commencing upon the Closing and lasting
until the earlier of (a) the first business day after the fifth annual meeting
of the stockholders of Jones Lang LaSalle following such closing and (b) June
1, 2003.
"US GAAP" means United States Generally Accepted Accounting Principles.
"Voting Securities" means (i) Jones Lang LaSalle common stock, (ii) other
securities of Jones Lang LaSalle entitled to vote generally for the election
of directors of Jones Lang LaSalle or (iii) securities of Jones Lang LaSalle
convertible into or exchangeable for or exercisable for any of the foregoing.
G-9
<PAGE>
INDEX TO FINANCIAL STATEMENTS
<TABLE>
<S> <C>
JONES LANG WOOTTON (The English Partnership and subsidiaries):
Independent Auditors' Report............................................ F-4
Consolidated Profit and Loss Accounts for the Nine Months Ended 30
September 1998 and 1997 and Years Ended 31 December 1997, 1996 and
1995................................................................... F-5
Consolidated Statements of Movements on Partners' Funds for the Nine
Months Ended 30 September 1998 and Years Ended 31 December 1997, 1996
and 1995............................................................... F-6
Consolidated Balance Sheets as of 30 September 1998 and 31 December
1997, 1996............................................................. F-7
Consolidated Statements of Cash Flows for the Nine Months Ended 30
September 1998 and 1997 and Years Ended 31 December 1997, 1996 and
1995................................................................... F-8
Consolidated Statements of Total Recognised Gains and Losses for the
Nine Months Ended 30 September 1998 and 1997 and Years Ended 31
December 1997, 1996 and 1995........................................... F-9
Reconciliations of Movements in Partners' Funds for the Nine Months
Ended 30 September 1998 and 1997 and Years Ended 31 December 1997, 1996
and 1995............................................................... F-9
Notes to the Accounts................................................... F-10
JONES LANG WOOTTON--SCOTLAND:
Independent Auditors' Report............................................ F-33
Consolidated Profit and Loss Accounts for the Nine Months Ended 30
September 1998 and 1997 and Years Ended 31 December 1997, 1996 and
1995................................................................... F-34
Statement of Total Recognised Gains and Losses for the Nine Months Ended
30 September 1998 and 1997 and Years Ended 31 December 1997, 1996 and
1995................................................................... F-34
Consolidated Balance Sheets at 30 September 1998 and 31 December 1997
and 1996............................................................... F-35
Consolidated Statement of Cash Flows for the Nine Months Ended 30
September 1998 and 1997 and Years Ended 31 December 1997, 1996 and
1995................................................................... F-36
Statement of Movements on Funds for the Nine Months Ended 30 September
1998 and Years Ended 31 December 1997, 1996 and 1995................... F-37
Notes to the Accounts................................................... F-38
JONES LANG WOOTTON--IRISH PRACTICE:
Independent Auditors' Report............................................ F-48
Combined Profit and Loss Accounts for the Nine Months to 30 September
1998 and 1997 and Years Ended 31 December 1997, 1996 and 1995.......... F-49
Combined Balance Sheets as at 30 September 1998 and as at 31 December
1997, 1996............................................................. F-50
Combined Statements of Total Recognised Gains and Losses for the Nine
Months to 30 September 1998 and 1997 and Years Ended 31 December 1997,
1996 and 1995.......................................................... F-51
Combined Statements of Movements in Partners' Funds for the Nine Months
to 30 September 1998 and 1997 and Years Ended 31 December 1997, 1996
and 1995............................................................... F-51
Combined Statements of Cash Flows for the Nine Months to 30 September
1998 and 1997 and Years Ended 31 December 1997, 1996 and 1995.......... F-52
Notes to the Combined Financial Statements.............................. F-53
JLW ASIA HOLDINGS LIMITED:
Independent Auditors' Report............................................ F-68
Group Profit and Loss Accounts for the Nine Months Ended 30 September
1998 and 1997 and Years Ended 31 December 1997, 1996 and 1995.......... F-69
Group Balance Sheets as at 30 September 1998, 31 December 1997 and
1996................................................................... F-70
Group Cash Flow Statements for the Nine Months Ended 30 September 1998
and 1997 and Years Ended 31 December 1997, 1996 and 1995............... F-71
Group Statements of Total Recognised Gains and Loss for the Nine Months
Ended 30 September 1998 and 1997 and Years Ended 31 December 1997, 1996
and 1995............................................................... F-72
</TABLE>
F-1
<PAGE>
<TABLE>
<S> <C>
Reconciliation of Shareholders' Funds for the Nine Months Ended 30
September 1998 and 1997 and Years Ended 31 December 1997, 1996 and
1995.................................................................. F-72
Notes to the Group Financial Statements................................ F-73
JLW PROPERTY CONSULTANTS PTE LTD:
Independent Auditors' Report........................................... F-94
JLW AUSTRALASIA GROUP:
Independent Auditors' Report........................................... F-96
Combined Profit and Loss Accounts for the Nine Months Ended 30
September 1998 and 1997 and Years Ended 31 December 1997, 1996 and
1995.................................................................. F-97
Statement of Movements on Reserves for the Nine Months Ended 30
September 1998 and Years Ended 31 December 1997, 1996 and 1995........ F-98
Combined Balance Sheets as at 30 September 1998, 31 December 1997 and
1996.................................................................. F-99
Combined Statements of Cash Flows for the Nine Months Ended 30
September 1998 and 1997 and Years Ended 31 December 1997, 1996 and
1995.................................................................. F-100
Combined Statements of Total Recognised Gains and Losses for the Nine
Months Ended 30 September 1998 and 1997 and Years Ended 31 December
1997, 1996 and 1995................................................... F-101
Reconciliation of Movements in Combined Shareholders' Funds for the
Nine Months Ended 30 September 1998 and Years Ended 31 December 1997
and 1996.............................................................. F-101
Notes to the Accounts.................................................. F-102
COMPASS GROUP:
Independent Auditors' Report........................................... F-121
Combined Balance Sheets as of September 30, 1998 and December 31,
1997.................................................................. F-122
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..................... F-123
Combined Statements of Stockholders' Equity for the Nine Months Ended
September 30, 1998 and for the Period June 11, 1997 to December 31,
1997.................................................................. F-124
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..................... F-125
Notes to the Combined Financial Statements............................. F-126
</TABLE>
F-2
<PAGE>
JONES LANG WOOTTON
(The English Partnership and subsidiaries)
Financial Statements
Years ended 31 December 1997, 1996 and 1995
F-3
<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 31 December 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 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 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 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 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 31 December 1997 and the
determination of Partners' funds as of 31 December 1997 and 1996, to the
extent summarised in Note 27 to the accounts.
Deloitte & Touche
Chartered Accountants
London, United Kingdom
23 November 1998
F-4
<PAGE>
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)
<TABLE>
<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
======== ======== ======== ======== ========
</TABLE>
All activities derive from continuing operations.
F-5
<PAGE>
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)
<TABLE>
<CAPTION>
Foreign Corporate
exchange profit and
Other translation Annuitants' Partners' loss account
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
translation
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
translation
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
translation
differences............ (61) (519) 14 (724) (712) (2,002)
----- ------ ------ ------- ------ -------
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
translation
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
----- ------ ------ ------- ------ -------
</TABLE>
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.
F-6
<PAGE>
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)
<TABLE>
<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 at 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)
Provisions 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
======= ======= =======
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>
F-7
<PAGE>
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)
<TABLE>
<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
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>
F-8
<PAGE>
JONES LANG WOOTTON
(The English Partnership and subsidiaries)
CONSOLIDATED 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)
<TABLE>
<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 recognised gains and
losses relating to the year.. 31,349 23,063 33,736 29,336 14,722
====== ====== ====== ====== ======
</TABLE>
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)
<TABLE>
<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 recognised 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>
F-9
<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 capitalised and amortised 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 recognised 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.
F-10
<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 amortisation and
are amortised 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:
<TABLE>
<S> <C> <C>
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 $825 1 year
Computer
equipment --on cost 3-4 years
Short leasehold
improvements --on cost 3-10 years
</TABLE>
Leasehold property is amortised equally over the length of the lease.
No depreciation is provided on fine art.
Taxation
Taxation is provided on the taxable profits of the corporate entities within
the Firm. No current or deferred taxation is provided on the profits
attributable to the partners as the liability for taxation falls on the
individual partners.
Deferred taxation
Deferred taxation is provided at the anticipated tax rates on timing
differences arising from the inclusion of items of income and expenditure in
tax computations in periods different from those in which they are included in
financial statements to the extent that it is probable that a liability or
asset will crystallise in the future.
Investments
Except as stated below, investments held as fixed assets are stated at cost
less provision for any permanent diminution in value.
In the consolidated accounts, shares in associated undertakings are
accounted for using the equity method of accounting. The consolidated profit
and loss account includes the Firm's share of pre-tax profits and losses and
attributable taxation of the associated undertakings. In the consolidated
balance sheet, the investment in associated undertakings is shown as the
Firm's share of the separable net assets, of the associated undertakings.
Investment income includes the share of profits of Jones Lang Wootton
Scotland and Jones Lang Wootton Ireland attributable to certain partners in
Jones Lang Wootton who participate in the profit of those firms for the
benefit of all partners in Jones Lang Wootton.
F-11
<PAGE>
JONES LANG WOOTTON
(The English Partnership and subsidiaries)
NOTES TO THE ACCOUNTS
Years ended 31 December 1997, 1996 and 1995
(US$ 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 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
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.
F-12
<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 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 1 January
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
<TABLE>
<CAPTION>
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>
Profit on ordinary activities before tax
<TABLE>
<CAPTION>
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>
F-13
<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
<TABLE>
<CAPTION>
Unaudited
nine months
ended
30 September
1998 1997 1996
------------ ------ ------
<S> <C> <C> <C>
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
====== ====== ======
</TABLE>
3. OPERATING PROFIT
<TABLE>
<CAPTION>
1997 1996 1995
------- ------- ------
<S> <C> <C> <C>
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
======= ======= ======
<CAPTION>
No. No. No.
------- ------- ------
<S> <C> <C> <C>
Average number of persons employed:
Technical and administration........................ 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
======= ======= ======
</TABLE>
F-14
<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
<TABLE>
<CAPTION>
1997 1996 1995
----- ----- -----
<S> <C> <C> <C>
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
===== ===== =====
</TABLE>
5. INTEREST PAYABLE AND SIMILAR CHARGES
<TABLE>
<CAPTION>
1997 1996 1995
---- ---- -----
<S> <C> <C> <C>
Bank loans, overdrafts and other loans....................... 647 704 1,152
Finance charges--finance leases.............................. 2 100 101
--- --- -----
649 804 1,253
=== === =====
</TABLE>
6. TAX ON PROFIT ON ORDINARY ACTIVITIES
<TABLE>
<CAPTION>
1997 1996 1995
----- ----- -----
<S> <C> <C> <C>
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
===== ===== =====
</TABLE>
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.
F-15
<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
<TABLE>
<CAPTION>
Contract
rights
--------
<S> <C>
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 amortisation
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................................................. --
===
</TABLE>
F-16
<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)
8. TANGIBLE FIXED ASSETS
<TABLE>
<CAPTION>
Office
machinery,
computer Improvements
equipment to short Short
Motor and Fine leasehold leasehold
Vehicles fixtures 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
translation
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
translation
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
translation
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
translation
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
------ ------- --- ------ --- -------
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
====== ======= === ====== === =======
</TABLE>
The net book value of the Firm's fixed assets includes motor vehicles
amounting to $41 (31 December 1996--$310) in respect of assets held under
finance leases.
F-17
<PAGE>
JONES LANG WOOTTON
(The English Partnership and subsidiaries)
NOTES TO THE ACCOUNTS
Years ended 31 December 1997, 1996 and 1995
(US$ in thousands, except where stated otherwise)
9. INVESTMENTS
<TABLE>
<CAPTION>
1997 1996
---- ----
<S> <C> <C>
Net book value
Associates......................................................... 462 708
Other investments.................................................. 66 56
--- ---
528 764
=== ===
</TABLE>
Investments in Associates
<TABLE>
<CAPTION>
1997 1996
---- ----
<S> <C> <C>
Global Realty Advisers............................................. 189 200
GRA (Bermuda) Limited.............................................. 252 486
Jones Lang Wootton Realty Advisors................................. -- --
JLW & WAE Residential.............................................. 21 22
--- ---
462 708
=== ===
</TABLE>
<TABLE>
<CAPTION>
Share of
post
acquisition
Cost reserves Total
---- ----------- ------
<S> <C> <C> <C>
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
=== ====== ======
</TABLE>
Other investments other than loans:
<TABLE>
<S> <C>
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
===
</TABLE>
F-18
<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
<TABLE>
<CAPTION>
1997 1996
------ ------
<S> <C> <C>
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
====== ======
</TABLE>
11. CREDITORS: AMOUNTS FALLING DUE WITHIN ONE YEAR
<TABLE>
<CAPTION>
1997 1996
------ ------
<S> <C> <C>
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
====== ======
</TABLE>
12. CREDITORS: AMOUNTS FALLING DUE AFTER MORE THAN ONE YEAR
<TABLE>
<CAPTION>
1997 1996
---- ----
<S> <C> <C>
Obligation under finance leases (note 21).......................... 7 35
Other creditors.................................................... 233 167
--- ---
240 202
=== ===
</TABLE>
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:
<TABLE>
<CAPTION>
Amount of loan/
Overdraft at
31 December
Subsidiaries 1997
------------ ---------------
<C> <S> <C>
French Francs 25,000,000 Jones Lang Wootton SA France 1,060
Spanish Pesetas 150,000,000 Jones Lang Wootton SA Spain --
Sterling 50,000 Jones Lang Wootton Poland --
-----
1,060
=====
</TABLE>
At 31 December 1997 J.L.W. Supply Company has given an indemnity of
(Pounds)250 ($411 at year end exchange rates) on behalf of UK subsidiary
companies of the firm and guarantees of (Pounds)712 ($1,172 at year end
exchange rates) in respect of overseas related parties.
F-19
<PAGE>
JONES LANG WOOTTON
(The English Partnership and subsidiaries)
NOTES TO THE ACCOUNTS
Years ended 31 December 1997, 1996 and 1995
(US$ in thousands, except where stated otherwise)
14. PROVISIONS FOR LIABILITIES AND CHARGES
<TABLE>
<CAPTION>
Charged
Balance at to profit Balance at
31 December Exchange and loss 31 December
1996 differences account 1997
----------- ----------- --------- -----------
<S> <C> <C> <C> <C>
Provision for computer software
upgrade........................ -- 3 820 823
Insurance fund.................. 1,201 (45) 116 1,272
Pension-back service provision
re Jones Lang Wootton BV,
Holland........................ 171 (16) 85 240
----- --- ----- -----
1,372 (58) 1,021 2,335
===== === ===== =====
</TABLE>
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 recognised.
15. RECONCILIATION OF OPERATING PROFIT TO NET CASH INFLOW FROM OPERATING
ACTIVITIES
<TABLE>
<CAPTION>
1997 1996 1995
------ ------- ------
<S> <C> <C> <C>
Operating profit..................................... 35,394 28,942 15,141
Depreciation and amortisation 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 transaction differences............. 169 (559) (10)
------ ------- ------
Net cash inflow from operating activities............ 48,948 31,328 26,625
====== ======= ======
</TABLE>
16. ANALYSIS OF NET FUNDS
<TABLE>
<CAPTION>
Other
non-
Cash cash Exchange
1995 flow changes movement 1996
------- ------ ------- -------- -------
<S> <C> <C> <C> <C> <C>
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
======= ====== === ====== =======
</TABLE>
F-20
<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)
<TABLE>
<CAPTION>
Other
non-
Cash cash Exchange
1996 flow changes movement 1997
------- ------ ------- -------- ------
<S> <C> <C> <C> <C> <C>
Cash in hand and at bank............ 14,844 7,177 -- (779) 21,242
Overdrafts.......................... (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
======= ====== === ==== ======
</TABLE>
17. RECONCILIATIONS OF NET CASH FLOW TO MOVEMENT IN NET FUNDS
<TABLE>
<CAPTION>
1997 1996 1995
------ ------ ------
<S> <C> <C> <C>
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)
====== ====== ======
</TABLE>
18. ACQUISITION OF A BUSINESS
<TABLE>
<CAPTION>
1997
----
<S> <C>
Net assets acquired
Goodwill................................................................ 401
===
Satisfied by
Cash.................................................................... 401
===
</TABLE>
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
F-21
<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)
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.
The pension cost 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--
$358).
20. OPERATING LEASE COMMITMENTS
At 31 December 1997 and 1996 the Firm was committed to making the following
payments during the next year in respect of operating leases:
<TABLE>
<CAPTION>
1997 1997 1996 1996
Land and Office Land and Office
buildings Equipment buildings equipment
--------- --------- --------- ---------
<S> <C> <C> <C> <C>
Lease which expire:
Within one year...................... 987 535 1,350 832
Within two to five years............. 4,474 1,371 4,434 1,460
After five years..................... 7,875 166 7,217 222
------ ----- ------ -----
13,336 2,072 13,001 2,514
====== ===== ====== =====
</TABLE>
F-22
<PAGE>
JONES LANG WOOTTON
(The English Partnership and subsidiaries)
NOTES TO THE ACCOUNTS
Years ended 31 December 1997, 1996 and 1995
(US$ in thousands, except where stated otherwise)
21. OBLIGATIONS UNDER FINANCE LEASES
<TABLE>
<CAPTION>
1997 1996
---- ----
<S> <C> <C>
The minimum lease payments to which the Firm was committed at 31
December 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
=== ===
</TABLE>
22. CAPITAL COMMITMENTS
<TABLE>
<CAPTION>
1997 1996
----- -----
<S> <C> <C>
Contracted for but not provided.................................. 1,619 1,600
===== =====
</TABLE>
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.
<TABLE>
<S> <C>
Goodwill................................................................. 401
---
Cash paid................................................................ 401
===
</TABLE>
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 organisation 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--$818) due to other entities in the Jones Lang Wootton
organisation in which the Firm has no shareholding.
The Firm is taking advantage of the exemption granted by paragraph 3(a) of
Financial Reporting Standard No. 8 "Related Party Disclosures" not to disclose
transactions with group companies which are related parties.
F-23
<PAGE>
JONES LANG WOOTTON
(The English Partnership and subsidiaries)
NOTES TO THE ACCOUNTS
Years ended 31 December 1997, 1996 and 1995
(US$ in thousands, except where stated otherwise)
25. ADDITIONAL INFORMATION ON SUBSIDIARIES AND ASSOCIATED UNDERTAKINGS
<TABLE>
<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
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 Luxembourg 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>
F-24
<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 March 13, 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 March 13, 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 Bermudan
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 from 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 1 January
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
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.
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.
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.
F-25
<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 income statement
<TABLE>
<CAPTION>
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 amortisation....... (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>
Consolidated balance sheet
<TABLE>
<CAPTION>
Unaudited
30 September
1998 1997 1996
------------ ------ ------
<S> <C> <C> <C>
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
====== ====== ======
</TABLE>
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.
F-26
<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)
Summary consolidated cash flow information as presented in accordance with
SFAS 95:
<TABLE>
<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...... 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
======= ======= ======= ======= ======
</TABLE>
A reconciliation between the consolidated statement of cash flows presented
in accordance with UK GAAP and US GAAP is set out below:
<TABLE>
<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 (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>
F-27
<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)
<TABLE>
<CAPTION>
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>
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:
<TABLE>
<CAPTION>
30 September
1998 1997 1996
------------ ------ ------
<S> <C> <C> <C>
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
====== ====== ======
</TABLE>
Unbilled fee income is included in "prepayments 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.
F-28
<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)
Other current liabilities
Other current liabilities comprises:
<TABLE>
<CAPTION>
30 September
1998 1997 1996
------------ ------ ------
<S> <C> <C> <C>
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
====== ====== ======
</TABLE>
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.
Balance sheet
<TABLE>
<CAPTION>
30 September
1998 1997 1996
------------ ------- -------
<S> <C> <C> <C>
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 amortisation 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
amortisation of $464, $324 and $101 in 1998, 1997
and 1996 respectively............................ 299 439 662
Investments....................................... 350 528 764
Deferred tax asset................................ 3,943 1,746 2,603
Trade receivables--long term...................... 6,246 282 116
Other assets...................................... 10,283 9,988 11,093
------- ------- -------
Total assets.................................. 154,972 134,802 125,244
======= ======= =======
</TABLE>
F-29
<PAGE>
JONES LANG WOOTTON
(The English Partnership and subsidiaries)
NOTES TO THE ACCOUNTS
Years ended 31 December 1997, 1996 and 1995
(US$ in thousands, except where stated otherwise)
Balance sheet
<TABLE>
<CAPTION>
30 September
1998 1997 1996
------------ ------- -------
<S> <C> <C> <C>
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 translation adjustments.... (54) (661) 186
------- ------- -------
Total partners' funds........................ 61,498 58,836 50,833
------- ------- -------
Total liabilities and Partners' funds........ 154,972 134,802 125,244
======= ======= =======
</TABLE>
F-30
<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)
Profit and loss account
<TABLE>
<CAPTION>
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
amortisation............... 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
======= ======= ======= ======= =======
</TABLE>
Earnings per share information has not been presented as the firm is not a
corporate entity.
F-31
<PAGE>
JONES LANG WOOTTON - SCOTLAND
FINANCIAL STATEMENTS
Years ended 31 December 1997, 1996 and 1995
F-32
<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 31 December 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
F-33
<PAGE>
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)
<TABLE>
<CAPTION>
Unaudited Unaudited
nine months ended nine months ended
Note 30 September 1998 30 September 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
====== ====== ====== ====== ======
</TABLE>
All activities derive from continuing operations.
STATEMENT 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)
<TABLE>
<CAPTION>
Unaudited Unaudited
nine months ended nine months ended
30 September 1998 30 September 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>
F-34
<PAGE>
JONES LANG WOOTTON - SCOTLAND
CONSOLIDATED BALANCE SHEETS
30 September 1998 and 31 December 1997 and 1996
(US $ in thousands, except where stated otherwise)
<TABLE>
<CAPTION>
Unaudited
Notes 30 September 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: amount 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 translation reserve.. 157 (98) 187
------ ------ ------
5,219 4,664 2,096
====== ====== ======
</TABLE>
F-35
<PAGE>
JONES LANG WOOTTON - SCOTLAND
CONSOLIDATED STATEMENT 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)
<TABLE>
<CAPTION>
Unaudited Unaudited
nine months ended nine months ended
Notes 30 September 1998 30 September 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)
------ ------ ------ ------ ------
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>
F-36
<PAGE>
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)
<TABLE>
<CAPTION>
Corporate Foreign
profit and exchange
Partners' loss 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
====== === ==== ======
</TABLE>
Corporate profit and loss account reserves represent the amounts retained
within the corporate entity consolidated in these financial statements.
F-37
<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 30 September 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:
<TABLE>
<S> <C> <C>
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
</TABLE>
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.
F-38
<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 1 January 1995. All differences arising as a result of this
translation have been taken directly to the foreign exchange translation
reserve.
F-39
<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:
<TABLE>
<CAPTION>
1997 1996 1995
----- ----- -----
<S> <C> <C> <C>
(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
===== ===== =====
<CAPTION>
No No No
----- ----- -----
<S> <C> <C> <C>
Average number of persons employed:
Technical and administration............................. 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
<CAPTION>
1997 1996 1995
----- ----- -----
<S> <C> <C> <C>
Other interest receivable and similar income............. 102 57 35
===== ===== =====
4. INTEREST PAYABLE AND SIMILAR CHARGES
<CAPTION>
1997 1996 1995
----- ----- -----
<S> <C> <C> <C>
Bank loans, overdrafts and other loans................... 12 13 6
===== ===== =====
5. TAX ON PROFIT ON ORDINARY ACTIVITIES
<CAPTION>
1997 1996 1995
----- ----- -----
<S> <C> <C> <C>
United Kingdom corporation tax based on the profit for
the year for the corporate entity....................... 46 36 43
===== ===== =====
</TABLE>
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.
F-40
<PAGE>
JONES LANG WOOTTON - SCOTLAND
NOTES TO THE ACCOUNTS
Years ended 31 December 1997, 1996 and 1995
(US $ in thousands, except where stated otherwise)
6. TANGIBLE FIXED ASSETS
<TABLE>
<CAPTION>
Office
machinery, Improve-
computer ments to
Motor equipment leasehold
vehicles & fixtures premises Total
-------- ---------- --------- -----
<S> <C> <C> <C> <C>
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
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
===== ===== === =====
</TABLE>
7. INVESTMENTS
<TABLE>
<CAPTION>
1997 1996
----- ----
<S> <C> <C>
Net book value:
Business investment.............................................. -- 2
===== ===
Other investments other than loans:
At 1 January 1997................................................ 2
Amortisation..................................................... (2)
-----
At 31 December 1997.............................................. --
=====
</TABLE>
F-41
<PAGE>
JONES LANG WOOTTON - SCOTLAND
NOTES TO THE ACCOUNTS
Years ended 31 December 1997, 1996 and 1995
(US $ in thousands, except where stated otherwise)
8. DEBTORS
<TABLE>
<CAPTION>
1997 1996
----- -----
<S> <C> <C>
Trade debtors.................................................... 2,094 1,152
Other debtors due within one year................................ 95 18
Prepayments and accrued income................................... 289 281
----- -----
2,478 1,451
===== =====
</TABLE>
9. CREDITORS--AMOUNTS FALLING DUE WITHIN ONE YEAR
<TABLE>
<CAPTION>
1997 1996
----- -----
<S> <C> <C>
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
===== =====
</TABLE>
10. RECONCILIATION OF OPERATING PROFIT TO NET CASH INFLOW FROM OPERATING
ACTIVITIES
<TABLE>
<CAPTION>
1997 1996 1995
------ ----- -----
<S> <C> <C> <C>
Operating profit....................................... 4,996 2,072 1,609
Depreciation and amortisation 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
====== ===== =====
</TABLE>
11. ANALYSIS OF NET FUNDS
<TABLE>
<CAPTION>
Cash Exchange
1996 flow movement 1995
----- ----- -------- ----
<S> <C> <C> <C> <C>
Cash in hand and at bank........................ 662 595 49 18
Overdraft....................................... (9) 60 (2) (67)
----- ----- --- ---
653 655 47 (49)
===== ===== === ===
<CAPTION>
Cash Exchange
1997 flow movement 1996
----- ----- -------- ----
<S> <C> <C> <C> <C>
Cash in hand and at bank........................ 2,642 2,016 (36) 662
Overdraft....................................... (111) (103) 1 (9)
----- ----- --- ---
2,531 1,913 (35) 653
===== ===== === ===
</TABLE>
F-42
<PAGE>
JONES LANG WOOTTON - SCOTLAND
NOTES TO THE ACCOUNTS
Years ended 31 December 1997, 1996 and 1995
(US $ in thousands, except where stated otherwise)
12. RECONCILIATION OF NET CASH FLOW TO MOVEMENT IN NET FUNDS
<TABLE>
<CAPTION>
1997 1996 1995
----- ---- ----
<S> <C> <C> <C>
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)
===== === ====
</TABLE>
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:
<TABLE>
<CAPTION>
Land and buildings
--------------------
1997 1996
--------- ---------
<S> <C> <C>
Leases which expire:
Within one year........................................ -- --
Within two to five years............................... 97 102
After five years....................................... 206 214
--------- ---------
303 316
========= =========
</TABLE>
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.
F-43
<PAGE>
JONES LANG WOOTTON - SCOTLAND
NOTES TO THE ACCOUNTS
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
US GAAP:
<TABLE>
<CAPTION>
Unaudited nine Unaudited nine
months ended months 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>
A reconciliation between the consolidated statement of cash flows presented
in accordance with UK GAAP and US GAAP is set out below:
<TABLE>
<CAPTION>
Unaudited nine Unaudited nine
months ended months 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>
F-44
<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:
<TABLE>
<CAPTION>
Unaudited
30 September
1998 1997 1996
------------ ----- -----
<S> <C> <C> <C>
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
===== ===== =====
</TABLE>
F-45
<PAGE>
JONES LANG WOOTTON - SCOTLAND
NOTES TO THE ACCOUNTS
Years ended 31 December 1997, 1996 and 1995
(US $ in thousands, except where stated otherwise)
Profit and loss accounts:
<TABLE>
<CAPTION>
Unaudited nine Unaudited nine
months ended months 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
amortisation................. 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>
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:
<TABLE>
<CAPTION>
Unaudited
30 September 1998 1997 1996
----------------- ----- -----
<S> <C> <C> <C>
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
===== ===== =====
</TABLE>
Unbilled fee income is included in prepayments and accrued income in the UK
GAAP balance sheet.
Other current liabilities
Other current liabilities comprises:
<TABLE>
<CAPTION>
Unaudited
30 September 1998 1997 1996
------------------ ---- ----
<S> <C> <C> <C>
Other creditors............................... 265 80 28
Other taxes................................... 482 530 354
--- --- ---
Other current liabilities reported in
accordance with US GAAP...................... 747 610 382
=== === ===
</TABLE>
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.
F-46
<PAGE>
JONES LANG WOOTTON - IRISH PRACTICE
COMBINED FINANCIAL STATEMENTS
Years ended 31 December 1997, 1996 and 1995
F-47
<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 recognised 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 summarised in Notes 19 and 20 to the combined financial
statements.
Deloitte & Touche
Chartered Accountants and Registered
Auditors
Dublin
24 November 1998
F-48
<PAGE>
JONES LANG WOOTTON - IRISH PRACTICE
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)
<TABLE>
<CAPTION>
Unaudited nine Unaudited nine
months ended months ended
Notes 30 September 1998 30 September 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
====== ====== ====== ====== ======
</TABLE>
All activities derive from continuing operations.
F-49
<PAGE>
JONES LANG WOOTTON - IRISH PRACTICE
COMBINED BALANCE SHEETS
As at 30 September 1998 and as at 31 December 1997 and 1996
(US$ in thousands, except where stated otherwise)
<TABLE>
<CAPTION>
Unaudited
Notes 30 September 1998 1997 1996
----- ----------------- ------ ------
<S> <C> <C> <C> <C>
Fixed Assets
Tangible 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).................. 9 (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>
F-50
<PAGE>
JONES LANG WOOTTON - IRISH PRACTICE
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)
<TABLE>
<CAPTION>
Unaudited nine Unaudited nine
months ended months ended
30 September 1998 30 September 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
Unrealised surplus on
revaluation of
leasehold interest..... -- -- 299 -- --
Foreign exchange
translation
difference............. 228 (397) (479) 142 62
----- ----- ----- ----- -----
Total recognised
gains and losses... 4,068 1,849 3,650 4,122 1,741
===== ===== ===== ===== =====
</TABLE>
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)
<TABLE>
<CAPTION>
Unaudited nine Unaudited nine
months ended months ended
30 September 1998 30 September 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
Unrealised surplus on
revaluation of
leasehold interest..... -- -- 285 -- --
Foreign exchange
translation
difference............. 228 (397) (479) 142 62
------ ------ ------ ------ ------
Closing funds........... 4,711 2,414 3,195 2,879 1,297
====== ====== ====== ====== ======
</TABLE>
F-51
<PAGE>
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)
<TABLE>
<CAPTION>
Unaudited nine Unaudited nine
months ended months ended
Notes 30 September 1998 30 September 1997 1997 1996 1995
----- ----------------- ----------------- ------ ------ ------
<S> <C> <C> <C> <C> <C> <C>
Net cash inflow from op-
erating activities..... 11 3,730 2,402 3,531 4,856 2,379
------ ------ ------ ------ ------
Returns on investments
and servicing of fi-
nance
Interest received....... 38 23 78 21 --
Interest paid........... (16) (24) (18) (18) (18)
Interest element of fi-
nance lease rental pay-
ments.................. (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 tan-
gible 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)
------ ------ ------ ------ ------
Distributions
Partners' drawings less
cash introduced........ (2,463) (2,215) (3,185) (2,453) (2,005)
Former partners and de-
pendents............... (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 fi-
nance lease rental pay-
ments.................. (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>
F-52
<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 common control and management
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:
<TABLE>
<S> <C> <C>
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
</TABLE>
F-53
<PAGE>
JONES LANG WOOTTON - IRISH PRACTICE
NOTES TO THE COMBINED FINANCIAL STATEMENTS--(Continued)
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.
F-54
<PAGE>
JONES LANG WOOTTON - IRISH PRACTICE
NOTES TO THE COMBINED FINANCIAL STATEMENTS--(Continued)
Years ended 31 December 1997, 1996 and 1995
(US$ in thousands, except where stated otherwise)
2. PROFIT ON ORDINARY ACTIVITIES BEFORE TAXATION
<TABLE>
<CAPTION>
1997 1996 1995
----- ----- -----
<S> <C> <C> <C>
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
<CAPTION>
1997 1996 1995
----- ----- -----
<S> <C> <C> <C>
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
===== ===== =====
<CAPTION>
Average number of employees:
(excluding proprietary partners) No. No. No.
-------------------------------- ----- ----- -----
<S> <C> <C> <C>
Technical and administration:
Jones Lang Wootton & Jones Lang Wootton Property
Management Services.................................... 47 46 47
Utrillo Limited......................................... 36 36 36
----- ----- -----
83 82 83
===== ===== =====
</TABLE>
F-55
<PAGE>
JONES LANG WOOTTON - IRISH PRACTICE
NOTES TO THE COMBINED FINANCIAL STATEMENTS--(Continued)
Years ended 31 December 1997, 1996 and 1995
(US$ in thousands, except where stated otherwise)
4. TAXATION ON PROFIT ON ORDINARY ACTIVITIES
<TABLE>
<CAPTION>
1997 1996 1995
---- ---- ----
<S> <C> <C> <C>
Based on the profit for the year:
Corporation tax on corporate entities............................ 4 4 --
=== === ===
</TABLE>
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.
5. TANGIBLE FIXED ASSETS
<TABLE>
<CAPTION>
Office Computers
Motor Furniture and other Leasehold
Vehicles and 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 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 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
---- ----- ---- --- -----
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>
F-56
<PAGE>
JONES LANG WOOTTON - IRISH PRACTICE
NOTES TO THE COMBINED FINANCIAL STATEMENTS--(Continued)
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$578) in respect of assets held under finance leases.
6. WORK IN PROGRESS
There is no material work in progress at the balance sheet dates.
7. DEBTORS
<TABLE>
<CAPTION>
1997 1996
----- -----
<S> <C> <C>
Trade debtors................................................ 1,481 1,455
Prepayments and accrued income............................... 1,130 983
----- -----
2,611 2,438
===== =====
8. CREDITORS: (Amounts falling due within one year)
<CAPTION>
1997 1996
----- -----
<S> <C> <C>
Bank overdraft............................................... 19 8
Taxation and social security................................. 328 457
Accruals..................................................... 816 950
Obligations under finance leases (note 10)................... 125 134
----- -----
1,288 1,549
===== =====
9. CREDITORS: (Amounts falling due after more than one year)
<CAPTION>
1997 1996
----- -----
<S> <C> <C>
Obligations under finance leases (note 10)................... 247 441
===== =====
10. LEASE OBLIGATIONS
Net lease obligations to third parties under finance leases were as follows:
<CAPTION>
1997 1996
----- -----
<S> <C> <C>
The minimum lease payments to which the practice was
committed at 31 December were as follows:
Due within one year........................................ 151 181
Due within two to five years............................... 268 498
----- -----
419 679
Less: Interest allocated to future periods................... (47) (104)
----- -----
372 575
===== =====
The leases expire:
Within one year............................................ 125 134
After more than one year................................... 247 441
----- -----
372 575
===== =====
</TABLE>
F-57
<PAGE>
JONES LANG WOOTTON - IRISH PRACTICE
NOTES TO THE COMBINED FINANCIAL STATEMENTS--(Continued)
Years ended 31 December 1997, 1996 and 1995
(US$ in thousands, except where stated otherwise)
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
<TABLE>
<CAPTION>
1997 1996 1995
----- ----- -----
<S> <C> <C> <C>
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
===== ===== =====
</TABLE>
12. ANALYSIS OF NET FUNDS
<TABLE>
<CAPTION>
Cash Exchange Cash Exchange
1995 flow movement 1996 flow movement 1997
------ ----- -------- ----- ---- -------- ----
<S> <C> <C> <C> <C> <C> <C> <C>
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
====== ===== === ===== ==== ==== ====
</TABLE>
13. RECONCILIATION OF NET CASH FLOW TO MOVEMENT IN NET FUNDS
<TABLE>
<CAPTION>
1997 1996 1995
---- ------ ------
<S> <C> <C> <C>
(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)
==== ====== ======
</TABLE>
F-58
<PAGE>
JONES LANG WOOTTON - IRISH PRACTICE
NOTES TO THE COMBINED FINANCIAL STATEMENTS--(Continued)
Years ended 31 December 1997, 1996 and 1995
(US$ in thousands, except where stated otherwise)
14. PARTNERS' FUNDS
<TABLE>
<CAPTION>
Foreign
exchange Provision
translation Revaluation Partners for
reserves reserves balances annuitants Total
----------- ----------- -------- ---------- ------
<S> <C> <C> <C> <C> <C>
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)
Unrealised 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
==== === ====== ===== ======
</TABLE>
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$1,137. This agreement is conditional upon the
completion of the merger with LaSalle Partners.
16. PENSION COMMITMENTS
Jones Lang Wootton Partnership and Utrillo Limited operate separate defined
benefit schemes, which provide benefits based on final pensionable salaries
for eligible employees and salaried partners.
The contributions are based on the advice of independent actuaries obtained
at three yearly intervals, using the attained age method of funding.
The last actuarial valuation of the partnership pension scheme was at 1
January 1998. The principal assumption in the valuation was that, over the
long term, the net return on investments will exceed the future salary
increases by 2% per annum. The actuarial report of the partnership scheme
disclosed that the actuarial
F-59
<PAGE>
JONES LANG WOOTTON - IRISH PRACTICE
NOTES TO THE COMBINED FINANCIAL STATEMENTS--(Continued)
Years ended 31 December 1997, 1996 and 1995
(US$ in thousands, except where stated otherwise)
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.
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:
<TABLE>
<CAPTION>
1997 1996 1995
---- ---- ----
<S> <C> <C> <C>
Pension costs............................................... 169 190 244
=== === ===
Prepaid pension costs included in prepayments and accrued
income..................................................... 70 53
=== ===
Accrued pension costs included in accruals.................. -- --
=== ===
</TABLE>
17. RELATED PARTY DISCLOSURES
Trade debtors includes US$41 (1996 : US$40) due from Jones Lang Wootton
English partnership.
The English partnership of Jones Lang Wootton share, through their UK
representatives, as Irish proprietary partners in the profits of the combined
entities. Included within partners funds are amounts attributable to the
English partnership in respect of their profit share.
18. INFORMATION REGARDING CORPORATE ENTITIES
The corporate entities which are wholly owned and controlled by Jones Lang
Wootton - Irish Practice are :
<TABLE>
<CAPTION>
Country of
Company Incorporation Activity
- ------- ------------- --------
<S> <C> <C>
Utrillo Limited......................... Ireland Staff services provider
Jones Lang Wootton Property Management Property management
Services............................... Ireland services provider
JLW Financial Services Limited.......... Ireland Dormant company
JLW Limited............................. Ireland Dormant company
Jones Lang Wootton Limited.............. Ireland Dormant company
</TABLE>
19. SIGNIFICANT DIFFERENCES BETWEEN IRISH/UK GAAP AND US GAAP
The combined financial statements are prepared in accordance with Irish/UK
GAAP which differs in certain significant respects from US GAAP. Ireland and
the UK adopt common accounting standards. The principal differences that
affect the combined profit for the years and the partners' funds are explained
below and the approximate effect is shown below the explanations.
F-60
<PAGE>
JONES LANG WOOTTON - IRISH PRACTICE
NOTES TO THE COMBINED FINANCIAL STATEMENTS--(Continued)
Years ended 31 December 1997, 1996 and 1995
(US$ in thousands, except where stated otherwise)
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.
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:
<TABLE>
<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 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>
F-61
<PAGE>
JONES LANG WOOTTON - IRISH PRACTICE
NOTES TO THE COMBINED FINANCIAL STATEMENTS--(Continued)
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:
<TABLE>
<CAPTION>
Unaudited
nine months
ended
30 September
1998 1997 1996
------------ ----- -----
<S> <C> <C> <C>
Partners' funds in accordance with Irish/UK
GAAP........................................... 4,711 3,195 2,879
Adjustments:
Unrealised surplus on revaluation of leasehold
interest and amortisation.................... (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
===== ===== =====
</TABLE>
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:
<TABLE>
<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>
F-62
<PAGE>
JONES LANG WOOTTON - IRISH PRACTICE
NOTES TO THE COMBINED FINANCIAL STATEMENTS--(Continued)
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:
<TABLE>
<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>
F-63
<PAGE>
JONES LANG WOOTTON - IRISH PRACTICE
NOTES TO THE COMBINED FINANCIAL STATEMENTS--(Continued)
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
<TABLE>
<CAPTION>
Unaudited
30 September
1998 1997 1996
------------ ----- -----
<S> <C> <C> <C>
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$1,179 in 1997 and
1996, respectively ................................ 1,004 1,158 1,220
Other non current assets............................ 1,109 853 746
----- ----- -----
Total assets...................................... 7,785 5,228 5,562
===== ===== =====
Liabilities and partners' funds
Current liabilities
Accounts payable and accrued liabilities............ 1,491 702 912
Taxation............................................ -- -- 4
Other liabilities................................... 117 61 51
Employee entitlements............................... 502 505 574
Borrowings.......................................... 72 20 8
----- ----- -----
Total current liabilities......................... 2,182 1,288 1,549
Deferred tax liability.............................. 355 273 238
Other long term liabilities......................... 156 246 441
----- ----- -----
Total liabilities................................. 2,693 1,807 2,228
===== ===== =====
Partners' balances.................................. 4,032 3,743 3,099
Foreign exchange translation reserve................ (77) (322) 235
Provision for annuitants............................ 1,137 -- --
----- ----- -----
Total partners' funds............................. 5,092 3,421 3,334
===== ===== =====
Total liabilities and partners' funds........... 7,785 5,228 5,562
===== ===== =====
</TABLE>
F-64
<PAGE>
JONES LANG WOOTTON - IRISH PRACTICE
NOTES TO THE COMBINED FINANCIAL STATEMENTS--(Continued)
Years ended 31 December 1997, 1996 and 1995
(US$ in thousands, except where stated otherwise)
Income Statement
<TABLE>
<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>
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:
<TABLE>
<CAPTION>
Unaudited
30 September
1998 1997 1996
------------ ----- -----
<S> <C> <C> <C>
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
===== ===== =====
</TABLE>
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.
F-65
<PAGE>
JONES LANG WOOTTON - IRISH PRACTICE
NOTES TO THE COMBINED FINANCIAL STATEMENTS--(Continued)
Years ended 31 December 1997, 1996 and 1995
(US$ in thousands, except where stated otherwise)
Other current liabilities:
<TABLE>
<CAPTION>
Unaudited
30 September
1998 1997 1996
------------ ---- ----
<S> <C> <C> <C>
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
===== === ===
</TABLE>
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.
F-66
<PAGE>
JLW ASIA HOLDINGS LIMITED
FINANCIAL STATEMENTS
Years ended 31 December 1997, 1996 and 1995
F-67
<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 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. 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
F-68
<PAGE>
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)
<TABLE>
<CAPTION>
Unaudited Unaudited
nine months nine months
ended ended 31 31 31
30 September 30 September December December December
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
allowances 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
======= ======= ======= ======= =======
</TABLE>
All activities derive from continuing operations.
F-69
<PAGE>
JLW ASIA HOLDINGS LIMITED
GROUP BALANCE SHEETS
30 September 1998 and 31 December 1997 and 1996
(US$ in thousands, except where stated otherwise )
<TABLE>
<CAPTION>
Unaudited 31 31
30 September December 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>
F-70
<PAGE>
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 )
<TABLE>
<CAPTION>
Unaudited Unaudited
nine months nine months
ended ended 31 31 31
30 September 30 September December December December
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 re-
sources
Decrease/(increase) in
short term deposits.... 17(b) 5,489 (850) (2,684) 2,048 3,351
------ ------ ------- ------ -------
Net cash flow before fi-
nancing................ (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)
====== ====== ======= ====== =======
</TABLE>
F-71
<PAGE>
JLW ASIA HOLDINGS LIMITED
GROUP 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)
<TABLE>
<CAPTION>
Unaudited Unaudited
nine months nine months
ended ended 31 31 31
30 September 30 September December December December
Note 1998 1997 1997 1996 1995
---- ------------ ------------ -------- -------- --------
<S> <C> <C> <C> <C> <C> <C>
8,079
Profit for the period... (195) 10,969 9,223 7,761
Exchange difference on
retranslation of
net assets............. 16 (15) 122 15 (15) 15
---- ----- ------ ----- -----
Total recognised gains
and losses relating to
the period............. (210) 8,201 10,984 9,208 7,776
==== ===== ====== ===== =====
</TABLE>
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)
<TABLE>
<CAPTION>
Unaudited Unaudited
nine months nine months
ended ended 31 31 31
30 September 30 September December December December
Note 1998 1997 1997 1996 1995
---- ------------ ------------ -------- -------- --------
<S> <C> <C> <C> <C> <C> <C>
Total recognised 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>
F-72
<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. The Group's financial
statements include the accounts of all majority-owned and controlled
subsidiaries in which the group has more than a 50% voting equity interest.
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. These accounts are under the common control and
management of JLW Asia Holdings Limited and therefore consolidate 100% of the
results and net assets of these subsidiary undertakings and do not recognise
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.
F-73
<PAGE>
JLW ASIA HOLDINGS LIMITED
NOTES TO THE GROUP FINANCIAL STATEMENTS--(Continued)
Years ended 31 December 1997, 1996 and 1995
(US$ in thousands, except where 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 recognised 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:
<TABLE>
<S> <C>
Motor vehicles.................................... 20%
Office furniture and equipment.................... 20%
Computer equipment................................ 25%-33 1/3%
Leasehold improvements............................ Over the term of the lease
</TABLE>
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.
F-74
<PAGE>
JLW ASIA HOLDINGS LIMITED
NOTES TO THE GROUP FINANCIAL STATEMENTS--(Continued)
Years ended 31 December 1997, 1996 and 1995
(US$ dollars in thousands, except where 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 recognised 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 analyse
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 analysed as follows:
30 September 1998 (unaudited)
<TABLE>
<CAPTION>
Hong
Kong Singapore Others Total
------ --------- ------ ------
<S> <C> <C> <C> <C>
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
====== ===== ====== ======
</TABLE>
30 September 1997 (unaudited)
<TABLE>
<CAPTION>
Hong
Kong Singapore Others Total
------ --------- ------ ------
<S> <C> <C> <C> <C>
Turnover.................................... 40,300 11,848 8,174 60,322
====== ====== ===== ======
Profit on ordinary activities before
taxation................................... 6,715 701 2,255 9,671
====== ====== ===== ======
</TABLE>
F-75
<PAGE>
JLW ASIA HOLDINGS LIMITED
NOTES TO THE GROUP FINANCIAL STATEMENTS--(Continued)
Years ended 31 December 1997, 1996 and 1995
(US$ in thousands, except where stated otherwise)
31 December 1997
<TABLE>
<CAPTION>
Hong Kong Singapore Others Total
--------- --------- ------ ------
<S> <C> <C> <C> <C>
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
====== ====== ===== ======
</TABLE>
31 December 1996
<TABLE>
<CAPTION>
Hong Kong Singapore Others Total
--------- --------- ------ ------
<S> <C> <C> <C> <C>
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
====== ====== ====== ======
</TABLE>
31 December 1995
<TABLE>
<CAPTION>
Hong Kong Singapore Others Total
--------- --------- ------ ------
<S> <C> <C> <C> <C>
Turnover................................. 35,918 16,416 11,602 63,936
====== ====== ====== ======
Profit on ordinary activities before
taxation................................ 1,667 1,864 5,110 8,641
====== ====== ====== ======
</TABLE>
3. OPERATING PROFIT
Operating profit is stated after charging:
<TABLE>
<CAPTION>
Unaudited Unaudited
nine months nine months
ended ended 31 31 31
30 September 30 September December December December
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 --
===== ===== ===== ===== =====
</TABLE>
F-76
<PAGE>
JLW ASIA HOLDINGS LIMITED
NOTES TO THE GROUP FINANCIAL STATEMENTS--(Continued)
Years ended 31 December 1997, 1996 and 1995
(US$ in thousands, except where stated otherwise)
4. DIRECTORS' REMUNERATION
Emoluments of the directors were as follows:
<TABLE>
<CAPTION>
Unaudited Unaudited
nine months nine months
ended ended 31 31 31
30 September 30 September December December December
1998 1997 1997 1996 1995
------------ ------------ -------- -------- --------
<S> <C> <C> <C> <C> <C>
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
===== ===== ===== ===== =====
</TABLE>
5. TAX ON PROFIT ON ORDINARY ACTIVITIES
The taxation charge is made up as follows:
<TABLE>
<CAPTION>
Unaudited Unaudited
nine months nine months
ended ended 31 31 31
30 September 30 September December December December
1998 1997 1997 1996 1995
------------ ------------ -------- -------- --------
<S> <C> <C> <C> <C> <C>
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
=== ===== ===== ===== ===
</TABLE>
The Group has no liability to UK corporation tax.
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$7,871 for the years ended 31 December 1997, 1996 and 1995
and the nine months ended 30 September 1998 and 1997 respectively represent
cash distributions of profit sharing arrangements for the senior management
of the Group. In general these arrangements take the form of a dividend
payment by the relevant subsidiary undertaking to the holding company,
which pays a corresponding dividend to its "B" shareholder (note 15) who
acts as a trustee in respect of the profit sharing arrangements with senior
management of the relevant
F-77
<PAGE>
JLW ASIA HOLDINGS LIMITED
NOTES TO THE GROUP FINANCIAL STATEMENTS--(Continued)
Years ended 31 December 1997, 1996 and 1995
(US$ in thousands, except where stated otherwise)
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.
7. TANGIBLE ASSETS
31 December 1997
<TABLE>
<CAPTION>
Office
furniture
Leasehold and Computer Motor
improvement 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.................... 0 (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.................... 0 (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>
31 December 1996
<TABLE>
<CAPTION>
Office
furniture
Leasehold and Computer Motor
improvement 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) 0 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>
The net book value of the Group's fixed assets amounted to US$3.5 million
and US$4.0 million at 31 December 1997 and 1996 respectively in respect of
assets held under finance leases and hire purchase contracts.
F-78
<PAGE>
JLW ASIA HOLDINGS LIMITED
NOTES TO THE GROUP FINANCIAL STATEMENTS--(Continued)
Years ended 31 December 1997, 1996 and 1995
(US$ in thousands, except where stated otherwise)
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:
<TABLE>
<CAPTION>
31 31
December December
1997 1996
-------- --------
<S> <C> <C>
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
==== ====
</TABLE>
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:
<TABLE>
<CAPTION>
Company Place of incorporation
------- ----------------------
<S> <C>
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
</TABLE>
The business of the JLW Transact Group is consultancy and agency services in
respect of hotels.
F-79
<PAGE>
JLW ASIA HOLDINGS LIMITED
NOTES TO THE GROUP FINANCIAL STATEMENTS--(Continued)
Years Ended 31 December 1997, 1996 and 1995
(US$ in thousands, except where stated otherwise)
9. DEBTORS
<TABLE>
<CAPTION>
31 31
December December
1997 1996
-------- --------
<S> <C> <C>
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
====== ======
</TABLE>
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
<TABLE>
<CAPTION>
31 31
December December
Note 1997 1996
---- -------- --------
<S> <C> <C> <C>
Current instalments 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
====== ======
</TABLE>
11. CREDITORS: AMOUNTS FALLING DUE AFTER MORE THAN ONE YEAR
<TABLE>
<CAPTION>
31 31
December December
Note 1997 1996
---- -------- --------
<S> <C> <C> <C>
Loans............................................... 12 202 732
Obligations under finance leases and hire purchase
contracts.......................................... 13 1,447 2,654
----- -----
1,649 3,386
===== =====
</TABLE>
F-80
<PAGE>
JLW ASIA HOLDINGS LIMITED
NOTES TO THE GROUP FINANCIAL STATEMENTS--(Continued)
Years ended 31 December 1997, 1996 and 1995
(US$ in thousands, except where stated otherwise)
12. LOANS
<TABLE>
<CAPTION>
31 31
December December
Note 1997 1996
---- -------- --------
<S> <C> <C> <C>
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
=== =====
</TABLE>
13. OBLIGATIONS UNDER LEASES AND HIRE PURCHASE CONTRACTS
Net amounts due under finance leases and hire purchase contracts:
<TABLE>
<CAPTION>
31 31
December December
Note 1997 1996
---- -------- --------
<S> <C> <C> <C>
Amounts payable:
Within one year..................................... 10 2,086 1,173
Between two and five years.......................... 11 1,447 2,654
----- -----
3,533 3,827
===== =====
</TABLE>
Annual commitments under non-cancellable operating leases are as follows:
<TABLE>
<CAPTION>
31 31
December December
1997 1996
-------- --------
<S> <C> <C>
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
====== ======
</TABLE>
14. DEFERRED TAXATION
<TABLE>
<CAPTION>
31 31
December December
1997 1996
-------- --------
<S> <C> <C>
At beginning of period..................................... 151 25
Exchange adjustment........................................ (35) 1
Arising during the period.................................. 77 125
--- ---
At end of period........................................... 193 151
=== ===
</TABLE>
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.
F-81
<PAGE>
JLW ASIA HOLDINGS LIMITED
NOTES TO THE GROUP FINANCIAL STATEMENTS--(Continued)
Years ended 31 December 1997, 1996 and 1995
(US$ in thousands, except where stated otherwise)
15. SHARE CAPITAL
<TABLE>
<CAPTION>
31 December 1997
and 1996
$
----------------
<S> <C>
Authorised:
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 "O' 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 US$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$1............................ 1
-----
5
=====
</TABLE>
The "A" shares are the only shares in the capital of the company which
confer on the holders a right to vote at any general meeting of the company,
and any such holders are entitled to one vote for each share held. "A" shares
carry no right to any dividend declared or payable. "A" shares carry no right
to any participation, over and above repayment of capital, in surplus assets
or profits of the company upon a reduction of capital or on a winding up.
The "B" share carries no voting rights, but is the only share in issue which
carries the right to dividend and to the participation in surplus assets or
profits upon reduction of capital or on a winding up.
F-82
<PAGE>
JLW ASIA HOLDINGS LIMITED
NOTES TO THE GROUP FINANCIAL STATEMENTS--(Continued)
Years ended 31 December 1997, 1996 and 1995
(US$ in thousands, except where stated otherwise)
16. RESERVES
<TABLE>
<CAPTION>
Exchange Profit
fluctuation and loss
reserve account Total
----------- -------- ------
<S> <C> <C> <C>
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 loss 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 nine-month period.......... -- (2,084) (2,084)
---- ------ ------
At 30 September 1998............................. -- 10,632 10,632
==== ====== ======
</TABLE>
17. NOTES TO THE STATEMENT OF CASH FLOWS
(a) Reconciliation of operating profit to net cash (outflow)/inflow from
operating activities
<TABLE>
<CAPTION>
Unaudited Unaudited
nine months nine months
ended ended 31 31 31
30 September 30 September December December December
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>
F-83
<PAGE>
JLW ASIA HOLDINGS LIMITED
NOTES TO THE GROUP FINANCIAL STATEMENTS--(Continued)
Years ended 31 December 1997, 1996 and 1995
(US$ in thousands, except where stated otherwise)
(b) Analysis of net debt
30 September 1998 (unaudited)
<TABLE>
<CAPTION>
At Other At
1 January Cash Exchange non-cash 30 September
1998 Flow differences movements 1998
--------- ------ ----------- --------- ------------
<S> <C> <C> <C> <C> <C>
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)
====== ====== === ====== ======
</TABLE>
30 September 1997 (unaudited)
<TABLE>
<CAPTION>
At Other At
1 January Cash Exchange non-cash 30 September
1997 Flow differences movements 1997
--------- ----- ----------- --------- ------------
<S> <C> <C> <C> <C> <C>
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
====== ===== === ==== ======
</TABLE>
31 December 1997
<TABLE>
<CAPTION>
At Other At
1 January Cash Exchange non-cash 31 December
1997 Flow differences movements 1997
--------- ----- ----------- --------- -----------
<S> <C> <C> <C> <C> <C>
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
====== ===== ==== ==== ======
</TABLE>
F-84
<PAGE>
JLW ASIA HOLDINGS LIMITED
NOTES TO THE GROUP FINANCIAL STATEMENTS--(Continued)
Years ended 31 December 1997, 1996 and 1995
(US$ in thousands, except where stated otherwise)
31 December 1996
<TABLE>
<CAPTION>
At Other At
1 January Cash Exchange non-cash 31 December
1996 Flow differences movements 1996
--------- ------ ----------- --------- -----------
<S> <C> <C> <C> <C> <C>
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
====== ====== === ==== ======
</TABLE>
31 December 1995
<TABLE>
<CAPTION>
At Other At
1 January Cash Exchange non-cash 31 December
1995 Flow differences movements 1995
--------- ------ ----------- --------- -----------
<S> <C> <C> <C> <C> <C>
Cash at bank and in
hand................... 3,142 393 (45) -- 3,490
Bank overdrafts......... (36) (454) 0 -- (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
====== ====== ==== ====== ======
</TABLE>
- --------
* Short term deposits are included within cash at bank and in hand in the
balance sheet.
F-85
<PAGE>
JLW ASIA HOLDINGS LIMITED
NOTES TO THE GROUP FINANCIAL STATEMENTS--(Continued)
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
<TABLE>
<CAPTION>
Unaudited Unaudited
nine months nine months
ended ended 31 31 31
30 September 30 September December December December
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>
(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$128 in 1997, 1996 and the
nine months in 1998 respectively.
As of 30 September 1998, the group had a number of Hong Kong employees who
have completed the required number of years of service under the Employment
Ordinance in Hong Kong (the "Ordinance") to be eligible for long service
payments on termination of their employment. The group is only liable to make
such
F-86
<PAGE>
JLW ASIA HOLDINGS LIMITED
NOTES TO THE GROUP FINANCIAL STATEMENTS--(Continued)
Years ended 31 December 1997, 1996 and 1995
(US$ in thousands, except where stated otherwise)
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 organisation 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 licence 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.
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 31 December 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:
<TABLE>
<CAPTION>
Percentage of shareholding
----------------------------
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 Singapore 100 "A" shares of S$1 each 90% 100% No Property consulting,
Consultants Pte Ltd. 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 Hong Kong 100 "A" shares of HK$1 each 90% 100% No Real estate agency,
Limited 1 "E" share of HK$1 each 100% 100% Yes property consulting
1 "Y" share of HK$1 each 100% 100% Yes and valuation
</TABLE>
F-87
<PAGE>
JLW ASIA HOLDINGS LIMITED
NOTES TO THE GROUP FINANCIAL STATEMENTS--(Continued)
Years ended 31 December 1997, 1996 and 1995
(US$ in thousands, except where stated otherwise)
22. SIGNIFICANT DIFFERENCES BETWEEN UKGAAP AND USGAAP
The Group's accounting policies conform with UKGAAP which differ in certain
material respects from USGAAP. Differences that have a significant effect on
net profit/(loss) and shareholders' funds are set out below.
Goodwill arising on consolidation
Under UKGAAP, positive or negative goodwill arising on acquisition of
subsidiaries or associated companies are reflected in reserves in the year of
acquisition.
Under USGAAP, 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 UKGAAP, 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 crystallize 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
crystallize. Net deferred tax debits are not carried forward as assets, except
to the extent that recoverability is assured beyond reasonable doubt.
USGAAP 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
USGAAP and the Group's treatment of deferred income taxes in accordance with
UKGAAP for the periods presented.
Long service payments
Under UKGAAP, 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 USGAAP, 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 UKGAAP, 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.
F-88
<PAGE>
JLW ASIA HOLDINGS LIMITED
NOTES TO THE GROUP FINANCIAL STATEMENTS--(Continued)
Years ended 31 December 1997, 1996 and 1995
(US$ in thousands, except where stated otherwise)
Under USGAAP, 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 in accordance with EITF Issue No. 97-2. As such, JLW
(Thailand) Limited would not be consolidated under US GAAP. However, as the
investee is in a net loss position and the company has provided for operating
losses in excess of its investment and has recognized as an expense 100% of
such amounts for both UK GAAP and US GAAP, there is no difference in net
income/(loss) or shareholders' funds in accordance with US GAAP for the
periods presented.
Effect on profit for the period of significant differences between UKGAAP
and USGAAP is as follows:
<TABLE>
<CAPTION>
Unaudited Unaudited
nine months nine months
ended ended 31 31 31
30 September 30 September December December December
1998 1997 1997 1996 1995
------------ ------------ -------- -------- --------
<S> <C> <C> <C> <C> <C>
Profit/(loss) for the
period in accordance with
UKGAAP................... (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
USGAAP................... (1,096) 8,228 11,138 9,353 7,885
====== ===== ====== ===== =====
</TABLE>
Effect on shareholders' funds of significant differences between UKGAAP and
USGAAP is as follows:
<TABLE>
<CAPTION>
Unaudited Unaudited 31 31 31
30 September 30 September December December December
1998 1997 1997 1996 1995
------------ ------------ -------- -------- --------
<S> <C> <C> <C> <C> <C>
Shareholders' funds in
accordance with UKGAAP.. 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
USGAAP.................. 10,632 17,765 13,632 17,286 15,588
====== ====== ====== ====== ======
</TABLE>
Consolidated statements of cash flows
The consolidated statements of cash flows prepared under UKGAAP differ in
certain presentational respects from the format required under Statement of
Financial Accounting Standards ("SFAS") No.95. Under UKGAAP, 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.
F-89
<PAGE>
JLW ASIA HOLDINGS LIMITED
NOTES TO THE GROUP FINANCIAL STATEMENTS--(Continued)
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:
<TABLE>
<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...... (3,625) 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
====== ====== ======= ====== =======
</TABLE>
A reconciliation between the statement of cash flows presented in accordance
with UKGAAP and USGAAP is set out below:
<TABLE>
<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 (outflow)/inflow
from operating activities
(UKGAAP)................... (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 USGAAP 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>
F-90
<PAGE>
JLW ASIA HOLDINGS LIMITED
NOTES TO THE GROUP FINANCIAL STATEMENTS--(Continued)
Years ended 31 December 1997, 1996 and 1995
(US$ in thousands, except where stated otherwise)
<TABLE>
<CAPTION>
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,
financial investment and
acquisitions (UKGAAP)..... (290) (272) (424) (1,085) (142)
------ ------ ------- ------ -------
Net cash used in investment
activities (USGAAP)....... (290) (272) (424) (1,085) (142)
====== ====== ======= ====== =======
Financing activities
Net cash outflow from
financing (UKGAAP)........ (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 (USGAAP)....... (1,091) (9,313) (17,309) (8,286) (13,210)
====== ====== ======= ====== =======
</TABLE>
F-91
<PAGE>
JLW ASIA HOLDINGS LIMITED
NOTES TO THE GROUP FINANCIAL STATEMENTS--(Continued)
Years ended 31 December 1997, 1996 and 1995
(US$ in thousands, except where stated otherwise)
23. BALANCE SHEET AND PROFIT AND LOSS ACCOUNTS UNDER USGAAP.
The following balance sheets and profit and loss accounts have been prepared
in accordance with USGAAP and reflect the adjustments detailed in note 22 to
the financial statements and certain other reclassifications.
Balance sheet
<TABLE>
<CAPTION>
Unaudited
30 September
1998 1997 1996
------------ ------ ------
<S> <C> <C> <C>
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 $4,141 at 30
September 1998, 31 December 1997 and 1996,
respectively...................................... 4,785 4,977 5,719
Interest in associated undertakings................ -- -- 548
Investments........................................ 419 346 287
------ ------ ------
Total assets..................................... 32,778 34,245 39,649
====== ====== ======
Liabilities and stockholders' equity
Current liabilities
Accounts payable and accrued liabilities........... 3,773 5,742 5,668
Taxation........................................... 806 2,132 1,037
Other liabilities.................................. 10,600 8,569 10,615
Borrowings......................................... 4,102 2,392 1,761
------ ------ ------
Total current liabilities........................ 19,281 18,835 19,081
Deferred tax liability............................. 231 193 151
Other long term liabilities........................ 2,634 1,585 3,131
------ ------ ------
Total liabilities................................ 22,146 20,613 22,363
------ ------ ------
Stockholders' equity
Issued share capital............................... -- -- --
Retained earnings.................................. 10,632 13,617 17,286
Effects of cumulative translation adjustments...... -- 15 --
------ ------ ------
Total stockholders' equity....................... 10,632 13,632 17,286
------ ------ ------
Total liabilities and stockholders' equity..... 32,778 34,245 39,649
====== ====== ======
</TABLE>
F-92
<PAGE>
JLW ASIA HOLDINGS LIMITED
NOTES TO THE GROUP FINANCIAL STATEMENTS--(Continued)
Years ended 31 December 1997, 1996 and 1995
(US$ in thousands, except where stated otherwise)
Profit and loss accounts
<TABLE>
<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 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>
F-93
<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
F-94
<PAGE>
JLW AUSTRALASIA GROUP
FINANCIAL STATEMENTS
Years ended 31 December 1997, 1996 and 1995
F-95
<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 summarised in Note 22 and Note 23 to the combined
financial statements.
ERNST & YOUNG
Sydney
23 November 1998
F-96
<PAGE>
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)
<TABLE>
<CAPTION>
Unaudited Unaudited
nine months nine months
ended ended
Note 30 September 1998 30 September 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)
======= ======= ======= ======= =======
</TABLE>
All activities derive from continuing operations.
F-97
<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, except where stated otherwise)
<TABLE>
<CAPTION>
Foreign
Exchange Profit
Translation and Loss
Reserve Account Total
----------- -------- ------
<S> <C> <C> <C>
Balance at 1 January 1995.......................... -- 3,654 3,654
Loss for the year.................................. -- (5) (5)
Foreign exchange translation differences........... (137) -- (137)
------ ----- ------
Balance at 1 January 1996.......................... (137) 3,649 3,512
Profit for the year................................ -- 2,175 2,175
Foreign exchange translation differences........... 269 -- 269
------ ----- ------
Balance at 31 December 1996........................ 132 5,824 5,956
Profit for the year................................ -- 1,021 1,021
Foreign exchange translation differences........... (1,198) -- (1,198)
------ ----- ------
Balance at 31 December 1997........................ (1,066) 6,845 5,779
Profit for the period.............................. -- 265 265
Foreign exchange translation differences........... (576) -- (576)
------ ----- ------
Unaudited balance at 30 September 1998............. (1,642) 7,110 5,468
====== ===== ======
</TABLE>
Corporate profit and loss account reserves represent the amounts retained
within the corporate entities combined in these accounts.
F-98
<PAGE>
JLW AUSTRALASIA GROUP
COMBINED BALANCE SHEETS
30 September 1998 and 31 December 1997 and 1996
(US$ in thousands, except where stated otherwise)
<TABLE>
<CAPTION>
Unaudited
Note 30 September 1998 1997 1996
---- ----------------- ------- -------
<S> <C> <C> <C> <C>
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 translation
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
====== ======= =======
</TABLE>
F-99
<PAGE>
JLW AUSTRALIASIA GROUP
COMBINED STATEMENTS OF CASHFLOWS
Nine months ended 30 September 1998 and 1997
and years ended 31 December 1997, 1996 and 1995
(US$ in thousands, except where stated otherwise)
<TABLE>
<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 (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 finance... 78 (1,176) (4,155) (669) (569)
------ ------ ------ ------ ------
Taxation
Tax paid................................ (2,670) (1,392) (2,017) (926) (2,651)
------ ------ ------ ------ ------
Capital expenditure and financial in-
vestment
Payments to acquire tangible fixed as-
sets................................... (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
expenditure and financial investment... 202 (268) (663) (678) (1,579)
------ ------ ------ ------ ------
Net cash inflow (outflow) before financ-
ing.................................... (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 financ-
ing.................................... (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>
F-100
<PAGE>
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)
<TABLE>
<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........... 265 2,848 6,311 3,119 912
Currency translation differences
on foreign currency
net investments................ (576) (532) (1,198) 269 (137)
---- ----- ------ ----- ----
Total recognised gains and
losses relating to the year.... (311) 2,316 5,113 3,388 775
==== ===== ====== ===== ====
</TABLE>
RECONCILIATION 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)
<TABLE>
<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......... 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>
F-101
<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 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
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 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 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.
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.
F-102
<PAGE>
JLW AUSTRALASIA GROUP
NOTES TO THE ACCOUNTS--(Continued)
Years ended 31 December 1997, 1996 and 1995
(US$ in thousands, except where stated otherwise)
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.
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.
F-103
<PAGE>
JLW AUSTRALASIA GROUP
NOTES TO THE ACCOUNTS--(Continued)
Years ended 31 December 1997, 1996 and 1995
(US$ in thousands, except where stated otherwise)
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.
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.
F-104
<PAGE>
JLW AUSTRALASIA GROUP
NOTES TO THE ACCOUNTS--(Continued)
Years ended 31 December 1997, 1996 and 1995
(US$ in thousands, except where stated otherwise)
2. OPERATING PROFIT
<TABLE>
<CAPTION>
1997 1996 1995
------ ------ ------
<S> <C> <C> <C>
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
====== ====== ======
</TABLE>
<TABLE>
<CAPTION>
No. No. No.
----- ----- -----
<S> <C> <C> <C>
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
Rentals under operating leases.......................
Other operating leases............................. 2,931 5,271 4,156
===== ===== =====
(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
===== ===== =====
</TABLE>
3. INVESTMENT INCOME
<TABLE>
<CAPTION>
1997 1996 1995
----- ----- -----
<S> <C> <C> <C>
Income from interests in associated companies.............. 420 739 --
Income from related body corporates........................ 1,325 855 958
Other interest receivable and similar income............... 150 94 77
----- ----- -----
1,895 1,688 1,035
===== ===== =====
</TABLE>
4. INTEREST PAYABLE AND SIMILAR CHARGES
<TABLE>
<CAPTION>
1997 1996 1995
---- ---- ----
<S> <C> <C> <C>
Bank loans, overdrafts and other loans........................ 144 436 401
Finance charges--finance leases............................... 196 238 286
--- --- ---
340 674 687
=== === ===
</TABLE>
F-105
<PAGE>
JLW AUSTRALASIA GROUP
NOTES TO THE ACCOUNTS--(Continued)
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 of the following:
<TABLE>
<CAPTION>
Based on the profit for the year 1997 1996 1995
-------------------------------- ----- ----- ----
<S> <C> <C> <C>
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
===== ===== ====
</TABLE>
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:
<TABLE>
<S> <C> <C> <C>
Deferred tax liability..................................... 331 (81) 25
Deferred tax asset......................................... (69) 21 (331)
--- --- ----
262 (60) (306)
=== === ====
</TABLE>
F-106
<PAGE>
JLW AUSTRALASIA GROUP
NOTES TO THE ACCOUNTS--(Continued)
Years ended 31 December 1997, 1996 and 1995
(US$ in thousands, except where stated otherwise)
6. TANGIBLE FIXED ASSETS
<TABLE>
<CAPTION>
Office machinery,
Motor computer equipment
vehicles and fixtures Total
-------- ------------------ ------
<S> <C> <C> <C>
Cost
At 1 January 1996...................... 1,622 5,231 6,853
Foreign exchange translation differ-
ences................................. 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 translation differ-
ences................................. (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 translation differ-
ences................................. 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 translation differ-
ences................................. (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
===== ====== ======
</TABLE>
The net book value of the group's fixed assets includes motor vehicles
amounting to $1,088 (31 December 1996 $1,631) in respect of assets held under
finance leases.
F-107
<PAGE>
JLW AUSTRALASIA GROUP
NOTES TO THE ACCOUNTS--(Continued)
Years ended 31 December 1997, 1996 and 1995
(US$ in thousands, except where stated otherwise)
7. INVESTMENTS
<TABLE>
<CAPTION>
1997 1996
----- ----
<S> <C> <C>
Net book value
Associates........................................................ 979 888
Other investments................................................. 82 48
----- ---
1,061 936
===== ===
</TABLE>
Investments in Associates
<TABLE>
<CAPTION>
1997 1996
---- ----
<S> <C> <C>
JLW Transact Group................................................. 979 888
=== ===
</TABLE>
<TABLE>
<CAPTION>
Share of
post
acquisition
Cost reserves Total
---- ----------- -----
<S> <C> <C> <C>
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
Profit for the year.................................. -- 280 280
Profits distributed.................................. -- -- --
Foreign exchange translation......................... -- (189) (189)
--- ---- ----
At 31 December 1997.................................. 320 659 979
=== ==== ====
</TABLE>
8. DEBTORS
<TABLE>
<CAPTION>
31 December 31 December
1997 1996
----------- -----------
<S> <C> <C>
Trade debtors........................................ 11,023 12,002
Other debtors:
Due within one year................................ 1,118 1,777
Due after more than one year....................... -- 79
Prepayments and accrued income....................... 222 440
------ ------
12,363 14,298
====== ======
</TABLE>
9. CREDITORS: AMOUNTS FALLING DUE WITHIN ONE YEAR
<TABLE>
<CAPTION>
1997 1996
------ ------
<S> <C> <C>
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
====== ======
</TABLE>
F-108
<PAGE>
JLW AUSTRALASIA GROUP
NOTES TO THE ACCOUNTS--(Continued)
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
<TABLE>
<CAPTION>
1997 1996
---- -----
<S> <C> <C>
Obligation under finance leases................................... 544 1,037
Other creditors................................................... -- 652
Amounts owed to related entities.................................. -- 1,112
--- -----
544 2,801
=== =====
</TABLE>
11. BORROWINGS
JLW Australia Pty Limited has a bank overdraft facility available to the
extent of $1,951 (1996: $4,766) subject to certain covenants being met. This
is secured by a registered mortgage debenture over all assets of the wholly-
owned controlled entities in the JLW Holdings Pty Limited "Australia" economic
entity.
12. PROVISIONS FOR LIABILITIES AND CHARGES
<TABLE>
<CAPTION>
31 December 31 December
1997 1996
----------- -----------
<S> <C> <C>
Employee Entitlements................................ 1,916 2,047
===== =====
Deferred Tax Liability Cumulative Effect
Provided........................................... -- --
===== =====
Not Provided:
Deferred Tax Asset............................... 871 1,202
Deferred Tax Liability........................... (80) (149)
===== =====
</TABLE>
13. RECONCILIATION OF OPERATING PROFIT TO NET CASH INFLOW FROM OPERATING
ACTIVITIES
<TABLE>
<CAPTION>
1997 1996 1995
------ ------ ------
<S> <C> <C> <C>
Operating profit................................... 7,689 3,796 1,288
Depreciation and amortisation charges.............. 1,445 1,393 1,422
(Profit)/loss on sale of tangible fixed assets..... (317) (193) (109)
Increase/(Decrease) in provisions for liabilities
and charges....................................... (84) 152 (1,132)
(Increase)/Decrease in debtors..................... 926 2,249 (883)
Increase/(Decrease) in creditors................... 1,153 (1,155) (53)
Foreign exchange transaction differences........... (661) (262) (67)
------ ------ ------
Net cash inflow from operating activities.......... 10,151 5,980 466
====== ====== ======
</TABLE>
F-109
<PAGE>
JLW AUSTRALASIA GROUP
NOTES TO THE ACCOUNTS--(Continued)
Years ended 31 December 1997, 1996 and 1995
(US$ in thousands, except where stated otherwise)
14. ANALYSIS OF NET FUNDS
<TABLE>
<CAPTION>
Cash
1996 flow 1995
------ ------ ------
<S> <C> <C> <C>
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)
====== ====== ======
<CAPTION>
Cash
1997 flow 1996
------ ------ ------
<S> <C> <C> <C>
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)
====== ====== ======
</TABLE>
15. RECONCILIATIONS OF NET CASH FLOW TO MOVEMENT IN NET FUNDS
<TABLE>
<CAPTION>
1997 1996
----- ------
<S> <C> <C>
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)
===== ======
</TABLE>
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.
F-110
<PAGE>
JLW AUSTRALASIA GROUP
NOTES TO THE ACCOUNTS--(Continued)
Years ended 31 December 1997, 1996 and 1995
(US$ in thousands, except where stated otherwise)
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:
<TABLE>
<CAPTION>
1997 1996
Buildings Buildings
--------- ---------
<S> <C> <C>
Lease which expire:
Within one year........................................ -- --
Within two to five years............................... 15,759 21,914
After five years....................................... -- --
------ ------
15,759 21,914
====== ======
</TABLE>
18. OBLIGATIONS UNDER FINANCE LEASES
<TABLE>
<CAPTION>
1997 1996
----- -----
<S> <C> <C>
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
===== =====
</TABLE>
19. CALLED UP SHARE CAPITAL
<TABLE>
<CAPTION>
1997 1996
---- ----
<S> <C> <C>
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
=== ===
</TABLE>
F-111
<PAGE>
JLW AUSTRALASIA GROUP
NOTES TO THE ACCOUNTS--(Continued)
Years ended 31 December 1997, 1996 and 1995
(US$ in thousands, except where stated otherwise)
20. RELATED PARTY TRANSACTIONS
JLW Holdings Pty Limited
The following related party transactions occurred during the financial year:
<TABLE>
<CAPTION>
1997 1996 1995
31 December 31 December 31 December
----------- ----------- -----------
<S> <C> <C> <C> <C> <C> <C>
1) Related party dividends
and income
i) JLW Australia Pty
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 Pty Limited:
--dividend............... 188 185 --
--- --- ---
2) Interest paid on subordinated loans is at commercial rates of
interest and amounted to $99 (1996: $163, 1995: $172). These
loans are subordinated in favour of the National Australia
Bank's financial accommodation only.
</TABLE>
Jones Lang Wootton Holdings Limited (New Zealand)
No related party debts have been written off or forgiven during the year.
F-112
<PAGE>
JLW AUSTRALASIA GROUP
NOTES TO THE ACCOUNTS--(Continued)
Years ended 31 December 1997, 1996 and 1995
(US$ 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
<TABLE>
<CAPTION>
Country of
incorporation/
registration and Proportion of
Company operation Activity Ownership held
- ------- ---------------- ------------------------- --------------
<S> <C> <C> <C>
JLW Holdings Pty Australia 100%
Limited................ Holding Company
JLW Australia Pty Australia 100%
Limited................ Holding Company
JLW (NSW) Pty Limited... Australia Property, sales, leasing 100%
and management company
JLW (ACT) Pty Limited... Australia Property, sales, leasing 100%
and management company
JLW (VIC) Pty Limited... Australia Property, sales, leasing 100%
and management company
JLW (QLD) Pty Limited... Australia Property, sales, leasing 100%
and management company
JLW (SA) Pty Limited.... Australia Property, sales, leasing 100%
and management company
JLW (WA) Pty Limited.... Australia Property, sales, leasing 100%
and management company
JLW Strata Management Australia Property Management 100%
Pty Limited............ Services
JLW Management Services Australia Property Management 100%
Pty Limited............ Services
JLW Property Fund Australia Property Licencing 100%
Advisors Pty Limited... Company
JLW Corporate Property Australia 100%
(VIC) Pty Limited...... Dormant Company
JLW Property Financial Australia Property Licencing 100%
Services Ltd........... Company
JLW Advisory Services Australia Property Advisory 100%
Pty Limited............ Services
JLW Corporate Facilities
Management Pty
Limited................ Australia Dormant Company 100%
JLW Superannuation Pty Australia Superannuation Fund 100%
Limited................ Trustee
JLW Nominees Pty Australia 100%
Limited................ Dormant Company
JLW Advisory Corporate Property Advisory
Property Pty Limited... Australia Services 100%
JLW Executive Australia 100%
Superannuation Pty Superannuation Fund
Limited................ Trustee
JLW (TAS) Pty Limited... Australia Dormant Company 100%
JLW Fund Management Pty Australia 100%
Limited................ Dormant Company
JLW International Fund
Management Pty
Limited................ Australia Dormant Company 100%
Caylott Pty Limited..... Australia Dormant Company 100%
Jones Lang Wootton Fund
Management Pty
Limited................ Australia Dormant Company 100%
Jones Lang Wootton
International Fund
Management Pty
Limited................ Australia Dormant Company 100%
</TABLE>
F-113
<PAGE>
JLW AUSTRALASIA GROUP
NOTES TO THE ACCOUNTS--(Continued)
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
<TABLE>
<CAPTION>
Country of
incorporation/
registration and Proportion of
Company operation Activity Ownership held
- ------- ---------------- -------- --------------
<S> <C> <C> <C>
Jones Lang Wootton New Zealand Property, sales, 100%
Holdings Limited....... leasing and management
company
JLW Advisory Limited.... New Zealand Property Advisory 100%
Services
JLW International Fund New Zealand Dormant Company 100%
Management Limited.....
JLW Fund Management New Zealand Dormant Company 100%
Limited................
JLW Facilities New Zealand Dormant Company 100%
Management Limited.....
Jones Lang Wootton Fund New Zealand Dormant Company 100%
Management Limited.....
Jones Lang Wootton
International Fund
Management Limited..... New Zealand Dormant Company 100%
Jones Lang Wootton New Zealand Property, sales, 100%
Limited................ leasing and management
company
</TABLE>
(iii) Combined JLW "Transact Group"
<TABLE>
<CAPTION>
Country of
incorporation/
registration and Proportion of
Company operation Activity Ownership held
- ------- ---------------- -------- --------------
<S> <C> <C> <C>
JLW Transact Pty Ltd Australia Hotel Sales, Note 1
Australia.................. Leasing and
Management
JLW Transact Ltd New New Zealand Hotel Sales, Note 1
Zealand.................... Leasing and
Management
JLW Transact Ltd Hong Kong.. Hong Kong Hotel Sales, Note 1
Leasing and
Management
JLW Administration Pty Ltd.. Australia Hotel Sales, Note 1
Leasing and
Management
Transact Hotel & Tourism
Property Singapore Hotel Sales, Note 1
(Singapore) Pte Limited.... Leasing and
Management
JLW Transact Pte Limited Indonesia Hotel Sales, Note 1
Indonesia.................. Leasing and
Management
</TABLE>
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%).
F-114
<PAGE>
JLW AUSTRALASIA GROUP
NOTES TO THE ACCOUNTS--(Continued)
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.
Combined income statements
<TABLE>
<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>
F-115
<PAGE>
JLW AUSTRALASIA GROUP
NOTES TO THE ACCOUNTS--(Continued)
Years ended 31 December 1997, 1996 and 1995
(US$ in thousands, except where stated otherwise)
Combined balance sheets
<TABLE>
<CAPTION>
Unaudited
30 September
1998 1997 1996
------------ ------ ------
<S> <C> <C> <C>
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
====== ====== ======
</TABLE>
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:
<TABLE>
<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... (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 --
====== ====== ====== ====== ======
</TABLE>
F-116
<PAGE>
JLW AUSTRALASIA GROUP
NOTES TO THE ACCOUNTS--(Continued)
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:
<TABLE>
<CAPTION>
Unaudited Unaudited
nine months nine months
ended ended
30 September 1998 30 September 1997 1997 1996 1995
----------------- ----------------- ------ ------ ------
<S> <C> <C> <C> <C> <C>
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)
====== ====== ====== ====== ======
</TABLE>
No differences exist between UK GAAP and US GAAP for investing activities.
F-117
<PAGE>
JLW AUSTRALASIA GROUP
NOTES TO THE ACCOUNTS--(Continued)
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
<TABLE>
<CAPTION>
Unaudited
30 September
1998 1997 1996
------------ ------ ------
<S> <C> <C> <C>
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 translation 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
====== ====== ======
</TABLE>
F-118
<PAGE>
JLW AUSTRALASIA GROUP
NOTES TO THE ACCOUNTS--(Continued)
Years ended 31 December 1997, 1996 and 1995
(US$ in thousands, except where stated otherwise)
Profit and loss account
<TABLE>
<CAPTION>
Unaudited Unaudited
nine months nine months
ended 30 September ended 30 September
1998 1997 1997 1996 1995
------------------ ------------------ ------ ------ ------
<S> <C> <C> <C> <C> <C>
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,
administrative and
other.................. 18,734 20,811 28,440 29,648 32,458
Merger-related non-
recurring charges...... 2,509 -- -- -- --
Depreciation and
amortisation........... 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
====== ====== ====== ====== ======
</TABLE>
F-119
<PAGE>
COMPASS GROUP
Financial Statements
December 31, 1997
F-120
<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.
KPMG Peat Marwick LLP
Atlanta, Georgia
September 21, 1998, except
for note 12, which is as of
October 31, 1998
F-121
<PAGE>
COMPASS GROUP
COMBINED BALANCE SHEETS
September 30, 1998 (unaudited) and December 31, 1997
<TABLE>
<CAPTION>
September
30, December
1998 31, 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
============ ===========
LIABILITIES AND STOCKHOLDERS' EQUITY
</TABLE>
Current liabilities:
<TABLE>
<S> <C> <C>
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--$1 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
============ ===========
</TABLE>
See accompanying notes to combined financial statements.
F-122
<PAGE>
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
<TABLE>
<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)
============ ========== ==========
</TABLE>
See accompanying notes to combined financial statements.
F-123
<PAGE>
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
<TABLE>
<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
======= ========== =========== ===========
</TABLE>
See accompanying notes to combined financial statements.
F-124
<PAGE>
COMPASS GROUP
COMBINED STATEMENTS OF CASH FLOWS
For the Six Months ended June 30, 1998 (unaudited) and the
Period June 11, 1997 to December 31, 1997
<TABLE>
<CAPTION>
Nine months June 11, June 11,
ended 1997 to 1997 to
September 30, September December 31,
1998 30, 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)
------------ ----------- ------------
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
============
</TABLE>
See accompanying notes to combined financial statements.
F-125
<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.
(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
F-126
<PAGE>
COMPASS GROUP
NOTES TO COMBINED FINANCIAL STATEMENTS
September 30, 1998 (unaudited) and December 31, 1997
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:
<TABLE>
<S> <C>
Management contracts......................................... $ 97,132,087
Excess purchase price over net assets acquired............... 53,585,335
Accumulated amortization..................................... (13,911,635)
------------
$136,805,787
============
</TABLE>
(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.
(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.
F-127
<PAGE>
COMPASS GROUP
NOTES TO COMBINED FINANCIAL STATEMENTS
September 30, 1998 (unaudited) and December 31, 1997
(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.
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).
F-128
<PAGE>
COMPASS GROUP
NOTES TO COMBINED FINANCIAL STATEMENTS
September 30, 1998 (unaudited) and December 31, 1997
(3) PROPERTY, PLANT, AND EQUIPMENT
Property, plant, and equipment at December 31, 1997 is summarized as
follows:
<TABLE>
<S> <C>
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
===========
</TABLE>
Depreciation expense for the period June 11, 1997 to December 31, 1997 was
$863,904.
(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:
<TABLE>
<CAPTION>
Current Deferred Total
---------- ---------- ------
<S> <C> <C> <C>
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
========== ========== ======
</TABLE>
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:
<TABLE>
<CAPTION>
Period from
June 11, 1997
to December 31,
1997
----------------
<S> <C> <C>
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%
========= =====
</TABLE>
F-129
<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:
<TABLE>
<CAPTION>
December 31,
1997
------------
<S> <C>
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
==========
</TABLE>
There is no valuation allowance for deferred tax assets as of December 31,
1997. In assessing whether the deferred tax assets are realizable, 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 realizable; however, it could be reduced in
the near term if estimates of future taxable income during the carryforward
period are reduced.
(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 part-time employees who have reached age 21 and have
completed six months of continuous service. The
F-130
<PAGE>
COMPASS GROUP
NOTES TO COMBINED FINANCIAL STATEMENTS
September 30, 1998 (unaudited) and December 31, 1997
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.
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:
<TABLE>
<CAPTION>
Minimum
Year rental
---- -----------
<S> <C>
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
===========
</TABLE>
Rental expense for the period June 11, 1997 to December 31, 1997 was
$2,829,190.
F-131
<PAGE>
COMPASS GROUP
NOTES TO COMBINED FINANCIAL STATEMENTS
September 30, 1998 (unaudited) and December 31, 1997
(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:
<TABLE>
<CAPTION>
June 11, 1997
to
December 31,
1997 (audited)
--------------
<S> <C>
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
==========
</TABLE>
(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.
F-132
<PAGE>
ANNEXES
<PAGE>
ANNEX A
-------
MORGAN STANLEY
MORGAN STANLEY & CO.
INCORPORATED
1585 BROADWAY
NEW YORK, NEW YORK 10036
(212) 761-4000
October 21,1998
Board of Directors
LaSalle Partners Incorporated
200 East Randolph Drive
Chicago, Illinois 60601
Ladies and Gentlemen:
We understand that Jones Lang Wootton and several affiliated companies
(collectively, "Seller") and LaSalle Partners Incorporated (the "Buyer") have
entered into several agreements, each dated October 21, 1998 (collectively, the
"Purchase and Sale Agreements"), which provide, among other things, for the
purchase by Buyer of the various equity interests in the Seller (collectively,
the "Transaction"). Pursuant to the Transaction, the Seller will become
wholly-owned (directly and indirectly) by the Buyer, and the various
shareholders and partners of the Seller will receive, in the aggregate, 14.3
million shares of the Buyer's common stock, par value $0.01 per share, and $6.0
million of cash, subject to adjustments in certain circumstances. The terms and
conditions of the Transaction are more fully set forth in the Purchase and Sale
Agreements.
You have asked for our opinion as to whether the consideration to be paid by the
Buyer pursuant to the Purchase and Sale Agreements in the aggregate is fair from
a financial point of view to the Buyer.
A-1
<PAGE>
Board of Directors
October 21, 1998
Page 2
For purposes of the opinion set forth herein, we have:
(i) reviewed certain publicly available financial statements and
other information of the Buyer;
(ii) reviewed certain internal financial statements and other
financial and operating data concerning the Seller prepared by
the management of the Seller;
(iii) analyzed certain financial projections prepared by the management
of the Buyer;
(iv) discussed the past and current operations and financial condition
and the prospects of the Seller with senior executives of the
Seller;
(v) analyzed certain internal financial statements and other
financial operating data concerning the Buyer prepared by the
management of the Buyer;
(vi) discussed the past and current operations and fiscal condition
and the prospects of the Buyer with senior executives of the
Buyer, and analyzed the pro forma impact of the Transaction on
the Buyer's earnings per share, consolidated capitalization and
financial ratios;
(vii) compared the financial performance of the Buyer and the prices
and trading activity of its common stock with that of certain
other comparable publicly traded companies and their securities;
(viii) reviewed the financial terms, to the extent publicly available,
of certain comparable acquisition transactions;
(ix) participated in discussions among representatives of the Seller
and the Buyer and their financial and legal advisors;
(x) reviewed the Purchase and Sale Agreements and certain related
documents; and
(xi) performed such other analyses and considered such other factors
as we have deemed appropriate.
We have assumed and relied upon without independent verification the accuracy
and completeness of the information reviewed by us for the purposes of this
opinion. With respect to the financial projections, including information
relating to certain strategic, financial and operational benefits anticipated
from the Transaction, we have assumed that they have been reasonably prepared on
bases reflecting the best currently available estimates and judgments of the
future financial performances of the Buyer and Seller (including the Buyer's
estimate of transaction costs associated with the Transaction and potential cost
savings through the combined operations). We have not made any independent
valuation or appraisals of the assets or liabilities of the Buyer or Seller, nor
have we been furnished with any such appraisals. In addition, Morgan Stanley
assumed the Transaction will be consummated in accordance with the terms set
forth in the Purchase and Sale Agreements. Our opinion is necessarily based on
financial, economic, market and other conditions as in effect on, and the
information made available to us as of, the date hereof
A-2
<PAGE>
Board of Directors
October 21, 1998
Page 3
We have acted as financial advisor to the Board of Directors of the Buyer in
connection with this transaction and Will receive a fee for our services. In the
past, Morgan Stanley & Co. Incorporated and its affiliates have provided
financial advisory and financing services for the Buyer and have received fees
for the rendering of these services.
It is understood that this letter is for the information of the Board of
Directors of the Buyer only and may not be used for any other purpose without
our prior written consent, except that this opinion may be included in its
entirety in any filing made by the Buyer in respect to the Transaction with the
Securities and Exchange Commission.
Based upon and subject to the foregoing, we are of the opinion on the date
hereof that the consideration to be paid by the Buyer pursuant to the Purchase
and Sale Agreements in the aggregate is fair from a financial point of view to
the Buyer.
Very truly yours,
MORGAN STANLEY & CO. INCORPORATED
By: /s/ Christopher J. Niehaus
-------------------------------
Christopher J. Niehaus
Managing Director
A-3
<PAGE>
ANNEX B
-------
CONFORMED
(as amended through November 10, 1998)
===============================================================================
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......................................B-4
Section 1.1 Purchase and Sale of Shares.........................B-4
Section 1.2 Purchase Price......................................B-4
Section 1.3 Escrow of Certain Consideration Shares..............B-5
Section 1.4 Consideration Adjustment............................B-6
Section 1.5 Closing............................................B-16
Section 1.6 Deliveries by the Shareholders.....................B-17
Section 1.7 Deliveries by Parent...............................B-18
Section 1.8 Representatives....................................B-19
Section 1.9 Corporate Governance Matters.......................B-21
Section 1.10 Integration........................................B-25
ARTICLE II
MATTERS RELATING TO THE
SHAREHOLDER TRANSACTION DOCUMENTS;
REALLOCATION....................................................B-25
Section 2.1 Signing Procedures.................................B-25
Section 2.2 Permitted Reallocation of Consideration and Shares.B-27
ARTICLE III
REPRESENTATIONS AND WARRANTIES
OF THE JLW PARTNERSHIPS
AND THE MANAGEMENT SHAREHOLDERS.................................B-28
Section 3.1 Shares; Claims to Assets...........................B-28
Section 3.2 Corporate Organization.............................B-29
Section 3.3 Capitalization of the Companies....................B-30
Section 3.4 Subsidiaries and Affiliates........................B-31
Section 3.5 Authorization......................................B-32
Section 3.6 No Violation.......................................B-33
Section 3.7 Consents and Approvals.............................B-34
Section 3.8 Financial Statements...............................B-34
B-i
<PAGE>
Section 3.9 No Undisclosed Liabilities.........................B-37
Section 3.10 Absence of Certain Changes.........................B-37
Section 3.11 Real Property......................................B-38
Section 3.12 Intangible Property Rights.........................B-38
Section 3.13 Certain Contracts..................................B-41
Section 3.14 Licenses and Other Authorizations..................B-43
Section 3.15 Year 2000 and Euro Compliance......................B-44
Section 3.16 Clients............................................B-44
Section 3.17 Operation of the Businesses........................B-45
Section 3.18 Insurance..........................................B-45
Section 3.19 Labor Relations....................................B-46
Section 3.20 Employee Benefit Plans.............................B-46
Section 3.21 Litigation.........................................B-49
Section 3.22 Compliance with Law................................B-49
Section 3.23 Taxes..............................................B-50
Section 3.24 Environmental Matters..............................B-52
Section 3.25 Personnel..........................................B-54
Section 3.26 Disclosure Documents...............................B-54
Section 3.27 Integration Matters................................B-55
Section 3.28 Related Party Transactions.........................B-55
Section 3.29 Activities of NewCo 1, NewCo 2, NewCo 3 and
Salta Ltd..........................................B-55
Section 3.30 Securities Laws Matters............................B-56
Section 3.31 Opinion of Financial Advisor.......................B-56
Section 3.32 Certain Fees.......................................B-56
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF PARENT........................B-56
Section 4.1 Corporate Organization.............................B-56
Section 4.2 Capitalization.....................................B-56
Section 4.3 Subsidiaries and Affiliates........................B-57
Section 4.4 Authorization......................................B-58
Section 4.5 No Violation.......................................B-58
Section 4.6 Consents and Approvals.............................B-59
Section 4.7 SEC Reports and Financial Statements...............B-59
Section 4.8 No Undisclosed Liabilities.........................B-60
Section 4.9 Absence of Certain Changes or Events...............B-60
B-ii
<PAGE>
Section 4.10 Licenses and Other Authorizations..................B-61
Section 4.11 Insurance..........................................B-61
Section 4.12 Labor Relations....................................B-61
Section 4.13 Parent Employee Benefit Matters....................B-62
Section 4.14 Litigation.........................................B-64
Section 4.15 Compliance with Law................................B-65
Section 4.16 Taxes..............................................B-65
Section 4.17 Opinion of Financial Advisors......................B-66
Section 4.18 Certain Fees.......................................B-66
Section 4.19 Disclosure Documents...............................B-66
Section 4.20 Other..............................................B-67
ARTICLE V
COVENANTS OF THE JLW PARTNERSHIPS
AND THE COMPANIES...............................................B-67
Section 5.1 Operation of the Companies.........................B-67
Section 5.2 Access.............................................B-71
Section 5.3 Consents...........................................B-71
Section 5.4 Closing Net Worth..................................B-72
Section 5.5 Other Offers.......................................B-72
Section 5.6 Integration Matters................................B-72
Section 5.7 Nine-Month Financial Statements....................B-73
ARTICLE VI
COVENANTS OF PARENT.............................................B-73
Section 6.1 Operation of Parent................................B-73
Section 6.2 Access.............................................B-76
Section 6.3 Consents...........................................B-76
Section 6.4 Listing of Consideration Shares....................B-77
Section 6.5 Stockholder Approval; Proxy........................B-77
Section 6.6 Other Offers.......................................B-78
Section 6.7 Employee Trust.....................................B-79
Section 6.8 Certain Stockholder Agreements.....................B-79
Section 6.9 Guarantee of Indemnification Agreements............B-79
Section 6.10 [Intentionally Left Blank].........................B-80
B-iii
<PAGE>
Section 6.11 Certain Instruments of Indemnification.............B-80
Section 6.12 Obtain Certain Releases............................B-80
Section 6.13 Employee Stock Options.............................B-80
Section 6.14 Director and Officer Indemnification...............B-80
ARTICLE VII
CONDITIONS TO OBLIGATIONS OF THE PARTIES........................B-81
Section 7.1 No Injunctions or Restraints.......................B-81
Section 7.2 No Litigation......................................B-81
Section 7.3 HSR Act and Other Approvals........................B-82
Section 7.4 Stockholders Vote..................................B-82
Section 7.5 Other Closings.....................................B-82
Section 7.6 Consummation of the Integration....................B-82
Section 7.7 Exercise of Put Right or Call Right................B-83
Section 7.8 Execution and Delivery of the other Operative
Agreements.........................................B-83
Section 7.9 Amendments.........................................B-83
ARTICLE VIII
CONDITIONS TO OBLIGATIONS OF PARENT.............................B-83
Section 8.1 Representations and Warranties Correct as of the
Integration Commencement Date......................B-83
Section 8.2 Certain Representations and Warranties Correct as
of the Closing Date................................B-84
Section 8.3 Performance; No Default............................B-84
Section 8.4 Delivery of Certificate............................B-85
Section 8.5 Opinions of Counsel to the JLW Partnerships and
the Companies......................................B-85
Section 8.6 Comfort Letter.....................................B-85
Section 8.7 Settlement of Related Party Accounts..............B-85
Section 8.8 No Material Adverse Effect.........................B-85
B-iv
<PAGE>
ARTICLE IX
CONDITIONS TO OBLIGATIONS OF THE SHAREHOLDERS...................B-85
Section 9.1 Representations and Warranties Correct as of the
Integration Commencement Date......................B-86
Section 9.2 Performance; No Default............................B-86
Section 9.3 Delivery of Certificate............................B-86
Section 9.4 Opinions of Counsel to Parent......................B-87
Section 9.5 Good Standing Certificate..........................B-87
Section 9.6 Listing of Consideration Shares....................B-87
Section 9.7 Certain Stockholder Agreements.....................B-87
Section 9.8 Indemnification Agreements.........................B-87
Section 9.9 Inland Revenue Ruling..............................B-87
Section 9.10 No Material Adverse Effect.........................B-87
Section 9.11 Directors and Officers.............................B-88
Section 9.12 Amendments.........................................B-88
ARTICLE X
TAX MATTERS.....................................................B-88
Section 10.1 Allocation of Purchase Price.......................B-88
Section 10.2 Tax Returns........................................B-88
Section 10.3 Mutual Cooperation.................................B-89
Section 10.4 Tax Covenant.......................................B-89
ARTICLE XI
TERMINATION.....................................................B-90
Section 11.1 Termination of Agreement...........................B-90
Section 11.2 Effect of Termination..............................B-92
Section 11.3 Termination Fee....................................B-93
ARTICLE XII
SURVIVAL AND INDEMNIFICATION....................................B-93
Section 12.1 Survival of Representations, Warranties
and Covenants......................................B-93
Section 12.2 Indemnification of the Buyers......................B-94
B-v
<PAGE>
ARTICLE XIII
MISCELLANEOUS...................................................B-94
Section 13.1 Further Efforts..................................B-94
Section 13.2 Expenses.........................................B-94
Section 13.3 Press Releases and Announcements.................B-95
Section 13.4 Entire Agreement; No Third Party Beneficiaries...B-95
Section 13.5 Amendment, Extension and Waiver..................B-95
Section 13.6 Headings.........................................B-95
Section 13.7 Notices..........................................B-95
Section 13.8 Assignment......................................B-100
Section 13.9 Applicable Law..................................B-100
Section 13.10 Jurisdiction....................................B-100
Section 13.11 Service of Process..............................B-101
Section 13.12 Words in Singular and Plural Form...............B-101
Section 13.13 Counterparts....................................B-101
Section 13.14 [Intentionally Left Blank]......................B-101
Section 13.15 Restrictive Trade Practices Act.................B-101
Section 13.16 WAIVER OF JURY TRIAL............................B-101
ARTICLE XIV
CERTAIN DEFINITIONS............................................B-102
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
B-vi
<PAGE>
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
B-vii
<PAGE>
INDEX OF DEFINED TERMS
----------------------
Defined
Term 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)
B-viii
<PAGE>
Defined
Term in Section
- ---- ----------
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
B-ix
<PAGE>
Defined
Term in Section
- ---- ----------
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
B-x
<PAGE>
Defined
Term in Section
- ---- ----------
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)
B-xi
<PAGE>
Defined
Term in Section
- ---- ----------
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
B-xii
<PAGE>
Defined
Term in Section
- ---- ----------
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
B-xiii
<PAGE>
Defined
Term in Section
- ---- ----------
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)
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<PAGE>
Defined
Term in Section
- ---- ----------
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
B-xv
<PAGE>
Defined
Term in Section
- ---- ----------
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
B-xvi
<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
<PAGE>
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
B-2
<PAGE>
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:
B-3
<PAGE>
ARTICLE I
PURCHASE AND SALE OF SHARES
---------------------------
Section 1.1 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 1.2 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 Shares
B-4
<PAGE>
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 1.3 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
B-5
<PAGE>
(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 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
B-6
<PAGE>
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
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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
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<PAGE>
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
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<PAGE>
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
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<PAGE>
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
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<PAGE>
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
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<PAGE>
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
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<PAGE>
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
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<PAGE>
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
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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
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(ii) 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 1.6 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:
(a) 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;
(b) 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;
(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 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;
(e) executed counterparts of any Consents obtained pursuant to
Section 5.3 hereof and not previously delivered to Parent 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
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<PAGE>
(h) 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 1.7 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:
(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) thereof;
(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 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
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(ix) 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 1.8 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 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 (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
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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
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, 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.
(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 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
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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
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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
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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
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<PAGE>
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.
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(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 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
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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
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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)
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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
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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
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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).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)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)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).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).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
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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
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<PAGE>
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.
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(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
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<PAGE>
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
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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
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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 (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.
(c) 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
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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;
(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 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
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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 3.11 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 3.12 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 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
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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,
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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
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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 3.13 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
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("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
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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 3.14 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.
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Section 3.15 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 3.16 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
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
(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 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
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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 3.17 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 3.18 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 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.
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Section 3.19 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 3.20 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
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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
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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
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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 3.21 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 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 3.22 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
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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 3.23 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
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
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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.
(b) 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.
(c) 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.
(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 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).
(e) 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
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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.
(f) 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).
(g) 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.
(h) 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 3.24 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 JLW Partnership, Company or Company
Subsidiary has received written notice of any Action pending, nor to the
Knowledge of each JLW Partnership, Company
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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: (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 trespass 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 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.
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(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 3.25 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 3.26 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.
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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, 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 3.28 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 3.29 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.
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Section 3.30 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 3.31 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 3.32 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
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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
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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
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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
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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
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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.
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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
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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-
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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
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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.
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(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 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
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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.
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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:
(i) 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;
(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 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;
(v) pay, discharge or satisfy any material Lien,
unless required by the terms thereof or of the documents evidencing or governing
any related indebtedness;
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(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 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);
(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
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;
(xii) 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;
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(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 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
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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.
(f) 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
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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.
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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:
(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
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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
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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
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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
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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
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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
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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
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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,
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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
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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
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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
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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) 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.
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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
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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
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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.
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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.
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(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.
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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
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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);
(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
Shareholders' Representatives within two Business Days thereafter;
(i) 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;
(j) by either the Sellers' Representatives or Parent, if the
Put Right or Call Right shall not have been exercised during the Exercise
Period; or
(k) 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
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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
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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
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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.
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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
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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
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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
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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
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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
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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
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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
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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.
"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
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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
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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.
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"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.
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"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:
(i) Patent Rights. All United States,
international and foreign patents and patent applications, and utility models
("Patents");
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(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.
"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.
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"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
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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.
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<PAGE>
"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.
B-110
<PAGE>
"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.
B-111
<PAGE>
"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.
B-112
<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
B-113
<PAGE>
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
B-114
<PAGE>
JLW CONTINUATION, LTD.
By: /s/ Andrew Jenkins
------------------------------------------
Name: Andrew Jenkins
Title: Director
B-115
<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
B-116
<PAGE>
ANNEX C
-------
CONFORMED
(as amended through November 10, 1998)
=============================================================================
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......................................C-4
Section 1.1 Purchase and Sale of Shares.........................C-4
Section 1.2 Purchase Price......................................C-5
Section 1.3 Escrow of Certain Consideration Shares..............C-6
Section 1.4 Consideration Adjustment............................C-6
Section 1.5 Closing............................................C-16
Section 1.6 Deliveries by the Shareholders.....................C-17
Section 1.7 Deliveries by the Buyers...........................C-18
Section 1.8 Representatives....................................C-19
Section 1.9 Corporate Governance Matters.......................C-21
Section 1.10 Integration........................................C-25
ARTICLE II
MATTERS RELATING TO THE
SHAREHOLDER TRANSACTION DOCUMENTS;
REALLOCATION....................................................C-26
Section 2.1 Signing Procedures.................................C-26
Section 2.2 Permitted Reallocation of Consideration and Shares.C-28
ARTICLE III
REPRESENTATIONS AND WARRANTIES
OF THE SELLERS, THE COMPANIES
AND THE MANAGEMENT SHAREHOLDERS.................................C-29
Section 3.1 Shares; Claims to Assets...........................C-29
Section 3.2 Corporate Organization.............................C-30
Section 3.3 Capitalization of the Companies....................C-31
Section 3.4 Subsidiaries and Affiliates........................C-31
Section 3.5 Authorization......................................C-32
Section 3.6 No Violation.......................................C-32
Section 3.7 Consents and Approvals.............................C-33
C-i
<PAGE>
Section 3.8 Financial Statements...............................C-33
Section 3.9 No Undisclosed Liabilities.........................C-36
Section 3.10 Absence of Certain Changes.........................C-37
Section 3.11 Real Property......................................C-37
Section 3.12 Intangible Property Rights.........................C-38
Section 3.13 Certain Contracts..................................C-41
Section 3.14 Licenses and Other Authorizations..................C-42
Section 3.15 Year 2000 and Euro Compliance......................C-42
Section 3.16 Clients............................................C-43
Section 3.17 Operation of the Businesses........................C-44
Section 3.18 Insurance..........................................C-44
Section 3.19 Labor Relations....................................C-44
Section 3.20 Employee Benefit Matters...........................C-45
Section 3.21 Litigation.........................................C-47
Section 3.22 Compliance with Law................................C-47
Section 3.23 Taxes..............................................C-48
Section 3.24 Environmental Matters..............................C-50
Section 3.25 Personnel..........................................C-51
Section 3.26 Disclosure Documents...............................C-52
Section 3.27 Integration Matters................................C-52
Section 3.28 Related Party Transactions.........................C-52
Section 3.29 Securities Laws Matters............................C-53
Section 3.30 Opinion of Financial Advisor.......................C-53
Section 3.31 Certain Fees.......................................C-53
ARTICLE IIIA
CERTAIN REPRESENTATIONS, WARRANTIES
AND COVENANTS OF THE SELLERS....................................C-53
Section 3.1A Ownership and Sale of Shares.......................C-53
Section 3.2A Authorization......................................C-54
Section 3.3A No Violation.......................................C-54
Section 3.4A Consents and Approvals.............................C-55
Section 3.5A Investment Matters.................................C-55
Section 3.6A Regulation S.......................................C-56
C-ii
<PAGE>
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF PARENT,
US ACQUISITION SUB AND US ACQUISITION SUB II....................C-58
Section 4.1 Corporate Organization.............................C-58
Section 4.2 Capitalization.....................................C-58
Section 4.3 Subsidiaries and Affiliates........................C-59
Section 4.4 Authorization......................................C-59
Section 4.5 No Violation.......................................C-60
Section 4.6 Consents and Approvals.............................C-61
Section 4.7 SEC Reports and Financial Statements...............C-61
Section 4.8 No Undisclosed Liabilities.........................C-62
Section 4.9 Absence of Certain Changes or Events...............C-62
Section 4.10 Licenses and Other Authorizations..................C-63
Section 4.11 Insurance..........................................C-63
Section 4.12 Labor Relations....................................C-63
Section 4.13 Parent Employee Benefit Matters....................C-63
Section 4.14 Litigation.........................................C-66
Section 4.15 Compliance with Law................................C-67
Section 4.16 Taxes..............................................C-67
Section 4.17 Activities of US Acquisition Sub and US
Acquisition Sub II.................................C-68
Section 4.18 Opinion of Financial Advisors......................C-68
Section 4.19 Certain Fees.......................................C-68
Section 4.20 Disclosure Documents...............................C-68
Section 4.21 Other..............................................C-69
ARTICLE V
COVENANTS OF THE SELLERS
AND THE COMPANIES...............................................C-69
Section 5.1 Operation of the Companies.........................C-69
Section 5.2 Access.............................................C-73
Section 5.3 Consents...........................................C-73
Section 5.4 Closing Net Worth..................................C-74
Section 5.5 Other Offers.......................................C-74
Section 5.6 Integration Matters................................C-74
C-iii
<PAGE>
Section 5.7 Nine-Month Financial Statements....................C-75
Section 5.8 Name Changes.......................................C-75
ARTICLE VI
COVENANTS OF PARENT.............................................C-75
Section 6.1 Operation of Parent................................C-75
Section 6.2 Access.............................................C-79
Section 6.3 Consents...........................................C-79
Section 6.4 Listing of Consideration Shares....................C-79
Section 6.5 Stockholder Approval; Proxy........................C-79
Section 6.6 Other Offers.......................................C-80
Section 6.7 Employee Trust.....................................C-81
Section 6.8 Certain Stockholder Agreements.....................C-82
Section 6.9 Certain Instruments of Indemnification.............C-82
Section 6.10 Employee Stock Options.............................C-82
Section 6.11 Director and Officer Indemnification...............C-83
ARTICLE VII
CONDITIONS TO OBLIGATIONS OF THE PARTIES........................C-83
Section 7.1 No Injunctions or Restraints.......................C-83
Section 7.2 No Litigation......................................C-83
Section 7.3 HSR Act and Other Approvals........................C-84
Section 7.4 Stockholders Vote..................................C-84
Section 7.5 Other Closings.....................................C-84
Section 7.6 Consummation of the Integration....................C-85
Section 7.7 Execution and Delivery of the other Operative
Agreements.........................................C-85
Section 7.8 Amendments.........................................C-85
ARTICLE VIII
CONDITIONS TO OBLIGATIONS OF PARENT.............................C-85
Section 8.1 Representations and Warranties Correct as of the
Integration Commencement Date......................C-85
C-iv
<PAGE>
Section 8.2 Certain Representations and Warranties Correct
as of the Closing Date.............................C-86
Section 8.3 Performance; No Default............................C-86
Section 8.4 Delivery of Certificate............................C-87
Section 8.5 Opinions of Counsel to the Sellers and the
Companies..........................................C-87
Section 8.6 Comfort Letter.....................................C-87
Section 8.7 Settlement of Related Party Accounts...............C-87
Section 8.8 No Material Adverse Effect.........................C-87
Section 8.9 Termination of Annuity Scheme......................C-88
ARTICLE IX
CONDITIONS TO OBLIGATIONS OF THE SELLERS AND THE
SHAREHOLDERS....................................................C-88
Section 9.1 Representations and Warranties Correct as of the
Integration Commencement Date......................C-88
Section 9.2 Performance; No Default............................C-88
Section 9.3 Delivery of Certificate............................C-89
Section 9.4 Opinions of Counsel to Parent......................C-89
Section 9.5 Good Standing Certificate..........................C-89
Section 9.6 Listing of Consideration Shares...................C-89
Section 9.7 Certain Stockholder Agreements.....................C-89
Section 9.8 No Material Adverse Effect.........................C-89
Section 9.9 Amendments.........................................C-90
Section 9.10 Directors and Officers.............................C-90
ARTICLE X
TAX MATTERS.....................................................C-90
Section 10.1 Allocation of Purchase Price.......................C-90
Section 10.2 Tax Returns........................................C-90
Section 10.3 Mutual Cooperation.................................C-91
Section 10.4 Tax Covenant.......................................C-91
C-v
<PAGE>
ARTICLE XI
TERMINATION..............................................................C-92
Section 11.1 Termination of Agreement...........................C-92
Section 11.2 Effect of Termination..............................C-94
Section 11.3 Termination Fee....................................C-94
ARTICLE XII
SURVIVAL AND INDEMNIFICATION....................................C-95
Section 12.1 Survival of Representations, Warranties and
Covenants..........................................C-95
Section 12.2 Indemnification of the Buyers......................C-95
ARTICLE XIII
MISCELLANEOUS...................................................C-96
Section 13.1 Further Efforts...................................C-96
Section 13.2 Expenses..........................................C-96
Section 13.3 Press Releases and Announcements..................C-96
Section 13.4 Entire Agreement; No Third Party Beneficiaries....C-96
Section 13.5 Amendment, Extension and Waiver...................C-97
Section 13.6 Headings..........................................C-97
Section 13.7 Notices...........................................C-97
Section 13.8 Assignment.......................................C-102
Section 13.9 Applicable Law...................................C-102
Section 13.10 Jurisdiction.....................................C-102
Section 13.11 Service of Process...............................C-103
Section 13.12 Words in Singular and Plural Form................C-103
Section 13.13 Counterparts.....................................C-103
Section 13.14 WAIVER OF JURY TRIAL.............................C-103
ARTICLE XIV
CERTAIN DEFINITIONS............................................C-103
C-vi
<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
C-vii
<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
C-viii
<PAGE>
INDEX OF DEFINED TERMS
----------------------
Defined
Term 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
C-ix
<PAGE>
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
C-x
<PAGE>
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)
C-xi
<PAGE>
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
C-xii
<PAGE>
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
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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)
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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
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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
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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
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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
<PAGE>
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
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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:
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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
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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
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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
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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"),
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(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
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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
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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
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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
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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
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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
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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.
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(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
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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:
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(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;
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(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;
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(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,
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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
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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
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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
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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;
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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.
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(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
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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
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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.
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(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
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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
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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
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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
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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
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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
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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
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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
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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
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(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.
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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
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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
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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.
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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
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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
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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
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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;
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(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
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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
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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.
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(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
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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
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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 trespass 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,
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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
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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
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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
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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
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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
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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
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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.
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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
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("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
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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
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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
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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.
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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
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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
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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
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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.
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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
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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
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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.
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(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
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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
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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
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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
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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'
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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
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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;
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(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;
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(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
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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.
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(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
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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
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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
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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
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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.
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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
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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.
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(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 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.
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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
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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.
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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
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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.
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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
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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,
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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
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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.
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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
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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
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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
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(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:
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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:
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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
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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, pre serving, 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.
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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
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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
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(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
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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,
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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.
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"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
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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
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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.
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"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
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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.
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"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.
C-113
<PAGE>
"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.
C-114
<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
C-115
<PAGE>
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
C-116
<PAGE>
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
C-117
<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
C-118
<PAGE>
ANNEX D
-------
CONFORMED
(as amended through November 10, 1998)
===============================================================================
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.........................................D-4
Section 1.1 Purchase and Sale of Shares..................D-4
Section 1.2 Redemption of Convertible Notes..............D-5
Section 1.3 Escrow of Certain Consideration Shares.......D-6
Section 1.4 Consideration Adjustment. ...................D-7
Section 1.5 Closing.....................................D-18
Section 1.6 Deliveries by the Sellers and Shareholders..D-19
Section 1.7 Deliveries by the Buyers....................D-20
Section 1.8 Representatives.............................D-22
Section 1.9 Corporate Governance Matters................D-24
Section 1.10 Integration.................................D-29
ARTICLE II
MATTERS RELATING TO THE SHAREHOLDER
TRANSACTION DOCUMENTS; REALLOCATION....................................D-29
Section 2.1 Signing Procedures..........................D-29
Section 2.2 Permitted Reallocation of Consideration and
Shares......................................D-32
ARTICLE III
REPRESENTATIONS AND WARRANTIES
OF THE SELLERS, THE COMPANIES AND
THE MANAGEMENT SHAREHOLDERS............................................D-32
Section 3.1 Shares; Claims to Assets....................D-33
Section 3.2 Corporate Organization......................D-33
Section 3.3 Capitalization of the Companies.............D-34
Section 3.4 Subsidiaries and Affiliates.................D-35
Section 3.5 Authorization...............................D-35
Section 3.6 No Violation................................D-36
Section 3.7 Consents and Approvals......................D-36
Section 3.8 Financial Statements........................D-37
D-i
<PAGE>
Page
----
Section 3.9 No Undisclosed Liabilities..................D-39
Section 3.10 Absence of Certain Changes..................D-40
Section 3.11 Real Property...............................D-41
Section 3.12 Intangible Property Rights..................D-41
Section 3.13 Certain Contracts...........................D-45
Section 3.14 Licenses and Other Authorizations...........D-46
Section 3.15 Year 2000 and Euro Compliance...............D-47
Section 3.16 Clients.....................................D-48
Section 3.17 Operation of the Businesses.................D-48
Section 3.18 Insurance...................................D-49
Section 3.19 Labor Relations.............................D-49
Section 3.20 Employee Benefit Matters....................D-49
Section 3.21 Litigation..................................D-56
Section 3.22 Compliance with Law.........................D-56
Section 3.23 Taxes.......................................D-57
Section 3.24 Environmental Matters.......................D-62
Section 3.25 Personnel...................................D-64
Section 3.26 Disclosure Documents........................D-64
Section 3.27 Integration Matters.........................D-64
Section 3.28 Related Party Transactions..................D-65
Section 3.29 Securities Laws Matters.....................D-65
Section 3.30 Opinion of Financial Advisor................D-65
Section 3.31 Certain Fees................................D-66
ARTICLE IIIA
CERTAIN REPRESENTATIONS, WARRANTIES
AND COVENANTS OF THE SELLERS...........................................D-66
Section 3.1A Ownership and Sale of Shares................D-66
Section 3.2A Authorization...............................D-67
Section 3.3A No Violation................................D-68
Section 3.4A Consents and Approvals......................D-68
Section 3.5A Investment Matters..........................D-69
Section 3.6A Regulation S................................D-69
D-ii
<PAGE>
Page
----
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF PARENT,
US ACQUISITION SUB AND AUSTRALIA ACQUISITION SUB.......................D-72
Section 4.1 Corporate Organization......................D-72
Section 4.2 Capitalization..............................D-73
Section 4.3 Subsidiaries and Affiliates.................D-73
Section 4.4 Authorization...............................D-74
Section 4.5 No Violation................................D-75
Section 4.6 Consents and Approvals......................D-76
Section 4.7 SEC Reports and Financial Statements........D-76
Section 4.8 No Undisclosed Liabilities..................D-77
Section 4.9 Absence of Certain Changes or Events........D-77
Section 4.10 Licenses and Other Authorizations...........D-78
Section 4.11 Insurance...................................D-78
Section 4.12 Labor Relations.............................D-78
Section 4.13 Parent Employee Benefit Matters.............D-78
Section 4.14 Litigation..................................D-82
Section 4.15 Compliance with Law.........................D-82
Section 4.16 Taxes.......................................D-82
Section 4.17 Activities of US Acquisition Sub and
Australia Acquisition Sub...................D-83
Section 4.18 Opinion of Financial Advisors...............D-84
Section 4.19 Certain Fees................................D-84
Section 4.20 Disclosure Documents........................D-84
Section 4.21 Other.......................................D-84
ARTICLE V
COVENANTS OF THE SELLERS AND THE COMPANIES.............................D-85
Section 5.1 Operation of the Companies..................D-85
Section 5.2 Access......................................D-89
Section 5.3 Consents....................................D-89
Section 5.4 Closing Net Worth...........................D-90
Section 5.5 Other Offers................................D-90
Section 5.6 Integration Matters.........................D-90
Section 5.7 Nine-Month Financial Statements.............D-91
D-iii
<PAGE>
Page
----
Section 5.8 Intercompany Accounts.......................D-91
Section 5.9 Name Changes................................D-91
Section 5.10 Certain Charges.............................D-91
Section 5.11 Stockholder Agreement.......................D-92
ARTICLE VI
COVENANTS OF PARENT....................................................D-92
Section 6.1 Operation of Parent.........................D-92
Section 6.2 Access......................................D-95
Section 6.3 Consents....................................D-96
Section 6.4 Listing of Consideration Shares.............D-96
Section 6.5 Stockholder Approval; Proxy.................D-96
Section 6.6 Other Offers................................D-97
Section 6.7 Employee Trust..............................D-98
Section 6.8 Certain Stockholder Agreements..............D-99
Section 6.9 Certain Instruments of Indemnification......D-99
Section 6.10 Employee Stock Options......................D-99
Section 6.11 Director and Officer Indemnification.......D-100
Section 6.12 Note Purchase Agreement Matters............D-100
ARTICLE VII
CONDITIONS TO OBLIGATIONS OF THE PARTIES..............................D-100
Section 7.1 No Injunctions or Restraints...............D-101
Section 7.2 No Litigation..............................D-101
Section 7.3 HSR Act and Other Approvals................D-101
Section 7.4 Stockholders Vote..........................D-102
Section 7.5 Other Closings.............................D-102
Section 7.6 Consummation of the Integration............D-102
Section 7.7 Execution and Delivery of the other
Operative Agreements.......................D-103
Section 7.8 Amendments.................................D-103
ARTICLE VIII
CONDITIONS TO OBLIGATIONS OF THE BUYERS...............................D-103
D-iv
<PAGE>
Page
----
Section 8.1 Representations and Warranties Correct as
of the Integration Commencement Date.......D-103
Section 8.2 Certain Representations and Warranties
Correct as of the Closing Date.............D-104
Section 8.3 Performance; No Default....................D-104
Section 8.4 Delivery of Certificate....................D-105
Section 8.5 Opinions of Counsel to the Sellers and the
Companies..................................D-105
Section 8.6 Comfort Letter.............................D-105
Section 8.7 Settlement of Related Party Accounts.......D-105
Section 8.8 No Material Adverse Effect.................D-105
Section 8.9 Continuing Affiliate Releases..............D-106
Section 8.10 Stockholder Agreement......................D-106
ARTICLE IX
CONDITIONS TO OBLIGATIONS OF THE
SELLERS AND THE SHAREHOLDERS..........................................D-106
Section 9.1 Representations and Warranties Correct as
of the Integration Commencement Date.......D-106
Section 9.2 Performance; No Default....................D-107
Section 9.3 Delivery of Certificate....................D-107
Section 9.4 Opinions of Counsel to Parent..............D-107
Section 9.5 Good Standing Certificate..................D-107
Section 9.6 Listing of Consideration Shares............D-107
Section 9.7 Certain Stockholder Agreements.............D-108
Section 9.8 No Material Adverse Effect.................D-108
Section 9.9 Directors and Officers.....................D-108
Section 9.10 Amendments.................................D-108
ARTICLE X
TAX MATTERS...........................................................D-108
Section 10.1 Allocation of Purchase Price...............D-108
Section 10.2 Tax Returns................................D-108
Section 10.3 Mutual Cooperation.........................D-109
Section 10.4 Tax Covenant...............................D-110
D-v
<PAGE>
Page
----
ARTICLE XI
TERMINATION...........................................................D-110
Section 11.1 Termination of Agreement...................D-110
Section 11.2 Effect of Termination......................D-113
Section 11.3 Termination Fee............................D-113
ARTICLE XII
SURVIVAL AND INDEMNIFICATION..........................................D-113
Section 12.1 Survival of Representations, Warranties and
Covenants..................................D-113
Section 12.2 Indemnification of the Buyers..............D-114
ARTICLE XIII
MISCELLANEOUS.........................................................D-114
Section 13.1 Further Efforts............................D-114
Section 13.2 Expenses...................................D-115
Section 13.3 Press Releases and Announcements...........D-115
Section 13.4 Entire Agreement; No Third Party
Beneficiaries..............................D-115
Section 13.5 Amendment, Extension and Waiver............D-115
Section 13.6 Headings...................................D-116
Section 13.7 Notices....................................D-116
Section 13.8 Assignment.................................D-120
Section 13.9 Applicable Law.............................D-120
Section 13.10 Jurisdiction...............................D-120
Section 13.11 Service of Process.........................D-121
Section 13.12 Words in Singular and Plural Form..........D-121
Section 13.13 Counterparts...............................D-121
Section 13.14 WAIVER OF JURY TRIAL.......................D-121
ARTICLE XIV
CERTAIN DEFINITIONS...................................................D-122
D-vi
<PAGE>
Page
----
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
D-vii
<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
D-viii
<PAGE>
Terms Defined in Section
- ----- ------------------
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
D-ix
<PAGE>
Terms Defined in Section
- ----- ------------------
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
D-x
<PAGE>
Terms Defined in Section
- ----- ------------------
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
D-xi
<PAGE>
Terms Defined in Section
- ----- ------------------
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)
D-xii
<PAGE>
Terms Defined in Section
- ----- ------------------
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)
D-xiii
<PAGE>
Terms Defined in Section
- ----- ------------------
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
D-xiv
<PAGE>
Terms Defined in Section
- ----- ------------------
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
D-xv
<PAGE>
Terms Defined in Section
- ----- ------------------
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
D-xvi
<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,
<PAGE>
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");
D-2
<PAGE>
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
D-3
<PAGE>
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
D-4
<PAGE>
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
D-5
<PAGE>
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
D-6
<PAGE>
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").
D-7
<PAGE>
(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
D-8
<PAGE>
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
D-9
<PAGE>
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
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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
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<PAGE>
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
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<PAGE>
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
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<PAGE>
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,
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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
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<PAGE>
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.
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<PAGE>
(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
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<PAGE>
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
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<PAGE>
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;
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<PAGE>
(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;
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<PAGE>
(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.
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(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'
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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
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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
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<PAGE>
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'
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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
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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
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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.
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(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
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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
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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.
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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 NonParticipating 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
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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
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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.
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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,
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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
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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
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<PAGE>
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.
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(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
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<PAGE>
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,
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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
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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-
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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
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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.
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(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)
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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
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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
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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.
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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
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<PAGE>
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
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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
subcontractors; and (B) none of the Companies or Company Subsidiaries
contributes to any funds which will provide its directors, employees or
subcontractors 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
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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
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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;
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(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;
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(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.
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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
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<PAGE>
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.
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(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
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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
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(iv) has a franking account surplus at least equal to
the balance disclosed on the Closing Date.
(l) 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 reenactment 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:
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(A) ss.137R of the Victorian Stamps Act
1958;
(B) ss.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").
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(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,
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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 trespass emanating from Managed Properties;
(iv) violations of any applicable Environ mental 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
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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
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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
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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)
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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
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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.
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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.
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(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
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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.
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(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.
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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
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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.
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(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
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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.
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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.
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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
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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
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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.
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(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.
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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,
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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
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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
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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
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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;
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(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;
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(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.
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(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
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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
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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.
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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;
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(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;
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(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;
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(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
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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
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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
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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
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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
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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
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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
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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
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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
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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
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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.
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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
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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
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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
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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
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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
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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
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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).
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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
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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
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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
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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
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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
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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
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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
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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;
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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 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
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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.
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"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
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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.
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"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
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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.
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<PAGE>
"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.
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<PAGE>
"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.
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<PAGE>
"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
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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
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<PAGE>
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.
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<PAGE>
"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.
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<PAGE>
"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.
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<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
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<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
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<PAGE>
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
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<PAGE>
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
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<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
D-138
<PAGE>
ANNEX E
-------
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 subsidiary 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 "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 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 Agreement, the
"Purchase Agreements" and each, individually, a "Purchase Agreement"), pursuant
to which,
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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
transactions 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
Agreement, 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 placement in
escrow, pursuant to the terms of this Agreement, of the Escrow Shares and the
Adjustment Shares;
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<PAGE>
WHEREAS, pursuant to a Shareholders Contribution and
Coordination 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, individually,
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. (a) 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 respective Subsidiaries, but subject to the last
paragraph of this Section 1.1(a)) together with their respective directors,
officers, employees and agents (collectively, the
E-3
<PAGE>
"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 Share
holder 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");
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(iv) any breach by any JLW Seller,
Europe/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 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. Notwithstanding anything to the contrary
contained in this Agreement, (i) each Asia Region Shareholder and such
Shareholder's Related JLW Owner, if any (jointly and severally between such
Shareholder and its Related
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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 Consideration 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 Australasia 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
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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
Share holder Misrepresentation 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 representation, 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 liability 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
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under the Applicable Joinder Agreement, this Agreement, 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 appropriate 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 foregoing 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
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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 Share holder, Australasia Region Shareholder or
Europe/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
Misrepresentation 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 Misrepresentation 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).
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(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
APPLICABLE) 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 LIMITATION,
(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
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<PAGE>
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
indemnification 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 indemnification 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 reasonably 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
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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 applicable,
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
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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
connection 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
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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 Companies,
the Australasia Region Companies or any of their respective Subsidiaries 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 Shareholders
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.
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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, 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,
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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 respective 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 recapitalization 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
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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 Shareholders' 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 accordance with the provisions of Section 3.4(e)
below, as well as any distributions 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 subdivision of the Escrow Shares, or the receipt of any other dividend or
distribution in respect of any of the Escrow Shares, the Subaccounts of the
Shareholders and the ESOT shall be adjusted accordingly. Any cash dividends
received by the Escrow Agent in respect of any Escrow Shares allocated 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.
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Section 3.3 Ownership of Escrow Fund; Voting. (a) Unless and
until assigned, transferred and delivered to Parent, the Shareholders or the
ESOT Trustee (on behalf of the ESOT) in accordance with the provisions 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 distributions, property and other rights distributed
(including, without limitation, 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
permissible) 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 instructions 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
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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 acknowledged 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' Representatives (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
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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 agreement
between the Claiming Party and the Shareholders' Representatives, within two
Business Days after the Escrow Agent's receipt of such agreement.
(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 arbitrators 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
Shareholder Claim or Management Misrepresentation Claim. In addition, in respect
of any single Shareholder Claim or
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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 Shareholder 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 Shareholder 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 Consideration 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
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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' Representatives,
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
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<PAGE>
Stock as reported on the New York Stock Exchange Composite 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. (a) 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 Distribution 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. Notwithstanding
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 Forfeiture Shares (and
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<PAGE>
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
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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
accordance 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 termination
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
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hereunder, and no party hereunder 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.
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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
representations 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)
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<PAGE>
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' Representative, 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
proceedings shall be con ducted, and the award shall be rendered, in the English
language. In the event of an
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arbitration involving two parties hereto, there shall be three arbitrators of
whom each the claimant and the respondent 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 Arbitration 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 Beneficiaries.
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 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.
E-29
<PAGE>
Section 7.3 Amendment, Extension and Waiver. This Agreement
may be amended only in writing signed by Parent and the Shareholders'
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 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.
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
E-30
<PAGE>
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
E-31
<PAGE>
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
E-32
<PAGE>
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
E-33
<PAGE>
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.
E-34
<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: /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
LPI (AUSTRALIA) HOLDINGS PTY LIMITED
By: /s/ Jeanann Diab
-------------------------------------------
Name: Jeanann Diab
Title: Vice President
E-35
<PAGE>
HARRIS TRUST AND SAVINGS BANK
By: /s/ Marianne Tinerella
-------------------------------------------
Name: Marianne Tinerella
Title: Trust Officer
E-36
<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: ----------------------------
-------------------------
- --------
* "Signature Confirmation" means (i) a signature guarantee by a firm or
other entity identified in Rule 17Ad-15 under the Securities Exchange
Act of 1934, as amended, including (as such terms are defined therein)
(A) a bank; (B) a broker, dealer, municipal securities dealer,
municipal securities broker, government securities dealer or government
securities broker; (C) a credit union; (D) a national securities
exchange, registered securities association or clearing agency; or (E)
savings institution that is a participant in a Securities Transfer
Association recognized program (an "Eligible Institution") or (ii) if a
signature guarantee by an Eligible Institution is unavailable in the
jurisdiction in which the Person for whom Signature Confirmation is
required resides, the witnessing of such signature by one of the
Persons listed on Schedule 2 to the Instruction Letter accompanying the
Offering Circular.
E-37
<PAGE>
ANNEX F
-------
[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
F-1
<PAGE>
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.
F-2
<PAGE>
"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
F-3
<PAGE>
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.
F-4
<PAGE>
"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.
F-5
<PAGE>
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);
F-6
<PAGE>
(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,
F-7
<PAGE>
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.
F-8
<PAGE>
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
F-9
<PAGE>
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).
F-10
<PAGE>
(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
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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
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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
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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
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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.
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(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
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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.
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(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
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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
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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
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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.
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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
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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. ss. 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. ss. 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 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
F-23
<PAGE>
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 under standing 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.
F-24
<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:
-----------------------
- --------
* "Signature Confirmation" means (i) a signature guarantee by
a firm or other entity identified in Rule 17Ad-15 under the
Securities Exchange Act of 1934, as amended, including (as
such terms are defined therein) (A) a bank; (B) a broker,
dealer, municipal securities dealer, municipal securities
broker, government securities dealer or government
securities broker; (C) a credit union; (D) a national
securities exchange, registered securities association or
clearing agency; or (E) savings institution that is a
participant in a Securities Transfer Association recognized
program (an "Eligible Institution") or (ii) if a signature
guarantee by an Eligible Institution is unavailable in the
jurisdiction in which the Person for whom Signature
Confirmation is required resides, the witnessing of such
signature by one of the Persons listed on Schedule 2 to the
Instruction Letter accompanying the Offering Circular.
F-25
<PAGE>
ANNEX G
-------
- -----------------------------------------------------------------------------
SECOND AMENDED AND RESTATED BYLAWS
of
JONES LANG LASALLE INCORPORATED
A Maryland Corporation
- -----------------------------------------------------------------------------
<PAGE>
TABLE OF CONTENTS
-----------------
Page
----
ARTICLE I
OFFICES..............................................................G-1
SECTION 1. PRINCIPAL OFFICE.....................................G-1
SECTION 2. OTHER OFFICES........................................G-1
ARTICLE II
MEETINGS OF STOCKHOLDERS.............................................G-1
SECTION 1. PLACE OF MEETINGS....................................G-1
SECTION 2. ANNUAL MEETINGS......................................G-1
SECTION 3. SPECIAL MEETINGS.....................................G-1
SECTION 4. QUORUM...............................................G-2
SECTION 5. PROXIES..............................................G-2
SECTION 6. VOTING...............................................G-2
SECTION 7. NATURE OF BUSINESS AT MEETINGS OF STOCKHOLDERS.......G-2
SECTION 8. RECORD DATE..........................................G-3
SECTION 9. INFORMAL ACTION......................................G-4
ARTICLE III
DIRECTORS............................................................G-4
SECTION 1. NUMBER AND ELECTION OF DIRECTORS.....................G-4
SECTION 2. NOMINATION OF DIRECTORS..............................G-4
SECTION 3. VACANCIES............................................G-5
SECTION 4. DUTIES AND POWERS....................................G-5
SECTION 5. ORGANIZATION.........................................G-6
SECTION 6. REMOVALS OF DIRECTORS................................G-6
SECTION 7. MEETINGS.............................................G-6
SECTION 8. QUORUM...............................................G-6
SECTION 9. ACTIONS OF BOARD.....................................G-6
SECTION 10. MEETINGS BY MEANS OF CONFERENCE TELEPHONE............G-6
SECTION 11. COMMITTEES...........................................G-7
SECTION 12. COMPENSATION.........................................G-7
SECTION 13. ENTIRE BOARD OF DIRECTORS............................G-7
ARTICLE IV
OFFICERS.............................................................G-7
SECTION 1. GENERAL..............................................G-7
SECTION 2. REMOVAL..............................................G-8
SECTION 3. VOTING SECURITIES OWNED BY THE CORPORATION...........G-8
SECTION 4. CHAIRMAN OF THE BOARD AND CHIEF EXECUTIVE OFFICER....G-8
G-i
<PAGE>
Page
----
SECTION 5. PRESIDENT, DEPUTY CHIEF EXECUTIVE OFFICER AND
CHIEF OPERATING OFFICER..............................G-9
SECTION 6. DEPUTY CHAIRMAN OF THE BOARD.........................G-9
SECTION 7. EXECUTIVE VICE PRESIDENTS, SENIOR VICE PRESIDENTS,
MANAGING DIRECTORS, PRINCIPALS AND VICE PRESIDENTS...G-9
SECTION 8. SECRETARY............................................G-9
SECTION 9. TREASURER...........................................G-10
SECTION 10. ASSISTANT SECRETARIES...............................G-10
SECTION 11. ASSISTANT TREASURERS................................G-10
ARTICLE V
STOCK...............................................................G-10
SECTION 1. FORM OF CERTIFICATES................................G-10
SECTION 2. SIGNATURES..........................................G-11
SECTION 3. LOST, DESTROYED, STOLEN OR MUTILATED CERTIFICATES...G-11
SECTION 4. TRANSFERS...........................................G-11
SECTION 5. TRANSFER AND REGISTRY AGENTS........................G-11
SECTION 6. BENEFICIAL OWNERS...................................G-12
ARTICLE VI
NOTICES.............................................................G-12
SECTION 1. NOTICES.............................................G-12
SECTION 2. WAIVERS OF NOTICE...................................G-12
ARTICLE VII
GENERAL PROVISIONS..................................................G-12
SECTION 1. DIVIDENDS...........................................G-12
SECTION 2. DISBURSEMENTS.......................................G-13
SECTION 3. FISCAL YEAR.........................................G-13
SECTION 4. CORPORATE SEAL......................................G-13
ARTICLE VIII
INDEMNIFICATION.....................................................G-13
SECTION 1. POWER TO INDEMNIFY IN ACTIONS, SUITS OR PROCEEDINGS.G-13
SECTION 2. AUTHORIZATION OF INDEMNIFICATION....................G-13
SECTION 3. DIRECTORS' RELIANCE ON REPORTS......................G-14
SECTION 4. INDEMNIFICATION BY A COURT..........................G-14
SECTION 5. EXPENSES PAYABLE IN ADVANCE.........................G-14
SECTION 6. NONEXCLUSIVITY OF INDEMNIFICATION
AND ADVANCEMENT OF EXPENSES.........................G-14
SECTION 7. INSURANCE...........................................G-15
G-ii
<PAGE>
Page
----
SECTION 8. CERTAIN DEFINITIONS.................................G-15
SECTION 9. SURVIVAL OF INDEMNIFICATION AND ADVANCEMENT
OF EXPENSES.........................................G-15
SECTION 10. LIMITATION ON INDEMNIFICATION.......................G-15
SECTION 11. INDEMNIFICATION OF EMPLOYEES AND AGENTS.............G-15
ARTICLE IX
AMENDMENTS..........................................................G-16
SECTION 1. AMENDMENTS..........................................G-16
ARTICLE X
TRANSITION PERIOD MATTERS...........................................G-16
SECTION 1. GENERAL.............................................G-16
SECTION 2. DIRECTORS...........................................G-16
SECTION 3. COMMITTEES..........................................G-18
SECTION 4. OFFICERS............................................G-19
SECTION 5. AMENDMENTS..........................................G-19
SECTION 6. ACTIONS OF THE BOARD................................G-19
G-iii
<PAGE>
AMENDED AND RESTATED BYLAWS
OF
JONES LANG LASALLE INCORPORATED
(hereinafter called the "Corporation")
ARTICLE I
OFFICES
-------
SECTION 1. PRINCIPAL OFFICE. The principal office of the Corporation
within the State of Maryland shall be in the City of Baltimore, State of
Maryland.
SECTION 2. OTHER OFFICES. The Corporation may also have offices at
such other places, both within and without the State of Maryland, as the Board
of Directors may from time to time determine.
ARTICLE II
MEETINGS OF STOCKHOLDERS
------------------------
SECTION 1. PLACE OF MEETINGS. Meetings of the stockholders for the
election of directors or for any other purpose shall be held at such time and
place, within the United States, as shall be designated from time to time by the
Board of Directors and stated in the notice of the meeting or in a duly executed
waiver of notice thereof.
SECTION 2. ANNUAL MEETINGS. The annual meetings of stockholders shall
be held on such date and at such time during the month of May as shall be
designated from time to time by the Board of Directors and stated in the notice
of the meeting, at which meetings the stockholders shall elect directors, and
transact such other business as may properly be brought before the meeting.
Written notice of the annual meeting stating the place, date and hour of the
meeting shall be given to each stockholder entitled to vote at such meeting and
each other stockholder entitled to notice of such meeting not less than ten nor
more than ninety days before the date of the meeting. Failure to hold an annual
meeting does not invalidate the Corporation's existence or affect any otherwise
valid corporate acts.
SECTION 3. SPECIAL MEETINGS. Unless otherwise prescribed by law or by
the Charter, special meetings of stockholders, for any purpose or purposes, may
be called by (i) the Chairman of the Board and Chief Executive Officer, (ii)
President, Deputy Chief Executive Officer and Chief Operating Officer, or (iii)
the Board of Directors and must be called by the Secretary on the written
request of stockholders entitled to cast at least a majority of all the votes
entitled to be cast at the meeting, which request shall state the purpose or
purposes of the proposed meeting and the matters proposed to be acted upon at
such meeting. At a special meeting of the stockholders, only such business shall
be conducted as shall be specified in the notice of meeting (or any supplement
thereto). Written notice of a special meeting stating the place, date and hour
of the meeting as determined by the
G-1
<PAGE>
Board of Directors, the Chairman of the Board and Chief Executive Officer or the
President, Deputy Chief Executive Officer and Chief Operating Officer and the
purpose or purposes for which the meeting is called shall be given by the
Secretary not less than ten (10) nor more than ninety (90) days before the date
of the meeting to each stockholder entitled to vote at such meeting and each
stockholder entitled to notice of such meeting.
SECTION 4. QUORUM. Except as otherwise required by law or by the
Charter, the holders of a majority of the shares of stock issued and outstanding
and entitled to vote thereat, present in person or represented by proxy, shall
constitute a quorum at all meetings of the stockholders for the transaction of
business. A quorum, once established, shall not be broken by the withdrawal of
enough votes to leave less than a quorum. If, however, such quorum shall not be
present or represented at any meeting of the stockholders, the stockholders
entitled to vote thereat, present in person or represented by proxy, shall have
power to adjourn the meeting from time to time, without notice other than
announcement at the meeting, until a quorum shall be present or represented. At
such adjourned meeting at which a quorum shall be present or represented, any
business may be transacted which might have been transacted at the meeting as
originally noticed. If the adjournment is to a date more than one hundred twenty
(120) days after the original record date, or if after the adjournment a new
record date is fixed for the adjourned meeting, a notice of the adjourned
meeting shall be given to each stockholder entitled to vote at the meeting not
less than ten (10) nor more than ninety (90) days before the date of the
meeting.
SECTION 5. PROXIES. Any stockholder entitled to vote may do so in
person or by his or her proxy appointed by an instrument in writing signed by
such stockholder or by his or her agent hereunto authorized, delivered to the
Secretary of the meeting; provided, however, that no proxy shall be voted or
acted upon after eleven months from its date, unless said proxy provides for a
longer period.
SECTION 6. VOTING. At all meetings of the stockholders at which a
quorum is present, except as otherwise required by law, the Charter or these
Bylaws, any question brought before any meeting of stockholders shall be decided
by the affirmative vote of a majority of the total number of votes cast by
holders of stock entitled to vote on such question, voting as a single class.
The Board of Directors, in its discretion, or the officer of the Corporation
presiding at a meeting of stockholders, in his or her discretion, may require
that any votes cast at such meeting shall be cast by written ballot.
SECTION 7. NATURE OF BUSINESS AT MEETINGS OF STOCKHOLDERS. No business
may be transacted at an annual meeting of stockholders, other than business that
is either (a) properly brought before the annual meeting by or at the direction
of the Board of Directors (or any duly authorized committee thereof) or (b)
otherwise properly brought before the annual meeting by any stockholder of the
Corporation (i) who is a stockholder of record on the date of the giving of the
notice provided for in this Section 7 and on the record date for the
determination of stockholders entitled to vote at such annual meeting and (ii)
who complies with the notice procedures set forth in this Section 7.
In addition to any other applicable requirements, for business to be
properly brought before an annual meeting by a stockholder, such stockholder
must have given timely notice thereof in proper written form to the Secretary of
the Corporation.
To be timely, a stockholder's notice to the Secretary must be delivered
to or mailed and received at the principal executive offices of the Corporation
not less than ninety (90) days nor more than one hundred twenty (120)
G-2
<PAGE>
days prior to the anniversary date of the immediately preceding annual meeting
of stockholders; provided, however, that in the event that the annual meeting is
called for a date that is not within thirty (30) days before or after such
anniversary date, notice by the stockholder in order to be timely must be so
received not later than the close of business on the tenth (10th) day following
the day on which notice of the date of the annual meeting was mailed or public
announcement of the date of the annual meeting was made, whichever first occurs.
In no event shall the public announcement of an adjournment of an annual meeting
commence a new time period for the giving of a stockholder's notice as described
above.
To be in proper written form, a stockholder's notice to the Secretary
must set forth as to each matter such stockholder proposes to bring before the
annual meeting (i) a brief description of the business desired to be brought
before the annual meeting and the reasons for conducting such business at the
annual meeting, (ii) the name and record address of such stockholder, (iii) the
class or series and number of shares of stock of the Corporation which are owned
beneficially or of record by such stockholder, (iv) a description of all
arrangements or understandings between such stockholder and any other person or
persons (including their names) in connection with the proposal of such business
by such stockholder and any material interest of such stockholder in such
business and (v) a representation that such stockholder intends to appear in
person or by proxy at the annual meeting to bring such business before the
meeting.
No business shall be conducted at the annual meeting of stockholders,
except business brought before the annual meeting in accordance with the
procedures set forth in this Section 7, PROVIDED, HOWEVER, that, once business
has been properly brought before the annual meeting in accordance with such
procedures, nothing in this Section 7 shall be deemed to preclude discussion by
any stockholder of any such business. If the Chairman of an annual meeting
determines that business was not properly brought before the annual meeting in
accordance with the foregoing procedures, the Chairman shall declare to the
meeting that the business was not properly brought before the meeting and such
business shall not be transacted.
For purposes of this Section 7, "public announcement" shall mean an
announcement in a press release reported by the Dow Jones News Service,
Associated Press or comparable national news service or in a document publicly
filed by the Corporation with the Securities and Exchange Commission pursuant to
Section 13, 14 or 15(d) of the Securities Exchange Act of 1934, as amended (the
"Exchange Act").
SECTION 8. RECORD DATE. In order that the Corporation may determine the
stockholders entitled to notice of or to vote at any meeting of stockholders or
any adjournment thereof, or entitled to receive any dividend or other
distribution or any allotment of other rights, or entitled to exercise any
rights in respect of any change, conversion or exchange of stock, or for the
purpose of any other lawful action, the Board of Directors may fix a record
date, which record date shall not precede the close of business on the day on
which the record date is fixed and which record date: (a) in the case of any
meeting of stockholders or adjournment thereof, shall not be more than ninety
(90) nor less than ten (10) days before the date of such meeting; and (b) in the
case of any other action, shall not be more than ninety days prior to such other
action. If no record date is fixed: (x) the record date for determining
stockholders entitled to notice of or to vote at a meeting of stockholders shall
be the later of (i) the close of business on the day on which notice is mailed
or (ii) the thirtieth day before the meeting; and (y) the record date for
determining stockholders for any other purpose shall be at the close of business
on the day on which the Board of Directors adopts the resolution relating
thereto. A determination of stockholders of record entitled to notice of
G-3
<PAGE>
or to vote at a meeting of stockholders shall apply to any adjournment of the
meeting; PROVIDED, HOWEVER, that the Board of Directors may fix a new record
date for the adjourned meeting.
SECTION 9. INFORMAL ACTION. Any action required or permitted to be
taken at a meeting of the stockholders may be taken without a meeting if there
is filed with the records of meetings of stockholders a unanimous written
consent which sets forth the action and is signed by each stockholder entitled
to vote on the matter and a written waiver of any right to dissent signed by
each stockholder entitled to notice of the meeting but not entitled to vote
thereat.
ARTICLE III
DIRECTORS
---------
SECTION 1. NUMBER AND ELECTION OF DIRECTORS. Subject to the provisions
of Article X, the Board of Directors shall consist of not less than 3 nor more
than 15 members, the exact number of which shall be determined from time to time
by resolution adopted by the Board of Directors. Subject to the provisions of
Article X and except as provided in Section 3 of this Article III, directors
shall be elected by the stockholders at the annual meetings of stockholders, and
each director so elected shall hold office until such director's successor is
duly elected and qualifies, or until such director's earlier death, resignation
or removal. Directors need not be stockholders.
SECTION 2. NOMINATION OF DIRECTORS. Subject to the provisions of
Article X, only persons who are nominated in accordance with the following
procedures shall be eligible for election and qualified to serve as directors of
the Corporation, except as may be otherwise provided in the Charter (with
respect to the right of holders of common stock or preferred stock of the
Corporation to nominate and elect a specified number of directors in certain
circumstances). Subject to the provisions of Article X, nominations of persons
for election to the Board of Directors may be made at any annual meeting of
stockholders, or at any special meeting of stockholders called for the purpose
of electing directors, (a) by or at the direction of the Board of Directors (or
any duly authorized committee thereof) or (b) by any stockholder of the
Corporation (i) who is a stockholder of record on the date of the giving of the
notice provided for in this Section 2 and on the record date for the
determination of stockholders entitled to vote at such meeting and (ii) who
complies with the notice procedures set forth in this Section 2.
In addition to any other applicable requirements, for a nomination to
be made by a stockholder, such stockholder must have given timely notice thereof
in proper written form to the Secretary of the Corporation.
To be timely, a stockholder's notice to the Secretary must be delivered
to or mailed and received at the principal executive offices of the Corporation
(a) in the case of an annual meeting, not less than ninety (90) days nor more
than one hundred twenty (120) days prior to the anniversary date of the
immediately preceding annual meeting of stockholders; provided, however, that in
the event that the annual meeting is called for a date that is not within thirty
(30) days before or after such anniversary date, notice by the stockholder in
order to be timely must be so received not later than the close of business on
the tenth (10th) day following the day on which notice of the date of the annual
meeting was mailed or public announcement of the date of the annual meeting was
made, whichever first occurs; and (b) in the case of a special meeting of
stockholders called for the purpose of electing directors, not later than the
close of business on the tenth (10th) day following the day on which notice of
the date of the special meeting was mailed or public announcement of the date of
the special meeting was made, whichever
G-4
<PAGE>
first occurs. In no event shall the public announcement of an adjournment of an
annual or special meeting commence a new time period for the giving of a
stockholder's notice as described above.
To be in proper written form, a stockholder's notice to the Secretary
must set forth (a) as to each person whom the stockholder proposes to nominate
for election as a director (i) the name, age, business address and residence
address of the person, (ii) the principal occupation or employment of the
person, (iii) the class or series and number of shares of stock of the
Corporation which are owned beneficially or of record by the person and (iv) any
other information relating to the person that would be required to be disclosed
in a proxy statement or other filings required to be made in connection with
solicitations of proxies for election of directors pursuant to Section 14 of the
Exchange Act, and the rules and regulations promulgated thereunder; and (b) as
to the stockholder giving the notice (i) the name and record address of such
stockholder, (ii) the class or series and number of shares of stock of the
Corporation which are owned beneficially or of record by such stockholder, (iii)
a description of all arrangements or understandings between such stockholder and
each proposed nominee and any other person or persons (including their names)
pursuant to which the nomination(s) are to be made by such stockholder, (iv) a
representation that such stockholder intends to appear in person or by proxy at
the meeting to nominate the persons named in its notice and (v) any other
information relating to such stockholder that would be required to be disclosed
in a proxy statement or other filings required to be made in connection with
solicitations of proxies for election of directors pursuant to Section 14 of the
Exchange Act and the rules and regulations promulgated thereunder. Such notice
must be accompanied by a written consent of each proposed nominee to being named
as a nominee and to serve as a director if elected.
If the Chairman of the meeting determines that a nomination was not
made in accordance with the foregoing procedures, the Chairman shall declare to
the meeting that the nomination was defective and such defective nomination
shall be disregarded.
For purposes of this Section 2, "public announcement" shall mean an
announcement in a press release reported by the Dow Jones News Service,
Associated Press or comparable national news service or in a document publicly
filed by the Corporation with the Securities and Exchange Commission pursuant to
Section 13, 14 or 15(d) of the Exchange Act.
SECTION 3. VACANCIES. Subject to the provisions of Article X and to the
terms of any one or more classes or series of common stock or preferred stock,
any vacancy on the Board of Directors that results from an increase in the
number of directors may be filled by a majority of the entire Board of
Directors, and any other vacancy occurring on the Board of Directors may be
filled by a majority of the Board of Directors then in office, even if less than
a quorum, or by a sole remaining director. The stockholders may elect to fill a
vacancy on the Board of Directors which results from the removal of a Director.
Notwithstanding the foregoing, whenever the holders of any one or more class or
classes or series of preferred stock or common stock of the Corporation shall
have the right, voting separately as a class, to elect directors at an annual or
special meeting of stockholders, the election, term of office, filling of
vacancies and other features of such directorships shall be governed by the
Charter.
SECTION 4. DUTIES AND POWERS. The business and affairs of the
Corporation shall be managed under the direction of the Board of Directors which
may exercise all such powers of the Corporation and do all such lawful acts and
things as are not by statute or by the Charter or by these Bylaws required to be
exercised or done by the stockholders.
G-5
<PAGE>
SECTION 5. ORGANIZATION. At each meeting of the Board of Directors, the
Chairman of the Board and Chief Executive Officer, or in the absence of the
Chairman of the Board and Chief Executive Officer, the President, Deputy Chief
Executive Officer and Chief Operating Officer, or in the absence of the
President, Deputy Chief Executive Officer and Chief Operating Officer, the
Deputy Chairman of the Board, if there be one, or in the absence of the Deputy
Chairman of the Board, a director chosen by a majority of the directors present,
shall act as Chairman of the meeting. The Secretary of the Corporation shall act
as Secretary of each meeting of the Board of Directors. In case the Secretary
shall be absent from any meeting of the Board of Directors, an Assistant
Secretary shall perform the duties of Secretary at such meeting; and in the
absence from any such meeting of the Secretary and all the Assistant
Secretaries, the Chairman of the meeting may appoint any person to act as
Secretary of the meeting.
SECTION 6. REMOVALS OF DIRECTORS. Any director or the entire Board of
Directors may be removed only in accordance with the provisions of the Charter.
SECTION 7. MEETINGS. The Board of Directors may hold meetings, both
regular and special, either within or without the State of Maryland. Regular
meetings of the Board of Directors may be held at such time and at such place as
may from time to time be determined by the Board of Directors. Special meetings
of the Board of Directors may be called by the Chairman of the Board and Chief
Executive Officer, the President, Deputy Chief Executive Officer and Chief
Operating Officer, or a majority of the directors then in office. Notice of
every regular or special meeting of the Board stating the place, date and hour
of the meeting shall be given to each director either by mail not less than
forty-eight (48) hours before the date of the meeting, by telephone, facsimile
or telegram on twenty-four (24) hours' notice, or on such shorter notice as the
person or persons calling such meeting may deem necessary or appropriate in the
circumstances.
SECTION 8. QUORUM. Except as may be otherwise required by law and,
subject to the provisions of Article X, the Charter or these Bylaws, at all
meetings of the Board of Directors, a majority of the entire Board of Directors
shall constitute a quorum for the transaction of business and the action of a
majority of the directors present at any meeting at which there is a quorum
shall be the action of the Board of Directors. If a quorum shall not be present
at any meeting of the Board of Directors, the directors present thereat may
adjourn the meeting from time to time, without notice other than announcement at
the meeting of the time and place of the adjourned meeting, until a quorum shall
be present.
SECTION 9. ACTIONS OF BOARD. Unless otherwise provided by the Charter
or these Bylaws, any action required or permitted to be taken at any meeting of
the Board of Directors or of any committee thereof may be taken without a
meeting, if all the members of the Board of Directors or committee, as the case
may be, consent thereto in writing, and the writing or writings are filed with
the minutes of proceedings of the Board of Directors or committee.
SECTION 10. MEETINGS BY MEANS OF CONFERENCE TELEPHONE. Unless otherwise
provided by the Charter or these Bylaws, members of the Board of Directors, or
any committee thereof, may (and, at the request of any such member, shall be
given an opportunity to) participate in a meeting of the Board of Directors or
such committee by means of a conference telephone or similar communications
equipment if all persons
G-6
<PAGE>
participating in the meeting can hear each other at the same time, and
participation in a meeting pursuant to this Section 10 shall constitute presence
in person at such meeting.
SECTION 11. COMMITTEES. Subject to the provisions of Article X: (i) the
Board of Directors may, by resolution passed by a majority of the entire Board
of Directors, appoint one or more committees of one or more of the directors of
the Corporation; (ii) the Board of Directors may designate one or more directors
as alternate members of any committee, who may replace any absent or
disqualified member at any meeting of any such committee; and (iii) in the
absence or disqualification of a member of a committee, and in the absence of a
designation by the Board of Directors of an alternate member to replace the
absent or disqualified member, the member or members thereof present at any
meeting and not disqualified from voting, whether or not he or they constitute a
quorum, may unanimously appoint another member of the Board of Directors to act
at the meeting in the place of any absent or disqualified member. Any committee,
to the extent permitted by law and provided in these Bylaws or in the resolution
establishing such committee, shall have and may exercise all the powers and
authority of the Board of Directors in the management of the business and
affairs of the Corporation.
SECTION 12. COMPENSATION. The directors may be paid their expenses, if
any, of attendance at each meeting of the Board of Directors and may be paid a
fixed sum for attendance at each meeting of the Board of Directors or a stated
salary, or such other emoluments as the Board of Directors shall from time to
time determine. No such payment shall preclude any director from serving the
Corporation in any other capacity and receiving compensation therefor. Members
of special or standing committees may be allowed compensation for attending
committee meetings.
SECTION 13. ENTIRE BOARD OF DIRECTORS. As used in these Bylaws
generally, the term "entire Board of Directors" means the total number of
directors which the Corporation would have if there were no vacancies.
Notwithstanding anything to the contrary provided herein, if at any time the
number of directors actually holding office do not constitute the requisite
percentage of the entire Board of Directors necessary to take action as provided
in these Bylaws, then any action required to be taken on such item shall be
taken by an affirmative vote of 75% of the directors then in office; provided,
however, during the Transition Period at least one JLW Director and one Parent
Director must vote in favor of such action.
ARTICLE IV
OFFICERS
--------
SECTION 1. GENERAL. Subject in each case to the provisions of Article
X, the officers of the Corporation shall be elected by the Board of Directors
and shall be (i) a Chairman of the Board and Chief Executive Officer (who must
be a director) , (ii) a President, Deputy Chief Executive Officer and Chief
Operating Officer, (iii) a Secretary and (iv) a Treasurer, each of whom shall be
elected by the Board of Directors and shall hold office for such term and shall
exercise such powers and perform such duties as set forth in these Bylaws and as
shall be determined from time to time by the Board of Directors. The Board of
Directors or the Chairman of the Board and Chief Executive Officer, in his or
her discretion, may also elect or appoint a Deputy Chairman of the Board, one or
more Executive Vice Presidents, Senior Vice Presidents, Managing Directors,
Principals, Vice Presidents, Assistant Secretaries, Assistant Treasurers and
other officers, and the President, Deputy Chief Executive Officer and Chief
Operating Officer may appoint one or more Vice Presidents, Assistant
Secretaries, Assistant Treasurers
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and other officers of the Corporation below the level of Vice President, each of
whom shall hold office for such term and shall exercise such powers and perform
such duties as set forth in these Bylaws and as shall be determined from time to
time (x) by the Board of Directors, if such officer was elected by the Board of
Directors, (y) by the Chairman of the Board and Chief Executive Officer, if such
officer was appointed by the Chairman of the Board and Chief Executive Officer
or (z) by the Chairman of the Board and Chief Executive Officer or the
President, Deputy Chief Executive Officer and Chief Operating Officer, if such
officer was appointed by the President, Deputy Chief Executive Officer and Chief
Operating Officer.
SECTION 2. REMOVAL. Subject in each case to the provisions of Article
X, all officers of the Corporation shall hold office until their successors are
chosen and qualified, or until their earlier resignation or removal and any
officer may be removed at any time (i) by the affirmative vote of a majority of
the entire Board of Directors, (ii) by the Chairman and Chief Executive Officer,
if such officer was appointed by the Chairman and Chief Executive Officer, or
(iii) by the Chairman of the Board and Chief Executive Officer or President,
Deputy Chief Executive Officer and Chief Operating Officer, if such officer was
appointed by the President, Deputy Chief Executive Officer and Chief Operating
Officer.
SECTION 3. VOTING SECURITIES OWNED BY THE CORPORATION. Powers of
attorney, proxies, waivers of notice of meeting, consents and other instruments
relating to securities owned by the Corporation may be executed in the name of
and on behalf of the Corporation by the Chairman of the Board and Chief
Executive Officer, the President, Deputy Chief Executive Officer and Chief
Operating Officer, the Deputy Chairman of the Board or any Executive Vice
President, and any such officer may in the name of and on behalf of the
Corporation, take all such action as any such officer may deem advisable to vote
in person or by proxy at any meeting of security holders of any corporation in
which the Corporation may own securities, and at any such meeting shall possess
and may exercise any and all rights and power incident to the ownership of such
securities and which, as the owner thereof, the Corporation might have exercised
and possessed if present. The Board of Directors may, by resolution, from time
to time confer like powers upon any other person or persons. Shares of the
Corporation's own stock owned directly or indirectly by the Corporation shall
not be voted at any meeting and shall not be counted in determining the total
number of outstanding shares entitled to be voted at any given time unless such
shares are held by the Corporation in a fiduciary capacity.
SECTION 4. CHAIRMAN OF THE BOARD AND CHIEF EXECUTIVE OFFICER. The
Chairman of the Board and Chief Executive Officer shall be the chief executive
officer of the Corporation and shall in general supervise and control all of the
business and affairs of the Corporation. The Chairman of the Board and Chief
Executive Officer shall preside at all meetings of the stockholders of the
Corporation. The Chairman of the Board and Chief Executive Officer shall possess
the power to execute all deeds, mortgages, bonds, contracts, certificates and
other instruments of the Corporation requiring a seal, under the seal of the
Corporation, except in cases where the execution thereof shall be expressly
delegated by the Board of Directors or by these Bylaws to some other officer or
agent of the Corporation or shall be required by law to be otherwise executed or
signed. The Chairman of the Board and Chief Executive Officer shall make reports
to the Board of Directors and the stockholders, and shall see that all orders
and resolutions of the Board of Directors and of any committee thereof are
carried into effect. The Chairman of the Board shall also perform such other
duties and may exercise such other powers as from time to time may be assigned
to him or her by these Bylaws or by the Board of Directors.
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SECTION 5. PRESIDENT, DEPUTY CHIEF EXECUTIVE OFFICER AND CHIEF
OPERATING OFFICER. The President, Deputy Chief Executive Officer and Chief
Operating Officer shall be the second most senior executive of the Corporation
and, subject to the direction and control of the Chairman of the Board of
Directors, shall be the deputy chief executive officer and chief operating
officer of the Corporation and shall assist the Chairman of the Board and Chief
Executive Officer in the administration and operation of the Corporation's
business and general supervision of its policies and affairs. In the absence of
the Chairman of the Board and Chief Executive Officer, the President, Deputy
Chief Executive Officer and Chief Operating Officer shall preside at all
meetings of the stockholders of the Corporation. The President, Deputy Chief
Executive Officer and Chief Operating Officer shall possess the power to execute
all deeds, mortgages, bonds, contracts, certificates and other instruments of
the Corporation requiring a seal, under the seal of the Corporation, except in
cases where the execution thereof shall be expressly delegated by the Board of
Directors or by these Bylaws to some other officer or agent of the Corporation
or shall be required by law to be otherwise executed or signed. The President,
Deputy Chief Executive Officer and Chief Operating Officer shall also perform
such other duties and may exercise such other powers as from time to time may be
assigned to him or her by these Bylaws, the Chairman of the Board and Chief
Executive Officer or by the Board of Directors.
SECTION 6. DEPUTY CHAIRMAN OF THE BOARD. The Deputy Chairman of the
Board, if there be one, shall, in the absence of the Chairman of the Board and
Chief Executive Officer and the President, Deputy Chief Executive Officer and
Chief Operating Officer, preside at all meetings of the stockholders of the
Corporation and shall perform such other duties and may exercise such other
powers as from time to time may be assigned to him by the Board of Directors or
the Chairman of the Board and Chief Executive Officer.
SECTION 7. EXECUTIVE VICE PRESIDENTS, SENIOR VICE PRESIDENTS, MANAGING
DIRECTORS, PRINCIPALS AND VICE PRESIDENTS. Each Executive Vice President, Senior
Vice President, Managing Director, Principal or other Vice President shall
perform such duties and have such powers as from time to time may be assigned to
him by the Board of Directors, the Chairman of the Board and Chief Executive
Officer or the President, Deputy Chief Executive Officer and Chief Operating
Officer, as provided in Section 1 of this Article IV.
SECTION 8. SECRETARY. The Secretary shall attend all meetings of the
Board of Directors and all meetings of stockholders and record all the
proceedings thereat in a book or books to be kept for that purpose; the
Secretary shall also perform like duties for the standing committees when
required. The Secretary shall give, or cause to be given, notice of all meetings
of the stockholders and special meetings of the Board of Directors, and shall
perform such other duties as may be prescribed by the Board of Directors, the
Chairman of the Board and Chief Executive Officer or the President, Deputy Chief
Executive Officer and Chief Operating Officer, under whose supervision the
Secretary shall act. If the Secretary shall be unable or shall refuse to cause
to be given notice of all meetings of the stockholders and special meetings of
the Board of Directors, and if there be no Assistant Secretary, then either the
Board of Directors or the Chairman of the Board and Chief Executive Officer or
the President, Deputy Chief Executive Officer and Chief Operating Officer may
choose another officer to cause such notice to be given. The Secretary shall
have custody of the seal of the Corporation and the Secretary or any Assistant
Secretary, if there be one, shall have authority to affix the same to any
instrument requiring it and when so affixed, it may be attested by the signature
of the Secretary or by the signature of any such Assistant Secretary. The Board
of
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Directors may give general authority to any other officer to affix the seal of
the Corporation and to attest the affixing by his or her signature. The
Secretary shall see that all books, reports, statements, certificates and other
documents and records required by law to be kept or filed are properly kept or
filed, as the case may be.
SECTION 9. TREASURER. The Treasurer shall have the custody of the
corporate funds and securities and shall keep full and accurate accounts of
receipts and disbursements in books belonging to the Corporation and shall
deposit all moneys and other valuable effects in the name and to the credit of
the Corporation in such depositories as may be designated by the Board of
Directors. The Treasurer shall disburse the funds of the Corporation as may be
ordered by the Board of Directors, taking proper vouchers for such
disbursements, and shall render to the Chairman of the Board and Chief Executive
Officer and the Board of Directors, at its regular meetings, or when the Board
of Directors so requires, an account of all transactions as Treasurer and of the
financial condition of the Corporation. If required by the Board of Directors,
the Treasurer shall give the Corporation a bond in such sum and with such surety
or sureties as shall be satisfactory to the Board of Directors for the faithful
performance of the duties of the office of Treasurer and for the restoration to
the Corporation, in case of the Treasurer's death, resignation, retirement or
removal from office, of all books, papers, vouchers, money and other property of
whatever kind in the Treasurer's possession or under control of the Treasurer
belonging to the Corporation.
SECTION 10. ASSISTANT SECRETARIES. Except as may be otherwise provided
in these Bylaws, Assistant Secretaries, if there be any, shall perform such
duties and have such powers as from time to time may be assigned to them by the
Board of Directors, the Chairman of the Board and Chief Executive Officer, the
President, Deputy Chief Executive Officer and Chief Operating Officer, any
Executive Vice President, if there be one, or the Secretary, and in the absence
of the Secretary or in the event of his or her disability or refusal to act,
shall perform the duties of the Secretary, and when so acting, shall have all
the powers of and be subject to all the restrictions upon the Secretary.
SECTION 11. ASSISTANT TREASURERS. Assistant Treasurers, if there be
any, shall perform such duties and have such powers as from time to time may be
assigned to them by the Board of Directors, the Chairman of the Board and Chief
Executive Officer, the President, Deputy Chief Executive Officer and Chief
Operating Officer, any Executive Vice President, if there be one, or the
Treasurer, and in the absence of the Treasurer or in the event of the
Treasurer's disability or refusal to act, shall perform the duties of the
Treasurer, and when so acting, shall have all the powers of and be subject to
all the restrictions upon the Treasurer. If required by the Board of Directors,
an Assistant Treasurer shall give the Corporation a bond in such sum and with
such surety or sureties as shall be satisfactory to the Board of Directors for
the faithful performance of the duties of the office of Assistant Treasurer and
for the restoration to the Corporation, in case of the Assistant Treasurer's
death, resignation, retirement or removal from office, of all books, papers,
vouchers, money and other property of whatever kind in the Assistant Treasurer's
possession or under control of the Assistant Treasurer belonging to the
Corporation.
ARTICLE V
STOCK
-----
SECTION 1. FORM OF CERTIFICATES. Every holder of stock in the
Corporation shall be entitled to have certificates which represent and certify
the shares of stock of the Corporation owned of record by such stockholder. Each
stock certificate shall include on its face the name of the Corporation, the
name of the
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stockholder to whom it is issued, the class of stock and number of shares
represented by the certificate and a statement that the Corporation shall
furnish on request and without charge a full statement of any designations,
preferences, conversion and other rights, voting powers, restrictions,
limitations as to dividends, qualifications, terms and conditions of redemption,
and, in the case of preferred stock or a special class in a series, the
differences in the relative rights and preferences between the shares of each
series to the extent that they have been set and the authority of the Board of
Directors to set the relative rights and preferences of a subsequent series, and
shall otherwise be in such form, not inconsistent with the Maryland General
Corporation Law (the "MGCL") and the Charter, as shall be approved by the Board
of Directors or any officer or officers designated for such purpose by
resolution of the Board of Directors.
SECTION 2. SIGNATURES. Each such certificate shall be signed, in the
name of the Corporation, (i) by the Chairman of the Board and Chief Executive
Officer, the President, Deputy Chief Executive Officer and Chief Operating
Officer or an Executive Vice President and (ii) by the Treasurer or an Assistant
Treasurer, or the Secretary or an Assistant Secretary of the Corporation,
certifying the number of shares of stock in the Corporation owned of record by
such holder . Any or all of the signatures on a certificate may be a facsimile.
In case any officer, transfer agent or registrar who has signed or whose
facsimile signature has been placed upon a certificate shall have ceased to be
such officer, transfer agent or registrar before such certificate is issued, it
may be issued by the Corporation with the same effect as if such person were
such officer, transfer agent or registrar at the date of issue.
SECTION 3. LOST, DESTROYED, STOLEN OR MUTILATED CERTIFICATES. The
Board of Directors or any officer of the Corporation may direct a new
certificate to be issued in place of any certificate theretofore issued by the
Corporation alleged to have been lost, stolen or destroyed, upon the making of
an affidavit of that fact by the person claiming the certificate of stock to be
lost, stolen or destroyed. When authorizing such issue of a new certificate, the
Board of Directors may, in its discretion and as a condition precedent to the
issuance thereof, require the owner of such lost, stolen or destroyed
certificate, or such person's legal representative, to advertise the same in
such manner as the Board of Directors shall require and/or to give the
Corporation a bond in such sum as it may direct as indemnity against any claim
that may be made against the Corporation with respect to the certificate alleged
to have been lost, stolen or destroyed.
SECTION 4. TRANSFERS. Stock of the Corporation shall be transferable in
the manner prescribed by law and in these Bylaws. Transfers of stock shall be
made on the books of the Corporation only by the person named in the certificate
or by such person's attorney lawfully constituted in writing and upon the
surrender of the certificate therefor, properly endorsed for transfer and
payment of all necessary transfer taxes; provided, however, that such surrender
and endorsement or payment of taxes shall not be required in any case in which
the officers of the Corporation shall determine to waive such requirement. Every
certificate exchanged, returned or surrendered to the Corporation shall be
marked "Cancelled," with the date of cancellation, by the Secretary or Assistant
Secretary of the Corporation or the transfer agent thereof. No transfer of stock
shall be valid as against the Corporation for any purpose until it shall have
been entered in the stock records of the Corporation by an entry showing from
and to whom transferred.
SECTION 5. TRANSFER AND REGISTRY AGENTS. The Corporation may from time
to time maintain one or more transfer offices or agents and registry offices or
agents at such place or places as may be determined from time to time by the
Board of Directors.
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SECTION 6. BENEFICIAL OWNERS. The Corporation shall be entitled to
recognize the exclusive right of a person registered on its books as the owner
of shares to receive dividends, and to vote as such owner, and to hold liable
for calls and assessments a person registered on its books as the owner of
shares, and shall not be bound to recognize any equitable or other claim to or
interest in such share or shares on the part of any other person, whether or not
it shall have express or other notice thereof, except as otherwise provided by
law.
ARTICLE VI
NOTICES
-------
SECTION 1. NOTICES. Whenever written notice is required by law, the
Charter or these Bylaws to be given to any director, member of a committee or
stockholder, such notice may be given by hand-delivery, telecopier or air
courier, and in the case of a notice to a stockholder may be given by
hand-delivery or mail, addressed to such director, member of a committee or
stockholder, at such person's address or telecopy number as it appears on the
records of the Corporation, as the case may be, with any charges therefor being
prepaid, and such notice shall be deemed to be given at the time personally
delivered, if delivered by hand; upon transmission thereof by the sender and
issuance by the transmitting machine of a confirmation slip relating thereto, if
telecopied; on the third business day after delivery to the air courier for
courier delivery, if sent by air courier; and at the time when the same shall be
deposited with the United States Mail, if sent by mail.
SECTION 2. WAIVERS OF NOTICE. (a) Whenever any notice is required by
law, the Charter or these Bylaws, to be given to any director, member of a
committee or stockholder, a waiver thereof in writing, signed by the person or
persons entitled to said notice, whether before or after the time stated
therein, shall be deemed equivalent to notice. Attendance of a person at a
meeting in person or represented by proxy, shall constitute a waiver of notice
of such meeting, except where the person attends the meeting for the express
purpose of objecting at the beginning of the meeting to the transaction of any
business because the meeting is not lawfully called or convened.
(b) Neither the business to be transacted at, nor the purpose
of, any regular or special meeting of the stockholders, directors or members of
a committee of directors need be specified in any written waiver of notice
unless so required by law, the Charter or these Bylaws.
ARTICLE VII
GENERAL PROVISIONS
------------------
SECTION 1. DIVIDENDS. Subject to the requirements of the MGCL and the
provisions of the Charter, dividends upon the stock of the Corporation may be
authorized by the Board of Directors at any regular or special meeting of the
Board of Directors, and may be paid in cash, in property, or in shares of the
Corporation's capital stock.
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SECTION 2. DISBURSEMENTS. All checks or demands for money and notes of
the Corporation shall be signed by such officer or officers or such other person
or persons as the Board of Directors may from time to time designate.
SECTION 3. FISCAL YEAR. The fiscal year of the Corporation shall end
on December 31st of each year.
SECTION 4. CORPORATE SEAL. The corporate seal shall have inscribed
thereon the name of the Corporation, the year of its organization and the words
"Corporate Seal, Maryland." The seal may be used by causing it or a facsimile
thereof to be impressed or affixed or reproduced or otherwise.
ARTICLE VIII
INDEMNIFICATION
---------------
SECTION 1. POWER TO INDEMNIFY IN ACTIONS, SUITS OR PROCEEDINGS. Subject
to Section 2 of this Article VIII, the Corporation shall indemnify any person
who was or is a party or is threatened to be made a party to any threatened,
pending or completed action, suit or proceeding, whether civil, criminal,
administrative or investigative (collectively, a "Proceeding") by reason of the
fact that such person is or was a director or officer of the Corporation, or is
or was serving at the request of the Corporation as a director, officer,
partner, trustee, employee or agent of another corporation, partnership, joint
venture, trust, employee benefit plan or other enterprise, against expenses
(including attorneys' fees), judgments, penalties, fines and amounts paid in
settlement actually and reasonably incurred by such person in connection with
such Proceeding unless it is established that: (i) the act or omission of such
person was material to the matter giving rise to the Proceeding and (A) was
committed in bad faith or (B) was the result of active and deliberate
dishonesty; (ii) such person actually received an improper personal benefit in
money, property or services; or (iii) in the case of any criminal proceeding,
such person had reasonable cause to believe that the act or omission was
unlawful ((i), (ii) and (iii) collectively, "Improper Conduct"). The termination
of any Proceeding by judgment, order or settlement shall not, of itself, create
a presumption that such person committed Improper Conduct. The termination of
any Proceeding by conviction or upon a plea of nolo contendere or its
equivalent, or an entry of an order of probation prior to judgment, shall create
a rebuttable presumption that such person committed Improper Conduct.
SECTION 2. AUTHORIZATION OF INDEMNIFICATION. Any indemnification under
this Article VIII (unless ordered by a court) shall be made by the Corporation
only as authorized in the specific case upon a determination that
indemnification of the director or officer is proper in the circumstances
because such did not commit Improper Conduct. Such determination shall be made
(i) by a majority vote of a quorum consisting of directors who are not parties
to such Proceeding or, if a quorum cannot be obtained, then by a majority vote
of a committee of the Board of Directors consisting solely of two or more
directors who are not parties to such Proceeding and who were duly designated to
act in the matter by a majority vote of the full Board of Directors in which the
designated directors who are parties to such Proceeding may participate, (ii) by
written opinion of special legal counsel selected by the Board of Directors or a
committee of the Board as set forth in (i) of this Section 2 or, if the
requisite quorum of the full Board of Directors cannot be obtained therefor and
the committee cannot be established, by a majority vote of the full Board of
Directors in which directors who are parties to such proceedings may participate
or (iii) by the stockholders. To the extent, however, that a director or officer
of the Corporation has
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been successful on the merits or otherwise in defense of any Proceeding
described above, or in defense of any claim, issue or matter therein, such
person shall be indemnified against expenses (including attorneys' fees)
actually and reasonably incurred by such person in connection therewith, without
the necessity of authorization in the specific case.
SECTION 3. DIRECTORS' RELIANCE ON REPORTS. For purposes of any
determination under Section 2 of this Article VIII, a director shall be deemed
not to have committed Improper Conduct if (i) in performing his or her duties,
such director relied on any information, opinion, report or statement, including
any financial statement or other financial data, prepared or presented by (A) an
officer or employee of the Corporation whom such director reasonably believed to
be reliable and competent on the matters presented, (B) a lawyer, public
accountant or other person, as to a matter which such director reasonably
believed to be within the person's professional or expert competence or (C) a
committee of the Board of Directors on which such director did not serve, as to
a matter within its delegated authority, if such director reasonably believed
the committee to merit confidence; and (ii) such director did not have any
knowledge concerning the matter in question which would cause such reliance to
be unwarranted. The provisions of this Section 3 shall not be deemed to be
exclusive or to limit in any way the circumstances in which a director may be
deemed to not have committed Improper Conduct.
SECTION 4. INDEMNIFICATION BY A COURT. Notwithstanding any contrary
determination in the specific case under Section 2 of this Article VIII, and
notwithstanding the absence of any determination thereunder, a court of
appropriate jurisdiction, upon application of an officer or director and such
notice as the court shall require, may order indemnification in the following
circumstances: (i) if it determines an officer or director has not committed
Improper Conduct, the court shall order indemnification, in which case the
officer or director shall be entitled to recover the expenses of securing such
reimbursement; or (ii) if it determines that the officer or director is fairly
and reasonably entitled to indemnification, whether or not the officer or
director has committed Improper Conduct or, in a Proceeding charging improper
personal benefit to the officer or director, such officer or director has been
adjudged to be liable on the basis that the personal benefit was improperly
received, the court may order such indemnification as the court shall deem
proper, provided, however, that such indemnification shall be limited to
expenses with respect to (x) any Proceeding by or in the right of the
Corporation or (y) any Proceeding charging improper personal benefit to the
officer or director, where such officer or director has been adjudged to be
liable on the basis that the personal benefit was improperly received.
SECTION 5. EXPENSES PAYABLE IN ADVANCE. Expenses incurred by a director
or officer in defending or investigating a threatened or pending action, suit or
proceeding shall be paid or reimbursed by the Corporation in advance of the
final disposition of such action, suit or proceeding upon receipt of (i) a
written affirmation by the director or officer of such director's or officer's
good faith belief that the standard of conduct necessary for indemnification by
the Corporation has been met and (ii) a written undertaking by or on behalf of
such director or officer to repay such amount if it shall ultimately be
determined that such person is not entitled to be indemnified by the Corporation
as authorized in this Article VIII.
SECTION 6. NONEXCLUSIVITY OF INDEMNIFICATION AND ADVANCEMENT OF
EXPENSES. The indemnification and advancement of expenses provided by or granted
pursuant to this Article VIII shall not be deemed exclusive of any other rights
to which those seeking indemnification or advancement of expenses may be
entitled under the Charter or any Bylaw, agreement, contract, vote of
stockholders or directors, an agreement or otherwise, both as to action in such
person's official capacity and as to action in another capacity while holding
such
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office, it being the policy of the Corporation that indemnification of the
persons specified in Section 1 of this Article VIII shall be made to the fullest
extent permitted by law. The provisions of this Article VIII shall not be deemed
to preclude the indemnification of any person who is not specified in Section 1
of this Article VIII but whom the Corporation has the power or obligation to
indemnify under the provisions of the MGCL, or otherwise.
SECTION 7. INSURANCE. The Corporation may purchase and maintain
insurance on behalf of any person who is or was a director or officer of the
Corporation, or is or was a director or officer of the Corporation serving at
the request of the Corporation as a director, officer, partner, trustee,
employee or agent of another corporation, partnership, joint venture, trust,
employee benefit plan or other enterprise against any liability asserted against
such person and incurred by such person in any such capacity, or arising out of
such person's status as such, whether or not the Corporation would have the
power or the obligation to indemnify such person against such liability under
the provisions of this Article VIII.
SECTION 8. CERTAIN DEFINITIONS. For purposes of this Article VIII,
references to "the Corporation" shall include, in addition to the resulting
corporation, any constituent corporation (including any constituent of a
constituent) absorbed in a consolidation or merger which, if its separate
existence had continued, would have had power and authority to indemnify its
directors or officers, so that any person who is or was a director or officer of
such constituent corporation, or is or was a director or officer of such
constituent corporation serving at the request of such constituent corporation
as a director, officer, partner, trustee, employee or agent of another
corporation, partnership, joint venture, trust, employee benefit plan or other
enterprise, shall stand in the same position under the provisions of this
Article VIII with respect to the resulting or surviving corporation as such
person would have with respect to such constituent corporation if its separate
existence had continued. For purposes of this Article VIII, references to
"fines" shall include any excise taxes assessed on a person with respect to an
employee benefit plan; and references to "serving at the request of the
Corporation" shall include any service as a director, officer, partner, trustee,
employee or agent of the Corporation which imposes duties on, or involves
services by, such director or officer with respect to an employee benefit plan,
its participants or beneficiaries.
SECTION 9. SURVIVAL OF INDEMNIFICATION AND ADVANCEMENT OF EXPENSES.
The indemnification and advancement of expenses provided by, or granted pursuant
to, this Article VIII shall, unless otherwise provided when authorized or
ratified, continue as to a person who has ceased to be a director or officer and
shall inure to the benefit of the heirs, executors and administrators of such a
person.
SECTION 10. LIMITATION ON INDEMNIFICATION. Notwithstanding anything
contained in this Article VIII to the contrary, except for proceedings to
enforce rights to indemnification (which shall be governed by Section 4 hereof),
the Corporation shall not be obligated to indemnify any director or officer (or
his or her heirs, executors or personal or legal representatives) or advance
expenses in connection with a proceeding (or part thereof) initiated by such
person unless such proceeding (or part thereof) was authorized or consented to
by the Board of Directors of the Corporation.
SECTION 11. INDEMNIFICATION OF EMPLOYEES AND AGENTS. The Corporation
may, to the extent authorized from time to time by the Board of Directors,
provide rights to indemnification and to the advancement of expenses to
employees and agents of the Corporation similar to those conferred in this
Article VIII to directors and officers of the Corporation.
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ARTICLE IX
AMENDMENTS
----------
SECTION 1. AMENDMENTS. Subject in each case to the provisions of
Article X, these Bylaws may be altered, amended or repealed, in whole or in
part, or new Bylaws may be adopted by the Board of Directors or by the
stockholders as provided in the Charter.
ARTICLE X
TRANSITION PERIOD MATTERS
-------------------------
SECTION 1. GENERAL. Notwithstanding anything else contained in these
Bylaws to the contrary, the provisions of this Article X are intended to reflect
certain transitional matters set forth in the Purchase and Sale Agreement
(Europe/USA), dated as of October 21, 1998, the Purchase and Sale Agreement
(Asia), dated as of October 21, 1998 and the Purchase and Sale Agreement
(Australasia), dated as of October 21, 1998 (collectively the "Purchase
Agreements") by and among the Corporation, certain of the Corporation's
subsidiaries and the other parties named therein.
SECTION 2. DIRECTORS. Notwithstanding anything to the contrary set
forth in these Bylaws, during the period ending on the first to occur of (i) the
first Business Day following the fifth annual meeting of the stockholders of
Parent following the closing of the transactions contemplated by the Purchase
Agreements (the "Closing") and (ii) June 1, 2003 (the "Transition Period") the
following provisions shall apply:
(A) The Board of Directors shall consist of fourteen members; provided
that the number of members constituting the Board of Directors may at any time
be increased to fifteen by a resolution approved by the Parent Nominating
Committee and the JLW Nominating Committee (as defined below) and by a majority
of the entire Board of Directors.
(B) Immediately following the Closing, the Board of Directors shall
consist of the following members appointed to the following classes of directors
(each of which members shall have been designated as set forth in Section 1.9(a)
of the Purchase Agreements): (i) Mr. Stuart L. Scott (class of [.]), Mr. Robert
C. Spoerri (class of [.]), Mr. M.G. Rose (class of [.]) and Mr. Daniel W.
Cummings (class of [.]) (the "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 this Article X); (ii) Mr. Darryl
Hartley-Leonard (class of [.]), Mr. Thomas C. Theobald (class of [.]) and Mr.
John R. Walter (class of [.]) (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 this Article X,
who shall be an Independent Director); (iii) Mr. Christopher A. Peacock (class
of [.]), Mr. Michael J. Smith (class of [.]), Mr. Peter H.T. Lee (class of [.])
and Mr. Clive J. Pickford (class of [.]) (the "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 this Article
X); and (iv) Professor Henri-Claude de Bettignies (class of [.]), Mr. Derek A.
Higgs (class of [.]) and Dr. David K.P. Li (class of [.]) (the "JLW Independent
Directors," which term shall also be deemed to refer to any replacement for a
JLW Independent
G-16
<PAGE>
Director elected in accordance with the applicable provisions of this Article X,
who shall be an Independent Director). The Parent Employee Directors and the
Parent Independent Directors are sometimes collectively referred to herein as
the "Parent Directors" and the JLW Employee Directors and the JLW Independent
Directors are sometimes collectively referred to herein as the "JLW Directors."
Notwithstanding any other provision hereof, (i) it shall be a qualification for
any director elected by the Board of Directors 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 the Corporation) 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 of Directors 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 the
Corporation) that such replacement director shall have been nominated by the
Parent Nominating Committee.
(C) 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 of Directors (the "Parent
Nominating Committee") with the powers and duties delegated to such committee in
this Article X, 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 of Directors (the
"JLW Nominating Committee") with the powers and duties delegated to such
committee in this Article X. Except as otherwise set forth in this Article X,
the Parent Nominating Committee and the JLW Nominating Committee (collectively,
the "Nominating Committees") shall exercise all power and authority of the Board
of Directors with respect to designation of persons as the nominees of the Board
of Directors for election to, or designating persons to fill vacancies on, the
Board of Directors.
(D) 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 and that at least one JLW Independent Director
shall at all times have his primary place of business and residence outside of
the United Kingdom. At any meeting of the stockholders at which directors are to
be elected, the officer of the Corporation presiding at such meeting shall
nominate, before the nominations are closed and the vote taken, the nominee(s)
designated by the applicable Nominating Committees pursuant to the foregoing. At
any meeting of the stockholders at which directors are to be elected, neither
the Board of Directors nor any committee thereof shall nominate (or cause there
to be nominated) as a director any person not designated as a nominee by one of
the Nominating Committees pursuant to the foregoing.
(E) If any Parent Director is removed from the Board of Directors,
becomes disqualified, resigns, retires, dies or otherwise cannot continue to
serve as a member of the Board of Directors, the Parent Nominating Committee
shall have the exclusive power on behalf of the entire Board of Directors to
designate a person to fill such vacancy, and if any JLW Director is removed from
the Board of Directors, becomes disqualified, resigns, retires, dies, or
G-17
<PAGE>
otherwise cannot continue to serve as a member of the Board of Directors, the
JLW Nominating Committee shall have the exclusive power on behalf of the entire
Board of Directors to designate a person to fill such vacancy, in each case,
subject to the approval of a majority of the directors then remaining in office;
provided that at least three Parent Directors and at least three JLW Directors
shall at all times be Independent Directors; and 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) In the event that the number of members constituting the Board of
Directors is increased to fifteen as provided in (A) above, 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 of Directors.
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 Nominating Committees shall jointly acting as a single
committee, designate a nominee for such position, which nominee 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. Neither the Board of Directors 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
of Directors, becomes disqualified, resigns, retires, dies or otherwise cannot
continue to serve as a member of the Board of Directors, the Parent Nominating
Committee and the JLW Nominating Committee, acting as a single committee, shall
have exclusive power on behalf of the Board of Directors 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 by a
majority of directors then remaining in office.
For purposes of these Second Amended and Restated Bylaws, "Independent
Director" means any individual who is not a past or present employee or officer
of the Corporation or any Europe/USA Region Company, Asia Region Company or
Australasia Region Company (in each case as defined in the Purchase Agreements),
or any of their respective affiliates or an affiliate of such an employee or
officer, except as otherwise agreed by the Nominating Committees of the Board of
Directors.
SECTION 3. COMMITTEES. During the Transition Period, each standing
committee of the Board of Directors shall consist 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 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 of Directors, which appointment must be
approved by both a majority of the members of the Parent Nominating Committee
and a majority of the members of the JLW Nominating Committee. If any Parent
Director who is a member of any committee is removed from the Board of
Directors, becomes disqualified, resigns, retires, dies or otherwise cannot
continue to serve in such position, his replacement shall be selected by the
Parent Nominating Committee, and if any JLW Director who is a member of any such
committee
G-18
<PAGE>
is removed from the Board of Directors, becomes disqualified, resigns, retires,
dies or otherwise cannot continue to serve in such position, his replacement
shall be selected by the JLW Nominating Committee.
SECTION 4. OFFICERS. Stuart L. Scott shall hold the position of
Chairman of the Board and Chief Executive Officer 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 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 or President, Deputy Chief Executive Officer and Chief
Operating Officer 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 and President, Deputy Chief Executive Officer and Chief Operating
Officer shall be selected from the officers or employees of the Corporation
immediately prior to the Closing ("Parent Employees") and the partners, officers
or employees of the JLW Businesses (as defined in the Purchase Agreements)
immediately prior to the Closing ("JLW Employees"); provided, further, that
during such period, (i) if the office of the Chairman and Chief Executive
Officer is held by a Parent Employee, then the office of President, Deputy Chief
Executive Officer and Chief Operating Officer shall be held by a JLW Employee,
and (ii) if the office of Chairman of the Board and Chief Executive Officer is
held by a JLW Employee, then the office of President, Deputy Chief Executive
Officer and Chief Operating Officer shall be held by a Parent Employee. The
Chairman of the Board and Chief Executive Officer and the President, Deputy
Chief Executive Officer and Chief Operating Officer 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 of
Directors.
SECTION 5. AMENDMENTS. 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 these Bylaws.
SECTION 6. ACTIONS OF THE BOARD. During the Transition Period, the
affirmative vote of at least a majority of the entire Board of Directors shall
be required to constitute Board action, except as otherwise as specifically
provided in Section 2 of this Article X.
G-19
<PAGE>
ANNEX H
-------
ARTICLES OF AMENDMENT
TO THE
ARTICLES OF INCORPORATION
OF
LASALLE PARTNERS INCORPORATED
LaSalle Partners Incorporated, a Maryland corporation having
its principal office in the City of Baltimore, Maryland (hereinafter called the
"Corporation"), hereby certifies to the State Department of Assessments and
Taxation of Maryland that:
FIRST: The charter of the Corporation is hereby amended by
striking out Article 1 of the Articles of Incorporation and inserting in lieu
thereof the following:
FIRST: The name of the Corporation is: Jones Lang LaSalle
Incorporated.
SECOND: The amendment of the charter of the Corporation as
hereinabove set forth has been duly advised by the board of directors and
approved by the stockholders of the Corporation.
IN WITNESS WHEREOF, LaSalle Partners Incorporated has caused
these Articles of Amendment to be signed in its name and on its behalf as of the
[.] day of [.], 1999.
LaSalle Partners Incorporated
By:
--------------------------
Its:
-------------------------
ATTEST:
By:
---------------------------
Its:
--------------------------
<PAGE>
THE UNDERSIGNED, President and Secretary of LaSalle Partners
Incorporated, in connection with the foregoing Articles of Amendment, of which
this certificate is made a part, hereby acknowledge, in the name and on behalf
of the Corporation, the foregoing Articles of Amendment, of which this
certificate is made a part, to be the corporate act of the Corporation and
further certify that, to the best of their knowledge, information, and belief,
the matters and facts set forth therein with respect to the approval thereof are
true in all material respects, under the penalties of perjury.
- --------------------------- ---------------------------
Secretary President
H-2
<PAGE>
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^^ ^^ ^^ ^^ ^^ ^^ ^^ ^^ ^^ ^^ ^^ ^^ ^^ ^^ ^^ ^^ ^^ ^^ ^^ ^^ ^^ ^^ ^^ ^^ ^^ ^^
^^ ^^ ^^ ^^ ^^ ^^ ^^ ^^ ^^ ^^ ^^ ^^ ^^ ^^ ^^ ^^ ^^ ^^ ^^ ^^ ^^ ^^ ^^ ^^ ^^ ^^
^^ ^^ ^^ ^^ ^^ ^^ ^^ ^^ ^^ ^^ ^^ ^^ ^^ ^^ ^^ ^^ ^^ ^^ ^^ ^^ ^^ ^^ ^^ ^^ ^^ ^^
^^ ^^ ^^ ^^ ^^ ^^ ^^ ^^ ^^ ^^ ^^
^ FOLD AND DETACH HERE ^^
PROXY PROXY
LASALLE PARTNERS INCORPORATED
200 East Randolph Drive
Chicago, Illinois 60601
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
OF LASALLE PARTNERS INCORPORATED
The undersigned hereby appoints Mr. Stuart L. Scott, Mr. Robert C. Spoerri
and Mr. William E. Sullivan, and each of them with full power to act without
the others, as proxies, with full power of substitution, to represent and to
vote on behalf of the undersigned all of the shares of common stock, par value
$0.01 per share, of LaSalle Partners Incorporated ("LaSalle Partners") which
the undersigned is entitled in any capacity to vote if personally present at
the Special Meeting of Stockholders of LaSalle Partners to be held on
Wednesday, March 10, 1999 in the Indiana Room on Lower Level 1 of the Amoco
Building, 200 East Randolph Drive, Chicago, Illinois 60601 at 4:00 p.m., local
time, and at any and all adjournments or postponements thereof (the "Special
Meeting"), upon the proposals listed on the reverse side of this Proxy and
more fully described in the Notice of Special Meeting of Stockholders dated
February 4, 1999 and the LaSalle Partners Proxy Statement and, in their
discretion, upon all matters incident to the conduct of the Special Meeting
and upon all matters presented at the Special Meeting but which were not known
to the Board of Directors at a reasonable time before the solicitation of this
proxy.
THIS PROXY REVOKES ALL PRIOR PROXIES GIVEN BY THE UNDERSIGNED AND, WHEN
PROPERLY EXECUTED, WILL BE VOTED IN THE MANNER DIRECTED HEREIN BY THE
UNDERSIGNED STOCKHOLDER. IF NO DIRECTION IS GIVEN, THIS PROXY, WHEN PROPERLY
EXECUTED, WILL BE VOTED FOR EACH PROPOSAL SET FORTH ON THE REVERSE HEREOF AND
IN THE DISCRETION OF THE PROXIES ON ALL OTHER MATTERS THAT MAY PROPERLY COME
BEFORE THE SPECIAL MEETING. THE UNDERSIGNED HEREBY ACKNOWLEDGES RECEIPT OF THE
NOTICE OF SPECIAL MEETING OF STOCKHOLDERS AND THE PROXY STATEMENT (WITH ALL
ENCLOSURES AND ATTACHMENTS) DATED FEBRUARY 4, 1999 RELATED TO THE SPECIAL
MEETING.
IMPORTANT--This Proxy must be completed, signed and dated on the reverse side.
(Continued on reverse side)
<PAGE>
LASALLE PARTNERS
INCORPORATED
PLEASE MARK VOTE IN OVAL
IN THE FOLLOWING MANNER
USING DARK INK ONLY.
0
I
0
- -
^^ ^^ ^^ ^^ ^^ ^^ ^^ ^^ ^^ ^^ ^^ ^^ ^^ ^^ ^^ ^^ ^^ ^^ ^^ ^^ ^^ ^^ ^^ ^^ ^^ ^^
^^ ^^ ^^ ^^ ^^ ^^ ^^ ^^ ^^ ^^ ^^ ^^ ^^ ^^ ^^ ^^ ^^ ^^ ^^ ^^ ^^ ^^ ^^ ^^ ^^ ^^
^^ ^^ ^^ ^^ ^^ ^^ ^^ ^^ ^^ ^^ ^^ ^^ ^^ ^^ ^^ ^^ ^^ ^^ ^^ ^^ ^^ ^^ ^^ ^^ ^^ ^^
^^ ^^ ^^ ^^ ^^ ^^ ^^ ^^ ^^ ^^ ^^
^ FOLD AND DETACH HERE ^^
PLEASE VOTE, SIGN, DATE AND RETURN THIS PROXY FORM PROMPTLY USING THE ENCLOSED
ENVELOPE.
THE LASALLE PARTNERS BOARD OF DIRECTORS RECOMMENDS A VOTE FOR EACH OF THE
FOLLOWING PROPOSALS:
For
0
Against
0
Abstain
0
For
0
Against
0
Abstain
0
1. Proposal to issue up to 14,254,116 shares of common stock, par value $.01
per share, of LaSalle Partners in connection with its acquisition of the
property and asset management, advisory and other real estate businesses
operated by a series of partnerships and corporations in Europe, Asia,
Australia, North America and New Zealand under the name "Jones Lang
Wootton" or "JLW" (the "JLW Companies").
2. Proposal to amend the LaSalle Partners Articles of Amendment and
Restatement to change the name of LaSalle Partners to "Jones Lang LaSalle
Incorporated" at the time of the closing of the acquisition of the JLW
Companies.
For
0
Against
0
Abstain
0
3. Proposal to approve an amendment to the LaSalle Partners 1997 Stock Award
and Incentive Plan to increase the aggregate number of shares of LaSalle
Partners common stock issuable thereunder to 4,160,000 from 2,215,000.
Please sign name exactly as imprinted (do not print). Please include any
changes in address. If shares are held jointly, EACH holder should sign. Exec-
utors, administrators, trustees, guardians and others signing in a representa-
tive capacity should indicate the capacity in which they sign. An authorized
officer may sign on behalf of a corporation and should indicate the name of
the corporation and his or her capacity.
Dated: _____________________________________________________________ , 1999
Signature(s)___________________________________________________________________
- -------------------------------------------------------------------------------
PLEASE MARK, DATE AND RETURN THIS PROXY PROMPTLY.
