<PAGE>
FORM 10-Q
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF
THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended September 30, 1994
----------------------------
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF
THE SECURITIES EXCHANGE ACT OF 1934
For the transition period from __________________ to ___________________
Commission File Number: 1-8122
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GRUBB & ELLIS COMPANY
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(exact name of registrant as specified in its charter)
Delaware 94-1424307
- - ------------------------------- --------------------
(State or other jurisdiction of (IRS Employer
incorporation or organization) Identification No.)
One Montgomery Street, Telesis Tower,
San Francisco, CA 94104
----------------------------------------
(Address of principal executive offices)
(Zip Code)
(415) 956-1990
----------------------------------------------------
(Registrant's telephone number, including area code)
No Change
---------------------------------------------------------------
(Former name, former address and former fiscal year, if changed
since last report)
Indicate by check mark whether the registrant (1) has filed all reports required
to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the preceding 12 months (or for such shorter period that the registrant was
required to file such reports), and (2) has been subject to such filing
requirements for the past 90 days. Yes X No
--- ---
8,718,469
---------------------------------------------------------------------
(Number of shares outstanding of the registrant's
common stock at November 1, 1994)
1
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PART I
FINANCIAL INFORMATION
2
<PAGE>
ITEM 1. FINANCIAL STATEMENTS
GRUBB & ELLIS COMPANY AND SUBSIDIARIES
Condensed Consolidated Statements of Operations
(in thousands, except per share amounts and shares)
(unaudited)
<TABLE>
<CAPTION>
Three Months Nine Months
Ended September 30, Ended September 30,
------------------- -------------------
1994 1993 1994 1993
---- ---- ---- ----
<S> <C> <C> <C> <C>
Revenue:
Real estate brokerage $ 38,682 $ 41,197 $ 103,891 $ 115,450
commissions
Real estate service fees 8,322 8,865 22,937 27,345
Other income 151 790 1,113 1,086
Less: Commissions (22,511) (25,541) (59,252) (71,241)
------------ ----------- ------------- -----------
Gross profit 24,644 25,311 68,689 72,640
------------ ----------- ------------- -----------
Expenses and other:
Selling, general and
administrative 12,210 14,036 36,019 40,315
Salaries and wages 11,003 10,658 32,729 33,243
Interest expense 15 49 40 143
Interest expense to related parties 694 568 1,966 1,829
Special charges and unusual items (519) -- (827) --
Depreciation and amortization 575 538 1,511 1,683
Other, net (18) -- (89) --
------------ ----------- ------------- -----------
Total expenses and other 23,960 25,849 71,349 77,213
------------ ----------- ------------- -----------
Income (loss) before
income taxes 685 (538) (2,660) (4,573)
Provision for income taxes 101 100 297 275
------------ ----------- ------------- -----------
Net income (loss) $ 584 $ (638) $ (2,957) $ (4,848)
------------ ----------- ------------- -----------
Undeclared dividends (accretion
of liquidation preference) on $ 658 $ 599 $ 1,953 $ 1,597
preferred stock
Net income (loss) applicable to
common stock $ (74) $ (1,237) $ (4,910) $ (6,445)
Net income (loss) per common share
and equivalents $ (.02) $ (.30) $ (1.18) $ (1.61)
Weighted average common
shares 4,261,351 4,060,268 4,146,011 4,006,156
</TABLE>
See notes to condensed consolidated financial statements.
3
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GRUBB & ELLIS COMPANY AND SUBSIDIARIES
Condensed Consolidated Balance Sheets
(in thousands)
ASSETS
<TABLE>
<CAPTION>
September 30, December 31, September 30,
1994 1993 1993
----------- ------------ --------------
(unaudited) (unaudited)
Current Assets
<S> <C> <C> <C>
Cash and cash
equivalents $ 10,745 $ 22,364 $ 14,042
Real estate brokerage
commissions receivable 2,401 493 4,973
Real estate services
fees and other commissions
receivable 3,375 2,312 2,525
Other receivables 2,824 4,865 4,941
Prepaid and other current assets 2,764 2,628 563
--------- --------- ---------
Total current assets 22,109 32,662 27,044
Noncurrent Assets
Real estate brokerage
commissions receivable 457 1,155 1,084
Real estate investments held for
sale and real estate owned 915 1,305 1,503
Equipment and leasehold
improvements, net 5,160 5,063 4,726
Excess of cost over net
assets of acquired
companies, net -- -- 10,156
Other assets 2,631 2,000 974
--------- --------- ---------
Total assets $ 31,272 $ 42,185 $ 45,487
--------- --------- ---------
--------- --------- ---------
</TABLE>
See notes to condensed consolidated financial statements.
4
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GRUBB & ELLIS COMPANY AND SUBSIDIARIES
Condensed Consolidated Balance Sheets, continued
(in thousands, except per share amounts and shares)
<TABLE>
<CAPTION>
September 30, December 31, September 30,
1994 1993 1993
------ ------ ------
(unaudited) (unaudited)
<S> <C> <C> <C>
LIABILITIES
Current Liabilities
Notes payable and current portion
of long-term debt $ 506 $ 506 $ 324
Current portion of notes payable and long-term
debt to related parties 6,000 8,830 1,830
Accounts payable 1,079 1,873 1,749
Compensation and employee benefits payable 8,321 11,817 7,615
Deferred commissions payable 540 2,814 497
Accrued severance obligations 1,237 2,883 1,002
Accrued office closure costs 2,553 3,043 2,211
Accrued claims and settlements 3,715 10,375 3,457
Other accrued expenses 6,665 8,363 5,761
--------- --------- -------
Total current liabilities 30,616 50,504 24,446
Long-Term Liabilities
Notes payable and long-term debt,
net of current portion 702 900 947
Notes payable and long-term debt
to related party, net of current portion 24,678 15,237 22,195
Accrued claims and settlements 13,068 9,678 17,982
Accrued severance obligations 287 555 638
Accrued office closure costs 2,496 4,043 2,764
Other 265 235 2,042
--------- --------- -------
Total liabilities 72,112 81,152 71,014
Commitments and contingencies (Note 4) -- -- --
--------- --------- -------
REDEEMABLE PREFERRED STOCK
12% Senior convertible preferred stock, $100.00 per
share redemption value: 137,160 shares outstanding 15,875 14,365 14,013
5% Junior convertible preferred stock, $100.00 per
share redemption value: 150,000 shares outstanding 16,147 15,535 15,357
Total redeemable preferred stock 32,022 29,900 29,370
STOCKHOLDERS' EQUITY (DEFICIT)
Preferred stock, $.01 par value:
1,000,000 shares authorized; 287,160 shares issued as
redeemable preferred stock
Common stock, $.01 par value: 25,000,000 shares authorized;
4,434,232, 4,060,271 and 4,060,268 shares issued and
outstanding at September 30, 1994, December 31, 1993 and
September 30, 1993, respectively. 45 41 41
Additional paid-in capital 47,028 48,070 48,680
Retained earnings (deficit) (119,935) (116,978) (103,618)
--------- --------- -------
Total stockholders' deficit (72,862) (68,867) (54,897)
--------- --------- -------
Total liabilities and stockholders' deficit $ 31,272 $ 42,185 $ 45,487
--------- --------- -------
--------- --------- -------
</TABLE>
See notes to condensed consolidated financial statements.
5
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GRUBB & ELLIS COMPANY AND SUBSIDIARIES
Condensed Consolidated Statements of Cash Flows
(unaudited - in thousands)
<TABLE>
<CAPTION>
For the Nine Months
Ended September 30,
---------------------------
1994 1993
------ ------
<S> <C> <C>
Cash Flows from Operating Activities:
Net loss $ (2,957) $ (4,848)
Adjustments to reconcile net loss to net
net cash used in operating activities (13,318) (7,224)
-------- -------
Net cash used in operating activities (16,275) (12,072)
-------- -------
Cash Flows from Investing Activities:
Dispositions of real estate investments held for sale
and real estate owned 344 1,494
Disposition of other assets -- 3,350
Purchases of equipment and leasehold
improvements (1,526) (1,991)
-------- -------
Net cash provided by (used in) investing activities (1,182) 2,853
-------- -------
Cash Flows from Financing Activities:
Proceeds from borrowing 6,000 8,000
Repayment of notes payable (199) (10,290)
Proceeds from issuance of preferred stock -- 13,750
Offering costs related to issuance of preferred stock -- (1,197)
Proceeds from issuance of common stock 37 61
-------- -------
Net cash provided by financing activities 5,838 10,324
-------- -------
Net increase (decrease) in cash and cash equivalents (11,619) 1,105
Cash and cash equivalents at beginning of period 22,364 12,937
-------- -------
Cash and cash equivalents at end of period $10,745 $14,042
-------- -------
-------- -------
---------------------------------------------------
Supplemental Disclosure of Cash Flow Information:
Cash paid during the year for:
Interest $1,281 $1,474
Income taxes 351 487
</TABLE>
See notes to condensed consolidated financial statements.
6
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GRUBB & ELLIS COMPANY AND SUBSIDIARIES
Notes to Condensed Consolidated Financial Statements
1. INTERIM PERIOD REPORTING
The accompanying unaudited condensed consolidated financial statements
include the accounts of Grubb & Ellis Company, its wholly and majority
owned and controlled subsidiaries and partnerships (the "Company"), and are
prepared in accordance with generally accepted accounting principles for
interim financial information and with the instructions to Form 10-Q and
Article 10 of Regulation S-X. Accordingly, they do not include all of the
information and footnotes required by generally accepted accounting
principles for complete financial statements, and therefore, should be read
in conjunction with the Company's Annual Report and footnotes thereto on
Form 10-K/A (Amendment No. 3) for the year ended December 31, 1993.
In the opinion of management, all adjustments (consisting of normal
recurring accruals) considered necessary for a fair presentation have been
included. Certain amounts in prior periods have been reclassified to
conform to the current presentation.
Operating results for the three-and nine-month periods ended September 30,
1994 are not necessarily indicative of the results that may be expected for
the year ending December 31, 1994. Any adjustments to reserves provided in
prior periods in connection with offices which management determined in
1993 to close in 1994 are reflected as "Special charges and unusual items".
2. INCOME TAXES
The Company's tax provision is attributed to current state tax liabilities.
3. NET INCOME (LOSS) PER COMMON SHARE AND EQUIVALENTS
Net income (loss) per common share and equivalents computations are based
on the weighted average number of common shares outstanding after giving
effect to potential dilution from common stock options and warrants.
The calculation of net income (loss) per share of common stock includes net
income (loss), less amounts applicable to the Senior and Junior Preferred
Stock for undeclared dividends (accretion of liquidation preference) earned
in the amounts of approximately $461,000 and $197,000, respectively, for
the quarter ended September 30, 1994, and $411,000 and $188,000,
respectively, for the quarter ended September 30, 1993. As of September
30, 1994, cumulative undeclared dividends applicable to the Senior and
Junior Preferred Stocks were $2,875,000 and $1,275,000, respectively.
7
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GRUBB & ELLIS COMPANY AND SUBSIDIARIES
Notes to Condensed Consolidated Financial Statements
4. COMMITMENTS AND CONTINGENCIES
The Company has guaranteed the contingent liabilities of one of its wholly-
owned subsidiaries with respect to two limited partnerships in which the
subsidiary formerly acted as general partner, in the aggregate amount of $4
million.
The Company previously disclosed in the Form 10-Q for the quarter ended
June 30, 1994 the details of a complaint, Johsz et al. v. Koll Company et
al., and the proposed exclusion from contracting services by the Resolution
Trust Corporation and the Federal Deposit Insurance Corporation of the
Company and its subsidiary, Grubb & Ellis Asset Services Company. There
has been no material change with respect to these matters.
The Company is involved in various other claims and lawsuits arising in the
ordinary course of business, as well as in connection with its
participation in various joint ventures, partnerships and a trust.
In the opinion of management, upon the advice of counsel, the eventual
outcome of the above claims and lawsuits will not have a material adverse
effect on the Company's financial position or results of operations.
5. LONG-TERM DEBT MODIFICATIONS AND RIGHTS OFFERING
On November 1, 1994, the Company, Warburg, Pincus Investors, L.P.
("Warburg") and The Prudential Insurance Company of America ("Prudential")
completed certain financing transactions pursuant to agreements (the
"Agreements") providing for, among other things, (1) the Company to seek
additional equity capital through a rights offering, (2) amendment of debt
agreements with Prudential,(3) issuance of additional warrants to purchase
common stock of the Company and (4) amendments to the existing Convertible
Preferred Stock and warrants held by Warburg and Prudential. The
Agreements were approved by the Company's stockholders on September 12,
1994.
The Rights Offering expired October 31, 1994. Common stockholders, other
than Warburg and Prudential, committed to purchase 84,542 shares of common
stock at the subscription price of $2.375 per share for total expected
proceeds of approximately $201,000.
8
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GRUBB & ELLIS COMPANY AND SUBSIDIARIES
Notes to Condensed Consolidated Financial Statements
5. LONG-TERM DEBT MODIFICATIONS AND RIGHTS OFFERING, (CONTINUED)
Pursuant to a Standby Agreement, Warburg purchased 4,277,433 shares (at
$2.375 per share) for total proceeds of approximately $10.2 million. As
provided for in the Agreements, Warburg paid for its shares through
cancellation of $6,158,904 of indebtedness outstanding under an interim
financing loan, including accrued interest of $158,904, and $4,000,000 in
cash. Warburg had made the interim financing loan pursuant to an
agreement entered into in March 1994, which agreement was terminated in
connection with the consummation of the financing transactions.
AMENDMENT TO PRUDENTIAL DEBT AGREEMENTS
Pursuant to the Agreements, the $15 million principal amount of the Senior
Notes, the PIK Notes and the revolving credit facility which would have
been due from 1994 through 1996 have been deferred and no principal
payments will be required until November 1, 1997, and thereafter (1) the
revolving credit facility will mature November 1, 1999, (2) principal on
the Senior Notes will be payable in two equal installments on November 1,
1997 and 1998, and (3) principal on the PIK Notes will be payable in two
approximately equal installments on November 1, 2000 and 2001. The
interest rate on the PIK Notes will increase from 10.65% to 11.65% per
annum on January 1, 1996. In addition, certain covenants of the debt
agreements remain in place, but will not be in effect until April 1, 1997.
The debt agreements, as amended, provide for supplemental principal
payments commencing July 1, 1998 if the Company meets certain financial
tests.
OTHER AMENDMENTS AND PROVISIONS
Pursuant to the financing transactions, certain provisions of the Company's
outstanding Senior Convertible Preferred Stock and Junior Convertible
Preferred Stock were amended. Among other things, the amendments eliminate
the mandatory redemption provisions, eliminate certain anti-dilution
provisions and increase the dividend rate commencing in 2002. As a result
of the application of the anti-dilution provisions previously
9
<PAGE>
GRUBB & ELLIS COMPANY AND SUBSIDIARIES
Notes to Condensed Consolidated Financial Statements
5. LONG-TERM DEBT MODIFICATIONS AND RIGHTS OFFERING (CONTINUED)
existing in the Senior Preferred Stock, the numbers of shares issuable upon
conversion of the Senior Preferred Stock have increased from approximately
4.6 million shares to approximately 5.1 million shares. Also pursuant to
the financing transactions, the Company's existing warrants to purchase
common stock held by Warburg and Prudential were amended. Among other
things, the amendments reduce the exercise price to $3.50 per share,
eliminate the anti-dilution provisions, and, in the case of the warrants
held by Prudential, extend the expiration date from January 1998 until
December 1998. Prudential waived the anti-dilution provisions of its
existing warrants in connection with the financing transactions. As a
result of the application of the anti-dilution provisions previously
existing in the warrants held primarily by Warburg, the number of shares
issuable upon conversion of such warrants increased from approximately
726,000 shares to approximately 1,035,000 shares. Warrants held by Warburg
to acquire approximately 374,000 shares under certain circumstances were
canceled.
As consideration for acquiring shares of stock in the Rights Offering in
connection with the Standby Agreement, and agreeing to the other
transactions contemplated by the Rights Offering, the Company will issue
Warburg warrants to purchase 325,000 shares at an exercise price of $2.375
per share. As consideration for modifying the debt agreement with
Prudential, waiving noncompliance with certain covenants and agreeing to
other financing transactions, the Company will issue Prudential warrants to
purchase 150,000 shares at an exercise price of $2.375 per share. Any or
all of the newly issued warrants described above may be exercised at any
time until five years after the date of issuance.
6. SPECIAL CHARGES AND UNUSUAL ITEMS
Special charges and unusual items were adjusted by $519,000 in the third
quarter of 1994. The adjustment relates to changes in estimates and
reduction of reserves associated with the closure of certain offices which
were accomplished more efficiently than had been estimated when reserves
were initially established at December 31, 1993.
10
<PAGE>
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS
RESULTS OF OPERATIONS
REVENUE
The Company has typically experienced its lowest quarterly revenue in the first
quarter of each year with historically higher and more consistent revenue in the
second and third quarters. The fourth quarter has historically provided the
highest quarterly revenue due to increased activity caused by the desire of
clients to complete transactions by year-end. Over the last three years,
revenue in any given quarter, as a percentage of total annual revenue, ranged
from a high of 29.2% to a low of 19.8%.
In connection with business operating plans established at the end of 1993, the
Company closed several unprofitable appraisal and consulting offices in February
1994 and modified its organizational structure to increase operating
efficiencies and reduce costs. The modifications included the integration of
management of commercial brokerage operations with the appraisal, consulting and
commercial mortgage brokerage operations, on a regional basis. The integration
also included those property management operations which the Company has
resumed, independent of Axiom Real Estate Management, Inc. ("Axiom"), a majority
owned subsidiary of the Company which provides property and facilities
management. Axiom closed certain offices pursuant to its strategic objective to
focus on those markets where it has a larger number of properties which will
enable it to provide more efficient, cost-effective service.
The Company's revenue is derived principally from commercial brokerage
operations. For the first nine months of 1994, total revenues of $127.9 million
declined by $15.9 million or 11.1% compared to the same period in 1993.
Excluding revenue from the Northern California residential brokerage operations
sold during 1993 and certain other offices which at the end of 1993 were closed
or were expected to be closed, as well as government contracting business
conducted during the first quarter of 1993 which was not repeated in 1994,
revenue increased approximately $11.9 million or 10.2% in the first nine months
of 1994 compared to the same period of 1993.
Revenue of $47.2 million for the third quarter of 1994 declined by $3.7 million
or 7.3% from revenue of $50.9 million for the third quarter of 1993. However,
excluding revenue from the Northern California residential brokerage and other
offices and government contracting business as described above, revenue from
continuing operations of $47.2 million in the third quarter 1994 increased by
11
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REVENUE, (CONTINUED)
$4.1 million or 9.4% compared to the third quarter 1993 revenue from continuing
operations of $43.1 million.
COSTS AND EXPENSES
Real estate brokerage commissions expense (salespersons' participation) is the
Company's major expense and is contingent upon gross brokerage commission
revenue levels. As a percentage of total revenue, salespersons' participation
expense for the first nine months of 1994 decreased to 46.3% from 49.5% for the
same period in 1993. Salespersons' participation expense for the third quarter
of 1994 decreased to 47.7% from 50.2% for the same period in 1993. Lower
salespersons' participation rates in 1994 are primarily attributable to the sale
of the Northern California residential brokerage operations and closure or
expected closure of certain other offices in 1993 which had higher salespersons'
participation rates.
Operating expenses from continuing operations, other than real estate brokerage
commissions expense, increased by $4.7 million to $71.3 million for the first
nine months of 1994 as compared to the same period in 1993. Operating expenses
from continuing operations in the third quarter of 1994 increased by $1.0
million or 4.4% from $23.0 million in the third quarter of 1993. These increases
were primarily a result of several key management positions being filled in the
latter part of 1993 and additional investments in training, computer systems,
and other resources anticipated to improve future profits. Special charges and
unusual items were adjusted by $519,000 in the third quarter of 1994. The
adjustment relates to changes in estimates and reduction of reserves associated
with the closure of certain offices which were accomplished more efficiently
than initially estimated at the end of 1993.
NET INCOME (LOSS)
Net loss of $3.0 million or $1.18 per common share for the first nine months of
1994 compares favorably to the net loss of $4.8 million or $1.61 per common
share for the same period in 1993. Net income for the third quarter of 1994 was
$584,000 as compared to a net loss of $638,000 for the third quarter of 1993,
primarily a result of management focusing on its core businesses and the
12
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NET INCOME (LOSS), (CONTINUED)
closing of unprofitable offices. Management of the Company continues to evaluate
its plans to close and/or pursue the sale of unprofitable operations, most of
which were fully reserved for at the end of 1993. Management believes current
reserves are adequate and therefore does not anticipate an adverse impact on
the Company's earnings. It is expected that cash flows related to office
closures and severance payments will approximate reserves established, however,
the eventual impact will be dependent upon the outcome of negotiations with
respect to potential dispositions. Net loss per common share was $.02 for the
third quarter of 1994, calculated as described in Note 3 to the Condensed
Consolidated Financial Statements. This compares to a net loss of $.30 per
common share for the same period last year.
LIQUIDITY AND CAPITAL RESOURCES
Cash and cash equivalents decreased by $11.6 million from December 31, 1993 to
September 30, 1994. The decrease was mainly attributable to cash used by
operations of $16.3 million, which included $5.4 million for 1993 salespersons'
and managers' incentive compensation, $2.3 million for deferred salespersons'
commission payments, $3.1 million related to nonrecurring legal settlements and
an interest payment of $1.0 million on the Prudential Senior Note. These cash
outflows were offset by cash received of $6 million from the Warburg interim
financing loan (see Note 5 to the Condensed Consolidated Financial Statements).
Working capital improved by $9.3 million during the first nine months of 1994
reflecting a deficit of $8.5 million at September 30, 1994. The improvement was
primarily related to an $8.8 million reclassification of debt (Prudential
Revolving Credit Note and Prudential Senior Notes) from current to noncurrent, a
$3.0 million reclassification of accrued claims and settlements from current to
noncurrent, $3.1 million of actual claims settlements, offset by $6.0 million in
borrowings on the Warburg interim financing loan.
The Company believes that its short-term and long-term cash requirements will be
met by operating cash flow, seasonal use of the Prudential $5 million Revolving
Credit Note and proceeds from the sale of common stock in the financing
transaction (see Note 5 to the Condensed Consolidated Financial Statements). The
Company's 1994 operating plan provides for positive operating cash flow and
reflects improvements in the third and fourth quarters consistent with
historical operating trends. The Company generated $2.1 million of operating
cash flow in the third quarter of 1994
13
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LIQUIDITY AND CAPITAL RESOURCES, (CONTINUED)
excluding $1.9 million of claims settlements, office closure and severance costs
for which reserves were provided at the end of 1993. If the 1994 operating plan
is not substantially achieved because of adverse economic conditions or other
unfavorable events, the Company may find it necessary to further reduce expense
levels, or undertake other actions as may be appropriate.
14
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PART II
OTHER INFORMATION
(Items 3 and 5 are not applicable
for the quarter ended September 30, 1994)
15
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ITEM 1. LEGAL PROCEEDINGS
The Company previously disclosed in the Form 10-Q for the quarter ended
June 30, 1994 the details of certain legal proceedings with respect to which
there was no material change during the quarter ended September 30, 1994.
ITEM 2. CHANGES IN SECURITIES
The general effect of the amendments to the Company's Certificate of
Incorporation, as referenced below, on the rights of the holders of Common Stock
are to reduce further dilution in the voting power of the holders of the Common
Stock by elimination, under most circumstances, of anti-dilution protection
provisions of the Preferred Stock. In addition, the increase in the dividend
rate to the Junior Convertible Preferred Stock will reduce the ability of the
Company to pay dividends on the Common Stock. There are other existing
restrictions on the Company's ability to pay dividends. The information set
forth in Item 4 below and in Note 5 to the Condensed Consolidated Financial
Statements in this Form 10-Q is incorporated herein by reference.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
The 1994 annual meeting of stockholders of the Company was held on
September 12, 1994. The Company submitted to a vote of stockholders, through
the solicitation of a proxy, the following proposals and the election of six
directors -- representing the entire Board of Directors.
The first proposal (the "Financing Transactions") consisted of a rights
offering to the Company's stockholders to purchase approximately 4.4 million
shares of Common Stock at a price of $2.375 per share, accompanied by a standby
commitment from Warburg, Pincus Investors, L.P. ("Warburg"), a principal
stockholder of the Company, to purchase shares not purchased in such rights
offering, up to certain limits. Warburg's proposed investment of approximately
$10.2 million pursuant to the standby commitment would be paid to the Company by
cancellation of indebtedness of the Company to Warburg in the approximate amount
of $6.2 million and the remainder would be paid in cash. The proposal also
included amendments to debt agreements between the Company and The Prudential
Insurance Company of America ("Prudential"), certain amendments to outstanding
warrants held by Warburg and Prudential, and the issuance of new warrants to
such parties.
The second proposal consisted of an amendment to the Certificate of
Incorporation of the Company relating to the terms of outstanding Senior and
Junior Convertible Preferred Stock, to eliminate mandatory redemption provisions
except in certain limited circumstances, to eliminate anti-dilution provisions,
to increase the dividend rate on the Junior Convertible Preferred Stock, and on
the Senior Convertible Preferred Stock in certain circumstances, and certain
changes to the conversion provisions related to the Junior
16
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ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS, CONTINUED
Convertible Preferred Stock. The votes cast for, against, votes abstaining,
broker nonvotes with respect to each proposal and votes cast for or withheld
with respect to nominees for election as director were as follows:
<TABLE>
<CAPTION>
BROKER
FOR AGAINST ABSTAIN NONVOTES
1. PROPOSAL TO APPROVE THE FINANCING TRANSACTIONS:
<S> <C> <C> <C> <C>
8,732,674 397,883 188,411 1,487,565
2. PROPOSAL TO AMEND THE PROVISIONS OF THE COMPANY'S CERTIFICATE
OF INCORPORATION WITH RESPECT TO THE PREFERRED STOCK:
Common 1,920,332 104,526 37,994 1,517,969
Senior Preferred Stock 4,551,201 0 0 0
Junior Preferred Stock 2,674,511 0 0 0
3. ELECTION OF DIRECTORS:
FOR WITHHOLD AUTHORITY
JOE F. HANAUER 10,692,795 113,738
R. DAVID ANACKER 10,695,615 110,918
LAWRENCE S. BACOW 10,695,615 110,918
REUBEN S. LEIBOWITZ 10,717,449 89,084
ROBERT J. MCLAUGHLIN 10,695,615 110,918
JOHN D. SANTOLERI 10,694,989 111,544
</TABLE>
ITEM 6(A). EXHIBITS
(4) INSTRUMENTS DEFINING THE RIGHTS OF SECURITY HOLDERS, INCLUDING
INDENTURES
4.1 Senior Note, Subordinated Note and Revolving Credit Note Agreement
between The Prudential Insurance Company of America and the Registrant
dated as of November 2, 1992, incorporated herein by reference to
Exhibit 4.6 to the Registrant's Current Report on Form 8-K filed on
February 8, 1993 (Commission File No. 1-8122).
4.2 Letter agreement between The Prudential Insurance Company of America
and the Registrant dated March 26, 1993, incorporated herein by
reference to Exhibit 4.10 to the Registrant's Quarterly Report on Form
10-Q filed on May 15, 1993 (Commission File No. 1-8122).
17
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ITEM 6(A). EXHIBITS, CONTINUED
4.3 Letter agreement between The Prudential Insurance Company of America
and the Registrant dated April 19, 1993, incorporated herein by
reference to Exhibit 4.11 to the Registrant's Quarterly Report on Form
10-Q filed on May 15, 1993 (Commission File No. 1-8122).
4.4 Letter agreement between The Prudential Insurance Company of America
and the Registrant dated October 26, 1993, incorporated herein by
reference to Exhibit 4.21 to the Registrant's registration statement
on Form S-8 filed on November 12, 1993 (Registration No. 33-71484).
4.5 Letter agreement between The Prudential Insurance Company of America
and the Registrant dated March 28, 1994, incorporated by reference to
Exhibit 4.5 to the Registrant's Annual Report on Form 10-K filed on
March 31, 1994 (Commission File No. 1-8122).
4.6 Modification to Note and Security Agreement between the Registrant and
The Prudential Insurance Company of America dated as of March 28,
1994, incorporated by reference to Exhibit 4.17 to the Registrant's
Amendment to its Annual Report on Form 10-K/A filed on April 29, 1994
(Commission File No. 1-8122).
4.7 Amendment dated July 20, 1994 to the Senior Note, Subordinated Note
and Revolving Credit Note Agreement between the Registrant and The
Prudential Insurance Company of America, incorporated herein by
reference to Exhibit 10.2 to the Registrant's registration statement
on Form S-3 filed on July 22, 1994 (Registration No. 33-54707).
4.8 Securities Purchase Agreement between The Prudential Insurance
Company of America and the Registrant, dated
as of November 2, 1992, incorporated herein by reference to Exhibit
28.4 to the Registrant's Current Report on
Form 8-K filed on November 12, 1992 (Commission File No. 1-8122).
4.9 Securities Purchase Agreement among Warburg, Pincus Investors, L.P.,
Joe F. Hanauer and the Registrant, dated as of November 2, 1992,
incorporated herein by reference to Exhibit 28.3 to the Registrant's
Current Report on Form 8-K filed on November 12, 1992 (Commission File
No. 1-8122).
4.10 Specimen of stock subscription warrant No. 8 issued to the Joe F.
Hanauer Trust, dated as of January 29, 1993, exercisable for 158,608
shares of the Registrant's Common Stock, incorporated herein by
reference to
18
<PAGE>
ITEM 6(A). EXHIBITS, CONTINUED
Exhibit 4.12 to the Registrant's registration statement on Form S-8
filed on November 12, 1993 (Registration No. 33-71484).
4.11 Specimen of stock subscription warrant No. S-4 issued to
the Joe F. Hanauer Trust, dated January 29, 1993,
exercisable for 25,954 shares of the Registrant's Common Stock,
incorporated herein by reference to Exhibit 4.18 to the Registrant's
registration statement on Form S-8 filed on November 12, 1993
(Registration No. 33-71484).
4.12 Summary of terms of proposed bridge loan and rights offering executed
by Warburg, Pincus Investors, L.P., The Prudential Insurance Company
of America and the Registrant as of March 28, 1994, incorporated
herein by reference to Exhibit 4.11 to the Registrant's Annual Report
on Form 10-K filed on March 31, 1994 (Commission File No. 1-8122).
4.13 Cash Collateral Account Agreement between Bank of America, N.T.&S.A.
and the Registrant dated as of March 29, 1994, incorporated herein by
reference to Exhibit 4.12 to the Registrant's Annual Report on Form
10-K filed on March 31, 1994 (Commission File No. 1-8122).
4.14 Intercreditor Agreement between Warburg, Pincus Investors, L.P. and
The Prudential Insurance Company of America dated as of March 28,
1994, incorporated herein by reference to Exhibit 4.13 to the
Registrant's Annual Report on Form 10-K filed on March 31, 1994
(Commission File No. 1-8122).
4.15 Promissory Note in the amount of up to $10 million dated as of March
29, 1994, executed by the Registrant in favor of Warburg, Pincus
Investors, L.P., Incorporated herein by reference to Exhibit 4.15 to
the Registrant's Amendment to its Annual Report on Form 10-K/A filed
on April 29, 1994 (Commission File No. 1-8122).
4.16 Loan and Security Agreement among the Registrant, Warburg, Pincus
Investors, L.P. and The Prudential Insurance Company of America dated
as of March 29, 1994; incorporated herein by reference to Exhibit 4.16
to the Registrant's Amendment to its Annual Report on Form 10-K/A
filed on April 29, 1994 (Commission File No. 1-8122).
4.17 Promissory Note in the amount of $250,000 dated as of January 8, 1990
executed by the Registrant in favor of DW Limited Partnership,
incorporated herein by reference to Exhibit 4.14 to the Registrant's
Annual Report on
19
<PAGE>
ITEM 6(A). EXHIBITS, CONTINUED
Form 10-K filed on March 31, 1994 (Commission File No. 1-8122).
4.18 Amendment to the Certificate of Incorporation of the Registrant,
effective November 1, 1994.
4.19 Certificate of Incorporation of the Company, as restated effective
December 8, 1993, incorporated herein by reference to Exhibit 4.1 to
the Registrant's registration statement on Form S-3 filed on July 22,
1994 (Registration No. 33-54707).
4.20 Amendment to the Bylaws of the Registrant, effective June 1, 1994.
4.21 Bylaws of the Registrant, as amended as of June 1, 1994.
4.22 Form of Rights Certificate in connection with 1994 Rights Offering of
the Registrant, incorporated herein by reference to Exhibit 4.3 to the
Registrant's registration statement on Form S-3 filed on July 22,
1994 (Registration No. 33-54707).
4.23 Specimen of Stock Subscription Warrant No. 16 issued to The Prudential
Insurance Company of America, restated as of November 1, 1994,
exercisable for 200,000 shares of the Registrant's Common Stock.
4.24 Specimen of Stock Subscription Warrant No. 17 issued to The Prudential
Insurance Company of America, as of November 1, 1994, exercisable for
150,000 shares of the Registrant's Common Stock.
4.25 Specimen of Stock Subscription Warrant No. 18 issued to Warburg,
Pincus Investors, L.P., restated as of November 1, 1994, exercisable
for 687,358 shares of the Registrant's Common Stock.
4.26 Specimen of Stock Subscription Warrant No. 19 issued to Warburg,
Pincus Investors, L.P., as of November 1, 1994, exercisable for
325,000 shares of the Registrant's Common Stock.
4.27 Amended Senior Note executed by the Registrant in favor of The
Prudential Insurance Company of America in the amount of $6,500,000,
dated as of November 1, 1994.
4.28 Amended Senior Note executed by the Registrant in favor of The
Prudential Insurance Company of America in the amount of $3,500,000,
dated as of November 1, 1994.
20
<PAGE>
ITEM 6(A). EXHIBITS, CONTINUED
4.29 Amended Payment-In-Kind Note executed by the Registrant in favor of
The Prudential Insurance Company of America in the amount of
$10,900,834.33, dated as of November 1, 1994.
4.30 Amended Revolving Credit Note executed by the Registrant in favor of
The Prudential Insurance Company of America in the amount of
$5,000,000, dated as of November 1, 1994.
On an individual basis, instruments other than Exhibits 4.1 through
4.30 listed above defining the rights of holders of long-term debt of
the Registrant and its consolidated subsidiaries and partnerships do
not exceed ten percent of total consolidated assets and are,
therefore, omitted; however, the Registrant will furnish
supplementally to the Commission any such omitted instrument upon
request.
(10) MATERIAL CONTRACTS
10.1 Grubb & Ellis Company 1990 Amended and Restated Stock
Option Plan, as amended as of May 28, 1993, incorporated
herein by reference to Exhibit 4.1 to the Registrant's
registration statement on Form S-8 filed on November 12, 1993
(Registration No. 33-71580).
10.2 Agreement between HSM Inc. and David Donosky dated January 15,
1988, regarding exchange of indebtedness, incorporated
herein by reference to Exhibit 10.23 to the Registrant's
Annual Report on Form 10-K filed on March 30, 1988
(Commission File No. 1-8122).
10.3 Loan Agreement between David Donosky and the Registrant dated
October 20, 1989, incorporated herein by reference to Exhibit
10.21 to the Registrant's registration statement on Form S-2
filed on January 12, 1990 (Registration No. 33-32979).
10.4 Description of Grubb & Ellis Company Senior Management
Compensation Plan, incorporated herein by reference to Exhibit
10.17 to the Registrant's Annual Report on Form 10-K filed on
March 30, 1992 (Commission File No. 1-8122).
10.5 Stock Purchase and Stockholder Agreement dated May 6, 1992, among
GE New Corp., the Registrant and International Business Machines
Corporation, incorporated herein by reference to Exhibit 28.2 to
the Registrant's Quarterly Report on Form 10-Q filed on May 15,
1992 (Commission File No. 1-8122).
21
<PAGE>
(10) MATERIAL CONTRACTS, CONTINUED
10.6 Master Management Agreement dated May 6, 1992 between International
Business Machines Corporation and GE New Corp., incorporated herein by
reference to Exhibit 28.2 to the Registrant's Quarterly Report on
Form 10-Q filed on May 15, 1992 (Commission File No. 1-8122).
10.7 Master Financing Agreement dated August 5, 1992 between IBM Credit
Corporation and Axiom Real Estate Management, Inc., incorporated
herein by reference to Exhibit 28.4 to the Registrant's Quarterly
Report on Form 10-Q filed on August 13, 1992 (Commission File No. 1-
8122).
10.8 Credit Agreement dated as of August 31, 1992, between Axiom Real
Estate Management, Inc. and the Registrant, incorporated herein by
reference to Exhibit 28.6 to the Registrant's Quarterly Report on
Form 10-Q filed on November 16, 1992 (Commission File No. 1-8122).
10.9 Purchase Agreement dated March 4, 1993 between the Registrant and Fox
and Carskadon/Better Homes and Gardens, incorporated herein by
reference to Exhibit 10.21 to the Registrant's Quarterly Report on
Form 10-Q filed May 15, 1993 (Commission File No. 1-1822).
10.10 Stockholders' Agreement among Warburg, Pincus Investors, L.P., The
Prudential Insurance Company of America, Joe F. Hanauer and the
Registrant dated January 29, 1993, incorporated herein by reference
to Exhibit 28.1 to the Registrant's Current Report on Form 8-K filed
on February 8, 1993 (Commission File No. 1-8122).
10.11 Amendment to Stockholders' Agreement among Warburg, Pincus Investors,
L.P., The Prudential Insurance Company of America, Joe F. Hanauer and
the Registrant, dated as of July 1, 1993, incorporated herein by
reference to Exhibit 10.15 to the Registrant's Quarterly Report on
Form 10-Q filed on August 16, 1993 (Commission File No. 1-8122).
10.12 Employment Agreement, effective May 20, 1992, between the Registrant
and Alvin L. Swanson, Jr., incorporated herein by reference to
Exhibit 10.29 to the Registrant's Annual Report on Form 10-K filed on
April 15, 1993 (Commission File No. 1-8122).
10.13 First Amendment to Employment Agreement, effective as of May 20,
1992, between the Registrant and Alvin L. Swanson, Jr., incorporated
herein by reference to Exhibit 10.30 to the Registrant's Annual
Report on Form 10-K filed on April 15, 1993 (Commission File No. 1-
8122).
22
<PAGE>
(10) MATERIAL CONTRACTS, CONTINUED
10.14 Third Amendment to Employment Agreement, effective as of February 24,
1993, between the Registrant and Alvin L. Swanson, Jr., incorporated
herein by reference to Exhibit 10.31 to the Registrant's Quarterly
Report on Form 10-Q filed on May 15, 1993 (Commission File No. 1-
8122).
10.15 Separation Agreement dated August 1, 1994 between the Registrant and
Gordon M. Hess.
10.16 1993 Stock Option Plan for Outside Directors, incorporated herein by
reference to Exhibit 4.1 to the Registrant's registration statement
on Form S-8 filed on November 12, 1993 (Registration No. 33-71484).
10.17 Separation Agreement between the Registrant and Wilbert F. Schwartz
dated as of April 25, 1994, incorporated herein by reference to
Exhibit 10.23 to the Registrant's Amendment to its Annual Report on
Form 10-K/A filed on April 29, 1994 (Commission File No. 1-8122).
10.18 Standby Agreement dated July 21, 1994 between the Registrant and
Warburg, Pincus Investors, L.P., incorporated by reference to Exhibit
10.1 to the Registrant's registration statement on Form S-3 filed on
July 22, 1994 (Registration No. 33-5470).
10.19 Second Amendment to the Stockholders' Agreement dated November 1,
1994, among the Registrant, Warburg, Pincus Investors, L.P., The
Prudential Insurance Company of America, and Joe F. Hanauer.
(11) STATEMENT REGARDING COMPUTATION OF PER SHARE EARNINGS
(27) FINANCIAL DATA SCHEDULE
ITEM 6(B) REPORTS ON FORM 8-K
A current report on Form 8-K dated September 12, 1994 was filed by the
Registrant, reporting under Item 5 OTHER EVENTS the approval of
certain financing transactions including a rights offering by the
Registrant's stockholders at the 1994 annual meeting of
stockholders.
23
<PAGE>
SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
GRUBB & ELLIS COMPANY
(Registrant)
Date: November 10, 1994 /s/ James E. Klescewski
---------------------------------
James E. Klescewski
Vice President and Controller
24
<PAGE>
Grubb & Ellis Company and Subsidiaries
EXHIBIT INDEX (A)
for the quarter ended September 30, 1994
----------------------------------------
EXHIBIT
- - -------
4.18 Amendment to the Certificate of Incorporation of the Registrant,
effective November 1, 1994.
4.20 Amendment to the Bylaws of the Registrant, effective June 1, 1994.
4.21 Bylaws of the Registrant, as amended as of June 1, 1994.
4.23 Specimen of Stock Subscription Warrant No. 16 issued to The
Prudential Insurance Company of America, restated as of November 1,
1994, exercisable for 200,000 shares of the Registrant's Common Stock.
4.24 Specimen of Stock Subscription Warrant No. 17 issued to The
Prudential Insurance Company of America, as of November 1, 1994,
exercisable for 150,000 shares of the Registrant's Common Stock.
4.25 Specimen of Stock Subscription Warrant No. 18 issued to Warburg,
Pincus Investors, L.P., restated as of November 1, 1994, exercisable
for 687,358 shares of the Registrant's Common Stock.
4.26 Specimen of Stock Subscription Warrant No. 19 issued to Warburg,
Pincus Investors, L.P., as of November 1,1994, exercisable for 325,000
shares of the Registrant's Common Stock.
4.27 Amended Senior Note executed by the Registrant in favor of The
Prudential Insurance Company of America in the amount of $6,500,000,
dated as of November 1,1994.
4.28 Amended Senior Note executed by the Registrant in favor of The
Prudential Insurance Company of America in the amount of $3,500,000,
dated as of November 1,1994
4.29 Amended Payment-In-Kind Note executed by the Registrant in favor of
The Prudential Insurance Company of America in the amount of
$10,900,834.33, dated as of November 1, 1994.
25
<PAGE>
Grubb & Ellis Company and Subsidiaries
EXHIBIT INDEX (continued) (A)
for the quarter ended September 30, 1994
----------------------------------------
EXHIBIT
4.30 Amended Revolving Credit Note executed by the Registrant in favor of
The Prudential Insurance Company of America in the amount of
$5,000,000, dated as of November 1, 1994.
10.15 Separation Agreement dated August 1, 1994 between the Registrant and
Gordon M. Hess.
10.19 Second Amendment to the Stockholders' Agreement dated November 1,
1994, among the Registrant, Warburg, Pincus Investors, L.P., The
Prudential Insurance Company of America, and Joe F. Hanauer.
(11) Statement Regarding Computation of Per Share Earnings
(27) Financial Data Schedule
(A) Exhibits incorporated by reference are listed in Item 6(a) of this report.
26
<PAGE>
EXHIBIT 4.18
CERTIFICATE OF AMENDMENT
OF
RESTATED CERTIFICATE OF INCORPORATION
GRUBB & ELLIS COMPANY, a corporation organized and existing under
and by virtue of the General Corporation Law of the State of Delaware, DOES
HEREBY CERTIFY:
FIRST: That on June 1, 1994, the Board of Directors of said
Corporation duly adopted the following resolution setting forth proposed
amendments to the Restated Certificate of Incorporation of said Corporation,
declaring said amendments to be advisable and calling a meeting of the
stockholders of said Corporation for consideration thereof. The resolution
setting forth the proposed amendments is as follows:
RESOLVED, that Article IV of the Certificate of Incorporation of
this Corporation is hereby amended to read in its entirety as follows:
"The total number of shares of capital stock which the Corporation
shall have authority to issue is twenty-six million (26,000,000) shares, of
which twenty-five million (25,000,000) shares with a par value of $.01 each
shall be designated Common Stock, and of which one million (1,000,000) shares
with a par value of $.01 each shall be designated Preferred Stock, of which
Preferred Stock fifty thousand (50,000) shares with a par value of $.01 each
shall be designated Series A Senior Convertible Preferred Stock ("Series A
Senior Preferred Stock"), two hundred thousand (200,000) shares with a par value
of $.01 each shall be designated Series B Senior Convertible Preferred Stock
("Series B Senior Preferred Stock") and two hundred thousand (200,000) shares
with a par value of $.01 each shall be designated Junior Convertible Preferred
Stock. Except as noted in the second following paragraph, as used herein,
"Senior Convertible Preferred Stock," shall mean collectively, the Series A
Senior Preferred Stock and the Series B Senior Preferred Stock, or either of
them. As used herein, "Convertible Preferred Stock" shall mean collectively,
the Senior Convertible Preferred Stock and the Junior Convertible Preferred
Stock, or either of them.
Upon the filing on January 29, 1993 of the Certificate of Amendment
of Certificate of Incorporation (the "Amendment"), every five shares of
outstanding Common Stock were automatically reclassified, changed and converted
into one share of Common Stock. No fractional shares of Common Stock were
issued upon such conversion, but in lieu thereof, the Corporation paid a cash
adjustment in respect of such fractional interest in an amount equal to such
fractional interest multiplied by the Market Price of a share of Common Stock on
the date on which the Amendment was filed. Unless otherwise requested by the
holders thereof, the share certificates representing the shares of Common Stock
outstanding prior to the filing of the Amendment represent such shares as
reclassified, changed and converted following the filing of the Amendment. In
addition, on December 8, 1993, the Company filed a Restated Certificate of
Incorporation restating, integrating, and not further amending the provisions of
the Company's certificate of incorporation as amended and supplemented before
that date.
Upon the filing of this Certificate of Amendment of Restated
Certificate of Incorporation (the "Certificate of Amendment"), Warburg, Pincus
Investors, L.P. ("Warburg") will exchange all of its shares of Senior
Convertible Preferred Stock held prior to such filing ("Existing
<PAGE>
Senior Convertible Preferred Stock") for an equal number of shares of Series B
Senior Preferred Stock. Effective immediately after the issuance of such shares
of Series B Senior Preferred Stock, each remaining share of Existing Senior
Convertible Preferred Stock shall be automatically reclassified, changed and
converted into one share of Series A Senior Preferred Stock. Unless otherwise
requested by the holders thereof, the share certificates representing the shares
of Existing Senior Convertible Preferred Stock outstanding prior to the filing
of the Certificate of Amendment which have not been exchanged for Series B
Senior Convertible Stock shall represent shares of Series A Senior Convertible
Preferred Stock as reclassified, changed and converted following the issuance of
the Series B Senior Convertible Stock.
The class of capital stock of the Corporation designated Common
Stock shall have (i) subject to the proviso at the end of this sentence, full
voting rights, with one vote represented by each share of stock; (ii) rights to
payment of dividends without preference if, as, and when declared by the Board
of Directors of the Corporation; and (iii) rights to liquidation distributions
of the Corporations's assets without preference after payment of preferential
liquidation distributions, if any, payable on any issued and outstanding series
of Preferred Stock; provided, however, that, notwithstanding the provisions of
clause (i) of this sentence, the holders of Common Stock shall not have the
right to vote on any of the matters described in Section 4(b)(i) or 4(b)(ii)
below in this Article IV except in clauses (A) and (D) thereof, except as
otherwise required by the laws of the State of Delaware.
The Preferred Stock may be issued from time to time in one or more
series. The Board of Directors is hereby expressly vested with authority to fix
by resolution or resolutions the designations and the powers, preferences and
relative, participating, optional or other special rights, and the
qualifications, limitations or restrictions thereof (including, without
limitation, the voting powers, if any, the dividend rate, conversion rights,
redemption price, or liquidation preference), of any wholly unissued series of
Preferred Stock, to fix the number of shares constituting any such series, and
to increase or decrease the number of shares of any such series (but not below
the number of shares thereof then outstanding). In case the number of shares of
any such series shall be so decreased, the shares constituting such decrease
shall resume the status which they had prior to the adoption of the resolution
or resolutions originally fixing the number of shares of such series.
A statement of the designations and the voting powers, preferences
and relative, participating, optional and other special rights of the shares of
the Senior Convertible Preferred Stock and the Junior Convertible Preferred
Stock, and the qualifications, limitations or restrictions thereof are as
follows:
1. RANK. The Senior Convertible Preferred Stock shall, with
respect to dividend rights and rights on liquidation, winding up and
dissolution, rank prior to any other equity securities of the Corporation,
including all classes of Common Stock and any other series of Preferred Stock of
the Corporation, with the Series A Senior Preferred Stock and the Series B
Senior Preferred Stock ranking on an equal priority in all such foregoing
respects. The Junior Convertible Preferred Stock shall, with respect to
dividend rights and rights on liquidation, winding up and dissolution, rank
prior to any other equity securities of the Corporation, including all classes
of Common Stock and any other series of Preferred Stock of the Corporation other
than the Senior Convertible Preferred Stock which shall rank prior to the Junior
Convertible Preferred Stock (all of such equity securities of the Corporation to
which the Junior Convertible Preferred Stock ranks prior are collectively
referred to herein as the "Junior Stock").
2
<PAGE>
2. DIVIDENDS
(a) SENIOR CONVERTIBLE PREFERRED STOCK. The holders of Senior
Convertible Preferred Stock shall be entitled to receive, when and as declared
by the Board of Directors out of funds legally available therefor, cumulative
dividends at a rate (the "Senior Dividend Rate") equal to the greater of 12% or
the Junior Preferred Dividend Rate (as defined below). Such dividends shall be
computed on the basis of the Series A Senior Preferred Stock Stated Value and
the Series B Senior Preferred Stock Stated Value, respectively, and shall be
payable annually on the first day of each October commencing on the first of
such dates to occur after the Issue Date. Dividends shall accrue on each share
of Senior Convertible Preferred Stock from the Issue Date and shall accrue from
day to day, whether or not earned or declared. Accrued but unpaid dividends on
the Senior Convertible Preferred Stock shall increase at a compounding rate
equal to the Senior Dividend Rate compounded annually. Dividends paid on the
shares of Senior Convertible Preferred Stock in an amount less than the total
amount of such dividends at the time accrued and payable on such shares shall be
allocated pro rata on a share-by-share basis among all such shares at the time
outstanding. The Board of Directors may fix a record date for the determination
of holders of all, but not less than all shares of Senior Convertible Preferred
Stock entitled to receive payment of a dividend or distribution declared
thereon, which record date shall be not more than 30 days prior to the date
fixed for the payment thereof. During such time as any shares of the Senior
Convertible Preferred Stock are outstanding, the Corporation shall not declare,
pay or set apart for payment any dividend on any of the Junior Convertible
Preferred Stock or Junior Stock, other than a redemption pursuant to Section
5(h), or make any payment on account of, or set apart money for a sinking or
other similar fund or make any payment for, the purchase, redemption or other
retirement of, any of the Junior Convertible Preferred Stock or Junior Stock or
any warrants, rights, calls or options exercisable for or convertible into any
of the Junior Convertible Preferred Stock or Junior Stock, or make any
distribution in respect thereof, either directly or indirectly, and whether in
cash, obligations or shares of the Corporation or other property (other than
distributions or dividends in Junior Convertible Preferred Stock or Junior Stock
to the holders of Junior Convertible Preferred Stock or Junior Stock), and shall
not permit any corporation or other entity directly or indirectly controlled by
the Corporation to purchase or redeem any of the Junior Convertible Preferred
Stock or Junior Stock or any warrants, rights, calls or options exercisable for
or convertible into any of the Junior Convertible Preferred Stock or Junior
Stock, other than a redemption pursuant to Section 5(h), unless prior to or
concurrently with such declaration, payment, setting apart for payment,
purchase, redemption or distribution, as the case may be, the full cumulative
dividends on all outstanding shares of Senior Convertible Preferred Stock shall
have been paid in full or contemporaneously are declared and paid through the
most recent dividend payment date. Notwithstanding the foregoing, a redemption
pursuant to Section 5(h) may be effected prior to the payment in full of
cumulative dividends on all outstanding shares of Senior Convertible Preferred
Stock. The dividend rights of the Series A Senior Preferred Stock and Series B
Senior Preferred Stock shall be on an equal priority.
(b) JUNIOR CONVERTIBLE PREFERRED STOCK. The holders of Junior
Convertible Preferred Stock shall be entitled to receive, when and as declared
by the Board of Directors out of funds legally available therefor, cumulative
dividends payable in cash at a rate (the "Junior Preferred Dividend Rate") of 5%
per annum through December 31, 2001, 10% per annum from January 1, 2002 through
December 31, 2002, 11% per annum from January 1, 2003 through December 31, 2003,
12% per annum from January 1, 2004 through December 31, 2004, and commencing on
January 1, 1995 and on each January 1 thereafter, such rate shall increase by
2%. Such dividends shall be computed on the basis of the Junior Convertible
Preferred Stock Stated Value and shall be payable annually on the first day of
each October commencing on the first of such dates to occur after
3
<PAGE>
the shares of Junior Convertible Preferred Stock are initially issued.
Dividends shall accrue on each share of Junior Convertible Preferred Stock from
the date of issuance thereof and shall accrue from day to day, whether or not
earned or declared. Accrued but unpaid dividends shall increase at a
compounding rate equal to the Junior Preferred Dividend Rate compounded
annually. Dividends paid on the shares of Junior Convertible Preferred Stock in
an amount less than the total amount of such dividends at the time accrued and
payable on such shares shall be allocated pro rata on a share-by-share basis
among all such shares at the time outstanding. The Board of Directors may fix a
record date for the determination of holders of shares of Junior Convertible
Preferred Stock entitled to receive payment of a dividend or distribution
declared thereon, which record date shall be not more than 30 days prior to the
date fixed for the payment thereof. During such time as any shares of the
Junior Convertible Preferred Stock are outstanding, the Corporation shall not
declare, pay or set apart for payment any dividend on any of the Junior Stock or
make any payment on account of, or set apart money for a sinking or other
similar fund or make any payment for, the purchase, redemption or other
retirement of, any of the Junior Stock or any warrants, rights, calls or options
exercisable for or convertible into any of the Junior Stock, or make any
distribution in respect thereof, either directly or indirectly, and whether in
cash, obligations or shares of the Corporation or other property (other than
distributions or dividends in Junior Stock to the holders of Junior Stock), and
shall not permit any corporation or other entity directly or indirectly
controlled by the Corporation to purchase or redeem any of the Junior Stock or
any warrants, rights, calls or options exercisable for or convertible into any
of the Junior Stock, unless prior to or concurrently with such declaration,
payment, setting apart for payment, purchase, redemption or distribution, as the
case may be, the full cumulative dividends on all outstanding shares of Junior
Convertible Preferred Stock shall have been paid in full or contemporaneously
are declared and paid through the most recent dividend payment date.
3. LIQUIDATION PREFERENCE
(a) SENIOR CONVERTIBLE PREFERRED STOCK. In the event of any
voluntary or involuntary liquidation, dissolution or winding up of the affairs
of the Corporation, the holders of the shares of Series A Senior Preferred Stock
and Series B Senior Preferred Stock then outstanding shall be entitled to be
first paid out of the assets of the Corporation available for distribution to
its stockholders an amount in cash equal to $100.00 per share of Series A Senior
Preferred Stock (the "Series A Senior Preferred Stock Stated Value") and $100.00
per share of Series B Senior Preferred Stock (the "Series B Senior Preferred
Stock Stated Value"), respectively, plus an amount equal to all dividends
(whether or not earned or declared) on such shares accrued and unpaid thereon to
the date of final distribution, before any payment shall be made or any assets
distributed to the holders of the Junior Convertible Preferred Stock or Junior
Stock. Except as provided in the preceding sentence, holders of the Senior
Convertible Preferred Stock shall not be entitled to any distribution in the
event of liquidation, dissolution or winding up of the affairs of the
Corporation. If, upon any such liquidation, dissolution or winding up of the
Corporation, the remaining assets of the Corporation available for distribution
to its stockholders shall be insufficient to pay the holders of the Senior
Convertible Preferred Stock the full amount to which they shall be entitled, the
holders of any of the Senior Convertible Preferred Stock shall share ratably in
any distribution of the remaining assets and funds of the Corporation in
proportion to the respective amounts which would otherwise be payable in respect
of the shares held by them upon such distribution if all amounts payable on or
with respect to such shares were paid in full. The distribution rights of the
Series A Senior Preferred Stock and Series B Senior Preferred Stock shall be on
an equal priority.
(b) JUNIOR CONVERTIBLE PREFERRED STOCK. In the event of any
voluntary or involuntary liquidation, dissolution or winding up of the affairs
of the Corporation, if assets are
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remaining after the payment in full of the preferential amount of the Series A
Senior Preferred Stock Stated Value and the Series B Senior Preferred Stock
Stated Value set forth in Section 3(a) plus an amount equal to all dividends
(whether or not earned or declared) on such shares accrued and unpaid thereon,
the holders of the shares of Junior Convertible Preferred Stock then outstanding
shall be next entitled to be first paid out of the assets of the Corporation
available for distribution to its stockholders an amount in cash equal to
$100.00 per share (the "Junior Convertible Preferred Stock Stated Value") plus
an amount equal to all dividends (whether or not earned or declared) on such
shares accrued and unpaid thereon to the date of final distribution, before any
payment shall be made or any assets distributed to the holders of any of the
Junior Stock. Except as provided in the preceding sentence, holders of the
Junior Convertible Preferred Stock shall not be entitled to any distribution in
the event of liquidation, dissolution or winding up of the affairs of the
Corporation. If, upon any such liquidation, dissolution or winding up of the
Corporation, the remaining assets of the Corporation available for distribution
to its stockholders shall be insufficient to pay the holders of the Junior
Convertible Preferred Stock the full amount to which they shall be entitled, the
holders of the Junior Convertible Preferred Stock shall share ratably in any
distribution of the remaining assets and funds of the Corporation in proportion
to the respective amounts which would otherwise be payable in respect of the
shares held by them upon such distribution if all amounts payable on or with
respect to such shares were paid in full.
(c) For the purposes of this Section 3, neither the voluntary
sale, conveyance, exchange or transfer (for cash, shares of stock, securities or
other consideration) of all or substantially all the property or assets of the
Corporation nor the consolidation or merger of the Corporation with one or more
other corporations shall be deemed a liquidation, dissolution or winding up,
voluntary or involuntary.
(d) The liquidation payment with respect to each outstanding
fractional share of Convertible Preferred Stock shall be equal to a ratably
proportionate amount of the liquidation payment with respect to each outstanding
share of Convertible Preferred Stock.
4. VOTING RIGHTS
(a) RIGHT TO VOTE. Except as otherwise required by law, the
Senior Convertible Preferred Stock, the Junior Convertible Preferred Stock, the
Common Stock and any other capital stock of the Corporation entitled to vote
with the Common Stock shall be deemed to be one class for the purpose of voting,
or giving written consent in lieu of voting, on all matters submitted for the
approval of the stockholders of the Corporation. Each person in whose name
shares of Convertible Preferred Stock shall be registered on the record date for
determining the holders of the Convertible Preferred Stock entitled to vote at
any meeting of stockholders (or adjournment thereof) or to consent to corporate
action in writing without a meeting shall be entitled to, at such meeting or
with respect to such action, one vote for each share of Common Stock of the
Corporation into which each share of Convertible Preferred Stock registered in
the name of such person on such record date could be converted (with any
fractional share determined on an aggregate conversion basis being rounded to
the nearest whole share).
(b) SIGNIFICANT EVENTS
(i) During such time as any shares of Senior Convertible
Preferred Stock are outstanding, the Corporation will not, without the
affirmative vote or consent of the holders of at least two-thirds of the
issued and outstanding shares of Senior Convertible
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Preferred Stock voting together as one single and separate class, (A)
create, authorize or issue (including on conversion or exchange of any
convertible or exchangeable securities or by reclassification) any class
or series of shares ranking on a parity with or prior to the Senior
Convertible Preferred Stock, either as to dividends upon voluntary or
involuntary liquidation, dissolution or winding up, (B) increase the
authorized shares of, or issue (including on conversion or exchange of any
convertible or exchangeable securities or by reclassification) any shares
of Senior Convertible Preferred Stock, (C) amend, alter, waive the
application of, or repeal (whether by merger, consolidation or otherwise)
any provision of the Certificate of Incorporation of the Corporation,
enter into any agreement or take any other corporate action which in any
manner would alter, change or otherwise adversely affect the powers,
rights or preferences of the Senior Convertible Preferred Stock, (D)
effect the reorganization, recapitalization, liquidation, dissolution or
winding up of the Corporation, or the sale, lease, conveyance or exchange
of all or substantially all of the assets, property or business of the
Corporation, or the merger or consolidation of the Corporation with or
into any other corporation, if such transaction in any manner would alter,
change or otherwise adversely affect the powers, rights or preferences of
the Senior Convertible Preferred Stock or (E) take any action which would
cause a dividend or other distribution to be deemed to be received by the
holders of the Senior Convertible Preferred Stock for federal income tax
purposes unless such dividend or other distribution is actually received
by such holders.
(ii) During such time as any shares of Junior Convertible
Preferred Stock are outstanding, the Corporation will not, without the
affirmative vote or consent of the holders of at least two-thirds of the
issued and outstanding shares of Junior Convertible Preferred Stock voting
together as a separate class, (A) create, authorize or issue (including on
conversion or exchange of any convertible or exchangeable securities or by
reclassification) any class or series of shares ranking on a parity with
or prior to the Junior Convertible Preferred Stock, either as to dividends
or redemption or upon voluntary or involuntary liquidation, dissolution or
winding up, (B) increase the authorized shares of, or issue (including on
conversion or exchange of any convertible or exchangeable securities or by
reclassification) any shares of Junior Convertible Preferred Stock, (C)
amend, alter, waive the application of, or repeal (whether by merger,
consolidation or otherwise) any provision of the Certificate of
Incorporation of the Corporation, enter into any agreement or take any
other corporate action which in any manner would alter, change or
otherwise adversely affect the powers, rights or preferences of the Junior
Convertible Preferred Stock, (D) effect the reorganization,
recapitalization, liquidation, dissolution or winding up of the
Corporation, or the sale, lease, conveyance or exchange of all or
substantially all of the assets, property or business of the Corporation,
or the merger or consolidation of the Corporation with or into any other
corporation, if such transaction in any manner would alter, change or
otherwise
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adversely affect the powers, rights or preferences of the Junior
Convertible Preferred Stock or (E) take any action which would cause a
dividend or other distribution to be deemed to be received by the holders
of the Junior Convertible Preferred Stock for federal income tax purposes
unless such dividend or other distribution is actually received by such
holders.
(c) WRITTEN CONSENT. Whenever holders of the Convertible
Preferred Stock are required or permitted to take any action by vote, such
action may be taken without a meeting by written consent, setting forth the
action so taken and signed by the holders of the outstanding Senior Convertible
Preferred Stock or Junior Convertible Preferred Stock, as the case may be,
having not less than the minimum number of votes that would be necessary to
authorize or take such action at a meeting at which all such shares entitled to
vote thereon were present and voted.
5. CONVERSION. Holders of the Convertible Preferred Stock
shall have the following conversion rights (collectively, the "Conversion
Rights"):
(a) RIGHT TO CONVERT. Each share of Series A Senior Preferred
Stock, Series B Senior Preferred Stock and Junior Convertible Preferred Stock
shall be convertible, at the option of the holder thereof, at any time and from
time to time, into such number of validly issued, fully paid and nonassessable
shares of Common Stock of the Corporation, as is determined by dividing the
Series A Senior Preferred Stock Stated Value, the Series B Senior Preferred
Stock Stated Value or the Junior Convertible Preferred Stock Stated Value, as
the case may be, by the respective "Conversion Prices" (as defined below) in
effect at the time of the conversion; provided, however, that if such share
shall be called for redemption pursuant to Section 5(h), it may not be converted
after the redemption date unless the Corporation shall have failed to pay or
provide for the payment of the redemption price therefor (in accordance with
Section 5(h)). The Conversion Prices initially in effect shall be $2.6716 for
the Series A Senior Preferred Stock (the "Series A Senior Preferred Stock
Conversion Price"), $ 2.6564 for the Series B Senior Preferred Stock (the
"Series B Senior Preferred Stock Conversion Price"), and $5.6085 for the Junior
Convertible Preferred Stock (the "Junior Preferred Stock Conversion Price") (the
Series A Senior Preferred Stock Conversion Price, the Series B Senior Preferred
Stock Conversion Price, and the Junior Preferred Stock Conversion Price,
collectively the "Conversion Prices" and each individually, a "Conversion
Price"). Such initial Conversion Prices, and the rate at which shares of
Convertible Preferred Stock may be converted into shares of Common Stock, shall
be subject to adjustment as provided in Section 5(d) below.
(b) FRACTIONAL SHARES. No fractional shares of Common Stock
shall be issued upon conversion of the Convertible Preferred Stock, but in lieu
thereof, the Corporation shall pay a cash adjustment in respect of such
fractional interest in an amount equal to such fractional interest multiplied by
the Market Price of a share of Common Stock on the date on which such shares of
Convertible Preferred Stock are deemed to have been converted.
(c) MECHANICS OF CONVERSION
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(i) In order for a holder of the Convertible Preferred Stock
to convert shares of Convertible Preferred Stock into shares of Common
Stock, such holder shall surrender the certificate or certificates for
such shares of Convertible Preferred Stock, at the office of the transfer
agent for the Convertible Preferred Stock (or at the principal office of
the Corporation if the Corporation serves as its own transfer agent),
together with written notice that such holder elects to convert all or any
number of the shares of the Convertible Preferred Stock represented by
such certificate or certificates. Such notice shall state such holder's
name or the names of the nominees in which such holder wishes the
certificate or certificates for shares of Common Stock to be issued. If
required by the Corporation, certificates surrendered for conversion shall
be endorsed or accompanied by a written instrument or instruments of
transfer, in form satisfactory to the Corporation, duly executed by the
registered holder or his or its attorney duly authorized in writing. The
date on which the transfer agent (or the Corporation, if the Corporation
serves as its own transfer agent) receives such certificate or
certificates and notice shall be the conversion date ("Conversion Date").
As soon as practicable, and in any event within five business days, after
the Conversion Date, the Corporation shall issue and deliver, or cause to
be issued and delivered, to such holder of Convertible Preferred Stock, or
to his or its nominees, (i) a certificate or certificates for the number
of validly issued, fully paid and nonassessable shares of Common Stock to
which such holder shall be entitled upon conversion and (ii) if fewer than
the full number of shares of Convertible Preferred Stock evidenced by the
surrendered certificate or certificates are being converted, a new
certificate or certificates of like tenor for the number of shares
evidenced by such surrendered certificate or certificates less the number
of shares converted.
(ii) During such times as any shares of Convertible Preferred
Stock are outstanding, the Corporation shall reserve and keep available
out of its authorized but unissued stock, for the purpose of effecting the
conversion of Convertible Preferred Stock, such number of its duly
authorized shares of Common Stock as shall from time to time be sufficient
to effect the conversion of all outstanding shares of Convertible
Preferred Stock.
(iii) All shares of Convertible Preferred Stock which shall
have been surrendered for conversion as herein provided shall no longer be
deemed to be outstanding and all rights with respect to such shares
(including the rights, if any, to receive notices and to vote) shall
immediately cease and terminate on the Conversion Date, except only the
right of the holders thereof to receive shares of Common Stock in exchange
therefor. Such conversions shall be deemed to have been made at the close
of business on the Conversion Date and the converting holder shall be
treated for all purposes as having become the record holder of such Common
Stock at such time. Any shares of Convertible Preferred Stock so
converted shall be retired and canceled and shall not be reissued, and the
Corporation may from time to time take such appropriate action as may be
necessary to reduce the authorized Convertible Preferred Stock
accordingly.
(d) ANTI-DILUTION PROVISIONS
(i) ADJUSTMENTS; CAPITAL STOCK. The Series A Senior
Preferred Stock Conversion Price set forth above shall be subject to
adjustment from time to time as hereinafter provided. For purposes of
this Section 5, the term "Capital Stock" as used herein includes the
Corporation's Common Stock and shall also include any capital stock of any
class of the Corporation thereafter authorized which shall not be limited
to a fixed sum or
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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 Corporation.
(ii) ADJUSTMENT OF SERIES A SENIOR PREFERRED STOCK
CONVERSION PRICE UPON ISSUANCE OF ADDITIONAL SHARES OF CAPITAL STOCK
(A) In case the Corporation, at any time or from time
to time after the Issue Date shall issue or sell Additional Shares
of Capital Stock without consideration or for a consideration per
share less than the greater of the Series A Senior Preferred Stock
Conversion Price or the Market Price in effect, in each case, on the
date of such issue or sale, then, and in each such case, subject to
Section 5(d)(viii), the Series A Senior Preferred Stock Conversion
Price shall be reduced, concurrently with such issue or sale, to a
price (calculated to the nearest .001 of a cent) determined by
multiplying such Series A Senior Preferred Stock Conversion Price by
a fraction:
(1) the numerator of which shall be (a) the number of
shares of Capital Stock outstanding immediately prior to such
issue or sale plus (b) the number of shares of Capital Stock
which the aggregate consideration received by the Corporation
for the total number of such Additional Shares of Capital
Stock so issued or sold would purchase at the greater of such
Market Price or such Series A Senior Preferred Stock
Conversion Price, and
(2) the denominator of which shall be the number of
shares of Capital Stock outstanding immediately after such
issue or sale,
provided that, for the purposes of this Section 5(d)(ii)(A), (w)
immediately after any Additional Shares of Capital Stock are deemed to
have been issued pursuant to Section 5(d)(iii) or 5(d)(iv), such
Additional Shares shall be deemed to be outstanding, and (x) treasury
shares shall not be deemed to be outstanding; and provided further that,
for the purposes of this Section 5(d)(ii)(A), (y) the crediting of shares
of the Corporation's Common Stock to participating real estate
salespersons under the Corporation's Deferred Equity Program which was
adopted by the Corporation on October 18, 1989 shall cause an adjustment
in the Series A Senior Preferred Stock Conversion Price concurrently with
such crediting of the shares of the Corporation's Common Stock and (z) the
issuance of such shares previously credited to participating real estate
salespersons under the Corporation's Deferred Equity Program shall not
cause an adjustment in the Series A Senior Preferred Stock Conversion
Price.
(B) In case the Corporation, at any time or from time
to time after the Issue Date, shall declare, order, pay or make a
dividend or other distribution (including, without limitation, any
distribution of other or additional stock or other securities or
property or Options by way of dividend or spinoff, reclassification,
recapitalization or similar corporate rearrangement) on the Capital
Stock, other than (1) a dividend payable in Additional Shares of
Capital Stock or in Options for Capital Stock or Convertible
Securities or (2) a dividend payable in cash or other property and
declared out of retained earnings of the Corporation, then, and in
each such case, subject to Section 5(d)(viii), the Series A Senior
Preferred Stock Conversion Price in effect immediately prior to the
close of business on the record date fixed for the
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determination of holders of any class of securities entitled to
receive such dividend or distribution shall be reduced, effective as
of the close of business on such record date, to a price (calculated
to the nearest .001 of a cent) determined by multiplying the Series
A Senior Preferred Stock Conversion Price by a fraction:
(1) the numerator of which shall be the Market Price
in effect on such record date or, if any class of Capital
Stock trades on an ex-dividend basis, on the date prior to the
commencement of ex-dividend trading, less the value of such
dividend or distribution which has not been declared out of
retained earnings (as determined in good faith by the Board of
Directors of the Corporation) applicable to one share of
Capital Stock, and
(2) the denominator of which shall be such Market
Price.
(iii) TREATMENT OF OPTIONS AND CONVERTIBLE SECURITIES. In
case the Corporation, at any time or from time to time after the Issue
Date, shall issue, sell, grant or assume, or shall fix a record date for
the determination of holders of any class of securities entitled to
receive, any Options or Convertible Securities, then, and in each such
case, the maximum number of Additional Shares of Capital Stock (as set
forth in the instrument relating thereto, without regard to any provisions
contained therein for a subsequent adjustment of such number) issuable
upon the exercise of such Options or, in the case of Convertible
Securities and Options therefor, the conversion or exchange of such
Convertible Securities, shall be deemed to be Additional Shares of Capital
Stock issued as of the time of such issue, sale, grant or assumption or,
in case such a record date shall have been fixed, as of the close of
business on such record date, provided that such Additional Shares of
Capital Stock shall not be deemed to have been issued unless the
consideration per share (determined pursuant to Section 5(d)(v)) of such
shares would be less than the greater of the applicable Conversion Price
or the Market Price in effect, in each case, on the date of and
immediately prior to such issue, sale, grant or assumption or immediately
prior to the close of business on such record date or, if the Capital
Stock trades on an ex-dividend basis, on the date prior to the
commencement of ex-dividend trading, as the case may be, and provided,
further, that in any such case in which Additional Shares of Capital Stock
are deemed to be issued,
(A) no further adjustment of the Series A Senior
Preferred Conversion Price shall be made upon the subsequent issue
or sale of Additional Shares of Capital Stock or Convertible
Securities upon the exercise of such Options or the conversion or
exchange of such Convertible Securities;
(B) if such Options or Convertible Securities by their
terms provide, with the passage of time or otherwise, for any change
in the consideration payable to the Corporation, or change in the
number of Additional Shares of Capital Stock issuable, upon the
exercise, conversion or exchange thereof (by change of rate or
otherwise), the Conversion Price computed upon the original issue,
sale, grant or assumption thereof (or upon the occurrence of the
record date with respect thereto), and any subsequent adjustments
based thereon, shall, upon any such change becoming effective, be
recomputed to reflect such change insofar as it affects such
Options, or the rights of conversion or exchange under such
Convertible Securities, which are outstanding at such time;
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(C) upon the expiration of any such Options or of the
rights of conversion or exchange under any such Convertible
Securities which shall not have been exercised (or upon purchase by
the Corporation and cancellation or retirement of any such Options
which shall not have been exercised or of any such Convertible
Securities the rights of conversion or exchange under which shall
not have been exercised), the Conversion Price computed upon the
original issue, sale, grant or assumption thereon (or upon the
occurrence of the record date with respect thereto), and any
subsequent adjustments based thereon, shall, upon such expiration
(or such cancellation or retirement, as the case may be), be
recomputed as if:
(1) in the case of Options for Capital Stock or of
Convertible Securities, the only Additional Shares of Capital
Stock issued or sold (or deemed issued or sold) were the
Additional Shares of Capital Stock, if any, actually issued or
sold upon the exercise of such Options or the conversion or
exchange of such Convertible Securities and the consideration
received therefor were (a) an amount equal to (i) the
consideration actually received by the Corporation for the
issue, sale, grant or assumption of all such Options, whether
or not exercised, plus (ii) the consideration actually
received by the Corporation upon such exercise, minus (iii)
the consideration paid by the Corporation for any purchase of
such Options which were not exercised, or (b) an amount equal
to (i) the consideration actually received by the Corporation
for the issue, sale, grant or assumption of all such
Convertible Securities which were actually converted or
exchanged, plus (ii) the additional consideration, if any,
actually received by the Corporation upon such conversion or
exchange, minus (iii) the excess, if any, of the consideration
paid by the Corporation for any purchase of such Convertible
Securities, the rights of conversion or exchange under which
were not exercised, over an amount that would be equal to the
fair value (as determined in good faith by the Board of
Directors of the Corporation) of the Convertible Securities so
purchased if such Convertible Securities were not convertible
into or exchangeable for Additional Shares of Capital Stock,
and
(2) in the case of Options for Convertible Securities,
only the Convertible Securities, if any, actually issued or
sold upon the exercise of such Options were issued at the time
of the issue, sale, grant or assumption of such Options, and
the consideration received by the Corporation for the
Additional Shares of Capital Stock deemed to have then been
issued were an amount equal to (a) the consideration actually
received by the Corporation for the issue, sale, grant or
assumption of all such Options, whether or not exercised, plus
(b) the consideration deemed to have been received by the
Corporation (pursuant to Section 5(d)(v)) upon the issue or
sale of the Convertible Securities with respect to which such
Options were actually exercised, minus (c) the consideration
paid by the Corporation for any purchase of such Options which
were not exercised.
(iv) TREATMENT OF STOCK DIVIDENDS, STOCK SPLITS, ETC.;
CERTAIN STOCK REPURCHASES
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(A) In case the Corporation, at any time or from time
to time after the Issue Date, shall declare or pay any dividend or
other distribution on the Capital Stock payable in Capital Stock, or
shall effect a subdivision of the outstanding shares of Capital
Stock into a greater number of shares of Capital Stock (by
reclassification or otherwise than by payment of a dividend in
Capital Stock), then, and in each such case, Additional Shares of
Capital Stock shall be deemed to have been issued (1) in the case of
any such dividend, immediately after the close of business on the
record date for the determination of holders of any class of
securities entitled to receive such dividend, or (2) in the case of
any such subdivision, at the close of business on the day
immediately prior to the day upon which such corporate action
becomes effective.
(B) If the Corporation at any time or from time to
time after the Issue Date shall, directly or indirectly, including
through a Subsidiary (as defined below) or otherwise, purchase,
redeem or otherwise acquire (a "Repurchase") any of its Capital
Stock at a price per share greater than the Market Price, then the
Series A Senior Preferred Stock Conversion Price upon each such
Repurchase shall be adjusted to the price determined by multiplying
the Series A Senior Preferred Stock Conversion Price by a fraction
(1) the numerator of which shall be the number of shares of Capital
Stock outstanding immediately prior to the such Repurchase minus the
number of shares of Capital Stock which the aggregate consideration
for total repurchased Capital Stock would purchase at the Market
Price; and (2) the denominator of which shall be the number of
shares of Capital Stock outstanding immediately after such
Repurchase. For the purposes of this Subsection 5(d)(iv)(B), the
date as of which the Series A Senior Preferred Stock Conversion
Price shall be computed shall be the earlier of (x) the date on
which the Corporation shall enter into contract for the Repurchase
of such Capital Stock, or (y) the date of the actual Repurchase of
such Capital Stock. For purposes of this Section 5(d)(iv)(B), a
Repurchase of Convertible Securities shall be deemed to be a
Repurchase of the underlying Capital Stock, and the computation
herein required shall be made on the basis of the full exercise,
conversion or exchange for such Convertible Securities on the date
as of which such computation is required hereby to be made even if
such Convertible Securities are not exercisable, convertible or
exchangeable on such date.
(v) COMPUTATION OF CONSIDERATION. For the purposes of
this Section 5:
(A) The consideration for the issue or sale of any
Additional Shares of Capital Stock or for the issue, sale, grant or
assumption of any Options or Convertible Securities, irrespective of
the accounting treatment of such consideration,
(1) insofar as it consists of cash, shall be computed
as the amount of cash received by the Corporation, and insofar
as it consists of securities or other non-cash consideration,
shall be computed as of the date immediately preceding such
issue, sale, grant or assumption as the fair value (as
determined in good faith by the Board of Directors of the
Corporation) of such consideration (or, if such consideration
is received for the issue or sale of Additional Shares of
Capital Stock and the Market Price thereof is less than the
fair value, as so determined, of such consideration, then such
consideration shall be computed as the Market Price of such
Additional Shares of Capital Stock), in each case without
deducting any expenses paid or incurred
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by the Corporation, any commissions or compensation paid or
concessions or discounts allowed to underwriters, dealers or
others performing similar services and any accrued interest or
dividends in connection with such issue or sale, and
(2) in case Additional Shares of Capital Stock are
issued or sold or Options or Convertible Securities are
issued, sold, granted or assumed together with other stock or
securities or other assets of the Corporation for a
consideration which covers both, shall be the proportion of
such consideration so received, computed as provided in
subsection (1) above, allocable to such Additional Shares of
Capital Stock or Options or Convertible Securities, as the
case may be, all as determined in good faith by the Board of
Directors of the Corporation.
(B) All Additional Shares of Capital Stock, Options or
Convertible Securities issued in payment of any dividend or other
distribution on any class of stock of the Corporation and all
Additional Shares of Capital Stock issued to effect a subdivision of
the outstanding shares of Capital Stock into a greater number of
shares of Capital Stock (by reclassification or otherwise than by
payment of a dividend in Capital Stock) shall be deemed to have been
issued without consideration.
(C) Additional Shares of Capital Stock deemed to have
been issued for consideration pursuant to Section 5(d)(iii),
relating to Options and Convertible Securities, shall be deemed to
have been issued for a consideration per share determined by
dividing
(1) the total amount, if any, received and receivable
by the Corporation as consideration for the issue, sale, grant
or assumption of the Options or Convertible Securities in
question, plus the minimum aggregate amount of additional
consideration (as set forth in the instruments relating
thereto, without regard to any provision contained therein for
a subsequent adjustment of such consideration) payable to the
Corporation upon the exercise in full of such Options or the
conversion or exchange of such Convertible Securities or, in
the case of Options for Convertible Securities, the exercise
of such Options for Convertible Securities and the conversion
or exchange of such Convertible Securities, in each case
comprising such consideration as provided in the foregoing
subsection (A), by
(2) the maximum number of shares of Capital Stock (as
set forth in the instruments relating thereto, without regard
to any provision contained therein for a subsequent adjustment
of such number) issuable upon the exercise of such Options or
the conversion or exchange of such Convertible Securities.
(D) In case the Corporation shall issue any Additional
Shares of Capital Stock, Options or Convertible Securities in
connection with the acquisition by the Corporation of the stock or
assets of any other corporation or the merger of any other
corporation into the Corporation under circumstances where on the
date of issue of such Additional Shares of Capital Stock, Options or
Convertible Securities the
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consideration received for such Additional Shares of Capital Stock
or deemed to have been received for the Additional Shares of Capital
Stock deemed to be issued pursuant to Section 5(d)(iii) is less than
the Market Price of the Capital Stock in effect immediately prior to
such issue but on the date the number of Additional Shares of
Capital Stock or the amount and the exercise price or conversion
price of such Options or Convertible Securities to be so issued were
set forth in a binding agreement between the Corporation and the
other party or parties to such transaction the consideration
received for such Additional Shares of Capital Stock or deemed to
have been received for the Additional Shares of Capital Stock deemed
to be issued pursuant to Section 5(d)(iii) would not have been less
than the Market Price of the Capital Stock then in effect, such
Additional Shares of Capital Stock shall not be deemed to have been
issued for less than the Market Price of the Capital Stock if such
terms so set forth in such binding agreement are not changed prior
to the date of issue.
(vi) ADJUSTMENTS FOR COMBINATIONS, ETC. In case the
outstanding shares of Capital Stock shall be combined or consolidated, by
reclassification or otherwise, into a lesser number of shares of Capital
Stock, the Conversion Prices in effect immediately prior to such
combination or consolidation shall, concurrently with the effectiveness of
such combination or consolidation, be proportionately increased.
(vii) DILUTION IN CASE OF OTHER SECURITIES. In case any
Other Securities shall be issued or sold or shall become subject to issue
or sale upon the conversion or exchange of any securities of the
Corporation or to subscription, purchase or other acquisition pursuant to
any options issued or granted by the Corporation for a consideration such
as to dilute, on a basis to which the standards established in the other
provisions of this Section 5 are applicable, the conversion rights of the
holders of the Series A Senior Preferred Stock, then, and in each such
case, the computations, adjustments and readjustments provided for in this
Section 5 with respect to the applicable Conversion Price shall be made as
nearly as possible in the manner so provided and applied to determine the
amount of Other Securities from time to time receivable upon the
conversion of the Series A Senior Preferred Stock, so as to protect the
holders of the Series A Senior Preferred Stock against the effect of such
dilution.
(viii) MINIMUM ADJUSTMENT AND TIMING OF ADJUSTMENT OF
CONVERSION PRICE
(A) If the amount of any adjustment of the Series A
Senior Preferred Stock Conversion Price required pursuant to this
Section 5 would be less than one percent (1%) of such Conversion
Price in effect at the time such adjustment is otherwise so required
to be made, such amount shall be carried forward and adjustment with
respect thereto made at the time of and together with any subsequent
adjustment which, together with such amount and any other amount or
amounts so carried forward, shall aggregate at least one percent
(1%) of such Conversion Price; provided that, upon the conversion of
any shares of Series A Senior Preferred Stock, all adjustments
carried forward and not theretofore made up to and including the
date of such conversion shall, with respect to the Series A Senior
Preferred Stock then converted, be made to the nearest .001 of a
cent.
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(B) Each Series A Senior Preferred Conversion Price
shall be adjusted within 90 days of the end of each fiscal year of
the Corporation with respect to events subject to the anti-dilution
provisions of the Series A Senior Preferred Stock which have
occurred during such fiscal year; provided that, upon the conversion
of any shares of Series A Senior Preferred Stock, all adjustments
carried forward and not theretofore made up to and including the
date of such conversion shall, with respect to the shares of Series
A Senior Preferred Stock then converted, be made to the nearest .001
of a cent and provided further that the applicable Series A Senior
Preferred Conversion Price shall also be adjusted prior to any
transfer or other disposition of any Series A Senior Preferred Stock
and promptly at any time upon the request of the holder of any
Series A Senior Preferred Stock, subject to the provisions of clause
5(d)(viii)(A) above.
(ix) CHANGES IN CAPITAL STOCK; SERIES A SENIOR PREFERRED
STOCK. In case at any time the Corporation shall be a party to any
transaction (including, without limitation, a merger, consolidation, sale
of all or substantially all of the Corporation'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 Corporation 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 (each such
transaction being herein called the "Transaction," the date of
consummation of the Transaction being herein called the "Consummation
Date," the Corporation (in the case of a recapitalization of the Capital
Stock or any other such transaction in which the Corporation retains
substantially all of its assets and survives as a corporation) or such
other corporation or entity (in each other case) being herein called the
"Acquiring Company," and the common stock (or equivalent equity interests)
of the Acquiring Company being herein called the "Acquirer's Common
Stock"), then, as a condition of the consummation of the Transaction,
lawful and adequate provisions shall be made so that each holder of Series
A Senior Preferred Stock, upon the conversion thereof at any time on or
after the Consummation Date (but subject, in the case of an election
pursuant to clause (B) or (C) below, to the time limitation hereinafter
provided for such election),
(A) shall be entitled to receive, and any Series A
Senior Preferred Stock shall thereafter represent the right to
receive, in lieu of the Common Stock issuable upon such conversion
prior to the Consummation Date, such number of shares of the
Acquirer's Common Stock as are issuable in exchange for each share
of Common Stock, unless the Acquiring Company fails to meet the
requirements set forth in clauses (D), (E) and (F) below, in which
case shares of the common stock of the corporation (herein called a
"Parent") which directly or indirectly controls the Acquiring
Company if it meets the requirements set forth in clauses (D), (E)
and (F) below, at an aggregate conversion price for such number of
shares equal to the lesser of (1) the Conversion Price in effect
immediately prior to the Consummation Date multiplied by a fraction
the numerator of which is the aggregate market price for such number
of shares (determined in the same manner as provided in the
definition of Market Price) of the Acquirer's Common Stock or the
Parent's common stock, as the case may be, immediately prior to the
Consummation Date and the denominator of which is the Market Price
per share of Common Stock immediately prior to the
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Consummation Date, or (2) the aggregate market price for such number
of shares (as so determined) of the Acquirer's Common Stock or the
Parent's common stock, as the case may be, immediately prior to the
Consummation Date (subject in each case to adjustments from and
after the Consummation Date as nearly equivalent as possible to the
adjustments provided for in this Section 5),
or at the election of the holder of such Series A Senior Preferred Stock
pursuant to notice given to the Corporation on or before the later of (1)
the thirtieth day following the Consummation Date, and (2) the sixtieth
day following the date of delivery or mailing to such holder of the last
proxy statement relating to the vote on the Transaction by the holders of
the Capital Stock,
(B) shall be entitled to receive, and any Series A
Senior Preferred Stock shall thereafter represent the right to
receive, in lieu of the Capital Stock issuable upon such conversion
prior to the Consummation Date, the highest amount of securities or
other property to which such holder would actually have been
entitled as a stockholder upon the consummation of the Transaction
if such holder had converted such Series A Senior Preferred Stock
immediately prior thereto (subject to adjustments from and after the
Consummation Date as nearly equivalent as possible to the
adjustments provided for in this Section 5), provided that if a
purchase, tender or exchange offer shall have been made to and
accepted by the holders of more than 50% of the outstanding shares
of Capital Stock, and if the holder of such Series A Senior
Preferred Stock so designates in such notice given to the
Corporation, the holder of such Series A Senior Preferred Stock
shall be entitled to receive in lieu thereof, the highest amount of
securities or other property to which such holder would actually
have been entitled as a stockholder if such holder had converted
such Series A Senior Preferred Stock prior to the expiration of such
purchase, tender or exchange offer and accepted such offer (subject
to adjustments from and after the consummation of such purchase,
tender or exchange offer as nearly equivalent as possible to the
adjustments provided for in this Section 5),
or, if neither the Acquiring Company nor the Parent meets the requirements
set forth in clauses (D), (E) and (F) below, at the election of the holder
of Series A Senior Preferred Stock pursuant to notice given to the
Corporation on or before the later of (1) the thirtieth day following the
Consummation Date, and (2) the sixtieth day following the date of delivery
or mailing to such holder of the last proxy statement relating to the vote
on the Transaction by the holders of the Common Stock,
(C) shall be entitled to receive, within 15 days after
such election, in full satisfaction of the Conversion Rights
afforded to the Series A Senior Preferred Stock held by such holder
under this Section 5, an amount equal to the fair market value of
such conversion rights as determined by an independent investment
banker (with an established national reputation as a valuer of
equity securities) selected by the Corporation, such fair market
value to be determined with regard to all material relevant factors
but without regard to the effects on such value of the Transaction.
The Corporation agrees to obtain, and deliver to each holder of Series A
Senior Preferred Stock a copy of, the determination of an independent
investment banker (selected by the Corporation and reasonably satisfactory
to the holders of Series A Senior Preferred Stock)
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necessary for the valuation under clause (C) above within 15 days after
the Consummation Date of any Transaction to which clause (C) is
applicable.
The requirements referred to above in the case of the
Acquiring Company or its Parent are that immediately after the
Consummation Date:
(D) it is a solvent corporation organized under the
laws of any State of the United States of America having its common
stock listed on the New York Stock Exchange or the American Stock
Exchange or quoted by NASDAQ or any successor thereto or comparable
system, and such common stock continues to meet such requirements
for such listing or quotation,
(E) it is required to file, and in each of its three
fiscal years immediately preceding the Consummation Date has filed,
reports with the Securities and Exchange Commission pursuant to
Section 13 or 15(d) of the Securities Exchange Act of 1934, as
amended, and
(F) in the case of the Parent, such Parent is required
to include the Acquiring Company in the consolidated financial
statements contained in the Parent's Annual Report on Form 10-K as
filed with the Securities and Exchange Commission and is not itself
included in the consolidated financial statements of any other
Person (other than its consolidated subsidiaries).
Notwithstanding anything contained herein to the contrary, the Corporation
shall not effect any Transaction unless prior to the consummation thereof
each corporation or entity (other than the Corporation) which may be
required to deliver any securities or other property upon the conversion
of Series A Senior Preferred Stock, the surrender of Series A Senior
Preferred Stock or the satisfaction of conversion rights as provided
herein shall assume, by written instrument delivered to each holder of
Series A Senior Preferred Stock, 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 Series A Senior
Preferred Stock an opinion of counsel for such corporation or entity,
satisfactory to each holder of Series A Senior Preferred Stock, which
opinion shall state that all the outstanding Series A Senior Preferred
Stock, including, without limitation, the conversion 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, together with such other matters as such
holders may reasonably request.
(x) TREATMENT OF STOCK DIVIDENDS, STOCK SPLITS, ETC.;
CERTAIN TRANSACTIONS. In case the Corporation, at any time or from time
to time after the Issue Date, shall be a party to any Transaction, each
holder of Series B Senior Preferred Stock and each holder of Junior
Convertible Preferred Stock, upon the exercise thereof at any time on or
after the Consummation Date shall be entitled to receive, and such Series
B Senior Preferred Stock and Junior Convertible Preferred Stock shall
thereafter represent the right to receive, in lieu of the Common Stock
issuable upon conversion 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 such Series B Senior Preferred
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Stock or Junior Convertible Preferred Stock been converted immediately
prior to such Transaction.
Notwithstanding anything contained herein to the contrary, the
Corporation shall not effect any Transaction unless prior to the
consummation thereof each corporation or entity (including, without
limitation, the Corporation) which may be required to deliver any
securities or property (including cash) upon the conversion of Series B
Senior Preferred Stock or Junior Convertible Preferred Stock, the
surrender of Series B Senior Preferred Stock or Junior Convertible
Preferred Stock or the satisfaction of conversion rights as provided
herein shall assume, by written instrument delivered to each holder of
Series B Senior Preferred Stock or Junior Convertible Preferred Stock, 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 Series B Senior Preferred Stock or Junior Convertible
Preferred Stock an opinion of counsel for such corporation or entity,
satisfactory to each such holder, which opinion shall state that all the
rights and privileges, including without limitation, conversion privileges
of the Series B Senior Preferred Stock and the Junior Convertible
Preferred Stock 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, together with such other matters as such
holders may reasonably request.
In case the Corporation 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 Series B Preferred Stock Conversion
Price and the Junior Preferred Stock Conversion Price shall be adjusted
(to the nearest cent) by multiplying, (x) in the case of the Series B
Senior Preferred Stock, the Series B Preferred Stock Conversion 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, or (y) in the case of the
Junior Preferred Stock Conversion Price, the Junior Preferred Stock
Conversion 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.
(xi) CERTAIN ISSUES AND REPURCHASES EXCEPTED. Anything
herein to the contrary notwithstanding, the Corporation shall not be
required to make any adjustment of the Series A Senior Preferred
Conversion Prices in the case of (A) the issuance of shares of the Senior
Convertible Preferred Stock on the Issue Date and the issuance of shares
of Series A Senior Preferred Stock and Series B Senior Preferred Stock
pursuant to this Article IV upon the filing of the Certificate of
Amendment as described herein, (B) the issuance of shares of
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the Junior Convertible Preferred Stock on the Issue Date, (C) the issuance
of warrants to purchase shares of Common Stock (the "Warburg Warrants")
concurrently with the issuance of the Senior Convertible Preferred Stock
on January 29, 1993 (the "Restructuring Date"), and any amendments to such
Warburg Warrants through the date of filing of the Certificate of
Amendment, (D) the issuance to The Prudential Insurance Company of America
("Prudential") of warrants to purchase shares of Common Stock (the "New
Prudential Warrants") concurrently with the issuance of the Junior
Convertible Preferred Stock, and any amendments to such New Prudential
Warrants through the date of filing of the Certificate of Amendment, (E)
the issuance of warrants to purchase shares of Common Stock (the "1994
Warrants") concurrently with the filing of this Certificate of Amendment,
and any amendments to such 1994 Warrants, (F) the issuance of shares of
Capital Stock issuable upon conversion of the Convertible Preferred Stock
or upon exercise of the Warburg Warrants, the New Prudential Warrants, the
1994 Warrants, the Stock Subscription Warrant, dated as of November 25,
1986, by the Corporation to Prudential or any other Option or right
outstanding on the Issue Date to purchase or otherwise acquire Capital
Stock, (G) the granting by the Corporation, after the Issue Date, of
Options to purchase Capital Stock or the sale or grant, after the Issue
Date, of Capital Stock, pursuant to option or stock purchase plans or
agreements, or other incentive compensation plans or agreements,
heretofore or hereafter adopted in respect of, or entered into with,
directors, officers, employees or salespersons (other than pursuant to the
Corporation's Preferred Equity Program) of the Corporation or any of its
Subsidiaries in connection with their employment, being directors or
acting as salesperson, provided that the consideration for the sale or
grant of any such Options or Capital Stock (including the exercise price
of any Option) is at least equal to the Market Price of such shares of
Capital Stock on the date such Options are granted or the date established
by any such plan for a purchase thereunder, as the case may be, (H) the
Repurchase from any director, officer, employee or salesperson of the
Corporation or any Subsidiary of any Option or share of Capital Stock upon
his resignation or other termination from being a director, officer,
employee or salesperson of the Corporation or any Subsidiary or (I) the
issuance of shares of Common Stock in payment of the redemption price of
the Rights issued pursuant to the Rights Agreement, dated as of March 13,
1989, as amended, between the Corporation and Bank of America N.T. & S.A.,
as Rights Agent.
(xii) NOTICE OF ADJUSTMENT. Upon the occurrence of any
event requiring an adjustment of any Conversion Price, then and in each
such case the Corporation shall promptly deliver to each holder of
Convertible Preferred Stock a certificate signed by the President or any
Vice President and the Secretary or any Assistant Secretary of the
Corporation (an "Officers' Certificate") stating the applicable Conversion
Price resulting from such adjustment and the increase or decrease, if any,
in the number of shares of Common Stock issuable upon conversion of such
Convertible Preferred Stock, 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
Convertible Preferred Stock stating that such holder contemplates
conversion of such Convertible Preferred Stock, the Corporation will
obtain and deliver to each holder of Convertible Preferred Stock the
opinion of its regular independent auditors or another firm of independent
public accountants of recognized national standing selected by the
Corporation's Board of Directors who are satisfactory to the registered
holders of a majority of the Convertible Preferred Stock, which opinion
shall confirm the statements in the most recent Officers' Certificate
delivered under this Section 5(d)(xi). It is understood and agreed that
the independent public accountant
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rendering any such opinion shall be entitled expressly to assume in such
opinion the accuracy of any determination of fair value made by the Board
of Directors of the Corporation pursuant to Section 5(d)(v).
(xiii)OTHER NOTICES. In case at any time:
(A) the Corporation 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;
(B) the Corporation 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;
(C) the Corporation shall offer for subscription pro
rata to the holders of Capital Stock any additional shares of stock
of any class or other rights;
(D) there shall be any capital reorganization, or
reclassification of the Capital Stock of the Corporation, or
consolidation or merger of the Corporation with, or sale of all or
substantially all of its assets to, another corporation or other
entity;
(E) there shall be a voluntary or involuntary
dissolution, liquidation or winding-up of the Corporation; or
(F) there shall be any other Transaction;
then, in any one or more of such cases, the Corporation shall give to each
holder of Convertible Preferred Stock (1) at least 15 days prior to any
event referred to in clause (A) or (B) above, at least 30 days prior to
any event referred to in clause (C), (D) or (E) 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 Corporation 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 (2) in the case of
any such reorganization, reclassification, consolidation, merger, sale,
dissolution, liquidation, winding-up or Transaction known to the
Corporation, at least 30 days prior written notice of the date (or, if not
then known, a reasonable approximation thereof by the Corporation) when
the same shall take place. Such notice in accordance with the foregoing
clause (1) 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 (2) 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 of
1933, as amended, or to a favorable vote of security holders, if either is
required.
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(xiv) CERTAIN EVENTS. If any event occurs as to which, in
the good faith judgment of the Board of Directors of the Corporation, the
other provisions of this Section 5 are not strictly applicable or if
strictly applicable would not fairly protect the conversion rights of the
holders of the Series A Senior Preferred Stock in accordance with the
essential intent and principles of such provisions, then the Board of
Directors of the Corporation shall appoint its regular independent
auditors or another firm of independent public accountants of recognized
national standing who are satisfactory to the holders of a majority of the
Series A Senior Preferred Stock which shall give their opinion upon the
adjustment, if any, on a basis consistent with such essential intent and
principles, necessary to preserve, without dilution, the rights of the
holders of the Series A Senior Preferred Stock. Upon receipt of such
opinion, the Board of Directors of the Corporation shall forthwith make
the adjustments described therein; provided, that no such adjustment shall
have the effect of increasing any Series A Senior Preferred Stock
Conversion Price as otherwise determined pursuant to this Section 5. The
Corporation may make such reductions in the Series A Senior Preferred
Conversion Price or increase in the number of shares of Common Stock
purchasable hereunder as it deems advisable, including any reductions or
increases, as the case may be, necessary to ensure that any event treated
for Federal income tax purposes as a distribution of stock or stock rights
not be taxable to recipients.
(e) NO IMPAIRMENT. The Corporation shall 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 Corporation, but
shall at all times in good faith assist in the carrying out of all the
provisions of this Section 5 and in the taking of all such action as may be
necessary or appropriate in order to protect the Conversion Rights of the
holders of the Series A Senior Preferred Stock against impairment.
(f) MANDATORY CONVERSION. If (i) at all times during a two-year
period prior to the date of conversion the ratio of Consolidated Debt to EBITDA
(each as defined below) of the Corporation has not exceeded 3.0:1.0, (ii) on
each Trading Day during a six-month period prior to the date of conversion the
Daily Market Price of the Common Stock has exceeded $8.75 per share, subject to
proportionate adjustment whenever there shall occur a stock split, combination,
reclassification or other similar event involving the Common Stock, and (iii)
the Corporation is in full compliance with all of the terms and conditions of
all agreements pursuant to which the Corporation or any Subsidiary shall have
incurred Indebtedness for borrowed money all, but not less than all, of the then
outstanding shares of Convertible Preferred Stock shall be converted into shares
of Common Stock as provided below. The Corporation shall provide written notice
of the occurrence of the foregoing events giving rise to such mandatory
conversion by United States certified or registered mail, postage prepaid,
mailed not more than 30 days thereafter to all holders of record of the shares
to be converted at such holders' addresses as the same appear on the stock
register of the Corporation. Each such notice shall state the proposed date on
which such mandatory conversion will occur (which date shall not be fewer than
30 days after the date notice thereof is received), the applicable Conversion
Price and the place or places where certificates for shares of the Convertible
Preferred Stock are to be surrendered for conversion. From and after the date
of mandatory conversion, the certificates for the Convertible Preferred Stock
shall be deemed to represent only the shares of Common Stock into which such
shares of Convertible Preferred Stock shall have been converted. The Holder of
such certificates shall surrender such certificates for conversion upon and
pursuant to the request of the Corporation.
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(g) CERTAIN DEFINITIONS. For purposes of this Article IV, the
following terms shall have the following meanings:
(i) "ADDITIONAL SHARES OF CAPITAL STOCK" shall mean
all shares (including treasury shares) of Capital Stock issued or
sold (or, pursuant to Sections 5(d)(iii) or 5(d)(iv) deemed to be
issued) by the Corporation after the Issue Date, whether or not
subsequently reacquired or retired by the Corporation, other than
shares of Common Stock issued upon the conversion of the Convertible
Preferred Stock.
(ii) "CONSOLIDATED DEBT" shall mean with respect to
any Person, the total Indebtedness of such Person and its
Subsidiaries on a consolidated basis determined in accordance with
GAAP.
(iii) "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.
(iv) "DAILY 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 average
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 Corporation. 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, "Daily 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 Corporation 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 Corporation), as of a date which is 15
days preceding the date as of which the determination is to be made.
(v) "EBITDA" shall mean, with respect to any Person,
for any period, the sum of (A) the net income of such Person and its
Subsidiaries on a
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consolidated basis before taxes, excluding extraordinary items and
income or loss from discontinued operations, (B) total interest
expense of such Person and its Subsidiaries on a consolidated basis
and (C) depreciation and amortization for such Person and its
Subsidiaries on a consolidated basis.
(vi) "GAAP" shall mean generally accepted accounting
principles set forth in the opinions and pronouncements of the
Accounting Principles Board of the American Institute of Certified
Public Accountants and statements and pronouncements of the
Financial Accounting Standards Board or in such other statements by
such other entity as may be approved by a significant segment of the
accounting profession.
(vii) "INDEBTEDNESS" shall mean, with respect to any
Person, all items (excluding items of contingency reserves or of
reserves for deferred income taxes) which in accordance with GAAP
would be included in determining total liabilities as shown on the
liability side of a balance sheet of such Person as of the date on
which Indebtedness is to be determined.
(viii) "ISSUE DATE" shall mean the date on which
shares of Convertible Preferred Stock are first issued by the
Corporation. "Issue Date" with respect to the shares of Series A
Senior Preferred Stock and Series B Senior Preferred Stock
outstanding on the date of filing of the Certificate of Amendment
shall be deemed to be the date of issuance of the respective shares
of Existing Senior Convertible Preferred Stock which were exchanged
for or converted into such shares of Series A Senior Preferred Stock
and Series B Senior Preferred Stock.
(ix) "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 20
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 Corporation. 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
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Board of Directors of the Corporation 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 Corporation), as of a date
which is 15 days preceding the date as of which the determination is
to be made.
(x) "OPTIONS" shall mean rights, options or warrants
to subscribe for, purchase or otherwise acquire either Additional
Shares of Capital Stock or Convertible Securities.
(xi) "OTHER SECURITIES" shall mean any stock (other
than Capital Stock) and any other securities of the Corporation or
any other Person (corporate or otherwise) which the holders of the
Convertible Preferred Stock at any time shall be entitled to
receive, or shall have received, upon the conversion or partial
conversion of the Convertible Preferred Stock, in lieu of or in
addition to Common Stock, or which at any time shall be issuable or
shall have been issued in exchange for or in replacement of Common
Stock or Other Securities pursuant to Section 5(d)(ix) or otherwise.
(xii) "PERSON" shall mean any individual, firm,
corporation or other entity, and shall include any successor (by
merger or otherwise) of such entity.
(xiii) "SUBSIDIARY" shall mean any corporation or
other entity the majority of the outstanding voting shares of which
is at the time owned (either alone or through Subsidiaries or
together with Subsidiaries) by the Corporation or another
Subsidiary.
(xiv) "TRADING DAY" shall mean any day on which the
New York Stock Exchange is open for trading on a regular basis.
(xv) "TRANSACTION" shall have the meaning set forth
in Section 5(d)(ix).
(h) JUNIOR CONVERTIBLE PREFERRED STOCK
(i) In the event that the Corporation undertakes to sell its
Common Stock through an underwritten public offering (an "Offering"), and
if the underwriter advises the Corporation that in order to complete such
Offering on the most favorable terms to the Corporation it is necessary
for the Junior Convertible Preferred Stock to be retired, then the
Corporation may so notify the holders of the Junior Convertible Preferred
Stock (the "Conversion Notice"), and such holders shall, on or prior to
the Conversion Date (as defined below) convert their Junior Convertible
Preferred Stock into Common Stock pursuant to the terms of this Article
IV. The holders of the Junior Convertible Preferred Stock shall be
obligated to convert their Junior Convertible Preferred Stock only if (A)
on or prior to the Conversion Date, all the holders of the Series B Senior
Preferred Stock shall have converted their Series B Senior Preferred Stock
into Common Stock, or all Series B Senior Preferred Stock shall otherwise
have been retired, and (B) the Market Price of the Common Stock at
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the Conversion Date is greater than the sum of the Junior Preferred Stock
Stated Value plus accrued dividends per share of Junior Convertible
Preferred Stock (such sum being referred to herein as the "Accreted
Value"); PROVIDED that if at the Conversion Date, the Market Price of
the Common Stock is less than the Accreted Value, then each holder of the
Junior Convertible Preferred Stock must either, at its option (A) convert
the Junior Convertible Preferred Stock into Common Stock on or prior to
the Conversion Date or (B) require the Corporation to redeem the Junior
Convertible Preferred Stock at the Accreted Value, in which case such
holder shall notify the Corporation of its election on or prior to the
Conversion Date. If a holder elects to require the Corporation to redeem
the Junior Convertible Preferred Stock, then the Corporation shall make
such redemption within 60 days after the Conversion Date; PROVIDED that
the Corporation shall be obligated to redeem the Junior Convertible
Preferred Stock only if it has sufficient funds legally available on the
redemption date in order to redeem shares of Junior Convertible Preferred
Stock pursuant to this Section 5(h); PROVIDED FURTHER that if the
Board determines not to proceed with the Offering any notice of redemption
shall be withdrawn and the Corporation's obligation to redeem such shares
shall terminate. "Conversion Date" shall mean the date stated in the
Conversion Notice on or prior to which the holders of the Junior
Convertible Preferred Stock shall be required to convert their Junior
Convertible Preferred Stock in accordance with this Section 5(h). Without
the consent of each holder of Junior Convertible Preferred Stock, the
Conversion Date may not be a date earlier than the closing date of the
Offering; PROVIDED that the Conversion Notice may identify the
Offering's closing date as "the closing date," in lieu of using a calendar
date.
(ii) If the Corporation shall be required to redeem shares
Junior Convertible Preferred Stock pursuant to Section 5(h)(i), then
notice of such redemption shall be given by United States certified or
registered mail, postage prepaid, mailed not less than thirty (30) days
nor more than sixty (60) days prior to the redemption date, to all holders
of record of the shares to be redeemed at such holders' addresses as the
same appear on the stock register of the Corporation. Each such notice
shall state: (A) the redemption date; (B) the number of shares of Junior
Convertible Preferred Stock to be redeemed and, if less than all the
shares held by such holder are to be redeemed from such holder, the number
of shares to be redeemed from such holder; (C) the redemption price; and
(D) the place or places where certificates for shares of the Junior
Convertible Preferred Stock are to be surrendered for payment of the
redemption price.
(iii) Notice having been mailed as aforesaid, from and after
the redemption date (unless default shall be made by the Corporation in
providing payment of the redemption price by deposit with a bank or trust
company having capital and surplus of at least $50,000,000 of the shares
called for redemption) said shares shall no longer be deemed to be
outstanding, and all rights of the holders thereof as stockholders of the
Corporation (except the right to receive from the Corporation the
redemption price) shall cease. Upon surrender, in accordance with the
above-mentioned notice, of the certificates for any shares so redeemed
(properly endorsed or signed for transfer, if the Board of Directors of
the Corporation shall so require and the notice shall so state), such
shares shall be redeemed by the Corporation at the redemption price
provided for in this Section 5(h). In the event fewer than all of the
shares represented by any such certificate are redeemed, a new certificate
shall be issued, without cost to the holder thereof, representing the
unredeemed shares. The provisions of this Section 5(h)(iii) shall be
subject to Section 5(h)(i).
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(i) REACQUIRED SHARES. Shares of Convertible Preferred Stock
which have been issued and reacquired in any manner, including shares purchased
or redeemed or exchanged, shall (upon compliance with any applicable provisions
of the laws of the State of Delaware) have the status of authorized and unissued
shares of Preferred Stock undesignated as to series and may be redesignated and
reissued as part of any series of the Preferred Stock; provided, however, that
no such issued and reacquired shares of Senior Convertible Preferred Stock shall
be reissued or sold as Series A Senior Preferred Stock and no such issued and
reacquired shares of Junior Convertible Preferred Stock shall be reissued or
sold as Junior Convertible Preferred Stock.
SECOND: That thereafter, pursuant to resolution of the Board of
Directors, a meeting of the stockholders of said corporation was duly called and
held, upon notice in accordance with Section 222 of the General Corporation Law
of the State of Delaware at which meeting the necessary number of shares as
required by statute were voted in favor of the amendments.
THIRD: That said amendments were duly adopted in accordance with
the provisions of Section 242 of the General Corporation Law of the State of
Delaware.
IN WITNESS WHEREOF, GRUBB & ELLIS COMPANY has caused this
certificate to be signed by Robert J. Walner, its Senior Vice President, and
Carol M. Vanairsdale, its Assistant Secretary, this 1st day of November, 1994.
GRUBB & ELLIS COMPANY
/s/ Robert J. Walner
______________________________
Robert J. Walner
Senior Vice President
Attest:
/s/ Carol M. Vanairsdale
______________________________
Carol M. Vanairsdale
Assistant Secretary
26
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EXHIBIT 4.20
AMENDMENT TO THE BYLAWS OF GRUBB & ELLIS COMPANY
The following amendment to Section 2.06(c)of the Bylaws of the Grubb &
Ellis Company (the "Company") was adopted and approved by the Company's Board
of Directors effective June 1, 1994. The following text was added to Section
2.06(c) of the Company's Bylaws:
"Shares represented by proxies that
reflect, with respect to a
proposal, abstentions or limited
voting authority, including "broker
non-votes" (i.e., shares held by a
broker or nominee which are
represented at the meeting, but
with respect to which such broker
or nominee is not empowered to vote
on a particular proposal or
proposals), shall be counted as
shares that are present and
entitled to vote for purposes of
determining the presence of a
quorum. For purposes of
determining the outcome of any
proposal, shares represented by
such proxies will be treated as not
present and not entitled to vote
with respect to the proposal."
<PAGE>
EXHIBIT 4.21
GRUBB & ELLIS
BYLAWS
As Amended June 1, 1994
ARTICLE I
OFFICES
Section 1.01 PRINCIPAL OFFICE. The principal office for the
transaction of the business of Grubb & Ellis Company (hereinafter called the
"Corporation") shall be at One Montgomery Street, Telesis Tower, San
Francisco, California 94104. The Board of Directors (hereinafter called the
"Board") is hereby granted full power and authority to change said principal
office from one location to another, either within or without the State of
Delaware.
ARTICLE II
MEETING OF STOCKHOLDERS
Section 2.01 ANNUAL MEETINGS. Annual Meetings of the stockholders of
the Corporation for the purpose of electing directors and for the transaction
of such other proper business as may come before such meetings may be held at
such time, date and place as the Board shall determine by resolution.
Section 2.02 SPECIAL MEETINGS. Special meetings of the stockholders
of the Corporation for any purpose or purposes may be called at any time by the
Board, or by a majority of the members of the Board or by a committee of the
Board which has been duly designated by the Board, whose powers and authority,
as provided in a resolution of the Board or in the Bylaws of the Corporation,
include the power to call such meetings, or by the affirmative vote of the
holders of at least a majority of the outstanding shares of capital stock of the
Corporation entitled to vote generally in the election of directors (considered
for this purpose as one class), but such special meetings may not be called by
any other person or persons.
Section 2.03 PLACE OF BUSINESS. All meetings of the stockholders shall
be held at such places, within or without the State of Delaware, as may from
time to time be designated by the person or persons calling the respective
meetings and specified in the respective notices thereof.
Section 2.04 NOTICE OF MEETINGS. Except as otherwise expressly required
by law, notice of each meeting of the stockholders, whether annual or special,
shall be given not less than ten nor more than sixty days before the date of the
meeting, to each stockholder of record entitled to vote at such meeting by
delivering a typewritten or printed notice thereof to him personally, or by
depositing such notice in the United States mail, in a postage prepaid envelope,
directed to him at
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his post office address furnished by him to the Secretary of the Corporation for
such purpose or, if he shall not have furnished to the Secretary his address for
such purposes, then at his post office address as it appears on the records of
the Corporation, or by transmitting a notice thereof to him at such address by
telegraph, cable or wireless. Except as otherwise expressly required by law, no
publication of any notice of a meeting of the stockholders shall be required.
Every notice of a meeting of the stockholders shall state the time, date and
place of the meeting and, in the case of a special meeting, or as otherwise
expressly required by law, shall state the purpose or purposes for which the
meeting is called. Notice of any meeting of stockholders shall not be required
to be given to any stockholder who shall have waived such notice and such notice
shall be deemed waived by any stockholder who shall attend such meeting in
person or by proxy, except a stockholder who shall attend such meeting for the
express purpose of objecting, at the beginning of the meeting, to the
transaction of any business because the meeting is not lawfully called or
convened. Neither the business to be transacted at, nor the purpose of, any
regular or special meeting of stockholders need be specified in any written
waiver of notice. When a meeting is adjourned to another time, date or place,
written notice need not be given of the adjourned meeting if the time, date and
place thereof are announced at the meeting at which the adjournment is taken;
provided, however, that if the date of any adjourned meeting is more than thirty
days after the date for which the meeting was originally noticed, or if a new
record date is fixed for the adjourned meeting, written notice of the time,
date, and place of the adjourned meeting shall be given in conformity herewith.
At any adjourned meeting, any business may be transacted which might have been
transacted at the original meeting.
Section 2.05 QUORUM. Except in the case of any meeting for the election
of directors summarily ordered as provided by law, or as otherwise specified in
the Certificate of Incorporation or these Bylaws, the holders of record of a
majority in voting interest of the shares of stock of the Corporation entitled
to be voted thereat, present in person or by proxy, shall constitute a quorum
for the transaction of business at any meeting of the stockholders of the
Corporation or any adjournment thereof. In the absence of a quorum at any
meeting or any adjournment thereof, a majority in voting interest of the
stockholders present in person or by proxy and entitled to vote thereat or, in
the absence therefrom of all the stockholders, any officer entitled to preside
at, or to act as secretary of, such meeting may adjourn such meeting from time
to time, but no other business may be transacted. At any adjourned meeting at
which a quorum is present any business may be transacted which might have been
transacted at the meeting as originally called. The stockholders present at a
duly called or held meeting at which a quorum is present may continue to do
business until adjournment notwithstanding the withdrawal of enough stockholders
to leave less than a quorum.
Section 2.06 VOTING. (a) Each stockholder shall, at each meeting of
the stockholders, be entitled to vote in person or by proxy each share or
fractional share of the stock of the Corporation having voting rights on the
matter in question and which shall have been held by him and registered in his
name on the books of the Corporation:
(i) on the date fixed pursuant to Section 6.05 of these
Bylaws as the record date for the determination of stockholders
entitled to notice of and to vote at such meeting, or
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<PAGE>
(ii) if no such date shall have been so fixed, then (aa) at
the close of business on the day next preceding the day on which
notice of the meeting shall be given or (bb) if notice of the
meeting shall be waived, at the close of business on the day next
preceding the day on which the meeting shall be held.
(b) Shares of its own stock belonging to the Corporation or to
another corporation if a majority of the shares entitled to vote in the
election of directors in such other corporation is held, directly or
indirectly, by the Corporation, shall neither be entitled to vote nor be
counted for quorum purposes. Persons holding stock of the Corporation in
a fiduciary capacity shall be entitled to vote such stock. Persons whose
stock is pledged shall be entitled to vote, unless in the transfer by the
pledgor on the books of the Corporation he shall have expressly empowered
the pledgee to vote thereon, in which case only the pledgee, or his proxy,
may represent such stock and vote thereon. Stock having voting power
standing of record in the names of two or more persons, whether
fiduciaries, members of a partnership, joint tenants, tenants in common,
tenants by the entirety or otherwise, or with respect to which two or more
persons have the same fiduciary relationship, shall be voted in accordance
with the provisions of the General Corporation Law of the State of
Delaware.
(c) Any such voting rights may be exercised by the stockholder
entitled thereto in person or by his proxy appointed by an instrument in
writing, subscribed by such stockholder or by his attorney thereunto
authorized and delivered to the Secretary of the meeting; provided,
however, that no proxy shall be voted or acted upon after three years from
its date unless said proxy shall provide for a longer period. The
attendance at any meeting of a stockholder who may theretofore have given
a proxy shall not have the effect of revoking the same unless he shall in
writing so notify the secretary of the meeting prior to the voting of the
proxy. At any meeting of the stockholders all matters, except as
otherwise provided in the Certificate of Incorporation, in these Bylaws or
by law, shall be decided by the vote of a majority in voting interest of
the stockholders present in person or by proxy and entitled to vote
thereat and thereon, subject to the requirements concerning a quorum set
forth in Section 2.05. The vote at any meeting of the stockholders on any
question need not be by written ballot, unless so directed by the chairman
of the meeting. On a vote by ballot each ballot shall be signed by the
stockholder voting, or by his proxy, if there be such proxy, and it shall
state the number of shares voted.
Shares represented by proxies that reflect, with respect to a
proposal, abstentions or limited voting authority, including "broker
non-votes" (i.e., shares held by a broker or nominee which are represented
at the meeting, but with respect to which such broker or nominee is not
empowered to vote on a particular proposal or proposals), shall be counted
as shares that are present and entitled to vote for purposes of
determining the presence of a quorum. For purposes of determining the
outcome of any proposal, shares represented by such proxies will be
treated as not present and not entitled to vote with respect to the
proposal.
Section 2.07 LIST OF STOCKHOLDERS. The Secretary of the Corporation and
persons authorized by the Secretary shall prepare and make, at least ten days
before every meeting of
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<PAGE>
stockholders, a complete list of the stockholders entitled to vote at the
meeting, arranged in alphabetical order, and showing the address of each
stockholder and the number of shares registered in the name of each
stockholder. Such list shall be open to the examination of any stockholder,
for any purpose germane to the meeting, during ordinary business hours, for a
period of at least ten days prior to the meeting, either at a place within the
city where the meeting is to be held, which place shall be specified in the
notice of the meeting, or, if not so specified, at the place where the meeting
is to held. The list shall also be produced and kept at the time and place of
the meeting during the entire duration thereof and may be inspected by any
stockholder who is present.
Section 2.08 JUDGES. If at any meeting of the stockholders a vote by
written ballot shall be taken on any question, the chairman of such meeting may
appoint a judge or judges to at with respect to such vote. If no judge is
appointed, the chairman of such meeting or his designee shall serve as judge.
Such judges shall decide upon the qualification of the voters and shall report
the number of shares represented at the meeting and entitled to vote on such
question, shall conduct and accept the votes, and, when the voting is completed,
shall ascertain and report the number of shares voted respectively for and
against the question. Reports of the judges shall be in writing and subscribed
and delivered by them to the Secretary of the Corporation. The judges need not
be stockholders of the Corporation, and any officer of the Corporation may be a
judge on any question other than a vote for or against a proposal in which he
shall have a material interest.
Section 2.09 ORGANIZATION. At every meeting of the stockholders the
Chairman of the Board, or in his absence the President, or in his absence the
Vice President designated by the Chairman of the Board or in the absence of such
designation a chairman (who shall be one of the Vice Presidents, if any is
present) chosen by a majority in interest of the stockholders of the Corporation
present in person or by proxy and entitled to vote, shall act as Chairman. The
Secretary of the Corporation, or his designee, shall act as Secretary of all
meetings of the stockholders. In the absence at any such meeting of the
Secretary or Assistant Secretary, the Chairman may appoint another person to act
as Secretary of the meeting.
ARTICLE III
BOARD OF DIRECTORS
Section 3.01. GENERAL POWERS. The property, business and affairs of
the Corporation shall be managed by or under the direction of the Board.
Individual directors shall not have the authority to act and shall not act as
agents for the Corporation, nor otherwise to manage its business or affairs, nor
to direct any officer or employer in the manner in which he shall discharge his
duties, unless such director is a duly elected officer of the Corporation or is
specifically authorized by special resolution of the Board to act on behalf of
the Corporation in a specific matter for a limited purpose.
Section 3.02 NUMBER AND TERM OF OFFICE. The number of directors of
the Corporation (exclusive of directors to be elected, if any, by the holders of
any one or more series of Preferred Stock voting separately as a class or
classes) shall not be less than six nor more than eighteen, the exact number of
directors to be determined from time to time by a resolution adopted by the
Board.
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<PAGE>
Unless these Bylaws are amended by the stockholders of the Corporation
to provide for the division of the directors into classes, at each annual
meeting all directors shall be elected to hold office until their respective
successors are elected and qualified or until their earlier resignation or
removal. Any vacancies in the Board for any reason, and any newly created
directorships resulting from any increase in the number of directors, may be
filled by the Board, acting by a majority of the directors then in office,
although less than a quorum, and any directors so chosen shall hold office until
the next election of directors and until their successors shall have been duly
elected and qualified. No decrease in the number of directors shall shorten the
term of any incumbent director. Notwithstanding the foregoing, and except as
otherwise required by law, whenever the holders of any one or more series of
Preferred Stock shall have the right, voting separately as a class, to elect one
or more directors of the Corporation, the terms of the director or directors
elected by such holders shall expire at the next succeeding annual meeting of
stockholders. The stockholders of the Corporation shall not have cumulative
voting rights.
Section 3.03 DIRECTOR NOMINATIONS. Nominations for the election to the
Board may be made by the Board or by any stockholder of any outstanding class of
capital stock of the Corporation entitled to vote for the election of directors.
In all cases, such nominations shall be made by notice in writing delivered or
mailed by first class United States mail, postage prepaid, to the Secretary of
the Corporation. Written notice of nominations by the Board of Directors shall
be given by the Chairman of the Board to the Secretary of the Corporation in the
manner prescribed herein. Any other written notice shall be given by the
notifying stockholder to the Secretary of the Corporation in the manner
prescribed herein. Such written notice shall be so mailed or delivered not less
than fourteen days nor more than fifty days prior to any meeting of the
stockholders called for the election of directors; provided, however, that if
less than twenty-one days' notice of the meeting is given to stockholders, such
written notice shall be delivered or mailed, as prescribed, to the Secretary of
the Corporation not later than the close of the seventh day following the day on
which notice of the meeting was mailed to stockholders. The Secretary shall
file each notice with the corporate records, and such notices shall be open to
inspection by the stockholders at all reasonable times during office hours.
Such written notice must contain the following information to the extent
known:
(a) The name, age, business address or, if known, residence
address of each proposed nominee;
(b) The principal occupation or employment of each proposed
nominee; and
(c) The name and residence address of the Chairman of the Board
for the notice by the Board of Directors, or the name and residence
address of the notifying shareholder for notice by said shareholder; and
(d) The total number of shares that to the best of the knowledge
and belief of the person giving the notice will be voted for each of the
proposed nominees.
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<PAGE>
Section 3.04 ELECTION OF DIRECTORS. The directors shall be elected
by the stockholders of the Corporation, and at each election the persons
receiving the greatest number of votes, up to the number of directors then to be
elected, shall be the persons then elected. The election of directors is
subject to any provisions contained in the Certificate of Incorporation relating
thereto.
Section 3.05 RESIGNATIONS. Any director of the Corporation may resign
at any time by giving written notice to the Board or to the Secretary of the
Corporation. Any such resignation shall take effect at the time specified
therein, or if the time be not specified, it shall take effect immediately upon
its receipt, and, unless otherwise specified therein, the acceptance of such
resignation shall not be necessary to make it effective.
Sections 3.06 VACANCIES. Except as otherwise provided in the
Certificate of Incorporation, any vacancy in the Board, whether because of
death, resignation, disqualification, an increase in the number of directors, or
any other cause, may be filled by vote of the majority of the remaining
directors, although less than a quorum. Each director so chosen to fill a
vacancy shall hold office until the next election of directors and until his
successor shall have been elected and shall qualify or until he shall resign or
shall have been removed.
Section 3.07 PLACE OF MEETING, ETC. The Board may hold any of its
meetings at such place or places within or without the State of Delaware as
designated from time to time by resolution of the Board or by written consent of
all members of the Board. Any meeting shall be valid wherever held, if held by
the written consent of all members of the Board, given either before or after
the meeting and filed with the minutes of the proceedings of the Board.
Directors may participate in any regular or special meeting of the Board by
means of conference telephone or similar communications equipment pursuant to
which all persons participating in the meeting of the Board can hear each other,
and such participation shall constitute presence in person at such meeting.
Section 3.08 FIRST MEETING. The Board shall meet as soon as
practicable after each annual election of directors and notice of such first
meeting shall not be required.
Section 3.09 REGULAR MEETINGS. Regular meetings of the Board may be
held at such time, date and place as the Board shall from time to time by
resolution determine. If any day fixed for a meeting shall be a legal holiday
at the place where the meeting is to be held, then the meeting shall be held at
the same time and place on the next succeeding business day not a legal
holiday. Except as provided by law, notice of regular meetings need not be
given.
Section 3.10 SPECIAL MEETINGS. Special meetings of the Board may be
called at any time by the Chairman of the Board or the President, to be held at
the principal office of the Corporation, or at such other place or places,
within or without the State of Delaware, as the person or persons calling the
meeting may designate.
Notice of special meetings of the Board in which attendance in person is
required shall be given to each director by two days' service of the same by
telegram, by letter, or personally. In the case of a meeting in which
attendance in person is not required, notice of such special meeting of the
Board shall be given to each director twenty-four hours prior to such meeting.
Notice may be
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waived by any director and any meeting shall be a legal meeting without notice
having been given if all the directors shall be present there at or if those not
present shall, either before or after the meeting, sign a written waiver of
notice of, or a consent to, such meeting or shall after the meeting sign an
approval of the minutes thereof. All such waivers, consents or approvals shall
be filed with the corporate records.
Section 3.11 QUORUM AND MANNER OF ACTING. Except as otherwise provided
in the Certificate of Incorporation, these Bylaws or by law, the presence of a
majority of the authorized number of directors shall be required to constitute a
quorum for the transaction of business at any meeting of the Board, and all
matters shall be decided at any such meeting, a quorum being present, by the
affirmative votes of a majority of the directors present. In the absence of a
quorum, a majority of directors present at any meeting may adjourn the same from
time to time until a quorum shall be present. Notice of any adjourned meeting
need not be given. The directors shall act only as a Board, and the individual
directors shall have no power as such.
Section 3.12 ACTION BY CONSENT. Any action required or permitted to be
taken at any meeting of the Board or of any committee thereof may be taken
without a meeting if a written consent thereto is signed by all members of the
Board or of such committee, as the case may be, and such written consent is
filed with the corporate records of the proceedings of the Board or such
committee.
Section 3.13 ORGANIZATION. At every meeting of the Board, the Chairman
of the Board, or in his absence, the President or in the absence of both, a
director appointed by a majority of directors present shall preside. The
Secretary of the Corporation shall act, unless the presiding officer appoints
another to act, as Secretary of the Board of Directors.
Section 3.14 COMPENSATION. By resolution of the Board, directors in
their capacity as such may be allowed a reasonable annual retainer fee, in
addition to a reasonable fixed fee for attendance at the meetings of the Board
of Directors and expenses of attendance, if any. Members of special or standing
committee may be allowed such compensation for attending committee meetings as
the Board shall determine.
Section 3.15 COMMITTEES. The Board may, by resolution passed by the
Board, designate one or more committees, each committee to consist of one or
more of the directors of the Corporation. Any such committee, to the extent
provided in a resolution of the Board or these Bylaws, shall have and may
exercise all the powers and authority of the Board in the management of the
business and affairs of the Corporation but no such committee shall have any
power or authority to amend the Certificate of Incorporation, adopt an agreement
of merger or consolidation, recommend to the stockholders the sale, lease or
exchange of all or substantially all of the Corporation's property and assets,
recommend to the stockholders a dissolution of the Corporation or a revocation
of the dissolution, or amend these Bylaws of the Corporation. Any such
committee shall keep written minutes of its meetings and report the same to the
Board at the next regular meetings of the Board.
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ARTICLE IV
OFFICERS
Section 4.01 NUMBER. The officers of the Corporation shall be a
President, one or more Vice Presidents, including a Chief Financial Officer, a
Secretary, a Controller and a Treasurer, and such other officers as may be
appointed in accordance with the provisions of Section 4.02 of this ARTICLE IV.
The Board may also appoint a Chairman of the Board or a Vice Chairman of the
Board. Either the President or Chairman of the Board of Directors shall be
designated as the Chief Executive Officer.
Section 4.02 SUBORDINATE OFFICERS, ETC. The Board may appoint such
other officers, committees or agents as the business of the Corporation may
require, including one or more Assistant Treasurers, one or more Assistant Vice
Presidents and one or more Assistant Secretaries, each of whom shall hold office
for such period, have such authority and perform such duties as the Board may
from time to time determine by resolution which is not inconsistent with these
Bylaws. The Board may delegate to any officer or committee appointed by it the
power to appoint any such subordinate officers, committees or agents.
Section 4.03 DIVISIONAL OFFICERS, ETC. The Board may appoint such
other officers, committee or agents as the business of the Corporation may
require for its divisions, including a President, Chief Financial Officer,
Secretary, Controller and Treasurer of such divisions, each of whom shall hold
office for such period, have such authority and perform such duties as the Board
may from time to time determine by resolution. The Board may delegate to any
officer or committee appointed by it the power to appoint any such divisional
officers, committees or agents.
Section 4.04 ELECTION. TERM OF OFFICE AND QUALIFICATIONS. Each
officer shall hold his office until his successor is appointed and qualified or
until his earlier resignation or removal. If an officer is appointed by the
Board, only the Board may remove such officer, unless otherwise specified by the
Board when such officer is appointed.
Section 4.05 REMOVAL. Any officer may be removed, either with or
without cause, by the vote of a majority of the Board at any regular or special
meeting of the Board, or, except in the case of any officer appointed by the
Board, or by any superior officer or officers, if the power of removal is
conferred upon such committee or such officer or officers by the Board.
Section 4.06 RESIGNATIONS. Any officer may sign at any time by giving
written notice to the Board or to the Chairman of the Board, the President, or
the Secretary of the Corporation. Any such resignation shall take effect at the
time specified therein; and, unless otherwise specified therein, the acceptance
of such resignation shall not be necessary to make it effective.
Section 4.07 VACANCIES. A vacancy in any office because of death,
resignation, removal or disqualification or any other cause, shall be filled in
the manner prescribed in these Bylaws for regular appointment or elections to
such offices.
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Section 4.08 CHAIRMAN OF THE BOARD. The Chairman of the Board, Vice
Chairman of the Board or, if none are appointed, the President, shall preside at
all meetings of the stockholders and of the Board. The Chairman of the Board,
if a person other than the President, shall have such additional duties and
responsibilities and membership on such Committees of the Board as may be
prescribed by the Board or these Bylaws.
Section 4.09 CHIEF EXECUTIVE OFFICER. The Chairman of the Board, if
other than the President, may be designated as the Chief Executive Officer.
Otherwise the President shall be the Chief Executive Officer. Subject to the
control of the Board, the Chief Executive Officer shall have general
supervision, direction and control of the business and officers of the
Corporation.
Section 4.10 PRESIDENT. Subject to such supervisory powers as may be
given by the Board to the Chairman of the Board, the President shall have the
powers and duties of management usually vested in the office of the president of
a corporation and shall have such other powers and duties as may be prescribed
by the Board or these Bylaws.
Section 4.11 VICE PRESIDENTS. The Vice Presidents shall exercise and
perform such powers and duties with respect to the administration of the
business and affairs of the Corporation as may from time to time be assigned to
each of them by the Chief Executive Officer or by the Board or as is prescribed
by these Bylaws. One or more of them may, but need not, be designated as an
Executive Vice President. In the absence or disability of the President, the
Vice President, in order of their rank as fixed by the Board, or if not ranked,
the Vice President designated by the Board, or failing such designation the
Chief Financial Officer shall until the return or replacement of the President
perform all of the duties of the President and when so acting shall have all of
the powers of and be subject to all the restrictions upon the President.
Section 4.12 SECRETARY. The Secretary shall keep, or cause to be kept,
a book of minutes at the principal office for the transaction of the business of
the Corporation, or such other place as the Board may order, of all meetings of
directors and stockholders, with the time, date and place of holding, whether
regular or special, and if special, how authorized, the names of those present
at directors' meetings, the number of shares present or represented at
stockholders' meetings and the proceedings thereof.
The Secretary shall keep, or cause to be kept, at the principal office for
the transaction of the business of the Corporation or at the office of the
Corporation's transfer agent, a share register, or a duplicate share register,
showing the names of the stockholders and their addresses; the number and
classes of shares held by each; the number and date of certificates issued for
the same; and the number and date of cancellation of every certificate
surrendered for cancellation.
The Secretary shall give, or cause to be given, notice of all the meetings
of the stockholders and of the Board required by these Bylaws or by law to be
given, and he shall keep the seal of the Corporation in safe custody, and shall
have such other powers and perform such other duties as may be prescribed by the
Board or these Bylaws. If for any reason the Secretary shall fail to give
notice of any special meeting of the Board called by one or more of the persons
identified in Section 3.10, or if he shall fail to give notice of any special
meeting of the stockholders called by
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the Board, then any such person identified in Section 3.10 of these Bylaws may
give notice of any such special meeting.
Section 4.13 CHIEF FINANCIAL OFFICER. The Chief Financial Officer, or
in his absence, the Chief Executive Officer, shall have responsibility for
overall corporate financial planning. Subject to the control of the Board, the
Chief Financial Officer, or in his absence, the Chief Executive Officer, shall
have general supervision, direction and control of the functions of the
Treasurer and Controller of the Corporation, each of whom shall report to the
Chief Financial Officer or to such other officer as may be designated by the
Chief Executive Officer.
Section 4.14 TREASURER. The Treasurer shall keep and maintain, or
cause to be kept and maintained, adequate and correct accounts of the properties
and business transactions of the Corporation, including accounts of its assets,
liabilities, receipts, disbursements, gains, losses, capital, surplus and
shares. Any surplus, including earned surplus, paid-in surplus and surplus
arising from a reduction of capital, shall be classified according to source and
shown in a separate account. The books of account shall at all reasonable times
be open to inspection by the Board.
The Treasurer shall deposit all monies and other valuables in the name and
to the credit of the Corporation with such depositories or in the manner as may
be designated by the Board. He shall disburse the funds of the Corporation as
may be ordered by the Board and subject to any restrictions as may be imposed by
the Board, shall render to the President and Chief Executive Officer, Chief
Financial Officer and the Board, whenever they request it, an account of all of
his transactions as Treasurer and of the financial condition of the Corporation,
and shall have such other powers and perform such other duties as may be
prescribed by the Board or these Bylaws.
Section 4.15 CONTROLLER. The Controller shall supervise the
maintenance of adequate and correct accounts of the properties and business
transactions of all subsidiaries of the Corporation and shall exercise and
perform such powers and duties with respect to the administration of the
business and affairs of the Corporation as may from time to time be assigned to
him by the President and Chief Executive Officer or by any Vice President or by
the Board or as is prescribed by these Bylaws.
Section 4.16 SALARIES. The salaries of the officers shall be fixed
from time to time by the Board, and no officer shall be prevented from receiving
such salary by reason of the fact that he is also a director of the Corporation.
ARTICLE V
CONTRACTS, CHECKS, DRAFTS, BANK ACCOUNTS, ETC.
Section 5.01 EXECUTION OF CONTRACTS. The Board, except as in these
Bylaws otherwise provided, may authorize any officer or officers, agent or
agents, to enter into any contract or execute and deliver any instrument in the
name of and on behalf of the Corporation, and such authority may be general or
confined to specific instances and, unless so authorized, no officer, agent, or
employee shall have any power or authority to bind the Corporation by any
contract or
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engagement or to pledge its credit or to render it liable pecuniarily for any
purpose or in any amount.
Section 5.02 LOANS. No loans shall be contracted on behalf of the
Corporation and no negotiable papers shall be issued in its name, unless and
except as authorized by the Board. When so authorized by the Board, any officer
or agent of the Corporation may effect loans and advances at any time for the
Corporation from any bank, trust company, or other institution, or from any
firm, corporation or individual, and for such loans and advances may make,
execute and deliver promissory notes, bonds or other evidences of indebtedness
of the Corporation, and when authorized as aforesaid, as security for the
payment of any and all loans, advances, indebtedness, and liabilities of the
Corporation, may pledge, hypothecate or transfer any and all stocks, securities,
and other personal property at any time held by the Corporation, and to that end
endorse, assign and deliver the same. Such authority may be general or confined
to specific instances.
Section 5.03 DEPOSITS. All funds of the Corporation shall be deposited
from time to time to the credit of the Corporation with such banks, bankers,
trust companies or other depositaries as the Board may select or as may be
selected by any officer or officers, agent or agents of the Corporation to whom
such power may be delegated from time to time by the Board.
Section 5.04 CHECKS, DRAFTS, ETC. All checks, drafts or other orders
for payment of money, notes, acceptances, or other evidence of indebtedness
issued in the name of the Corporation, shall be signed by such officer or
officers, agent or agents of the Corporation and in such manner as shall be
determined from time to time by resolution of the Board.
Section 5.05 GENERAL AND SPECIAL BANK ACCOUNTS. The Board may from
time to time authorize the opening and keeping of general and special bank
accounts with such banks, trust companies or other depositaries as the Board may
select or as may be selected by any officer or officers, assistant or
assistants, agent or agents, or attorney, or attorneys of the Corporation to
whom power shall have been delegated by the Board. The Board may make such
special rules and regulations with respect to such bank accounts, not
inconsistent with the provisions of these Bylaws, as it may deem expedient.
ARTICLE VI
SHARES AND THEIR TRANSFERS
Section 6.01 CERTIFICATES FOR STOCK. Every owner of stock of the
Corporation shall be entitled to have a certificate or certificates, to be in
such form as the Board shall prescribe, certifying the number and class of
shares of the stock of the Corporation owned by him. The certificates
representing shares of such stock shall be numbered in the order in which they
shall be issued and shall be signed in the name of the Corporation by the
Chairman of the Board, the President, or a Vice President, and by the
Secretary or an Assistant Secretary or by the Treasurer or an Assistant
Treasurer. Any and all of the signatures on the certificates may be a
facsimile. In case any officer, transfer agent or registrar who has signed or
whose facsimile signature has been placed upon any such certificate shall
thereafter have ceased to be such officer, transfer agent or registrar
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before such certificate is issued, such certificate may nevertheless be issued
by the Corporation with the same effect as though the person who signed such
certificate, or whose facsimile signature shall have been placed thereupon, were
such officer, transfer agent or registrar at the date of issue. A record shall
be kept of the respective names of the persons, firms or corporations owning the
stock represented by such certificates, the number and class of shares
represented by such certificates, and the respective dates thereof, and in case
of cancellation, the respective dates of cancellation. Every certificate
surrendered to the Corporation for exchange or transfer shall be canceled, and
no new certificate or certificates shall be issued in exchange for any existing
certificate until such existing certificate shall have been so canceled,
excepting cases provided for in Section 6.04.
Section 6.02 TRANSFER OF STOCK. Transfers of shares of stock of the
Corporation shall be made only on the books of the Corporation by the registered
holder thereof, or by his attorney thereunto authorized by power of attorney
duly executed and filed with the Secretary, or with a transfer clerk or a
transfer agent appointed as provided in Section 6.03, and upon surrender of the
certificate or certificates for such shares properly endorsed and the payment of
all taxes thereon. The person in whose name shares of stock stand on the books
of the Corporation shall be deemed the owner thereof for all purposes as regards
the Corporation. Whenever any transfer of shares shall be made for collateral
security, and not absolutely, such fact shall be stated expressly in the entry
of transfer if, when the certificate or certificates shall be presented to the
Corporation for transfer, both the transferor and the transferee request the
Corporation to do so.
Section 6.03 REGULATIONS. The Board may make such rules and
regulations as it may deem expedient, not inconsistent with these Bylaws,
concerning the issue, transfer and registration of certificates for shares of
the stock of the Corporation. It may appoint, or authorize any officer or
officers to appoint, one or more transfer clerks or one or more transfer agents
and one or more registrars, and may require all certificates for stock to bear
the signature or signatures of any of them.
Section 6.04 LOST, STOLEN, DESTROYED, AND MUTILATED CERTIFICATES. The
holder of any certificate for stock of the Corporation shall immediately notify
the Corporation of any loss, theft, destruction, or mutilation of such
certificates, and the Corporation may issue a new certificate for stock in the
place of any certificate theretofore issued by it alleged to have been lost,
stolen, destroyed, or mutilated. The Board may, in its discretion, require the
owner of the certificate or his legal representatives to give the Corporation a
bond in such sum, not exceeding double the value of the stock, and with such
surety or sureties, as it may direct, sufficient to indemnify the Corporation,
its transfer agents, and registrar against any claim that may be made against
them on account of the alleged loss or destruction of any such certificate; a
new certificate may be so issued without requiring any bond when, in the
judgment of the Secretary,it is proper so to do.
Section 6.05 FIXING DATE OF DETERMINATION OF STOCKHOLDERS OF RECORD.
In order that the Corporation may determine the stockholders entitled to notice
of or to vote at any meeting of stockholders or any adjournment thereof, or
entitled to receive payment of any dividend or other distribution or allotment
of any rights, or entitled to exercise any rights in respect to any other
change, conversion or exchange of stock or for the purpose of any other lawful
action, the Board may fix, in advance, a record date, which shall not be more
than sixty nor less than ten days before the date of such meeting, nor more than
sixty days prior to any other action. If, in any case
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involving the determination of stockholders for any purpose other than notice of
or voting at a meeting of stockholders, the Board shall not fix such a record
date, the record date for determining stockholders for such purpose shall be the
close of business on the day on which the Board shall adopt the resolution
relating thereto. A determination of stockholders entitled to notice of or to
vote at a meeting of stockholders shall apply to any adjournment of such
meeting; provided, however, that the Board may fix a new record date for the
adjourned meeting.
ARTICLE VII
INDEMNIFICATION
Section 7.01 RIGHT TO INDEMNIFICATION. (a) Each person who was or is
made a party or is threatened to be made a party to or is involved in any
action, suit or proceeding, whether civil, criminal, administrative or
investigative (hereinafter, a "proceeding"), by reason of the fact that he or
she, or a person of whom he or she is the legal representative, is or was a
director, officer or employee of the Corporation or as a director, officer or
employee of the Corporation is or was serving at the request of the Corporation
as a director, officer or employee of another corporation or of a partnership,
joint venture, trust or other enterprise, including service with respect to
employee benefit plans, whether the basis of such proceeding is alleged action
in an official capacity as a director, officer, employee or agent or in any
other capacity while serving as a director, officer or employee, shall be
indemnified and held harmless by the Corporation to the fullest extent
authorized by the Delaware General Corporation Law, as the same exists or may
hereafter be amended (but, in the case of any such amendment, only to the extent
that such amendment permits the Corporation to provide broader indemnification
rights than said law permitted the Corporation to provide prior to such
amendment), against all expense, liability and loss (including attorneys' fees,
judgments, fines, ERISA excise taxes or penalties and amounts paid or to be paid
in settlement) reasonably incurred or suffered by such person in connection
therewith, and such indemnification shall continue as to such person who has
ceased to be a director, officer or employee and shall inure to the benefit of
his or her heirs, executors and administrators; provided, however, that, except
as provided in paragraph (b) hereof, the Corporation shall indemnify any such
person seeking indemnification in connection with a proceeding (or part thereof)
initiated by such person only if such proceeding (or part thereof) was
authorized by the Board of Directors of the Corporation. The right to
indemnification conferred in this Section shall be a contract right and shall
include the right to be paid by the Corporation the expenses incurred in
defending any such proceeding in advance of its final disposition; provided,
however, that, if the Delaware General Corporation Law requires, the payment of
such expenses incurred by such person in his or her capacity as a director or
officer (and not any other capacity in which service was or is rendered by such
person while a director or officer, including, without limitation, service to an
employee benefit plan) in advance of the final disposition of a proceeding shall
be made only upon delivery to the Corporation of an undertaking, by or on behalf
of such person, to repay all amounts so advanced if it shall ultimately be
determined that such person is not entitled to be indemnified under this Section
or otherwise. The Corporation may, by action of its Board of Directors, provide
indemnification and advance expenses to any agent of the Corporation with the
same scope and effect as the foregoing indemnification of directors, officers
and employees.
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(b) RIGHT OF CLAIMANT TO BRING SUIT. If a Claim under paragraph
(a) of this Section is not paid in full by the Corporation within thirty
days after a written claim has been received by the Corporation, the
claimant may at any time thereafter bring suit against the Corporation to
recover the unpaid amount of the claim, and, if successful in whole or in
part, the claimant shall also be entitled to be paid the expense of
prosecuting such claim. It shall be a defense to any such action (other
than an action brought to enforce a claim for expenses incurred in
defending any proceeding in advance of its final disposition where the
required undertaking, if any is required, has been tendered to the
Corporation) that the claimant has not met the standards of conduct which
make it permissible under the Delaware General Corporation Law for the
Corporation to indemnify the claimant for the amount claimed, but the
burden of providing such defense shall be on the Corporation. Neither the
failure of the Corporation (including its Board of Directors, independent
legal counsel or its stockholders) to have made a determination prior to
the commencement of such action that indemnification of the claimant is
proper in the circumstances because he or she has met the applicable
standards of conduct set forth in the Delaware General Corporation Law,
nor an actual determination by the Corporation (including its Board of
Directors, independent legal counsel or its stockholders) that the
claimant has not met such applicable standards of conduct, shall be a
defense to such action or create a presumption that the claimant has not
met the applicable standards of conduct.
(c) NON-EXCLUSIVITY OF RIGHTS. The rights to indemnification
and the payment of expenses incurred in defending a proceeding in advance
of its final disposition conferred in this Section shall not be exclusive
of any other right which any person may have or hereafter acquire under
any statute, provision of the Certificate of Incorporation, by-law,
agreement, vote of stockholders or disinterested directors or otherwise.
(d) INSURANCE. The Corporation may maintain insurance, at its
expense, to protect itself and any director, officer or employee of the
Corporation or another corporation, partnership, joint venture, trust or
other enterprise against any such expense, liability or loss, whether or
not the Corporation would have the power to indemnify such person against
such expense, liability or loss under the Delaware General Corporation
Law.
ARTICLE VIII
Section 8.01 SEAL. The Board shall provide a corporate seal, which
shall be in the form of a circle and shall bear the name of the Corporation and
word and figures showing that the Corporation was incorporated in the State of
Delaware and year of incorporation.
Section 8.02 WAIVER OF NOTICES. Whenever notice is required to be
given by these Bylaws or the Certificate of Incorporation or by law, the person
entitled to said notice may waive such notice in writing, either before or after
the time stated therein, and such waiver shall be deemed equivalent to notice.
Section 8.03 FISCAL YEAR. The fiscal year of the Corporation shall,
unless otherwise fixed by resolution of the Board of Directors, end on the last
day of December in each year.
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Section 8.04 INSPECTION OF BOOKS. All books and records of the
Corporation shall be open to inspection to the extent expressly provided by law
and not otherwise. Any permissible inspection shall be arranged as far in
advance as possible with the President of the Corporation, or such other person
as the President may designate from time to time. Such inspection shall not
interrupt or interfere with the business and employees of the Corporation.
Confidential Information obtained by such inspection shall be used only as
provided in these Bylaws.
Section 8.05 AMENDMENTS. These Bylaws may be amended, altered or
repealed, and new Bylaws may be adopted, (i) by the affirmative vote of the
holders of at least a majority of the outstanding shares of capital stock of the
Corporation entitled to vote generally in the election of directors (considered
for this purpose as one class) or (ii) by an affirmative vote of the majority of
the Board but such right of the directors shall not divest or limit the right of
the stockholders to adopt, alter or repeal these Bylaws.
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EXHIBIT 4.23
Stock Subscription Warrant to Subscribe for
200,000 Shares of Common Stock
Stock Subscription Warrant No. 16
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.
RESTATED 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 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
<PAGE>
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 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
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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.
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
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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.
(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
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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 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
5
<PAGE>
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 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.
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<PAGE>
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 (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.
7
<PAGE>
(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.
(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
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<PAGE>
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 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
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<PAGE>
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.
"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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(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 November 1, 1994.
GRUBB & ELLIS COMPANY
By ____________________________
Robert J. Walner
Senior Vice President
Attest:
By ____________________________
Carol M. Vanairsdale
Assistant Secretary
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<PAGE>
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>
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>
EXHIBIT 4.24
Stock Subscription Warrant to Subscribe for
150,000 Shares of Common Stock
Stock Subscription Warrant No. 17
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.
NEW 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
<PAGE>
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 November 1, 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
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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.
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
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<PAGE>
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.
(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;
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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 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.
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(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 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.
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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 (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.
7
<PAGE>
(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.
(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
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<PAGE>
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 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
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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.
"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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(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 November 1, 1994.
GRUBB & ELLIS COMPANY
By ____________________________
Robert J. Walner
Senior Vice President
Attest:
By ____________________________
Carol M. Vanairsdale
Assistant
11
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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>
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>
EXHIBIT 4.25
Stock Subscription Warrant to Subscribe for
687,358 Shares of Common Stock
Stock Subscription Warrant No. 18
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.
RESTATED STOCK SUBSCRIPTION WARRANT
To Subscribe for and Purchase Shares
of Common Stock of
GRUBB & ELLIS COMPANY
THIS CERTIFIES THAT, for value received,
WARBURG, PINCUS INVESTORS, L.P. ("WARBURG") 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
SIX HUNDRED EIGHTY SEVEN THOUSAND THREE HUNDRED AND FIFTY EIGHT
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 be exercised by the holder
hereof in whole or in part (but not as
<PAGE>
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 January 29, 1998.
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
2
<PAGE>
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.
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.
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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.
(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;
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(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 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,
5
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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 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
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<PAGE>
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 (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
7
<PAGE>
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.
(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 canceled 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
8
<PAGE>
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.
"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
9
<PAGE>
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.
"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.
"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.
"WARBURG WARRANTS" shall mean all warrants, including any
amendments thereto, issued to Warburg pursuant to the Securities Purchase
Agreement dated November 2, 1992 by and among the Company, Warburg and Joe F.
Hanauer.
"WARRANT SECURITIES" shall mean the Warrants and the Warrant
Shares.
16. MISCELLANEOUS.
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(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 Warburg 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 Warburg 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 November 1, 1994.
GRUBB & ELLIS COMPANY
By ____________________________
Robert J. Walner
Senior Vice President
Attest:
By ____________________________
Carol M. Vanairsdale
Assistant Secretary
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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>
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>
EXHIBIT 4.26
Stock Subscription Warrant to Subscribe for
325,000 Shares of Common Stock
Stock Subscription Warrant No. 19
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.
NEW STOCK SUBSCRIPTION WARRANT
To Subscribe for and Purchase Shares
of Common Stock of
GRUBB & ELLIS COMPANY
THIS CERTIFIES THAT, for value received,
WARBURG, PINCUS INVESTORS, L.P. ("WARBURG") 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
THREE HUNDRED AND TWENTY FIVE 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 rightsrepresented by this Warrant may be exercised by the holder
hereof in whole or in part (but not as
<PAGE>
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 January 29, 1998.
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
2
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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.
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.
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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.
(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;
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(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 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,
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<PAGE>
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 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
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<PAGE>
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 (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
7
<PAGE>
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.
(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
8
<PAGE>
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.
"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
9
<PAGE>
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.
"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.
"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.
"WARBURG WARRANTS" shall mean all warrants, including any
amendments thereto, issued to Warburg pursuant to the Securities Purchase
Agreement dated November 2, 1992 by and among the Company, Warburg and Joe F.
Hanauer.
"WARRANT SECURITIES" shall mean the Warrants and the Warrant
Shares.
16. MISCELLANEOUS.
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(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 Warburg 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 Warburg 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 November 1, 1994.
GRUBB & ELLIS COMPANY
By ____________________________
Robert J. Walner
Senior Vice President
Attest:
By ____________________________
Carol M. Vanairsdale
Assistant Secretary
11
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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>
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>
EXHIBIT 4.27
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
$6,500,000 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 its registered assigns, the principal sum
of SIX MILLION AND FIVE HUNDRED THOUSAND DOLLARS ($6,500,000) (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
August 1, 1994, payable semiannually on the first day of February and August in
each year, commencing on February 1, 1995, 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
<PAGE>
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.
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 in the original principal amount of $6,500,000
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: /s/ Robert J. Hanlon, Jr.
-----------------------------------------
Name: Robert J. Hanlon, Jr.
Title: Senior Vice President and
Chief Financial Officer
-2-
<PAGE>
EXHIBIT 4.28
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-2 Amended and Restated as of
$3,500,000 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 its registered assigns, the principal sum
of THREE MILLION AND FIVE HUNDRED THOUSAND DOLLARS ($3,500,000) (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
August 1, 1994, payable semiannually on the first day of February and August in
each year, commencing on February 1, 1995, 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
<PAGE>
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.
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 in the original principal amount of $3,500,000
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: /s/ Robert J. Hanlon, Jr.
----------------------------
Name: Robert J. Hanlon, Jr.
Title: Senior Vice President and
Chief Financial Officer
-2-
<PAGE>
EXHIBIT 4.29
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-1 Amended and Restated as of
$10,900,834.33 November 1, 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 PRUDENTIAL INSURANCE COMPANY OF
AMERICA (the "Holder"), or registered assigns, the principal sum of TEN MILLION,
NINE HUNDRED THOUSAND, EIGHT HUNDRED AND THIRTY-FOUR DOLLARS AND THIRTY-THREE
CENTS ($10,900,834.33) (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 November 1, 1994 (as defined below), payable
semiannually on the first day of February and August in each year, commencing on
February 1, 1995, 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
<PAGE>
respect to the outstanding Notes prior to such issuance. Any such additional
PIK Notes shall be governed by and subject to the 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,
-2-
<PAGE>
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 those certain 10.65%
Subordinated Payment-In-Kind Notes Due November 1, 1999 issued or to have been
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: /s/ Robert J. Hanlon, Jr.
-----------------------------
Name: Robert J. Hanlon, Jr.
Title: Senior Vice President and
Chief Financial Officer
-3-
<PAGE>
EXHIBIT 4.30
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.
<PAGE>
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 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 /s/ Robert J. Hanlon, Jr.
--------------------------
Name: Robert J. Hanlon, Jr.
Title: Senior Vice President and
Chief Financial Officer
-2-
<PAGE>
SCHEDULE I
REVOLVING LOANS AND PAYMENTS
Amount of Amount of Unpaid Principal
Date Revolving Loan Principal Repaid Balance
- - ---- -------------- ---------------- -------
-3-
<PAGE>
Exhibit 10.15
August 1, 1994
Mr. Gordon Hess
2101 Pacific Avenue, #301
San Francisco, CA 94115
RE: SEPARATION AGREEMENT
Dear Gordon:
This letter, upon your signature, will constitute the agreement between you
and Grubb & Ellis Company and all of its subsidiaries, divisions, regions and
related entities (collectively "Grubb & Ellis" or the "Company") on the terms of
your separation from employment with the Company (the "Agreement").
1. Effective July 11, 1994 you commenced an unpaid leave of absence from
Grubb & Ellis of up to four months, or through November 11, 1994. During the
period of time you are on leave, you will remain a Grubb & Ellis employee and
will not have a break in service. However, effective July 11, 1994 you are no
longer an officer of Grubb & Ellis and this letter constitutes your resignation
as an officer and/or director of Grubb & Ellis Company and all subsidiaries and
related entities effective July 8, 1994. While you are on leave, Grubb & Ellis
will continue to make company contributions towards your participation in the
group insurance program. You will not earn paid sick leave or paid vacation
benefits while you are on leave. Unless you elect to terminate your employment
with Grubb & Ellis prior to November 11, 1994, or unless Grubb & Ellis and you
subsequently agree that you will be employed with Grubb & Ellis in some capacity
on or prior to November 11, 1994, then your employment will terminate with Grubb
& Ellis and all subsidiaries and related entities effective at the end of the
work day on November 11, 1994. You understand that, as of November 11, 1994 or,
if you elect to terminate your employment with Grubb & Ellis earlier than
November 11,1994, then on the date you elect to terminate your employment with
Grubb & Ellis prior to November 11, 1994, you will no longer be covered by or
eligible for any benefits under any Company employee benefit plans.
2. You will be paid your earned salary and accrued vacation pay as
indicated in the attached copy of a Personnel Action Notice, and any payments
due you under the Managers' Incentive Program, less withholding taxes and
customary payroll deductions, through the effective date of your employment's
termination, except that you will not receive any salary while you are on your
unpaid leave of absence. Your accrued and unused vacation benefits total
<PAGE>
287.92 hours and payment for same, less applicable withholding taxes will be
made to you upon your termination of employment with Grubb & Ellis.
3. You will receive by separate cover information regarding your rights
to health insurance continuation and any 401(k) PLUS benefits. To the extent
that you have such rights, nothing in this Agreement will impair those rights.
4. You will immediately return to Grubb & Ellis any information you have
about the Company's practices, procedures, trade secrets, client lists, or
marketing of the Company's services.
5. a) Although you are not otherwise entitled to it by the standard
termination policy of the Company, in consideration of your acceptance of this
Agreement, after the "effective date" of this Agreement as defined in paragraph
9 below, and upon your execution of the release attached herein as Exhibit A on
or after your employment with Grubb & Ellis terminates as provided in this
Agreement, the Company will provide you with benefits in the form of the
continuation of your current monthly base salary each month for seven months,
commencing the earlier to occur of (i) your election to terminate employment
with Grubb & Ellis prior to November 11, 1994 or (ii) November 11, 1994, less
withholding taxes and customary payroll deductions. If you should continue as
an employee with Grubb & Ellis before, on or after November 11, 1994, or if you
should become either reemployed by the Company or employed by a Competitor of
the Company within seven months after the termination of your employment, the
payments set forth in this paragraph shall cease. If you should enter into a
consulting agreement with Grubb & Ellis, the payments set forth in this
paragraph shall not cease. "Competitor of the Company" shall mean any person
that is, or has an affiliate that is, engaged in the business of providing real
estate services to the public at large including real estate brokerage, mortgage
brokerage, real estate property or facilities management, real estate asset
management, real estate appraisal and consulting and real estate advisory
services and has together with all affiliates thereof, annual revenues derived
from such activities for the most recently completed fiscal year in excess of
either (i) $1.5 million in any of the 25 largest standard metropolitan
statistical areas of the United States in which the Company does business or
(ii) $20 million nationally.
b) You acknowledge that Grubb & Ellis has made no representations to
you about the tax consequences of the above payments. You are advised to obtain
independent tax advice.
6. You waive and release and promise never to assert any and all claims
of any and every kind, in law or equity, known or unknown, direct and indirect,
of any nature whatsoever, from the beginning of time to the date hereof, that
you have or might have against Grubb & Ellis Company and its predecessors,
subsidiaries, affiliates, associates, owners, divisions,
2
<PAGE>
representatives, related entities, officers, directors, shareholders, agents,
partners, insurers, employee benefit plans (and their trustees, administrators
and other fiduciaries), attorneys, employees, successors, heirs, or assigns, and
all persons acting by, through, under or in connection with them or any of them,
arising from or related to your employment with the Company and/or the
termination of your employment with the Company.
These claims include, but are not limited to, claims arising under federal,
state and local statutory or common law or ordinance, such as the Age
Discrimination in Employment Act, as amended, Title VII of the Civil Rights Act
of 1964, as amended, the Equal Pay Act of 1963, as amended, the Civil Rights Act
of 1866, as amended, the law of contract and tort, and any other laws and
regulations relating to employment, or employment discrimination and/or the
payment of wages, vacation pay or benefits.
You also waive and release and promise never to assert any such claims,
even if you do not believe that you have such claims. Therefore, you waive any
statutory rights to limit releases to known claims, including any and all rights
and benefits conferred upon you by the provisions of Section 1542 of the Civil
Code of the State of California, which states as follows:
A general release does not extend to claims which the creditor does not know
or suspect to exist in his favor at the time of executing the release, which if
known by him must have materially affected his settlement with the debtor.
7. You will not, unless required or otherwise permitted by law, disclose
to others any information regarding the following:
a. Any non-public information regarding the Company's practices,
procedures, trade secrets, client lists, or product marketing of the Company's
services, except that you may disclose this information to your attorney in
order for your attorney to render professional services to you. You will
instruct your attorney, however, to maintain the confidentiality of this
information just as you must, and you and your attorney will remain liable for
any breach of such confidence by your attorney.
b. The terms of this Agreement, the benefits being paid under it or
the fact of its payment, except that you may disclose this information to your
attorney, accountant or other professional advisor to whom you must make the
disclosure in order for them to render professional services to you, and to
members of your immediate family. You will instruct them, however, to maintain
the confidentiality of this information just as you must.
8. In the event that you breach any of your obligations under this
Agreement or as otherwise imposed by the law, the Company will be entitled to
recover the benefits paid under the agreement and to obtain all other relief
provided by law and equity. This Agreement will be governed by the law of the
State of California.
3
<PAGE>
9. The following is required by the Older Workers Benefit Protection Act:
You have up to 21 days from the date you receive this letter to accept the
terms of this Agreement, although you may accept it at any time within those 21
days. You are advised to consult an attorney about the Agreement.
To accept the Agreement, please date and sign this Agreement and return it
to me either by personal delivery or by mail at Grubb & Ellis Company, One
Montgomery Street, San Francisco, CA 94104. (An extra original for your files
is enclosed.) Once you do so, you will still have an additional 7 days after
signing in which to revoke your acceptance. To revoke, you must send me a
written statement of revocation. If you do not revoke, the eighth day after the
date of your acceptance will be the "effective date" of the Agreement.
10. This Agreement represents the sole and entire agreement between the
parties herein and supersedes any and all previous verbal or written promises or
agreements, negotiations and discussions, if any, between you and the Company
with respect to the subject matter it contains, and shall not be terminated or
altered except in writing by you and a duly authorized representative of Grubb &
Ellis Company.
11. This Agreement shall not be binding on the Company unless and until it
is signed and returned to Grubb & Ellis as provided above. Nothing in this
Agreement shall constitute an admission of liability or wrongdoing by the
Company.
Dated: August 1, 1994 GRUBB & ELLIS COMPANY
By: /s/ Robert J. Walner
----------------------
Robert J. Walner,
Senior Vice President and General Counsel
By signing this letter, I acknowledge that I have had the opportunity to
review this Separation Agreement carefully with an attorney of my choice; that I
understand the terms of the agreement; and that I voluntarily agree to them.
Dated: 8/1, 1994.
/s/ Gordon Hess
-------------------------
Gordon Hess
4
<PAGE>
State of California )
)
County of San Francisco )
On this 1st day of August 1994, before me,
/s/ M.E. Boyd, the undersigned
Notary Public, personally appeared
/s/ Godon M. Hess
[x] personally known to me
[ ] proved to me on the basis of satisfactory evidence to be the person(s) who
executed the within instrument as or on behalf of
the corporation therein named, and acknowledged to me that the corporation
executed it.
WITNESS my hand and official seal.
M.E. BOYD
COMM # 1004196
NOTARY PUBLIC
CALIFORNIA
SAN FRANCISCO COUNTY
EXPIRES SEPT. 6, 1997
/s/ M E Boyd
5
<PAGE>
EXHIBIT "A"
TO AGREEMENT BETWEEN
GORDON HESS AND GRUBB & ELLIS COMPANY
DATED AUGUST 1, 1994
I hereby waive and release and promise never to assert any and all claims
of any and every kind, in law or equity, known or unknown, direct and indirect,
of any nature whatsoever, from the beginning of time to the date hereof, that I
have or might have against Grubb & Ellis Company and its predecessors,
subsidiaries, affiliates, associates, owners, divisions, representatives,
related entities, officers, directors, shareholders, agents, partners, insurers,
employee benefit plans (and their trustees, administrators and other
fiduciaries), attorneys, employees, successors, heirs, or assigns, and all
persons acting by, through, under or in connection with them or any of them
(collectively hereinafter referred to as "Grubb & Ellis"), arising from or
related to my employment with Grubb & Ellis and/or the termination of my
employment with Grubb & Ellis.
These claims include, but are not limited to, claims arising under federal,
state and local statutory or common law or ordinance, such as the Age
Discrimination in Employment Act, as amended, Title VII of the Civil Rights Act
of 1964, as amended, the Equal Pay Act of 1963, as amended, the Civil Rights Act
of 1866, as amended, the law of contract and tort, and any other laws and
regulations relating to employment, or employment discrimination and/or the
payment of wages, vacation pay or benefits.
I also waive and release and promise never to assert any such claims, even
if I do not believe that I have such claims. Therefore, I waive any statutory
rights to limit releases to known claims, including any and all rights and
benefits conferred upon me by the provisions of Section 1542 of the Civil Code
of the State of California, which states as follows:
A general release does not extend to claims which the creditor does not
know or suspect to exist in his favor at the time of executing the release,
which if known by him must have materially affected his settlement with the
debtor.
Dated: September 15, 1994.
/s/ Gordon Hess
------------------------
Gordon Hess
<PAGE>
State of California )
)
County of San Francisco )
On this 13th day of September 1994, before me,
/s/ M.E. Boyd,
the undersigned Notary Public, personally appeared
/s/ Godon M. Hess
[x] personally known to me
[ ] proved to me on the basis of satisfactory evidence to be the person(s) who
executed the within instrument as or on behalf of
the corporation therein named, and acknowledged to me that the corporation
executed it.
WITNESS my hand and official seal.
M.E. BOYD
COMM # 1004196
NOTARY PUBLIC
CALIFORNIA
SAN FRANCISCO COUNTY
EXPIRES SEPT. 6, 1997
/s/ M E Boyd
<PAGE>
EXHIBIT 10.19
SECOND AMENDMENT TO STOCKHOLDERS' AGREEMENT
Reference is made to that certain Stockholders' Agreement (the
"Stockholders' Agreement") dated as of January 29 1993 and amended as of July 1,
1993 by and among Grubb & Ellis Company, a Delaware corporation (the "Company"),
Warburg, Pincus Investors, L.P., a Delaware limited partnership ("Warburg"), Joe
F. Hanauer ("Hanauer") and The Prudential Insurance Company of America, a New
Jersey insurance corporation ("Prudential"). Capitalized terms used herein
without definition shall have the meanings set forth in the Stockholders'
Agreement.
RECITALS
A. On March 28, 1994, the Company, Warburg and Prudential reached
agreement (the "Preliminary Agreement") upon the terms of a proposed financing
transaction to provide the Company with additional working capital, including:
(i) an interim credit facility pursuant to which Warburg agreed to make periodic
advances to the Company in an aggregate principal amount for all such advances
outstanding not to exceed $10 million (the "Bridge Loan"); (ii) a rights
offering by the Company (the "Rights Offering") in which the Company would issue
to each holder of Common Stock one nontransferable right (a "Right") to purchase
one share of Common Stock at a subscription price of $2.375 per share for each
share of Common Stock; (iii) a standby agreement (the "Standby Agreement")
pursuant to which Warburg agreed to acquire Rights not purchased by the
Company's stockholders in the Rights Offering up to an amount not to exceed $10
million, plus accrued interest on the Bridge Loan; (iv) amendments to the Note
Purchase Agreement (as amended from time to time) between Prudential and the
Company (the "Prudential Loan Agreement Amendments"); (v) amendments to the New
Prudential Warrants, the Warburg Warrants and the Preferred Stock held by
Warburg, Hanauer and Prudential; and (vi) subject to certain conditions, the
issuance of new warrants to Warburg and Prudential.
B. On July 21, 1994, Warburg and the Company entered into the
Standby Agreement.
C. On September 12, 1994, the stockholders of the Company approved
the Financing Transactions, which are more fully described in the Company's
Proxy Statement dated July 29, 1994 (the "Proxy Statement").
D. On the date hereof:
1. The Company completed the Rights Offering and Warburg
fulfilled its obligations under the Standby Agreement;
1
<PAGE>
2. Prudential and the Company entered into the
Prudential Loan Agreement Amendments;
3. The Company filed with the Delaware Secretary of State
the Company's Restated Certificate of Incorporation (the "Charter Amendment")
and Warburg surrendered to the Company for cancellation certificates
representing all of its 128,266 shares of Senior Preferred Stock in exchange for
certificates representing 128,266 shares of Series B Senior Preferred Stock;
4. Warburg surrendered to the Company for cancellation the
Warburg Warrants in exchange for amended warrants to purchase an aggregate of
687,358 shares of Common Stock at an exercise price of $3.50 per share (the
"Warburg Amended Warrants");
5. Prudential surrendered to the Company for cancellation
the New Prudential Warrants in exchange for amended warrants to purchase 200,000
shares of Common Stock at an exercise price of $3.50 per share (the "Prudential
Amended Warrants");
6. The Company issued to Warburg new warrants to purchase
350,000 shares of Common Stock at an exercise price of $2.375 per share (the
"Warburg 1994 Warrants");
7. Warburg surrendered to the Company for cancellation all of
its Contingent Warrants (as defined in the Proxy Statement); and
8. The Company issued to Prudential new warrants to purchase
150,000 shares of Common Stock at an exercise price of $2.375 per share (the
"Prudential 1994 Warrants").
E. The parties desire to make certain amendments to the
Stockholders' Agreement.
NOW, THEREFORE, in acknowledgement of the foregoing recitals, the
parties hereby agree as follows:
1. Section l.l(g) of the Stockholders' Agreement is hereby amended
to read as follows:
(g) "Prudential Securities" shall mean the Junior Preferred Stock,
the Prudential Amended Warrants, the Prudential 1994 Warrants and the
Prudential Warrant Shares
2
<PAGE>
and any and all issued shares of Prudential Registrable Securities.
2. Section l.l(s) of the Stockholders' Agreement is hereby amended
to read as follows:
(s) "Warburg Securities" shall mean the Senior Preferred Stock, the
Warburg Amended Warrants, the Warburg 1994 Warrants and any and all issued
shares of Warburg Registrable Securities.
3. The following definitions are hereby added to Section 1.1 of
the Stockholders' Agreement:
(t) "Preferred Stock" shall mean the Senior Preferred Stock and the
Junior Preferred Stock.
(u) "Senior Preferred Stock" shall mean the Series A Senior Preferred
Stock and the Series B Senior Preferred Stock.
(v) "Series A Senior Preferred Stock" shall mean the Company's Series A
Senior Convertible Preferred Stock, par value $.01 per share.
(w) "Series B Senior Preferred Stock" shall mean the Company's Series B
Senior Convertible Preferred Stock, par value $.01 per share.
4. References to the "date hereof" in the first paragraph of
Section 4.1(a) of the Stockholders' Agreement shall mean the date as of which
this Second Amendment to Stockholders' Agreement is executed.
5. The beginning of the third paragraph of Section 4.1(a) of the
Stockholders' Agreement is hereby amended by deleting the text up to and
including the first semi-colon in the second sentence therein and replacing it
with the following:
"Warburg Registrable Securities" shall include all shares of Common
Stock issued or issuable upon conversion of any Senior Preferred Stock,
all shares of Common Stock issued or issuable upon exercise of any Warburg
Amended Warrants or Warburg 1994 Warrants, any shares of Common Stock
acquired by Warburg pursuant to the Standby Agreement and any shares of
Common Stock acquired by Hanauer in connection with the Rights Offering
and "Prudential Registrable Securities" shall include all shares of Common
Stock issued or issuable upon conversion of any Junior Preferred Stock,
all shares of Common Stock issued or issuable upon exercise of any of the
Old Prudential Warrant
3
<PAGE>
the Prudential Amended Warrants or the Prudential 1994 Warrants and any
shares of Common Stock acquired by Prudential in connection with the
Rights Offering (Warburg Registrable Securities and Prudential
Registrable Securities are sometimes collectively referred to herein
as "Registrable Securities"). Registrable Securities shall include
all shares of Common Stock, or Common Stock issued or issuable upon
conversion or exercise of any securities of the Company, which may be
issued or distributed with respect to, or in exchange for, the Preferred
Stock, the Warburg Amended Warrants, the Warburg 1994 Warrants, the
Prudential Warrant Shares, the Prudential Amended Warrants, the Prudential
1994 Warrants or any of the Common Stock referred to in the preceding
sentence pursuant to a stock dividend, stock split or other distribution,
merger, consolidation, recapitalization or reclassification or otherwise,
and any securities of the Company which may be issued or distributed with
respect to, or in exchange for, any such Common Stock or such other
securities pursuant to a stock dividend, stock split or other
distribution, merger, consolidation, recapitalization or reclassification
or otherwise;
6. References to the "date hereof" in Section 5.1 (b) of the
Stockholders' Agreement shall mean the date as of which this Second Amendment to
Stockholders' Agreement is executed.
7. All notices, other communications or documents given to the
parties pursuant to Section 5.3 and any copies thereof shall be given as set
forth in Section 5.3, except as follows:
(a) If to the Company, a copy to:
Latham & Watkins
505 Montgomery Street, Suite 1900
San Francisco, California 94111
Attention: Scott R. Haber, Esq.
Telecopy number: (415) 395-8095
(b) If to Warburg, a copy to:
Stroock & Stroock & Lavan
7 Hanover Square
New York, New York 10004
Attention: Martin H. Neidell, Esq.
Telecopy number: (212) 806-6006
(c) If to Prudential, a copy to:
Sonnenschein, Nath & Rosenthal
4
<PAGE>
800 Sears Tower
Chicago, Illinois 60606
Attention: Mitchell L. Hollins, Esq.
Telecopy number: (312) 876-7934
8. Except as specifically provided herein, the terms and conditions of
the Stockholders' Agreement shall remain in full force and effect.
5
<PAGE>
IN WITNESS WHEREOF, the parties hereto have executed this Second
Amendment to Stockholders' Agreement this 1st day of November, 1994.
GRUBB & ELLIS COMPANY, a Delaware
corporation
By: /s/ Robert J. Walner
---------------------------------------------
Name: Robert J. Walner
-------------------------------------------
Title: Senior Vice President and General Counsel
------------------------------------------
WARBURG, PINCUS INVESTORS, L.P., a
Delaware limited partnership
WARBURG PINCUS & CO.,
General Partner
By: /s/ Reuben S. Leibowitz
---------------------------------------------
Name: Reuben S. Leibowitz
-------------------------------------------
Title: Partner
------------------------------------------
THE PRUDENTIAL INSURANCE COMPANY OF
AMERICA, a New Jersey insurance
corporation
By: /s/ John P. Mullman
---------------------------------------------
Name: John P. Mullman
-------------------------------------------
Title: Vice President
------------------------------------------
JOE F. HANAUER, an individual
By: /s/ Joe F. Hanauer
---------------------------------------------
Joe F. Hanauer
-6-
<PAGE>
GRUBB & ELLIS COMPANY AND SUBSIDIARIES
EXHIBIT (11) STATEMENT RE COMPUTATION OF
PER SHARE EARNINGS - FORM 10-Q
for the three-month and nine-month periods ended
September 30, 1994 and 1993
(unaudited)
(in thousands except for shares and per share amounts)
<TABLE>
<CAPTION>
Three Months Nine Months
Ended September 30, Ended September 30,
------------------- -------------------
1994 1993 1994 1993
---- ---- ---- ----
<S> <C> <C> <C> <C>
Primary income (loss) per share
applicable to Common Stock:
Weighted average common
shares outstanding 4,261,351 4,060,268 4,146,011 4,006,156
---------- ---------- ---------- -----------
---------- ---------- ---------- -----------
Net income (loss) $ 584 $ (638) $ (2,957) $ (4,848)
Earnings applicable to
Preferred Stock (658) (599) (1,953) (1,597)
---------- ---------- ---------- -----------
Net income (loss) applicable to
Common Stockholders $ (74) $ (1,237) $ (4,910) $ (6,445)
---------- ---------- ---------- -----------
---------- ---------- ---------- -----------
Net income (loss) per common
share and equivalents applicable
to Common Stock $ (.02) $ (.30) $ (1.18) $ (1.61)
---------- ---------- ---------- -----------
---------- ---------- ---------- -----------
Fully-diluted income (loss) per share
applicable to Common Stock:
Weighted average common
shares outstanding 4,261,351 4,060,268 4,146,011 4,006,156
---------- ---------- ---------- -----------
---------- ---------- ---------- -----------
Net income (loss) $ (74) $ (1,237) $ (4,910) $ (6,445)
---------- ---------- ---------- -----------
---------- ---------- ---------- -----------
Net income (loss) per common
share and equivalents applicable
to Common Stock $ (.02) $ (.30) $ (1.18) $ (1.61)
---------- ---------- ---------- -----------
---------- ---------- ---------- -----------
</TABLE>
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 5
<LEGEND>
The schedule contains summary financial information extracted from the
Condensed Consolidated Balance Sheets and the Condensed Consolidated Statements
of Operations and is qualified in its entirety by reference to such financial
statements.
</LEGEND>
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> DEC-31-1994
<PERIOD-START> JAN-01-1994
<PERIOD-END> SEP-30-1994
<CASH> 10,745
<SECURITIES> 0
<RECEIVABLES> 13,434
<ALLOWANCES> 7,201
<INVENTORY> 0
<CURRENT-ASSETS> 22,109
<PP&E> 18,992
<DEPRECIATION> 13,832
<TOTAL-ASSETS> 31,272
<CURRENT-LIABILITIES> 30,616
<BONDS> 0
<COMMON> 45
0
32,022
<OTHER-SE> 47,028
<TOTAL-LIABILITY-AND-EQUITY> 31,272
<SALES> 0
<TOTAL-REVENUES> 127,941
<CGS> 0
<TOTAL-COSTS> 59,252
<OTHER-EXPENSES> 71,309
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 40
<INCOME-PRETAX> (2,660)
<INCOME-TAX> 297
<INCOME-CONTINUING> (2,957)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (2,957)
<EPS-PRIMARY> (1.18)
<EPS-DILUTED> (1.18)
</TABLE>
