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UNITED STATES
SECURITIES EXCHANGE COMMISSION
Washington, D.C. 20549
SCHEDULE 13D
UNDER THE SECURITIES EXCHANGE ACT OF 1934
(AMENDMENT NO. 3 )*
Grubb & Ellis Company
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(Name of Issuer)
Common Stock, par value $.01 per share
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(Title of Class of Securities)
400095204
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(CUSIP Number)
John Mullman, The Prudential Insurance Company of America
Four Gateway Center, Newark, NJ 07102
(201) 802-7500
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(Name, Address and Telephone Number of Person Authorized
to Receive Notices and Communications)
November 1, 1994
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(Date of Event which Requires Filing of this Statement)
If the filing person has previously filed a statement on Schedule 13G to report
the acquisition which is the subject of this Schedule 13D, and is filing this
schedule because of Rule 13d-1(b)(3) or (4), check the following box / /.
Check the following box if a fee is being paid with the statement / /. (A fee
is not required only if the reporting person: (1) has a previous statement on
file reporting beneficial ownership of more than five percent of the class of
securities described in Item 1; and (2) has filed no amendment subsequent
thereto reporting ownership of five percent or less of such class.) (See Rule
13d-7.)
NOTE: Six copies of this statement, including all exhibits, should be filed
with the Commission. See Rule 13d-1(a) for other parties to whom copies are to
be sent.
*The remainder of this cover page shall be filled out for a reporting person's
initial filing on this form with respect to the subject class of securities and
for any subsequent amendment containing information which would alter
disclosures provided in a prior cover page.
The information required on the remainder of this cover page shall not be
deemed to be "filed" for the purpose of Section 18 of the Securities Exchange
Act of 1934 ("Act") or otherwise subject to the liabilities of that section of
the Act but shall be subject to all other provisions of the Act (however, see
the Notes).
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SCHEDULE 13D
CUSIP No. 400095204 Page 2 of Pages
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1. NAME OF REPORTING PERSON
S.S. OR IRS IDENTIFICATION NO. OF ABOVE PERSON
THE PRUDENTIAL INSURANCE COMPANY OF AMERICA
IRS Identification No. 22-1211670
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2. CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP* (a) / /
(b) /x/
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3. SEC USE ONLY
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4. SOURCE OF FUNDS*
OO
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5. CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT TO
ITEMS 2(d) or 2(e) / /
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6. CITIZENSHIP OR PLACE OF ORGANIZATION
New Jersey
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7. SOLE VOTING POWER
NUMBER OF 3,072,060
SHARES ------------------------------------------------------
BENEFICIALLY 8. SHARED VOTING POWER
OWNED BY
EACH -0-
PERSON ------------------------------------------------------
WITH 9. SOLE DISPOSITIVE POWER
3,422,060
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10. SHARED DISPOSITIVE POWER
-0-
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11. AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON
3,422,060
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12. CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES CERTAIN SHARES
/ /
28.9%
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13. PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11)
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14. TYPE OF REPORTING PERSON*
IC
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*SEE INSTRUCTIONS BEFORE FILLING OUT!
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This Amendment No. 3 (the "Amendment") to Schedule 13D is being
filed on behalf of the undersigned to amend the Schedule 13D dated November 11,
1992 (as previously amended, the "Schedule 13D"), relating to the common stock,
par value, $.01 per share (the "Common Stock"), of Grubb & Ellis Company, a
Delaware corporation (the "Company"). Unless otherwise indicated, all
capitalized terms used herein but not defined herein shall have the same
meaning as set forth in the Schedule 13D.
ITEM 3. SOURCE AND AMOUNT OF FUNDS OR OTHER CONSIDERATION.
Item 3 of to Schedule 13D is hereby amended by
inserting the following:
As contemplated by the provisions of the 1994 Term Sheet and
in connection with the 1994 Transaction, and in consideration for Prudential's
agreement to the terms thereof, including the amendment of the New Note
Purchase Agreement, Prudential was granted on November 1, 1994 the 1994
Prudential Warrants, initially exercisable to purchase 150,000 shares of
Common Stock at an exercise price of $2.375 per share (subject to adjustment to
prevent dilution). Furthermore, the New Prudential Warrants were exchanged for
Amended New Prudential Warrants (the "Amended Prudential Warrants", and,
collectively with the 1994 Prudential Warrants, the "Current Warrants"), which
reflected amendments to (i) reduce the exercise price thereof to $3.50 per
share, (ii) extend the exercise period until December 31, 1998 and (iii)
relinquish the antidilution provisions of the New Prudential Warrants for
certain dilutive stock issuances, including the issuances of rights, options,
warrants or securities convertible into Common Stock at a price per share less
than the greater of the current market price or the exercise price per share.
The form of the 1994 Prudential Warrants and the New Prudential
Warrants are included as exhibits to the Letter Agreement dated July 20, 1994
by and between Prudential and the Company (the "Amendment Letter") which is
filed as Exhibit 1 hereto.
ITEM 4. PURPOSE OF TRANSACTION.
ITEM 6. CONTRACTS, ARRANGEMENTS, UNDERSTANDING OR RELATIONSHIPS WITH
RESPECT TO SECURITIES OF THE ISSUER.
On November 1, 1994, the Company consummated the 1994
Transaction, substantially upon the terms set forth in the 1994 Term Sheet.
The 1994 Transaction was consummated to provide
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the Company with additional working capital which the Company believes it
requires to meet its current and projected working capital needs.
Rights Offering. On October 31, 1994, the Rights Offering
closed. Pursuant to the Rights Offering, the Company's shareholders exercised
rights to purchase 84,542 shares of Common Stock at a price of $2.375 per
share. Warburg, pursuant to the terms of a Standby Agreement with the Company,
purchased 4,277,433 shares of Common Stock at the same per share price. As
contemplated by the Standby Agreement and the 1994 Term Sheet, such shares were
purchased through the cancellation of $6 million owed to Warburg by the Company
pursuant to the Warburg Loan Agreement plus a wire transfer of $4 million.
Following such payment, the Warburg Loan Agreement and the Modification and
Security Agreement were terminated.
Modification of Warrants and Issuance of Additional Warrants.
In connection with the Closing of the Rights Offering, on November 1, 1994, the
Company issued to Prudential the Current Warrants, and Prudential surrendered
the New Prudential Warrants. Similarly, Warburg exchanged the Warburg $5.50
Warrants and the $5.00 Warrants held by it for new warrants (the "Warburg
Exchange Warrants") exercisable to purchase an aggregate of 687,358 shares of
Common Stock for an exercise price of $3.50 per share. As consideration for
providing the Warburg Loan Agreement and performing its obligations pursuant to
the Standby Agreement, the Company granted Warburg 325,000 warrants with an
exercise price of $2.375 per share (the "Rights Warrants" and collectively with
the Warburg Exchange Warrants, the "1994 Warburg Warrants). Furthermore, the
Contingent Warrants held by Warburg were cancelled in connection with the
Rights Offering. The 1994 Warburg Warrants, like the Current Warrants, do not
contain provisions which require adjustments to the exercise price of the
number of shares issuable upon exercise as a result of certain dilutive stock
issuances, including the issuances of rights, options, warrants or securities
convertible into Common Stock at a price per share less than the greater of the
current market price or the exercise price per share. Additionally, Warburg,
Hanauer and Prudential each waived application of the anti-dilution provisions
of the warrants held by them with respect to issuances by the Company from
January 29, 1993 through consummation of the Rights Offering pursuant to the
Company's 1990 Stock Option Plan (including securities issued upon the exercise
of stock options granted pursuant to such Plan) and the Company's Employee
Stock Purchase Plan.
Modification of Terms of Convertible Preferred Stock.
Furthermore, in connection with the Rights Offering, the Company's Certificate
of Incorporation was amended, to amend the terms of the Junior Convertible
Preferred Stock and the Senior Convertible Preferred Stock (collectively, the
"Preferred").
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(i) Redemption Provisions. The terms of the
Preferred were amended to eliminate the mandatory redemption provisions, except
that in certain limited circumstances, described below, the Company may be
required to redeem the Junior Preferred Stock in connection with an
underwritten public offering of the Company's Common Stock.
(ii) Anti-Dilution Provisions. As a result of the
Rights Offering and related transactions, the conversion price of the Senior
Preferred Stock held by Warburg was adjusted from $3.0137 to $2.6564 per share
of Common Stock and the conversion price of the Senior Preferred Stock held by
Hanauer was adjusted from $3.0137 to $2.6716. Prudential agreed to waive the
application of the anti-dilution provisions in connection with the Rights
Offering, and thus, the Junior Preferred Stock remains at $5.6085 per share.
Furthermore, the anti-dilution provisions of the Preferred Stock held by
Prudential and Warburg were amended to eliminate an anti-dilution adjustment in
the event of certain dilutive stock issuances, including the issuances of
rights, options, warrants or securities convertible into Common Stock at a
price per share less than the greater of the current market price or the
conversion price per share. The terms of the Preferred Stock held by Hanauer
was not effected by such amendment.
(iii) Dividend Rate. The Junior Convertible
Preferred Stock was amended to increase the dividend rate effective January 1,
2002 to 10% per annum with further increases of 1% per annum effective January
1, 2003 and January 1, 2004 and 2% per annum effective January 1, 2005 and each
January 1 thereafter. Additionally, the Senior Convertible Preferred Stock was
amended so that at such time as the dividend rate of the Junior Convertible
Preferred Stock would increase above the dividend rate on the Senior
Convertible Preferred Stock, the dividend rate on the Senior Convertible
Preferred Stock will increase by the same amount.
(iv) Conversion of Junior Preferred Stock.
Furthermore, the Junior Convertible Preferred Stock was amended to provide that
in the event the Company undertakes to sell Common Stock in an underwritten
public offering and the Company's investment bankers advise the Company that in
order to complete the public offering on the most favorable terms to the
Company it is necessary to retire such Preferred Stock then the Company may
direct all holders of the such Preferred Stock to convert such Preferred Stock
into Common Stock; provided that such holders will be obligated to convert only
after the time Warburg has committed to convert its Senior Convertible
Preferred Stock and the consummation of such underwritten public offering. If
the holders of the Junior Convertible Preferred Stock are required to convert
such Preferred Stock at a time when the Common Stock issuable upon conversion
would have a value less than the
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accreted value of such Preferred Stock (including all unpaid dividends), then
such holders may, in lieu of having such Preferred Stock converted into Common
Stock, require the Company to redeem such Preferred Stock at the accreted
value.
Amendment to Stockholders' Agreement. On November 1, 1994,
Warburg, Prudential and Hanauer entered into the Second Amendment to the
Stockholders' Agreement (the "Second Amendment") pursuant to which the
Stockholders' Agreement was amended to provide Warburg and Prudential with
registration rights for the 1994 Warrants and the Current Warrants, the Common
Stock issuable upon exercise of the such warrants, and shares of Common Stock
acquired in connection with the Rights Offering. The Common Stock issuable
upon exercise of such warrants and the shares of Common Stock acquired by
Warburg in connection with the Rights Offering are subject to the voting
requirements and other terms of the Stockholders' Agreement.
Loan Modifications. On July 20, 1994 the parties entered into
the Amendment Letter, which became effective on November 1, 1994 upon the
closing of the Rights Offering, and the compliance with certain other
conditions specified therein. The Amendment Letter amends the New Note
Purchase Agreement by, among other things, (i) extending the maturity of the
Revolving Credit Notes to November 1, 1999 (and eliminating the Company's
option to convert the Revolving Credit Note into a Term Note), (ii) extending
the maturity of the Senior Notes, such that they will be repaid in two equal
installments on November 1, 1997 and 1998, (iii) extending the maturity of the
PIK Notes, such that they will be repaid in two equal installments on November
1, 2000 and 2001, (iv) increasing the interest rate on the PIK Notes from
10.65% to 11.65% effective January 1, 1996, (v) providing that commencing
January 1, 1998, the Company will apply 75% of its previous year's Adjusted
Cash Inflow (as defined below) in excess of $5 million to repay the PIK Notes,
(vi) deferring the requirement that the Company have no indebtedness pursuant
to the Revolving Credit Notes for 60 consecutive days until 1997; and (vii)
deferring application of certain financial covenants, including, limitations on
capital expenditures, until 1997. "Adjusted Cash Flow" is defined, for any
fiscal year, as an amount equal to the positive difference between (x) EBITDA
for such fiscal year and (y) the sum of (i) $5 million, (ii) interest paid in
cash in such fiscal year, (iii) taxes paid in cash in such fiscal year, (iv)
Axiom pre-tax earnings for such fiscal year net of any debt repayments in such
fiscal year and (v) supplemental debt repayments made during such fiscal year
pursuant to the terms of the New Note Purchase Agreement, as amended. The
Amendment Letter is attached hereto as Exhibit 1 and is incorporated herein by
reference.
ITEM 5. INTEREST IN SECURITIES OF THE ISSUER.
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Item 5 to the Schedule 13D is hereby amended, in
pertinent part, as follows:
(a) As of the date hereof, Prudential directly
beneficially owns 3,422,060 shares of Common Stock through its direct ownership
of (i) 397,549 shares of Common Stock issued upon exercise of the Old Warrant,
(ii) 150,000 shares of Junior Convertible Preferred Stock which are convertible
into an aggregate of 2,674,511 shares of Common Stock and (iii) currently
exercisable New Prudential Warrants to purchase an aggregate of 350,000 shares
of Common Stock. Such shares of Junior Convertible Preferred Stock and New
Prudential Warrants upon conversion and when combined with the shares of Common
Stock currently held by Prudential represent approximately 28.9% of the Common
Stock calculated in accordance with Rule 13d-3(d)(1)(i) as described below.
The shares of Junior Preferred Stock and the shares of Common Stock held by
Prudential represent 18.5% of the outstanding voting power of the Company. As
of the date hereof and based upon the knowledge of Prudential and without
independent verification, none of the other Enumerated Persons beneficially
owns any shares of the Common Stock.
By reason of the provisions of Rule 13d-3 under the
Securities Exchange Act of 1934, as amended (the "Act"), Prudential, Warburg
and Hanauer may be deemed to be a "group". Prudential does not admit that it
is a member of a "group" with Warburg and Hanauer, nor does it admit that it
beneficially owns any shares of Common Stock now or in the future owned by
Warburg or Hanauer.
As of the date hereof, Warburg directly beneficially
owns 10,118,339 shares of Common Stock of through its direct ownership of (i)
4,277,433 shares of Common Stock, (i) 127,150 shares of Senior Convertible
Preferred Stock which are convertible into an aggregate of 4,828,548 shares of
Common Stock and (ii) currently exercisable 1994 Warburg Warrants to purchase
an aggregate of 1,012,358 shares of Common Stock. Such shares of Senior
Convertible Preferred Stock and 1994 Warburg Warrants, upon conversion and
exercise, represent approximately 69.1% of the Common Stock calculated in
accordance with Rule 13d-3(d)(1)(i) as described below. The shares of Senior
Preferred Stock and Common Stock held by Warburg represent 54.7% of the
outstanding voting power of the Company.
As of the date hereof, Hanauer directly beneficially
owns 767,741 shares of Common Stock through his direct ownership of (i) 42,306
shares of Common Stock, (ii) 8,817 shares of Senior Convertible Preferred Stock
which are convertible into an aggregate of 332,908 shares of Common Stock,
(iii) currently exercisable Warburg Warrants to purchase an aggregate of
310,571 shares of Common Stock, (iv) Contingent Warrants to purchase 36,956
shares of Common Stock and (v) a
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stock option (the "Hanauer Option") under the Company's Amended and Restated
Stock Option Plan currently exercisable for 45,000 shares of Common Stock. In
addition the Hanauer Option entitles Hanauer to acquire an additional 90,000
shares of Common Stock, which have been excluded from Hanauer's beneficial
holdings reported in this Schedule 13D as the Stock option will not be
exercisable with respect to the additional 90,000 shares within 60 days of the
date hereof. Such shares of Senior Convertible Preferred Stock and Warburg
Warrants, Contingent Warrants, and Stock options, upon conversion and exercise,
when combined with the shares of Common Stock currently held by Hanauer,
represent approximately 8.1% of the Common Stock calculated in accordance with
Rule 13d-3(d)(1)(i) as described below. The shares of Senior Preferred Stock
and the shares of Common Stock held by Hanauer represent 2.3% of the
outstanding voting power of the Company.
The percentages used in this paragraph 5(a) are
calculated based upon the 8,796,207 shares of Common Stock issued and
outstanding at November 1, 1994. Such information has been provided to
Prudential by the Company. The number of shares beneficially owned by Warburg
and Hanauer as of the date hereof is as reported in the Schedule 13D, as
amended, of Warburg filed with the Securities and Exchange Commission by
Warburg.
(b) As of the date hereof, Prudential has full power
to vote all shares of Common Stock and Junior Convertible Preferred Stock
(which votes on an as-converted basis) held by it, subject to the terms of the
Stockholders' Agreement. As of the date hereof, Prudential does not have the
power to vote any shares of Common Stock issuable to it upon exercise of the
New Prudential Warrants. Upon exercise of the Current Warrants, Prudential
would have full power to vote the shares of Common Stock issued upon exercise
of the Current Warrants, subject to the terms of the Stockholders' Agreement.
Prudential has full power to dispose of any shares of the Common Stock and
Junior Convertible Preferred Stock and the Current Warrants held by it. As of
the date hereof, none of the Enumerated Persons (other than Prudential) has the
power to vote or dispose of any shares of Common Stock or Junior Convertible
Preferred Stock.
(c) None of the Enumerated Parties has effected any
transactions in the Common Stock during the preceding 60 days.
(d) Except as set forth in this Item 5, no person
other than each respective record owner referred to herein of securities is
known to have the right to receive or the power to direct the receipt of
dividends from or the proceeds of sale of such securities.
(e) Not applicable.
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ITEM 7. MATERIAL FILED AS EXHIBITS.
1. There is filed herewith as Exhibit 1 that certain
Letter Agreement dated as of July 20, 1994 by and between Prudential and the
Company, including the exhibits thereto.
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SIGNATURES
After reasonable inquiry and to the best of my
knowledge and belief, I certify that the information set forth in this
statement is true, complete and correct.
November 21 , 1994
--------------------------------------
(Date)
THE PRUDENTIAL INSURANCE COMPANY
OF AMERICA
/s/ NICHOLAS M. GRAVES
--------------------------------------
(Signature)
Nicholas M. Graves, Senior V.P.
--------------------------------------
(Name and Title)
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EXHIBIT INDEX
<TABLE>
<CAPTION>
Exhibit
Number Description
- -------- -----------
<S> <C>
1 Letter Agreement dated as of July 20, 1994 by and
between Prudential and the Company, including the
exhibits thereto.
</TABLE>
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<PAGE> 1
EXHIBIT 1
Letter Agreement dated as of
July 20, 1994 by and between
Prudential and the Company,
including the exhibits thereto.
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July 20, 1994
Grubb & Ellis Company
One Montgomery Street
Telesis Tower
San Francisco, California 94104
Attention: Robert J. Hanlon, Jr.
Chief Financial Officer
Ladies and Gentlemen:
Reference is made to the Senior Notes, the Subordinated Notes and the
Revolving Credit Note Agreement among Grubb & Ellis Company (the "Company") and
The Prudential Insurance Company of America ("Prudential"), dated as of
November 2, 1992 (as amended from time to time, the "Agreement"), pursuant to
which Prudential (i) purchased an aggregate of $10,000,000 in principal amount
of the Company's 9.90% Senior Notes due November 1, 1996 (the "Senior Notes")
and an aggregate of $10,000,000 in principal amount of the Company's 10.65%
Subordinated Payment-in-Kind Notes due November 1, 1999 (the "PIK Notes") and
(ii) agreed to make revolving credit loans to the Company in the aggregate
principal amount of $5,000,000. Capitalized terms used herein and not defined
shall have the meanings given such terms in the Agreement.
Recitals
A. The Company has informed Prudential that the Company believes it
will need additional working capital to fulfill its financial plans.
B. On March 28, 1994, the Company, Prudential and Warburg, Pincus
Investors, L.P. ("Warburg") reached agreement (the "Preliminary Agreement")
upon the terms of a proposed financing transaction to provide the Company with
additional working capital, including (i) a bridge loan facility (the "Warburg
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Robert J. Hanlon, Jr.
July 20, 1994
Page 2
Bridge Loan") provided by Warburg, (ii) a rights offering (the "Rights
Offering") of Company Common Stock, and (iii) modification to the Agreement.
C. On March 28, 1994, Warburg and the Company entered into that
certain Loan and Security Agreement (the "Warburg Loan Agreement") regarding
the Warburg Bridge Loan, pursuant to which Warburg made available to the
Company a revolving credit facility of up to $10 million.
D. In addition, as contemplated by the Preliminary Agreement and at
the request of the Company, Prudential, by letter dated March 28, 1994, granted
the Company certain waivers with respect to certain covenants contained in the
Agreement and made certain other modifications thereof.
E. The Company intends to commence the Rights Offering pursuant to
which it intends to raise not less than $10 million of equity capital. The
proceeds from the Rights Offering will be used, in part, to repay, in full, all
of the Company's indebtedness to Warburg pursuant to the Warburg Loan
Agreement.
F. By the terms of the Preliminary Agreement, and in connection with
the consummation of the Rights Offering, Prudential has agreed, among other
things, to provide the Company with additional financing through the
lengthening of the amortization periods with respect to the Company's
indebtedness to Prudential as well as making certain other modifications to the
Agreement.
G. In consideration for Prudential's agreeing to make the foregoing
accommodations, the Company has agreed to certain other provisions set forth
herein.
NOW THEREFORE, in consideration of the terms and conditions contained
herein, the Company and Prudential agree as follows:
1. Paragraph 1 of the Agreement is hereby amended as follows:
(a) In subparagraph (a) deleting the date "November 1, 1996" and
replacing it with the date "November 1, 1998";
(b) In subparagraph (b) deleting the phrase "payable at the rate
of 10.65%" and replacing it with the phrase "payable at the then
applicable PIK Rate"; and
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<PAGE> 4
Robert J. Hanlon, Jr.
July 20, 1994
Page 3
(c) In subparagraph (b) deleting the date "November 1, 1999" and
replacing it with the date "November 1, 2001".
2. Paragraph 2B.9 of the Agreement is hereby deleted in its
entirety and all references to Converted Revolving Notes throughout the
Agreement are hereby deleted.
3. Paragraph 4A of the Agreement is hereby amended and restated in
its entirety as follows:
"4A. REQUIRED PREPAYMENTS OF THE SENIOR NOTES. The Company shall
prepay the Senior Notes, without premium, in the amount of $5,000,000
on November 1, 1997, together with interest thereon to such prepayment
date. The remaining outstanding principal amount of the Senior Notes,
together with interest accrued thereon, is due and payable on November
1, 1998."
5. Paragraph 4B of the Agreement is hereby amended and restated
in its entirety as follows:
"4B. REQUIRED PREPAYMENTS OF PIK NOTES. The Company shall prepay the
PIK Notes, without premium, in the amount equal to 50% of the
aggregate principal amount of all outstanding PIK Notes as of the date
that that certain amendment letter dated July 20, 1994 by and between
Prudential and the Company becomes effective (in accordance with
Section 22 thereof) on November 1, 2000, together with interest
thereon to such prepayment date. The remaining outstanding principal
amount of the PIK Notes, together with interest accrued thereon, is
due and payable on November 1, 2001."
6. Paragraph 4C of the Agreement is hereby deleted in its
entirety, and the following shall be substituted therefor:
"4C. REQUIRED PREPAYMENT FROM EXCESS CASH FLOW. On July 1,
1998 and on each July 1 and October 1 thereafter, the Company shall
apply thirty-seven and one-half percent (37.5%) of its positive Excess
Cash Flow, if any, from the preceding fiscal year to prepay the
principal amount of the PIK Notes, plus accrued interest to the date
of prepayment on the amount of the PIK Notes so prepaid, or, if all of
the PIK Notes have been repaid, to prepay the principal amount of the
Senior Notes, plus accrued interest to date of prepayment on the
amount of the Senior Notes so prepaid. Any such prepayments with
respect to the PIK
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<PAGE> 5
Robert J. Hanlon, Jr.
July 20, 1994
Page 4
Notes and/or Senior Notes shall be applied first to accrued and unpaid
interest thereon, and then in satisfaction of required payments of
principal in inverse order of their scheduled due dates."
7. Paragraph 4I of the Agreement is hereby deleted in its
entirety.
8. Paragraph 5A of the Agreement is hereby amended by deleting
the "and" at the conclusion of subparagraph (vi) thereof, renumbering
subparagraph (vii) as subparagraph (viii) and inserting the following as a new
subparagraph (vii):
"(vii) as soon as practicable and in any event within 90 days after
the end of each fiscal year, a schedule of all outstanding Guarantees
issued on behalf of salespersons of the Company or any Restricted
Subsidiary and all outstanding loans and outstanding advances made to
such Persons pursuant to the Commission Advance Program during such
fiscal year, which schedule shall specify (a) the outstanding amount
of each such Guarantee and advance, (b) the employee on whose behalf
such Guarantee, or to whom such advance, was made, (c) whether such
outstanding amount represents an outstanding Guarantee or an
outstanding advance and (d) the date such Guarantee or advance was
initially made; and"
9. Paragraph 6A of the Agreement is hereby amended and restated,
in its entirety, as follows:
"6A. WORKING CAPITAL RATIO. The Company covenants that on
and after April 1, 1997 it will not permit the ratio of Consolidated
Current Assets to Consolidated Current Liabilities (excluding the
current portion of Funded Debt) to be less than 1:1 at the end of any
fiscal quarter."
10. Paragraph 6C.2 of the Agreement is hereby amended as follows:
(a) By deleting Subparagraph 6C.2(ii) in its entirety, and
inserting in substitution therefor, the following:
"(ii) [Intentionally Omitted];";
(b) By deleting Subparagraph 6C.2(v) in its entirety and inserting
in substitution therefor, the following:
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Robert J. Hanlon, Jr.
July 20, 1994
Page 5
"(v) additional Indebtedness consisting of nonrecourse Debt
incurred by newly created or newly acquired Restricted
Subsidiaries not to exceed $15,000,000 in the aggregate with
respect to all such additional Indebtedness plus any such
additional nonrecourse Debt incurred with respect to 222
Sutter Street Partners, Ltd.;";
(c) By deleting Subparagraph 6C.2(vi) in its entirety, and
inserting in substitution therefor, the following:
"(vi) guarantees of loans and advances made to salespersons
of the Company or any Restricted Subsidiary pursuant to the
Commission Advance Program provided that after giving effect
thereto the aggregate amount of such guarantees plus the
aggregate amount of loans and advances permitted pursuant to
Subparagraph 6C.3(vi) shall not exceed $5,000,000 outstanding
at any one time;"; and
(d) By deleting Subparagraph 6C.2 (vii) in its entirety, and
inserting in substitution therefor, the following:
"(vii) Indebtedness incurred in connection with the
refinancing of the Revolving Loans in an amount not in excess
of the aggregate outstanding principal amount of Revolving
Loans as of the date of such refinancing; and".
11. Subparagraph 6C.3(vi) is hereby amended and restated in its
entirety as follows:
"(vi) make loans or other advances under the Commission
Advance Program to, or on account of errors and omissions
insurance premium payments for, salespersons associated with
the Company or any Restricted Subsidiary provided that the
aggregate principal amount of all such loans or advances plus
the aggregate amount of all guarantees permitted pursuant to
Subparagraph 6C.2(vi) shall not exceed $5,000,000 outstanding
at any one time.
12. The parties hereto acknowledge the following amendment and
restatement of Paragraph 6C.6, which was effected pursuant to that certain
letter agreement dated as of March 28, 1994 by and between Prudential and the
Company:
-5-
<PAGE> 7
Robert J. Hanlon, Jr.
July 20, 1994
Page 6
"6C.6 SALE OF ASSETS - Transfer, sell or otherwise dispose
of assets of the Company (including, without limitation, capital stock
of or Indebtedness owned by a Restricted Subsidiary to the Company or
another Restricted Subsidiary) other than (i) assets transferred, sold
or otherwise disposed of in the ordinary course of business, including
any assets which are obsolete or worn out or which are replaced within
three months of sale by assets of at least the equivalent market
value, (ii) equipment being sold, leased, transferred or otherwise
disposed of which the Company determines is no longer required by it
in conducting its business so long as replacements are obtained for
such equipment within three months of at least the equivalent market
value, (iii) assets (other than those described in clauses (i) or
(ii)) having a fair market value of up to $5,000,000 in the aggregate
and (iv) assets (other than those described in clauses (i) or (ii))
having a fair market value above $5,000,000 in the aggregate so long
as the Company prepays its obligations hereunder and under the Notes
pursuant to Paragraph 4D, except that any Restricted Subsidiary may at
any time transfer assets to a wholly owned Restricted Subsidiary of
the Company; provided, however, that (A) no assets may be disposed of
pursuant to clause (iv) at a time when an Event of Default has
occurred and is continuing and (B) in no event shall the Company
permit the sale of its name, its trademark, its logo or any other
significant intangible assets, except in connection with a permitted
sale of a Subsidiary or division;"
13. Paragraph 6D of the Agreement is hereby deleted in its
entirety and the following is hereby substituted therefor:
"6D. INTEREST COVERAGE RATIO. As of April 1, 1997 and each
July 1, October 1, January 1 and April 1 thereafter, the Company will
not permit its Interest Coverage Ratio to be less than 2.0 to 1.
14. Paragraph 6E of the Agreement is hereby amended and restated
in its entirety as follows:
"6E. CAPITAL EXPENDITURES. The Company will not, in any
fiscal year commencing on or after January 1, 1997, permit the sum of
(i) its and its Restricted Subsidiaries' Capital Expenditures and (ii)
the cost of all acquisitions of assets or stock of other Persons to
exceed a cumulative amount equal to the sum of (a) $5,000,000, (b) an
amount equal to 25% of the Company's positive Excess Cash Flow, if
any, for the preceding
-6-
<PAGE> 8
Robert J. Hanlon, Jr.
July 20, 1994
Page 7
fiscal year and (c) the Net Proceeds received in cash during such
fiscal year from the sale by the Company of, or exercise of any
warrant or option for, any stock in the Company."
15. Paragraph 6G of the Agreement is hereby amended and restated in
its entirety as follows:
"6G. CLEAN DOWN REQUIREMENT. In each fiscal year
commencing on or after January 1, 1997 the Company will not permit to
be outstanding any Revolving Loans or fees with respect thereto or
interest thereon during one sixty consecutive day period."
16. Paragraph 6H of the Agreement is hereby amended and restated in
its entirety as follows:
"6H. AXIOM. The Company will not permit Axiom to take, or
contract to take, any action, which would result in a violation of any
covenant, representation or warranty or other provision of this
Agreement were Axiom a Restricted Subsidiary except for any such
contracts or actions permitted or contemplated by the Axiom joint
venture agreement, as in effect on the date hereof.
17. Paragraph 11A of the Agreement is hereby amended by the addition
of the following definitions in the appropriate alphabetic location:
"'COMMISSION ADVANCE PROGRAM' shall mean any program pursuant to which
the Company or any Restricted Subsidiary may make advances to their
sales agents against future real estate commissions to be earned by
such sales agents.
'Consolidated Cash Interest Expenses' shall mean, when used with
respect to the Company for any period, the Total Interest Expense
which is paid or due and payable by the Company and its Restricted
Subsidiaries during such period, excluding any interest paid or due
and payable in stock or any debt or equity securities of the Company
or any of its Subsidiaries.
'CONSOLIDATED CASH TAX PAYMENTS' shall mean, when used with respect to
the Company for any period, the sum of all taxes (of whatever kind and
nature) paid or due and payable by the Company and its Restricted
Subsidiaries during such period.
-7-
<PAGE> 9
Robert J. Hanlon, Jr.
July 20, 1994
Page 8
'EXCESS CASH FLOW' shall mean, when used with respect to the Company
for any fiscal year, an amount equal to the positive difference
between (x) EBITDA for such fiscal year and (y) the sum of (i)
$5,000,000, (ii) Consolidated Cash Interest Payments for such fiscal
year, (iii) Consolidated Cash Tax Payments for such fiscal year, (iv)
Axiom pre-tax earnings for such fiscal year net of any debt repayments
to the Company from Axiom in such fiscal year, and (v) any payments
made pursuant to Paragraphs 4A, 4B, 4C, 4D or 4E hereof in such fiscal
year, all as determined in reliance upon the annual audited financial
statements for such fiscal year delivered to the Holders of Notes
pursuant to Paragraph 5A hereof on the March 31 next succeeding the
last day of such fiscal year.
'INTEREST COVERAGE RATIO' shall mean, as of any date, the ratio of (i)
EBITDA for the immediately preceding twelve month period to (ii) Total
Interest Expense for such period.
'PIK RATE' shall mean a per annum rate of interest equal to (i) 10.65%
from the date hereof until December 31, 1995, and (ii) 11.65%
thereafter."
18. The definitions of "SENIOR DEBT", "TERMINATION DATE" and "TOTAL
INTEREST EXPENSE" in paragraph 11A of the Agreement are hereby amended and
restated in their entirety as follows:
"'SENIOR DEBT' means Indebtedness owed by the Company under the Senior
Notes and the Revolving Notes and any permitted refinancing of any
such Notes.
'TERMINATION DATE' shall mean November 1, 1999."
'TOTAL INTEREST EXPENSE' shall mean, for any period, total interest
expense (including that attributable to capital leases in accordance
with GAAP) of the Company and its Restricted Subsidiaries on a
consolidated basis with respect to all outstanding Indebtedness of the
Company and its Restricted Subsidiaries, including, without
limitation, all commissions, discounts and other fees and charges owed
with respect to letters of credit, but excluding the amortization of
original issued discount and capitalized debt issuance expenses."
19. In consideration for Prudential's willingness to extend
additional credit to the Company, to waive the Events of Default that would be
caused by certain actions the Company has expressed
-8-
<PAGE> 10
Robert J. Hanlon, Jr.
July 20, 1994
Page 9
an interest in taking and to amend the Agreement, the Company hereby agrees as
follows:
(a) The first paragraph of each of the outstanding PIK Notes shall
be amended and restated such that (x) the interest rate on
such Notes (the "PIK Rate") shall equal 10.65% until December
31, 1995 and 11.65% thereafter and (y) the interest rate
payable on principal and, to the extent permitted by law,
interest which has become due and owing shall equal the
greater of (i) 2% over the then applicable PIK Rate and (ii)
2% over the rate of interest publicly announced by Morgan
Guaranty Trust Company of New York from time to time in New
York City as its prime rate; and the Company will deliver to
each of the Holders of PIK Notes Amended and Restated PIK
Notes (the "Amended PIK Notes") substantially in the form
attached hereto as Exhibit A;
(b) That certain Stock Subscription Warrant (the "Old Warrant")
issued by the Company to Prudential on January 29, 1993 shall
be amended and restated in the form attached hereto as Exhibit
B (the "Amended Old Warrant"), such amendment to:
(i) decrease the per share exercise price from $5.50
to $3.50;
(ii) eliminate certain of the antidilution provisions
therein; and
(iii) extend the period during which the Old Warrant is
exercisable until December 31, 1998.
(c) The Company shall issue to Prudential a warrant (the "New
Warrant"), in the form attached hereto as Exhibit C, to
purchase 150,000 shares (subject to adjustment) of the
Company's common stock at $2.375 per share (subject to
adjustment), which warrant shall be exercisable on the date of
issuance and for the five year period thereafter.
20. (a) The Company hereby acknowledges and agrees that it does
not currently have any claims of any kind, causes of action, suits, debts,
damages, judgments or liabilities whatsoever, whether known or unknown,
liquidated or unliquidated, contingent or otherwise, at law or in equity
(collectively, "Claims"), against Prudential, its directors, officers,
employees, agents, successors and assigns (collectively, the "Prudential
Parties"),
-9-
<PAGE> 11
Robert J. Hanlon, Jr.
July 20, 1994
Page 10
by reason of any act, cause, document, matter or thing whatsoever up to and
including the date hereof, related (i) to the borrower lender-relationship
created pursuant to the Agreement, the related documents or any prior
agreements relating to the Debt of the Company to Prudential and/or (ii) to
Prudential's ownership of stock in the Company or exercise of its rights as a
stockholder pursuant to the Stockholders' Agreement or otherwise and/or the
Prudential Stock Purchase Agreement, including, without limitation, any Claims
based upon any theory of equitable subordination or lender liability. To the
extent that any Claims referred to in the preceding sentence do exist, and as
additional consideration for Prudential's willingness to extend additional
credit to the Company and to amend the Agreement, the Company hereby releases
and forever discharges the Prudential Parties from, and unconditionally
covenants not to sue the Prudential Parties for, such Claims. The Company
acknowledges that this is intended to be a general release, that it has been
represented by independent counsel of its own choice and it has made this
acknowledgement and executed this release with the consent and upon the advice
of its counsel.
(b) Prudential hereby acknowledges and agrees that, other than (i)
its right to repayment of principal and payments of interest with respect to
the Notes and the other obligations of the Company pursuant to the Agreement
and hereunder (including, without limitation, its obligations to pay the costs
and expenses referred to in paragraph 22(i) hereof) and (ii) contractual
obligations and obligations pursuant to the Company's Certificate of
Incorporation with respect to the Prudential Preferred Stock and the Old
Warrants contemplated by the Prudential Stock Purchase Agreement, the Company's
Certificate of Incorporation, the Stockholders' Agreement or the Old Warrants,
it does not currently have any Claims, against the Company, its directors,
officers, employees, agents, successors and assigns (collectively, the "Company
Parties"), by reason of any act, cause, document, matter or thing whatsoever up
to and including the date hereof, related (x) to the borrower
lender-relationship created pursuant to the Agreement, the related documents or
any prior agreements relating to the Debt of the Company to Prudential and/or
(y) to Prudential's ownership of stock in the Company or exercise of its rights
as a stockholder pursuant to the Stockholders' Agreement or otherwise and/or
the Prudential Stock Purchase Agreement. To the extent that any Claims
referred to in the preceding sentence do exist, and as additional consideration
for the Company's willingness to amend the Agreement, the Prudential hereby
releases and forever discharges the Company Parties from, and unconditionally
covenants not to sue the Company Parties for, such Claims, including, without
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<PAGE> 12
Robert J. Hanlon, Jr.
July 20, 1994
Page 11
limitations, any claims pursuant to any federal or state securities laws;
provided, however, that nothing herein shall be deemed to release or discharge
any of the Company Parties from, or to grant a covenant not to sue any Company
Parties with respect to, any Claim arising from a breach of any representation,
warranty or covenant of the Company contained in the Agreement, the Prudential
Securities Purchase Agreement or any other contract, agreement or document, of
which Prudential, as of the date hereof, does not have actual knowledge;
further, provided, that Prudential hereby represents that it is not aware of
any facts which would constitute any such breach which upon the effectiveness
of this agreement (in accordance with Section 22 hereof) will continue to
exist, although nothing in this clause shall in any way abrogate the effect of
the immediately prior clause. Prudential acknowledges that it has been
represented by independent counsel of its own choice and it has made this
acknowledgement and executed this release with the consent and upon the advice
of its counsel.
21. Prudential hereby acknowledges and agrees that nothing herein or
in the Agreement shall require the proceeds from the Rights Offering or any
other public offering of any shares of the Company's stock to be applied to
repay the Company's obligations pursuant to the Agreement and the Notes,
provided, however, that this Paragraph 21 shall (i) in no way relieve the
Company from any of such repayment obligations in accordance with the terms of
the Agreement and the Notes, or (ii) in any manner limit the recourse of a
holder of any of the Notes to any of the Company's property, assets or funds.
22. The provisions of this agreement, including without limitation
the amendments to the Agreement, shall not be effective until the following
conditions have been completed to the satisfaction of Prudential and its
counsel:
(a) The Company shall have executed and delivered to Prudential
the New Warrant
(b) The Company shall have executed and delivered to Prudential
the Amended Old Warrant, upon which delivery Prudential agrees
to return to the Company the Old Warrant.
(c) The Company shall have executed and delivered to each Holder
of PIK Notes an Amended PIK Note, as described above in
paragraph 17 of this agreement, upon which delivery
Prudential, on behalf of such Holders, agrees to return to the
Company the original PIK Notes.
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<PAGE> 13
Robert J. Hanlon, Jr.
July 20, 1994
Page 12
(d) The Company shall have executed and delivered to each Holder
of Senior Notes an Amended and Restated Senior Note in the
form of Exhibit D hereto, upon which delivery Prudential, on
behalf of such Holders, agrees to return to the Company the
original Senior Notes.
(e) The Company shall have executed and delivered to Prudential an
Amended and Restated Revolving Credit Note in the form of
Exhibit E hereto, upon which delivery Prudential agrees to
return to the Company the original Revolving Credit Note.
(f) All conditions precedent to the consummation of the Rights
Offering shall have been satisfied or waived and Prudential
shall have received evidence that (i) the Board of Directors
has duly approved the Company's entry into and consummation of
the transactions contemplated by the Rights Offering
Documents, (ii) the holders of the requisite majorities of
each class of the capital stock of the Company entitled to
vote have duly consented to the Rights Offering according to
the terms of the Rights Offering Documents, and (iii) any
necessary filings and other acts required to consummate the
Rights Offering or to comply with applicable laws and
regulations have been duly completed. For the purposes of
this letter agreement, the term "Rights Offering Documents"
shall mean (i) that certain Registration Statement under the
Securities Act on Form S-3 filed by the Company with respect
to the shares of Common Stock, including all exhibits,
schedules and amendments thereto and (ii) that certain Standby
Agreement by and between Warburg and the Company.
(g) Prudential shall have received copies of the certificate of
incorporation, including all amendments thereto, of the
Company certified by the Secretary of State of Delaware as
being in full force and effect on a recent date prior to the
date hereof, together with the by-laws of the Company,
including all amendments thereto, certified by the Secretary
or Assistant Secretary of the Company.
(h) Prudential shall have received a copy of each of the Rights
Offering Documents, certified as a true and correct copy
thereof by officers of the parties thereto, certified copies
of all certificates and other documents delivered in
connection with the Rights
-12-
<PAGE> 14
Robert J. Hanlon, Jr.
July 20, 1994
Page 13
Offering and copies of all opinions delivered in connection
with the Rights Offering.
(i) The Company shall have reimbursed Prudential for its costs and
expenses, including but not limited to reasonable attorneys'
fees, incurred in the preparation and negotiation of this
agreement and the related documents.
(j) The Company shall have delivered to Prudential certificates of
incumbency and corporate resolutions authorizing the
execution, delivery and performance of this agreement, the New
Warrant, the Amended Old Warrant, the New Notes and all other
documents contemplated hereby and thereby, together with a
favorable opinion of counsel, all in form and substance
satisfactory to Prudential and its counsel.
(k) The Company and Prudential shall agree, in writing, as to the
outstanding principal and accrued and unpaid interest on the
Notes as of the date on which this agreement becomes effective
in accordance with the terms of this Section 22.
23. This amendment shall be effective only to the extent
specifically set forth herein. The Company agrees that the execution by
Prudential of this agreement does not constitute "a course of dealing" in
contravention of Prudential's rights under the Agreement, the Senior Notes, the
PIK Notes, the Revolving Notes, the Old Warrant and other related documents.
Except as expressly provided herein or in the documents contemplated hereby,
the Agreement, the Senior Notes, the PIK Notes, the Revolving Notes, the Old
Warrant and other related documents are neither altered nor amended, and all
the terms and conditions of the Agreement, the Senior Notes, the PIK Notes, the
Revolving Notes, the Old Warrant and other related documents remain in full
force and effect. This amendment will supersede, replace and terminate (i) all
provisions of the Preliminary Agreement regarding the amendment of the
Agreement, the Notes and the Old Warrant and (ii) any and all other prior
agreements regarding any such amendments, and hereafter neither the Company nor
Prudential shall have any liability under such provisions of the Preliminary
Agreement or any such other agreements; provided, however, that nothing herein
shall supersede, replace or terminate any provisions of the Preliminary
Agreement relating to (i) Prudential's ownership of preferred or common stock
in the Company, (ii) the provisions of the Stockholders' Agreement or (iii) any
provision in Exhibit A thereto under the headings
-13-
<PAGE> 15
Robert J. Hanlon, Jr.
July 20, 1994
Page 14
"Bridge Financing" and "Rights Offering and Subscription Warrant Conversion."
24. This amendment may be executed in several counterparts, each
of which shall be deemed to be an original but all of which shall constitute
one and the same agreement.
-14-
<PAGE> 16
Robert J. Hanlon, Jr.
July 20, 1994
Page 15
If you are in agreement with the foregoing, please sign the enclosed
duplicate of this letter where indicated below and return the same to Mr. John
Mullman of Prudential.
Very truly yours,
THE PRUDENTIAL INSURANCE
COMPANY OF AMERICA
By:
---------------------
Title:
Agreed and accepted as of
the date first above written:
GRUBB & ELLIS COMPANY
By:--------------------------
Title:
-15-
<PAGE> 17
EXHIBIT A
THIS NOTE HAS NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS
AMENDED, AND MAY NOT BE SOLD OR TRANSFERRED IN THE ABSENCE OF SUCH
REGISTRATION OR AN EXEMPTION THEREFROM UNDER SUCH ACT.
GRUBB & ELLIS COMPANY
AMENDED AND RESTATED
10.65% SUBORDINATED PAYMENT-IN-KIND NOTE
DUE NOVEMBER 1, 2001
No. AP-_ Amended and Restated as of
$ November __, 1994
FOR VALUE RECEIVED, the undersigned, Grubb & Ellis Company, a
corporation organized and existing under the laws of the State of Delaware (the
"Company"), hereby promises to pay to _________
_________________________________ (the "Holder"), or registered assigns, the
principal sum of ________________________ DOLLARS ($_________) (subject to
prepayments pursuant to the terms of the Agreement (as defined below)) on
November 1, 2001, with interest (computed on the basis of a 360-day year --
30-day month) on the unpaid balance thereof at the then applicable PIK Rate
from the date of issuance of the Original Note (as defined below), payable
semiannually on the first day of February and August in each year, commencing
on August 1, 1993, until the principal hereof shall have become due and
payable, provided that the unpaid balance of any principal and, to the extent
permitted by law, interest which shall have become due and payable shall bear
interest until paid at the greater of (i) 2% over the then applicable PIK Rate
and (ii) 2% over the rate of interest publicly announced by Morgan Guaranty
Trust Company of New York from time to time in New York City as its prime rate.
For the purposes of this Note, the PIK Rate shall mean a per annum interest
rate equal to (i) 10.65% until December 31, 1995 and (ii) 11.65% thereafter.
Subject to the provisions of the Agreement (as defined below), the
Company may, in its discretion, issue additional PIK Notes (as defined in the
Agreement) in lieu of a cash payment of any or all of the interest due on this
Note at any time prior to the retirement of all of the Company's Amended and
Restated 9.90% Senior Notes due November 1, 1998 issued pursuant to the
Agreement. Each issuance of additional PIK Notes in lieu of cash payments of
interest on the PIK Notes shall be made pro rata with respect to the
outstanding Notes prior to such issuance. Any such additional PIK Notes shall
be governed by and subject to the
<PAGE> 18
Agreement (as defined below) and shall be subject to the same terms (including
the rate of interest from time to time payable thereon) as this Note (except,
as the case may be, with respect to the issuance date and aggregate principal
amount).
Payments of both principal and interest are to be made at the main
office of Morgan Guaranty Trust Company of New York in New York City, or such
other place as the holder hereof shall designate to the Company in writing, in
lawful money of the United States of America.
This Note is one of a series of PIK Notes (the "Notes") issued pursuant
to a Senior Note, Subordinated Note and Revolving Credit Note Agreement dated
as of November 2, 1992 (as amended from time to time, herein called the
"Agreement") between the Company and The Prudential Insurance Company of
America, and is subject thereto and entitled to the benefits thereof. As
provided in the Agreement, this Note is subject to prepayment, in whole or in
part, as specified in the Agreement. The Company agrees to make prepayments of
principal on the dates and in the amounts specified in the Agreement.
This Note is a registered Note and, as provided in the Agreement, upon
surrender of this Note for registration of transfer, duly endorsed, or
accompanied by a written instrument of transfer duly executed, by the
registered holder hereof or his attorney duly authorized in writing, a new Note
for a like principal amount will be issued to, and registered in the name of,
the transferee. Prior to due presentment for registration of transfer, the
Company may treat the person in whose name this Note is registered as the owner
hereof for the purpose of receiving payment and for all other purposes, and the
Company shall not be affected by any notice to the contrary.
In case an Event of Default, as defined in the Agreement, shall occur
and be continuing, the principal of this Note may be declared due and payable
in the manner and with the effect provided in the Agreement.
The principal of and premium (if any) and interest on this Note is
subordinate and junior, to the extent set forth in the Agreement, to "the
Senior Debt" as defined in the Agreement.
This Note is intended to be performed in the State of New York, and
shall be construed and enforced in accordance with the law of such State.
The Company agrees in accordance with the Agreement to pay, and save the
holder hereof harmless against any liability for, any expenses arising in
connection with the enforcement by the holder hereof of any of its rights under
this Note or the Agreement.
-2-
<PAGE> 19
This Note amends and restates in its entirety that certain 10.65%
Subordinated Payment-In-Kind Note Due November 1, 1999 dated [ ]
(the "Original Note") issued by the Company to the Holder, and is made in
substitution and not in payment thereof. This Note is not intended as and
shall not be deemed to constitute a novation.
GRUBB & ELLIS COMPANY
By:
---------------------------
Name:
Title:
-3-
<PAGE> 20
EXHIBIT B
Stock Subscription Warrant to Subscribe for
200,000 Shares of Common Stock
THIS STOCK SUBSCRIPTION WARRANT AND ANY SHARES ACQUIRED UPON THE
EXERCISE OF THIS STOCK SUBSCRIPTION WARRANT HAVE NOT BEEN REGISTERED UNDER THE
SECURITIES ACT OF 1933, AS AMENDED. NEITHER THIS STOCK SUBSCRIPTION WARRANT
NOR ANY OF SUCH SHARES MAY BE SOLD OR TRANSFERRED IN THE ABSENCE OF SUCH
REGISTRATION OR AN EXEMPTION THEREFROM UNDER SAID ACT.
STOCK SUBSCRIPTION WARRANT
To Subscribe for and Purchase Shares
of Common Stock of
GRUBB & ELLIS COMPANY
THIS CERTIFIES THAT, for value received,
THE PRUDENTIAL INSURANCE COMPANY OF AMERICA ("Prudential") or
registered assigns, is entitled to subscribe for and purchase from GRUBB &
ELLIS COMPANY (herein called the "Company"), a corporation organized and
existing under the laws of the State of Delaware, at any time or from time to
time during the period specified in paragraph 2 hereof, up to
TWO HUNDRED THOUSAND
fully paid and nonassessable shares of the Company's Common Stock (the "Common
Stock") at an exercise price per share of $3.50 (the "Exercise Price"). The
number of shares purchasable hereunder and the Exercise Price are subject to
adjustment as provided in paragraph 4 hereof. These Stock Subscription
Warrants were originally issued pursuant to the Agreement. The term
"Warrants", as used herein, shall mean this Stock Subscription Warrant,
including all amendments hereto. The term "Warrant Shares", as used herein,
refers to the shares purchasable upon the exercise of the Warrants.
Certain terms used herein and not elsewhere defined are defined
in paragraph 15 hereof.
This Warrant is subject to the following provisions, terms and
conditions:
1. Manner of Exercise; Issuance of Certificates; Payment for
Shares. The rights represented by this Warrant may
<PAGE> 21
be exercised by the holder hereof in whole or in part (but not as to a
fractional Warrant Share), by the surrender of this Warrant, together with a
completed Exercise Agreement in the form attached hereto, during normal
business hours on any business day at the principal office of the Company (or
such other office or agency of the Company in New York, New York or San
Francisco, California as it may designate by notice in writing to the holder
hereof at the address of such holder appearing on the books of the Company) at
any time during the period set forth in paragraph 2 hereof and upon payment to
the Company by certified check or bank draft of the Exercise Price for such
shares, or, at the election of the holder hereof, by delivery of other Warrants
equal in value to the aggregate Exercise Price with respect to such Warrants
being exercised, the value of which other Warrants shall be deemed to equal the
difference between the Market Price of a share of Common Stock on the date
immediately preceding the date of exercise and the then current Exercise Price.
The Company agrees that the shares so purchased shall be and are deemed to be
issued to the holder hereof or its designee as the record owner of such shares
as of the close of business on the date on which this Warrant shall have been
surrendered and payment made for such shares as aforesaid. Certificates for
the Warrant Shares so purchased, representing the aggregate number of shares
specified in said Exercise Agreement, shall be delivered to the holder hereof
within a reasonable time, not exceeding five business days, after the rights
represented by this Warrant shall have been so exercised. Each stock
certificate so delivered shall be in such denominations as may be requested by
the holder hereof and shall be registered in the name of said holder or such
other name (upon compliance with the transfer requirements hereinafter set
forth) as shall be designated by said holder. If this Warrant shall have been
exercised only in part, then, unless this Warrant has expired, the Company
shall, at its expense, at the time of delivery of said stock certificates,
deliver to said holder a new Warrant representing the number of shares with
respect to which this Warrant shall not then have been exercised. The Company
shall pay all taxes and other expenses and charges payable in connection with
the preparation, execution and delivery of stock certificates (and any new
Warrants) pursuant to this paragraph except that, in case such stock
certificates shall be registered in a name or names other than the holder of
this Warrant or its nominee, funds sufficient to pay all stock transfer taxes
which shall be payable in connection with the execution and delivery of such
stock certificates shall be paid by the holder hereof to the Company at the
time of the delivery of such stock certificates by the Company as mentioned
above.
2. Period of Exercise. This Warrant is exercisable at any time
or from time to time prior to December 31, 1998.
3. Shares to be Fully Paid; Reservation of Shares. The Company
covenants and agrees that all Warrant Shares will, upon
-2-
<PAGE> 22
issuance, be fully paid and nonassessable and free from preemptive rights and
all taxes, liens and charges with respect to the issue thereof; and without
limiting the generality of the foregoing, the Company covenants and agrees that
it will from time to time take all such action as may be required to assure
that the par value per Warrant Share is at all times equal to or less than the
effective Exercise Price. The Company further covenants and agrees that during
the period within which the rights represented by this Warrant may be
exercised, the Company will at all times have authorized, and reserved for the
purpose of issue upon exercise of the subscription rights evidenced by this
Warrant, a sufficient number of shares of Common Stock to provide for the
exercise of the rights represented by this Warrant. The Company shall take all
such action as may be necessary to assure that such shares of Common Stock may
be so issued without violation of any applicable law or regulation and will be
approved for listing on any domestic securities exchange upon which the Common
Stock may be listed. The Company further covenants and agrees that it will, at
any time, at its expense, promptly list on each national securities exchange on
which any Capital Stock is at the time listed, upon official notice of
issuance, Common Stock issuable upon the exercise of any Warrant as provided in
paragraph 1 hereof, and maintain such listing of all shares of Common Stock
from time to time issuable upon such exercise, and will, at any time, register
under the Securities Exchange Act of 1934, as amended, all shares of Common
Stock from time to time issuable upon such exercise if and at the time that any
existing shares of Capital Stock are so registered.
4. Anti-dilution Provisions. The Exercise Price set forth
above shall be subject to adjustment from time to time as hereinafter provided.
For purposes of this paragraph 4, the term "Capital Stock" as used herein
includes the Company's Common Stock and shall also include any capital stock of
any class of the Company hereafter authorized which shall not be limited to a
fixed sum or percentage in respect of the rights of the holders thereof to
participate in dividends and in the distribution of assets upon the voluntary
or involuntary liquidation, dissolution or winding up of the Company; provided
that the shares purchasable pursuant to this Warrant shall include only Common
Stock. Upon each adjustment of the Exercise Price, this Warrant shall
thereafter represent the right to purchase, at the Exercise Price resulting
from such adjustment, the largest number of shares of Common Stock obtained by
multiplying the Exercise Price in effect immediately prior to such adjustment
by the number of shares of Common Stock purchasable thereunder immediately
prior to such adjustment and dividing the product thereof by the Exercise Price
resulting from such adjustment.
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<PAGE> 23
In case the Company, at any time, shall be a party to any
Transaction, each holder hereof, upon the exercise hereof at any time on or
after the Consummation Date shall be entitled to receive, and this Warrant
shall thereafter represent the right to receive, in lieu of the Common Stock
issuable upon exercise prior to the Consummation Date, the kind and amount of
securities or property (including cash) which it would have owned or have been
entitled to receive after the happening of such Transaction had this Warrant
been exercised immediately prior to such Transaction.
Notwithstanding anything contained herein to the contrary, the
Company shall not effect any Transaction unless prior to the consummation
thereof each corporation or entity (other than the Company) which may be
required to deliver any securities or other property upon the exercise of
Warrants, the surrender of Warrants or the satisfaction of exercise rights as
provided herein, shall assume, by written instrument delivered to each holder
of Warrants, the obligation to deliver to such holder such securities or other
property to which, in accordance with the foregoing provisions, such holder may
be entitled, and such corporation or entity shall have similarly delivered to
each holder of Warrants an opinion of counsel for such corporation or entity,
satisfactory to each holder of Warrants, which opinion shall state that all the
outstanding Warrants, including, without limitation, the exercise provisions
applicable thereto, if any, shall thereafter continue in full force and effect
and shall be enforceable against such corporation or entity in accordance with
the terms hereof and thereof and, together with such other matters as such
holders may reasonably request.
In case the Company shall (i) pay a dividend in shares of
Capital Stock or securities convertible into Capital Stock or make a
distribution to all holders of shares of Capital Stock in shares of Capital
Stock or securities convertible into Capital Stock, (ii) subdivide its
outstanding shares of Capital Stock, (iii) combine its outstanding shares of
Capital Stock into a smaller number of shares of Capital Stock or (iv) issue by
reclassification of its shares of Capital Stock other securities of the
Corporation, the Exercise Price shall be adjusted (to the nearest cent) by
multiplying the Exercise Price immediately prior to such adjustment by a
fraction, of which the numerator shall be the number of shares of Capital Stock
outstanding immediately prior to the occurrence of such event, and of which the
denominator shall be the number of shares of Capital Stock outstanding
(including any convertible securities issued pursuant to clause (i) or (iv)
above on an as converted basis) immediately thereafter. An adjustment made
pursuant to the foregoing sentence shall become effective immediately after the
effective date of such event retroactive to the record date, if any, for such
event.
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<PAGE> 24
(d) Notice of Adjustment. Upon the occurrence of any event
requiring an adjustment of the Exercise Price, then and in each such case the
Company shall promptly deliver to each holder of Warrants a certificate signed
by the President or any Vice President and the Secretary or any Assistant
Secretary of the Company (an "Officers' Certificate") stating the Exercise
Price resulting from such adjustment and the increase or decrease, if any, in
the number of shares of Common Stock issuable upon exercise of the Warrants,
setting forth in reasonable detail the method of calculation and the facts upon
which such calculation is based. Within 90 days after each fiscal year in
which any such adjustment shall have occurred, or within 30 days after any
request therefor by any holder of Warrants stating that such holder
contemplates exercise of such Warrants, the Company will obtain and deliver to
each holder of Warrants the opinion of its regular independent auditors or
another firm of independent public accountants of recognized national standing
selected by the Company's Board of Directors who are satisfactory to the
registered holder of this Warrant, which opinion shall confirm the statements
in the most recent Officers' Certificate delivered under this paragraph 4(d).
(e) Other Notices. In case at any time:
(i) the Company shall declare or pay to the holders of Capital
Stock any dividend other than a regular periodic cash dividend or any
periodic cash dividend in excess of 115% of the cash dividend for the
comparable fiscal period in the immediately preceding fiscal year;
(ii) the Company shall declare or pay any dividend upon Capital
Stock payable in stock or make any special dividend or other
distribution (other than regular cash dividends) to the holders of
Capital Stock;
(iii) the Company shall offer for subscription pro rata to the
holders of Capital Stock any additional shares of stock of any class or
other rights;
(iv) there shall be any capital reorganization, or
reclassification of the Capital Stock of the Company, or consolidation
or merger of the Company with, or sale of all or substantially all of
its assets to, another corporation or other entity;
(v) there shall be a voluntary or involuntary dissolution,
liquidation or winding-up of the Company; or
(vi) there shall be any other Transaction;
then, in any one or more of such cases, the Company shall give to the holder of
each Warrant (a) at least 15 days prior to any
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<PAGE> 25
event referred to in clause (i) or (ii) above, at least 30 days prior to any
event referred to in clause (iii), (iv) or (v) above, and within five business
days after it has knowledge of any pending Transaction, written notice of the
date on which the books of the Company shall close or a record shall be taken
for such dividend, distribution or subscription rights or for determining
rights to vote in respect of any such reorganization, reclassification,
consolidation, merger, sale, dissolution, liquidation, winding-up or
Transaction and (b) in the case of any such reorganization, reclassification,
consolidation, merger, sale, dissolution, liquidation, winding-up or
Transaction known to the Company, at least 30 days prior written notice of the
date (or, if not then known, a reasonable approximation thereof by the Company)
when the same shall take place. Such notice in accordance with the foregoing
clause (a) shall also specify, in the case of any such dividend, distribution
or subscription rights, the date on which the holders of Capital Stock shall be
entitled thereto, and such notice in accordance with the foregoing clause (b)
shall also specify the date on which the holders of Capital Stock shall be
entitled to exchange their Capital Stock for securities or other property
deliverable upon such reorganization, reclassification, consolidation, merger,
sale, dissolution, liquidation, winding-up or Transaction, as the case may be.
Such notice shall also state that the action in question or the record date is
subject to the effectiveness of a registration statement under the Securities
Act or to a favorable vote of security holders, if either is required.
5. Certain Agreements of the Company. The Company covenants
and agrees that:
(a) Certain Actions Prohibited. The Company will not by
amendment of its certificate of incorporation or through any reorganization,
transfer of assets, consolidation, merger, dissolution, issue or sale of
securities or any other voluntary action, avoid or seek to avoid the observance
or performance of any of the terms to be observed or performed hereunder by the
Company, but will at all times in good faith assist in the carrying out of all
the provisions of this Warrant and in the taking of all such action as may
reasonably be requested by the holder of any Warrant in order to protect the
exercise rights of the holders of the Warrants. Without limiting the
generality of the foregoing, the Company (i) will not increase the par value of
any shares of Common Stock receivable upon the exercise of the Warrants above
the Exercise Price then in effect, (ii) will take all such actions as may be
necessary or appropriate in order that the Company may validly and legally
issue fully paid and nonassessable shares of Common Stock upon the exercise of
all Warrants from time to time outstanding, (iii) will not take any action
which results in any adjustment of the number of shares of Common Stock
issuable after the action upon the exercise of all of the Warrants would exceed
the total number of shares of Common
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<PAGE> 26
Stock then authorized by the Company's certificate of incorporation and
available for the purpose of issue upon such exercise, and (iv) will not issue
any capital stock of any class which has the right to more than one vote per
share or any capital stock of any class which is preferred as to dividends or
as to the distribution of assets upon voluntary or involuntary dissolution,
liquidation or winding-up, unless the rights of the holders thereof shall be
limited to a fixed sum or percentage (or floating rate related to market
yields) of par value or stated value in aspect of participation in dividends
and a fixed sum or percentage of par value or stated value in any such
distribution of assets.
(b) Successors and Assigns. This Warrant will be binding
upon any entity succeeding to the Company by merger, consolidation or
acquisition of all or substantially all of the Company's assets.
(c) Issuance of Warrant Securities. If the issuance of any
Warrant Shares required to be reserved for purposes of exercise of this Warrant
or for the conversion of such Warrant Shares requires registration with or
approval of any Federal governmental authority under any Federal or state law
(other than any registration under the Securities Act) or listing on any
national securities exchange, before such shares may be issued upon exercise of
this Warrant, the Company will, at its expense, use its best efforts to cause
such shares to be duly registered or approved, or listed on the relevant
national securities exchange, as the case may be, at such time, so that such
shares may be issued in accordance with the terms hereof and so converted.
6. Issue Tax. The issuance of certificates for Warrant Shares
upon the exercise of Warrants shall be made without charge to the holders of
such Warrants or such shares for any issuance tax in respect thereof, provided
that the Company shall not be required to pay any tax which may be payable in
respect of any transfer involved in the issuance and delivery of any
certificate in a name other than the holder of the Warrant exercised.
7. Closing of Books. The Company will at no time close its
transfer books against the transfer of any Warrant, of any Warrant Shares
issued or issuable upon the exercise of any Warrant or in any manner which
interferes with the timely exercise of this Warrant.
8. Amendments to Terms of Warrant Shares. The Company will not
amend the terms of the Warrant Shares.
9. Availability of Information. The Company will cooperate
with each holder of any Warrants or Warrant Shares in supplying such
information as may be necessary for such holder to
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<PAGE> 27
complete and file any information reporting forms presently or hereafter
required by the Securities and Exchange Commission as a condition to the
availability of an exemption from the Securities Act for the sale of any
Warrants or Warrant Shares. The Company will deliver to any person at the time
holding any Warrants, promptly upon their becoming available, copies of all
financial statements, reports, notices and proxy statements sent or made
available generally by the Company to its stockholders, and copies of all
regular and periodic reports and all registration statements and prospectuses
filed by the Company with any securities exchange or with the Securities and
Exchange Commission.
10. No Rights or Liabilities as a Stockholder. This Warrant
shall not entitle the holder hereof to any voting rights or other rights as a
stockholder of the Company. No provision of this Warrant, in the absence of
affirmative action by the holder hereof to purchase Warrant Shares, and no mere
enumeration herein of the rights or privileges of the holder hereof, shall give
rise to any liability of such holder for the Exercise Price or as a stockholder
of the Company, whether such liability is asserted by the Company or by
creditors of the Company.
11. Transfer and Exchange.
(a) (1) The transfer of this Warrant and all rights hereunder,
in whole or in part, is registrable at the office or agency of the Company
referred to below by the holder hereof in person or by his duly authorized
attorney, upon surrender of this Warrant properly endorsed. Each taker and
holder of this Warrant, by taking or holding the same, consents and agrees that
this Warrant, when endorsed in blank, shall be deemed negotiable, and that the
holder hereof, when this Warrant shall have been so endorsed, may be treated by
the Company and all other persons dealing with this Warrant as the absolute
owner and holder hereof for any purpose and as the person entitled to exercise
the rights represented by this Warrant, or to the registration of transfer
hereof on the books of the Company; and until due presentment for registration
of transfer on such books the Company may treat the registered holder hereof as
the owner and holder for all purposes, and the Company shall not be affected by
notice to the contrary.
(2) The holder of this Warrant, by acceptance hereof,
understands that the Warrant Securities are characterized as "restricted
securities" under the federal securities laws inasmuch as they are being or
will be acquired from the Company in a transaction not involving a public
offering and that under such laws and applicable regulations such Warrant
Securities may be resold without registration under the Securities Act only in
certain limited circumstances. The holder of this Warrant, by acceptance
hereof, agrees to comply with all applicable laws
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<PAGE> 28
(including, without limitation, any filing required by the Hart-Scott-Rodino
Antitrust Improvements Act of 1976) upon exercise hereof.
The holder of this Warrant, by acceptance hereof, represents
that such holder is acquiring this Warrant and any Warrant Shares to be issued
upon exercise hereof for its own account (including any separate account) for
the purpose of investment and not with a view to or for sale in connection with
any distribution thereof. The holder hereof further represents that such
holder has had an opportunity to ask questions and receive answers from the
Company regarding the terms and conditions of the offering of the Warrant
Securities as required by Section (b)(2)(ii)(v) of Rule 502 of Regulation D
under the Securities Act.
Without in any way limiting the foregoing, the holder hereof
further agrees not to make any disposition of all or any portion of the Warrant
Securities unless and until:
(x) There is then in effect a Registration Statement under the
Securities Act covering such proposed disposition and such disposition is made
in accordance with such Registration Statement; or
(y) (i) The holder hereof shall have notified the Company of
the proposed disposition and shall have furnished the Company with a detailed
statement of the circumstances surrounding the proposed disposition, and (ii)
shall have furnished the Company with an opinion of counsel, reasonably
satisfactory to the Company (it being understood that if the holder of this
Warrant is a party to the Agreement, counsel who is such party's employee shall
be deemed reasonably satisfactory to the Company), that such disposition will
not require registration of such Warrant Securities under the Securities Act.
(b) Register. The Company shall maintain, at the principal
office of the Company (or such other office or agency of the Company in New
York, New York or San Francisco, California as it may designate by notice to
the holder hereof), a register for the Warrants, in which the Company shall
record the name and address of the person in whose name a Warrant has been
issued, as well as the name and address of each transferee and each prior owner
of such Warrant. Within 10 days after any holder of Warrants shall by notice
request the same, the Company will deliver to such holder a certificate, signed
by one of its officers, listing the name and address of every other holder of
Warrants and/or Warrant Shares, as such information appears in said register
and in the stock transfer books of the Company at the close of business on the
day before such certificate is signed.
-9-
<PAGE> 29
(c) Warrants Exchangeable for Different Denominations. This
Warrant is exchangeable, upon the surrender hereof by the holder hereof at the
office or agency of the Company referred to in paragraph 11(b), for new
Warrants of like tenor representing in the aggregate the right to subscribe for
and purchase the number of shares which may be subscribed for and purchased
hereunder of Common Stock, each of such new Warrants to represent the right to
subscribe for and purchase such number of shares as shall be designated by said
holder hereof at the time of such surrender.
(d) Replacement of Warrants. Upon receipt of evidence
reasonably satisfactory to the Company of the loss, theft, destruction or
mutilation of this Warrant and, in the case of any such loss, theft or
destruction, upon delivery of an indemnity bond (or, in the case of any
institutional holder, an indemnity agreement) reasonably satisfactory in form
and amount to the Company or, in the case of any such mutilation, upon
surrender and cancellation of such Warrant, the Company at its expense will
execute and deliver, in lieu thereof, a new Warrant of like tenor.
(e) Cancellation; Payment of Expenses. Upon the surrender of
this Warrant in connection with any exchange, transfer or replacement as
provided in this paragraph 11, this Warrant shall be promptly cancelled by the
Company. The Company shall pay all taxes (other than securities transfer
taxes) and all other expenses and charges payable in connection with the
preparation, execution and delivery of Warrants pursuant to this paragraph 11.
12. Notices. All notices, requests and other communications
required or permitted to be given or delivered to the holders of Warrants shall
be in writing, and shall be delivered, or shall be sent by certified or
registered mail, postage prepaid and addressed, to each holder at the address
shown on the register for the Warrants, or at such other address as shall have
been furnished to the Company by notice from such holder. All notices,
requests and other communications required or permitted to be given or
delivered to the Company shall be in writing, and shall be delivered, or shall
be sent by certified or registered mail, postage prepaid and addressed, to the
office of the Company, at One Montgomery Street, San Francisco, California
94104, Attention: Chief Financial Officer, with a copy to General Counsel, or
at such other address as shall have been furnished to the holders of Warrants
by notice from the Company. Any such notice, request or other communication
may be sent by telegram or telex, but shall in such case be subsequently
confirmed by a writing delivered or sent by certified or registered mail as
provided above. All notices shall be deemed to have been given either at the
time of the delivery thereof to (or the receipt by, in the case of a telegram
or telex) any
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<PAGE> 30
officer or employee of the person entitled to receive such notice at the
address of such person for purposes of this paragraph 12, or, if mailed, at the
completion of the third full day following the time of such mailing thereof to
such address, as the case may be.
13. Governing Law. This Warrant shall be construed in
accordance with and governed by the laws of the State of New York without
regard to the principles of conflicts of laws.
14. Remedies. The Company stipulates that the remedies at law
of the holder of this Warrant in the event of any default or threatened default
by the Company in the performance of or compliance with any of the terms of
this Warrant are not and will not be adequate, and that such terms may be
specifically enforced by a decree for the specific performance of any agreement
contained herein or by an injunction against a violation of any of the terms
hereof or otherwise.
15. Definitions. For the purpose of this Warrant, the
following terms shall have the following meanings:
"Additional Shares of Capital Stock" shall mean all shares
(including treasury shares) of Capital Stock issued or sold (or, pursuant to
paragraph 4(a) deemed to be issued) by the Company after the date hereof,
whether or not subsequently reacquired or retired by the Company, other than
shares of Common Stock issued upon the exercise of the Warrants.
"Capital Stock" shall have the meaning assigned to such term in
paragraph 4.
"Consummation Date" shall mean the date of the consummation of a
Transaction.
"Convertible Securities" shall mean any evidences of
indebtedness, shares of stock (other than Common Stock) or securities directly
or indirectly convertible into or exchangeable for Additional Shares of Capital
Stock.
"Market Price" shall mean, on any date specified herein, (A) if
any class of Capital Stock is listed or admitted to trading on any national
securities exchange, the highest price obtained by taking the arithmetic mean
over a period of twenty consecutive Trading Days ending the second Trading Day
prior to such date of the average, on each such Trading Day, of the high and
low sale price of shares of each such class of Capital Stock or if no such sale
takes place on such date, the average of the highest closing bid and lowest
closing asked prices thereof on such date, in each case as officially reported
on all national securities exchanges on which each such class of Capital Stock
is then listed or admitted to trading, or (B) if no shares of any
-11-
<PAGE> 31
class of Capital Stock are then listed or admitted to trading on any national
securities exchange, the highest closing price of any class of Capital Stock on
such date in the over-the-counter market as shown by NASDAQ or, if no such
shares of any class of Capital Stock are then quoted in such system, as
published by the National Quotation Bureau, Incorporated or any similar
successor organization, and in either case as reported by any member firm of
the New York Stock Exchange selected by the Company. If no shares of any class
of Capital Stock are then listed or admitted to trading on any national
securities exchange and if no closing bid and asked prices thereof are then so
quoted or published in the over-the-counter market, "Market Price" shall mean
the higher of (x) the book value per share of Capital Stock (assuming for the
purposes of this calculation the economic equivalence of all shares of all
classes of Capital Stock) as determined on a fully diluted basis in accordance
with generally accepted accounting principles by a firm of independent public
accountants of recognized standing (which may be its regular auditors) selected
by the Board of Directors of the Company as of the last day of any month ending
within 60 days preceding the date as of which the determination is to be made
or (y) the fair value per share of Capital Stock (assuming for the purposes of
this calculation the economic equivalence of all shares of all classes of
Capital Stock), as determined on a fully diluted basis in good faith by an
independent brokerage firm or Standard & Poor's Corporation (as selected by the
Board of Directors of the Company), as of a date which is 15 days preceding the
date as of which the determination is to be made.
"Options" shall mean rights, options or warrants to subscribe
for, purchase or otherwise acquire either Additional Shares of Capital Stock or
Convertible Securities.
"Other Securities" shall mean any stock (other than Capital
Stock) and any other securities of the Company or any other Person (corporate
or otherwise) which the holders of the Warrants at any time shall be entitled
to receive, or shall have received, upon the exercise or partial exercise of
the Warrants, in lieu of or in addition to Common Stock.
"Prudential Warrants" shall mean all warrants, including any
amendments thereto, issued pursuant to the Securities Purchase Agreement dated
November 2, 1992 between the Company and Prudential.
"Securities Act" shall mean the Securities Act of 1933, as
amended.
"Trading Day" shall mean any day on which the New York Stock
Exchange is open for trading on a regular basis.
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<PAGE> 32
"Transaction" shall mean any transaction to which the Company is
a party at any time (including, without limitation, a merger, consolidation,
sale of all or substantially all of the Company's assets, liquidation or
recapitalization of the Capital Stock) in which the previously outstanding
Capital Stock shall be changed into or exchanged for different securities of
the Company or common stock or other securities of another corporation or
interests in a noncorporate entity or other property (including cash) or any
combination of any of the foregoing or in which the Capital Stock ceases to be
a publicly traded security either listed on the New York Stock Exchange or the
American Stock Exchange or quoted by NASDAQ or any successor thereto or
comparable system.
"Warrant Securities" shall mean the Warrants and the Warrant
Shares.
16. Miscellaneous.
(a) Amendments. This Warrant and any provision hereof may be
amended or waived only by an instrument in writing signed by the holders of
then outstanding Prudential Warrants representing the right to purchase not
less than a majority of the total number of shares of Common Stock issuable
upon exercise of all then outstanding Prudential Warrants then not transferable
without registration under the Securities Act and, if it is to be bound
thereby, by the Company.
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<PAGE> 33
(b) Descriptive Headings. The descriptive headings of the
several paragraphs of this Warrant are inserted for purposes of reference only,
and shall not affect the meaning or construction of any of the provisions
hereof.
IN WITNESS WHEREOF, GRUBB & ELLIS COMPANY has caused this Stock
Subscription Warrant to be signed by its duly authorized officer under its
corporate seal, attested by its duly authorized officer, and the Warrant to be
dated as of _____________, 1994.
GRUBB & ELLIS COMPANY
By
------------------------
Title:
- ----------------------------
Attest:
By
----------------------------
Title:
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<PAGE> 34
FORM OF EXERCISE AGREEMENT
Date
To:
The undersigned, pursuant to the provisions set forth in the
within Stock Subscription Warrant, hereby agrees to subscribe for and purchase
________ shares of Common Stock covered by such Stock Subscription Warrant, and
makes payment herewith in full therefor at the price per share provided by such
Stock Subscription Warrant [in cash] [by delivery of $_____ principal amount of
______ Notes] [by cancellation of $______ of accrued and unpaid interest on
______ Notes].
Name
--------------------------
Title
-------------------------
Company
-----------------------
Signature
---------------------
Address
-----------------------
------------------------------
<PAGE> 35
ASSIGNMENT
FOR VALUE RECEIVED
hereby sells, assigns and transfers all of the rights of the undersigned under
the within Stock Subscription Warrant, with respect to the number of Warrant
Shares covered thereby set forth hereinbelow to:
Name of Assignee Address No. of Shares
- ---------------- ------- -------------
Dated: ___________, 19__.
Name
--------------------------
Title
-------------------------
Company
-----------------------
Signature
---------------------
Witness
-----------------------
<PAGE> 36
EXHIBIT C
Stock Subscription Warrant to Subscribe for
150,000 Shares of Common Stock
THIS STOCK SUBSCRIPTION WARRANT AND ANY SHARES ACQUIRED UPON THE
EXERCISE OF THIS STOCK SUBSCRIPTION WARRANT HAVE NOT BEEN REGISTERED UNDER THE
SECURITIES ACT OF 1933, AS AMENDED. NEITHER THIS STOCK SUBSCRIPTION WARRANT
NOR ANY OF SUCH SHARES MAY BE SOLD OR TRANSFERRED IN THE ABSENCE OF SUCH
REGISTRATION OR AN EXEMPTION THEREFROM UNDER SAID ACT.
STOCK SUBSCRIPTION WARRANT
To Subscribe for and Purchase Shares
of Common Stock of
GRUBB & ELLIS COMPANY
THIS CERTIFIES THAT, for value received,
THE PRUDENTIAL INSURANCE COMPANY OF AMERICA ("Prudential") or
registered assigns, is entitled to subscribe for and purchase from GRUBB &
ELLIS COMPANY (herein called the "Company"), a corporation organized and
existing under the laws of the State of Delaware, at any time or from time to
time during the period specified in paragraph 2 hereof, up to
ONE HUNDRED AND FIFTY THOUSAND
fully paid and nonassessable shares of the Company's Common Stock (the "Common
Stock") at an exercise price per share of $2.375 (the "Exercise Price"). The
number of shares purchasable hereunder and the Exercise Price are subject to
adjustment as provided in paragraph 4 hereof. These Stock Subscription
Warrants were originally issued pursuant to the Agreement. The term
"Warrants", as used herein, shall mean this Stock Subscription Warrant,
including all amendments hereto. The term "Warrant Shares", as used herein,
refers to the shares purchasable upon the exercise of the Warrants.
Certain terms used herein and not elsewhere defined are defined in paragraph 15
hereof.
This Warrant is subject to the following provisions, terms and
conditions:
1. Manner of Exercise; Issuance of Certificates; Payment for
Shares. The rights represented by this Warrant may be exercised by the holder
hereof in whole or in part (but not as to a fractional Warrant Share), by the
surrender of this Warrant, together with a completed Exercise Agreement in the
form attached hereto, during normal business hours on any business day at the
prin-
<PAGE> 37
cipal office of the Company (or such other office or agency of the Company in
New York, New York or San Francisco, California as it may designate by notice
in writing to the holder hereof at the address of such holder appearing on the
books of the Company) at any time during the period set forth in paragraph 2
hereof and upon payment to the Company by certified check or bank draft of the
Exercise Price for such shares, or, at the election of the holder hereof, by
delivery of other Warrants equal in value to the aggregate Exercise Price with
respect to such Warrants being exercised, the value of which other Warrants
shall be deemed to equal the difference between the Market Price of a share of
Common Stock on the date immediately preceding the date of exercise and the
then current Exercise Price. The Company agrees that the shares so purchased
shall be and are deemed to be issued to the holder hereof or its designee as
the record owner of such shares as of the close of business on the date on
which this Warrant shall have been surrendered and payment made for such shares
as aforesaid. Certificates for the Warrant Shares so purchased, representing
the aggregate number of shares specified in said Exercise Agreement, shall be
delivered to the holder hereof within a reasonable time, not exceeding five
business days, after the rights represented by this Warrant shall have been so
exercised. Each stock certificate so delivered shall be in such denominations
as may be requested by the holder hereof and shall be registered in the name of
said holder or such other name (upon compliance with the transfer requirements
hereinafter set forth) as shall be designated by said holder. If this Warrant
shall have been exercised only in part, then, unless this Warrant has expired,
the Company shall, at its expense, at the time of delivery of said stock
certificates, deliver to said holder a new Warrant representing the number of
shares with respect to which this Warrant shall not then have been exercised.
The Company shall pay all taxes and other expenses and charges payable in
connection with the preparation, execution and delivery of stock certificates
(and any new Warrants) pursuant to this paragraph except that, in case such
stock certificates shall be registered in a name or names other than the holder
of this Warrant or its nominee, funds sufficient to pay all stock transfer
taxes which shall be payable in connection with the execution and delivery of
such stock certificates shall be paid by the holder hereof to the Company at
the time of the delivery of such stock certificates by the Company as mentioned
above.
2. Period of Exercise. This Warrant is exercisable at any time
or from time to time prior to _____________, 1999.
3. Shares to be Fully Paid; Reservation of Shares. The Company
covenants and agrees that all Warrant Shares will, upon issuance, be fully paid
and nonassessable and free from preemptive rights and all taxes, liens and
charges with respect to the issue thereof; and without limiting the generality
of the foregoing, the Company covenants and agrees that it will from time to
time take all such action as may be required to assure that the par value per
Warrant Share is at all times equal to or less than the effective Exercise
Price. The Company further covenants and agrees that during the period within
which the rights represented by this Warrant may be exercised, the Company will
at all times have authorized, and reserved for the purpose of issue upon
exercise of the subscription rights evidenced by this Warrant, a sufficient
number of shares of Common Stock to provide for the exercise of the rights
represented by this Warrant. The Company shall take all such action as may be
necessary to assure that such shares of Common Stock may be so issued without
violation of any applicable law or regulation and will be approved for listing
on any domestic securities exchange upon which the Common Stock may be listed.
The Company further covenants and agrees that it will, at any time, at its
expense, promptly list on each national securities exchange on which any
Capital Stock is at the time listed, upon official notice of issuance, Common
Stock issuable upon the exercise of any Warrant as provided in paragraph 1
hereof, and maintain such listing of all shares of Common Stock from time to
time issuable upon such exercise, and will, at any
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<PAGE> 38
time, register under the Securities Exchange Act of 1934, as amended, all
shares of Common Stock from time to time issuable upon such exercise if and at
the time that any existing shares of Capital Stock are so registered.
4. Anti-dilution Provisions. The Exercise Price set forth
above shall be subject to adjustment from time to time as hereinafter provided.
For purposes of this paragraph 4, the term "Capital Stock" as used herein
includes the Company's Common Stock and shall also include any capital stock of
any class of the Company hereafter authorized which shall not be limited to a
fixed sum or percentage in respect of the rights of the holders thereof to
participate in dividends and in the distribution of assets upon the voluntary
or involuntary liquidation, dissolution or winding up of the Company; provided
that the shares purchasable pursuant to this Warrant shall include only Common
Stock. Upon each adjustment of the Exercise Price, this Warrant shall
thereafter represent the right to purchase, at the Exercise Price resulting
from such adjustment, the largest number of shares of Common Stock obtained by
multiplying the Exercise Price in effect immediately prior to such adjustment
by the number of shares of Common Stock purchasable thereunder immediately
prior to such adjustment and dividing the product thereof by the Exercise Price
resulting from such adjustment.
In case the Company, at any time, shall be a party to any
Transaction, each holder hereof, upon the exercise hereof at any time on or
after the Consummation Date shall be entitled to receive, and this Warrant
shall thereafter represent the right to receive, in lieu of the Common Stock
issuable upon exercise prior to the Consummation Date, the kind and amount of
securities or property (including cash) which it would have owned or have been
entitled to receive after the happening of such Transaction had this Warrant
been exercised immediately prior to such Transaction.
Notwithstanding anything contained herein to the contrary, the
Company shall not effect any Transaction unless prior to the consummation
thereof each corporation or entity (other than the Company) which may be
required to deliver any securities or other property upon the exercise of
Warrants, the surrender of Warrants or the satisfaction of exercise rights as
provided herein, shall assume, by written instrument delivered to each holder
of Warrants, the obligation to deliver to such holder such securities or other
property to which, in accordance with the foregoing provisions, such holder may
be entitled, and such corporation or entity shall have similarly delivered to
each holder of Warrants an opinion of counsel for such corporation or entity,
satisfactory to each holder of Warrants, which opinion shall state that all the
outstanding Warrants, including, without limitation, the exercise provisions
applicable thereto, if any, shall thereafter continue in full force and effect
and shall be enforceable against such corporation or entity in accordance with
the terms hereof and thereof and, together with such other matters as such
holders may reasonably request.
In case the Company shall (i) pay a dividend in shares of
Capital Stock or securities convertible into Capital Stock or make a
distribution to all holders of shares of Capital Stock in shares of Capital
Stock or securities convertible into Capital Stock, (ii) subdivide its
outstanding shares of Capital Stock, (iii) combine its outstanding shares of
Capital Stock into a smaller number of shares of Capital Stock or (iv) issue by
reclassification of its shares of Capital Stock other securities of the
Corporation, the Exercise Price shall be adjusted (to the nearest cent) by
multiplying the Exercise Price immediately prior to such adjustment by a
fraction, of which the numerator shall be the number of shares of Capital Stock
outstanding immediately prior to the occurrence of such event, and of which the
denominator shall be the number of shares of Capital Stock outstanding
(including any convertible securities issued pursuant to clause (i) or (iv)
above on an as converted basis) immediately
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<PAGE> 39
thereafter. An adjustment made pursuant to the foregoing sentence shall become
effective immediately after the effective date of such event retroactive to the
record date, if any, for such event.
(d) Notice of Adjustment. Upon the occurrence of any event
requiring an adjustment of the Exercise Price, then and in each such case the
Company shall promptly deliver to each holder of Warrants a certificate signed
by the President or any Vice President and the Secretary or any Assistant
Secretary of the Company (an "Officers' Certificate") stating the Exercise
Price resulting from such adjustment and the increase or decrease, if any, in
the number of shares of Common Stock issuable upon exercise of the Warrants,
setting forth in reasonable detail the method of calculation and the facts upon
which such calculation is based. Within 90 days after each fiscal year in
which any such adjustment shall have occurred, or within 30 days after any
request therefor by any holder of Warrants stating that such holder
contemplates exercise of such Warrants, the Company will obtain and deliver to
each holder of Warrants the opinion of its regular independent auditors or
another firm of independent public accountants of recognized national standing
selected by the Company's Board of Directors who are satisfactory to the
registered holder of this Warrant, which opinion shall confirm the statements
in the most recent Officers' Certificate delivered under this paragraph 4(d).
(e) Other Notices. In case at any time:
(i) the Company shall declare or pay to the holders of Capital
Stock any dividend other than a regular periodic cash dividend or any
periodic cash dividend in excess of 115% of the cash dividend for the
comparable fiscal period in the immediately preceding fiscal year;
(ii) the Company shall declare or pay any dividend upon Capital
Stock payable in stock or make any special dividend or other
distribution (other than regular cash dividends) to the holders of
Capital Stock;
(iii) the Company shall offer for subscription pro rata to the
holders of Capital Stock any additional shares of stock of any class or
other rights;
(iv) there shall be any capital reorganization, or
reclassification of the Capital Stock of the Company, or consolidation
or merger of the Company with, or sale of all or substantially all of
its assets to, another corporation or other entity;
(v) there shall be a voluntary or involuntary dissolution,
liquidation or winding-up of the Company; or
(vi) there shall be any other Transaction;
then, in any one or more of such cases, the Company shall give to the holder of
each Warrant (a) at least 15 days prior to any event referred to in clause (i)
or (ii) above, at least 30 days prior to any event referred to in clause (iii),
(iv) or (v) above, and within five business days after it has knowledge of any
pending Transaction, written notice of the date on which the books of the
Company shall close or a record shall be taken for such dividend, distribution
or subscription rights or for determining rights to vote in respect of any such
reorganization, reclassification, consolidation, merger, sale, dissolution,
liquidation, winding-up or Transaction and (b) in the case of any such
reorganization, reclassification, consolidation, merger, sale, dissolution,
liquidation, winding-up or Transaction
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<PAGE> 40
known to the Company, at least 30 days prior written notice of the date (or, if
not then known, a reasonable approximation thereof by the Company) when the
same shall take place. Such notice in accordance with the foregoing clause (a)
shall also specify, in the case of any such dividend, distribution or
subscription rights, the date on which the holders of Capital Stock shall be
entitled thereto, and such notice in accordance with the foregoing clause (b)
shall also specify the date on which the holders of Capital Stock shall be
entitled to exchange their Capital Stock for securities or other property
deliverable upon such reorganization, reclassification, consolidation, merger,
sale, dissolution, liquidation, winding-up or Transaction, as the case may be.
Such notice shall also state that the action in question or the record date is
subject to the effectiveness of a registration statement under the Securities
Act or to a favorable vote of security holders, if either is required.
5. Certain Agreements of the Company. The Company covenants
and agrees that:
(a) Certain Actions Prohibited. The Company will not by
amendment of its certificate of incorporation or through any reorganization,
transfer of assets, consolidation, merger, dissolution, issue or sale of
securities or any other voluntary action, avoid or seek to avoid the observance
or performance of any of the terms to be observed or performed hereunder by the
Company, but will at all times in good faith assist in the carrying out of all
the provisions of this Warrant and in the taking of all such action as may
reasonably be requested by the holder of any Warrant in order to protect the
exercise rights of the holders of the Warrants. Without limiting the
generality of the foregoing, the Company (i) will not increase the par value of
any shares of Common Stock receivable upon the exercise of the Warrants above
the Exercise Price then in effect, (ii) will take all such actions as may be
necessary or appropriate in order that the Company may validly and legally
issue fully paid and nonassessable shares of Common Stock upon the exercise of
all Warrants from time to time outstanding, (iii) will not take any action
which results in any adjustment of the number of shares of Common Stock
issuable after the action upon the exercise of all of the Warrants would exceed
the total number of shares of Common Stock then authorized by the Company's
certificate of incorporation and available for the purpose of issue upon such
exercise, and (iv) will not issue any capital stock of any class which has the
right to more than one vote per share or any capital stock of any class which
is preferred as to dividends or as to the distribution of assets upon voluntary
or involuntary dissolution, liquidation or winding-up, unless the rights of the
holders thereof shall be limited to a fixed sum or percentage (or floating rate
related to market yields) of par value or stated value in aspect of
participation in dividends and a fixed sum or percentage of par value or stated
value in any such distribution of assets.
(b) Successors and Assigns. This Warrant will be binding
upon any entity succeeding to the Company by merger, consolidation or
acquisition of all or substantially all of the Company's assets.
(c) Issuance of Warrant Securities. If the issuance of any
Warrant Shares required to be reserved for purposes of exercise of this Warrant
or for the conversion of such Warrant Shares requires registration with or
approval of any Federal governmental authority under any Federal or state law
(other than any registration under the Securities Act) or listing on any
national securities exchange, before such shares may be issued upon exercise of
this Warrant, the Company will, at its expense, use its best efforts to cause
such shares to be duly registered or approved, or listed on the relevant
national securities exchange, as the case may be, at such time, so that such
shares may be issued in accordance with the terms hereof and so converted.
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<PAGE> 41
6. Issue Tax. The issuance of certificates for Warrant Shares
upon the exercise of Warrants shall be made without charge to the holders of
such Warrants or such shares for any issuance tax in respect thereof, provided
that the Company shall not be required to pay any tax which may be payable in
respect of any transfer involved in the issuance and delivery of any
certificate in a name other than the holder of the Warrant exercised.
7. Closing of Books. The Company will at no time close its
transfer books against the transfer of any Warrant, of any Warrant Shares
issued or issuable upon the exercise of any Warrant or in any manner which
interferes with the timely exercise of this Warrant.
8. Amendments to Terms of Warrant Shares. The Company will not
amend the terms of the Warrant Shares.
9. Availability of Information. The Company will cooperate
with each holder of any Warrants or Warrant Shares in supplying such
information as may be necessary for such holder to complete and file any
information reporting forms presently or hereafter required by the Securities
and Exchange Commission as a condition to the availability of an exemption from
the Securities Act for the sale of any Warrants or Warrant Shares. The Company
will deliver to any person at the time holding any Warrants, promptly upon
their becoming available, copies of all financial statements, reports, notices
and proxy statements sent or made available generally by the Company to its
stockholders, and copies of all regular and periodic reports and all
registration statements and prospectuses filed by the Company with any
securities exchange or with the Securities and Exchange Commission.
10. No Rights or Liabilities as a Stockholder. This Warrant
shall not entitle the holder hereof to any voting rights or other rights as a
stockholder of the Company. No provision of this Warrant, in the absence of
affirmative action by the holder hereof to purchase Warrant Shares, and no mere
enumeration herein of the rights or privileges of the holder hereof, shall give
rise to any liability of such holder for the Exercise Price or as a stockholder
of the Company, whether such liability is asserted by the Company or by
creditors of the Company.
11. Transfer and Exchange.
(a) (1) The transfer of this Warrant and all rights hereunder,
in whole or in part, is registrable at the office or agency of the Company
referred to below by the holder hereof in person or by his duly authorized
attorney, upon surrender of this Warrant properly endorsed. Each taker and
holder of this Warrant, by taking or holding the same, consents and agrees that
this Warrant, when endorsed in blank, shall be deemed negotiable, and that the
holder hereof, when this Warrant shall have been so endorsed, may be treated by
the Company and all other persons dealing with this Warrant as the absolute
owner and holder hereof for any purpose and as the person entitled to exercise
the rights represented by this Warrant, or to the registration of transfer
hereof on the books of the Company; and until due presentment for registration
of transfer on such books the Company may treat the registered holder hereof as
the owner and holder for all purposes, and the Company shall not be affected by
notice to the contrary.
(2) The holder of this Warrant, by acceptance hereof,
understands that the Warrant Securities are characterized as "restricted
securities" under the federal securities laws inasmuch as they are being or
will be acquired from the Company in a transaction not involving a public
offering
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<PAGE> 42
and that under such laws and applicable regulations such Warrant Securities may
be resold without registration under the Securities Act only in certain limited
circumstances. The holder of this Warrant, by acceptance hereof, agrees to
comply with all applicable laws (including, without limitation, any filing
required by the Hart-Scott-Rodino Antitrust Improvements Act of 1976) upon
exercise hereof.
The holder of this Warrant, by acceptance hereof, represents
that such holder is acquiring this Warrant and any Warrant Shares to be issued
upon exercise hereof for its own account (including any separate account) for
the purpose of investment and not with a view to or for sale in connection with
any distribution thereof. The holder hereof further represents that such
holder has had an opportunity to ask questions and receive answers from the
Company regarding the terms and conditions of the offering of the Warrant
Securities as required by Section (b)(2)(ii)(v) of Rule 502 of Regulation D
under the Securities Act.
Without in any way limiting the foregoing, the holder hereof
further agrees not to make any disposition of all or any portion of the Warrant
Securities unless and until:
(x) There is then in effect a Registration Statement under the
Securities Act covering such proposed disposition and such disposition is made
in accordance with such Registration Statement; or
(y) (i) The holder hereof shall have notified the Company of
the proposed disposition and shall have furnished the Company with a detailed
statement of the circumstances surrounding the proposed disposition, and (ii)
shall have furnished the Company with an opinion of counsel, reasonably
satisfactory to the Company (it being understood that if the holder of this
Warrant is a party to the Agreement, counsel who is such party's employee shall
be deemed reasonably satisfactory to the Company), that such disposition will
not require registration of such Warrant Securities under the Securities Act.
(b) Register. The Company shall maintain, at the principal
office of the Company (or such other office or agency of the Company in New
York, New York or San Francisco, California as it may designate by notice to
the holder hereof), a register for the Warrants, in which the Company shall
record the name and address of the person in whose name a Warrant has been
issued, as well as the name and address of each transferee and each prior owner
of such Warrant. Within 10 days after any holder of Warrants shall by notice
request the same, the Company will deliver to such holder a certificate, signed
by one of its officers, listing the name and address of every other holder of
Warrants and/or Warrant Shares, as such information appears in said register
and in the stock transfer books of the Company at the close of business on the
day before such certificate is signed.
(c) Warrants Exchangeable for Different Denominations. This
Warrant is exchangeable, upon the surrender hereof by the holder hereof at the
office or agency of the Company referred to in paragraph 11(b), for new
Warrants of like tenor representing in the aggregate the right to subscribe for
and purchase the number of shares which may be subscribed for and purchased
hereunder of Common Stock, each of such new Warrants to represent the right to
subscribe for and purchase such number of shares as shall be designated by said
holder hereof at the time of such surrender.
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<PAGE> 43
(d) Replacement of Warrants. Upon receipt of evidence
reasonably satisfactory to the Company of the loss, theft, destruction or
mutilation of this Warrant and, in the case of any such loss, theft or
destruction, upon delivery of an indemnity bond (or, in the case of any
institutional holder, an indemnity agreement) reasonably satisfactory in form
and amount to the Company or, in the case of any such mutilation, upon
surrender and cancellation of such Warrant, the Company at its expense will
execute and deliver, in lieu thereof, a new Warrant of like tenor.
(e) Cancellation; Payment of Expenses. Upon the surrender of
this Warrant in connection with any exchange, transfer or replacement as
provided in this paragraph 11, this Warrant shall be promptly cancelled by the
Company. The Company shall pay all taxes (other than securities transfer
taxes) and all other expenses and charges payable in connection with the
preparation, execution and delivery of Warrants pursuant to this paragraph 11.
12. Notices. All notices, requests and other communications
required or permitted to be given or delivered to the holders of Warrants shall
be in writing, and shall be delivered, or shall be sent by certified or
registered mail, postage prepaid and addressed, to each holder at the address
shown on the register for the Warrants, or at such other address as shall have
been furnished to the Company by notice from such holder. All notices,
requests and other communications required or permitted to be given or
delivered to the Company shall be in writing, and shall be delivered, or shall
be sent by certified or registered mail, postage prepaid and addressed, to the
office of the Company, at One Montgomery Street, San Francisco, California
94104, Attention: Chief Financial Officer, with a copy to General Counsel, or
at such other address as shall have been furnished to the holders of Warrants
by notice from the Company. Any such notice, request or other communication
may be sent by telegram or telex, but shall in such case be subsequently
confirmed by a writing delivered or sent by certified or registered mail as
provided above. All notices shall be deemed to have been given either at the
time of the delivery thereof to (or the receipt by, in the case of a telegram
or telex) any officer or employee of the person entitled to receive such notice
at the address of such person for purposes of this paragraph 12, or, if mailed,
at the completion of the third full day following the time of such mailing
thereof to such address, as the case may be.
13. Governing Law. This Warrant shall be construed in
accordance with and governed by the laws of the State of New York without
regard to the principles of conflicts of laws.
14. Remedies. The Company stipulates that the remedies at law
of the holder of this Warrant in the event of any default or threatened default
by the Company in the performance of or compliance with any of the terms of
this Warrant are not and will not be adequate, and that such terms may be
specifically enforced by a decree for the specific performance of any agreement
contained herein or by an injunction against a violation of any of the terms
hereof or otherwise.
15. Definitions. For the purpose of this Warrant, the
following terms shall have the following meanings:
"Additional Shares of Capital Stock" shall mean all shares
(including treasury shares) of Capital Stock issued or sold (or, pursuant to
paragraph 4(a) deemed to be issued) by the Company after the date hereof,
whether or not subsequently reacquired or retired by the Company, other than
shares of Common Stock issued upon the exercise of the Warrants.
"Capital Stock" shall have the meaning assigned to such term in
paragraph 4.
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<PAGE> 44
"Consummation Date" shall mean the date of the consummation of a
Transaction.
"Convertible Securities" shall mean any evidences of
indebtedness, shares of stock (other than Common Stock) or securities directly
or indirectly convertible into or exchangeable for Additional Shares of Capital
Stock.
"Market Price" shall mean, on any date specified herein, (A) if
any class of Capital Stock is listed or admitted to trading on any national
securities exchange, the highest price obtained by taking the arithmetic mean
over a period of twenty consecutive Trading Days ending the second Trading Day
prior to such date of the average, on each such Trading Day, of the high and
low sale price of shares of each such class of Capital Stock or if no such sale
takes place on such date, the average of the highest closing bid and lowest
closing asked prices thereof on such date, in each case as officially reported
on all national securities exchanges on which each such class of Capital Stock
is then listed or admitted to trading, or (B) if no shares of any class of
Capital Stock are then listed or admitted to trading on any national securities
exchange, the highest closing price of any class of Capital Stock on such date
in the over-the-counter market as shown by NASDAQ or, if no such shares of any
class of Capital Stock are then quoted in such system, as published by the
National Quotation Bureau, Incorporated or any similar successor organization,
and in either case as reported by any member firm of the New York Stock
Exchange selected by the Company. If no shares of any class of Capital Stock
are then listed or admitted to trading on any national securities exchange and
if no closing bid and asked prices thereof are then so quoted or published in
the over-the-counter market, "Market Price" shall mean the higher of (x) the
book value per share of Capital Stock (assuming for the purposes of this
calculation the economic equivalence of all shares of all classes of Capital
Stock) as determined on a fully diluted basis in accordance with generally
accepted accounting principles by a firm of independent public accountants of
recognized standing (which may be its regular auditors) selected by the Board
of Directors of the Company as of the last day of any month ending within 60
days preceding the date as of which the determination is to be made or (y) the
fair value per share of Capital Stock (assuming for the purposes of this
calculation the economic equivalence of all shares of all classes of Capital
Stock), as determined on a fully diluted basis in good faith by an independent
brokerage firm or Standard & Poor's Corporation (as selected by the Board of
Directors of the Company), as of a date which is 15 days preceding the date as
of which the determination is to be made.
"Options" shall mean rights, options or warrants to subscribe
for, purchase or otherwise acquire either Additional Shares of Capital Stock or
Convertible Securities.
"Other Securities" shall mean any stock (other than Capital
Stock) and any other securities of the Company or any other Person (corporate
or otherwise) which the holders of the Warrants at any time shall be entitled
to receive, or shall have received, upon the exercise or partial exercise of
the Warrants, in lieu of or in addition to Common Stock.
"Prudential Warrants" shall mean all warrants, including any
amendments thereto, issued pursuant to The Prudential Insurance Company of
America on ______________, 1994.
"Securities Act" shall mean the Securities Act of 1933, as
amended.
"Trading Day" shall mean any day on which the New York Stock
Exchange is open for trading on a regular basis.
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<PAGE> 45
"Transaction" shall mean any transaction to which the Company is
a party at any time (including, without limitation, a merger, consolidation,
sale of all or substantially all of the Company's assets, liquidation or
recapitalization of the Capital Stock) in which the previously outstanding
Capital Stock shall be changed into or exchanged for different securities of
the Company or common stock or other securities of another corporation or
interests in a noncorporate entity or other property (including cash) or any
combination of any of the foregoing or in which the Capital Stock ceases to be
a publicly traded security either listed on the New York Stock Exchange or the
American Stock Exchange or quoted by NASDAQ or any successor thereto or
comparable system.
"Warrant Securities" shall mean the Warrants and the Warrant
Shares.
16. Miscellaneous.
(a) Amendments. This Warrant and any provision hereof may be
amended or waived only by an instrument in writing signed by the holders of
then outstanding Prudential Warrants representing the right to purchase not
less than a majority of the total number of shares of Common Stock issuable
upon exercise of all then outstanding Prudential Warrants then not transferable
without registration under the Securities Act and, if it is to be bound
thereby, by the Company.
(b) Descriptive Headings. The descriptive headings of the
several paragraphs of this Warrant are inserted for purposes of reference only,
and shall not affect the meaning or construction of any of the provisions
hereof.
IN WITNESS WHEREOF, GRUBB & ELLIS COMPANY has caused this Stock
Subscription Warrant to be signed by its duly authorized officer under its
corporate seal, attested by its duly authorized officer, and the Warrant to be
dated as of _____________, 1994.
GRUBB & ELLIS COMPANY
By -------------------------
Title:
Attest:
By ----------------------------
Title:
-10-
<PAGE> 46
FORM OF EXERCISE AGREEMENT
Date
To:
The undersigned, pursuant to the provisions set forth in the
within Stock Subscription Warrant, hereby agrees to subscribe for and purchase
________ shares of Common Stock covered by such Stock Subscription Warrant, and
makes payment herewith in full therefor at the price per share provided by such
Stock Subscription Warrant [in cash] [by delivery of $_____ principal amount of
______ Notes] [by cancellation of $______ of accrued and unpaid interest on
______ Notes].
Name--------------------------
Title-------------------------
Company-----------------------
Signature---------------------
Address-----------------------
------------------------------
<PAGE> 47
ASSIGNMENT
FOR VALUE RECEIVED
hereby sells, assigns and transfers all of the rights of the undersigned under
the within Stock Subscription Warrant, with respect to the number of Warrant
Shares covered thereby set forth hereinbelow to:
Name of Assignee Address No. of Shares
- ---------------- ------- -------------
Dated: ___________, 19__.
Name
-------------------------
Title
-------------------------
Company
-----------------------
Signature
---------------------
Witness
-----------------------
<PAGE> 48
EXHIBIT D
THIS NOTE HAS NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS
AMENDED, AND MAY NOT BE SOLD OR TRANSFERRED IN THE ABSENCE OF SUCH
REGISTRATION OR EXEMPTION THEREFROM UNDER SUCH ACT.
GRUBB & ELLIS COMPANY
AMENDED AND RESTATED
9.90% SENIOR NOTE DUE NOVEMBER 1, 1998
No. AS-1 Amended and Restated as of
$___________ November __, 1994
FOR VALUE RECEIVED, the undersigned, GRUBB & ELLIS COMPANY (herein
called the "Company"), a corporation organized and existing under the laws of
the State of Delaware, hereby promises to pay to The Prudential Insurance
Company of America ("Prudential"), or its registered assigns, the principal sum
of ________________ DOLLARS ($___________) (subject to prepayments pursuant to
the terms of the Agreement (as defined below)) on November 1, 1998, with
interest (computed on the basis of a 360-day year--30-day month) (a) on the
unpaid balance thereof at the rate of 9.90% per annum from January 29, 1993,
payable semiannually on the first day of February and August in each year,
commencing on August 1, 1993, until the principal hereof shall have become due
and payable, and (b) on any overdue payment (including any overdue prepayment)
of principal and any overdue payment of interest semiannually as aforesaid (or,
at the option of the registered holder hereof, on demand), at a rate per annum
from time to time equal to the greater of (i) 11.90% and (ii) 2.0% over the
rate of interest publicly announced by Morgan Guaranty Trust Company of New
York from time to time in New York City as its prime rate.
Payments of principal of and interest on this Note are to be made at the
main office of Morgan Guaranty Trust Company of New York in New York City or at
such other place as the holder hereof shall designate to the Company in
writing, in lawful money of the United States of America.
This Note is one of a series of Senior Notes (herein called the "Notes")
issued pursuant to a Senior Note, Subordinated Note and Revolving Credit Note
Agreement, dated as of November 2, 1992, (as amended from time to time, herein
called the "Agreement"), between the Company and The Prudential Insurance
Company of America and is subject thereto and entitled to the benefits thereof.
This Note is a registered Note and, as provided in the Agreement, upon
surrender of this Note for registration of transfer, duly endorsed, or
accompanied by a written instrument of transfer duly executed, by the
registered holder hereof or such holder's attorney duly authorized in writing,
a new Note for a like principal amount will be issued to, and registered in the
name of, the transferee. Prior to due presentment for registration of
transfer, the Company may treat the person in whose name this Note is
registered as the owner hereof for the purpose of receiving payment and for all
other purposes, and the Company shall not be affected by any notice to the
contrary.
<PAGE> 49
The Company agrees to make required prepayments of principal on the
dates and in the amounts specified in the Agreement. This Note is also subject
to optional prepayment, in whole or from time to time in part, on the terms
specified in the Agreement.
In case an Event of Default, as defined in the Agreement, shall occur
and be continuing, the principal of this Note may be declared or otherwise
become due and payable in the manner and with the effect provided in the
Agreement.
This Note is intended to be performed in the State of New York and shall
be construed and enforced in accordance with the law of such State.
The Company agrees in accordance with the Agreement to pay, and save the
holder hereof harmless against any liability for, any expenses arising in
connection with the enforcement by the holder hereof of any of its rights under
this Note or the Agreement.
This Note amends and restates in its entirety that certain 9.90% Senior
Note Due November 1, 1996 dated January 29, 1993 issued by the Company to
Prudential and is made in substitution and not in payment thereof. This Note
is not intended as and shall not be deemed to constitute a novation.
GRUBB & ELLIS COMPANY
By:
-----------------
Name:
Title:
-2-
<PAGE> 50
THIS NOTE HAS NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS
AMENDED, AND MAY NOT BE SOLD OR TRANSFERRED IN THE ABSENCE OF SUCH
REGISTRATION OR AN EXEMPTION THEREFROM UNDER SAID ACT.
GRUBB & ELLIS COMPANY
AMENDED AND RESTATED
REVOLVING CREDIT NOTE DUE NOVEMBER 1, 1999
No. AR-1 Amended and Restated as of
$5,000,000 November 1, 1994
FOR VALUE RECEIVED, the undersigned, Grubb & Ellis Company (herein
called the "Company"), a corporation organized and existing under the laws of
the State of Delaware, hereby promises to pay to The Prudential Insurance
Company of America ("Prudential"), or registered assigns (the "Payee"), the
principal sum of FIVE MILLION DOLLARS ($5,000,000) or so much as is advanced by
the Payee hereunder and outstanding, on November 1, 1999, with interest
(computed on the basis of a 360-day year and actual number of days elapsed) (a)
on the unpaid principal balance thereof at the interest rate set forth more
fully in the Senior Note, Subordinated Note and Revolving Credit Note
Agreement, dated as of November 2, 1992, between the Company and The Prudential
Insurance Company of America (as amended from time to time, herein called the
"Agreement") payable on each Rate Reset Date (as defined in the Agreement),
until the principal hereof shall have become due and payable, and (b) on any
overdue payment (including any overdue prepayment) of principal and, to the
extent permitted by applicable law, any overdue payment of interest, payable
quarterly as aforesaid (or, at the option of the registered holder hereof, on
demand), at a rate per annum from time to time equal to the greater of (i) the
LIBOR Rate (as defined in the Agreement) plus 3.5% and (ii) 2% over the rate of
interest publicly announced by Morgan Guaranty Trust Company of New York from
time to time in New York City as its prime rate.
Payments of principal and interest are to be made at the main office of
Morgan Guaranty Trust Company of New York in New York City or at such other
place as the holder hereof shall designate to the Company in writing, in lawful
money of the United States of America.
This Note is issued pursuant to the Agreement and is subject thereto and
entitled to the benefits thereof. As provided in the Agreement, this Note is
subject to prepayment, in whole or from time to time in part, without premium.
This Note is a registered Note and, as provided in the Agreement, upon
surrender of this Note for registration of transfer, duly endorsed, or
accompanied by a written instrument of transfer duly executed, by the
registered holder hereof or such holder's attorney duly authorized in writing,
a new Note for a like principal amount will be issued to, and registered in the
name of, the transferee. Prior to due presentment for registration of
transfer, the Company may treat the person in whose
<PAGE> 51
name this Note is registered as the owner hereof for the purpose of receiving
payment and for all other purposes, and the Company shall not be affected by
any notice to the contrary.
In case an Event of Default, as defined in the Agreement, shall occur
and be continuing, the principal of this Note may be declared or otherwise
become due and payable in the manner and with the effect provided in the
Agreement.
This Note is intended to be performed in the State of New York and shall
be construed and enforced in accordance with the law of such state.
The Company agrees in accordance with the Agreement to pay, and save the
holder hereof harmless against any liability for, any expenses arising in
connection with the enforcement by the holder hereof of any of its rights under
this Note or the Agreement.
This Note amends and restates that certain Revolving Credit Note Due
December 31, 1994 dated January 29, 1993 issued by the Company to Prudential
and is made in substitution and not in payment thereof. This Note is not
intended as and shall not be deemed to constitute a novation.
GRUBB & ELLIS COMPANY
By
-----------------
Name:
Title:
-2-
<PAGE> 52
SCHEDULE I
REVOLVING LOANS AND PAYMENTS
Amount of Amount of Unpaid Principal
Date Revolving Loan Principal Repaid Balance
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-3-
