-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, BEzMMFq82VzORlVQ4DevszUJD1ltWfueONMiUTTH9QVRFNS/+5Rk85ChF8DcjafD nnVzk8Y7F9yW2LRQBWNXaA== 0000892626-99-000570.txt : 19991117 0000892626-99-000570.hdr.sgml : 19991117 ACCESSION NUMBER: 0000892626-99-000570 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 5 CONFORMED PERIOD OF REPORT: 19990930 FILED AS OF DATE: 19991115 FILER: COMPANY DATA: COMPANY CONFORMED NAME: JONES LANG LASALLE INC CENTRAL INDEX KEY: 0001037976 STANDARD INDUSTRIAL CLASSIFICATION: REAL ESTATE AGENTS & MANAGERS (FOR OTHERS) [6531] IRS NUMBER: 364150422 STATE OF INCORPORATION: MD FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 10-Q SEC ACT: SEC FILE NUMBER: 001-13145 FILM NUMBER: 99751495 BUSINESS ADDRESS: STREET 1: 200 E RANDOLPH DR CITY: CHICAGO STATE: IL ZIP: 60601 BUSINESS PHONE: 3127825800 FORMER COMPANY: FORMER CONFORMED NAME: LASALLE PARTNERS INC DATE OF NAME CHANGE: 19970417 10-Q 1 UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM 10-Q [ X ] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 FOR THE QUARTERLY PERIOD ENDED SEPTEMBER 30, 1999 OR [ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15 (d) OF THE SECURITIES EXCHANGE ACT OF 1934 FOR THE TRANSITION PERIOD FROM __________ TO __________ Commission file number 1-13145 JONES LANG LASALLE INCORPORATED ----------------------------------------------------- (Exact name of registrant as specified in its charter) Maryland 36-4150422 ------------------------- --------------------------------- (State or other jurisdic- (IRS Employer Identification No.) tion of incorporation or organization) 200 East Randolph Drive, Chicago, IL 60601 - --------------------------------------- ---------- (Address of principal executive office) (Zip Code) Registrant's telephone number, including area code 312/782-5800 Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes [ X ] No [ ] Indicate the number of shares outstanding of each of the issuer's classes of common stock, as of the latest practicable date. Outstanding at Class November 12, 1999 ----- ------------------ Common Stock ($0.01 par value) 30,188,641 TABLE OF CONTENTS PART I FINANCIAL INFORMATION Item 1. Financial Statements . . . . . . . . . . . . . . . . 3 Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations. . . . . . . . . 21 Item 3. Quantitative and Qualitative Disclosures about Market Risk. . . . . . . . . . . . . . . . . . . . . 31 PART II OTHER INFORMATION Item 1. Legal Proceedings. . . . . . . . . . . . . . . . . . 32 Item 2. Changes in Securities and Use of Proceeds. . . . . . 32 Item 5. Other Matters. . . . . . . . . . . . . . . . . . . . 32 Item 6. Exhibits and Reports on Form 8-K . . . . . . . . . . 32 PART I. FINANCIAL INFORMATION ITEM 1. FINANCIAL STATEMENTS JONES LANG LASALLE INCORPORATED CONSOLIDATED BALANCE SHEETS SEPTEMBER 30, 1999 AND DECEMBER 31, 1998 (in thousands, except share data) (UNAUDITED) SEPTEMBER 30, DECEMBER 31, 1999 1998 ------------- ----------- ASSETS - ------ Current assets: Cash and cash equivalents. . . . . . . . . $ 21,593 16,941 Trade receivables, net of allowances of $11,566 and $3,978 in 1999 and 1998, respectively . . . . . . . . . . . 206,079 116,965 Notes receivable and advances to real estate ventures . . . . . . . . . . 5,008 17,042 Other receivables. . . . . . . . . . . . . 14,370 3,385 Prepaid expenses . . . . . . . . . . . . . 7,394 2,185 Other assets . . . . . . . . . . . . . . . 6,649 -- Deferred and current tax benefit . . . . . 46,805 9,926 ---------- --------- Total current assets . . . . . . . 307,898 166,444 Property and equipment, at cost, less accumulated depreciation of $51,010 and $35,859 in 1999 and 1998, respectively . . . . . . . . . . 68,783 28,773 Intangibles resulting from business acquisitions, net of accumulated amortization of $23,323 and $11,961 in 1999 and 1998, respectively . . . . . . . . . . . . . . . 375,578 229,437 Investments in real estate ventures. . . . . 56,830 52,976 Long-term receivables, net . . . . . . . . . 10,666 10,950 Prepaid pension asset. . . . . . . . . . . . 19,421 -- Other assets, net. . . . . . . . . . . . . . 3,203 2,341 ---------- ---------- $ 842,379 490,921 ========== ========== LIABILITIES AND STOCKHOLDERS' EQUITY - ------------------------------------ Current liabilities: Accounts payable and accrued liabilities. . . . . . . . . . . $ 60,644 51,101 Accrued compensation . . . . . . . . . . . 108,840 58,398 Short-term borrowings. . . . . . . . . . . 10,478 -- Other liabilities. . . . . . . . . . . . . 38,824 8,324 ---------- ---------- Total current liabilities. . . . . 218,786 117,823 Long-term liabilities: Credit facilities. . . . . . . . . . . . . 323,994 202,923 Deferred tax liability . . . . . . . . . . 4,584 -- Other. . . . . . . . . . . . . . . . . . . 3,456 603 Commitments and contingencies ---------- ---------- Total liabilities. . . . . . . . . 550,820 321,349 JONES LANG LASALLE INCORPORATED CONSOLIDATED BALANCE SHEETS - CONTINUED SEPTEMBER 30, 1999 AND DECEMBER 31, 1998 (in thousands, except share data) (UNAUDITED) SEPTEMBER 30, DECEMBER 31, 1999 1998 ------------- ----------- Stockholders' equity: Common stock, $.01 par value per share, 100,000,000 shares authorized; 30,188,641 shares issued and outstanding. . . . . . . . . . . . . . . 303 163 Additional paid-in capital . . . . . . . . 445,761 123,543 Deferred stock compensation. . . . . . . . (93,293) -- Unallocated ESOT shares. . . . . . . . . . (9) -- Retained earnings (deficit). . . . . . . . (65,264) 44,792 Accumulated other comprehensive income . . . . . . . . . . . . . . . . . 4,061 1,074 ---------- ---------- Total stockholders' equity . . . . 291,559 169,572 ---------- ---------- $ 842,379 490,921 ========== ========== See accompanying notes to consolidated financial statements. JONES LANG LASALLE INCORPORATED CONSOLIDATED STATEMENTS OF EARNINGS AND COMPREHENSIVE INCOME THREE AND NINE MONTHS ENDED SEPTEMBER 30, 1999 AND 1998 (in thousands, except share data) (UNAUDITED)
THREE MONTHS ENDED NINE MONTHS ENDED SEPTEMBER 30 SEPTEMBER 30 ------------------------- ------------------------- 1999 1998 1999 1998 ---------- ---------- ---------- ---------- Revenue: Fee-based services . . . . . . . . . . . . . . . . . .$ 190,979 63,611 467,449 186,067 Equity in earnings from unconsolidated ventures . . . . . . . . . . . . . . . . . . . . . . 2,371 466 4,422 2,340 Other income . . . . . . . . . . . . . . . . . . . . . 822 755 2,866 1,702 ---------- ---------- ---------- ---------- Total revenue. . . . . . . . . . . . . . . . . . 194,172 64,832 474,737 190,109 Operating expenses: Compensation and benefits. . . . . . . . . . . . . . . 135,170 37,739 335,249 116,775 Operating, administrative and other. . . . . . . . . . 36,587 16,265 115,177 50,057 Depreciation and amortization. . . . . . . . . . . . . 9,665 2,599 26,726 8,177 ---------- ---------- ---------- ---------- Total operating expenses before merger related non-recurring charges. . . . . . . . . 181,422 56,603 477,152 175,009 ---------- ---------- ---------- ---------- Merger related non-recurring charges: Stock compensation expense . . . . . . . . . . . . . . 14,942 -- 82,383 -- Integration and transition expenses. . . . . . . . . . 10,800 -- 32,989 -- ---------- ---------- ---------- ---------- Total merger related non-recurring charges. . . . . . . . . . . . . . . . . . . . 25,742 -- 115,372 -- ---------- ---------- ---------- ---------- Total operating expenses . . . . . . . . . . . . 207,164 56,603 592,524 175,009 ---------- ---------- ---------- ---------- Operating income (loss). . . . . . . . . . . . . (12,992) 8,229 (117,787) 15,100 Interest expense . . . . . . . . . . . . . . . . . . . . 4,967 413 12,312 992 ---------- ---------- ---------- ---------- Earnings (loss) before provision (benefit) for income taxes . . . . . . . . . . (17,959) 7,816 (130,099) 14,108 Net provision (benefit) for income taxes . . . . . . . . (1,022) 3,010 (20,043) 5,432 ---------- ---------- ---------- ---------- Net earnings (loss). . . . . . . . . . . . . . .$ (16,937) 4,806 (110,056) 8,676 ========== ========== ========== ========== JONES LANG LASALLE INCORPORATED CONSOLIDATED STATEMENTS OF EARNINGS AND COMPREHENSIVE INCOME - CONTINUED THREE AND NINE MONTHS ENDED SEPTEMBER 30, 1999 AND 1998 (in thousands, except share data) (UNAUDITED) THREE MONTHS ENDED NINE MONTHS ENDED SEPTEMBER 30 SEPTEMBER 30 ------------------------- ------------------------- 1999 1998 1999 1998 ---------- ---------- ---------- ---------- Other comprehensive income, net of tax: Foreign currency translation adjustments. . . . . . . . . . . . . . . . . . . . .$ 2,881 244 2,987 542 ---------- ---------- ---------- ---------- Comprehensive income (loss). . . . . . . . . . . . . . .$ (14,056) 5,050 (107,069) 9,218 ========== ========== ========== ========== Basic earnings (loss) per common share . . . . . . . . .$ (0.70) 0.30 (4.98) 0.54 ========== ========== ========== ========== Weighted average shares outstanding. . . . . . . . . . .24,110,884 16,230,358 22,109,143 16,210,340 ========== ========== ========== ========== Diluted earnings (loss) per common share . . . . . . . .$ (0.70) 0.29 (4.98) 0.53 ========== ========== ========== ========== Diluted weighted average shares outstanding. . . . . . . . . . . . . . . . . . . . . .24,110,884 16,446,906 22,109,143 16,403,225 ========== ========== ========== ========== See accompanying notes to consolidated financial statements.
JONES LANG LASALLE INCORPORATED CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY PERIODS ENDED SEPTEMBER 30, 1999 AND DECEMBER 31, 1998 (in thousands, except share data) (UNAUDITED)
Deferred Effect of Common Stock Additional Retained Stock Unallocated Cumulative ------------------- Paid-In Earnings Compen- ESOT Translation Shares Amount Capital (Deficit) sation Shares Adjustment Total ---------- ------ ---------- --------- ---------- ------------ ----------- --------- Balances at December 31, 1997 . . . . . . . . .16,200,000 $ 162 121,778 24,327 -- -- 630 146,897 Net earnings. . . . . -- -- -- 20,465 -- -- -- 20,465 Shares issued under stock purchase plan. . . . 64,176 1 1,765 -- -- -- -- 1,766 Other . . . . . . . . -- -- -- -- -- -- 444 444 ---------- ----- -------- ------ -------- ------- ------ -------- Balances at December 31, 1998 . . .16,264,176 163 123,543 44,792 -- -- 1,074 169,572 Net loss. . . . . . . -- -- -- (110,056) -- -- -- (110,056) Shares issued in connection with: Stock option plan . . . . . . . 21,292 -- 495 -- -- -- -- 495 Stock purchase programs . . . . . 93,981 1 2,630 -- -- -- -- 2,631 Share activity related to JLW merger: Shares issued at closing . . . .14,254,116 143 355,233 -- (160,253) (9) -- 195,114 Adjustment shares sub- sequently retained . . . . . (444,924) (4) (8,298) -- -- -- -- (8,302) JONES LANG LASALLE INCORPORATED CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY PERIODS ENDED SEPTEMBER 30, 1999 AND DECEMBER 31, 1998 - CONTINUED (in thousands, except share data) (UNAUDITED) Deferred Effect of Common Stock Additional Retained Stock Unallocated Cumulative ------------------- Paid-In Earnings Compen- ESOT Translation Shares Amount Capital (Deficit) sation Shares Adjustment Total ---------- ------ ---------- --------- ---------- ------------ ----------- --------- Stock compensa- tion adjustments. . -- -- (27,842) -- 22,859 -- -- (4,983) Amortization of deferred stock compensation. . . . -- -- -- -- 44,101 -- -- 44,101 Other . . . . . . . . -- -- -- -- -- -- 2,987 2,987 ---------- ----- -------- ------- -------- ------- ------ -------- Balances at September 30, 1999 . .30,188,641 $ 303 445,761 (65,264) (93,293) (9) 4,061 291,559 ========== ===== ======== ======= ======== ======= ====== ======== See accompanying notes to consolidated financial statements.
JONES LANG LASALLE INCORPORATED CONSOLIDATED STATEMENTS OF CASH FLOWS NINE MONTHS ENDED SEPTEMBER 30, 1999 AND 1998 (in thousands, unless otherwise noted) (UNAUDITED) 1999 1998 --------- -------- Cash flows from operating activities: Net earnings (loss). . . . . . . . . . . . . . . . $(110,056) 8,676 Reconciliation of net income (loss) to net cash provided by (used in) operating activities: Depreciation and amortization. . . . . . . . . . 26,726 8,177 Equity in earnings from unconsolidated ventures . . . . . . . . . . . . . . . . . . . (4,422) (2,340) Provision for loss on receivables and other assets . . . . . . . . . . . . . . . . . 1,544 1,218 Stock compensation expense . . . . . . . . . . . 81,942 -- Changes in: Receivables. . . . . . . . . . . . . . . . . . . 33,941 5,683 Prepaid expenses and other assets. . . . . . . . (4,146) (817) Deferred and current tax benefit . . . . . . . . (24,929) -- Accounts payable, accrued liabilities and compensation and other liabilities . . . . . . (109,784) (4,841) --------- -------- Net cash (used in) provided by operating activities . . . . . . . . . . . (109,184) 15,756 Cash flows provided by (used in) investing activities: Net capital additions - property and equipment. . . . . . . . . . . . . . . . . . . . (23,641) (11,790) Cash balances assumed in Jones Lang Wootton merger, net of cash paid and transaction costs (Note 4) . . . . . . . . . . . . . . . . . 10,094 -- Other acquisitions, net of cash acquired and transaction costs. . . . . . . . . . . . . . (3,003) (5,465) Investments in real estate ventures: Capital contributions and advances to real estate ventures . . . . . . . . . . . . . (8,963) (45,965) Distributions, repayments of advances and sale of investments. . . . . . . . . . . . 25,055 3,411 --------- -------- Net cash used in investing activities . . . . . . . . . . . . . . . . (458) (59,809) Cash flows provided by financing activities: Net borrowings under long-term credit facilities . . . . . . . . . . . . . . . . . . . 114,381 28,442 Common stock issued under stock option plan. . . . 495 -- --------- -------- Net cash provided by financing activities. . 114,876 28,442 JONES LANG LASALLE INCORPORATED CONSOLIDATED STATEMENTS OF CASH FLOWS - CONTINUED NINE MONTHS ENDED SEPTEMBER 30, 1999 AND 1998 (in thousands, unless otherwise noted) (UNAUDITED) 1999 1998 --------- -------- Effects of foreign currency translation on cash balances. . . . . . . . . . . . . . . . . . (582) 165 --------- -------- Net increase (decrease) in cash and cash equivalents. . . . . . . . 4,652 (15,446) Cash and cash equivalents, beginning of period . . 16,941 30,660 --------- -------- Cash and cash equivalents, end of period . . . . . $ 21,593 15,214 ========= ======== Supplemental disclosure of cash flow information: Combined interest paid was $13,524 and $935 for the periods ended September 30, 1999 and 1998, respectively. Taxes paid were $13,077 and $1,930 for the periods ended September 30, 1999 and 1998, respectively. See accompanying notes to consolidated financial statements. JONES LANG LASALLE INCORPORATED NOTES TO CONSOLIDATED FINANCIAL STATEMENTS SEPTEMBER 30, 1999 AND 1998 (in millions, except where otherwise noted) (UNAUDITED) Readers of this quarterly report should refer to our audited financial statements for the year ended December 31, 1998, which are included in our 1998 Form 10-K, filed with the Securities and Exchange Commission, as certain footnote disclosures which would substantially duplicate those contained in such audited financial statements have been omitted from this report. (1) ORGANIZATION Jones Lang LaSalle Incorporated ("Jones Lang LaSalle") formerly LaSalle Partners Incorporated [successor to LaSalle Partners Limited Partnership and LaSalle Partners Management Limited Partnership (collectively, the "Predecessor Partnerships")], was incorporated in Maryland on April 15, 1997 (collectively referred to as the "Company"). On July 22, 1997, the Company completed an initial public offering (the "Offering") of 4.0 million shares of Jones Lang LaSalle common stock, $.01 par value per share (the "Common Stock"). In addition, all of the partnership interests held in the Predecessor Partnerships were contributed to the Company, pursuant to agreements among the general and limited partners, in exchange for an aggregate of 12.2 million shares of common stock. The contribution occurred immediately prior to the closing of the Offering. The 4.0 million shares were offered at $23 per share, aggregating $82.8 million, net of offering costs, of which $63.5 million was used to retire long-term debt and related interest. The Predecessor Partnerships were subject to a reorganization as part of the Company's incorporation. Due to the existence of a paired share arrangement between the Predecessor Partnerships and between the former general partners of the Predecessor Partnerships, as well as the existence of identical ownership before and after the incorporation of the Predecessor Partnerships, such transactions were accounted for in a manner similar to the accounting used for a pooling of interests. Thus, the Company's financial statements include the financial positions and results of operations of the Predecessor Partnerships at their historical basis. On March 11, 1999, LaSalle Partners Incorporated and Jones Lang Wootton ("JLW") completed the merger of their operations. In connection with the merger, LaSalle Partners Incorporated changed its name to Jones Lang LaSalle Incorporated. (2) INTERIM INFORMATION The consolidated financial statements as of September 30, 1999 and for the three and nine month periods ended September 30, 1999 and 1998 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 September 30, 1999 and 1998 are not necessarily indicative of the results to be obtained for the full fiscal year. Certain amounts have been reclassified to conform with the September 30, 1999 presentation. (3) STOCK-BASED COMPENSATION The Company grants stock options for a fixed number of shares to employees with an exercise price equal to the fair value of the shares at the date of grant. The Company follows the requirements of the Accounting Principles Board ("APB") Opinion No. 25, "Accounting for Stock Issued to Employees" in accounting for stock-based compensation, and, accordingly, recognizes no compensation expense for stock option grants, but provides the annual pro forma disclosures required by the Statement of Financial Accounting Standards ("SFAS") No. 123, "Accounting for Stock-Based Compensation". In connection with the merger with JLW, the Company issued shares to former employees of JLW which are subject to vesting provisions or are contingently returnable. Shares issued that are contingently returnable are accounted for as a variable stock award plan. The remaining shares issued are accounted for as a fixed stock award plan. Compensation expense associated with shares subject to vesting is recognized over the vesting period. (4) JONES LANG WOOTTON MERGER In accordance with the purchase and sale agreements, the Company issued 14.3 million shares of its common stock on March 11, 1999, plus $6.2 million in cash (collectively, the "Consideration") in connection with the acquisition of the property and asset management, advisory and other real estate businesses operated by a series of JLW partnerships and corporations in Europe, Asia, Australia, North America and New Zealand. Approximately 12.5 million of the shares were issued to former JLW equity owners (having both direct and indirect ownership) and 1.8 million of the shares were placed in an employee ownership trust ("ESOT") to be distributed by December 31, 2000 to selected employees of the former JLW entities. Issuance of the shares was not registered under the U.S. securities laws, and the shares are generally subject to a contractual one-year restriction on sale. Included in the 14.3 million shares originally issued were 1.2 million shares which were subject to a post-closing net worth adjustment. The procedures related to the post-closing net worth calculation were completed during the third quarter and resulted in .5 million shares being retained by the Company and an additional $.5 million in cash consideration being due to certain of the former JLW shareholders. The transaction, which was principally structured as a share exchange, has been treated as a purchase and is being accounted for using both APB Opinion No. 16, "Business Combinations" and APB Opinion No. 25, "Accounting for Stock Issued to Employees" as reflected in the following table. Accordingly, JLW's operating results have been included in the Company's results as of March 1, 1999, the effective date of the merger for accounting purposes. No. of % of Shares Accounting Method Shares Issued ----------------- -------- ----------- APB Opinion No. 16 7.2 52% APB Opinion No. 25 - Fixed Award 5.3 38% Variable Award 1.3 10% ---- ---- Net Shares Issued 13.8 100% ==== ==== As noted in the previous table, 7.2 million shares, or 52% of the shares issued, are subject to accounting under APB Opinion No. 16. The value of those shares totaled $142.1 million for accounting purposes based on the five-day average closing stock price surrounding the date the financial terms of the merger with JLW were substantially complete, discounted at a rate of 20% for transferability restrictions. The value of the shares, in addition to a cash payment of approximately $6.2 million and capitalizable transaction costs of approximately $15.9 million were allocated to the identifiable assets and liabilities acquired, based on management's estimate of fair value, which totaled $246.9 million and $238.5 million, respectively. Included in the assets acquired is $32.0 million in cash. The resulting excess purchase price of $155.8 million was allocated to goodwill which is being amortized on a straight-line basis over 40 years based on management's estimate of useful lives. The remaining 6.6 million shares, or 48% of the shares issued, and $.4 million in cash paid are subject to accounting under APB Opinion No. 25. Accordingly, shares issued are being accounted for as compensation expense or deferred compensation expense to the extent they are subject to forfeiture or vesting provisions. Included in the 6.6 million shares are 1.3 million shares that are subject to variable stock award plan accounting. The remaining 5.3 million shares and the $.4 million in cash paid are subject to fixed stock award plan accounting. Compensation expense incurred for the three and nine months ended September 30, 1999 totaled $14.9 million and $82.4 million, respectively, inclusive of the compensation expense recognized at closing and the amortization of deferred compensation for the periods. (5) SUBSEQUENT EVENT On October 27, 1999, the Company closed a new $380 million unsecured credit agreement. The agreement includes a $223.5 million three-year revolving facility and a $156.5 million term facility due October 15, 2000 (collectively, the "New Facilities"). The Company is authorized under the agreement to increase the revolving facility up to a total of $250 million and the term facility up to a total of $175 million through the expansion of its existing bank group. The New Facilities replace the Company's five year unsecured $150 million revolving credit facility, $175 million term credit facility and $30 million short-term facility (the "Existing Facilities"). The revolving facility is available for working capital, co- investments and acquisitions. The New Facilities are guaranteed by certain of the Company's subsidiaries. The Company must maintain a certain level of consolidated net work and a ratio of funded debt to earnings before interest expense, taxes, depreciation and amortization ("EBITDA"). The Company must also meet a minimum interest coverage ratio, minimum liquidity ratio, and minimum EBITDA. Additionally, the Company is restricted from, among other things, incurring certain levels of indebtedness to lenders outside of the New Facilities, disposing of a significant portion of its assets, and paying dividends until the term facility is repaid. Lender approval is required for certain levels of co-investment. The New Facilities bear variable rates of interest based on market rates. The Company uses interest rate swaps to convert a portion of the floating rate indebtedness to a fixed rate. The effective interest rate on the Existing Facilities was 6.23% and 5.99% for the three and nine months ended September 30, 1999, respectively, including the effect of interest rate swap agreements. (6) EARNINGS PER SHARE The basic and diluted losses per common share were calculated based on basic weighted average shares outstanding of 24.1 million and 22.1 million for the three and nine months ended September 30, 1999, respectively. Consideration shares issued as a result of the merger with JLW, to the extent included, have been weighted as of March 11, 1999. As a result of the operating loss incurred for the period, diluted weighted average shares outstanding for the three and nine months ended September 30, 1999 do not give effect to common stock equivalents, consisting principally of consideration shares issued in connection with the JLW merger that are subject to vesting provisions or are contingently returnable, as to do so would be anti-dilutive. Basic earnings per share was based on weighted average shares outstanding of 16.2 million for both the three and nine month periods ended September 30, 1998. Diluted earnings per share was based on weighted average shares outstanding of 16.4 million for the three and nine month periods ended September 30, 1998, which reflects an increase of .2 million shares primarily representing the dilutive effect of outstanding stock options whose exercise price was less than the average market price of the Company's stock for the period, and, to a lesser extent, the dilutive effect of shares to be issued under the Company's employee stock benefit plans. (7) BUSINESS SEGMENTS As a result of the merger with JLW, the Company is managing its business along a combination of functional and geographic lines. Accordingly, operations have been classified into six business segments, two global functional businesses: (i) Investment Management and (ii) Hotel Services; and four geographic regions consisting of the: (iii) Americas; (iv) Europe; (v) Asia; and (vi) Australasia. The Investment Management segment provides real estate investment management services to institutional investors, corporations, and high net worth individuals. The Hotels Services segment provides strategic advisory, sales, acquisition and asset management services related solely to hotel, conference and resort properties. The geographic regions of the Americas, Europe, Asia and Australasia each provide Owner and Occupier Services which consist primarily of tenant representation and agency leasing, investment disposition and acquisition, and valuation services (collectively, "implementation services") and property, facility, development and project management services (collectively, "management fees"). Results for 1998 have been realigned based upon the current business segments. Total revenue by industry segment includes revenue derived from services provided to other segments. Operating income represents total revenue less direct and indirect allocable expenses. The Company allocates all expenses, other than interest and income taxes, as substantially all expenses incurred benefit one or more of the segments. Merger related non- recurring charges are not allocated to the segments. Summarized unaudited financial information by business segment for the three and nine month periods ended September 30, 1999 and 1998 is as follows ($ in thousands):
SEGMENT OPERATING RESULTS THREE MONTHS ENDED NINE MONTHS ENDED SEPTEMBER 30 SEPTEMBER 30 ------------------------ ------------------------ 1999 1998 1999 1998 --------- -------- --------- -------- OWNER AND OCCUPIER SERVICES - AMERICAS Revenue: Implementation services. . . . . . . . . . . . . . .$ 43,010 27,991 81,617 66,070 Management fees. . . . . . . . . . . . . . . . . . . 26,257 17,392 81,606 48,602 Equity earnings. . . . . . . . . . . . . . . . . . . 178 (47) 279 (53) Other services . . . . . . . . . . . . . . . . . . . 2,901 3,003 7,394 6,121 Intersegment revenue . . . . . . . . . . . . . . . . 1,619 622 1,759 928 ---------- ---------- ---------- ---------- 73,965 48,961 172,655 121,668 Operating expenses: Compensation, operating and administrative expenses. . . . . . . . . . . . . . 61,895 40,879 179,412 117,949 Depreciation and amortization. . . . . . . . . . . . 5,076 1,573 15,152 4,790 ---------- ---------- ---------- ---------- Operating income (loss). . . . . . . . . . . .$ 6,994 6,509 (21,909) (1,071) ========== ========== ========== ========== EUROPE Revenue: Implementation services. . . . . . . . . . . . . . .$ 44,998 420 106,867 543 Management fees. . . . . . . . . . . . . . . . . . . 22,216 -- 52,047 -- Equity earnings. . . . . . . . . . . . . . . . . . . (132) -- (225) -- Other services . . . . . . . . . . . . . . . . . . . 713 17 4,900 167 ---------- ---------- ---------- ---------- 67,795 437 163,589 710 Operating expenses: Compensation, operating and administrative expenses. . . . . . . . . . . . . . 65,230 141 146,605 710 Depreciation and amortization. . . . . . . . . . . . 2,399 -- 5,371 -- ---------- ---------- ---------- ---------- Operating income . . . . . . . . . . . . . . .$ 166 296 11,613 -- ========== ========== ========== ========== SEGMENT OPERATING RESULTS THREE MONTHS ENDED NINE MONTHS ENDED SEPTEMBER 30 SEPTEMBER 30 ------------------------ ------------------------ 1999 1998 1999 1998 --------- -------- --------- -------- AUSTRALASIA Revenue: Implementation services. . . . . . . . . . . . . . .$ 8,822 -- 23,978 -- Management fees. . . . . . . . . . . . . . . . . . . 4,668 -- 11,483 -- Other services . . . . . . . . . . . . . . . . . . . 1,011 -- 1,917 -- ---------- ---------- ---------- ---------- 14,501 -- 37,378 -- Operating expenses: Compensation, operating and administrative expenses. . . . . . . . . . . . . . 13,095 -- 33,679 -- Depreciation and amortization. . . . . . . . . . . . 336 -- 1,234 -- ---------- ---------- ---------- ---------- Operating income . . . . . . . . . . . . . . .$ 1,070 -- 2,465 -- ========== ========== ========== ========== ASIA Revenue: Implementation services. . . . . . . . . . . . . . .$ 9,772 118 20,472 333 Management fees. . . . . . . . . . . . . . . . . . . 5,861 -- 13,642 -- Other services . . . . . . . . . . . . . . . . . . . 1,543 2 3,346 3 ---------- ---------- ---------- ---------- 17,176 120 37,460 336 Operating expenses: Compensation, operating and administrative expenses. . . . . . . . . . . . . . 13,878 519 34,708 1,322 Depreciation and amortization. . . . . . . . . . . . 864 6 2,020 16 ---------- ---------- ---------- ---------- Operating income (loss). . . . . . . . . . . .$ 2,434 (405) 732 (1,002) ========== ========== ========== ========== HOTEL SERVICES - Revenue: Implementation services. . . . . . . . . . . . . . .$ 2,511 -- 5,611 -- Management fees. . . . . . . . . . . . . . . . . . . 470 -- 943 -- Other services . . . . . . . . . . . . . . . . . . . 734 -- 1,196 -- ---------- ---------- ---------- ---------- 3,715 -- 7,750 -- Operating expenses: Compensation, operating and administrative expenses. . . . . . . . . . . . . . 3,182 -- 7,721 -- Depreciation and amortization. . . . . . . . . . . . 45 -- 106 -- ---------- ---------- ---------- ---------- Operating income (loss). . . . . . . . . . . .$ 488 -- (77) -- ========== ========== ========== ========== SEGMENT OPERATING RESULTS THREE MONTHS ENDED NINE MONTHS ENDED SEPTEMBER 30 SEPTEMBER 30 ------------------------ ------------------------ 1999 1998 1999 1998 --------- -------- --------- -------- INVESTMENT MANAGEMENT - Revenue: Implementation services. . . . . . . . . . . . . . .$ 2,078 845 8,115 3,524 Advisory fees. . . . . . . . . . . . . . . . . . . . 14,153 14,192 44,957 61,489 Equity earnings. . . . . . . . . . . . . . . . . . . 2,325 513 4,368 2,393 Other services . . . . . . . . . . . . . . . . . . . 83 386 224 917 ---------- ---------- ---------- ---------- 18,639 15,936 57,664 68,323 Operating expenses: Compensation, operating and administrative expenses. . . . . . . . . . . . . . 16,096 13,087 50,060 47,779 Depreciation and amortization. . . . . . . . . . . . 945 1,020 2,843 3,371 ---------- ---------- ---------- ---------- Operating income . . . . . . . . . . . . . . .$ 1,598 1,829 4,761 17,173 ========== ========== ========== ========== Total segment revenue. . . . . . . . . . . . . . . . . .$ 195,791 65,454 476,496 191,037 Intersegment revenue eliminations. . . . . . . . . . . . (1,619) (622) (1,759) (928) ---------- ---------- ---------- ---------- Total revenue. . . . . . . . . . . . . . . . .$ 194,172 64,832 474,737 190,109 ========== ========== ========== ========== Total segment operating expenses . . . . . . . . . . . .$ 183,041 57,225 478,911 175,937 Intersegment operating expense eliminations . . . . . . . . . . . . . . . . . . . . . (1,619) (622) (1,759) (928) ---------- ---------- ---------- ---------- Total operating expenses before merger related non-recurring charges. . . . . . . . . . . .$ 181,422 56,603 477,152 175,009 ========== ========== ========== ========== Operating income (loss) before merger related non-recurring charges. . . . . . . . . . . .$ 12,750 8,229 (2,415) 15,100 ========== ========== ========== ==========
(8) PRO FORMA CONSOLIDATED FINANCIAL STATEMENTS The following Pro Forma results for the nine months ended September 30, 1999 give effect to the merger with JLW as if it occurred on January 1, 1999. Jones Lang LaSalle Actual results reflect the results of operations of the LaSalle Partners' businesses for the two months ended February 28, 1999 and the operations of the merged Jones Lang LaSalle businesses for the period from March 1, 1999 to September 30, 1999. JLW Results reflect operating results for each of the JLW companies for the two months ended February 28, 1999, as adjusted for market compensation, taxes and other costs associated with the integration of the companies. Acquisition Adjustments represent the impact of the additional amortization of goodwill resulting from the merger, and income taxes as if the Company was taxable for the period at an effective tax rate of 38%. Merger-Related Adjustments reflect the additional non-cash compensation expense associated with certain shares issued in connection with the JLW merger and the related income tax effect as if the merger had occurred on January 1, 1999. Pro Forma weighted average shares outstanding include shares issued in connection with the merger with JLW, excluding those shares which are contingently returnable or subject to vesting provisions, as though they were issued on January 1, 1999. The pro forma adjustments are based upon available information and certain assumptions that management believes are reasonable. The pro forma consolidated financial statements are not necessarily indicative of what the actual results of operations would have been for the nine month period ended September 30, 1999 had the JLW merger been completed as of the date indicated nor does it purport to represent the future financial position or results of operations of the Company.
NINE MONTHS ENDED SEPTEMBER 30, 1999 -------------------------------------------------------------------------------- Jones Lang Merger- LaSalle JLW Acquisition Adjusted Related Actual Results Adjustments Pro Forma Adjustments Pro Forma ---------- ---------- ----------- ---------- ----------- ---------- Revenue: Fee-based services . . . . . $ 467,449 58,039 -- 525,488 -- 525,488 Equity in earnings from uncon- solidated ventures . . . . 4,422 -- -- 4,422 -- 4,422 Other income . . . . . . . . 2,866 421 -- 3,287 -- 3,287 ---------- ---------- ---------- ---------- ---------- ---------- Total revenue. . . . . 474,737 58,460 -- 533,197 -- 533,197 Operating expenses: Compensation and benefits. . 335,249 43,610 -- 378,859 -- 378,859 Operating, administrative and other. . . . . . . . . 115,177 18,360 -- 133,537 -- 133,537 Depreciation and amortization . . . . . . . 26,726 2,197 850 29,773 -- 29,773 ---------- ---------- ---------- ---------- ---------- ---------- Total operating expenses before merger related non- recurring charges. . 477,152 64,167 850 542,169 -- 542,169 ---------- ---------- ---------- ---------- ---------- ---------- Operating loss before merger related non- recurring charges. . (2,415) (5,707) (850) (8,972) -- (8,972) Merger related non-recurring charges: Stock compensation expense. . . . . . . . . 82,383 -- -- 82,383 234 82,617 Integration and transition expense. . . . . . . . . 32,989 12,325 -- 45,314 -- 45,314 ---------- ---------- ---------- ---------- ---------- ---------- Total merger related non-recurring charges. . . . . . . 115,372 12,325 -- 127,697 234 127,931 ---------- ---------- ---------- ---------- ---------- ---------- Total operating expenses . . . . . . 592,524 76,492 850 669,866 234 670,100 ---------- ---------- ---------- ---------- ---------- ---------- Operating loss . . . . (117,787) (18,032) (850) (136,669) (234) (136,903) Interest expense, net. . . . 12,312 (93) -- 12,219 -- 12,219 ---------- ---------- ---------- ---------- ---------- ---------- Jones Lang Merger- LaSalle JLW Acquisition Adjusted Related Actual Results Adjustments Pro Forma Adjustments Pro Forma ---------- ---------- ----------- ---------- ----------- ---------- Loss before benefit for income taxes . . (130,099) (17,939) (850) (148,888) (234) (149,122) Net benefit for income taxes. . . . . . . . . . . (20,043) (2,133) (323) (22,499) (189) (22,688) ---------- ---------- ---------- ---------- ---------- ---------- Net loss . . . . . . . $ (110,056) (15,806) (527) (126,389) (45) (126,434) ========== ========== ========== ========== ========== ========== Basic loss per common share. $ (4.98) $ (5.26) ========== ========== Weighted average shares outstanding. . . . . . . . 22,109,143 24,057,044 ========== ========== Diluted loss per common share. . . . . . . . . . . $ (4.98) $ (5.26) ========== ========== Diluted weighted average shares outstanding . . . . 22,109,143 24,057,044 ========== ==========
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS OVERVIEW Jones Lang LaSalle Incorporated (the "Company"; formerly LaSalle Partners Incorporated) is a leading full-service real estate services firm that provides investment management, hotel acquisition, disposition, strategic advisory and valuation, property management, corporate property services, development services, project management, tenant and agency leasing, investment disposition, acquisition, financing and capital placement services on a local, regional and global basis. With over 6,000 employees in 98 key markets spanning 34 countries and five continents, Jones Lang LaSalle is able to satisfy local, regional and international service needs. The ability to provide this network of services around the globe was solidified effective March 11, 1999 with the merger of LaSalle Partners Incorporated and the Jones Lang Wootton ("JLW") companies. In accordance with the purchase and sale agreements, Jones Lang LaSalle issued 14.3 million shares of common stock, plus $6.2 million in cash (collectively, the "Consideration"). Included in the 14.3 million shares are 1.2 million shares subject to the post-closing net worth adjustment. The procedures related to the post-closing net worth calculation were completed during the third quarter and resulted in .5 million shares being retained by the Company and an additional $.5 million in cash consideration being due to certain of the former JLW shareholders. Of the original 14.3 million shares issued, approximately 12.5 million of the shares were issued to former JLW equity owners and 1.8 million shares were placed in an employee ownership trust ("ESOT") to be distributed by December 31, 2000 to selected employees of the former JLW entities. Included in the total ESOT shares are .9 million that were allocated on March 11, 1999, with the remaining .9 million shares to be allocated by December 31, 2000. Issuance of the shares was not registered under the U.S. securities laws, and the shares are generally subject to a contractual one-year restriction on sale. The merger, which was principally structured as a share exchange, has been treated as an acquisition and is being accounted for using both APB Opinion No. 16, "Business Combinations" and APB Opinion No. 25, "Accounting for Stock Issued to Employees". In accordance with the purchase and sale agreements, the merger is effective for accounting purposes as of March 1, 1999. Accordingly, the results of operations for the former JLW entities have been included in the first quarter results of Jones Lang LaSalle from that date. Giving effect to the adjustment shares retained, the following table summarizes the accounting treatment applied to the issued shares: Net Net Shares Shares Issued at to be Total Net Accounting Method Closing Allocated Shares - ----------------- ---------- ---------- ---------- APB Opinion No. 16 . . . . . . 7.2 -- 7.2 APB Opinion No. 25 - Fixed Award. . . . . . . . . 4.4 .9 5.3 Variable Award . . . . . . . 1.3 -- 1.3 ----- ----- ----- Net Shares Issued. . . . . . . 12.9 .9 13.8 ===== ===== ===== As a general matter, the accounting treatment of the Consideration is dependent on whether the recipient (i) had a legal ownership interest in the JLW entities prior to the integration of those entities ("Current JLW Owners"); (ii) obtained their legal ownership interest in the JLW entities as part of the JLW integration ("New JLW Owners"); or, (iii) will receive their shares from the ESOT. The accounting treatment is further dependent on whether the shares issued are non-restricted ("Non-restricted Shares"), issued from the ESOT ("ESOT Shares"), or are subject to (i) forfeiture provisions ("Forfeiture Shares); (ii) indemnification provisions ("Indemnification Shares"); or, (iii) closing net worth requirements ("Adjustment Shares"). All Consideration paid to Current JLW Owners, excluding Forfeiture Shares, has been accounted for using the purchase method of accounting under APB Opinion No. 16. Such Consideration consists of 7.2 million shares and $6.2 million in cash. The shares were valued based on the average price of Jones Lang LaSalle 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 merger (October 9, 1998) discounted at a rate of 20%, to account for transferability restrictions applicable to such shares. The total value attributed to the issuance of shares, $142.1 million, in addition to the cash payment and capitalizable transaction costs of approximately $15.9 million have been allocated to the identifiable assets and liabilities acquired with the excess value being allocated to goodwill which is being amortized over its estimated useful life of 40 years. Accounting under APB Opinion No. 25 is being applied to the remaining 6.6 million shares which represents all shares issued to New JLW Owners, shares allocated from the ESOT and Forfeiture Shares issued to Current JLW Owners. Shares issued or allocated from the ESOT at March 11, 1999 were valued at $35.375, the market price of Jones Lang LaSalle common stock on March 10, 1999. Shares to be allocated from the ESOT on December 31, 1999 and 2000, totaling .9 million, will be valued based on the prevailing market price of the common stock on those dates. Of the 5.7 million shares issued or allocated from the ESOT on March 11, 1999, after giving effect to the adjustment shares retained, 1.3 million shares, which are deemed to be contingently returnable, are being accounted for as a variable stock award plan. Such shares include Forfeiture Shares issued to the JLW Asia Shareholders (which are subject to indemnification provisions) in addition to Indemnification Shares issued to New JLW Owners and allocated from the ESOT at March 11, 1999. 1.2 million shares subject to forfeiture or vesting provisions have been accounted for as deferred compensation with compensation expense to be recognized over the forfeiture or vesting period. The value of the remaining .1 million shares was accounted for as compensation expense during 1999. Under a variable stock award plan, the amount of compensation expense and value of deferred compensation will be adjusted at the end of each quarter based on the change in stock price from the previous quarter until the final number of shares to be issued is known. The remaining 4.4 million shares after giving effect to the adjustment shares retained, issued or allocated from the ESOT on March 11, 1999 subject to accounting under APB Opinion No. 25 are being accounted for as a fixed stock award plan. Such shares include Forfeiture Shares issued to Current JLW Owners (excluding Forfeiture Shares issued to JLW Asia Shareholders which are subject to indemnification provisions) and New JLW Owners in addition to shares allocated from the ESOT on March 11, 1999 which are not subject to indemnity provisions. 3.4 million of those shares are subject to forfeiture or vesting provisions and have been accounted for as deferred compensation with compensation expense to be recognized over the forfeiture or vesting period. The value of the remaining 1.0 million shares, in addition to a cash payment of $.4 million, were accounted for as compensation expense during 1999. Compensation expense incurred for the three and nine months ended September 30, 1999 related to the issuance of shares and the amortization of deferred compensation totaled $14.9 million and $82.4 million, respectively, net of the quarterly adjustment for the change in stock price. Deferred compensation at September 30, 1999 totaled $93.3 million, including the effect of the quarterly adjustment for the change in stock price, which will be amortized into compensation expense through December 31, 2000. Such compensation expense, in addition to compensation expense anticipated to be incurred at December 31, 1999 and 2000 associated with the final allocations of ESOT shares, is expected to result in significant non-cash net losses for Jones Lang LaSalle for those periods. RESULTS OF OPERATIONS THREE AND NINE MONTHS ENDED SEPTEMBER 30, 1999 COMPARED TO THREE AND NINE MONTHS ENDED SEPTEMBER 30, 1998 Operating results for the three and nine months ended September 30, 1999 include the results of the acquired Compass businesses (the acquisition was completed in October 1998) and the results of the JLW entities effective March 1, 1999. Total revenue, after elimination of intersegment revenue, increased $129.3 million to $194.2 million for the three months ended September 30, 1999 and increased $284.6 million to $474.7 million for the nine months ended September 30, 1999 from the prior year periods, primarily as a result of these two transactions. These increases were partially offset by lower performance fees generated on the disposition of assets under management during the nine months ended September 30, 1999 as compared to the prior year period, which had high levels of performance fees. Total operating expenses, after elimination of intersegment expenses and excluding the effect of merger related non- recurring charges, increased $124.8 million to $181.4 million for the three months ended September 30, 1999 and increased $302.1 million to $477.2 million for the nine months ended September 30, 1999, as compared with the prior year periods, also substantially a result of these transactions. Merger related non-recurring charges totaled $25.7 million and $115.4 million for the three and nine months ended September 30, 1999, respectively. $14.9 million and $82.4 million of these charges for the three and nine months ended September 30, 1999, respectively, represent non-cash compensation expense recorded as a result of shares issued to certain former employees of JLW in connection with the merger. $10.8 million and $33.0 million of these charges represent non-recurring transition and integration costs for the three and nine months ended September 30, 1999, respectively, of which approximately $7.6 million are attributable to the integration of the acquired Compass businesses for the nine months ended September 30, 1999. The remaining transition expense relates to the merger with JLW, and represents non-capitalizable expenses such as rebranding, office consolidations, and information technology initiatives. The resulting operating income for the three months ended September 30, 1999, excluding the effect of merger related non-recurring charges, totaled $12.8 million compared to $8.2 million in the prior year period. The operating loss for the nine months ended September 30, 1999, excluding the effect of merger related non-recurring charges, totaled $2.5 million compared to operating income of $15.1 million in the prior year period. The operating results for the three and nine month periods of 1999 have been negatively affected by four primary factors, (i) the seasonal nature of the operations and the compounding effect of the Compass acquisition; (ii) distractions caused by the integration of the Compass and JLW operations; (iii) increased infrastructure costs associated with the acquisition of Compass and the roll out of the JD Edwards property accounting system, and a delay in the realization of anticipated cost savings from these events; and (iv) lower performance fees generated on the disposition of certain assets under management. Historically, the leasing & management, corporate property services, project management and development management businesses in the Americas Region have incurred an operating loss through the third quarter of each year. This pattern was intensified with the acquisition of Compass which had the same seasonal experience and doubled the size of the Jones Lang LaSalle leasing & management portfolio. In addition, the efforts taken to fully integrate the employees and business processes of the Compass and JLW entities, specifically in the United States, resulted in a significant distraction of senior management of the Americas Region resulting in less new business generation as compared to the prior year periods. Further, this distraction resulted in a delay in capturing the anticipated synergies from the Compass acquisition as well as the benefits anticipated from the implementation of the JD Edwards property accounting system. Finally, performance fees generated on the disposition of assets under management by both the Investment Management segment and Americas Region during the nine months ended September 30, 1998 were well above those generated during the same period in 1999, consistent with management's expectation that the timing of dispositions and related performance fees could result in significant fluctuations in periodic earnings. These matters are expected to effect the performance of Jones Lang LaSalle for the full year 1999 reporting period. The integration of the businesses is well underway and significant progress has been made toward creating the platform with which to grow the business. Including the effect of the merger related non-recurring charges, the operating loss for the three and nine months ended September 30, 1999 totaled $13.0 million and $117.8 million, respectively, compared to operating income in the prior year periods of $8.2 million and $15.1 million, respectively. SEGMENT OPERATING RESULTS INVESTMENT MANAGEMENT. Investment Management revenue increased $2.7 million to $18.6 million for the three months ended September 30, 1999 from the prior year period and decreased $10.7 million to $57.7 million for the nine months ended September 30, 1999 from the prior year period. The decrease for the nine month period is primarily attributable to performance fees generated in the second quarter of 1998 on the disposition of certain assets under management, partially offset by increased acquisition fees generated during the nine month period ended September 30, 1999. Operating expenses increased $2.9 million to $17.0 million for the three months ended September 30, 1999 and increased $1.8 million to $52.9 million for the nine months ended September 30, 1999 as compared with the prior year periods primarily as a result of the merger with JLW. The increase for the nine months ended September 30, 1999 was partially offset by lower accruals for incentive bonuses during 1999 as compared to the prior year period as a result of lower performance fees generated. HOTEL SERVICES. Hotel Services, a new reportable segment as a result of the recent merger, had total revenue of $3.7 million and $7.8 million for the three and nine months ended September 30, 1999, respectively. Services provided represented a combination of valuation, disposition and acquisition services. Operating expenses for the segment totaled $3.2 million and $7.8 million for the three and nine months ended September 30, 1999, respectively. AMERICAS REGION. Revenue for the Americas Region increased $25.0 million to $74.0 million for the three months ended September 30, 1999 and increased $51.0 million to $172.7 million for the nine months ended September 30, 1999 compared to the prior year periods. The increases are primarily attributable to the acquisition of Compass, and the resulting increase in leasing, property management and corporate property service fees, and, to a lesser extent, to the merger with JLW. Operating expenses for the segment increased $24.5 million to $67.0 million for the three months ended September 30, 1999 and increased $71.8 million to $194.6 million for the nine months ended September 30, 1999 compared to the prior year periods. These increases are primarily attributable to the acquisition of Compass and the related increase in personnel, office occupancy and goodwill amortization costs, in addition to the merger with JLW, incremental infrastructure and depreciation expense associated with the implementation and roll out of the JD Edwards property accounting and information system, and costs incurred in expanding the operations in South America. EUROPE REGION. Revenue for the Europe Region, which is substantially a new reportable segment as a result of the JLW merger and the acquisition of Compass, totaled $67.8 million and $163.6 million for the three and nine months ended September 30, 1999, respectively. The revenue generated by the Region primarily reflects robust activity within the United Kingdom primarily in the form of tenant and agency leasing activities and investment sales and acquisition transactions, and to a lesser extent to investment and leasing activities for the third quarter of 1999 in Germany. Operating expenses for the region totaled $67.6 million and $152.0 million for the three and nine months ended September 30, 1999, respectively. These expenses increased for the three months ended September 30, 1999, as compared to previous quarters, primarily as a result of increases in accruals for compensation expenses, reflective of the overall strong performance of the segment and increases in pension costs. ASIA REGION. Revenue for the Asia Region, also substantially a new reportable segment as a result of the merger, totaled $17.2 million and $37.5 million for the three and nine months ended September 30, 1999, respectively, primarily reflecting strong activity within Hong Kong representing management fees, agency leasing activity, consulting and valuation services. Operating expenses totaled $14.7 million and $36.7 million for the three and nine months ended September 30, 1999, respectively. The Region continues to see growing indications that economic recovery has begun and that global outsourcing continues to produce new business opportunities. The currency valuation throughout most of the Asia Region remained stable for the periods, inflation remained low, and property prices and rents in a number of the Asia markets have begun to stabilize. AUSTRALASIA REGION. Revenue for the Australasia Region, a new reportable segment as a result of the JLW merger and the acquisition of Compass, totaled $14.5 million and $37.4 million for the three and nine months ended September 30, 1999, respectively. Leasing activity has remained strong over the first half of 1999, reflecting improved business confidence. Operating expenses totaled $13.4 million and $34.9 million for the three and nine months ended September 30, 1999, respectively. The Australasia Region operations continue to benefit from several positive trends, including continued economic growth funded by strong consumer spending, the outsourcing of property management functions by corporations and the Australian government, and a strengthening in the Australian dollar against the U.S. dollar for the nine months ended. INTEREST EXPENSE Interest expense increased $4.6 million to $5.0 million for the three months ended September 30, 1999 and increased $11.3 million to $12.3 million for the nine months ended September 30, 1999 from the prior year periods, primarily as a result of the acquisition of Compass and the related borrowings on the acquisition credit facility, and to a lesser extent, additional borrowings on the revolving credit facilities as a result of the transition and integration expenses associated with the acquisition of Compass and merger with JLW. BENEFIT FOR INCOME TAXES The benefit for income taxes increased $4.0 million to $1.0 million for the three months ended September 30, 1999 and increased $25.5 million to $20.0 million for the nine months ended September 30, 1999 from a provision of $3.0 million and $5.4 million, respectively, in the prior year periods, primarily as a result of the increased net loss, exclusive of the compensation expense associated with the issuance of shares to former JLW employees in connection with the merger, at an effective tax rate of 38%. In addition, a benefit has been recognized on a portion of the stock compensation expense, which is largely non-deductible for tax purposes, based on the rates prevailing in the applicable countries. NET LOSS The net loss for the three months ended September 30, 1999 totaled $16.9 million compared to net income of $4.8 million in the prior year period. The net loss for the nine months ended September 30, 1999 totaled $110.1 million compared to net income of $8.7 million for the prior year period. The increase in net loss compared to the prior year periods is predominantly a result of the merger related non-recurring charges, in addition to the effects on operations previously discussed by segment. OTHER COMPREHENSIVE INCOME The financial statements of the Company's subsidiaries that are located outside of the U.S., except those subsidiaries located in highly inflationary economies, are generally measured using the local currency as the functional currency. The assets and liabilities of these subsidiaries are translated at the rates of exchange at the balance sheet date with the resulting translation adjustments included as a separate component of stockholders' equity and comprehensive income. Other comprehensive income for the three and nine month periods ended September 30, 1999 was $2.9 million and $3.0 million as compared to $.2 million and $.5 million for the corresponding prior year periods. These increases are a direct result of the merger with JLW and the resulting increase of the Company's oeprations which do not have the U.S. Dollar as their functional currency. Specific- ally, these increases are a result of the strengthening of the British Pound against the U.S. Dollar for the three and nine months ended September 30, 1999 and a strengthening of the Australian Dollar against the U.S. Dollar for the nine months ended September 30, 1999, partially offset by a weakening experienced for the three months ended September 30, 1999. LIQUIDITY AND CAPITAL RESOURCES Historically, the Company has financed its operations, acquisitions and co-investment activities with internally generated funds, the common stock of the Company and borrowings under the credit facilities. As of September 30, 1999, the Company's existing five year unsecured $150 million revolving credit facility and $175 million term credit facility were fully drawn, including the impact of outstanding letters of credit. During the third quarter, the Company extended the maturity of its short term facility, originally obtained in May, in a reduced amount of $30 million, to November 30, 1999. There were no outstanding borrowings on the short- term facility at September 30, 1999. The three facilities described in this paragraph are collectively referred to as the "Existing Facilities". On October 27, 1999, the Company closed a new $380 million unsecured credit agreement. The agreement includes a $223.5 million three-year revolving facility and a $156.5 million term facility due October 15, 2000 (collectively, the "New Facilities"). The Company is authorized under the agreement to increase the revolving facility up to a total of $250 million and the term facility up to a total of $175 million through the expansion of its existing bank group. The New Facilities replace the Company's Existing Facilities. The revolving facility is available for working capital, co-investments and acquisitions. The New Facilities are guaranteed by certain of the Company's subsidiaries. The Company must maintain a certain level of consolidated net worth and a ratio of funded debt to earnings before interest expense, taxes, depreciation and amortization ("EBITDA"). The Company must also meet a minimum interest coverage ratio, minimum liquidity ratio, and minimum EBITDA. Additionally, the Company is restricted from, among other things, incurring certain levels of indebtedness to lenders outside of the New Facilities, disposing of a significant portion of its assets, and paying dividends until the term facility is repaid. Lender approval is required for certain levels of co-investment. The New Facilities bear variable rates of interest based on market rates. The Company uses interest rate swaps to convert a portion of the floating rate indebtedness to a fixed rate. The effective interest rate on the Existing Facilities was 6.23% and 5.99% for the three and nine months ended September 30, 1999, respectively, including the effect of interest rate swap agreements. The interest rate swap agreements had a notional amount as of September 30, 1999 of $55 million. The Company has additional access to liquidity via various overdraft facilities and short term credit facilities in Europe, Asia, and Australia. The aggregate amount available under these facilities approximates $41.9 million, of which $10.5 million was outstanding as of September 30, 1999. Borrowings on these facilities are currently limited to $50 million under the terms of the New Facilities. Management believes that the New Facilities, along with existing local borrowing facilities and cash flow generated from operations, will provide adequate liquidity and financial flexibility to meet working capital requirements, including merger and integration costs yet to be paid. Permanent financing alternatives will be considered for the refinancing of the term facility due October 15, 2000. During the nine months ended September 30, 1999, cash flows used in operating activities totaled $109.2 million compared to cash flows provided by operations of $15.8 million in the prior year period. The increased use is primarily a result of increased operating expenses resulting from the acquisition of Compass and the merger with JLW, and the related payment of integration, transition and transaction costs associated with the transactions. To a lesser extent, the increased use is due to higher bonus accruals at December 31, 1998 as compared to December 31, 1997, which are paid in the first quarter of the following year. Jones Lang LaSalle expects to continue to pursue co-investment opportunities with investment management clients for which the holding period typically ranges from three to seven years. While this program remains very important to the continued growth of the Investment Management segment, the future commitment to co-investment is completely discretionary and can be increased or decreased based on the availability of capital and other factors. The performance of the Investment Management segment would likely be negatively impacted if a substantial decrease in co-investment were to occur. Management anticipates that co-investment activity within the Americas and Europe regions will continue with probable expansion into Asia and Australasia, as appropriate opportunities arise. This strategy should serve to grow the assets under management, generate returns on investment and create potential opportunities to provide other services. Such co-investments are generally represented by non-controlling general partner and limited partner interests. In addition to a share of investment returns, the Company typically earns investment management fees, and in some cases, property management and leasing fees on these investments. The equity earnings from these co-investments have had a relatively small impact on current earnings and cash flow. However, increased investment participation could increase fluctuations in net earnings and cash flow as a result of the timing and magnitude of the gains or losses and potential performance fees, if any, to be recognized upon the disposition of these assets. In most of these investments, Jones Lang LaSalle will not have complete discretion to control the timing of the disposition of such investments. As of September 30, 1999, there were total investments of $56.8 million in 39 separate property or fund co- investments with additional capital commitments of $10.8 million for future fundings of co-investments. Capital expenditures are anticipated to be approximately $40.0 to $50.0 million for 1999 which is significantly higher than prior years or expected annual expenditures in 2000 and beyond. The increased level of expenditures in the current year are associated primarily with the implementation of the JD Edwards property accounting and information system, the integration of a global accounting system, and office consolidations related to the recent merger and acquisition. Net cash used in investing activities was $0.5 million for the nine months ended September 30, 1999 compared with $59.8 million in the prior year period. The decreased use of cash of $59.3 million is primarily attributable to the significant co-investment activity in 1998, including an $18.8 million investment in LaSalle Hotel Properties, in addition to increased distributions and repayments in 1999 of advances from coinvestment ventures, and, to a lesser extent, to cash acquired in the merger with JLW. These increases were partially offset by increased capital expenditures during 1999 as a result of the JLW merger and acquisition of Compass and the resulting consolidation of corporate offices, and the continued customization and implementation of the JD Edwards property accounting and information system. Net cash provided by financing activities was $114.9 million for the nine months ended September 30, 1999 compared with $28.4 million in the prior year period. The increase in cash flows is a result of increased borrowings on the Existing Facilities as a result of the increased uses of cash described above. SEASONALITY Historically, the Company's revenue, operating profits and net earnings in the first three calendar quarters are substantially lower than in the fourth quarter. Other than Investment Management, this seasonality is due to a calendar year-end focus, primarily in the United States on the completion of transactions, which is consistent with the real estate industry generally. The Investment Management segment earns performance fees on client's returns on their real estate investments. Such performance fees are generally earned when the asset is disposed of, the timing of which the Company does not have complete discretion over. Non- variable operating expenses, which are treated as expenses when incurred during the year, are relatively constant on a quarterly basis. Therefore, the Company typically sustains a loss in the first quarter of each calendar year, typically reports a small profit or loss in the second and third quarters and records a substantial majority of its earnings in the fourth calendar quarter, barring the recognition of investment generated performance fees. INFLATION Jones Lang LaSalle's operations are directly affected by various national and local economic conditions, including interest rates, the availability of credit to finance real estate transactions and the impact of tax laws. To date, management does not believe that general inflation has had a material impact on operations, as revenue, bonuses, and other variable costs related to revenue are primarily impacted by real estate supply and demand rather than general inflation. OTHER MATTERS ACCOUNTING MATTERS Statement of Financial Accounting Standards No. 133 "Accounting for Derivative Instruments and Hedging Activities" becomes effective for all fiscal quarters for fiscal years beginning after June 15, 2000 and is not expected to have a material impact on the financial statements. YEAR 2000 ISSUES 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. As a result, 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 disruption of operations, including, among other things, a temporary inability to process transactions, pay invoices or engage in similar normal business activities. Jones Lang LaSalle has defined five key phases in addressing the Year 2000 Issue: Awareness, Assessment, Renovation, Validation and Implementation. Under the guidance of a Year 2000 program team, whose strategy is supported by senior management, the Company has in place a firmwide Awareness Phase and will continue this phase through December 31, 1999 to maintain a heightened sense of awareness to the Year 2000 Issue. As part of the Assessment Phase, it has reviewed the year 2000 readiness of its information technology systems through the creation of critical applications, systems software and hardware inventories. These inventories included detailed information relating to the potential impact of the Year 2000 issue to Jones Lang LaSalle. The global Assessment Phase was completed in early 1999. Renovation and Validation Phase efforts are substantially complete. The Company conducts its business primarily with commercial software purchased from third-party vendors versus in-house developed software. Over the last two years, the Company has significantly upgraded its information systems capabilities, and is currently in the final stages of rolling out new property and client accounting systems in the United States. Continued upgrades of critical business systems provide a historically sound software infrastructure, and positively impact the degree of effort necessary related to the renovation process of converting, replacing or eliminating selected platforms, applications, databases and utilities, as well as the validation process of testing and verifying for Year 2000 readiness. The schedule for completion of these renovations and validation efforts remains on schedule with anticipated completion during the fourth quarter of 1999. The continuing Implementation Phase, which involves returning the tested systems to operational status and the development of contingency plans for critical business systems, is also anticipated to be completed during the fourth quarter of 1999. Management expects that the cost of additional modifications to its software and hardware to meet Year 2000 requirements will not be material. The total anticipated cost related to the phases previously discussed is currently projected to be approximately $6.3 million, including approximately $4.8 million of operating expenses associated with testing and other matters and $1.5 million of capital expenditures primarily representing system upgrades which provide operational benefits above and beyond Year 2000 compliance. Jones Lang LaSalle has incurred approximately $3.1 million in operating expenses to date. Properties for which the Company provides management services rely on a variety of third party suppliers to provide critical operating services. These suppliers may utilize systems and embedded technologies to control the operation of building systems such as utilities, lighting, security, elevators, heating, ventilation and air conditioning systems. Jones Lang LaSalle is in the process of obtaining assurances from suppliers as to their Year 2000 readiness and preparing contingency plans, including the identification of alternative suppliers. The Company does not control these third party suppliers, and for some suppliers, such as utility companies, there may be no feasible alternative suppliers available. The failure to these suppliers' systems could have a material adverse effect on the operations of the affected property, and widespread failures could have a material adverse effect on Jones Lang LaSalle. Plans for a complete millennium period staffing and communication strategy are underway to address any concerns. A corporate business resumption strategy has been defined to create specific response action plans throughout the organization to deal with situations which arise that could cause interruption to or have serious impact on the continuation of normal business operations. The strategy includes specific contingency and communication plans to be instituted at the time of an emergency, and will allow the Company's resources to effectively react to critical issues resulting from any Year 2000 related occurrences. The ability of third parties with whom the Company transacts business or companies that may be acquired to adequately address their Year 2000 issues is outside Jones Lang LaSalle's control. At this time, the Company is in the process of reviewing the Year 2000 readiness of major suppliers and customers. There can be no assurance that the failure of major suppliers and customers to adequately address Year 2000 issues will not have a material adverse effect on the Company's business, financial condition, and results of operations. Although the Company is not aware of any threatened claims related to the Year 2000, it may become subject to litigation arising from such claims, and, depending on the outcome, such litigation could have a material adverse affect on Jones Lang LaSalle. It is not clear whether insurance coverage would be adequate to offset these and other business risks related to the Year 2000. ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK INTEREST RATE RISK Jones Lang LaSalle is exposed to interest rate changes primarily as a result of its lines of credit used to maintain liquidity and to fund capital expenditures, acquisitions, co-investments and operations. The Company's interest rate risk management objective is to limit the impact of interest rate changes on earnings and cash flows and to lower overall borrowing costs. To achieve this objective, the Company borrows primarily at variable rates and enters into derivative financial instruments such as interest rate swap agreements when appropriate. The Company does not enter into derivative or interest rate transactions for speculative purposes. The Company has entered into interest rate swap agreements with a notional amount of $55.0 million providing for an average fixed interest rate of approximately 5.21% as of September 30, 1999. These agreements have terms which expire through June 15, 2000. Such interest rate swap agreements had an approximate market value of $.2 million at September 30, 1999. The carrying value of the debt approximates its fair value. As of September 30, 1999, the outstanding borrowings on the Existing Facilities were $324.0 million. The Existing Facilities bore and the New Facilities bear variable rates of interest based on market rates. The effective interest rate on the Existing Facilities was 6.23% and 5.99% for the three and nine months ended September 30, 1999, respectively, including the effect of interest rate swap agreements. FOREIGN CURRENCY RISK Jones Lang LaSalle's reporting currency is the U.S. Dollar. Business is transacted in various foreign currencies throughout Europe, Asia, and Australasia. The financial statements of subsidiaries outside the U.S., except those located in highly inflationary economies, are generally measured using the local currency as the functional currency. As a result, fluctuations in the U.S. Dollar relative to the other currencies in which earnings are generated can impact the Company's business, operating results and financial condition as reported in U.S. dollars. For the three and nine months ended September 30, 1999, on a pro forma basis (excluding the effect of stock compensation expense), 168% and 93% of our net loss was attributable to operations with U.S. Dollars as their functional currency and (68%) and 7% was attributable to operations having other functional currencies, respectively. Revenues and expenses have primarily been earned and incurred in the currency of the location where the operations generating the revenues and expenses have occurred, thereby limiting exposure to exchange rate fluctuations to some extent. On a limited basis, the Company enters into forward currency exchange contracts to manage currency risks and reduce exposure resulting from fluctuations in the designated foreign currency associated with existing commitments, assets or liabilities. There were no significant forward exchange contracts in effect at September 30, 1999. The Company does not use foreign currency exchange contracts for trading purposes. DISCLOSURE OF LIMITATIONS As the information presented above includes only those exposures that exist as of September 30, 1999, it does not consider those exposures or positions which could arise after that date. Moreover, because firm commitments are not presented, the information presented has limited predictive value. As a result, the ultimate realized gain or loss with respect to interest rate and foreign currency fluctuations will depend on the exposures that arise during the period, the hedging strategies at the time and interest and foreign currency rates. PART II. OTHER INFORMATION ITEM 1. LEGAL PROCEEDINGS Jones Lang LaSalle is a defendant in various litigation matters arising in the ordinary course of business, some of which involve claims for damages that are substantial in amount. Many of these matters are covered by insurance. In the opinion of management, the ultimate resolution of such litigation matters is not expected to have a material adverse effect on the Company's financial position, results of operations and liquidity. ITEM 2. CHANGES IN SECURITIES AND USE OF PROCEEDS Under the credit agreement with respect to the New Facilities, the Company is restricted from paying dividends until the term facility is repaid. ITEM 5. OTHER MATTERS SAFE HARBOR STATEMENT UNDER THE PRIVATE SECURITIES LITIGATION REFORM ACT OF 1995: Certain statements in this filing and elsewhere (such as in reports, other filings with the Securities and Exchange Commission, press releases, presentations and communications by Jones Lang LaSalle or its management and written and oral statements) may constitute "forward-looking statements" within the meaning of the Private Securities Litigation Reform Act of 1995. Such forward-looking statements involve known and unknown risks, uncertainties and other factors which may cause the Company's actual results, performance, achievements, plans and objectives 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) each of the Quarterly Reports on Form 10-Q for the quarters ended September 30, 1999, June 30, 1999 and March 31, 1999, in Item 2. "Management's Discussion and Analysis of Financial Condition and Results of Operations", Item 3. "Quantitative and Qualitative Disclosures About Market Risk", and elsewhere, (ii) our Annual Report on Form 10-K for the year ended December 31, 1998, in Item 1. "Business", Item 7. "Management's Discussion and Analysis of Financial Condition and Results of Operations", Item 7A. "Quantitative and Qualitative Disclosures About Market Risk", and elsewhere, and (iii) our Proxy Statement dated February 4, 1999 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 in other reports filed with the Securities and Exchange Commission. The Company expressly disclaims any obligation or undertaking to update or revise any forward-looking statements to reflect any changes in events or circumstances or in its expectations or results. ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K (a) A list of exhibits is set forth in the Exhibit Index which immediately precedes the exhibits and which is incorporated by reference herein. (b) Reports on Form 8-K None. SIGNATURES Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized. JONES LANG LASALLE INCORPORATED Dated: November 12, 1999 BY: /S/ WILLIAM E. SULLIVAN ------------------------------ William E. Sullivan Executive Vice President and Chief Financial Officer (Authorized Officer and Principal Financial Officer) EXHIBIT INDEX Exhibit Number Description - ------- ----------- 10.1 Second Amendment to 1997 Stock Award and Incentive Plan 10.2 Third Amendment to 1997 Stock Award and Incentive Plan 10.3 Amended and Restated Multicurrency Credit Agreement, dated as of October 27, 1999 27.1 Financial Data Schedule. EX-10.1 2 EXHIBIT 10.1 - ------------ SECOND AMENDMENT TO THE JONES LANG LASALLE INCORPORATED 1997 STOCK AWARD AND INCENTIVE PLAN WHEREAS, Jones Lang LaSalle Incorporated (f/k/a LaSalle Partners Incorporated) (the "Company") maintains the 1997 Stock Award And Incentive Plan, as amended (the "Plan"). WHEREAS, the Company has determined that amending the Plan in certain respects is in the best interest of the Company. WHEREAS, Section 10(e) of the Plan provides for amendment of the Plan, and the Board of Directors of the Company and the Stockholders of the Company have approved the amendment to the Plan set forth herein. NOW THEREFORE, the Plan has been amended effective March 11, 1999 as follows: 1. Section 5 of the Plan is hereby amended by deleting the number "2,215,000" in the first sentence thereof and replacing it with the number "4,160,000." 2. Capitalized terms used but not defined in this Amendment shall have the respective meanings assigned to them in the Plan. Except as herein modified, all the terms, conditions and provisions of the Plan are hereby ratified, confirmed and carried forward. EX-10.2 3 EXHIBIT 10.2 - ------------ THIRD AMENDMENT TO THE JONES LANG LASALLE INCORPORATED 1997 STOCK AWARD AND INCENTIVE PLAN WHEREAS, Jones Lang LaSalle Incorporated (f/k/a LaSalle Partners Incorporated) (the "Company") maintains the 1997 Stock Award And Incentive Plan, as amended (the "Plan"). WHEREAS, the Company has determined that amending the Plan in certain respects is in the best interest of the Company. WHEREAS, Section 10(e) of the Plan provides that the Board of Directors of the Company may at any time and from time-to-time alter, amend, suspend or terminate the Plan in whole or in part, and the Board of Directors have approved the amendment to the Plan set forth herein. NOW THEREFORE, the Plan has been amended effective July 29, 1999 as follows: 1. Section 9(b) of the Plan is hereby deleted and replaced in its entirety with the following new Section 9(b): (b) ELECTED OPTIONS. Each non-employee director may, at any time prior to the commencement of any calendar year during which he or she will serve as a member of the Board, irrevocably elect to receive, in lieu of the annual directors' retainer payable to such non-employee director with respect to such calendar year, an Option (an "Elected Option") to purchase shares of Stock. With respect to the annual retainer payable to a New Director for the first calendar year (beginning with the 1998 calendar year) of his or her Board service, such an election must be made within five (5) days of his or her election or appointment to the Board and prior to the performance of any significant service with the respect to such first year. The number of shares of Stock covered by an Elected Option received in lieu of an annual retainer for 1999, 2000 and 2001 shall be the number (rounded to the nearest whole number of shares) equal to (i) the annual retainer divided by (ii) the value per share of the Elected Option, which value shall be equal to thirty three percent (33%) of the exercise price. The number of shares of Stock covered by an Elected Option received in lieu of an annual retainer for 2002 and each year thereafter shall be the number (rounded to the nearest whole number of shares) equal to (i) the annual retainer divided by (ii) the value, as determined by application of the Black-Scholes Option Pricing Model (the "Black-Scholes Model"), of a ten year option with respect to one (1) share of Stock and with an exercise price equal to the exercise price at which the Elected Option will be granted. The Black-Scholes Model calculation shall be based upon the volatility of the Stock over the period (i) beginning on the later of (x) the date which is ten (10) years before the date of grant of the Elected Option and (y) July 17, 1997 and (ii) ending on the date of grant of the Elected Option. The risk free rate of return for purposes of the Black- Scholes Model calculation shall be the yield (based on the "ask price") with respect to "U.S. Treasury Strips" with a maturity which is closest to the date which is ten (10) years from the date of grant of the Elected Option, as reported in the Wall Street Journal (or, to the extent that such yield is not quoted in the Wall Street Journal, such other rate as determined by the Committee) on the date of grant of the Elected Option (or, if not published on the date of grant, the last date preceding the date of grant on which the Wall Street Journal is published). An Elected Option shall be granted on January 1 of the year following the year in which the annual retainer to which it relates is earned. 2. Section 9(c)(ii) of the Plan is hereby deleted and replaced in its entirety with the following new Section 9(c)(ii): (ii) The exercise price of Automatic Options shall be equal to the Fair Market Value of the shares of Stock subject to such Automatic Options on the date of grant. The exercise price of Elected Options shall be equal to (i) the average closing price of the Stock on the national securities exchange on which the Stock is principally traded on the last trading day in March, June, September and December of the year in which the annual retainer is earned, or (ii) if the shares of Stock are then traded in an over-the-counter market, the average of the average of the closing bid and asked prices for the shares of Stock in such over-the-counter market on the last trading day on which a trade occurs in March, June, September and December of the year in which the annual retainer is earned, or (iii) if the shares of Stock are not then listed on a national securities exchange or traded in an over-the-counter market, such value as the Committee, in its sole discretion, shall determine. 3. Capitalized terms used but not defined in this Amendment shall have the respective meanings assigned to them in the Plan. Except as herein modified, all the terms, conditions and provisions of the Plan are hereby ratified, confirmed and carried forward. EX-10.3 4 EXHIBIT 10.3 - ------------ ========================================================================== AMENDED AND RESTATED MULTICURRENCY CREDIT AGREEMENT Dated as of October 27, 1999 Among JONES LANG LASALLE INCORPORATED, THE GUARANTORS PARTY HERETO, THE BANKS PARTY HERETO, HARRIS TRUST AND SAVINGS BANK. as Administrative Agent, Co-Lead Arranger and Joint Book Runner, THE CHASE MANHATTAN BANK, as Documentation Agent, BANK ONE, NA, as Syndication Agent, BANC ONE CAPITAL MARKETS, INC., as Co-Lead Arranger and Joint Book Runner AND CHASE SECURITIES INC., as Co-Arrangers ========================================================================== AMENDED AND RESTATED MULTICURRENCY CREDIT AGREEMENT This Multicurrency Credit Agreement, dated as of October 27, 1999, is among Jones Lang LaSalle Incorporated, a Maryland corporation (the "Borrower"), the Guarantors (as hereinafter defined) party hereto, the banks from time to time party hereto (each a "Bank" and, collectively, the "Banks") and Harris Trust and Savings Bank, as Administrative Agent. Preliminary Statement The Borrower, the Banks party thereto and the Administrative Agent are parties to a Multicurrency Credit Agreement, dated as of November 25, 1997 (as amended, modified or supplemented prior to the date hereof, the "Original Credit Agreement"); and Subject to and upon the terms and conditions set forth herein, the parties desire to amend and restate the Original Credit Agreement in the form of this Agreement; Now, Therefore, in consideration of the mutual agreements contained herein, and the other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the parties hereto hereby agree as follows: SECTION 1. THE REVOLVING CREDIT. SECTION 1.1. REVOLVING CREDIT COMMITMENTS. Subject to the terms and conditions hereof, each Bank severally agrees to make a loan or loans (individually a "Revolving Loan" and collectively "Revolving Loans") to the Borrower from time to time on a revolving basis in U.S. Dollars and Alternative Currencies in an aggregate outstanding Original Dollar Amount up to the amount of its Revolving Credit Commitment subject to any increases or reductions thereof pursuant to the terms hereof, before the Revolving Credit Termination Date. The sum of the (i) aggregate Original Dollar Amount of Revolving Loans, (ii) the aggregate Original Dollar Amount of Swingline Loans, and (iii) L/C Obligations at any time outstanding shall not exceed the Revolving Credit Commitments in effect at such time. The sum of the aggregate Original Dollar Amount of all Revolving Loans denominated in an Alternative Currency at any times outstanding shall not exceed $75,000,000. Each Borrowing of Revolving Loans shall be made ratably from the Banks in proportion to their respective Percentages. As provided in Section 1.7(a) hereof, the Borrower may elect that each Borrowing of Revolving Loans denominated in U.S. Dollars be either Domestic Rate Loans or Eurocurrency Loans. All Revolving Loans denominated in an Alternative Currency shall be Eurocurrency Loans. Revolving Loans may be repaid and the principal amount thereof reborrowed before the Revolving Credit Termination Date, subject to all the terms and conditions hereof. SECTION 1.2. TERM LOAN COMMITMENTS. Subject to the terms and conditions hereof, each Bank, by its acceptance hereof, severally agrees to make a loan (individually a "Term Loan" and collectively for all the Banks, the "Term Loans") in U.S. Dollars to the Borrower in the amount of such Bank's Term Loan Commitment. The Term Loans shall be advanced in a single Borrowing on the Effective Date (or, if the Term Loan Commitments are increased pursuant to Section 1.15 hereof, on the date the increase in Commitments become effective) and shall be made ratably by the Banks in proportion to their respective Percentages. As provided in Section 1.7(a) hereof, the Borrower may elect that the Term Loans be outstanding as Domestic Rate Loans or Eurocurrency Loans. No amount repaid or prepaid on any Term Loan may be borrowed again. SECTION 1.3. THE SWINGLINE. (a) SWINGLINE LOANS. Subject to all of the terms and conditions hereof, Harris Bank agrees to make loans in U.S. Dollars to the Borrower ("Swingline Loans"), which shall not in the aggregate at any time outstanding exceed the lesser of (i) the Swingline Commitment or (ii) the difference between (x) the Revolving Credit Commitments in effect at such time and (y) the Revolving Loans and L/C Obligations outstanding at the time of computation. The Swingline Commitment may be availed of by the Borrower from time to time and borrowings thereunder may be repaid and used again during the period ending on the day immediately preceding the Revolving Credit Termination Date. (b) MINIMUM BORROWING AMOUNT. Each Swingline Loan shall be in an amount not less than $100,000. (c) INTEREST ON SWINGLINE LOANS. Each Swingline Loan shall bear interest (computed on the basis of a year of 360 days and actual days elapsed) for the Interest Period selected therefor at the Domestic Rate plus the Applicable Margin for Domestic Rate Loans or at the rate quoted by Harris Bank to the Borrower which is the interest rate determined in Harris Bank's discretion at which the Harris Bank would be willing to make such Swingline Loan available to the Borrower for such Interest Period (the rate so quoted for a given Interest Period being herein referred to as the "Quoted Rate"), provided that if any Swingline Loan is not paid when due (whether by lapse of time, acceleration or otherwise) such Swingline Loan shall bear interest whether before or after judgment, until payment in full thereof through the end of the Interest Period then applicable thereto at the rate set forth in Section 1.11 hereof. Interest on each Swingline Loan shall be due and payable on the last day of each Interest Period applicable thereto, and interest after maturity (whether by lapse of time, acceleration or otherwise) shall be due and payable upon demand. (d) REQUESTS FOR SWINGLINE LOANS. The Borrower shall give the Administrative Agent and Harris Bank prior notice (which may be written or oral) no later than 12:00 Noon (Chicago time) on the date upon which the Borrower requests that any Swingline Loan be made, specifying in each case the amount and date of such Swingline Loan and the Interest Period selected therefor. Within thirty (30) minutes after receiving such notice, Harris Bank shall quote the Quoted Rate for such Interest Period. The Borrower acknowledges and agrees that the interest rate quote is given for immediate and irrevocable acceptance, and if the Borrower does not so immediately accept the Quoted Rate for the full amount requested by the Borrower for such Swingline Loan, the Quoted Rate shall be deemed immediately withdrawn and such Swingline Loan shall be made at the rate per annum equal to the Domestic Rate from time to time in effect plus the Applicable Margin for Domestic Rate Loans. Subject to all of the terms and conditions hereof, the proceeds of such Swingline Loan shall be made available to the Borrower on the date so requested at the offices of the Administrative Agent in Chicago, Illinois. Anything contained in the foregoing to the contrary notwithstanding, (i) the obligation of Harris Bank to make Swingline Loans shall be subject to all of the terms and conditions of this Agreement and (ii) Harris Bank shall not be obligated to make more than one Swingline Loan during any one day. (e) REFUNDING LOANS. In its sole and absolute discretion, Harris Bank may at any time, on behalf of the Borrower (which hereby irrevocably authorizes Harris Bank to act on its behalf for such purpose), request each Bank to make a Revolving Loan in an amount equal to such Bank's Percentage of the amount of the Swingline Loans outstanding on the date such notice is given. Borrowings of Revolving Loans under this Section shall initially constitute Domestic Rate Loans unless timely notice is given pursuant to Section 1.7 hereof. Unless any of the conditions of Section 6 are not fulfilled on such date, each Bank shall make the proceeds of its requested Revolving Loan available to the Administrative Agent, in immediately available funds, at the principal office of the Administrative Agent in Chicago, Illinois, before 12:00 Noon (Chicago time) on the Business Day following the day such notice is given. The proceeds of such Revolving Loans shall be immediately applied to repay the outstanding Swingline Loans. (f) PARTICIPATIONS. If any Bank refuses or otherwise fails to make a Revolving Loan when requested by Harris Bank pursuant to Section 1.3(e) above (because the conditions in Section 6 are not satisfied or otherwise), such Bank will, by the time and in the manner such Revolving Loan was to have been funded to the Administrative Agent, purchase from Harris Bank an undivided participating interest in the outstanding Swingline Loans in an amount equal to its Percentage of the aggregate principal amount of Swingline Loans that were to have been repaid with such Revolving Loans. Each Bank that so purchases a participation in a Swingline Loan shall thereafter be entitled to receive its Percentage of each payment of principal received on the Swingline Loan and of interest received thereon accruing from the date such Bank funded to the Administrative Agent its participation in such Swingline Loan. The obligation of the Banks to Harris Bank shall be absolute and unconditional and shall not be affected or impaired by any Default or Event of Default which may then be continuing hereunder. (g) VOLUNTARY PREPAYMENT OF SWINGLINE LOANS. The Borrower may not voluntarily prepay any Swingline Loan bearing interest at the Quoted Rate before the last day of its Interest Period. The Borrower may voluntarily prepay any Swingline Loan bearing interest computed by reference to the Domestic Rate before the last day of its Interest Period at any time upon notice delivered to the Administrative Agent by the Borrower no later than 12:00 Noon (Chicago time) on the date of prepayment, such prepayment to be made by the payment of the principal amount to be prepaid and accrued interest thereon to the date fixed for prepayment. SECTION 1.4. LETTERS OF CREDIT. (a) GENERAL TERMS. Subject to the terms and conditions hereof, as part of the Revolving Credit the Administrative Agent shall issue standby letters of credit (each a "Letter of Credit") for the Borrower's account in U.S. Dollars in an aggregate undrawn face amount up to the L/C Commitment, provided that the aggregate L/C Obligations at any time outstanding shall not exceed the difference between the Revolving Commitments in effect at such time and the aggregate Original Dollar Amount of Revolving Loans and Swingline Loans then outstanding. Notwithstanding anything herein to the contrary, those certain letters of credit issued for the account of the Borrower by Harris Trust and Savings Bank and listed on Schedule 1.4 hereof (the "Existing Letters of Credit") shall each constitute a "Letter of Credit" herein for all purposes of this Agreement with the Borrower as the applicant therefor, to the same extent, and with the same force and effect as if the Existing Letters of Credit had been issued under this Agreement at the request of the Borrower. Each Letter of Credit shall be issued by the Administrative Agent, but each Bank shall be obligated to reimburse the Administrative Agent for its Percentage of the amount of each drawing thereunder and, accordingly, the undrawn face amount of each Letter of Credit shall constitute usage of the Revolving Commitment of each Bank pro rata in accordance with each Bank's Percentage. (b) APPLICATIONS. At any time before the Revolving Credit Termination Date, the Administrative Agent shall, at the request of the Borrower, issue one or more Letters of Credit, in a form satisfactory to the Administrative Agent, with expiration dates no later than the earlier of (i) one year after the date of its issuance or (ii) the Revolving Credit Termination Date, in an aggregate face amount as set forth above, upon the receipt of a duly executed application for the relevant Letter of Credit in the form customarily prescribed by the Administrative Agent for a standby letter of credit (each an "Application"). Notwithstanding anything contained in any Application to the contrary (i) the Borrower's obligation to pay fees in connection with each Letter of Credit shall be as exclusively set forth in Section 2.1(b) hereof, (ii) except during the continuance of an Event of Default, the Administrative Agent will not call for the funding by the Borrower of any amount under a Letter of Credit, or any other form of collateral security for the Borrower's obligations in connection with such Letter of Credit, before being presented with a drawing thereunder, and (iii) if the Administrative Agent is not timely reimbursed for the amount of any drawing under a Letter of Credit on the date such drawing is paid, the Borrower's obligation to reimburse the Administrative Agent for the amount of such drawing shall bear interest (which the Borrower hereby promises to pay) from and after the date such drawing is paid at a rate per annum equal to the sum of 2% plus the Domestic Rate from time to time in effect plus the Applicable Margin for Domestic Rate Loans that are Revolving Loans. The Administrative Agent agrees to issue amendments to the Letter(s) of Credit increasing the amount, or extending the expiration date, thereof at the request of the Borrower subject to the conditions of Section 6.2 and the other terms of this Section 1.4. (c) THE REIMBURSEMENT OBLIGATIONS. Subject to Section 1.4(b) hereof, the obligation of the Borrower to reimburse the Administrative Agent for all drawings under a Letter of Credit (a Reimbursement Obligation") shall be governed by the Application related to such Letter of Credit, except that reimbursement of each drawing shall be made in immediately available funds at the Administrative Agent's principal office in Chicago, Illinois by no later than 12:00 Noon (Chicago time) on the date when each drawing is paid or, if such drawing was paid after 11:30 a.m. (Chicago time), by the end of such day. If the Borrower does not make any such reimbursement payment on the date due and the Participating Banks fund their participations therein in the manner set forth in Section 1.4(d) below, then all payments thereafter received by the Administrative Agent in discharge of any of the relevant Reimbursement Obligations shall be distributed in accordance with Section 1.4(d) below. (d) THE PARTICIPATING INTERESTS. Each Bank (other than the Bank then acting as Administrative Agent in issuing Letters of Credit) severally agrees to purchase from the Administrative Agent, and the Administrative Agent hereby agrees to sell to each such Bank (a "Participating Bank"), an undivided percentage participating interest (a "Participating Interest"), to the extent of its Percentage, in each Letter of Credit issued by, and each Reimbursement Obligation owed to, the Administrative Agent. Upon any failure by the Borrower to pay any Reimbursement Obligation at the time required on the date due, as set forth in Section 1.4(c) above, or if the Administrative Agent is required at any time to return to the Borrower or to a trustee, receiver, liquidator, custodian or other Person any portion of any payment of any Reimbursement Obligation, each Participating Bank shall, not later than the Business Day it receives a request from the Administrative Agent to such effect, if such request is received before 1:00 p.m. (Chicago time), or not later than the following Business Day, if such request is received after such time, pay to the Administrative Agent an amount equal to its Percentage of such unpaid or recaptured Reimbursement Obligation together with interest on such amount accrued from the date the related payment was made by the Administrative Agent to the date of such payment by such Participating Bank at a rate per annum equal to (i) from the date the related payment was made by the Administrative Agent to the date two (2) Business Days after payment by such Participating Bank is due hereunder, the Federal Funds Rate for each such day and (ii) from the date two (2) Business Days after the date such payment is due from such Participating Bank to the date such payment is made by such Participating Bank, the Domestic Rate in effect for each such day. Each such Participating Bank shall thereafter be entitled to receive its Percentage of each payment received in respect of the relevant Reimbursement Obligation and of interest paid thereon, with the Administrative Agent retaining its Percentage as a Bank hereunder. The several obligations of the Participating Banks to the Administrative Agent under this Section 1.4 shall be absolute, irrevocable and unconditional under any and all circumstances whatsoever (except, without limiting the Borrower's obligations under each Application, to the extent the Borrower is relieved from its obligation to reimburse the Administrative Agent for a drawing under a Letter of Credit because of the Administrative Agent's gross negligence or willful misconduct in determining that documents received under the Letter of Credit comply with the terms thereof) and shall not be subject to any set-off, counterclaim or defense to payment which any Participating Bank may have or have had against the Borrower, the Administrative Agent, any other Bank or any other Person whatsoever. Without limiting the generality of the foregoing, such obligations shall not be affected by any Default or Event of Default or by any reduction or termination of any Revolving Commitment of any Bank, and each payment by a Participating Bank under this Section 1.4 shall be made without any offset, abatement, withholding or reduction whatsoever. The Administrative Agent shall be entitled to offset amounts received for the account of a Bank under this Agreement against unpaid amounts due from such Bank to the Administrative Agent hereunder (whether as fundings of participations, indemnities or otherwise), but shall not be entitled to offset against amounts owed to the Administrative Agent by any Bank arising outside this Agreement. (e) INDEMNIFICATION. The Participating Banks shall, to the extent of their respective Percentages, indemnify the Administrative Agent (to the extent not reimbursed by the Borrower) against any cost, expense (including reasonable counsel fees and disbursements), claim, demand, action, loss or liability (except such as result from the Administrative Agent's gross negligence or willful misconduct) that the Administrative Agent may suffer or incur in connection with any Letter of Credit. The obligations of the Participating Banks under this Section 1.4(e) and all other parts of this Section 1.4 shall survive termination of this Agreement and of all other L/C Documents. SECTION 1.5. APPLICABLE INTEREST RATES. (a) DOMESTIC RATE LOANS. Each Domestic Rate Loan made or maintained by a Bank shall bear interest during each Interest Period it is outstanding (computed on the basis of a year of 365 or 366 days, as applicable, and actual days elapsed) on the unpaid principal amount thereof from the date such Loan is advanced, continued or created by conversion from a Eurocurrency Loan until maturity (whether by acceleration or otherwise) at a rate per annum equal to the sum of the Applicable Margin plus the Domestic Rate from time to time in effect, payable on the last day of its Interest Period and at maturity (whether by acceleration or otherwise). "Domestic Rate" means for any day the greater of: (i) the rate of interest announced by the Administrative Agent from time to time as its prime commercial rate, or equivalent, as in effect on such day, with any change in the Domestic Rate resulting from a change in said prime commercial rate to be effective as of the date of the relevant change in said prime commercial rate; and (ii) the sum of (x) the rate determined by the Administrative Agent to be the prevailing rate per annum (rounded upwards, if necessary, to the nearest one hundred-thousandth of a percentage point) at approximately 10:00 a.m. (Chicago time) (or as soon thereafter as is practicable) on such day (or, if such day is not a Business Day, on the immediately preceding Business Day) for the purchase at face value of overnight Federal Funds in an amount comparable to the principal amount owed to the Banks for which such rate is being determined, plus (y) 1/2 of 1% (0.50%). (b) EUROCURRENCY LOANS. Each Eurocurrency Loan made or maintained by a Bank shall bear interest during each Interest Period it is outstanding (computed on the basis of a year of 360 days and actual days elapsed except for Eurocurrency Loans denominated in Pounds Sterling which shall be computed on the basis of a year of 365 or 366 days, as applicable, and actual days elapsed) on the unpaid principal amount thereof from the date such Loan is advanced, continued, or created by conversion from a Domestic Rate Loan until maturity (whether by acceleration or otherwise) at a rate per annum equal to the sum of the Applicable Margin plus the Adjusted LIBOR applicable for such Interest Period, payable on the last day of the Interest Period and at maturity (whether by acceleration or otherwise), and, if the applicable Interest Period is longer than three months, on each day occurring every three months after the commencement of such Interest Period. "Adjusted LIBOR" means, for any Borrowing of Eurocurrency Loans, a rate per annum determined in accordance with the following formula: Adjusted LIBOR = LIBOR ------------------------------- 1 - Eurocurrency Reserve Percentage "LIBOR" means, for an Interest Period for a Borrowing of Eurocurrency Loans, (a) the LIBOR Index Rate for such Interest Period, if such rate is available, and (b) if the LIBOR Index Rate cannot be determined, the average rate of interest per annum (rounded upwards, if necessary, to the nearest one hundred-thousandth of a percentage point) at which deposits in U.S. Dollars or the relevant Alternative Currency, as appropriate, in immediately available funds are offered to the Administrative Agent at 11:00 a.m. (London, England time) two (2) Business Days before the beginning of such Interest Period by major banks in the interbank eurocurrency market for delivery on the first day of and for a period equal to such Interest Period in an amount equal or comparable to the principal amount of such Borrowing. "LIBOR Index Rate" means, for any Interest Period, the rate per annum (rounded upwards, if necessary, to the next higher one hundred-thousandth of a percentage point) for deposits in U.S. Dollars or the relevant Alternative Currency, as appropriate, for a period equal to such Interest Period, which appears on the appropriate Telerate Page for such currency, as of 11:00 a.m. (London, England time) on the day two (2) Business Days before the commencement of such Interest Period. "Telerate Page" means the page designated on the Telerate Service (or such other service as may be nominated by the British Bankers' Association as the information vendor) for the purpose of displaying British Bankers' Association Interest Settlement Rates for the applicable currency. "Eurocurrency Reserve Percentage" means, for any Borrowing of Eurocurrency Loans, the daily average for the applicable Interest Period of the maximum rate, expressed as a decimal, at which reserves (including, without limitation, any supplemental, marginal and emergency reserves) are imposed during such Interest Period by the Board of Governors of the Federal Reserve System (or any successor) on "eurocurrency liabilities", as defined in such Board's Regulation D (or in respect of any other category of liabilities that includes deposits by reference to which the interest rate on Eurocurrency Loans is determined or any category of extensions of credit or other assets that include loans by non-United States offices of any Bank to United States residents), subject to any amendments of such reserve requirement by such Board or its successor, taking into account any transitional adjustments thereto. For purposes of this definition, the Eurocurrency Loans shall be deemed to be "eurocurrency liabilities" as defined in Regulation D without benefit or credit for any prorations, exemptions or offsets under Regulation D. (c) Rate Determinations. The Administrative Agent shall determine each interest rate applicable to the Loans, and a reasonable determination thereof by the Administrative Agent shall be conclusive and binding except in the case of manifest error or willful misconduct. The Original Dollar Amount of each Eurocurrency Loan denominated in an Alternative Currency shall be determined or redetermined, as applicable, effective as of the first day of each Interest Period applicable to such Loan. SECTION 1.6. MINIMUM BORROWING AMOUNTS. Each Borrowing of Domestic Rate Loans shall be in an amount not less than $1,000,000 and in integral multiples of $100,000. Each Borrowing of Eurocurrency Loans shall be in an amount not less than an Original Dollar Amount of $3,000,000 and in integral multiple of 100,000 units of the relevant currency as would have the Original Dollar Amount most closely approximating $100,000 or an integral multiple thereof. SECTION 1.7. MANNER OF BORROWING LOANS AND DESIGNATING INTEREST RATES APPLICABLE TO LOANS. (a) NOTICE TO THE ADMINISTRATIVE AGENT. The Borrower shall give notice to the Administrative Agent by no later than 12:00 noon (Chicago time) (i) at least four (4) Business Days before the date on which the Borrower requests the Banks to advance a Borrowing of Eurocurrency Loans denominated in an Alternative Currency, (ii) at least three (3) Business Days before the date on which the Borrower requests the Banks to advance a Borrowing of Eurocurrency Loans denominated in U.S. Dollars and (iii) at least one Business Day before on the date on which the Borrower requests the Banks to advance a Borrowing of Domestic Rate Loans. The Loans included in each Borrowing shall bear interest initially at the type of rate specified in such notice of a new Borrowing. Thereafter, the Borrower may from time to time elect to change or continue the type of interest rate borne by each Borrowing or, subject to the minimum amount requirement for each outstanding Borrowing contained in Section 1.6 hereof, a portion thereof, as follows: (i) if such Borrowing is of Eurocurrency Loans, on the last day of the Interest Period applicable thereto, the Borrower may continue part or all of such Borrowing as Eurocurrency Loans for an Interest Period or Interest Periods specified by the Borrower or, if such Eurocurrency Loan is denominated in U.S. Dollars, convert part or all of such Borrowing into Domestic Rate Loans, (ii) if such Borrowing is of Domestic Rate Loans, on any Business Day, the Borrower may convert all or part of such Borrowing into Eurocurrency Loans denominated in U.S. Dollars for an Interest Period or Interest Periods specified by the Borrower. The Borrower shall give all such notices requesting the advance, continuation, or conversion of a Borrowing to the Administrative Agent by telephone or telecopy (which notice shall be irrevocable once given and, if by telephone, shall be promptly confirmed in writing). Notices of the continuation of a Borrowing of Eurocurrency Loans denominated in U.S. Dollars for an additional Interest Period or of the conversion of part or all of a Borrowing of Eurocurrency Loans denominated in U.S. Dollars into Domestic Rate Loans or of Domestic Rate Loans into Eurocurrency Loans must be given by no later than 12:00 noon (Chicago time) at least three (3) Business Days before the date of the requested continuation or conversion. Notices of the continuation of a Borrowing of Eurocurrency Loans denominated in an Alternative Currency must be given no later than 12:00 noon (Chicago time) at least four (4) Business Days before the requested continuation. All such notices concerning the advance, continuation, or conversion of a Borrowing shall specify the date of the requested advance, continuation or conversion of a Borrowing (which shall be a Business Day), the amount of the requested Borrowing to be advanced, continued, or converted, the type of Loans to comprise such new, continued or converted Borrowing and, if such Borrowing is to be comprised of Eurocurrency Loans, the currency and Interest Period applicable thereto. The Borrower agrees that the Administrative Agent may rely on any such telecopy notice given by any person it in good faith believes is an Authorized Representative without the necessity of independent investigation, and in the event any such notice by telephone conflicts with any written confirmation, such telephonic notice shall govern if the Administrative Agent has acted in reliance thereon. (b) NOTICE TO THE BANKS. The Administrative Agent shall give prompt telephonic or telecopy notice to each Bank (which notice if by telephone, shall be promptly confirmed in writing) of any notice from the Borrower received pursuant to Section 1.7(a) above. The Administrative Agent shall give notice to the Borrower and each Bank by like means of the interest rate applicable to each Borrowing of Eurocurrency Loans and, if such Borrowing is denominated in an Alternative Currency, shall give notice by such means to the Borrower and each Bank of the Original Dollar Amount thereof. (c) BORROWER'S FAILURE TO NOTIFY. Any outstanding Borrowing of Domestic Rate Loans shall, subject to Section 6.2 hereof, automatically be continued for an additional Interest Period on the last day of its then current Interest Period unless the Borrower has notified the Administrative Agent within the period required by Section 1.7(a) that it intends to convert such Borrowing into a Borrowing of Eurocurrency Loans or notifies the Administrative Agent within the period required by Section 1.10(a) that it intends to prepay such Borrowing. If the Borrower fails to give notice pursuant to Section 1.7(a) above of the continuation or conversion of any outstanding principal amount of a Borrowing of Eurocurrency Loans denominated in U.S. Dollars before the last day of its then current Interest Period within the period required by Section 1.7(a) and has not notified the Administrative Agent within the period required by Section 1.10(a) that it intends to prepay such Borrowing, such Borrowing shall automatically be converted into a Borrowing of Domestic Rate Loans, subject to Section 6.2 hereof. If the Borrower fails to give notice pursuant to Section 1.7(a) above of the continuation of any outstanding principal amount of a Borrowing of Eurocurrency Loans denominated in an Alternative Currency before the last day of its then current Interest Period within the period required by Section 1.7(a) and has not notified the Administrative Agent within the period required by Section 1.10(a) that it intends to prepay such Borrowing, such Borrowing shall automatically be continued as a Borrowing of Eurocurrency Loans in the same Alternative Currency with an Interest Period of one month, subject to Section 6.2 hereof, including the application of Section 1.5 and of the restrictions contained in the definition of Interest Period. (d) DISBURSEMENT OF LOANS. Not later than 11:00 a.m. (Chicago time) on the date of any requested advance of a new Borrowing of Eurocurrency Loans, and not later than 1:00 p.m. (Chicago time) on the date of any requested advance of a new Borrowing of Domestic Rate Loans (other than Domestic Rate Loans the proceeds of which are used to repay Swingline Loans), subject to Section 6 hereof, each Bank shall make available its Loan comprising part of such Borrowing in funds immediately available at the principal office of the Administrative Agent in Chicago, Illinois, except that if such Borrowing is denominated in an Alternative Currency each Bank shall, subject to Section 1.5(c) and Section 6, make available its Loan comprising part of such Borrowing at such office as the Administrative Agent has previously specified in a notice to each Bank, in such funds as are then customary for the settlement of international transactions in such currency and no later than such local time as is necessary for such funds to be received and transferred to the Borrower for same day value on the date of the Borrowing. The Administrative Agent shall make available to the Borrower Loans denominated in U.S. Dollars at the Administrative Agent's principal office in Chicago, Illinois and Loans denominated in Alternative Currencies at such office as the Administrative Agent has previously agreed to with the Borrower, in each case in the type of funds received by the Administrative Agent from the Banks. (e) ADMINISTRATIVE AGENT RELIANCE ON BANK FUNDING. Unless the Administrative Agent shall have been notified by a Bank before the date on which such Bank is scheduled to make payment to the Administrative Agent of the proceeds of a Loan (which notice shall be effective upon receipt) that such Bank does not intend to make such payment, the Administrative Agent may assume that such Bank has made such payment when due and the Administrative Agent may in reliance upon such assumption (but shall not be required to) make available to the Borrower the proceeds of the Loan to be made by such Bank and, if any Bank has not in fact made such payment to the Administrative Agent, such Bank shall, on demand, pay to the Administrative Agent the amount made available to the Borrower attributable to such Bank together with interest thereon in respect of each day during the period commencing on the date such amount was made available to the Borrower and ending on (but excluding) the date such Bank pays such amount to the Administrative Agent at a rate per annum equal to the Federal Funds Rate or, in the case of a Loan denominated in an Alternative Currency, the cost to the Administrative Agent of funding the amount it advanced to fund such Bank's Loan, as determined by the Administrative Agent. If such amount is not received from such Bank by the Administrative Agent immediately upon demand, the Borrower will, on demand, repay to the Administrative Agent the proceeds of the Loan attributable to such Bank with interest thereon at a rate per annum equal to the interest rate applicable to the relevant Loan, but without such payment being considered a payment or prepayment of a Loan under Section 1.13 hereof, so that the Borrower will have no liability under such Section with respect to such payment. SECTION 1.8. INTEREST PERIODS. As provided in Section 1.7(a) hereof, at the time of each request to advance, continue, or create by conversion a Borrowing of Eurocurrency Loans, the Borrower shall select an Interest Period applicable to such Loans from among the available options. The term "Interest Period" means the period commencing on the date a Borrowing of Loans is advanced, continued, or created by conversion and ending: (a) in the case of Domestic Rate Loans, on the last day of the calendar quarter in which such Borrowing is advanced, continued, or created by conversion (or on the last day of the following quarter if such Loan is advanced, continued or created by conversion on the last day of a calendar quarter), (b) in the case of Eurocurrency Loans, 1, 2, 3, or 6 months thereafter, and (c) in the case of Swingline Loans, on the date, as the Borrower may select, one to five days thereafter; provided, however, that: (a) any Interest Period for a Borrowing of Revolving Loans consisting of Domestic Rate Loans that otherwise would end after the Revolving Credit Termination Date shall end on the Revolving Credit Termination Date, and any Interest Period for a Borrowing of Term Loans consisting of Domestic Rate Loans that otherwise would end after the Term Loan Maturity Date shall end on the Term Loan Maturity Date; (b) no Interest Period with respect to any portion of the Revolving Loans shall extend beyond the Revolving Credit Termination Date, no Interest Period with respect to any portion of the Term Loans shall extend beyond the Term Loan Maturity Date; (c) whenever the last day of any Interest Period would otherwise be a day that is not a Business Day, the last day of such Interest Period shall be extended to the next succeeding Business Day, provided that, if such extension would cause the last day of an Interest Period for a Borrowing of Eurocurrency Loans to occur in the following calendar month, the last day of such Interest Period shall be the immediately preceding Business Day; and (d) for purposes of determining an Interest Period for a Borrowing of Eurocurrency Loans, a month means a period starting on one day in a calendar month and ending on the numerically corresponding day in the next calendar month; provided, however, that if there is no numerically corresponding day in the month in which such an Interest Period is to end or if such an Interest Period begins on the last Business Day of a calendar month, then such Interest Period shall end on the last Business Day of the calendar month in which such Interest Period is to end. SECTION 1.9. MATURITY OF LOANS. Each Revolving Loan shall mature and become due and payable by the Borrower on the Revolving Credit Termination Date. Each Swingline Loan shall mature and become due and payable on the earlier of (i) the last day of its Interest Period and (ii) the Revolving Credit Termination Date. Each Term Loan shall mature and become due and payable by the Borrower on the Term Loan Maturity Date. SECTION 1.10. PREPAYMENTS. (a) OPTIONAL. The Borrower may prepay without premium or penalty and in whole or in part (but, if in part, then: (i) if such Borrowing is of Domestic Rate Loans, in an amount not less than $500,000, (ii) if such Borrowing is of Eurocurrency Loans denominated in U.S. Dollars, in an amount not less than $1,000,000, (iii) if such Borrowing is denominated in an Alternative Currency, an amount for which the U.S. Dollar Equivalent is not less than $1,000,000 and (iv) in an amount such that the minimum amount required for a Borrowing pursuant to Section 1.6 hereof remains outstanding) any Borrowing of Eurocurrency Loans upon three Business Days' (or, if such Eurocurrency Loan is denominated in an Alternative Currency, upon four Business Days') prior notice to the Administrative Agent or, in the case of a Borrowing of Domestic Rate Loans, notice delivered to the Administrative Agent no later than 12:00 noon (Chicago time) on the date of prepayment, such prepayment to be made by the payment of the principal amount to be prepaid and, in the case of a prepayment of a Eurocurrency Loan, accrued interest thereon to the date fixed for prepayment; provided that in the case of any such prepayment of Eurocurrency Loans, such prepayment shall be accompanied by amounts owing under Section 1.13 hereof. The Administrative Agent will promptly advise each Bank of any such prepayment notice it receives from the Borrower. (b) MANDATORY. (i) No later than the Business Day occurring immediately after the day on which the Borrower receives proceeds from the sale (including a liquidating dividend) of all or any portion of any Investment permitted under Section 7.14(k), the Borrower shall make a mandatory prepayment of the Revolving Loans in the amount of such proceeds. (ii) If on any March 31, June 30, September 30 or December 31 occurring after the date hereof the sum of (i) the U.S. Dollar Equivalent of all outstanding Revolving Loans hereunder, (ii) the aggregate Original Dollar Amount of all outstanding Swingline Loans hereunder, and (iii) the L/C Obligations exceeds the Revolving Commitments as then in effect, the Borrower shall immediately prepay Revolving Loans in an aggregate amount such that after giving effect thereto the sum of (i) the U.S. Dollar Equivalent of all outstanding Revolving Loans hereunder, (ii) the aggregate Original Dollar Amount of all outstanding Swingline Loans hereunder, and (iii) the outstanding L/C Obligations is less than or equal to the Revolving Commitments as then in effect. (iii) To the extent Term Loans remain outstanding, if after the Effective Date the Borrower or any Subsidiary shall issue new equity securities (whether common or preferred stock or otherwise), other than equity securities issued in connection with the Borrower's Stock Compensation Program, Employee Stock Purchase Plan, Stock Award and Incentive Plan and any similar programs or plans, the Borrower shall promptly notify the Administrative Agent of the estimated Net Cash Proceeds of such issuance to be received by or for the account of the Borrower or such Subsidiary in respect thereof. Promptly upon, and in no event later than the Business Day after, receipt by the Borrower or such Subsidiary of Net Cash Proceeds of such issuance, the Borrower shall prepay the Term Loans in an aggregate amount equal to 100% of the amount of such Net Cash Proceeds. (iv) To the extent Term Loans remain outstanding, if after the Effective Date the Borrower or any Subsidiary shall issue any indebtedness for borrowed money (other than short-term working capital facilities in local currencies), the Borrower shall promptly notify the Administrative Agent of the estimated Net Cash Proceeds of such issuance to be received by or for the account of the Borrower or such Subsidiary in respect thereof. Promptly upon, and in no event later than the Business Day after, receipt by the Borrower or such Subsidiary of Net Cash Proceeds of such issuance, the Borrower shall prepay the Term Loans in an aggregate amount equal to 100% of the amount of such Net Cash Proceeds. (v) To the extent Term Loans remain outstanding, the Borrower or any Subsidiary shall at any time or from time to time make or agree to make a Disposition, then the Borrower shall promptly notify the Administrative Agent of such proposed Disposition (including the amount of the estimated Net Cash Proceeds to be received by the Borrower or such Subsidiary in respect thereof) and (y) promptly upon, and in no event later than the Business Day after, receipt by the Borrower or the Subsidiary of the Net Cash Proceeds of such Disposition, the Borrower shall prepay the Term Loans in an aggregate amount equal to 100% of the amount of such Net Cash Proceeds. SECTION 1.11. DEFAULT RATE. If any payment of principal on any Loan is not made when due (whether by acceleration or otherwise), such Loan shall bear interest (computed on the basis of a year of 360 days and actual days elapsed or, if based on the Domestic Rate, on the basis of a year of 365 or 366 days, as applicable, and the actual number of days elapsed) from the date such payment was due until paid in full, payable on demand, at a rate per annum equal to: (a) for any Domestic Rate Loan, the sum of two percent (2%) plus the Domestic Rate from time to time in effect plus the Applicable Margin for Domestic Rate Loans; (b) for any Eurocurrency Loan, the sum of two percent (2%) plus the rate of interest in effect thereon at the time of such default until the end of the Interest Period applicable thereto and, thereafter, if such Loan is denominated in U.S. Dollars, at a rate per annum equal to the sum of two percent (2%) plus the Domestic Rate from time to time in effect plus the Applicable Margin for Domestic Rate Loans or, if such Loan is denominated in an Alternative Currency, at a rate per annum equal to the sum of the Eurocurrency Margin, plus two percent (2%) plus the rate of interest per annum as determined by the Administrative Agent (rounded upwards, if necessary, to the next higher one hundred-thousandth of a percentage point) at which overnight or weekend deposits (or, if such amount due remains unpaid more than three Business Days, then for such other period of time not longer than one month as the Administrative Agent may elect in its absolute discretion) of the relevant Alternative Currency for delivery in immediately available and freely transferable funds would be offered by the Administrative Agent to major banks in the interbank market upon request of such major banks for the applicable period as determined above and in an amount comparable to the unpaid principal amount of any such Eurocurrency Loan (or, if the Administrative Agent is not placing deposits in such currency in the interbank market , then the Administrative Agent's cost of funds in such currency for such period); and (c) for any Swingline Loan, the sum of 2% plus the rate of interest in effect thereon at the time of such default until the end of the Interest Period applicable thereto and, thereafter, at a rate per annum equal to 2% plus the Applicable Margin for Domestic Rate Loans plus the Domestic Rate from time to time in effect. SECTION 1.12. NOTELESS AGREEMENT; EVIDENCE OF INDEBTEDNESS. (a) Each Bank shall maintain in accordance with its usual practice an account or accounts evidencing the indebtedness of the Borrower to such Bank resulting from each Loan made by such Bank from time to time, including the amounts of principal and interest payable and paid to such Bank from time to time hereunder. (b) The Administrative Agent shall also maintain accounts in which it will record (a) the amount of each Loan made hereunder, the type thereof and the Interest Period with respect thereto, (b) the amount of any principal or interest due and payable or to become due and payable from the Borrower to each Bank hereunder and (c) the amount of any sum received by the Administrative Agent hereunder from the Borrower and each Bank's share thereof. (c) The entries maintained in the accounts maintained pursuant to paragraphs (i) and (ii) above shall be prima facie evidence of the existence and amounts of the Obligations therein recorded; provided, however, that the failure of the Administrative Agent or any Bank to maintain such accounts or any error therein shall not in any manner affect the obligation of the Borrower to repay the Obligations in accordance with their terms. (d) Any Bank may request that its Loans be evidenced by a promissory note or notes (each, a "Note"). In such event, the Borrower shall prepare, execute and deliver to such Bank a Note or Notes payable to the order of such Lender in a form supplied by the Administrative Agent. Thereafter, the Loans evidenced by such Note or Notes and interest thereon shall at all times (including after any assignment pursuant to Section 12.12) be represented by one or more Notes payable to the order of the payee named therein or any assignee pursuant to Section 12.12, except to the extent that any such Bank or assignee subsequently returns any such Note for cancellation and requests that such Loans once again be evidenced as described in subsections (a) and (b) above. SECTION 1.13. FUNDING INDEMNITY. If any Bank shall incur any loss, cost or expense (including, without limitation, any loss of profit, and any loss, cost or expense incurred by reason of the liquidation or re- employment of deposits or other funds acquired by such Bank to fund or maintain any Eurocurrency Loan or the relending or reinvesting of such deposits or amounts paid or prepaid to such Bank) as a result of: (a) any payment, prepayment or conversion of a Eurocurrency Loan on a date other than the last day of its Interest Period, (b) any failure (because of a failure to meet the conditions of Section 6 or otherwise) by the Borrower to borrow or continue a Eurocurrency Loan, or to convert a Domestic Rate Loan into a Eurocurrency Loan, on the date specified in a notice given pursuant to Section 1.7(a) or established pursuant to Section 1.7(c) hereof, (c) any failure by the Borrower to make any payment of principal on any Eurocurrency Loan when due (whether by acceleration or otherwise), or (d) any acceleration of the maturity of a Eurocurrency Loan as a result of the occurrence of any Event of Default hereunder, then, upon the demand of such Bank, the Borrower shall pay to such Bank such amount as will reimburse such Bank for such loss, cost or expense. If any Bank makes such a claim for compensation, it shall provide to the Borrower, with a copy to the Administrative Agent, a certificate executed by an officer of such Bank setting forth the amount of such loss, cost or expense in reasonable detail (including an explanation of the basis for and the computation of such loss, cost or expense) and the amounts shown on such certificate if reasonably calculated shall be conclusive absent manifest error. SECTION 1.14. COMMITMENT TERMINATIONS. The Borrower shall have the right at any time and from time to time, upon five (5) Business Days' prior written notice to the Administrative Agent, to terminate the Revolving Credit Commitments without premium or penalty, in whole or in part, any partial termination to be (i) in an amount not less than $5,000,000, and (ii) allocated ratably among the Banks in proportion to their respective Percentages, provided that the Revolving Credit Commitments may not be reduced to an amount less than the sum of the Original Dollar Amount of all Revolving Loans and Swingline Loans and all L/C Obligations then outstanding. The Borrower shall have the right at any time and from time to time, by notice to the Administrative Agent, to reduce or terminate the L/C Commitment without premium or penalty, in whole or in part; provided that the L/C Commitment may not be reduced to an amount less than all L/C Obligations then outstanding. The Borrower shall have the right at any time and from time to time, by notice to the Administrative Agent, to reduce or terminate the Swingline Commitment without premium or penalty, in whole or in part; provided that the Swingline Commitment may not be reduced to an amount less than the aggregate principal amount of the Swingline Loans then outstanding. Any such termination of the L/C Commitment or the Swingline Commitment shall not reduce the Revolving Credit Commitments unless the Borrower elects to do so in the manner provided above. The Administrative Agent shall give prompt notice to each Bank of any such termination of Commitments. Any termination of Commitments pursuant to this Section 1.14 may not be reinstated. SECTION 1.15. INCREASE IN COMMITMENTS. The Borrower may, on any Business Day prior to March 31, 2000, with the written consent of the Administrative Agent, increase the aggregate amount of the Commitments by delivering a Commitment Amount Increase Request at least 5 Business Days prior to the desired effective date of such increase (the "Commitment Amount Increase") identifying an additional Bank (or additional Commitments for existing Bank(s)) and the amount of its Commitment (or additional amount of its Commitment(s)); provided, however, that (i) any increase of the aggregate amount of the Commitments to an amount in excess of $425,000,000 will require the approval of all the Banks, (ii) any increase in the Commitments will be applied pro rata to the Revolving Credit Commitments and Term Loan Commitments, and (iii) any increase of the aggregate amount of the Commitments shall be in an amount not less than $5,000,000. The effective date of the Commitment Amount Increase shall be agreed upon by the Borrower and the Administrative Agent. Upon the effectiveness thereof, the new Bank (or, if applicable, existing Bank) shall advance Term Loans and Revolving Loans in an amount sufficient such that after giving effect to its Loans each Bank shall have outstanding its pro rata share of Term Loans and Revolving Loans. It shall be a condition to such effectiveness that no Eurocurrency Loans be outstanding on the date of such effectiveness and that the Borrower shall not have terminated any portion of the Commitments pursuant to Section 1.14 hereof. The Borrower agrees to pay any fees or expenses of the Agent relating to any Commitment Amount Increase. SECTION 2. FEES. SECTION 2.1. FEES. (a) COMMITMENT FEE. For the period from the Effective Date to and including the Revolving Credit Termination Date, the Borrower shall pay to the Administrative Agent for the ratable account of the Banks in accordance with their Percentages a commitment fee (the "Commitment Fee") on the average daily Unused Commitments at a rate of: (i) 0.20% per annum for each day Level I Status exists, (ii) 0.25% per annum for each day Level II Status exists, (iii) 0.30% per annum for each day Level III Status exists, (iv) 0.35% per annum for each day Level IV Status exists, and (v) 0.45% per annum for each day Level V status exists. Accrued Commitment Fees shall be due and, payable in arrears on December 31, 1999, on the last day of each calendar quarter thereafter and on the Revolving Credit Termination Date, unless the Revolving Commitments are terminated in whole on an earlier date, in which event the fee for the period to but not including the date of such termination shall be paid in whole on the date of such termination. (b) LETTER OF CREDIT FEES. On the date of issuance or extension, or increase in the amount, of any Standby Letter of Credit pursuant to Section 1.4 hereof, the Borrower shall pay to the Administrative Agent an issuance fee equal to 0.10% of the face amount of (or of the increase in the face amount of) such Letter of Credit. Quarterly in arrears, on the last day of each calendar quarter, commencing on December 31, 1999, the Borrower shall pay to the Administrative Agent, for the ratable benefit of the Banks in accordance with their Percentages, a letter of credit fee at a rate per annum equal to the Applicable Margin for Eurocurrency Loans advanced under the Revolving Credit in effect during each day of such quarter applied to the daily average face amount of Standby Letters of Credit outstanding during such quarter. (c) CLOSING FEES. On the Effective Date the Borrower shall pay to the Administrative Agent (i) for each Bank with a total Commitment of $40,000,000 or more on the Effective Date, a closing fee equal to 0.45% of each such Bank's Revolving Credit Commitment and 0.25% of each such Bank's Term Loan Commitment, (ii) for each Bank with a total Commitment of less than $40,000,000 but greater than or equal to $25,000,000 on the Effective Date, a closing fee equal to 0.35% of each such Bank's Revolving Credit Commitment and 0.20% of each such Bank's Term Loan Commitment and (iii) for each Bank with a total Commitment of less than $25,000,000 on the Effective Date, a closing fee equal to 0.25% of each such Bank's Revolving Credit Commitment and 0.15% of each such Bank's Term Loan Commitment. (d) ADMINISTRATIVE AGENT FEES. The Borrower shall pay to the Administrative Agent the fees agreed to between the Administrative Agent and the Borrower in a letter dated October 27, 1999 or as otherwise subsequently agreed between them. (e) FEE CALCULATIONS. All fees payable under Section 2.1(a) and (b) shall be computed on the basis of a year of 365 or 366 days, as applicable, for the actual number of days elapsed. SECTION 3. PLACE AND APPLICATION OF PAYMENTS. SECTION 3.1. PLACE AND APPLICATION OF PAYMENTS. All payments of principal of and interest on the Loans and the Reimbursement Obligations, and of all other amounts payable by the Borrower under this Agreement, shall be made by the Borrower to the Administrative Agent by no later than 12:00 Noon (Chicago time) on the due date thereof at the principal office of the Administrative Agent in Chicago, Illinois (or such other location in the State of Illinois as the Administrative Agent may designate to the Borrower) or, if such payment is to be made in an Alternative Currency, no later than 12:00 noon local time at the place of payment to such office as the Administrative Agent has previously specified in a notice to the Borrower for the benefit of the Person or Persons entitled thereto. Any payments received after such time shall be deemed to have been received by the Administrative Agent on the next Business Day. All such payments shall be made (i) in U.S. Dollars, in immediately available funds at the place of payment, or (ii) in the case of amounts payable hereunder in an Alternative Currency, in such Alternative Currency in such funds then customary for the settlement of international transactions in such currency, in each case without setoff or counterclaim. The Administrative Agent will promptly thereafter cause to be distributed like funds relating to the payment of principal or interest on Loans or commitment fees ratably to the Banks and like funds relating to the payment of any other amount payable to any Person to such Person, in each case to be applied in accordance with the terms of this Agreement. SECTION 4. DEFINITIONS; INTERPRETATION. SECTION 4.1. DEFINITIONS. The following terms when used herein have the following meanings: "Account" is defined in Section 8.4(b) hereof. "Acquisition" means any transaction, or any series of related transactions, consummated after the date of this Agreement, by which the Borrower or any of its Subsidiaries (i) acquires any going business or all or substantially all of the assets of any firm, corporation or division thereof, whether through purchase of assets, merger or otherwise, or (ii) directly or indirectly acquires (in one transaction or as the most recent transaction in a series of transactions) at least a majority (in number of votes) of the securities of a corporation which have ordinary voting power for the election of directors (other than securities having such power only by reason of the happening of a contingency) or at least a majority of the partnership interests of any partnership. "Adjusted EBIT" means, for any period, Consolidated Net Income for such period plus all amounts deducted in arriving at such Consolidated Net Income for such period for (i) Interest Expense, (ii) federal, state and local income tax expense, (iii) reasonable non-recurring transition costs incurred by the Borrower prior to December 31, 1999 in connection with the Compass Acquisition as reasonably acceptable to the Administrative Agent, (iv) all non-cash contributions or accruals to or with respect to deferred profit sharing or compensation and (v) reasonable non-recurring transition costs incurred by JLW or the Borrower prior to January 1, 2000 in connection with the JLW Acquisition and the Integration Plan (as defined in the JLW Purchase Agreement) as reasonably acceptable to the Administrative Agent; provided that any amounts added to Consolidated Net Income pursuant to clause (iv) above for any period shall be deducted from Consolidated Net Income for the period, if ever, in which such amounts are paid in cash by the Borrower or any of its Subsidiaries. "Adjusted EBITDA" means, for any period, Consolidated Net Income for such period plus all amounts deducted in arriving at such Consolidated Net Income for such period for (i) Interest Expense, (ii) federal, state and local income tax expense, (iii) all amounts properly charged for depreciation of fixed assets and amortization of intangible assets on the books of the Borrower and its Restricted Subsidiaries, (iv) reasonable non- recurring transition costs incurred by the Borrower prior to December 31, 1999 in connection with the Compass Acquisition as reasonably acceptable to the Administrative Agent, (v) all non-cash contributions or accruals to or with respect to deferred profit sharing or compensation, and (vi) reasonable non-recurring transition costs incurred by JLW or the Borrower prior to January 1, 2000 in connection with the JLW Acquisition and the Integration Plan (as defined in the JLW Purchase Agreement) as reasonably acceptable to the Administrative Agent; provided that any amounts added to Consolidated Net Income pursuant to clause (v) above for any period shall be deducted from Consolidated Net Income for the period, if ever, in which such amounts are paid in cash by the Borrower or any of its Subsidiaries. "Adjusted LIBOR" is defined in Section 1.5(b) hereof. "Affiliate" means, as to any Person, any other Person which directly or indirectly controls, or is under common control with, or is controlled by, such Person. As used in this definition, "control" (including, with their correlative meanings, "controlled by" and "under common control with") means possession, directly or indirectly, of power to direct or cause the direction of management or policies of a Person (whether through ownership of securities or partnership or other ownership interests, by contract or otherwise), provided that, in any event for purposes of this definition: (i) any Person which owns directly or indirectly 5% or more of the securities having ordinary voting power for the election of directors or other governing body of a corporation or 5% or more of the partnership or other ownership interests of any other Person (other than as a limited partner of such other Person) will be deemed to control such corporation or other Person; and (ii) each director and executive officer of the Borrower or any Subsidiary shall be deemed an Affiliate of the Borrower and each Subsidiary. "Administrative Agent" means Harris Trust and Savings Bank and any successor pursuant to Section 10.7 hereof. "Alternative Currency" means any of Australian Dollars, Belgian Francs, Deutsche Marks, Dutch Guilders, Euros, Hong Kong Dollars, Japanese Yen, New Zealand Dollar, Pound Sterling, Spanish Pesetas, Canadian Dollars, French Francs, Italian Lira, and Swiss Francs, and any other currency approved by all the Banks, in each case for so long as such currency is readily available to all the Banks and is freely transferable and freely convertible to U.S. Dollars and the Dow Jones Telerate Service or Reuters monitor Money Rates Service (or any successor to either) reports a LIBOR for such currency for interest periods of one, two, three and six calendar months; provided that if any Bank provides written notice to the Borrower (with a copy to the Administrative Agent) that any currency control or other exchange regulations are imposed in the country in which any such Alternative Currency is issued and that in the reasonable opinion of such Bank funding a Loan in such currency is impractical, then such currency shall cease to be an Alternative Currency hereunder until such time as all the Banks reinstate such country's currency as an Alternative Currency. "Applicable Margin" means, (i) on any date, for any Domestic Rate Loan or Eurocurrency Loan advanced under the Revolving Credit, the rate per annum set forth below, as in effect on such date as determined pursuant to the provisions of the definition of Pricing Date provided that the Applicable Margin for Revolving Loans shall be based on Level V Status until the Pricing Date for the fiscal quarter ending December 31, 1999; provided further so long as any Term Loan remains outstanding the Applicable Margin shall not be reduced below Level IV Status: Level Eurocurrency Loans Domestic Rate Loans Level I Status 1.00% 0% Level II Status 1.25% 0% Level III Status 1.50% 0% Level IV Status 1.75% 0% Level V Status 2.25% 0.50% provided further that from and after the date the Borrower repays a portion of the Term Loans in an aggregate principal amount of at least $100,000,000 with the Net Cash Proceeds from the issuance of Subordinated Debt, the Applicable Margin for Level IV Status for Eurocurrency Loans shall be reduced by 0.15% per annum and Level V Status for both Eurocurrency Loans and Domestic Rate Loans shall be reduced by 0.25% per annum; and (ii) on any date, for any Domestic Rate Loan or Eurocurrency Loan advanced as a Term Loan, the rate per annum set forth below, as in effect on such date as determined pursuant to the provisions of the definition of Pricing Date; provided that the Applicable Margin for Term Loans shall be based on Level V Status until the Pricing Date for the fiscal quarter ending March 31, 2000: Level Eurocurrency Loans Domestic Rate Loans Level I Status 1.75% 0% Level II Status 1.75% 0% Level III Status 1.75% 0% Level IV Status 1.75% 0% Level V Status 2.25% 0.50% "Application" is defined in Section 1.4(b) hereof. "Authorized Representative" means those persons shown on the list of officers provided by the Borrower pursuant to Section 6.1(g) hereof, or on any updated such list provided by the Borrower to the Administrative Agent, or any further or different officer of the Borrower so named by any Authorized Representative of the Borrower in a written notice to the Administrative Agent. "Bank" is defined in the first paragraph of this Agreement and includes the Administrative Agent in its capacity as issuer of Letters of Credit and holder of L/C Obligations after giving effect to each Participating Bank's interest therein. "Borrower" means Jones Lang LaSalle Incorporated, a Maryland corporation. "Borrowing" means the total of Loans of a single type advanced, continued for an additional Interest Period, or converted from a different type into such type by the Banks on a single date and for a single Interest Period. Borrowings of Loans are made and maintained ratably from each of the Banks according to their Percentages. A Borrowing is "advanced" on the day Banks advance funds comprising such Borrowing to the Borrower, is "continued" on the day a new Interest Period for the same type of Loans commences for such Borrowing, and is "converted" on the day such Borrowing is changed from one type of Loan to the other, all as requested by the Borrower pursuant to Section 1.7(a). "Business Day" means any day other than a Saturday or Sunday on which Banks are not authorized or required to close in Chicago, Illinois and, if the applicable Business Day relates to the borrowing or payment of a Eurocurrency Loan, on which banks are dealing in U.S. Dollar deposits or the relevant Alternative Currency in the interbank market in London, England and, if the applicable Business Day relates to the borrowing or payment of a Eurocurrency Loan denominated in an Alternative Currency, on which banks and foreign exchange markets are open for business in the city where disbursements of or payments on such Loan are to be made and, if such Alternative Currency is the Euro or any national currency of a nation that is a member of the European Economic and Monetary Union, which is a TARGET Settlement Day. "Capital Lease" means at any date any lease of Property which, in accordance with GAAP, would be required to be capitalized on the balance sheet of the lessee. "Capitalized Lease Obligations" means, for any Person, the amount of such Person's liabilities under Capital Leases determined at any date in accordance with GAAP. "Change of Control" means at any time: (i) any Person becomes the beneficial owner of securities of the Borrower representing 30% or more of the then outstanding Voting Stock of the Borrower; or (ii) during any period of twenty-four consecutive months beginning after the date of this Agreement, individuals who at the beginning of such period constitute the Board of Directors of the Borrower (the "Board"), together with any new director (other than a director designated by a person who has entered into an agreement with the Borrower to effect a transaction described in clause (i) of this Change of Control definition) whose election or nomination for election was approved by a vote of at least two-thirds of the directors then still in office who either were directors at the beginning of the period or whose election or nomination for election was previously so approved, cease for any reason to constitute a majority of the Board. For purposes of the definition of Change of Control Event, "Person" shall have the meaning ascribed to such term in Section 3(a)(9) of the Exchange Act as supplemented by Section 13(d)(3) of the Exchange Act; provided, however, that Person shall not include (i) the Borrower or any Wholly-Owned Subsidiary, or (ii) any person who, as of the date of this Agreement, was the Beneficial Owner of securities of the Borrower representing 20% or more of the combined voting power. "Code" means the Internal Revenue Code of 1986, as amended. "Commitment Amount Increase Request" means a Commitment Amount Increase Request in the form of Exhibit E hereto. "Commitments" means the Revolving Credit Commitments, Term Loan Commitments, L/C Commitment and the Swingline Commitment. "Compliance Certificate" means a certificate in the form of Exhibit C hereto. "Consolidated Net Income" means, for any period, the net income (or net loss) of the Borrower and its Restricted Subsidiaries for such period computed on a consolidated basis in accordance with GAAP, but excluding any extraordinary profits or losses; provided that there shall be included in such determination for such period all such amounts attributable to any Person acquired pursuant to an Acquisition to the extent such Person is not subsequently sold or otherwise disposed of (other than in a transaction pursuant to which the business of such Person is retained by the Borrower or a Subsidiary of the Borrower) during such period for the portion of such period prior to such Acquisition. "Consolidated Net Worth" means, as of the date of any determination thereof, the amount reflected as stockholders' equity upon a consolidated balance sheet of the Borrower and its Restricted Subsidiaries for such date computed on a consolidated basis in accordance with GAAP. "Contractual Obligation" means, as to any Person, any provision of any security issued by such Person or of any agreement, instrument or undertaking to which such Person is a party or by which it or any of its Property is bound. "Controlled Group" means all members of a controlled group of corporations and all trades and businesses (whether or not incorporated) under common control that, together with the Borrower or any of its Subsidiaries, are treated as a single employer under Section 414 of the Code. "Credit Documents" means this Agreement, the Notes, the Applications, the Letters of Credit, each Subsidiary Guarantee Agreement delivered to the Administrative Agent pursuant to Section 7.1 hereof and any security agreement delivered pursuant to Section 7.25 hereof. "Credit Event" means the advancing of any Loan, the continuation of or conversion into a Eurocurrency Loan denominated in an Alternative Currency, or the issuance of, or extension of the expiration date or increase in the amount of, any Letter of Credit. "Default" means any event or condition the occurrence of which would, with the passage of time or the giving of notice, or both, constitute an Event of Default. "Disposition" means the sale, conveyance, or other disposition of Property, other than sales, conveyances or other dispositions in the ordinary course of business. "Domestic Rate" is defined in Section 1.5(a) hereof. "Domestic Rate Loan" means a Loan bearing interest prior to maturity at a rate specified in Section 1.5(a) hereof. "Domestic Subsidiary" shall mean any Subsidiary which is not a Foreign Subsidiary. "Effective Date" means the date hereof. "Environmental and Health Laws" means any and all federal, state, local and foreign statutes, laws, regulations, ordinances, judgments, permits and other governmental rules or restrictions relating to human health, safety (including without limitation occupational safety and health standards), or the environment or to emissions, discharges or releases of pollutants, contaminants, hazardous or toxic substances, wastes or any other controlled or regulated substance into the environment, including without limitation ambient air, surface water, ground water or land, or otherwise relating to the manufacture, processing, distribution, use, treatment, storage, disposal, transport or handling of pollutants, contaminants, hazardous or toxic substances, wastes or any other controlled or regulated substance or the clean-up or other remediation thereof. "ERISA" is defined in Section 5.8 hereof. "Eurocurrency Loan" means a Loan bearing interest prior to maturity at the rate specified in Section 1.5(b) hereof. "Eurocurrency Reserve Percentage" is defined in Section 1.5(b) hereof. "Event of Default" means any of the events or circumstances specified in Section 8.1 hereof. "Exchange Act" means the Securities Exchange Act of 1934, as amended. "Federal Funds Rate" means the fluctuating interest rate per annum described in part (x) of clause (ii) of the definition of Domestic Rate in Section 1.3(a) hereof. "Foreign Subsidiary" shall mean each Subsidiary of the Borrower which is organized under the laws of a jurisdiction other than the United States of America or any State thereof. "GAAP" means generally accepted accounting principles as in effect on the Effective Date, applied by the Borrower and its Subsidiaries on a basis consistent with the preparation of the Borrower's financial statements furnished to the Banks as described in Section 5.4 hereof. "Guarantor" means (i) Jones Lang LaSalle Americas, Inc., a Maryland corporation, LaSalle Investment Management, Inc., a Maryland corporation, Jones Lang LaSalle International, Inc., a Delaware corporation, LP International, a limited liability company, a Wyoming limited liability company, Jones Lang LaSalle Co-Investment, Inc., a Maryland corporation, LaSalle Hotel Advisors, Inc., a Maryland corporation, Jones Lang Wootton USA, Inc. a Delaware corporation and (ii) any other Subsidiary of the Borrower designated by the Borrower as a Guarantor as required by Section 7.25 hereof. "Guaranty" by any Person means all obligations (other than endorsements in the ordinary course of business of negotiable instruments for deposit or collection) of such Person guaranteeing or in effect guaranteeing any Indebtedness, dividend or other financial obligation (including, without limitation, limited or full recourse obligations in connection with sales of receivables or any other Property) of any other Person (the "primary obligor") in any manner, whether directly or indirectly, including, without limitation, all obligations incurred through an agreement, contingent or otherwise, by such Person: (i) to purchase such Indebtedness or obligation or any Property or assets constituting security therefor, (ii) to advance or supply funds (x) for the purchase or payment of such Indebtedness or obligation, or (y) to maintain working capital or other balance sheet condition, or otherwise to advance or make available funds for the purchase or payment of such Indebtedness or obligation, or (iii) to lease property or to purchase Securities or other property or services primarily for the purpose of assuring the owner of such Indebtedness or obligation of the ability of the primary obligor to make payment of the Indebtedness or obligation, or (iv) otherwise to assure the owner of the Indebtedness or obligation of the primary obligor against loss in respect thereof. For the purpose of all computations made under this Agreement, the amount of a Guaranty in respect of any obligation shall be deemed to be equal to the maximum aggregate amount of such obligation at the time the amount of the Guaranty is being determined or, if the Guaranty is limited to less than the full amount of such obligation, the maximum aggregate potential liability under the terms of the Guaranty at the time the amount of the Guaranty is being determined. "Harris Bank" means Harris Trust and Savings Bank, in its individual capacity. "Hazardous Material" means any substance or material which is hazardous or toxic, and includes, without limitation, (a) asbestos, polychlorinated biphenyls, dioxins and petroleum or its by-products or derivatives (including crude oil or any fraction thereof) and (b) any other material or substance classified or regulated as "hazardous" or "toxic" pursuant to any Environmental and Health Law. "Indebtedness" means for any Person, (i) obligations of such Person for borrowed money, (ii) obligations of such Person representing the deferred purchase price of property or services other than accounts payable arising in the ordinary course of business on terms customary in the trade, (iii) obligations of such Person evidenced by notes, acceptances, or other instruments of such Person or pursuant to letters of credit issued for such Person's account, (iv) obligations, whether or not assumed, secured by Liens or payable out of the proceeds or production from Property now or hereafter owned or acquired by such Person, (v) Capitalized Lease Obligations of such Person and (vi) obligations for which such Person is obligated pursuant to a Guaranty. "Interest Coverage Ratio" means as of the last day of any calendar quarter the ratio of ADJUSTED EBIT for the four calendar quarters then ended to Interest Expense for the same four calendar quarters then ended. "Interest Expense" means, for any period, the sum of all interest charges of the Borrower and its Restricted Subsidiaries for such period determined on a consolidated basis in accordance with GAAP. "Interest Period" is defined in Section 1.8 hereof. "Investment" is defined in Section 7.14 hereof. "JLW Acquisition" means the transactions contemplated by the Purchase and Sale Agreements, dated as of October 21, 1998 (the "JLW Purchase Agreements") providing for the acquisition by Borrower and its Subsidiaries of the entities conducting business worldwide under the name Jones Lang Wootton (collectively, "JLW"). "L/C Commitment" means $30,000,000, as reduced pursuant to the terms hereof. "L/C Documents" means the Letters of Credit, any draft or other document presented in connection with a drawing thereunder, the Applications and this Agreement. "L/C Obligations" means the aggregate undrawn face amounts of all outstanding Letters of Credit and all unpaid Reimbursement Obligations. "Lending Office" is defined in Section 9.4 hereof. "Letter of Credit" is defined in Section 1.4(a) hereof. "Level I Status" exists at any date if, at such date, the Total Funded Debt to Adjusted EBITDA Ratio is less than 2.00 to 1.0. "Level II Status" exists at any date if, at such date, Level I Status does not exist and the Total Funded Debt to Adjusted EBITDA Ratio is less than 2.50 to 1.0. "Level III Status" exists at any date if, at such date, neither Level I nor Level II Status exists and the Total Funded Debt to Adjusted EBITDA Ratio is less than 3.00 to 1.0. "Level IV Status" exists at any date if, at such date, neither Level I nor Level II nor Level III Status exists and the Total Funded Debt to Adjusted EBITDA Ratio is less than 3.50 to 1.0. "Level V Status" exists at any date if, at such date, neither Level I Status, Level II Status, Level III Status nor Level IV Status exists. "LIBOR" is defined in Section 1.5(b) hereof. "Lien" means any interest in Property securing an obligation owed to a Person other than the owner of the Property, whether such interest is based on the common law, statute or contract, including, but not limited to, the security interest lien arising from a mortgage, encumbrance, pledge, conditional sale, security agreement or trust receipt, or a lease, consignment or bailment for security purposes. The term "Lien" shall also include survey exceptions or encumbrances, easements or reservations, or rights of others for rights-of-way, utilities and other similar purposes, or zoning or other restrictions as to the use of real properties. For the purposes of this definition, a Person shall be deemed to be the owner of any Property which it has acquired or holds subject to a conditional sale agreement, Capital Lease or other arrangement pursuant to which title to the Property has been retained by or vested in some other Person for security purposes, and such retention of title shall constitute a "Lien." "Liquidity Ratio" means, as of the last day of any calendar quarter, the ratio of Adjusted EBITDA for the four calendar quarters then ended to, for the same calendar quarters, the sum, for the Borrower and its Restricted Subsidiaries, of (i) Interest Expense, (ii) capital expenditures (as defined in GAAP), (iii) the component of the purchase price of any Acquisition paid by cash, including the aggregate principal amount of all liabilities assumed in connection with any such Acquisition, (iv) federal, state and local taxes actually paid, (v) that portion of Indebtedness of the Borrower or any of its Restricted Subsidiaries which is due and payable, (vi) the aggregate amount of cash dividends and other cash distributions on the capital stock of the Borrower including stock repurchases for cash and (vii) the aggregate principal amount of all Investments not constituting Acquisitions reduced by the amount of proceeds of the disposition of all or any part of any Investment not constituting an Acquisition received by the Borrower or any Restricted Subsidiary. "Loan" means a Domestic Rate Loan or Eurocurrency Loan, each of which is a "type" of Loan hereunder, outstanding as a Revolving Loan, Term Loan or Swingline Loan, as applicable. "Material Adverse Effect" means a material and adverse effect on the business, operations, Property or financial or other condition of the Borrower and its Subsidiaries, taken as a whole. "Net Cash Proceeds" means, as applicable, (a) with respect to any Disposition by a Person, cash and cash equivalent proceeds received by or for such Person's account, net of (i) reasonable direct costs relating to such Disposition and (ii) income, sale, use or other taxes paid or payable by such Person as a direct result of such Disposition and (b) with respect to any offering of equity securities of a Person or the issuance of any indebtedness for borrowed money by a Person, cash and cash equivalent proceeds received by or for such Person's account, net of reasonable legal, underwriting, printing and other fees and expenses incurred as a direct result thereof. "Non-Real Estate Restricted Subsidiary" means a Restricted Subsidiary which is not established solely for the purpose of making investments in real estate and real estate related assets, including notes and other securities, as permitted under Section 7.14(j) or Section 7.14(k) hereof. "Note" means any Revolving Note or Term Note. "Obligations" means all fees payable hereunder, all obligations of the Borrower to pay principal or interest on Loans and L/C Obligations, and all other payment obligations of the Borrower arising under or in relation to any Credit Document. "Original Dollar Amount" means the amount of any Obligation denominated in U.S. Dollars and, in relation to any Loan denominated in an Alternative Currency, the U.S. Dollar Equivalent of such Loan on the day it is advanced or continued for an Interest Period. "Participating Bank" is defined in Section 1.4(d) hereof. "Participating Interest" is defined in Section 1.4(d) hereof. "Percentage" means, for each Bank, the percentage of the Revolving Credit Commitments represented by such Bank's Revolving Credit Commitment or, if the Revolving Credit Commitments have been terminated, the percentage held by such Bank (including through participation interests in L/C Obligations and Swingline Loans) of the aggregate principal amount of all outstanding Obligations. "Person" means an individual, partnership, corporation, association, trust, unincorporated organization or any other entity or organization, including a government or any agency or political subdivision thereof. "Plan" means at any time an employee pension benefit plan covered by Title IV of ERISA or subject to the minimum funding standards under Section 412 of the Code that is either (i) maintained by a member of the Controlled Group or (ii) maintained pursuant to a collective bargaining agreement or any other arrangement under which more than one employer makes contributions and to which a member of the Controlled Group is then making or accruing an obligation to make contributions or has within the preceding five plan years made contributions. "PBGC" is defined in Section 5.8 hereof. "Pricing Date" means, for any fiscal quarter of the Borrower ended after the date hereof, the latest date by which the Borrower is required to deliver a Compliance Certificate for such fiscal quarter pursuant to Section 7.6(b). The Applicable Margin and Commitment Fee established on a Pricing Date shall remain in effect until the next Pricing Date. If the Borrower has not delivered a Compliance Certificate by the date such Compliance Certificate is required to be delivered under Section 7.6(b), Level V Status shall be deemed to exist from such required delivery date until a Compliance Certificate is delivered before the next Pricing Date. If the Borrower subsequently delivers such a Compliance Certificate before the next Pricing Date, the Applicable Margin and Commitment Fee established by such late delivered Compliance Certificate shall take effect from the date of delivery until the next Pricing Date. In all other circumstances, the Applicable Margin and Commitment Fee established by a Compliance Certificate shall be in effect from the Pricing Date that occurs immediately after the end of the Borrower's fiscal quarter covered by such Compliance Certificate until the next Pricing Date. "Property" means any interest in any kind of property or asset, whether real, personal or mixed, or tangible or intangible, whether now owned or hereafter acquired. "Reimbursement Obligation" is defined in Section 1.3(c) hereof. "Required Banks" means, as of the date of determination thereof, Banks whose outstanding Loans and interest in Letters of Credit and Unused Commitments constitute more than 51% of the sum of the total outstanding Loans, interests in Letters of Credit, and Unused Commitments of the Banks. "Restricted Subsidiary" means any Subsidiary of the Borrower other than an Unrestricted Subsidiary. "Revolving Credit" means the credit facility for making Revolving Loans and Swingline Loans and issuing Letters of Credit described in Sections 1.1, 1.3 and 1.4 hereof. "Revolving Credit Commitment" means, as to any Bank, the obligation of such Bank to make Revolving Loans and to participate in Letters of Credit issued for the account of the Borrower hereunder in an aggregate principal or face amount at any one time outstanding not to exceed the amount set forth opposite such Bank's name under the heading "Revolving Credit Commitment" on Schedule 1 attached hereto and made a part hereof, as the same may be reduced or modified at any time or from time to time pursuant to the terms hereof. "Revolving Credit Termination Date" means October 15, 2002. "Revolving Loan" is defined in Section 1.1 hereof and, as so defined, includes a Domestic Rate Loan or Eurocurrency Loan. "Revolving Note" means any promissory note issued at the request of a Bank pursuant to Section 1.12 in the form of Exhibit A-1 evidencing such Bank's Revolving Loans. "SEC" means the Securities and Exchange Commission. "Security" has the same meaning as in Section 2(l) of the Securities Act of 1933, as amended. "Set-Off" is defined in Section 11.7 hereof. "Subordinated Indebtedness" means any Indebtedness which is subordinated in right of payment to the prior payment of the Loans and other Obligations, in a principal amount and pursuant to documentation, containing interest rates, payment terms, maturities, amortization schedules, covenants, defaults, remedies and other material terms in form and substance satisfactory to the Banks. "Subsidiary" means, as to the Borrower, a corporation, partnership or other entity that, under GAAP, is included in the consolidated financial statements of the Borrower. "Subsidiary Guarantee Agreement" means a letter to the Administrative Agent in the form of Exhibit D hereto executed by a Subsidiary whereby it acknowledges it is party hereto as a Guarantor under Section 11 hereof. "Swingline Commitment" means $5,000,000 as the same may be reduced from time to time pursuant to Section 1.14 hereof. "Swingline Loan" is defined in Section 1.3 hereof. TARGET Settlement Day" means any day on which the Trans-European Automated Real-Time Gross Settlement Express Transfer (TARGET) System is open. "Term Loan" is defined in Section 1.2 hereof. "Term Loan Commitment" means, as to any Bank, the obligation of such Bank to make its Term Loan in the principal amount not to exceed the amount set forth opposite such Bank's name under the heading "Term Loan Commitment" on Schedule 1 attached hereto and made a part hereof or in the applicable Commitment Amount Increase Request. "Term Loan Maturity Date" means October 15, 2000. "Term Note" means any promissory note issued at the request of a Bank pursuant to Section 1.12 in the form of Exhibit A-2 evidencing such Bank's Term Loan. "Total Funded Debt" means, at any time the same is to be determined, the aggregate of all Indebtedness of the Borrower and its Restricted Subsidiaries determined without duplication on a consolidated basis. "Total Senior Funded Debt" means, at any time the same is to be determined, Total Funded Debt minus the principal balance of Subordinated Indebtedness then outstanding. "Unfunded Vested Liabilities" means, with respect to any Plan at any time, the amount (if any) by which (i) the present value of all vested nonforfeitable accrued benefits under such Plan exceeds (ii) the fair market value of all Plan assets allocable to such benefits, all determined as of the then most recent valuation date for such Plan, but only to the extent that such excess represents a potential liability of a member of the Controlled Group to the PBGC or the Plan under Title IV of ERISA. "Unrestricted Subsidiary" means any Subsidiary of the Borrower (other than a Guarantor) which (i) is established for the sole purpose of investing in real estate and real estate related assets including notes and other securities and (ii) is designated by the Borrower (with prior written notice to the Administrative Agent) to be an Unrestricted Subsidiary; provided that no Subsidiary may be an Unrestricted Subsidiary for more than 180 days. "Unused Commitments" means, at any time, the difference between the Revolving Credit Commitments then in effect and the aggregate outstanding principal amount of Revolving Loans and L/C Obligations. "U.S. Dollars" and "$" each means the lawful currency of the United States of America. "U.S. Dollar Equivalent" means the amount of U.S. Dollars which would be realized by converting an Alternative Currency into U.S. Dollars at the exchange rate quoted to the Administrative Agent, at approximately 11:00 a.m. (London time) three Business Days prior to the date on which a computation thereof is required to be made, by major banks in the interbank foreign exchange market for the purchase of U.S. Dollars for such Alternative Currency. "Voting Stock" of any Person means capital stock of any class or classes or other equity interests (however designated) having ordinary voting power for the election of directors or similar governing body of such Person, other than stock or other equity interests having such power only by reason of the happening of a contingency. "Welfare Plan" means a "welfare plan", as defined in Section 3(1) of ERISA. "Wholly-Owned" when used in connection with any Subsidiary of the Borrower means a Subsidiary of which all of the issued and outstanding shares of stock or other equity interests (other than directors' qualifying shares as required by law) shall be owned by the Borrower and/or one or more of its Wholly-Owned Subsidiaries. SECTION 4.2. INTERPRETATION. The foregoing definitions shall be equally applicable to both the singular and plural forms of the terms defined. All references to times of day in this Agreement shall be references to Chicago, Illinois time unless otherwise specifically provided. Where the character or amount of any asset or liability or item of income or expense is required to be determined or any consolidation or other accounting computation is required to be made for the purposes of this Agreement, the same shall be done in accordance with GAAP, to the extent applicable, except where such principles are inconsistent with the specific provisions of this Agreement. SECTION 5. REPRESENTATIONS AND WARRANTIES. The Borrower hereby represents and warrants to each Bank as to itself and, where the following representations and warranties apply to Subsidiaries, as to each of its Subsidiaries, as follows: SECTION 5.1. CORPORATE ORGANIZATION AND AUTHORITY. The Borrower is duly organized and existing in good standing under the laws of the State of Maryland; has all necessary corporate power to carry on its present business; and is duly licensed or qualified and in good standing in each jurisdiction in which the nature of the business transacted by it or the nature of the Property owned or leased by it makes such licensing, qualification or good standing necessary and in which the failure to be so licensed, qualified or in good standing would reasonably be expected to have a Material Adverse Effect. SECTION 5.2. SUBSIDIARIES. Schedule 5.2 (as updated from time to time pursuant to Section 7.1) hereto identifies each Guarantor, the jurisdiction of its organization, the percentage of issued and outstanding shares of each class of its capital stock or equity interests, as the case may be, owned by the Borrower and the Subsidiaries and, if such percentage is not 100% (excluding directors' qualifying shares as required by law), a description of each class of its authorized capital stock and other equity interests and the number of shares of each class issued and outstanding. Except to the extent that would not reasonably be expected to have a Material Adverse Effect, each Subsidiary is duly incorporated or formed and existing in good standing as a corporation, limited partnership, limited liability company or other entity under the laws of the jurisdiction of its incorporation or formation, has all necessary corporate or other power to carry on its present business, and is duly licensed or qualified and in good standing in each jurisdiction in which the nature of the business transacted by it or the nature of the Property owned or leased by it makes such licensing or qualification necessary. All of the issued and outstanding shares of capital stock and other equity interests of each Subsidiary are validly issued and outstanding and fully paid and, if such Subsidiary is a corporation, nonassessable except as set forth on Schedule 5.2 hereto. All such shares owned by the Borrower are owned beneficially, and of record, free of any Lien. As of the Effective Date, each direct Domestic Subsidiary of the Borrower is a Guarantor. SECTION 5.3. CORPORATE AUTHORITY AND VALIDITY OF OBLIGATIONS. The Borrower has full power and authority to enter into this Agreement and the other Credit Documents to which it is a party, to make the borrowings herein provided for, to issue its Notes in evidence thereof, to apply for the issuance of the Letters of Credit, and to perform all of its obligations under the Credit Documents to which it is a party. Each Guarantor has full power and authority to enter into this Agreement as a signatory hereto or pursuant to a Subsidiary Guarantee Agreement and to perform all of its obligations hereunder. Each Credit Document to which the Borrower is a party has been duly authorized, executed and delivered by the Borrower and constitutes valid and binding obligations of the Borrower in accordance with its terms. Each Credit Document to which a Guarantor is a party has been duly authorized, executed and delivered by such Guarantor and constitutes valid and binding obligations of such Guarantor in accordance with its terms. No Credit Document to which the Borrower is a party, nor the performance or observance by the Borrower of any of the matters or things therein provided for, contravenes any provision of law or any charter or by-law provision of the Borrower or (individually or in the aggregate) any material Contractual Obligation of or binding upon the Borrower or any of its Properties or results in or requires the creation or imposition of any Lien on any of the Properties or revenues of the Borrower. No Credit Document to which a Guarantor is a party, nor the performance or observance by such Guarantor of any of the matters or things therein provided for, contravenes any provision of law or any charter or by-law provision of such Guarantor or (individually or in the aggregate) any material Contractual Obligation of or binding upon such Guarantor or any of its Properties or results in or requires the creation or imposition of any Lien on any of the Properties or revenues of such Guarantor. SECTION 5.4. FINANCIAL STATEMENTS. All financial statements heretofore delivered to the Banks showing historical performance for each of the Borrower's fiscal years ending on or before December 31, 1998, have been prepared in accordance with GAAP applied on a basis consistent, except as otherwise noted therein, with that of the previous fiscal year. Each of such financial statements fairly presents on a consolidated basis the financial condition of the Borrower and its Subsidiaries as of the dates thereof and the results of operations for the periods covered thereby. The Borrower and its Subsidiaries had, as of the date of the relevant financial statements no material contingent liabilities other than those disclosed in such financial statements referred to in this Section 5.4 or in comments or footnotes thereto, or in any report supplementary thereto, heretofore furnished to the Banks. The unaudited interim consolidated balance sheet of the Borrower and its Subsidiaries as at June 30, 1999, and the related consolidated statements of income, retained earnings and cash flows of the Borrower and its Subsidiaries for the six (6) months then ended, heretofore furnished to the Banks, fairly present the consolidated financial condition of the Borrower and its Subsidiaries as at said date and the consolidated results of their operations and cash flows for the periods then ended in conformity with GAAP applied on a consistent basis. Neither the Borrower nor any Subsidiary has contingent liabilities which are material to it other than as indicated on such financial statements or, with respect to future periods, on the financial statements furnished pursuant to Section 7.6 hereof. Since June 30, 1999, there has been no material adverse change which has not been disclosed to the Banks in the business, operations, Property or financial or other condition, or business prospects, of the Borrower and its Subsidiaries on a consolidated basis. SECTION 5.5. NO LITIGATION; NO LABOR CONTROVERSIES. (a) There is no litigation or governmental proceeding pending, or to the knowledge of the Borrower or any Guarantor threatened, against the Borrower or any Subsidiary which, if adversely determined, would reasonably be expected (individually or in the aggregate) to have a Material Adverse Effect. (b) There are no labor controversies pending or, to the best knowledge of the Borrower or any Guarantor, threatened against the Borrower or any Subsidiary which would reasonably be expected (insofar as the Borrower may reasonably foresee) to have a Material Adverse Effect. SECTION 5.6. TAXES. The Borrower and its Subsidiaries have filed all United States federal tax returns, and all other tax returns, required to be filed and have paid all taxes due pursuant to such returns or pursuant to any assessment received by the Borrower or any Subsidiary, except such taxes, if any, as are being contested in good faith and for which adequate reserves have been provided. No notices of tax liens have been filed and no claims are being asserted concerning any such taxes, which liens or claims are material to the financial condition of the Borrower and its Subsidiaries on a consolidated basis taken as a whole. The charges, accruals and reserves on the books of the Borrower and its Subsidiaries for any taxes or other governmental charges are adequate. SECTION 5.7. APPROVALS. No authorization, consent, license, exemption, filing or registration with any court or governmental department, agency or instrumentality, nor any approval or consent of the stockholders of the Borrower or any Subsidiary or from any other Person, is necessary to the valid execution, delivery or performance by the Borrower or any Subsidiary of any Credit Document to which it is a party except for such approvals and consents which have been obtained and are in full force and effect. SECTION 5.8. ERISA. With respect to each Plan, the Borrower and each other member of the Controlled Group has fulfilled its obligations under the minimum funding standards of and is in compliance in all material respects with the Employee Retirement Income Security Act of 1974, as amended ("ERISA"), and with the Code to the extent applicable to it and has not incurred any liability to the Pension Benefit Guaranty Corporation ("PBGC") or a Plan under Title IV of ERISA other than a liability to the PBGC for premiums under Section 4007 of ERISA. Neither the Borrower nor any Subsidiary has any contingent liabilities for any post-retirement benefits under a Welfare Plan, other than liability for continuation coverage described in Part 6 of Title I of ERISA. SECTION 5.9. GOVERNMENT REGULATION. Neither the Borrower nor any Subsidiary is an "investment company" within the meaning of the Investment Company Act of 1940, as amended, or to the extent a Subsidiary is an "investment company," it is properly registered with the SEC. SECTION 5.10. MARGIN STOCK. Neither the Borrower nor any Subsidiary is engaged principally, or as one of its primary activities, in the business of extending credit for the purpose of purchasing or carrying margin stock ("margin stock" to have the same meaning herein as in Regulation U of the Board of Governors of the Federal Reserve System). The Borrower will not use the proceeds of any Loan or Letter of Credit in a manner that violates any provision of Regulation U or X of the Board of Governors of the Federal Reserve System. SECTION 5.11. LICENSES AND AUTHORIZATIONS; COMPLIANCE WITH ENVIRONMENTAL AND HEALTH LAWS. (a) The Borrower and each of its Subsidiaries has all necessary licenses, permits and governmental authorizations to own and operate its Properties and to carry on its business as currently conducted and contemplated, except to the extent the failure to have such licenses, permits or authorizations would not reasonably be expected to have a Material Adverse Effect. (b) To the best of the Borrower's and each Guarantor's knowledge, the business and operations of the Borrower and each Subsidiary comply in all respects with all applicable Environmental and Health Laws, except where the failure to so comply would not (individually or in the aggregate) reasonably be expected to have a Material Adverse Effect. (c) Neither the Borrower nor any Subsidiary has given, nor is it required to give, nor has it received, any notice, letter, citation, order, warning, complaint, inquiry, claim or demand to or from any governmental entity or in connection with any court proceeding with respect to a matter which would reasonably be expected to have a Material Adverse Effect claiming that: (i) the Borrower or any Subsidiary has violated, or is about to violate, any Environmental and Health Law; (ii) there has been a release, or there is a threat of release, of Hazardous Materials from the Borrower's or any Subsidiary's Property, facilities, equipment or vehicles; (iii) the Borrower or any Subsidiary may be or is liable, in whole or in part, for the costs of cleaning up, remediating or responding to a release of Hazardous Materials; or (iv) any of the Borrower's or any Subsidiary's property or assets are subject to a Lien in favor of any governmental entity for any liability, costs or damages, under any Environmental and Health Law arising from, or costs incurred by such governmental entity in response to, a release of a Hazardous Materials. SECTION 5.12. OWNERSHIP OF PROPERTY; LIENS. The Borrower and each Subsidiary has good record and marketable title in fee simple to, or valid leasehold interests in, all real property owned or leased by it, and good title to or valid leasehold interests in all its other Property. None of the Borrower's real property is subject to any Lien or Capitalized Lease Obligation except as permitted in Section 7.9, and none of the Borrower's or any Restricted Subsidiary's other Property is subject to any Lien, except as permitted in Section 7.9. SECTION 5.13. NO BURDENSOME RESTRICTIONS; COMPLIANCE WITH AGREEMENTS. Neither the Borrower nor any Subsidiary is (a) party or subject to any law, regulation, rule or order, or any Contractual Obligation that (individually or in the aggregate) would reasonably be expected to have a Material Adverse Effect or (b) in default in the performance, observance or fulfillment of any of the obligations, covenants or conditions contained in any agreement to which it is a party, which default would reasonably be expected to have a Material Adverse Effect. SECTION 5.14. ACCURACY OF INFORMATION. No information, exhibit or report furnished by the Borrower to any Bank or the Administrative Agent in connection with a Loan or Letter of Credit or the negotiation of the Credit Documents contained any material misstatement of fact or omitted to state any fact necessary to make the statements contained therein not misleading. SECTION 6. CONDITIONS PRECEDENT. The obligation of each Bank to advance, continue, or convert any Loan, or of the Administrative Agent to issue, extend the expiration date (including by not giving notice of non-renewal) of or increase the amount of any Letter of Credit, shall be subject to the following conditions precedent: SECTION 6.1. INITIAL CREDIT EVENT. Before or concurrently with the first Credit Event: (a) The Administrative Agent shall have received for each Bank the favorable written opinion of Hagan & Associates, counsel to the Borrower and Guarantors substantially in the form of Exhibit C hereto; (b) The Administrative Agent shall have received for each Bank copies of (i) the Certificate of Incorporation, together with all amendments, and a certificate of good standing, for the Borrower, both certified as of a date not earlier than 20 days prior to the date hereof by the appropriate governmental officer of the Borrower's jurisdiction of incorporation and (ii) the Borrower's bylaws and any amendments thereto, certified in each instance by its secretary or an assistant secretary; (c) The Administrative Agent shall have received copies of the partnership agreements of each Guarantor that is a partnership, certified by a general partner or other duly authorized officer thereof to be a true, correct and complete copy thereof; (d) The Administrative Agent shall have received copies of the Certificate of Incorporation and bylaws of each Guarantor that is a corporation, certified in each instance by its secretary or an assistant secretary; (e) The Administrative Agent shall have received copies, certified by the secretary or assistant secretary of each Guarantor that is a corporation, and of each corporate general partner in the case of each Guarantor that is a partnership having a corporation as its general partner, of its board of directors' resolutions authorizing the execution of the Credit Documents; (f) The Administrative Agent shall have received certificates, executed by a general partner of each Guarantor that is a partnership, and by the secretary or assistant secretary of each Guarantor that is a corporation, and of each corporate general partner in the case of each Guarantor that is a partnership having a corporation as its general partner, which shall identify by name and title and bear the signature of the partners or officers authorized to sign the Credit Documents; (g) The Administrative Agent shall have received to the extent requested by any Bank, such Bank's duly executed Note of the Borrower dated the date hereof and otherwise in compliance with the provisions of Section 1.12(d) hereof; (h) The Administrative Agent shall have received for each Bank a list of the Borrower's Authorized Representatives; (i) All legal matters incident to the execution and delivery of the Credit Documents shall be satisfactory to the Banks; (j) The $175,000,000 Credit Agreement dated as of September 21, 1998 among Jones Lang LaSalle, Incorporated, the Guarantors party thereto, the Lenders party thereto and Bank One, NA, as Administrative Agent, as amended, shall have been terminated and all amounts payable thereunder shall have been paid or shall be paid with the proceeds of such initial Credit Event; and (k) The $45,000,000 Credit Agreement dated as of May 4, 1999 among Jones Lang LaSalle Incorporated, the Banks party thereto and Harris Trust and Savings Bank, as Administrative Agent, as amended, shall have been terminated and all amounts payable thereunder shall have been paid or shall be paid with the proceeds of such initial Credit Event. SECTION 6.2. ALL CREDIT EVENTS. As of the time of each Credit Event hereunder: (a) In the case of a Borrowing, the Administrative Agent shall have received the notice required by Section 1.7 hereof (or, in the case of Swingline Loans, Section 1.3 hereof), in the case of the issuance of any Letter of Credit the Administrative Agent shall have received a duly completed Application for a Letter of Credit and, in the case of an extension or increase in the amount of a Letter of Credit, a written request therefor, in a form acceptable to the Administrative Agent; (b) In the case of (i) a Borrowing of Loans that would increase the aggregate principal amount of Loans outstanding (after giving effect to concurrent repayment of Loans), (ii) a Borrowing of Eurocurrency Loans denominated in an Alternative Currency or (iii) the increase in or issuance of a Letter of Credit, each of the representations and warranties set forth in Section 5 hereof shall be and remain true and correct in all material respects as of said time, except that if any such representation or warranty relates solely to an earlier date it need only remain true as of such date, taking into account any amendments to such Section (including, without limitation, any amendments to the Schedules referenced therein) made after the date of this Agreement in accordance with the provision hereof; (c) In the case of (i) a Borrowing of Loans that would increase the aggregate principal amount of Loans outstanding (after giving effect to concurrent repayment of Loans), (ii) a Borrowing of Eurocurrency Loans denominated in an Alternative Currency or (iii) the increase in or issuance of a Letter of Credit, no Default or Event of Default shall have occurred and be continuing or would occur as a result of such Credit Event; and (d) Such Credit Event shall not violate any order, judgment or decree of any court or other authority or any provision of law or regulation applicable to any Bank (including, without limitation, Regulation U of the Board of Governors of the Federal Reserve System). Each request for a Borrowing hereunder and each request for the issuance of, increase in the amount of, or extension of the expiration date of, a Letter of Credit shall be deemed to be a representation and warranty by the Borrower on the date of such Credit Event as to the facts specified in paragraphs (b) and (c) of this Section 6.2. SECTION 7. COVENANTS. The Borrower covenants and agrees that, so long as any Note or any L/C Obligation is outstanding hereunder, or any Commitment is available to or in use by the Borrower hereunder, except to the extent compliance in any case is waived in writing by the Required Banks: SECTION 7.1. CORPORATE EXISTENCE; SUBSIDIARIES. The Borrower shall, and shall cause each of its Restricted Subsidiaries to, preserve and maintain its existence, subject to the provisions of Section 7.12 hereof. SECTION 7.2. MAINTENANCE. The Borrower will maintain, preserve and keep its Property, necessary to the proper conduct of its business in reasonably good repair, working order and condition and will from time to time make all reasonably necessary repairs, renewals, replacements, additions and betterments thereto so that at all times such plants, properties and equipment shall be reasonably preserved and maintained, and the Borrower will cause each of its Subsidiaries to do so in respect of Property owned or used by it; provided, however, that nothing in this Section 7.2 shall prevent the Borrower or a Subsidiary from discontinuing the operation or maintenance of any such Properties if such discontinuance would not reasonably be expected to have a Material Adverse Effect. SECTION 7.3. TAXES. The Borrower will duly pay and discharge, and will cause each of its Subsidiaries duly to pay and discharge, all taxes, assessments, and governmental charges or levies upon or against it or against its Properties, in each case before the same becomes delinquent and before penalties accrue thereon, unless and to the extent that the same is being contested in good faith by appropriate proceedings and reserves in conformity with GAAP have been provided therefor on the books of the Borrower. SECTION 7.4. ERISA. The Borrower will, and will cause each of its Subsidiaries to, promptly pay and discharge all obligations and liabilities arising under ERISA of a character which if unpaid or unperformed might result in the imposition of a Lien against any of its properties or assets and will promptly notify the Administrative Agent of (i) the occurrence of any reportable event (as defined in ERISA) affecting a Plan, other than any such event of which the PBGC has waived notice by regulation, (ii) receipt of any notice from PBGC of its intention to seek termination of any Plan or appointment of a trustee therefor, (iii) its or any of its Subsidiaries' intention to terminate or withdraw from any Plan, and (iv) the occurrence of any event affecting any Plan which could result in the incurrence by the Borrower or any of its Subsidiaries of any material liability, fine or penalty, or any material increase in the contingent liability of the Borrower or any of its Subsidiaries under any post-retirement Welfare Plan benefit. The Administrative Agent will promptly distribute to each Bank any notice it receives from the Borrower pursuant to this Section 7.4. SECTION 7.5. INSURANCE. The Borrower will maintain, and will cause each of its Subsidiaries to maintain, insurance with good and responsible insurance companies, covering insurable Property owned by it with respect to such risks as is consistent with sound business practice. The Borrower will upon request of any Bank furnish to such Bank a summary setting forth the nature and extent of the insurance maintained pursuant to this Section 7.5. SECTION 7.6. FINANCIAL REPORTS AND OTHER INFORMATION. (a) The Borrower will maintain a system of accounting in accordance with GAAP and will furnish to the Banks and their respective duly authorized representatives such information respecting the business and financial condition of the Borrower and its Subsidiaries as any Bank may reasonably request; and without any request, the Borrower will furnish each of the following to each Bank: (i) within 60 days after the end of each of the first three quarterly fiscal periods of the Borrower, a copy of the Borrower's Form 10-Q Report filed with the SEC; (ii) within 120 days after the end of each fiscal year of the Borrower, a copy of the Borrower's Form 10-K Report filed with the SEC, prepared by the Borrower and containing or including as an exhibit thereto the Borrower's financial statements for such fiscal year as certified by independent public accountants of recognized national standing selected by the Borrower in accordance with GAAP with such accountants' unqualified opinion to the effect that the financial statements have been prepared in accordance with GAAP and present fairly in all material respects in accordance with GAAP the consolidated financial position of the Company and its Subsidiaries as of the close of such fiscal year and the results of their operations and cash flows for the fiscal year then ended and that an examination of such accounts in connection with such financial statements has been made in accordance with generally accepted auditing standards and, accordingly, such examination included such tests of the accounting records and such other auditing procedures as were considered necessary in the circumstances; (iii) within the period provided in subsection (ii) above, the written statement of the accountants who certified the audit report thereby required that in the course of their audit they have obtained no knowledge of any Default or Event of Default with respect to Sections 7.11, 7.15, 7.16, 7.17, 7.18, 7.19 and 7.20 or, if such accountants have obtained knowledge of any such Default or Event of Default, they shall disclose in such statement the nature and period of the existence thereof; (iv) promptly after the sending or filing thereof, copies of all proxy statements, financial statements and reports the Borrower sends to its shareholders, and copies of all other regular, periodic and special reports and all registration statements the Borrower files with the SEC or any successor thereto, or with any national securities exchanges; and (v) within 30 days of the beginning of each fiscal year of the Borrower an operating budget for the Borrower and its Subsidiaries for such fiscal year of the Borrower. (b) Each financial statement furnished to the Banks pursuant to subsection (i) or (ii) of this Section 7.6 shall be accompanied by a Compliance Certificate in the form of Exhibit B hereto signed by the Borrower's chief financial officer, treasurer or controller showing the Borrower's compliance with the covenants set forth in Sections 7.14(k), 7.15, 7.16, 7.17, 7.18, 7.19 and 7.20 hereof. (c) The Borrower will promptly (and in any event within three Business Days after any of the President, chief executive officer, chief financial officer, chief operating officer, treasurer, assistant treasurer, or controller of the Borrower has knowledge thereof) give notice to the Administrative Agent: (i) of the occurrence of any Change of Control, Default or Event of Default; (ii) of any default or event of default under any Contractual Obligation of the Borrower or any of its Subsidiaries, except for a default or event of default which is not reasonably expected to have a Material Adverse Effect; (iii) of the occurrence of an event or condition which would reasonably be expected to result in a Material Adverse Effect; and (iv) of any litigation or governmental proceeding of the type described in Section 5.5 hereof. SECTION 7.7. BANK INSPECTION RIGHTS. Upon reasonable notice from any Bank, the Borrower will permit such Bank (and such Persons as any Bank may designate) during normal business hours and under the Borrower's guidance, to visit and inspect any of the properties of the Borrower or any of its Subsidiaries, to examine all of their books of account, records, reports and other papers, to make copies and extracts therefrom, and to discuss their respective affairs, finances and accounts with their respective officers and employees. SECTION 7.8. CONDUCT OF BUSINESS. Neither the Borrower nor any Subsidiary will engage in any line of business if, as a result, the general nature of the business of the Borrower and its Subsidiaries taken as a whole would be substantially changed from that conducted on the date hereof. SECTION 7.9. LIENS. The Borrower will not, and will not permit any of its Restricted Subsidiaries to, create, incur, permit to exist or to be incurred any Lien of any kind on any Property owned by the Borrower or any Restricted Subsidiary; provided, however, that this Section 7.9 shall not apply to nor operate to prevent: (a) Liens arising by operation of law in connection with worker's compensation, unemployment insurance, social security obligations, taxes, assessments, statutory obligations or other similar charges, good faith deposits, pledges or Liens in connection with bids, tenders, contracts or leases to which the Borrower or any Subsidiary is a party (other than contracts for borrowed money), or other deposits required to be made in the ordinary course of business; provided that in each case the obligation secured is not overdue or, if overdue, is being contested in good faith by appropriate proceedings and for which reserves in conformity with GAAP have been provided on the books of the Borrower; (b) mechanics', workmen's, materialmen's, landlords', carriers' or other similar Liens arising in the ordinary course of business (or deposits to obtain the release of such Liens) securing obligations not due or, if due, being contested in good faith by appropriate proceedings and for which reserves in conformity with GAAP have been provided on the books of the Borrower; (c) Liens for taxes or assessments or other government charges or levies on the Borrower or any Subsidiary of the Borrower or their respective Properties, not yet due or delinquent, or which can thereafter be paid without penalty, or which are being contested in good faith by appropriate proceedings and for which reserves in conformity with GAAP have been provided on the books of the Borrower; (d) Liens arising out of judgments or awards against the Borrower or any Subsidiary of the Borrower, or in connection with surety or appeal bonds in connection with bonding such judgments or awards, the time for appeal from which or petition for rehearing of which shall not have expired or with respect to which the Borrower or such Subsidiary shall be prosecuting an appeal or proceeding for review, and with respect to which it shall have obtained a stay of execution pending such appeal or proceeding for review; provided that the aggregate amount of liabilities (including interest and penalties, if any) of the Borrower and its Subsidiaries secured by such Liens shall not exceed $1,000,000 at any one time outstanding; (e) Survey exceptions or encumbrances, easements or reservations, or rights of others for rights-of-way, utilities and other similar purposes, or zoning or other restrictions as to the use of real properties which are necessary for the conduct of the activities of the Borrower and any Subsidiary of the Borrower or which customarily exist on properties of corporations engaged in similar activities and similarly situated and which do not in any event materially impair their use in the operation of the business of the Borrower or any Subsidiary of the Borrower; (f) Liens existing on the date hereof and listed on Schedule 7.9 hereto; provided that, (i) such Liens do not at any time extend to the Property of any other Person and (ii) such Liens shall be released no later than March 10, 2000; (g) Any extension, renewal or replacement (or successive extensions, renewals or replacements) in whole or in part of any Lien referred to in the foregoing paragraphs (a) through (f), inclusive, provided, however, that the principal amount of Indebtedness secured thereby shall not exceed the principal amount of Indebtedness so secured at the time of such extension, renewal or replacement, and that such extension, renewal or replacement shall be limited to the Property which was subject to the Lien so extended, renewed or replaced; and (h) Liens on property (not constituting Investments) of the Borrower or any of its Subsidiaries created solely for the purpose of securing Indebtedness permitted by Section 7.22(g) hereof, representing or incurred to finance, refinance or refund the purchase price of Property, provided that no such Lien shall extend to or cover other Property of the Borrower or such Subsidiary other than the respective Property so acquired, and the principal amount of Indebtedness secured by any such Lien shall at no time exceed the original purchase price of such Property; and (i) Liens not otherwise permitted under this Section 7.9 on Property (other than (i) shares of stock in any Wholly-Owned Subsidiary and (ii) receivables, inventory and similar working capital assets) securing Indebtedness that, when combined with Capitalized Lease Obligations permitted under Section 7.11, is in an aggregate principal amount not exceeding $20,000,000 at any time outstanding; and (j) Liens not otherwise permitted under this Section 7.9 on any Property of any Person at the time such Person becomes a Subsidiary in connection with the JLW Acquisition or any Person that is merged or consolidated with or into the Borrower or any of its Subsidiaries in connection with the JLW Acquisition which Liens do not, in the aggregate for all such Liens, attach on Property with a fair market value in excess of $5,000,000. SECTION 7.10. USE OF PROCEEDS; REGULATION U. The proceeds of each Borrowing, and the credit provided by Letters of Credit, will be used by the Borrower and its Subsidiaries for working capital, repayment of other Indebtedness, and other general corporate purposes including acquisitions of businesses and other investments permitted by Section 7.14. The Borrower will not use any part of the proceeds of any of the Borrowings or of the Letters of Credit directly or indirectly to purchase or carry any margin stock (as defined in Section 5.10 hereof) or to extend credit to others for the purpose of purchasing or carrying any such margin stock. SECTION 7.11. SALES AND LEASEBACKS. The Borrower will not, nor will it permit any Restricted Subsidiary to, enter into any arrangement with any bank, insurance company or other lender or investor providing for the leasing by the Borrower or any Subsidiary of any Property theretofore owned by it and which has been or is to be sold or transferred by such owner to such lender or investor, except to the extent the aggregate principal amount of Capitalized Lease Obligations under such leases plus the outstanding principal amount of Indebtedness secured by Liens permitted by Section 7.9(i) (and not separately permitted by other provisions of Section 7.9) does not exceed $5,000,000 at any time outstanding; SECTION 7.12. MERGERS, CONSOLIDATIONS AND SALES OF ASSETS. (a) The Borrower will not, and will not permit any of its Restricted Subsidiaries to, (i) consolidate with or be a party to a merger with any other Person or (ii) sell, lease or otherwise dispose of all or a "substantial part" of the consolidated assets of the Borrower and its Restricted Subsidiaries; provided, however, that: (1) any Restricted Subsidiary of the Borrower may merge or consolidate with or into or sell, lease or otherwise convey its assets to the Borrower or any Restricted Subsidiary of which the Borrower directly or indirectly holds at least the same percentage equity ownership or is entitled through ownership of interests, contractually or otherwise, to at least the same economic interest; provided that in any such merger or consolidation involving the Borrower, the Borrower shall be the surviving or continuing corporation; (2) The Borrower and its Subsidiaries may dissolve or liquidate any Restricted Subsidiary of the Borrower or of such Subsidiary so long as all the assets of such dissolved or liquidated Restricted Subsidiary are concurrently transferred to the Borrower or any Restricted Subsidiary of which the Borrower directly or indirectly holds at least the same percentage equity ownership or is entitled through ownership of interests, contractually or otherwise, to at least the same economic interest; provided that if any Guarantor is dissolved or liquidated all of such Guarantor's assets shall be concurrently transferred to the Borrower or another Guarantor; (3) The Borrower or any Restricted Subsidiary of the Borrower may consolidate or merge with any other Person if the Borrower or such Restricted Subsidiary or, in the case of such a transaction involving the Borrower, the Borrower is the surviving or continuing corporation and at the time of such consolidation or merger, and after giving effect thereto, no Default or Event of Default shall have occurred and be continuing; (4) The Borrower and its Subsidiaries may sell or otherwise dispose of any asset which, in the reasonable judgment of such Person, have become obsolete or worn out; and (5) The Borrower and its Subsidiaries may in a fair market value transaction, sell or otherwise dispose of any direct or indirect Investment in real estate or real estate related assets, including notes and other securities. As used in this Section 7.12(a), a sale, lease, transfer or disposition of assets during any fiscal year shall be deemed to be of a "substantial part" of the consolidated assets of the Borrower and its Restricted Subsidiaries if the net book value of such assets, when added to the net book value of all other assets (not including dispositions of stock in Subsidiaries permitted under Section 7.12(b) hereof) sold, leased, transferred or disposed of by the Borrower and its Restricted Subsidiaries during such fiscal year (other than inventory in the ordinary course of business) exceeds 5% of the total assets of the Borrower and its Restricted Subsidiaries, determined on a consolidated basis as of the last day of the immediately preceding fiscal year. (b) Except with respect to the syndication or other disposition of Subsidiaries or interests in Subsidiaries through which direct or indirect Investments in real estate or real estate related assets, including notes and other securities, are made, the Borrower will not sell, transfer or otherwise dispose of, or permit any Restricted Subsidiary to issue, sell, transfer or otherwise dispose of, any shares of stock of any class (including as "stock" for purposes of this Section, any warrants, rights or options to purchase or otherwise acquire stock or other Securities exchangeable for or convertible into stock) of any Subsidiary, except to the Borrower or any Restricted Subsidiary of which the Borrower directly or indirectly holds at least the same percentage equity ownership or is entitled through ownership of interests, contractually or otherwise, to at least the same economic interest and except for the purpose of qualifying directors. SECTION 7.13. USE OF PROPERTY AND FACILITIES; ENVIRONMENTAL AND HEALTH AND SAFETY LAWS. (a) The Borrower will, and will cause each of its Subsidiaries to, comply in all material respects with the requirements of all Environmental and Health Laws applicable to or pertaining to the Properties or business operations of the Borrower or any Subsidiary of the Borrower to the extent noncompliance would reasonably be expected to have a Material Adverse Effect. Without limiting the foregoing, the Borrower will not, and will not permit any Person to, except in accordance with applicable law, dispose of any Hazardous Material into, onto or upon any real property owned or operated by the Borrower or any of its Subsidiaries if such disposal would reasonably be expected to have a Material Adverse Effect. (b) The Borrower will promptly provide the Banks with copies of any notice or other instrument of the type described in Section 5.11(c) hereof, and in no event later than five (5) Business Days after the President, chief executive officer, chief financial officer, chief operating officer, treasurer, assistant treasurer or controller of the Borrower receives such notice or instrument. SECTION 7.14. INVESTMENTS, ACQUISITIONS, LOANS, ADVANCES AND GUARANTIES. The Borrower will not, nor will it permit any Subsidiary to, directly or indirectly, make, retain or have outstanding any investments (whether through purchase of stock or obligations or otherwise) in, or loans or advances to, any other Person (other than the Borrower or a Subsidiary of the Borrower), or acquire all or any substantial part of the assets or business of any other Person (other than the Borrower or a Subsidiary of the Borrower) or division thereof, or be or become liable as endorser, guarantor, surety or otherwise (such as liability as a general partner) for any debt, obligation or undertaking of any other Person (other than the Borrower or a Subsidiary of the Borrower), or otherwise agree to provide funds for payment of the obligations of another (other than the Borrower or a Subsidiary of the Borrower), or supply funds thereto or invest therein or otherwise assure a creditor of another (other than the Borrower or a Subsidiary of the Borrower) against loss, or apply for or become liable to the issuer of a letter of credit which supports an obligation of another (other than the Borrower or a Subsidiary of the Borrower) (cumulatively, all of the foregoing, being "Investments"); provided, however, that the foregoing provisions shall not apply to nor operate to prevent: (a) investments in direct obligations of the United States of America or of any agency or instrumentality thereof whose obligations constitute full faith and credit obligations of the United States of America provided that any such obligation matures within one year from the date it is acquired by the Borrower or Subsidiary; (b) investments in commercial paper rated at least P-1 by Moody's Investors Services, Inc. or A-1 by Standard & Poor's Corporation maturing within one year of its date of issuance; (c) demand deposit accounts maintained in the ordinary course of business; (d) investments in certificates of deposit issued by and time deposits with any commercial bank (whether domestic or foreign) having capital and surplus of not less than $50,000,000 maturing within one year from the date of issuance thereof or in banker's acceptances endorsed by any Bank or other such commercial bank and maturing within six months of the date of acceptance; (e) investments in certificates of deposit issued by and time deposits with any commercial bank (whether domestic or foreign) having capital and surplus in excess of $10,000,000 but less than $50,000,000, which deposits shall not exceed $500,000 in the aggregate; (f) investments in repurchase obligations with a term of not more than seven (7) days for underlying securities of the types described in subsection (a) above entered into with any bank meeting the qualifications specified in subsection (c) above, provided all such agreements require physical delivery of the securities securing such repurchase agreement, except those delivered through the Federal Reserve Book Entry System; (g) investments in money market funds that invest solely, and which are restricted by their respective charters to invest solely, in investments of the type described in the immediately preceding subsections (a), (b), (c) and (d) above; (h) endorsements of negotiable instruments for collection in the ordinary course of business; (i) loans and advances to employees and relocation companies in the ordinary course of business not to exceed $8,000,000 in the aggregate at any one time outstanding; (j) Investments in existence on the date hereof and described on Schedule 7.14 hereof; (k) Acquisitions or Investments in a line of business related to that of the Borrower and its Subsidiaries and Investments directly and indirectly through Subsidiaries and other Persons in real estate and real estate related assets, including notes and other securities, provided that (i) no Default or Event of Default exists or would exist after giving effect to such Acquisition or Investment, (ii) in the case of an Acquisition, (I) the Board of Directors or other governing body or the holders of 100% of the equity interests of such Person whose Property, or Voting Stock or other interests in which, are being so acquired has approved the terms of such Acquisition, (II) the portion of the purchase price for all such Acquisitions paid by cash, including the aggregate principal amount of all liabilities assumed in connection with such Acquisitions, in any calendar year shall not exceed $20,000,000, and (III) until the Liquidity Ratio as established pursuant to financial statements delivered pursuant to Section 7.6(a) hereof exceeds 1.15 to 1.00 for two consecutive calendar quarters, the portion of the purchase price for all such Acquisitions paid for with equity securities of the Borrower or any Subsidiary in any calendar year shall not exceed $20,000,000, based on the fair market value of such equity securities on the date such Acquisitions are completed as reasonably determined by the Administrative Agent (in the case of equity securities constituting common stock such fair market value shall be determined based upon the closing price on the New York Stock Exchange on the immediately preceding day as reported in THE WALL STREET JOURNAL or other recognized financial publication acceptable to the Administrative Agent in its sole discretion), (iii) in the case of Investments not constituting Acquisitions, such Investment together with all other Investments not constituting Acquisitions permitted under this subsection (k) during the term of this Agreement reduced by the amount of proceeds of the disposition of all or any part of any such Investments does not exceed $150,000,000 in aggregate purchase price; provided that if the aggregate purchase price for any Investment by the Borrower or any Subsidiary in any one Person exceeds $20,000,000 the Borrower shall have received the prior written consent of the Required Banks; In determining the amount of Investments permitted under this Section 7.14, Investments shall always be taken at the original cost thereof (regardless of any subsequent appreciation or depreciation therein), and Investments in the form of loans and advances shall be taken at the principal amount thereof then remaining unpaid, and Investments in the form of guarantees (including liabilities as a general partner) shall be taken at the lesser of (i) amount of obligations guaranteed and (ii) the fair market value of all the assets of such guarantor or general partner. A change in the form of an Investment (e.g. from an interest as a limited partner to making a direct loan to such limited partnership or a change in the form of an entity from a limited partnership to a corporation) shall not be regarded as a further Investment except to the extent the Borrower or any of its Subsidiaries invests any further money. SECTION 7.15. CONSOLIDATED NET WORTH. The Borrower will at all times maintain a Consolidated Net Worth of not less than the Minimum Required Amount. For purposes of this section, the "Minimum Required Amount" shall mean (i) $250,000,000 for the period from and including the Effective Date through and including December 30, 1999, (ii) $270,000,000 during the Annual Measurement Period commencing on December 31, 1999, and (iii) during each Annual Measurement Period thereafter, an amount equal to the sum of (x) the Minimum Required Amount for the immediately preceding Annual Measurement Period plus (y) an amount equal to 50% of the cumulative positive Consolidated Net Income earned in the fiscal year completed during the immediately preceding Annual Measurement Period (but without subtraction for any negative Consolidated Net Income for any such fiscal year); provided, however, in each case such Minimum Required Amount shall increase on the date of the issuance of capital securities (other than in connection with the Borrower's Stock Compensation Program, Employee Stock Purchase Plan, Stock Award and Incentive Plan and any similar programs or plans and the JLW Acquisition) by the Borrower by an amount equal to 100% of the Net Cash Proceeds of such issuance. As used herein the term "Annual Measurement Period" shall mean each period commencing on December 31 of a calendar year and ending on December 30 of the immediately subsequent calendar year. SECTION 7.16. FUNDED DEBT TO ADJUSTED EBITDA. The Borrower will as of the last day of each calendar quarter maintain the ratio of Total Funded Debt as of such day to Adjusted EBITDA for the four calendar quarters then ended at not more than: Total Funded Debt to Adjusted EBITDA From and To and Ratio Shall Not Be Including Including Greater Than December 31, 1999 June 30, 2000 3.75 to 1.00 July 1, 2000 March 31, 2001 3.50 to 1.00 April 1, 2001 March 31, 2002 3.25 to 1.00 April 1, 2002 Thereafter 3.00 to 1.00 SECTION 7.17. SENIOR FUNDED DEBT TO ADJUSTED EBITDA. The Borrower will as of the last day of each calendar quarter maintain the ratio of Total Senior Funded Debt as of such day to Adjusted EBITDA for the four calendar quarters then ended at not more than: Total Senior Funded Debt To Adjusted EBITDA From and To and Ratio Shall Not Including Including Be Greater Than December 31, 1999 June 30, 2000 3.75 to 1.00 July 1, 2000 March 31, 2001 3.50 to 1.00 April 1, 2001 March 31, 2002 3.00 to 1.00 April 1, 2002 Thereafter 2.75 to 1.00 SECTION 7.18. INTEREST COVERAGE RATIO. The Borrower will as of the last day of each calendar quarter, commencing with the calendar quarter ending December 31, 1999, maintain an Interest Coverage Ratio of not less than 3.00 to 1.00. SECTION 7.19. LIQUIDITY RATIO. The Borrower will as of the last day of each calendar quarter maintain a Liquidity Ratio of not less than: Liquidity Ratio From and To and Shall Not Be Including Including Less Than January 1, 2000 December 31, 2000 1.00 to 1.00 January 1, 2001 December 31, 2001 1.10 to 1.00 January 1, 2002 Thereafter 1.15 to 1.00 SECTION 7.20. MINIMUM ADJUSTED EBITDA. The Borrower will for the year ended December 31, 1999 have Adjusted EBITDA in an amount no less than $95,000,000. SECTION 7.21. DIVIDENDS AND OTHER SHAREHOLDER DISTRIBUTIONS. The Borrower shall only declare or pay dividends or make a distribution (other than dividends and distributions payable solely in its capital stock) of any kind (including by redemption or purchase other than purchases of outstanding capital stock (i) in connection with the Borrower's Stock Compensation Program, Employee Stock Purchase Plan, Stock Award and Incentive Plan and any similar programs or plans and (ii) in connection with the satisfaction of taxes relating to the shares being allocated and distributed under the Employee Stock Ownership Trust established in connection with the acquisition by the Company of the businesses conducted worldwide under the names "Jones Lang Wootton" and "JLW") on its outstanding capital stock, if (i) the Term Loans have been repaid in full and (ii) no Default or Event of Default exists prior to or would result after giving effect to such action. SECTION 7.22. INDEBTEDNESS. The Borrower will not, and will not permit any of its Restricted Subsidiaries to, have outstanding at any time any Indebtedness other than: (a) The Obligations of the Borrower and Guarantors owing to the Banks and Administrative Agent hereunder; (b) Indebtedness of the Borrower to any Subsidiary and of any Subsidiary to the Borrower and any other Subsidiary; (c) Capitalized Lease Obligations in an aggregate principal amount outstanding not to exceed $20,000,000 on any date of determination; (d) Subordinated Indebtedness; (e) Investments (as defined in Section 7.14) permitted pursuant to Section 7.14 in the form of Indebtedness; (f) Guaranties by the Borrower and its Subsidiaries of obligations of the Borrower and its Subsidiaries which obligations are not prohibited under this Agreement; (g) Indebtedness not otherwise permitted by this Section 7.22 of not more than $50,000,000 in aggregate principal amount outstanding on any date of determination for the Borrower and its Restricted Subsidiaries. SECTION 7.23. TRANSACTIONS WITH AFFILIATES. The Borrower will not, and will not permit any of its Subsidiaries to, enter into or be a party to any material transaction or arrangement (where "material" means material for the Borrower and its Subsidiaries taken as a whole) with any Affiliate of such Person (other than the Borrower or any of its Subsidiaries), including without limitation, the purchase from, sale to or exchange of Property with, any merger or consolidation with or into, or the rendering of any service by or for, any Affiliate, except in the ordinary course of and pursuant to the reasonable requirements of the Borrower's or such Subsidiary's business and upon fair and reasonable terms no less favorable to the Borrower or such Subsidiary than could be obtained in a comparable arm's-length transaction with a Person other than an Affiliate. SECTION 7.24. COMPLIANCE WITH LAWS. Without limiting any of the other covenants of the Borrower in this Section 7, the Borrower will, and will cause each of its Subsidiaries to, conduct its business, and otherwise be, in compliance with all applicable laws, regulations, ordinances and orders of any governmental or judicial authorities; provided, however, that neither the Borrower nor any Subsidiary of the Borrower shall be required to comply with any such law, regulation, ordinance or order if (x) it shall be contesting such law, regulation, ordinance or order in good faith by appropriate proceedings and reserves in conformity with GAAP have been provided therefor on the books of the Borrower or such Subsidiary, as the case may be, or (y) the failure to comply therewith is not reasonably expected to have, in the aggregate, a Material Adverse Effect. SECTION 7.25. ADDITIONAL GUARANTORS. (a) If on the last day of each calendar quarter ending December 31, 1999, September 30, 2000 and each calendar quarter ending thereafter the portion of the Adjusted EBITDA for the four calendar quarters then ended for the Borrower and its Non-Real Estate Restricted Subsidiaries attributable to the Borrower and the Guarantors is less than 70% of the Adjusted EBITDA for such four calendar quarters of the Borrower and the Non-Real Estate Restricted Subsidiaries, then the Borrower will, within 15 Business Days of the date on which the balance sheet for such date is required to be delivered pursuant to Section 7.6(i) or Section 7.6(ii), cause a Subsidiary or Subsidiaries to become a Guarantor or Guarantors hereunder so that the portion of the Adjusted EBITDA for the Borrower and its Non-Real Estate Restricted Subsidiaries attributable to the Borrower and the Guarantors for such period is equal to or in excess of 70% of the Adjusted EBITDA for the Borrower and its Non-Real Estate Restricted Subsidiaries for such period. To the extent any Subsidiary becomes a Guarantor as a result of the requirements of this Section 7.25(a), the Guaranty of such Subsidiary shall be released upon request of the Borrower if (i) on the last day of two successive calendar quarters the portion of the Adjusted EBITDA for the four calendar quarters then ended for the Borrower and its Non-Real Estate Restricted Subsidiaries attributable to the Borrower and the Guarantors (other than the Guarantor which the Borrower has requested be released) is greater than 70% of the Adjusted EBITDA for each such period of the Borrower and its Non-Real Estate Restricted Subsidiaries and (ii) no Event of Default or Default is continuing. The Administrative Agent is hereby authorized to execute all appropriate documents on behalf of the Lenders to document the release of such Subsidiary from its Guaranty. (b) In addition to the requirements of Section 7.25(a) the Borrower will cause any Subsidiary to become a Guarantor hereunder within 15 days of the date on which the balance sheet and income statement for any calendar quarter is required to be delivered pursuant to Section 7.6(i), or Section 7.6(ii), if for the four calendar quarters then ending the portion of Adjusted EBITDA for the Borrower and its Non-Real Estate Restricted Subsidiaries attributable solely to such Subsidiary for such period is equal to or in excess of 5% of the Adjusted EBITDA for the Borrower and its Non-Real Estate Restricted Subsidiaries for such period. To the extent any such Subsidiary becomes a Guarantor, such Guaranty shall be released upon request of the Borrower if on the last day of two successive calendar quarters the portion of Adjusted EBITDA of the Borrower and its Non-Real Estate Restricted Subsidiaries for such period attributable solely to such Subsidiary was less than 5% of the total Adjusted EBITDA of the Borrower and its Non-Real Estate Restricted Subsidiaries for such period, provided that no Event of Default or Default is continuing. The Administrative Agent is hereby authorized to execute all appropriate documents on behalf of the Banks to document the release of such Guaranty. (c) To the extent Section 7.25(a) or (b) would require that a Foreign Subsidiary be added as a Guarantor, in lieu of having such Subsidiary provide a Guaranty pursuant to Section 11, the Borrower may elect to provide, and to cause its Subsidiaries to provide, within 60 days of the date on which the Borrower is required by either Section 7.25(a) or (b) above to cause such Foreign Subsidiary to become a Guarantor, the Administrative Agent with a security interest in 65% of the issued and outstanding capital stock owned by the Borrower and its Subsidiaries of such Foreign Subsidiary pursuant to a security agreement in form and substance reasonably acceptable to the Administrative Agent. Each Foreign Subsidiary with respect to which a security interest is granted pursuant to this Section 7.25(c) shall be regarded as a Guarantor for purposes of this Section 7.25. To the extent a security interest in the stock of any Foreign Subsidiary is provided pursuant to this Section 7.25(c), such security interest shall be released upon request of the Borrower if after giving effect to such release the Borrower is in compliance with Sections 7.25(a) and (b) and provided that no Event of Default or Default is continuing. The Administrative Agent is hereby authorized to execute all appropriate documents on behalf of the Banks to document the release of such security interest. SECTION 8. EVENTS OF DEFAULT AND REMEDIES. SECTION 8.1. EVENTS OF DEFAULT. Any one or more of the following shall constitute an Event of Default: (a) default (x) in the payment when due of the principal amount of any Loan or of any Reimbursement Obligation or (y) for a period of three (3) days in the payment when due of interest or of any other Obligation; (b) default by the Borrower or any Subsidiary in the observance or performance of any covenant set forth in the first sentence of Section 7.1, Section 7.6(c), 7.9 through 7.12, or 7.14 through 7.21 hereof; (c) default by the Borrower or any Subsidiary in the observance or performance of any provision hereof or of any other Credit Document not mentioned in (a) or (b) above, which is not remedied within thirty (30) days after notice thereof to the Borrower by the Administrative Agent (acting at the request of any Bank); (d) (i) failure to pay when due Indebtedness in an aggregate principal amount of $1,000,000 or more of the Borrower or any Subsidiary or (ii) default shall occur under one or more indentures, agreements or other instruments under which any Indebtedness of the Borrower or any Subsidiary in an aggregate principal amount of $1,000,000 or more is outstanding and such default shall continue for a period of time sufficient to permit the holder or beneficiary of such Indebtedness or a trustee therefor to cause the acceleration of the maturity of any such Indebtedness or any mandatory unscheduled prepayment, purchase or funding thereof; (e) any representation or warranty made herein or in any other Credit Document by the Borrower or any Subsidiary, or in any statement or certificate furnished pursuant hereto or pursuant to any other Credit Document by the Borrower or any Subsidiary, or in connection with any Credit Document, shall be untrue in any material respect as of the date of the issuance or making, or deemed making or issuance, thereof; (f) the Borrower or any Subsidiary shall (i) have entered involuntarily against it an order for relief under the United States Bankruptcy Code, as amended, or any analogous action is taken under any other applicable law relating to bankruptcy or insolvency, (ii) fail to pay, or admit in writing its inability to pay, its debts generally as they become due, (iii) make an assignment for the benefit of creditors, (iv) apply for, seek, consent to, or acquiesce in, the appointment of a receiver, custodian, trustee, examiner, liquidator or similar official for it or any substantial part of its Property, (v) institute any proceeding seeking to have entered against it an order for relief under the United States Bankruptcy Code, as amended, to adjudicate it insolvent, or seeking dissolution, winding up, liquidation, reorganization, arrangement, adjustment or composition of it or its debts under any law relating to bankruptcy, insolvency or reorganization or relief of debtors or fail within the time allowed therefor to file an answer or other pleading denying the material allegations of any such proceeding filed against it, (vi) take any corporate action (such as the passage by the Borrower's board of directors of a resolution) in furtherance of any matter described in parts (i)-(v) above, or (vii) fail to contest in good faith any appointment or proceeding described in Section 8.1(g) hereof; (g) a custodian, receiver, trustee, examiner, liquidator or similar official shall be appointed for the Borrower or any Subsidiary or any substantial part of any of their Property, or a proceeding described in Section 8.1(f)(v) shall be instituted against the Borrower or any Subsidiary, and such appointment continues undischarged or such proceeding continues undismissed or unstayed for a period of sixty (60) days; (h) the Borrower or any Subsidiary shall fail within thirty (30) days to pay, bond or otherwise discharge any judgment or order for the payment of money in excess of $2,500,000, which is not stayed on appeal or otherwise being appropriately contested in good faith in a manner that stays execution thereon; (i) the Borrower or any other member of the Controlled Group shall fail to pay when due an amount or amounts aggregating in excess of $200,000 which it shall have become liable to pay to the PBGC or to a Plan under Title IV of ERISA; or notice of intent to terminate a Plan or Plans having aggregate Unfunded Vested Liabilities in excess of $200,000 (collectively, a "Material Plan") shall be filed under Title IV of ERISA by the Borrower or any Subsidiary or any other member of the Controlled Group, any plan administrator or any combination of the foregoing; or the PBGC shall institute proceedings under Title IV of ERISA to terminate or to cause a trustee to be appointed to administer any Material Plan or a proceeding shall be instituted by a fiduciary of any Material Plan against the Borrower or any other member of the Controlled Group to enforce Section 515 or 4219(c)(5) of ERISA and such proceeding shall not have been dismissed within thirty (30) days thereafter; or a condition shall exist by reason of which the PBGC would be entitled to obtain a decree adjudicating that any Material Plan must be terminated; or (j) the Borrower or any Subsidiary, or any Person acting on behalf of the Borrower or a Subsidiary, or any governmental authority challenges the validity of any Credit Document or the Borrower's or a Subsidiary's obligations thereunder or any Credit Document ceases to be in full force and effect; or (k) a Change of Control shall have occurred. SECTION 8.2. NON-BANKRUPTCY DEFAULTS. When any Event of Default other than those described in subsections (f) or (g) of Section 8.1 hereof has occurred and is continuing, the Administrative Agent shall, by written notice to the Borrower: (a) if so directed by the Required Banks, terminate the remaining Commitments and all other obligations of the Banks hereunder on the date stated in such notice (which may be the date thereof); (b) if so directed by the Required Banks, declare the principal of and the accrued interest on all outstanding Loans and all other amounts due under the Credit Documents to be forthwith due and payable and thereupon all outstanding Loans, including both principal and interest thereon, shall be and become immediately due and payable together with all other amounts payable under the Credit Documents without further demand, presentment, protest or notice of any kind; and (c) if so directed by the Required Banks, demand that the Borrower immediately pay to the Administrative Agent, subject to Section 8.4, the full amount then available for drawing under each or any Letter of Credit, and the Borrower agrees to immediately make such payment and acknowledges and agrees that the Banks would not have an adequate remedy at law for failure by the Borrower to honor any such demand and that the Administrative Agent, for the benefit of the Banks, shall have the right to require the Borrower to specifically perform such undertaking whether or not any drawings or other demands for payment have been made under any Letter of Credit. The Administrative Agent, after giving notice to the Borrower pursuant to Section 8.1(c) or this Section 8.2, shall also promptly send a copy of such notice to the other Banks, but the failure to do so shall not impair or annul the effect of such notice. SECTION 8.3. BANKRUPTCY DEFAULTS. When any Event of Default described in subsections (f) or (g) of Section 8.1 hereof has occurred and is continuing, then all outstanding Loans shall immediately become due and payable together with all other amounts payable under the Credit Documents without presentment, demand, protest or notice of any kind, the obligation of the Banks to extend further credit pursuant to any of the terms hereof shall immediately terminate and the Borrower shall immediately pay to the Administrative Agent, subject to Section 8.4, the full amount then available for drawing under all outstanding Letters of Credit, the Borrower acknowledging that the Banks would not have an adequate remedy at law for failure by the Borrower to honor any such demand and that the Banks, and the Administrative Agent on their behalf, shall have the right to require the Borrower to specifically perform such undertaking whether or not any draws or other demands for payment have been made under any of the Letters of Credit. SECTION 8.4. COLLATERAL FOR UNDRAWN LETTERS OF CREDIT. (a) If the payment or prepayment of the amount available for drawing under any or all outstanding Letters of Credit is required under Section 8.2 or 8.3 above, the Borrower shall forthwith pay the amount required to be so prepaid, to be held by the Administrative Agent as provided in subsection (b) below. (b) All amounts prepaid pursuant to subsection (a) above shall be held by the Administrative Agent in a separate collateral account (such account, and the credit balances, properties and any investments from time to time held therein, and any substitutions for such account, any certificate of deposit or other instrument evidencing any of the foregoing and all proceeds of and earnings on any of the foregoing being collectively called the "Account") as security for, and for application by the Administrative Agent (to the extent available) to, the reimbursement of any payment under any Letter of Credit then or thereafter made by the Administrative Agent, and to the payment of the unpaid balance of any Loans and all other Obligations. The Account shall be held in the name of and subject to the exclusive dominion and control of the Administrative Agent for the benefit of the Administrative Agent and the Banks. If and when requested by the Borrower, the Administrative Agent shall invest funds held in the Account from time to time in direct obligations of, or obligations the principal of and interest on which are unconditionally guaranteed by, the United States of America with a remaining maturity of one year or less, provided that the Administrative Agent is irrevocably authorized to sell investments held in the Account when and as required to make payments out of the Account for application to amounts due and owing from the Borrower to the Administrative Agent or Banks; provided, however, that if (i) the Borrower shall have made payment of all Obligations, (ii) all relevant preference or other disgorgement periods relating to the receipt of such payments have passed, and (iii) no Letters of Credit, Commitments, Loans or other Obligations remain outstanding hereunder, then the Administrative Agent shall repay to the Borrower any remaining amounts held in the Account. SECTION 8.5. NOTICE OF DEFAULT. The Administrative Agent shall give notice to the Borrower under Section 8.1(c) hereof promptly upon being requested to do so by any Bank and shall thereupon notify all the Banks thereof. SECTION 8.6. EXPENSES. The Borrower agrees to pay to the Administrative Agent and each Bank, and any other holder of any Note outstanding hereunder, all expenses reasonably incurred or paid by the Administrative Agent and such Bank or any such holder, including reasonable attorneys' fees and court costs, in connection with any Default or Event of Default by the Borrower hereunder or in connection with the enforcement of any of the Credit Documents. SECTION 9. CHANGE IN CIRCUMSTANCES. SECTION 9.1. CHANGE OF LAW. Notwithstanding any other provisions of this Agreement or any Note, if at any time after the date hereof any change in applicable law or regulation or in the interpretation thereof makes it unlawful for any Bank to make or continue to maintain Eurocurrency Loans or to perform its obligations as contemplated hereby, such Bank shall promptly give notice thereof to the Borrower and such Bank's obligations to make or maintain Eurocurrency Loans under this Agreement shall terminate until it is no longer unlawful for such Bank to make or maintain Eurocurrency Loans. The Borrower shall prepay on demand the outstanding principal amount of any such affected Eurocurrency Loans, together with all interest accrued thereon at a rate per annum equal to the interest rate applicable to such Loan; provided, however, subject to all of the terms and conditions of this Agreement, the Borrower may then elect to borrow the principal amount of the affected Eurocurrency Loans from such Bank by means of Domestic Rate Loans from such Bank, which Domestic Rate Loans shall not be made ratably by the Banks but only from such affected Bank. SECTION 9.2. UNAVAILABILITY OF DEPOSITS OR INABILITY TO ASCERTAIN, OR INADEQUACY OF, LIBOR. If on or prior to the first day of any Interest Period for any Borrowing of Eurocurrency Loans: (a) the Administrative Agent determines that deposits in U.S. Dollars or the applicable Alternative Currency (in the applicable amounts) are not being offered to it in the eurocurrency interbank market for such Interest Period, or that by reason of circumstances affecting the interbank eurocurrency market adequate and reasonable means do not exist for ascertaining the applicable LIBOR, or (b) Banks having 51% or more of the aggregate amount of the Commitment reasonably determine and so advise the Administrative Agent that LIBOR as reasonably determined by the Administrative Agent will not adequately and fairly reflect the cost to such Banks or Bank of funding their or its Eurocurrency Loans or Loan for such Interest Period, then the Administrative Agent shall forthwith give notice thereof to the Borrower and the Banks, whereupon until the Administrative Agent notifies the Borrower that the circumstances giving rise to such suspension no longer exist, the obligations of the Banks or of the relevant Bank to make Eurocurrency Loans in the currency so affected shall be suspended; provided that such suspension shall have no effect on any Eurocurrency Loan then outstanding. SECTION 9.3. INCREASED COST AND REDUCED RETURN. (a) If, on or after the date hereof, the adoption of any applicable law, rule or regulation, or any change therein, or any change in the interpretation or administration thereof by any governmental authority, central bank or comparable agency charged with the interpretation or administration thereof, or compliance by any Bank (or its Lending Office) with any request or directive (whether or not having the force of law but, if not having the force of law, compliance with which is customary in the relevant jurisdiction) of any such authority, central bank or comparable agency: (i) shall subject any Bank (or its Lending Office) to any tax, duty or other charge with respect to its Eurocurrency Loans, its Notes, its Letter(s) of Credit, or its participation in any thereof, any Reimbursement Obligations owed to it or its obligation to make Eurocurrency Loans, issue a Letter of Credit, or to participate therein, or shall change the basis of taxation of payments to any Bank (or its Lending Office) of the principal of or interest on its Eurocurrency Loans, Letter(s) of Credit, or participations therein or any other amounts due under this Agreement in respect of its Eurocurrency Loans, Letter(s) of Credit, or participations therein, any Reimbursement Obligations owed to it, or its obligation to make Eurocurrency Loans, issue a Letter of Credit, or acquire participations therein (except for changes in the rate of tax on the overall net income or profits of such Bank or its Lending Office imposed by the jurisdiction in which such Bank or its lending office is incorporated in which such Bank's principal executive office or Lending Office is located); or (ii) shall impose, modify or deem applicable any reserve, special deposit, capital or similar requirement (including, without limitation, any such requirement imposed by the Board of Governors of the Federal Reserve System, but excluding with respect to any Eurocurrency Loans any such requirement included in an applicable Eurocurrency Reserve Percentage) against assets of, deposits with or for the account of, or credit extended by, any Bank (or its Lending Office) or shall impose on any Bank (or its Lending Office) or on the interbank market any other condition affecting its Eurocurrency Loans, its Notes, its Letter(s) of Credit, or its participation in any thereof, any Reimbursement Obligation owed to it, or its obligation to make Eurocurrency Loans, to issue a Letter of Credit, or to participate therein; and the result of any of the foregoing is to increase the cost to such Bank (or its Lending Office) of making or maintaining any Eurocurrency Loan, issuing or maintaining a Letter of Credit, or participating therein, or to reduce the amount of any sum received or receivable by such Bank (or its Lending Office) under this Agreement or under its Notes with respect thereto, by an amount deemed by such Bank to be material, then, within fifteen (15) days after demand by such Bank (with a copy to the Administrative Agent), the Borrower shall be obligated to pay to such Bank such additional amount or amounts as will compensate such Bank for such increased cost or reduction; provided, however, that such Bank shall promptly notify the Borrower of an event which might cause it to seek compensation, and the Borrower shall be obligated to pay only such compensation which is incurred or which arises after the date ninety (90) days prior to the date such notice is given. In the event any law, rule, regulation or interpretation described above is revoked, declared invalid or inapplicable or is otherwise rescinded, and as a result thereof a Bank is determined to be entitled to a refund from the applicable authority for any amount or amounts which were paid or reimbursed by Borrower to such Bank hereunder, such Bank shall refund such amount or amounts to Borrower without interest. (b) Each Bank that determines to seek compensation under this Section 9.3 shall notify the Borrower and the Administrative Agent of the circumstances that entitle the Bank to such compensation pursuant to this Section 9.3 and will designate a different Lending Office if such designation will avoid the need for, or reduce the amount of, such compensation and will not, in the reasonable judgment of such Bank, be otherwise disadvantageous to such Bank. A certificate of any Bank claiming compensation under this Section 9.3 and setting forth the additional amount or amounts to be paid to it hereunder shall be conclusive in the absence of manifest error. In determining such amount, such Bank may use any reasonable averaging and attribution methods. SECTION 9.4. LENDING OFFICES. Each Bank may, at its option, elect to make its Loans hereunder at the branch, office or affiliate specified on the appropriate signature page hereof (each a "Lending Office") for each type of Loan available hereunder or at such other of its branches, offices or affiliates as it may from time to time elect and designate in a written notice to the Borrower and the Administrative Agent. SECTION 9.5. DISCRETION OF BANK AS TO MANNER OF FUNDING. Notwithstanding any other provision of this Agreement, each Bank shall be entitled to fund and maintain its funding of all or any part of its Loans in any manner it sees fit, it being understood, however, that for the purposes of this Agreement all determinations hereunder shall be made as if each Bank had actually funded and maintained each Eurocurrency Loan through the purchase of deposits of U.S. Dollars or the applicable Alternative Currency in the eurocurrency interbank market having a maturity corresponding to such Loan's Interest Period and bearing an interest rate equal to LIBOR for such Interest Period. SECTION 10. THE ADMINISTRATIVE AGENT. SECTION 10.1. APPOINTMENT AND AUTHORIZATION OF ADMINISTRATIVE AGENT. Each Bank hereby appoints Harris Trust and Savings Bank as the Administrative Agent under the Credit Documents and hereby authorizes the Administrative Agent to take such action as Administrative Agent on its behalf and to exercise such powers under the Credit Documents as are delegated to the Administrative Agent by the terms thereof, together with such powers as are reasonably incidental thereto. SECTION 10.2. ADMINISTRATIVE AGENT AND ITS AFFILIATES. The Administrative Agent shall have the same rights and powers under this Agreement and the other Credit Documents as any other Bank and may exercise or refrain from exercising the same as though it were not the Administrative Agent, and the Administrative Agent and its affiliates may accept deposits from, lend money to, and generally engage in any kind of business with the Borrower or any Affiliate of the Borrower as if it were not the Administrative Agent under the Credit Documents. The term "Bank" as used herein and in all other Credit Documents, unless the context otherwise clearly requires, includes the Administrative Agent in its individual capacity as a Bank. References in Section 1 hereof to the Administrative Agent's Loans, or to the amount owing to the Administrative Agent for which an interest rate is being determined, refer to the Administrative Agent in its individual capacity as a Bank. SECTION 10.3. ACTION BY ADMINISTRATIVE AGENT. If the Administrative Agent receives from the Borrower a written notice of an Event of Default pursuant to Section 7.6(c) hereof, the Administrative Agent shall promptly give each of the Banks written notice thereof. The obligations of the Administrative Agent under the Credit Documents are only those expressly set forth therein. Without limiting the generality of the foregoing, the Administrative Agent shall not be required to take any action hereunder with respect to any Default or Event of Default, except as expressly provided in Sections 8.2 and 8.5. In no event, however, shall the Administrative Agent be required to take any action in violation of applicable law or of any provision of any Credit Document, and the Administrative Agent shall in all cases be fully justified in failing or refusing to act hereunder or under any other Credit Document unless it shall be first indemnified to its reasonable satisfaction by the Banks against any and all costs, expense, and liability which may be incurred by it by reason of taking or continuing to take any such action. The Administrative Agent shall be entitled to assume that no Default or Event of Default exists unless notified to the contrary by a Bank or the Borrower. In all cases in which this Agreement and the other Credit Documents do not require the Administrative Agent to take certain actions, the Administrative Agent shall be fully justified in using its discretion in failing to take or in taking any action hereunder and thereunder. SECTION 10.4. CONSULTATION WITH EXPERTS. The Administrative Agent may consult with legal counsel, independent public accountants and other experts selected by it and shall not be liable for any action taken or omitted to be taken by it in good faith in accordance with the advice of such counsel, accountants or experts. SECTION 10.5. LIABILITY OF ADMINISTRATIVE AGENT; CREDIT DECISION. Neither the Administrative Agent nor any of its directors, officers, agents, or employees shall be liable for any action taken or not taken by it in connection with the Credit Documents (i) with the consent or at the request of the Required Banks or (ii) in the absence of its own gross negligence or willful misconduct. Neither the Administrative Agent nor any of its directors, officers, agents or employees shall be responsible for or have any duty to ascertain, inquire into or verify (i) any statement, warranty or representation made in connection with this Agreement, any other Credit Document or any Credit Event; (ii) the performance or observance of any of the covenants or agreements of the Borrower or any Guarantor contained herein or in any other Credit Document; (iii) the satisfaction of any condition specified in Section 6 hereof, except receipt of items required to be delivered to the Administrative Agent; or (iv) the validity, effectiveness, genuineness, enforceability, perfection, value, worth or collectibility hereof or of any other Credit Document or of any other documents or writing furnished in connection with any Credit Document; and the Administrative Agent makes no representation of any kind or character with respect to any such matter mentioned in this sentence. The Administrative Agent may execute any of its duties under any of the Credit Documents by or through employees, agents, and attorneys-in-fact and shall not be answerable to the Banks, the Borrower, or any Guarantor or any other Person for the default or misconduct of any such agents or attorneys- in-fact selected with reasonable care. The Administrative Agent shall not incur any liability by acting in reliance upon any notice, consent, certificate, other document or statement (whether written or oral) reasonably believed by it to be genuine or to be sent by the proper party or parties. In particular and without limiting any of the foregoing, the Administrative Agent shall have no responsibility for confirming the accuracy of any Compliance Certificate or other document or instrument received by it under the Credit Documents. The Administrative Agent may treat the payee of any Note as the holder thereof until written notice of transfer shall have been filed with the Administrative Agent signed by such payee in form satisfactory to the Administrative Agent. Each Bank acknowledges that it has independently and without reliance on the Administrative Agent or any other Bank, and based upon such information, investigations and inquiries as it deems appropriate, made its own credit analysis and decision to extend credit to the Borrower in the manner set forth in the Credit Documents. It shall be the responsibility of each Bank to keep itself informed as to the creditworthiness of the Borrower and the Guarantors, and the Administrative Agent shall have no liability to any Bank with respect thereto. SECTION 10.6. INDEMNITY. The Banks shall ratably, in accordance with their respective Percentages, indemnify and hold the Administrative Agent, and its directors, officers, employees, agents and representatives harmless from and against any liabilities, losses, costs or expenses suffered or incurred by it under any Credit Document or in connection with the transactions contemplated thereby, regardless of when asserted or arising, except to the extent they are promptly reimbursed for the same by the Borrower and except to the extent that any event giving rise to a claim was caused by the gross negligence or willful misconduct of the party seeking to be indemnified. The obligations of the Banks under this Section 10.6 shall survive termination of this Agreement. SECTION 10.7. RESIGNATION OF ADMINISTRATIVE AGENT AND SUCCESSOR ADMINISTRATIVE AGENT. The Administrative Agent may resign at any time by giving written notice thereof to the Banks and the Borrower. Upon any such resignation of the Administrative Agent, the Required Banks shall have the right to appoint a successor Administrative Agent with the consent of the Borrower. If no successor Administrative Agent shall have been so appointed by the Required Banks, and shall have accepted such appointment, within thirty (30) days after the retiring Administrative Agent's giving of notice of resignation, then the retiring Administrative Agent may, on behalf of the Banks and with the consent of the Borrower, appoint a successor Administrative Agent, which shall be any Bank hereunder or any commercial bank organized under the laws of the United States of America or of any State thereof and having a combined capital and surplus of at least $200,000,000. Upon the acceptance of its appointment as the Administrative Agent hereunder, such successor Administrative Agent shall thereupon succeed to and become vested with all the rights and duties of the retiring or removed Administrative Agent under the Credit Documents, and the retiring Administrative Agent shall be discharged from its duties and obligations thereunder. After any retiring Administrative Agent's resignation hereunder as Administrative Agent, the provisions of this Section 10 and all protective provisions of the other Credit Documents shall inure to its benefit as to any actions taken or omitted to be taken by it while it was Administrative Agent. SECTION 11. THE GUARANTEES. SECTION 11.1. THE GUARANTEES. To induce the Banks to provide the credits described herein and in consideration of benefits expected to accrue to each Guarantor by reason of the Commitments and for other good and valuable consideration, receipt of which is hereby acknowledged, each Guarantor hereby unconditionally and irrevocably guarantees jointly and severally to the Administrative Agent, the Banks, and each other holder of an Obligation, the due and punctual payment of all present and future indebtedness of the Borrower evidenced by or arising out of the Credit Documents, including, but not limited to, the due and punctual payment of principal of and interest on the Notes and the due and punctual payment of all other Obligations now or hereafter owed by the Borrower under the Credit Documents as and when the same shall become due and payable, whether at stated maturity, by acceleration or otherwise, according to the terms hereof and thereof. In case of failure by the Borrower punctually to pay any indebtedness or other Obligations guaranteed hereby, each Guarantor hereby unconditionally agrees jointly and severally to make such payment or to cause such payment to be made punctually as and when the same shall become due and payable, whether at stated maturity, by acceleration or otherwise, and as if such payment were made by the Borrower. SECTION 11.2. GUARANTEE UNCONDITIONAL. The obligations of each Guarantor as a guarantor under this Section 11 shall be unconditional and absolute and, without limiting the generality of the foregoing, shall not be released, discharged or otherwise affected by: (a) any extension, renewal, settlement, compromise, waiver or release in respect of any obligation of the Borrower or of any other Guarantor under this Agreement or any other Credit Document or by operation of law or otherwise; (b) any modification or amendment of or supplement to this Agreement or any other Credit Document; (c) any change in the corporate existence, structure or ownership of, or any insolvency, bankruptcy, reorganization or other similar proceeding affecting, the Borrower, any other Guarantor, or any of their respective assets, or any resulting release or discharge of any obligation of the Borrower or of any other Guarantor contained in any Credit Document; (d) the existence of any claim, set-off or other rights which the Guarantor may have at any time against the Administrative Agent, any Bank or any other Person, whether or not arising in connection herewith; (e) any failure to assert, or any assertion of, any claim or demand or any exercise of, or failure to exercise, any rights or remedies against the Borrower, any other Guarantor or any other Person or Property; (f) any application of any sums by whomsoever paid or howsoever realized to any obligation of the Borrower, regardless of what obligations of the Borrower remain unpaid; (g) any invalidity or unenforceability relating to or against the Borrower or any other Guarantor for any reason of this Agreement or of any other Credit Document or any provision of applicable law or regulation purporting to prohibit the payment by the Borrower or any other Guarantor of the principal of or interest on any Note or any other amount payable by it under the Credit Documents; or (h) any other act or omission to act or delay of any kind by the Administrative Agent, any Bank or any other Person or any other circumstance whatsoever that might, but for the provisions of this paragraph, constitute a legal or equitable discharge of the obligations of the Guarantor under this Section 11. SECTION 11.3. DISCHARGE ONLY UPON PAYMENT IN FULL; REINSTATEMENT IN CERTAIN CIRCUMSTANCES. Each Guarantor's obligations under this Section 11 shall remain in full force and effect until the Commitments are terminated and the principal of and interest on the Notes and all other amounts payable by the Borrower under this Agreement and all other Credit Documents shall have been paid in full. If at any time any payment of the principal of or interest on any Note or any other amount payable by the Borrower under the Credit Documents is rescinded or must be otherwise restored or returned upon the insolvency, bankruptcy or reorganization of the Borrower or of a Guarantor, or otherwise, each Guarantor's obligations under this Section 11 with respect to such payment shall be reinstated at such time as though such payment had become due but had not been made at such time. SECTION 11.4. WAIVERS. (a) GENERAL. Each Guarantor irrevocably waives acceptance hereof, presentment, demand, protest and any notice not provided for herein, as well as any requirement that at any time any action be taken by the Administrative Agent, any Bank or any other Person against the Borrower, another Guarantor or any other Person. (b) SUBROGATION AND CONTRIBUTION. Unless and until the Obligations have been fully paid and satisfied and the Commitments have terminated, each Guarantor hereby irrevocably waives any claim or other right it may now or hereafter acquire against the Borrower or any other Guarantor that arises from the existence, payment, performance or enforcement of such Guarantor's obligations under this Section 11 or any other Credit Document, including, without limitation, any right of subrogation, reimbursement, exoneration, contribution, indemnification, or any right to participate in any claim or remedy of the Administrative Agent, any Bank or any other holder of an Obligation against the Borrower or any other Guarantor whether or not such claim, remedy or right arises in equity or under contract, statute or common law, including, without limitation, the right to take or receive from the Borrower or any other Guarantor directly or indirectly, in cash or other property or by set-off or in any other manner, payment or security on account of such claim or other right. SECTION 11.5. LIMIT ON RECOVERY. Notwithstanding any other provision hereof, the right to recovery of the holders of the Obligations against each Guarantor under this Section 11 shall not exceed $1.00 less than the amount which would render such Guarantor's obligations under this Section 11 void or voidable under applicable law, including without limitation fraudulent conveyance law. SECTION 11.6. STAY OF ACCELERATION. If acceleration of the time for payment of any amount payable by the Borrower under this Agreement or any other Credit Document is stayed upon the insolvency, bankruptcy or reorganization of the Borrower, all such amounts otherwise subject to acceleration under the terms of this Agreement or the other Credit Documents shall nonetheless be payable jointly and severally by the Guarantors hereunder forthwith on demand by the Administrative Agent made at the request of the Required Banks. SECTION 12. MISCELLANEOUS. SECTION 12.1. WITHHOLDING TAXES. (a) PAYMENTS FREE OF WITHHOLDING. Except as otherwise required by law and subject to Section 12.1(b) hereof, each payment by the Borrower and each Guarantor under this Agreement or the other Credit Documents shall be made without withholding for or on account of any present or future taxes (other than overall net income taxes on the recipient) imposed by or within the jurisdiction in which the Borrower or such Guarantor is domiciled, any jurisdiction from which the Borrower or such Guarantor makes any payment, or (in each case) any political subdivision or taxing authority thereof or therein. If any such withholding is so required, the Borrower or relevant Guarantor shall make the withholding, pay the amount withheld to the appropriate governmental authority before penalties attach thereto or interest accrues thereon and forthwith pay such additional amount as may be necessary to ensure that the net amount actually received by each Bank and the Administrative Agent free and clear of such taxes (including such taxes on such additional amount) is equal to the amount which that Bank or the Administrative Agent (as the case may be) would have received had such withholding not been made. If the Administrative Agent or any Bank pays any amount in respect of any such taxes, penalties or interest the Borrower shall reimburse the Administrative Agent or that Bank for that payment on demand in the currency in which such payment was made. If the Borrower or any Guarantor pays any such taxes, penalties or interest, it shall deliver official tax receipts evidencing that payment or certified copies thereof to the Bank or Administrative Agent on whose account such withholding was made (with a copy to the Administrative Agent if not the recipient of the original) on or before the thirtieth day after payment. If any Bank or the Administrative Agent determines it has received or been granted a credit against or relief or remission for, or repayment of, any taxes paid or payable by it because of any taxes, penalties or interest paid by the Borrower or any Guarantor and evidenced by such a tax receipt, such Bank or Administrative Agent shall, to the extent it can do so without prejudice to the retention of the amount of such credit, relief, remission or repayment, pay to the Borrower or such Guarantor as applicable, such amount as such Bank or Administrative Agent determines is attributable to such deduction or withholding and which will leave such Bank or Administrative Agent (after such payment) in no better or worse position than it would have been in if the Borrower had not been required to make such deduction or withholding. Nothing in this Agreement shall interfere with the right of each Bank and the Administrative Agent to arrange its tax affairs in whatever manner it thinks fit nor oblige any Bank or the Administrative Agent to disclose any information relating to its tax affairs or any computations in connection with such taxes. (b) U.S. WITHHOLDING TAX EXEMPTIONS. Each Bank that is not a United States person (as such term is defined in Section 7701(a)(30) of the Code) shall submit to the Borrower and the Administrative Agent on or before the earlier of the date the initial Borrowing is made hereunder and thirty (30) days after the date hereof, two duly completed and signed copies of either Form 1001 (relating to such Bank and entitling it to a complete exemption from withholding under the Code on all amounts to be received by such Bank, including fees, pursuant to the Credit Documents and the Loans) or Form 4224 (relating to all amounts to be received by such Bank, including fees, pursuant to the Credit Documents and the Loans) of the United States Internal Revenue Service. Thereafter and from time to time, each Bank shall submit to the Borrower and the Administrative Agent such additional duly completed and signed copies of one or the other of such Forms (or such successor forms as shall be adopted from time to time by the relevant United States taxing authorities) as may be (i) requested by the Borrower in a written notice, directly or through the Administrative Agent, to such Bank and (ii) required under then-current United States law or regulations to avoid or reduce United States withholding taxes on payments in respect of all amounts to be received by such Bank, including fees, pursuant to the Credit Documents or the Loans. (c) INABILITY OF BANK TO SUBMIT FORMS. If any Bank determines, as a result of any change in applicable law, regulation or treaty, or in any official application or interpretation thereof, that it is unable to submit to the Borrower or Administrative Agent any form or certificate that such Bank is obligated to submit pursuant to subsection (b) of this Section 12.1. or that such Bank is required to withdraw or cancel any such form or certificate previously submitted or any such form or certificate otherwise becomes ineffective or inaccurate, such Bank shall promptly notify the Borrower and Administrative Agent of such fact and the Bank shall to that extent not be obligated to provide any such form or certificate and will be entitled to withdraw or cancel any affected form or certificate, as applicable. SECTION 12.2. NO WAIVER OF RIGHTS. No delay or failure on the part of the Administrative Agent or any Bank or on the part of the holder or holders of any Note in the exercise of any power or right under any Credit Document shall operate as a waiver thereof, nor as an acquiescence in any default, nor shall any single or partial exercise thereof preclude any other or further exercise of any other power or right, and the rights and remedies hereunder of the Administrative Agent, the Banks and the holder or holders of any Notes are cumulative to, and not exclusive of, any rights or remedies which any of them would otherwise have. SECTION 12.3. NON-BUSINESS DAY. If any payment of principal or interest on any Loan or of any other Obligation shall fall due on a day which is not a Business Day, interest or fees (as applicable) at the rate, if any, such Loan or other Obligation bears for the period prior to maturity shall continue to accrue on such Obligation from the stated due date thereof to but not including the next succeeding Business Day, on which the same shall be payable. SECTION 12.4. DOCUMENTARY TAXES. The Borrower agrees that it will pay any documentary, stamp or similar taxes payable in respect to any Credit Document, including interest and penalties, in the event any such taxes are assessed, irrespective of when such assessment is made and whether or not any credit is then in use or available hereunder. SECTION 12.5. SURVIVAL OF REPRESENTATIONS. All representations and warranties made herein or in certificates given pursuant hereto shall survive the execution and delivery of this Agreement and the other Credit Documents, and shall continue in full force and effect with respect to the date as of which they were made as long as any credit is in use or available hereunder. SECTION 12.6. SURVIVAL OF INDEMNITIES. All indemnities and all other provisions relative to reimbursement to the Banks of amounts sufficient to protect the yield of the Banks with respect to the Loans, including, but not limited to, Section 1.11, Section 9.3 and Section 12.15 hereof, shall survive the termination of this Agreement and the other Credit Documents and the payment of the Loans and all other Obligations. SECTION 12.7. SHARING OF SET-OFF. Each Bank agrees with each other Bank a party hereto that if such Bank shall receive and retain any payment, whether by set-off or application of deposit balances or otherwise ("Set-off"), on any of the Loans or Reimbursement Obligations in excess of its ratable share of payments on all such obligations then outstanding to the Banks, then such Bank shall purchase for cash at face value, but without recourse, ratably from each of the other Banks such amount of the Loans or Reimbursement Obligations, or participations therein, held by each such other Banks (or interest therein) as shall be necessary to cause such Bank to share such excess payment ratably with all the other Banks; provided, however, that if any such purchase is made by any Bank, and if such excess payment or part thereof is thereafter recovered from such purchasing Bank, the related purchases from the other Banks shall be rescinded ratably and the purchase price restored as to the portion of such excess payment so recovered, but without interest. For purposes of this Section 12.7, amounts owed to or recovered by, the Administrative Agent in connection with Reimbursement Obligations in which Banks have been required to fund their participation shall be treated as amounts owed to or recovered by the Administrative Agent as a Bank hereunder. SECTION 12.8. NOTICES. Except as otherwise specified herein, all notices under the Credit Documents shall be in writing (including telecopy or other electronic communication) and shall be given to a party hereunder at its address or telecopier number set forth below or such other address or telecopier number as such party may hereafter specify by notice to the Administrative Agent and the Borrower, given by courier, by United States certified or registered mail, or by other telecommunication device capable of creating a written record of such notice and its receipt. Notices under the Credit Documents to the Banks and the Administrative Agent shall be addressed to their respective addresses, telecopier or telephone numbers set forth on the signature pages hereof, and to the Borrower and the Guarantors to: Jones Lang LaSalle Incorporated 200 East Randolph Street Chicago, Illinois 60601 Attention: Brian P. Hake Telecopy: (312) 228-0980 Telephone: (312) 228-2522 with a copy of notices of Defaults and Events of Defaults to: Hagan & Associates 200 East Randolph Street Chicago, Illinois 60601 Attention: Robert K. Hagan and Fritz E. Freidinger Telecopy: (312) 228-2050 Telephone: (312) 228-0982 Each such notice, request or other communication shall be effective (i) if given by telecopier, when such telecopy is transmitted to the telecopier number specified in this Section 12.8 or on the signature pages hereof and a confirmation of receipt of such telecopy has been received by the sender, (ii) if given by courier, when delivered, (iii) if given by mail, three business days after such communication is deposited in the mail, registered with return receipt requested, addressed as aforesaid or (iv) if given by any other means, when delivered at the addresses specified in this Section 12.8 or on the signature pages hereof; provided that any notice given pursuant to Section 1 hereof shall be effective only upon receipt. SECTION 12.9. COUNTERPARTS. This Agreement may be executed in any number of counterpart signature pages, and by the different parties on different counterparts, each of which when executed shall be deemed an original but all such counterparts taken together shall constitute one and the same instrument. SECTION 12.10. SUCCESSORS AND ASSIGNS. This Agreement shall be binding upon the Borrower and its successors and assigns, and shall inure to the benefit of each of the Banks and the benefit of their respective successors and assigns, including any subsequent holder of any Note. The Borrower may not assign any of its rights or obligations under any Credit Document without the written consent of all of the Banks. SECTION 12.11. PARTICIPANTS. Each Bank shall have the right at its own cost to grant participations (to be evidenced by one or more agreements or certificates of participation) in the Loans made and Reimbursement Obligations and/or Commitments held by such Bank at any time and from time to time to one or more other Persons; provided that no such participation shall relieve any Bank of any of its obligations under this Agreement, and, provided, further that no such participant shall have any rights under this Agreement except as provided in this Section 12.11, and the Administrative Agent shall have no obligation or responsibility to such participant. Any agreement pursuant to which such participation is granted shall provide that the granting Bank shall retain the sole right and responsibility to enforce the obligations of the Borrower and Guarantors under this Agreement and the other Credit Documents including, without limitation, the right to approve any amendment, modification or waiver of any provision of the Credit Documents, except that such agreement may provide that such Bank will not agree to any modification, amendment or waiver of the Credit Documents that would reduce the amount of or postpone any fixed date for payment of any Obligation in which such participant has an interest or release (other than pursuant to the terms hereof) any Guarantor from its guaranty of any Obligations. Any party to which such a participation has been granted shall have the benefits of Section 1.11 and Section 9.3 hereof. SECTION 12.12. ASSIGNMENT OF COMMITMENTS BY BANKS. (a) Each Bank shall have the right at any time, with the prior written consent of the Borrower (which consent shall not be unreasonably withheld or delayed) and the Administrative Agent, to assign, transfer or negotiate all or any part of its rights and obligations under the Credit Documents (including, without limitation, the indebtedness evidenced by the Notes then held by such assigning Bank, together with an equivalent percentage of its obligation to make Loans and participate in Letters of Credit) to one or more Persons, provided that, unless otherwise agreed to by the Administrative Agent, such assignment shall be of a fixed percentage (and not by its terms of varying percentage) of the assigning Bank's rights and obligations under the Credit Documents; provided that each such assignment is in an amount of at least $5,000,000 or the entire Commitment of such Bank; provided further that (i) the consent of the Borrower to any such assignment shall not be required during the continuance of an Event of Default and (ii) neither the consent of the Borrower nor of the Administrative Agent shall be required if the assignee is an Affiliate of the assigning Bank. Each such assignment shall set forth the assignee's address for notices to be given under Section 12.8 hereof hereunder and its designated Lending Office pursuant to Section 9.4 hereof. Upon any such assignment, delivery to the Administrative Agent and the Borrower of an executed copy of such assignment agreement and the forms referred to in Section 11.1 hereof, if applicable, and, the payment of a $3,500 recordation fee to the Administrative Agent, the assignee shall become a Bank hereunder, all Loans, participations in Letters of Credit and the Commitment it thereby holds shall be governed by all the terms and conditions hereof and the Bank granting such assignment shall have its Commitment, and its obligations and rights in connection therewith, reduced by the amount of such assignment. At the time of the assignment the Borrower shall execute and deliver to the assignor and/or assignee new Notes. (b) Any Bank may at any time, without the consent of the Borrower or Administrative Agent, assign all or a portion of its rights under the Credit Documents to a Federal Reserve Bank; provided, however, that no such assignment shall release the transferor Bank from its obligations hereunder or cause such Federal Reserve Bank to become a "Bank" hereunder. SECTION 12.13. AMENDMENTS. Any provision of the Credit Documents may be amended or waived if, but only if, such amendment or waiver is in writing and is signed by (a) the Borrower, (b) the Required Banks, and (c) if the rights or duties of the Administrative Agent are affected thereby, the Administrative Agent; provided that: (i) no amendment or waiver pursuant to this Section 12.13 shall (A) increase or extend any Commitment of any Bank without the consent of such Bank or (B) reduce the amount of or postpone any fixed date for payment of any principal of or interest on any Loan or Reimbursement Obligation or of any fee payable hereunder without the consent of each Bank; (ii) no amendment or waiver pursuant to this Section 12.13 shall, unless signed by each Bank, change any provision of this Section 12.13, or the definition of Required Banks, or affect the number of Banks required to take any action under the Credit Documents, or release (other than pursuant to the terms hereof) any Guarantor from its guaranty of any Obligations; and (iii) no amendment or waiver pursuant to this Section 12.13 shall, unless signed by Harris Bank, change any provision of Section 1.3 or alter its rights or obligations with respect to Swingline Loans. SECTION 12.14. HEADINGS. Section headings used in this Agreement are for reference only and shall not affect the construction of this Agreement. SECTION 12.15. LEGAL FEES, OTHER COSTS AND INDEMNIFICATION. The Borrower agrees to pay all reasonable costs and expenses of the Administrative Agent in connection with the preparation and negotiation of the Credit Documents, including without limitation, the reasonable fees and disbursements of Chapman and Cutler, counsel to the Administrative Agent, in connection with the preparation and execution of the Credit Documents, and any amendment, waiver or consent related hereto, whether or not the transactions contemplated herein are consummated. The Borrower further agrees to indemnify each Bank, the Administrative Agent, and their respective directors, officers and employees, against all losses, claims, damages, penalties, judgments, liabilities and expenses (including, without limitation, all expenses of litigation or preparation therefor, whether or not the indemnified Person is a party thereto) which any of them may incur or reasonably pay arising out of or relating to any Credit Document or any of the transactions contemplated thereby or the direct or indirect application or proposed application of the proceeds of any Loan or Letter of Credit, other than those which arise from the gross negligence or willful misconduct of the party claiming indemnification. The Borrower, upon demand by the Administrative Agent or a Bank at any time, shall reimburse the Administrative Agent or Bank for any reasonable legal or other expenses incurred in connection with investigating or defending against any of the foregoing except if the same is directly due to the gross negligence or willful misconduct of the party to be indemnified. SECTION 12.16. SET OFF. In addition to any rights now or hereafter granted under applicable law and not by way of limitation of any such rights, upon the occurrence and during the continuance of any Event of Default, each Bank and each subsequent holder of any Note is hereby authorized by the Borrower and each Guarantor at any time or from time to time, without notice to the Borrower, to the Guarantors or to any other Person, any such notice being hereby expressly waived, to set off and to appropriate and to apply any and all deposits (general or special, including, but not limited to, indebtedness evidenced by certificates of deposit, whether matured or unmatured, but not including trust accounts or other accounts of the Borrower or any Guarantor in a fiduciary capacity, and in whatever currency denominated) and any other indebtedness at any time held or owing by that Bank or that subsequent holder to or for the credit or the account of the Borrower or any Guarantor, whether or not matured, against and on account of the obligations and liabilities of the Borrower or any Guarantor to that Bank or that subsequent holder under the Credit Documents, including, but not limited to, all claims of any nature or description arising out of or connected with the Credit Documents, irrespective of whether or not (a) that Bank or that subsequent holder shall have made any demand hereunder or (b) the principal of or the interest on the Loans or Notes and other amounts due hereunder shall have become due and payable pursuant to Section 8 and although said obligations and liabilities, or any of them, may be contingent or unmatured. SECTION 12.17. CURRENCY. Each reference in this Agreement to U.S. Dollars or to an Alternative Currency (the "relevant currency") is of the essence. To the fullest extent permitted by law, the obligation of the Borrower and each Guarantor in respect of any amount due in the relevant currency under this Agreement shall, notwithstanding any payment in any other currency (whether pursuant to a judgment or otherwise), be discharged only to the extent of the amount in the relevant currency that the Person entitled to receive such payment may, in accordance with normal banking procedures, purchase with the sum paid in such other currency (after any premium and costs of exchange) on the Business Day immediately following the day on which such Person receives such payment. If the amount of the relevant currency so purchased is less than the sum originally due to such Person in the relevant currency, the Borrower or relevant Guarantor agrees, as a separate obligation and notwithstanding any such judgment, to indemnify such Person against such loss, and if the amount of the specified currency so purchased exceeds the sum of (a) the amount originally due to the relevant Person in the specified currency plus (b) any amounts shared with other Banks as a result of allocations of such excess as a disproportionate payment to such Person under Section 12.7 hereof, such Person agrees to remit such excess to the Borrower. SECTION 12.18. ENTIRE AGREEMENT. The Credit Documents constitute the entire understanding of the parties thereto with respect to the subject matter thereof and any prior or contemporaneous agreements, whether written or oral, with respect thereto are superseded thereby. SECTION 12.19. GOVERNING LAW. This Agreement and the other Credit Documents, and the rights and duties of the parties hereto, shall be construed and determined in accordance with the internal laws of the State of Illinois. SECTION 12.20. SUBMISSION TO JURISDICTION; WAIVER OF JURY TRIAL. The Borrower and each Guarantor hereby submits to the nonexclusive jurisdiction of the United States District Court for the Northern District of Illinois and of any Illinois State court sitting in the City of Chicago for purposes of all legal proceedings arising out of or relating to this Agreement, the other Credit Documents or the transactions contemplated hereby or thereby. The Borrower and each Guarantor irrevocably waives, to the fullest extent permitted by law, any objection which it may now or hereafter have to the laying of the venue of any such proceeding brought in such a court and any claim that any such proceeding brought in such a court has been brought in an inconvenient forum. THE BORROWER, EACH GUARANTOR, THE ADMINISTRATIVE AGENT, AND EACH BANK HEREBY IRREVOCABLY WAIVES ANY AND ALL RIGHT TO TRIAL BY JURY IN ANY LEGAL PROCEEDING ARISING OUT OF OR RELATING TO ANY CREDIT DOCUMENT OR THE TRANSACTIONS CONTEMPLATED THEREBY. SECTION 12.21. LIMITATION OF LIABILITY. In addition to, and not in limitation of, any limitation on liability provided by law or by any contract, agreement, instrument or document, the liability of each Guarantor that is a partnership shall be limited to the assets of such Guarantor, and no present or future partner of any such Guarantor shall have any personal liability under this Agreement, except if such partner is itself a Guarantor or the Borrower SECTION 12.22. CONFIDENTIALITY. Each Bank agrees to keep confidential any confidential written information provided to it by or on behalf of the Borrower pursuant to or in connection with this Agreement; provided that nothing herein shall prevent any Bank from disclosing any such information (i) to the Administrative Agent or any other Bank, (ii) to any participant or assignee or prospective participant or assignee so long as such participant or assignee or prospective participant or assignee agrees in writing to the requirement that such information be kept confidential in the manner contemplated by this Section 12.22, (iii) to its employees involved in the administration of this Agreement, directors, attorneys, accountants and other professional advisors (each of which shall be instructed to hold the same in confidence), (iv) in response to the request or demand of any governmental authority, (v) in response to any order of any court or other governmental authority or as may otherwise be required pursuant to any law, regulation or legal process provided, however, that such Bank, to the extent legally permitted to do so, will use its best efforts to notify the Company prior to any disclosure of information contemplated by this subparagraph (v), (vi) which has been publicly disclosed other than in breach of this Agreement, or (vii) in connection with the exercise of any remedy hereunder or under any Credit Document. In Witness Whereof, the parties hereto have caused their duly authorized officers to execute and deliver this Agreement as of the date first above written. JONES LANG LASALLE INCORPORATED By: /s/ Brian P. Hake ------------------------------ Title: Vice President and Treasurer ------------------------------ JONES LANG LASALLE CO-INVESTMENT, INC., as Guarantor By: /s/ Brian P. Hake ------------------------------ Title: Vice President and Treasurer ------------------------------ LP INTERNATIONAL, a limited liability company, as Guarantor By: /s/ Brian P. Hake ------------------------------ Title: Vice President and Treasurer ------------------------------ JONES LANG LASALLE INTERNATIONAL, INC., as Guarantor By: /s/ Brian P. Hake ------------------------------ Title: Vice President and Treasurer ------------------------------ LASALLE INVESTMENT MANAGEMENT, INC., as Guarantor By: /s/ Brian P. Hake ------------------------------ Title: Vice President and Treasurer ------------------------------ JONES LANG LASALLE AMERICAS, INC., as Guarantor By: /s/ Brian P. Hake ------------------------------ Title: Vice President and Treasurer ------------------------------ LASALLE HOTEL ADVISORS, INC., as Guarantor By: /s/ Brian P. Hake ------------------------------ Title: Vice President and Assistant Treasurer ------------------------------ JONES LANG WOOTTON USA, INC., as Guarantor By: /s/ Brian P. Hake ------------------------------ Title: Vice President and Treasurer ------------------------------ Accepted and Agreed to as of the day and year last above written. Address and Amount of Commitments: Address: HARRIS TRUST AND SAVINGS BANK, in its individual capacity as a Bank and as Administrative Agent 111 West Monroe Street Chicago, Illinois 60690 By: /s/ Scott F. Geik Attn.: Scott Geik ------------------------------ Title: Managing Director Telecopy: (312) 293-4856 ------------------------------ Telephone: (312) 461-2801 Lending Offices: Domestic Rate Loans: 111 West Monroe Street Chicago, Illinois 60690 Attn.: Scott Geik Eurocurrency Loans: 111 West Monroe Street Chicago, Illinois 60690 Attn.: Scott Geik BANK ONE, NA Address: (Main Office Chicago) 1 Bank One, Suite ILI-0349 By: /s/ Lynn Braun Chicago, Illinois 60670 ------------------------------ Attn: Charles Moffett and Title: Vice President Lynn Braun ------------------------------ Telecopy: (312) 732-1117 Telephone: (312) 732-3827 Lending Offices: Domestic Rate Loans: 1 Bank One Plaza, ILI-0349 Chicago, Illinois 60670 Attn: Charles Moffett and Lynn Braun Eurocurrency Loans: 1 Bank One Plaza, ILI-0349 Chicago, Illinois 60670 Attn: Charles Moffett and Lynn Braun THE CHASE MANHATTAN BANK Address: 270 Park Avenue, 31st Floor By /s/ Charles E. Hoagland New York, New York 10017 ------------------------------ Attn.: Charles Hoagland Title Vice President ------------------------------ Telecopy: (212) 270-3513 Telephone: (212) 270-9557 Lending Offices: Domestic Rate Loans: 270 Park Avenue, 31st Floor New York, New York 10017 Attn.: Charles Hoagland Eurocurrency Loans: 270 Park Avenue, 31st Floor New York, New York 10017 Attn.: Charles Hoagland BANK OF AMERICA, N.A. Address: 231 South LaSalle Street By /s/ Christine M. Tierney Chicago, Illinois 60697 ------------------------------ Attn.: Christine Tierney and Title Senior Vice President Adam M. Goettsche ------------------------------ Telecopy: (312) 828-1974 Telephone: (312) 828-6316 Lending Offices: Domestic Rate Loans: 231 South LaSalle Street Chicago, Illinois 60697 Attn.: Christine Tierney and Adam M. Goettsche Eurocurrency Loans: 231 South LaSalle Street Chicago, Illinois 60697 Attn.: Christine Tierney and Adam M. Goettsche LASALLE BANK NATIONAL ASSOCIATION Address: 135 South LaSalle Street By /s/ Julie Anne Eck Chicago, Illinois 60603 ------------------------------ Attn.: Julie Eck Title Assistant Vice President ------------------------------ Telecopy: (312) 904-6467 Telephone: (312) 904-2314 Lending Offices: Domestic Rate Loans: 135 South LaSalle Street Chicago, Illinois 60603 Attn: Julie Eck Eurocurrency Loans: 135 South LaSalle Street Chicago, Illinois 60603 Attn: Julie Eck FIRSTAR BANK, N.A. Address: 425 Walnut Street, 8th Floor By /s/ Thomas P. Gibbons Cincinnati, Ohio 45202 ------------------------------ Attn.: Thomas Gibbons Title Vice President ------------------------------ Telecopy: (513) 632-2068 Telephone: (513) 632-2013 Lending Offices: Domestic Rate Loans: 425 Walnut Street, 8th Floor Cincinnati, Ohio 45202 Attn.: Mark Whitson Eurocurrency Loans: 425 Walnut Street, 8th Floor Cincinnati, Ohio 45202 Attn.: Mark Whitson THE NORTHERN TRUST COMPANY Address: 50 South LaSalle Street By /s/ Craig D. Mizushima Chicago, Illinois 60675 ------------------------------ Attn.: Craig D. Mizushima Title Vice President ------------------------------ Telecopy: (312) 444-7028 Telephone: (312) 557-8575 Lending Offices: Domestic Rate Loans: 50 South LaSalle Street Chicago, Illinois 60675 Attn.: Craig D. Mizushima Eurocurrency Loans: 50 South LaSalle Street Chicago, Illinois 60675 Attn.: Craig D. Mizushima MICHIGAN NATIONAL BANK Address: 27777 Inkster Road By /s/ Theresa L. Irland Farmington Hills, Michigan ------------------------------ 48333-9065 Title First Vice President Attn.: Teresa L. Irland ------------------------------ Telecopy: (248) 473-4345 Telephone: (248) 473-4310 Lending Offices: Domestic Rate Loans: 27777 Inkster Road Farmington Hills, Michigan 48333-9065 Attn.: Teresa L. Irland Eurocurrency Loans: 27777 Inkster Road Farmington Hills, Michigan 48333-9065 Attn.: Teresa L. Irland NATIONAL WESTMINSTER BANK PLC Address: NEW YORK BRANCH P.O. Box 12264 By /s/ Wendy Bateman 3rd Floor ------------------------------ One Princes Street Name Wendy Bateman London, England ------------------------------ EC2R8PB Title Corporate Manager Attn.: Jenny O'Ross ------------------------------ NASSAU BRANCH Telecopy: 011-0171-551-1094 By: /s/ Wendy Bateman Telephone: 011-0171-551-1094 ------------------------------ E-Mail: jenny.oross@natwest.com Name: Wendy Bateman ------------------------------ Title: Corporate Manager ------------------------------ Lending Offices: Domestic Rate Loans: 65 East 55th Street, 24th Floor New York, NY 10022 Attn.: Sattie Chinapen Asst. Vice President Eurocurrency Loans: Commercial Loans, NatWest Kings Cross House 200 Rentonville Road London, NI 9HL U.K. Attn.: Karl Salesse, Manager EX-27 5
5 THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE REGISTRANT'S FORM 10-Q FOR THE PERIOD ENDED SEPTEMBER 30, 1999 AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS INCLUDED IN SUCH REPORT. 9-MOS DEC-31-1999 SEP-30-1999 21,593 0 237,023 (11,566) 0 307,898 119,793 (51,010) 842,379 218,786 0 303 0 0 291,256 842,379 0 474,737 0 590,980 0 1,544 12,312 (130,099) (20,043) (110,056) 0 0 0 (110,056) (4.98) (4.98)
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