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SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
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SCHEDULE 13D
(Amendment No. 6)
Under the Securities Exchange Act of 1934
GRUBB & ELLIS COMPANY
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(Name of Issuer)
Common Stock, par value $.01 per share
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(Title of Class of Securities)
40009-51-0
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(CUSIP Number)
Joe F. Hanauer
361 Forest Avenue
Laguna Beach, California 92651
(714) 494-2333
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(Name, Address and Telephone Number of Person
Authorized to Receive Notices and Communications)
December 11, 1996
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(Date of Event which Requires Filing of this Statement)
If the filing person has previously filed a statement on Schedule 13G
to report the acquisition which is subject of this Schedule 13D, and
is filing this statement because of Rule 13d-1(b)(3) or (4), check the
following box: [ ]
Check the following box if a fee is being paid with the statement: [ ]
Page 1 of 69 Pages
Exhibit Index is on Page 9
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SCHEDULE 13D
CUSIP No. 40009-51-0 Page 2 of 69 Pages
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1. Name of Reporting Person
Joe F. Hanauer
2. Check the Appropriate Box if a Member of a Group (a) [ ]
(b) [X]
3. SEC Use Only
4. Source of Funds
OO
5. Check Box if Disclosure of Legal Proceedings is Required
Pursuant to Items 2(d) or 2(e) [ ]
6. Citizenship or Place of Organization
United States
7. Sole Voting Power
972,836 shares of Common Stock (See Item 5)
Number of
Shares 8. Shared Voting Power
Beneficially
Owned By -0- shares of Common Stock (See Item 5)
Each
Reporting 9. Sole Dispositive Power
Person
With 972,836 shares of Common Stock (See Item 5)
10. Shared Dispositive Power
-0- shares of Common Stock (See Item 5)
11. Aggregate Amount Beneficially Owned by Each Reporting Person
See Item 5 below
12. Check Box if the Aggregate Amount in Row (11) Excludes Certain Shares [ ]
13. Percent of Class Represented by Amount in Row (11)
See Item 5 below
14. Type of Reporting Person
IN
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This Amendment No. 6 to Schedule 13D is being filed on behalf of Joe
F. Hanauer to amend the Schedule 13D dated November 11, 1992, as amended (the
"Schedule 13D"), relating to the common stock, par value $.01 per share (the
"Common Stock"), of Grubb & Ellis Company, a Delaware corporation (the
"Company"). Unless otherwise indicated, all capitalized terms used herein but
not defined herein shall have the same meaning as set forth in the Schedule 13D.
ITEM 1. SECURITY AND ISSUER.
Item 1 to Schedule 13D is hereby amended, in pertinent part, as
follows:
The Company's principal executive offices are located at 10275 West
Higgins Road, Suite 300, Rosemont, Illinois 60018.
ITEM 2. IDENTITY AND BACKGROUND.
Item 2(a) to Schedule 13D is hereby amended and restated in its
entirety as follows:
(a) This statement is filed by Joe F. Hanauer. Mr. Hanauer holds all
of the securities reported in this Schedule 13D as being held by Mr. Hanauer as
trustee of the Joe F. Hanauer Trust dated June 15, 1988 (the "Hanauer Trust"),
except for 13,293 shares of Common Stock and the Stock Option (as defined
below), which Mr. Hanauer holds as an individual.
Item 2(c) to Schedule 13D is hereby amended, in pertinent part, as
follows:
(c) Mr. Hanauer is Chairman of the Board of the Company.
ITEM 3. SOURCE AND AMOUNT OF FUNDS OR OTHER CONSIDERATION.
ITEM 4. PURPOSE OF TRANSACTION.
Items 3 and 4 to Schedule 13D are hereby amended, in pertinent part,
as follows:
On December 11, 1996, the Company, Warburg, Pincus Investors, L.P.
("Warburg") and Mr. Hanauer entered into the Tri-Party Agreement (the "Tri-Party
Agreement"), pursuant to which, among other things, (i) Mr. Hanauer converted
his 8,894 shares of Series A Senior Preferred Stock into 339,629 shares of
Common Stock, (ii) Warburg transferred to Mr. Hanauer a portion of the Pru
Warrant No. 16 representing the right to purchase 14,286 shares of Common Stock
(the "Warrant No. 20") and a portion of the Pru Warrant No. 17 representing the
right to purchase 10,714 shares of Common Stock (the "Warrant No. 22"), (iii)
Mr. Hanauer surrendered to the Company for cancellation his warrants to purchase
an aggregate of 38,410 shares of Common Stock, which were exercisable only under
certain circumstances, (iv) the Company amended Mr. Hanauer's existing warrants
to purchase an aggregate of 323,541 shares of Common Stock to extend the
expiration date thereof to January 29, 2002 and eliminate certain anti-dilution
provisions (the "Existing Warrants"), and (v) Warburg, the Company and Mr.
Hanauer terminated the Stockholders Agreement (the "Stockholders Agreement")
dated as of January 29, 1993, as amended from time to time.
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Warrant No. 20 and Warrant No. 22 (collectively, the "New Warrants")
have an exercise price of $3.50 and 2.375, respectively, and are exercisable at
any time prior to January 29, 2002. Payment of the aggregate exercise price may
be made in cash or, at the election of the holder, by delivering warrants, the
value of which will be deemed to equal to the difference between the current
market price of a share of Common Stock on the date immediately preceding the
date of exercise and the then current exercise price. The exercise price and
the number of shares of Common Stock issuable upon exercise of the New Warrants
are subject to adjustment from time to time upon the occurrence of certain stock
dividends or distributions, stock splits, reverse stock splits or stock
reclassifications.
Warburg has executed a letter dated December 9, 1996 addressed to Mr.
Hanauer (the "Warburg/Hanauer Letter") confirming their understanding that
Warburg will cause the directors of the Company nominated by Warburg to nominate
Mr. Hanauer for election to the Board of Directors of the Company at the 1997
and 1998 annual meetings of the stockholders. In addition, Warburg agreed to
vote all of its shares of Common Stock in favor of Mr. Hanauer's election to the
Board of Directors of the Company.
Pursuant to the Tri-Party Agreement, the Company, Warburg, Mr. Hanauer
and C. Michael Kojaian, Mike Kojaian and Kenneth J. Kojaian (collectively, the
"Kojaian Purchasers") entered into the Registration Rights Agreement dated as of
December 11, 1996 (the "Registration Rights Agreement"), as more fully described
in Item 6 hereof.
A copy of each of the Tri-Party Agreement, Warrant No. 20, Warrant No.
22 and the Warburg/Hanauer Letter is attached hereto as Exhibits 1, 2, 3 and 4,
respectively, and is incorporated herein by reference in its entirety. Each of
the summaries of Exhibits 1, 2, 3 and 4 contained in this Schedule 13D is
subject to, and is qualified in its entirety by, all of the provisions contained
in the respective Exhibit.
ITEM 5. INTEREST IN SECURITIES OF THE ISSUER.
Item 5 to Schedule 13D is hereby amended and restated in its entirety
as follows:
(a) As of the date of this Schedule 13D, Mr. Hanauer is the
beneficial owner of 972,836 shares of Common Stock through ownership of (i)
420,728 shares of Common Stock, including 339,629 shares received by Mr. Hanauer
upon conversion of 8,894 shares of Series A Senior Preferred Stock, (ii)
currently exercisable New Warrants and Existing Warrants to purchase an
aggregate of 348,541 shares of Common Stock, and (iii) a stock option under the
Company's Amended and Restated Stock Option Plan (the "Stock Option") currently
exercisable for 203,567 shares of Common Stock. In addition, the Stock Option
entitles Mr. Hanauer to acquire an additional 34,283 shares of Common Stock,
which have been excluded from Mr. Hanauer's beneficial holdings reported on this
Schedule 13D as the Stock Option will not be exercisable with respect to the
additional 34,283 shares within 60 days of the date hereof. Item 6 contains
additional information concerning the Stock Option. The shares of Common Stock
beneficially owned by Mr. Hanauer as described herein represent approximately
5.7% of the shares of Common Stock calculated in accordance with Rule 13d-
3(d)(1)(i) in the manner described below.
The percentages used in this paragraph 5(a) are calculated based upon
16,603,987 shares of Common Stock issued and outstanding at the close of
business on December 11, 1996. Such information has been provided to the
Reporting Person by the Company. Pursuant to Rule 13d-3(d)(1)(i), shares of
Common Stock which are not outstanding which are subject to convertible
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securities are deemed to be outstanding for the purpose of computing the
percentage of outstanding securities of the shares of Common Stock owned by the
person holding such convertible securities, but are not deemed to be outstanding
for purposes of computing the percentage of such shares owned by any other
person.
By reason of the provisions of Rule 13d-3 under the Securities
Exchange Act of 1934, as amended (the "Act"), Mr. Hanauer and Warburg may be
deemed to be a "group." By reason of the provisions of Rule 13d-5 under the
Act, the group consisting of these entities may be deemed to own all shares of
Common Stock beneficially owned by Warburg and Mr. Hanauer. Mr. Hanauer does
not affirm the existence of such a group and disclaims beneficial ownership of
shares of Common Stock beneficially owned by Warburg.
(b) As of the date hereof, Mr. Hanauer has the sole power to vote and
to dispose of the Common Stock, the New Warrants, the Existing Warrants and the
Stock Option held by him, but does not have nor share such powers with respect
to any shares beneficially owned by Warburg.
(c) Except as set forth in this Schedule 13D, Mr. Hanauer has not
effected any transactions in the Common Stock during the preceding 60 days.
(d) Except as set forth in this Item 5, no person other than each
respective record owner referred to herein of securities is known to have the
right to receive or the power to direct the receipt of dividends from or the
proceeds of sale of such securities.
(e) Not applicable.
ITEM 6. CONTRACTS, ARRANGEMENTS, UNDERSTANDING OR RELATIONSHIPS WITH RESPECT
TO SECURITIES OF THE ISSUER.
Item 6 to Schedule 13D is amended hereby, in pertinent part, as
follows:
On January 4, 1995, the Company granted Mr. Hanauer the Stock Option
to purchase 102,850 shares of Common Stock at an exercise price of $1.875 per
share under the Company's 1990 Amended and Restated Stock Option Plan. The
exercise price represents market value at the date of grant. The option vests
in three equal, annual installments commencing on the first anniversary of the
date of grant.
Mr. Hanauer, the Company, Warburg and the Kojaian Purchasers entered
into the Registration Rights dated as of December 11, 1996 (the "Registration
Rights Agreement"). The Registration Rights Agreement provides that at any time
after December 11, 1996, (i) the holder or holders of at least 30% of the
aggregate amount of Warburg Registrable Securities (as defined below) may make
three written requests to the Company for registration under and in accordance
with the provisions of the Securities Act of 1933, as amended (the "Securities
Act"), of all or part of the Warburg Registrable Securities; PROVIDED, HOWEVER,
that Warburg may make any of such three requests for registration regardless of
the percentage of Warburg Registrable Securities it holds, and (ii) the holder
or holders of at least 30% of the aggregate amount of Kojaian Registrable
Securities (as defined below) may make three written requests to the Company for
registration under and in accordance with the provisions of the Securities Act
of all or part of the Kojaian Registrable Securities. "Warburg Registrable
Securities" includes all shares of Common Stock held by Warburg on December 11,
1996 and all shares of Common Stock issued or issuable upon exercise of any of
the warrants held by Warburg on December 11, 1996 to purchase shares of Common
Stock.
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"Hanauer Registrable Securities" includes all shares of Common Stock held by Mr.
Hanauer or the Hanauer Trust on December 11, 1996 and all shares of Common Stock
issued or issuable upon exercise of any of the warrants held by Mr. Hanauer or
the Hanauer Trust on December 11, 1996 to purchase shares of Common Stock.
"Kojaian Registrable Securities" includes the Kojaian Shares. Warburg
Registrable Securities, Hanauer Registrable Securities and Kojaian Registrable
Securities are sometimes collectively referred to herein as "Registrable
Securities."
The Registration Rights Agreement also provides that in the event that
a holder or holders of Warburg Registrable Securities requests a registration
pursuant to the foregoing provisions, Mr. Hanauer and the Hanauer Trust may
elect to include a proportionate share of the Hanauer Registrable Securities
held by them in such registration, in which case Mr. Hanauer (or the Hanauer
Trust) shall be permitted to sell such Hanauer Registrable Securities in the
same manner and on the same basis as such holder or holders of Warburg
Registrable Securities.
Pursuant to the Registration Rights Agreement, the holders of
Registrable Securities also have certain "piggyback" registration rights to
include their securities, subject to certain limitations, in registration
statements filed by the Company with respect to any offering of any equity
securities for its own account or for the account of any of its equity holders.
All expenses incident to the Company's performance of or compliance with the
Registration Rights Agreement will be borne by the Company, including, among
other things, all reasonable fees and disbursements of one counsel selected by
the holders of a majority of the Registrable Securities being registered in the
case of a piggyback registration, or one counsel selected by Warburg in the case
of a demand registration requested by Warburg and one counsel selected by the
holder or holders of at least a majority of the Kojaian Registrable Securities
in the case of a demand registration requested by the Kojaian Purchasers;
PROVIDED, HOWEVER, that the Company will not be responsible for the underwriting
discounts and commissions and transfer taxes, if any, and certain fees and
disbursements of counsel to the underwriters. The Registration Rights Agreement
contains customary indemnification and contribution provisions relating to the
exercise by the holders of Registrable Securities of their registration rights
thereunder.
A copy of the Registration Rights Agreement is attached hereto as
Exhibit 5 and is incorporated herein by reference in its entirety. The summary
of the Registration Rights Agreement contained in this Schedule 13D is subject
to, and is qualified in its entirety by, all of the provisions contained in the
Registration Rights Agreement.
A copy of each of the Tri-Party Agreement, Warrant No. 20, Warrant No.
22 and the Warburg/Hanauer Letter is attached hereto as Exhibits 1, 2, 3 and 4
respectively, and such agreements, and the descriptions contained in Item 4, are
incorporated herein by reference in their entirety. Each of the summaries of
Exhibits 1, 2, 3 and 4 contained in this Schedule 13D is subject to, and is
qualified in its entirety by, all of the provisions contained in the respective
Exhibit.
Except as described above, there are no contracts, arrangements,
understandings or relationships (legal or otherwise) between the person named in
Item 2 hereof and any other person with respect to any securities of the
Company, including but not limited to transfer or voting of any other
securities, finder's fees, joint ventures, loan or option arrangements, puts or
calls, guarantees of profits, divisions of profits or loss, or the giving or
withholding of proxies.
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ITEM 7. MATERIAL TO BE FILED AS EXHIBITS.
Exhibit 1. Tri-Party Agreement dated as of December 11, 1996 by and
among Grubb & Ellis Company, a Delaware corporation,
Warburg, Pincus Investors, L.P., a Delaware limited
partnership, and Joe F. Hanauer.
Exhibit 2. Stock Subscription Warrant No. 20 issued to Joe F. Hanauer
to purchase 14,286 shares of Common Stock of Grubb & Ellis
Company, a Delaware corporation.
Exhibit 3. Stock Subscription Warrant No. 22 issued to Joe F. Hanauer
to purchase 10,714 shares of Common Stock of Grubb & Ellis
Company, a Delaware corporation.
Exhibit 4. Letter Agreement by and among Warburg, Pincus Investors,
L.P., a Delaware limited partnership, and Joe F. Hanauer.
Exhibit 5. Registration Rights Agreement dated as of December 11, 1996
by and among Grubb & Ellis Company, a Delaware corporation,
Warburg, Pincus Investors, L.P., a Delaware limited
partnership, Joe F. Hanauer, Mike Kojaian, Kenneth J.
Kojaian and C. Michael Kojaian.
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SIGNATURE
After reasonable inquiry and to the best of his knowledge and belief,
the undersigned certifies that the information set forth in this statement is
true, complete and correct.
Dated: December 19, 1996
By: /s/ Joe F. Hanauer
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Joe F. Hanauer
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Exhibit Index
Exhibit 1. Tri-Party Agreement dated as of December 11, 1996 by and
among Grubb & Ellis Company, a Delaware corporation,
Warburg, Pincus Investors, L.P., a Delaware limited
partnership, and Joe F. Hanauer.
Exhibit 2. Stock Subscription Warrant No. 20 issued to Joe F. Hanauer
to purchase 14,286 shares of Common Stock of Grubb & Ellis
Company, a Delaware corporation.
Exhibit 3. Stock Subscription Warrant No. 22 issued to Joe F. Hanauer
to purchase 10,714 shares of Common Stock of Grubb & Ellis
Company, a Delaware corporation.
Exhibit 4. Letter Agreement by and among Warburg, Pincus Investors,
L.P., a Delaware limited partnership, and Joe F. Hanauer.
Exhibit 5. Registration Rights Agreement dated as of December 11, 1996
by and among Grubb & Ellis Company, a Delaware corporation,
Warburg, Pincus Investors, L.P., a Delaware limited
partnership, Joe F. Hanauer, Mike Kojaian, Kenneth J.
Kojaian and C. Michael Kojaian.
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Exhibit 1
TRI-PARTY AGREEMENT
This agreement (the "Agreement") is dated as of December 11, 1996 by and among
Grubb & Ellis Company (the "Company"), Warburg Pincus Investors L.P. ("Warburg")
and Joe F. Hanauer ("Hanauer").
RECITALS
I. On October 22, 1996, pursuant to an agreement dated October 21, 1996
between Warburg and The Prudential Insurance Company of America ("Prudential")
(the "Prudential/Warburg Agreement"), Warburg acquired from Prudential the
following securities of the Company for $23,000,000 (plus accrued interest of
$318,034.72 which was paid by the Company):
(a) $5,000,000 Principal Amount Amended and Restated Revolving Credit Note
due November 1, 1999; (b) $6,500,000 Principal Amount Amended and Restated 9.90%
Senior Note due November 1, 1998; (c) $3,500,000 Principal Amount Amended and
Restated 9.90% Senior Note due November 1, 1998 ((a), (b) and (c) above are
sometimes collectively referred to hereinafter as the "Senior Notes"); (d)
$10,900,834.33 Principal Amount Amended and Restated 10.65% Subordinated
Payment-In-Kind Note due November 1, 2001; (e) $1,520,058.79 Principal Amount
11.65% Subordinated Payment-In-Kind Note, due November 1, 2001; (f) $723,517.03
Principal Amount 11.65% Subordinated Payment-In-Kind Note, due November 1, 2001
((d), (e) and (f) above are sometimes collectively referred to hereinafter as
the "PIK Notes"); (g) 130,233 shares of Junior Convertible Preferred Stock; (h)
Restated Stock Subscription Warrant No. 16 to subscribe for 200,000 shares of
the Company's Common Stock ("Pru Warrant No. 16"); and (i) New Stock
Subscription Warrant No. 17 to subscribe for 150,000 shares of the Company's
Common Stock ("Pru Warrant No. 17") ((h) and (i) above are sometimes
collectively referred to hereinafter as the "Prudential Warrants") issued
pursuant to (i) that certain Senior Note, the Subordinated Note and Revolving
Credit Note Agreement between the Company and Prudential, dated as of November
2, 1992, as amended from time to time (the "Note Agreement") and (ii) that
certain Securities Purchase Agreement between the Company and Prudential, dated
as of November 2, 1992 (the "Securities Purchase Agreement"). The securities
set forth in (d) through (g) above are sometimes collectively referred to
hereinafter as the "Purchased Securities".
II. Also, on October 22, 1996, Warburg granted an option, through April 16,
1997, for the Company to acquire as an entirety, all of the securities in the
Company purchased by Warburg from Prudential as set forth in (a) through (i)
above (the "Option") at a purchase price equal to Warburg's cost ($23 million)
plus interest in an
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amount equal to 10% per annum through January 31, 1997 and 12% per annum
thereafter through April 16, 1997.
III. Warburg is the beneficial holder of 10,118,339 shares of the Company's
Common Stock through its ownership of (i) 4,277,433 shares of Common Stock, (ii)
128,266 shares of Series B Senior Preferred Stock which are convertible into an
aggregate of 4,828,548 shares of the Company's Common Stock and (iii) currently
exercisable warrants to purchase an aggregate of 1,012,358 shares of the
Company's Common Stock.
IV. Hanauer beneficially holds 951,963 shares of the Company's Common Stock
through his direct ownership of 13,293 shares of the Company's Common Stock and
through his ownership of the following securities held in a trust of which Mr.
Hanauer is the trustee and he and his wife and children are beneficiaries: (i)
67,806 shares of Common Stock, (ii) 8,894 shares of Series A Senior Preferred
Stock convertible into an aggregate of 339,629 shares of Common Stock, (iii)
currently exercisable warrants to purchase an aggregate of 323,541 shares of
Common Stock (the "Hanauer Warrants"), (iv) an option granted under a Company
stock option plan which is exercisable for 169,284 shares, and (v) warrants to
purchase 38,410 shares of Common Stock, which will be exercisable only under
certain circumstances ("Contingent Warrants").
V. The Company has entered into an agreement to sell to C. Michael Kojaian,
Mike Kojaian and Kenneth J. Kojaian 2,500,000 shares of the Company's Common
Stock at $4.00 per share (the "Kojaian Stock Purchase Agreement").
In consideration of the premises, and for good and valuable consideration,
the receipt of which is hereby acknowledged, the parties hereto desire to
complete the transactions set forth herein in this Agreement and agree as
follows:
1. Subject to the terms and conditions hereof, on the Closing Date (as
defined below):
(a) Warburg hereby agrees to sell, transfer and assign to the Company,
without recourse, representation or warranty of any kind except as set forth
herein, and the Company hereby agrees to purchase from Warburg, the Purchased
Securities for an aggregate purchase price equal to $10,000,000 plus accrued
interest of $69,315.07 (the "Purchase Price"); The PIK Notes shall be marked
"Canceled";
(b) The Prudential Warrants shall be amended to extend the term and
exercisability thereof to January 29, 2002;
(c) In consideration for Hanauer (i) converting his shares of Senior
Convertible Preferred Stock of the Company into Common Stock and (ii)
surrendering to the Company the Contingent Warrants, as more particularly set
forth below, Warburg agrees to transfer to Hanauer a portion of Pru Warrant No.
16, as amended pursuant to
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paragraph 1(b), representing the right to purchase 14,286 shares of the
Company's Common Stock, and a portion of Pru Warrant No. 17, as amended pursuant
to paragraph 1(b), representing the right to purchase 10,714 shares of the
Company's Common Stock;
(d) Warburg and Hanauer shall convert all of their shares of Senior
Convertible Preferred Stock of the Company into 4,828,548 and 339,629 shares,
respectively, of Company Common Stock;
(e) Warburg shall give notice to Prudential to convert all of the
19,767 shares of Junior Convertible Preferred Stock of the Company held by
Prudential into 352,447 shares of Company Common Stock, and Warburg shall use
reasonable efforts to cause Prudential to convert such Junior Convertible
Preferred Stock into Common Stock;
(f) Hanauer agrees to surrender to the Company the Contingent
Warrants to purchase 37,823 shares of Company Common Stock;
(g) The Company shall amend the Hanauer Warrants to extend the
expiration date thereof to January 29, 2002 and the anti-dilution provisions of
said warrants shall be amended to conform to the provisions of the Prudential
Warrants.
(h) The Stockholders' Agreement dated as of January 29, 1993, as
amended, among Warburg, Prudential, Hanauer and the Company shall be terminated;
(i) Warburg, the Company, Hanauer, C. Michael Kojaian, Mike Kojaian
and Kenneth J. Kojaian shall enter into a Registration Rights Agreement in the
form attached hereto as Exhibit A;
(j) The Company shall cancel the Contingent Warrants;
(k) The Company shall cancel the Purchased Securities; and
(l) Warburg will grant to the Company a new option (the "New Option")
attached hereto as Exhibit "B" and the Option will be canceled.
2. The Closing will take place on December 11, 1996 or such other date as
the parties hereto shall mutually agree (the "Closing Date") and on the Closing
Date the parties shall complete the matters set forth in Paragraph 1(b) through
1(j) above, and thereafter, following the closing under the Kojaian Stock
Purchase Agreement, (i) Warburg will deliver the Purchased Securities to the
Company, together with duly executed bond or stock powers, as applicable,
payable to the order of the Company, an incumbency certificate and such other
documents as the Company may reasonably request to terminate all of the
Company's obligations under the Note Agreement, and the PIK Notes, against
payment of $10,069,315.07 in immediately available funds to
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Warburg's account number, as prescribed by Warburg, (ii) Warburg shall assign to
the Company all of its right, title and interest in Prudential's warranties and
representations made to Warburg as set forth in the Prudential/Warburg
Agreement, and (iii) concurrently therewith, the parties shall complete the
matters set forth in Paragraph 1(k) and 1(l) above.
3. Warburg hereby represents and warrants as of the date hereof and as of
the Closing Date that: (a) Warburg is the sole legal, record and beneficial
owner of the Purchased Securities, and to the best of Warburg's knowledge,
Warburg has good title thereto; Warburg has no knowledge of any lien, claim,
option or other encumbrance by any person against the Purchased Securities being
transferred herein to the Company; to Warburg's knowledge, the representations
and warranties of Prudential pursuant to the Prudential/Warburg Agreement were
true and correct at the closing of the transactions under the Prudential/Warburg
Agreement; Warburg did not, prior to or during the period of time Warburg held
the Purchased Securities, by any action or inaction, directly or indirectly, in
whole or in part, cause any lien, claim, option or other encumbrance to occur
with respect to the Purchased Securities, or any of them; at the Closing,
Warburg will assign all of its right, title and interest in Prudential's
warranties and representations made to Warburg as set forth in the
Prudential/Warburg Agreement to the Company; (b) Warburg has full power,
authority and legal right to sell the Purchased Securities; and (c) Warburg has
been the sole beneficial owner of the Purchased Securities since October 22,
1996.
4. As of the date hereof and as of the Closing Date, the Company hereby
represents that: (a) it has full power, authority and legal right to acquire the
Purchased Securities; and (b) with respect to the conversion of their Senior
Convertible Preferred Stock of the Company into Common Stock, the Company is not
receiving any consideration from Hanauer and Warburg for the issuance of the
Common Stock of the Company to them other than the Senior Convertible Preferred
Stock to be surrendered for conversion. The Common Stock to be issued hereunder
will be validly issued, fully paid and nonassessable.
5. (a) Warburg hereby represents and warrants that as of the date hereof
and, as of the Closing Date, its ownership of the Company's securities as set
forth in Recital III is true and correct;
(b) Hanauer hereby represents and warrants that as of the date hereof
and, as of the Closing Date, his ownership of the Company's securities as set
forth in Recital IV is true and correct.
6. (a) Warburg and Hanauer hereby irrevocably waive any claims against
the Company or any of its affiliates or representatives based upon any matter
arising out of or related to the transactions contemplated by this Agreement,
including non-disclosure of any information relating to the Company, except with
respect to the
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representations contained in this Agreement and in the documents delivered
pursuant to this Agreement.
(b) Warburg, on behalf of itself and for all of its affiliates,
hereby waives any and all Defaults or Events of Default (each as defined in the
Note Agreement) that exist or may exist as of the Closing Date under the Note
Agreement.
7. The obligations of each of the Company, Warburg and Hanauer under this
Agreement are subject to and conditioned upon the satisfaction at or prior to
the Closing of each of the following conditions (unless waived by such party in
writing):
(a) REPRESENTATIONS AND WARRANTIES. All representations and
warranties of each other party contained in this Agreement and in any agreements
or instruments to be delivered pursuant hereto shall be true and correct at and
as of the Closing Date; and
(b) PERFORMANCE. Each other party shall have performed and complied
with all agreements and conditions required by this Agreement to be performed or
complied with by it on or prior to the Closing Date, including execution and
delivery of the documents contemplated by this Agreement; and
(c) NO PROCEEDINGS. No action, suit, investigation or legal or
administrative claim or proceeding shall be pending or threatened before any
court, governmental agency or regulatory authority which may result in the
restraint, prohibition, or the obtaining of damages or other relief in respect
of, or which is related to or arises out of, the consummation of transactions
contemplated by this Agreement; and
(d) The Company shall have obtained equity financing of at least Ten
Million Dollars ($10,000,000) pursuant to the closing of the Kojaian Stock
Purchase Agreement.
8. Each party hereto shall execute and deliver all further documents or
instruments reasonably requested by the other party in order to effect the
intent and purposes of this Agreement and obtain the full benefit of this
Agreement.
9. THIS AGREEMENT SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH
THE LAWS OF THE STATE OF NEW YORK WITHOUT REFERENCE TO THE CONFLICTS OF LAWS
PROVISIONS THEREOF AND SHALL BE BINDING UPON AND INURE TO THE BENEFIT OF THE
PARTIES HERETO AND THEIR RESPECTIVE SUCCESSORS AND ASSIGNS.
10. This Agreement, together with the exhibits hereof, constitutes the
complete agreement of the parties with respect to the subject matter hereof, and
supersedes all prior communications and agreements of the parties with respect
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thereto, all of which have become merged and integrated into this Agreement.
This Agreement cannot be amended, modified or waived, except by a writing
executed by each of the parties hereto.
11. This Agreement may be executed in two or more counterparts, each of
which shall be deemed an original but which together shall constitute one and
the same instrument.
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IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
executed as of the date first above written.
WARBURG, PINCUS INVESTORS, L.P.
By: Warburg, Pincus & Company, L.P.
its General Partner
By: /s/ John Santoleri
-----------------------------------------------
Name: John Santoleri
Title: Partner
GRUBB & ELLIS COMPANY
By: /s/ Robert J. Walner
-----------------------------------------------
Name: Robert J. Walner
Title: Senior Vice President and General Counsel
/s/ Joe F. Hanauer
--------------------------------------------------
JOE F. HANAUER
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Exhibit 2
Stock Subscription Warrant to Subscribe for
14,286 Shares of Common Stock
Stock Subscription Warrant No. 20
THIS STOCK SUBSCRIPTION WARRANT AND ANY SHARES ACQUIRED UPON THE
EXERCISE OF THIS STOCK SUBSCRIPTION WARRANT HAVE NOT BEEN REGISTERED UNDER THE
SECURITIES ACT OF 1933, AS AMENDED. NEITHER THIS STOCK SUBSCRIPTION WARRANT NOR
ANY OF SUCH SHARES MAY BE SOLD OR TRANSFERRED IN THE ABSENCE OF SUCH
REGISTRATION OR AN EXEMPTION THEREFROM UNDER SAID ACT.
STOCK SUBSCRIPTION WARRANT
To Subscribe for and Purchase Shares
of Common Stock of
GRUBB & ELLIS COMPANY
THIS CERTIFIES THAT, for value received,
JOE F. HANAUER TRUST ("HANAUER") 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
FOURTEEN THOUSAND TWO HUNDRED EIGHTY SIX
fully paid and nonassessable shares of the Company's common stock, par value
$0.01 per share (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.
This Stock Subscription Warrant is being issued pursuant to the Agreement. The
term "Warrant," 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
<PAGE>
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, 2002.
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
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<PAGE>
such action as may be necessary to assure that such shares of Common Stock may
be so issued without violation of any applicable law or regulation and will be
approved for listing on any domestic securities exchange upon which the Common
Stock may be listed. The Company further covenants and agrees that it will, at
any time, at its expense, promptly list on each national securities exchange on
which any Capital Stock is at the time listed, upon official notice of issuance,
Common Stock issuable upon the exercise of any Warrant as provided in paragraph
1 hereof, and maintain such listing of all shares of Common Stock from time to
time issuable upon such exercise, and will, at any time, register under the
Securities Exchange Act of 1934, as amended, all shares of Common Stock from
time to time issuable upon such exercise if and at the time that any existing
shares of Capital Stock are so registered.
4. ANTI-DILUTION PROVISIONS. The Exercise Price set forth above
shall be subject to adjustment from time to time as hereinafter provided. For
purposes of this paragraph 4, the term "Capital Stock" as used herein includes
the Company's Common Stock and shall also include any capital stock of any class
of the Company hereafter authorized which shall not be limited to a fixed sum or
percentage in respect of the rights of the holders thereof to participate in
dividends and in the distribution of assets upon the voluntary or involuntary
liquidation, dissolution or winding up of the Company; provided that the shares
purchasable pursuant to this Warrant shall include only Common Stock. Upon each
adjustment of the Exercise Price, this Warrant shall thereafter represent the
right to purchase, at the Exercise Price resulting from such adjustment, the
largest number of shares of Common Stock obtained by multiplying the Exercise
Price in effect immediately prior to such adjustment by the number of shares of
Common Stock purchasable thereunder immediately prior to such adjustment and
dividing the product thereof by the Exercise Price resulting from such
adjustment.
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
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<PAGE>
accordance with the terms hereof and thereof and, together with such other
matters as such holders may reasonably request.
In case the Company shall (i) pay a dividend in shares of Capital
Stock or securities convertible into Capital Stock or make a distribution to all
holders of shares of Capital Stock in shares of Capital Stock or securities
convertible into Capital Stock, (ii) subdivide its outstanding shares of Capital
Stock, (iii) combine its outstanding shares of Capital Stock into a smaller
number of shares of Capital Stock or (iv) issue by reclassification of its
shares of Capital Stock other securities of the Corporation, the Exercise Price
shall be adjusted (to the nearest cent) by multiplying the Exercise Price
immediately prior to such adjustment by a fraction, of which the numerator shall
be the number of shares of Capital Stock outstanding immediately prior to the
occurrence of such event, and of which the denominator shall be the number of
shares of Capital Stock outstanding (including any convertible securities issued
pursuant to clause (i) or (iv) above on an as converted basis) immediately
thereafter. An adjustment made pursuant to the foregoing sentence shall become
effective immediately after the effective date of such event retroactive to the
record date, if any, for such event.
(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;
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<PAGE>
(iii) the Company shall offer for subscription pro rata to the
holders of Capital Stock any additional shares of stock of any class or
other rights;
(iv) there shall be any capital reorganization, or
reclassification of the Capital Stock of the Company, or consolidation or
merger of the Company with, or sale of all or substantially all of its
assets to, another corporation or other entity;
(v) there shall be a voluntary or involuntary dissolution,
liquidation or winding-up of the Company; or
(vi) there shall be any other Transaction;
then, in any one or more of such cases, the Company shall give to the holder of
each Warrant (a) at least 15 days prior to any event referred to in clause (i)
or (ii) above, at least 30 days prior to any event referred to in clause (iii),
(iv) or (v) above, and within five business days after it has knowledge of any
pending Transaction, written notice of the date on which the books of the
Company shall close or a record shall be taken for such dividend, distribution
or subscription rights or for determining rights to vote in respect of any such
reorganization, reclassification, consolidation, merger, sale, dissolution,
liquidation, winding-up or Transaction and (b) in the case of any such
reorganization, reclassification, consolidation, merger, sale, dissolution,
liquidation, winding-up or Transaction 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
5
<PAGE>
may validly and legally issue fully paid and nonassessable shares of Common
Stock upon the exercise of all Warrants from time to time outstanding, (iii)
will not take any action which results in any adjustment of the number of shares
of Common Stock issuable after the action upon the exercise of all of the
Warrants would exceed the total number of shares of Common Stock then authorized
by the Company's certificate of incorporation and available for the purpose of
issue upon such exercise, and (iv) will not issue any capital stock of any class
which has the right to more than one vote per share or any capital stock of any
class which is preferred as to dividends or as to the distribution of assets
upon voluntary or involuntary dissolution, liquidation or winding-up, unless the
rights of the holders thereof shall be limited to a fixed sum or percentage (or
floating rate related to market yields) of par value or stated value in aspect
of participation in dividends and a fixed sum or percentage of par value or
stated value in any such distribution of assets.
(b) SUCCESSORS AND ASSIGNS. This Warrant will be binding upon any
entity succeeding to the Company by merger, consolidation or acquisition of all
or substantially all of the Company's assets.
(c) ISSUANCE OF WARRANT SECURITIES. If the issuance of any Warrant
Shares required to be reserved for purposes of exercise of this Warrant or for
the conversion of such Warrant Shares requires registration with or approval of
any Federal governmental authority under any Federal or state law (other than
any registration under the Securities Act) or listing on any national securities
exchange, before such shares may be issued upon exercise of this Warrant, the
Company will, at its expense, use its best efforts to cause such shares to be
duly registered or approved, or listed on the relevant national securities
exchange, as the case may be, at such time, so that such shares may be issued in
accordance with the terms hereof and so converted.
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
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<PAGE>
financial statements, reports, notices and proxy statements sent or made
available generally by the Company to its stockholders, and copies of all
regular and periodic reports and all registration statements and prospectuses
filed by the Company with any securities exchange or with the Securities and
Exchange Commission.
10. NO RIGHTS OR LIABILITIES AS A STOCKHOLDER. This Warrant shall
not entitle the holder hereof to any voting rights or other rights as a
stockholder of the Company. No provision of this Warrant, in the absence of
affirmative action by the holder hereof to purchase Warrant Shares, and no mere
enumeration herein of the rights or privileges of the holder hereof, shall give
rise to any liability of such holder for the Exercise Price or as a stockholder
of the Company, whether such liability is asserted by the Company or by
creditors of the Company.
11. TRANSFER AND EXCHANGE.
(a) (1) The transfer of this Warrant and all rights hereunder, in
whole or in part, is registrable at the office or agency of the Company referred
to below by the holder hereof in person or by his duly authorized attorney, upon
surrender of this Warrant properly endorsed. Each taker and holder of this
Warrant, by taking or holding the same, consents and agrees that this Warrant,
when endorsed in blank, shall be deemed negotiable, and that the holder hereof,
when this Warrant shall have been so endorsed, may be treated by the Company and
all other persons dealing with this Warrant as the absolute owner and holder
hereof for any purpose and as the person entitled to exercise the rights
represented by this Warrant, or to the registration of transfer hereof on the
books of the Company; and until due presentment for registration of transfer on
such books the Company may treat the registered holder hereof as the owner and
holder for all purposes, and the Company shall not be affected by notice to the
contrary.
(2) The holder of this Warrant, by acceptance hereof, understands
that the Warrant Securities are characterized as "restricted securities" under
the federal securities laws inasmuch as they are being or will be acquired from
the Company in a transaction not involving a public offering and that under such
laws and applicable regulations such Warrant Securities may be resold without
registration under the Securities Act only in certain limited circumstances.
The holder of this Warrant, by acceptance hereof, agrees to comply with all
applicable laws (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)(v) of Rule 502 of Regulation D under the Securities
Act.
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Without in any way limiting the foregoing, the holder hereof further
agrees not to make any disposition of all or any portion of the Warrant
Securities unless and until:
(x) There is then in effect a Registration Statement under the
Securities Act covering such proposed disposition and such disposition is made
in accordance with such Registration Statement; or
(y) (i) The holder hereof shall have notified the Company of the
proposed disposition and shall have furnished the Company with a detailed
statement of the circumstances surrounding the proposed disposition, and (ii)
shall have furnished the Company with an opinion of counsel, reasonably
satisfactory to the Company (it being understood that if the holder of this
Warrant is a party to the Agreement, counsel who is such party's employee shall
be deemed reasonably satisfactory to the Company), that such disposition will
not require registration of such Warrant Securities under the Securities Act.
(b) REGISTER. The Company shall maintain, at the principal office of
the Company (or such other office or agency of the Company in New York, New York
or San Francisco, California as it may designate by notice to the holder
hereof), a register for the Warrants, in which the Company shall record the name
and address of the person in whose name a Warrant has been issued, as well as
the name and address of each transferee and each prior owner of such Warrant.
Within 10 days after any holder of Warrants shall by notice request the same,
the Company will deliver to such holder a certificate, signed by one of its
officers, listing the name and address of every other holder of Warrants and/or
Warrant Shares, as such information appears in said register and in the stock
transfer books of the Company at the close of business on the day before such
certificate is signed.
(c) WARRANTS EXCHANGEABLE FOR DIFFERENT DENOMINATIONS. This Warrant
is exchangeable, upon the surrender hereof by the holder hereof at the office or
agency of the Company referred to in paragraph 11(b), for new Warrants of like
tenor representing in the aggregate the right to subscribe for and purchase the
number of shares which may be subscribed for and purchased hereunder of Common
Stock, each of such new Warrants to represent the right to subscribe for and
purchase such number of shares as shall be designated by said holder hereof at
the time of such surrender.
(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
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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
10275 West Higgins Road, Suite 300, Rosemont, Illinois 60018, Attention: Chief
Financial Officer, with a copy to General Counsel, or at such other address as
shall have been furnished to the holders of Warrants by notice from the Company.
Any such notice, request or other communication may be sent by telegram or
telex, but shall in such case be subsequently confirmed by a writing delivered
or sent by certified or registered mail as provided above. All notices shall be
deemed to have been given either at the time of the delivery thereof to (or the
receipt by, in the case of a telegram or telex) any officer or employee of the
person entitled to receive such notice at the address of such person for
purposes of this paragraph 12, or, if mailed, at the completion of the third
full day following the time of such mailing thereof to such address, as the case
may be.
13. GOVERNING LAW. This Warrant shall be construed in accordance
with and governed by the laws of the State of New York without regard to the
principles of conflicts of laws.
14. REMEDIES. The Company stipulates that the remedies at law of the
holder of this Warrant in the event of any default or threatened default by the
Company in the performance of or compliance with any of the terms of this
Warrant are not and will not be adequate, and that such terms may be
specifically enforced by a decree for the specific performance of any agreement
contained herein or by an injunction against a violation of any of the terms
hereof or otherwise.
15. DEFINITIONS. For the purpose of this Warrant, the following
terms shall have the following meanings:
"AGREEMENT" shall mean the Tri-Party Agreement dated December 11, 1996
by and among the Company, Warburg, Pincus Investors, L.P. and Joe F. Hanauer.
"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.
"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
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price of shares of each such class of Capital Stock or if no such sale takes
place on such date, the average of the highest closing bid and lowest closing
asked prices thereof on such date, in each case as officially reported on all
national securities exchanges on which each such class of Capital Stock is then
listed or admitted to trading, or (B) if no shares of any class of Capital Stock
are then listed or admitted to trading on any national securities exchange, the
highest closing price of any class of Capital Stock on such date in the
over-the-counter market as shown by NASDAQ or, if no such shares of any class of
Capital Stock are then quoted in such system, as published by the National
Quotation Bureau, Incorporated or any similar successor organization, and in
either case as reported by any member firm of the New York Stock Exchange
selected by the Company. If no shares of any class of Capital Stock are then
listed or admitted to trading on any national securities exchange and if no
closing bid and asked prices thereof are then so quoted or published in the
over-the-counter market, "Market Price" shall mean the higher of (x) the book
value per share of Capital Stock (assuming for the purposes of this calculation
the economic equivalence of all shares of all classes of Capital Stock) as
determined on a fully diluted basis in accordance with generally accepted
accounting principles by a firm of independent public accountants of recognized
standing (which may be its regular auditors) selected by the Board of Directors
of the Company as of the last day of any month ending within 60 days preceding
the date as of which the determination is to be made or (y) the fair value per
share of Capital Stock (assuming for the purposes of this calculation the
economic equivalence of all shares of all classes of Capital Stock), as
determined on a fully diluted basis in good faith by an independent brokerage
firm or Standard & Poor's Corporation (as selected by the Board of Directors of
the Company), as of a date which is 15 days preceding the date as of which the
determination is to be made.
"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.
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"WARBURG/HANAUER WARRANTS" shall mean (i) this Stock Subscription
Warrant No. 20, (ii) the Stock Subscription Warrant No. 21 issued to Warburg,
Pincus Investors, L.P. to purchase 185,714 shares of Common Stock, (iii) the
Stock Subscription Warrant No. 22 issued to Joe F. Hanauer Trust to purchase
10,714 shares of Common Stock, and (iv) the Stock Subscription Warrant No. 23
issued to Warburg, Pincus Investors, L.P. to purchase 139,286 shares of Common
Stock, and including any amendments to the warrants referred to in (i), (ii),
(iii) and (iv) of this definition.
"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 Warburg/Hanauer 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/Hanauer 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.
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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 December 11, 1996.
GRUBB & ELLIS COMPANY
By /s/ Robert J. Walner
----------------------------
Attest:
By /s/ Carol Vanairsdale
----------------------------
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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 3
---------
Stock Subscription Warrant to Subscribe for
10,714 Shares of Common Stock
Stock Subscription Warrant No. 22
THIS STOCK SUBSCRIPTION WARRANT AND ANY SHARES ACQUIRED UPON THE
EXERCISE OF THIS STOCK SUBSCRIPTION WARRANT HAVE NOT BEEN REGISTERED UNDER THE
SECURITIES ACT OF 1933, AS AMENDED. NEITHER THIS STOCK SUBSCRIPTION WARRANT NOR
ANY OF SUCH SHARES MAY BE SOLD OR TRANSFERRED IN THE ABSENCE OF SUCH
REGISTRATION OR AN EXEMPTION THEREFROM UNDER SAID ACT.
STOCK SUBSCRIPTION WARRANT
To Subscribe for and Purchase Shares
of Common Stock of
GRUBB & ELLIS COMPANY
THIS CERTIFIES THAT, for value received,
JOE F. HANAUER TRUST 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
TEN THOUSAND SEVEN HUNDRED FOURTEEN
fully paid and nonassessable shares of the Company's common stock, par value
$0.01 per share (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.
This Stock Subscription Warrant is being issued pursuant to the Agreement. The
term "Warrant," 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
<PAGE>
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, 2002.
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
2
<PAGE>
such action as may be necessary to assure that such shares of Common Stock may
be so issued without violation of any applicable law or regulation and will be
approved for listing on any domestic securities exchange upon which the Common
Stock may be listed. The Company further covenants and agrees that it will, at
any time, at its expense, promptly list on each national securities exchange on
which any Capital Stock is at the time listed, upon official notice of issuance,
Common Stock issuable upon the exercise of any Warrant as provided in paragraph
1 hereof, and maintain such listing of all shares of Common Stock from time to
time issuable upon such exercise, and will, at any time, register under the
Securities Exchange Act of 1934, as amended, all shares of Common Stock from
time to time issuable upon such exercise if and at the time that any existing
shares of Capital Stock are so registered.
4. ANTI-DILUTION PROVISIONS. The Exercise Price set forth above
shall be subject to adjustment from time to time as hereinafter provided. For
purposes of this paragraph 4, the term "Capital Stock" as used herein includes
the Company's Common Stock and shall also include any capital stock of any class
of the Company hereafter authorized which shall not be limited to a fixed sum or
percentage in respect of the rights of the holders thereof to participate in
dividends and in the distribution of assets upon the voluntary or involuntary
liquidation, dissolution or winding up of the Company; provided that the shares
purchasable pursuant to this Warrant shall include only Common Stock. Upon each
adjustment of the Exercise Price, this Warrant shall thereafter represent the
right to purchase, at the Exercise Price resulting from such adjustment, the
largest number of shares of Common Stock obtained by multiplying the Exercise
Price in effect immediately prior to such adjustment by the number of shares of
Common Stock purchasable thereunder immediately prior to such adjustment and
dividing the product thereof by the Exercise Price resulting from such
adjustment.
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
3
<PAGE>
accordance with the terms hereof and thereof and, together with such other
matters as such holders may reasonably request.
In case the Company shall (i) pay a dividend in shares of Capital
Stock or securities convertible into Capital Stock or make a distribution to all
holders of shares of Capital Stock in shares of Capital Stock or securities
convertible into Capital Stock, (ii) subdivide its outstanding shares of Capital
Stock, (iii) combine its outstanding shares of Capital Stock into a smaller
number of shares of Capital Stock or (iv) issue by reclassification of its
shares of Capital Stock other securities of the Corporation, the Exercise Price
shall be adjusted (to the nearest cent) by multiplying the Exercise Price
immediately prior to such adjustment by a fraction, of which the numerator shall
be the number of shares of Capital Stock outstanding immediately prior to the
occurrence of such event, and of which the denominator shall be the number of
shares of Capital Stock outstanding (including any convertible securities issued
pursuant to clause (i) or (iv) above on an as converted basis) immediately
thereafter. An adjustment made pursuant to the foregoing sentence shall become
effective immediately after the effective date of such event retroactive to the
record date, if any, for such event.
(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;
4
<PAGE>
(iii) the Company shall offer for subscription pro rata to the
holders of Capital Stock any additional shares of stock of any class or
other rights;
(iv) there shall be any capital reorganization, or reclassification
of the Capital Stock of the Company, or consolidation or merger of the
Company with, or sale of all or substantially all of its assets to, another
corporation or other entity;
(v) there shall be a voluntary or involuntary dissolution,
liquidation or winding-up of the Company; or
(vi) there shall be any other Transaction;
then, in any one or more of such cases, the Company shall give to the holder of
each Warrant (a) at least 15 days prior to any event referred to in clause (i)
or (ii) above, at least 30 days prior to any event referred to in clause (iii),
(iv) or (v) above, and within five business days after it has knowledge of any
pending Transaction, written notice of the date on which the books of the
Company shall close or a record shall be taken for such dividend, distribution
or subscription rights or for determining rights to vote in respect of any such
reorganization, reclassification, consolidation, merger, sale, dissolution,
liquidation, winding-up or Transaction and (b) in the case of any such
reorganization, reclassification, consolidation, merger, sale, dissolution,
liquidation, winding-up or Transaction 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
5
<PAGE>
may validly and legally issue fully paid and nonassessable shares of Common
Stock upon the exercise of all Warrants from time to time outstanding, (iii)
will not take any action which results in any adjustment of the number of shares
of Common Stock issuable after the action upon the exercise of all of the
Warrants would exceed the total number of shares of Common Stock then authorized
by the Company's certificate of incorporation and available for the purpose of
issue upon such exercise, and (iv) will not issue any capital stock of any class
which has the right to more than one vote per share or any capital stock of any
class which is preferred as to dividends or as to the distribution of assets
upon voluntary or involuntary dissolution, liquidation or winding-up, unless the
rights of the holders thereof shall be limited to a fixed sum or percentage (or
floating rate related to market yields) of par value or stated value in aspect
of participation in dividends and a fixed sum or percentage of par value or
stated value in any such distribution of assets.
(b) SUCCESSORS AND ASSIGNS. This Warrant will be binding upon any
entity succeeding to the Company by merger, consolidation or acquisition of all
or substantially all of the Company's assets.
(c) ISSUANCE OF WARRANT SECURITIES. If the issuance of any Warrant
Shares required to be reserved for purposes of exercise of this Warrant or for
the conversion of such Warrant Shares requires registration with or approval of
any Federal governmental authority under any Federal or state law (other than
any registration under the Securities Act) or listing on any national securities
exchange, before such shares may be issued upon exercise of this Warrant, the
Company will, at its expense, use its best efforts to cause such shares to be
duly registered or approved, or listed on the relevant national securities
exchange, as the case may be, at such time, so that such shares may be issued in
accordance with the terms hereof and so converted.
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
6
<PAGE>
financial statements, reports, notices and proxy statements sent or made
available generally by the Company to its stockholders, and copies of all
regular and periodic reports and all registration statements and prospectuses
filed by the Company with any securities exchange or with the Securities and
Exchange Commission.
10. NO RIGHTS OR LIABILITIES AS A STOCKHOLDER. This Warrant shall
not entitle the holder hereof to any voting rights or other rights as a
stockholder of the Company. No provision of this Warrant, in the absence of
affirmative action by the holder hereof to purchase Warrant Shares, and no mere
enumeration herein of the rights or privileges of the holder hereof, shall give
rise to any liability of such holder for the Exercise Price or as a stockholder
of the Company, whether such liability is asserted by the Company or by
creditors of the Company.
11. TRANSFER AND EXCHANGE.
(a) (1) The transfer of this Warrant and all rights hereunder, in
whole or in part, is registrable at the office or agency of the Company referred
to below by the holder hereof in person or by his duly authorized attorney, upon
surrender of this Warrant properly endorsed. Each taker and holder of this
Warrant, by taking or holding the same, consents and agrees that this Warrant,
when endorsed in blank, shall be deemed negotiable, and that the holder hereof,
when this Warrant shall have been so endorsed, may be treated by the Company and
all other persons dealing with this Warrant as the absolute owner and holder
hereof for any purpose and as the person entitled to exercise the rights
represented by this Warrant, or to the registration of transfer hereof on the
books of the Company; and until due presentment for registration of transfer on
such books the Company may treat the registered holder hereof as the owner and
holder for all purposes, and the Company shall not be affected by notice to the
contrary.
(2) The holder of this Warrant, by acceptance hereof, understands
that the Warrant Securities are characterized as "restricted securities" under
the federal securities laws inasmuch as they are being or will be acquired from
the Company in a transaction not involving a public offering and that under such
laws and applicable regulations such Warrant Securities may be resold without
registration under the Securities Act only in certain limited circumstances.
The holder of this Warrant, by acceptance hereof, agrees to comply with all
applicable laws (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)(v) of Rule 502 of Regulation D under the Securities
Act.
7
<PAGE>
Without in any way limiting the foregoing, the holder hereof further
agrees not to make any disposition of all or any portion of the Warrant
Securities unless and until:
(x) There is then in effect a Registration Statement under the
Securities Act covering such proposed disposition and such disposition is made
in accordance with such Registration Statement; or
(y) (i) The holder hereof shall have notified the Company of the
proposed disposition and shall have furnished the Company with a detailed
statement of the circumstances surrounding the proposed disposition, and (ii)
shall have furnished the Company with an opinion of counsel, reasonably
satisfactory to the Company (it being understood that if the holder of this
Warrant is a party to the Agreement, counsel who is such party's employee shall
be deemed reasonably satisfactory to the Company), that such disposition will
not require registration of such Warrant Securities under the Securities Act.
(b) REGISTER. The Company shall maintain, at the principal office of
the Company (or such other office or agency of the Company in New York, New York
or San Francisco, California as it may designate by notice to the holder
hereof), a register for the Warrants, in which the Company shall record the name
and address of the person in whose name a Warrant has been issued, as well as
the name and address of each transferee and each prior owner of such Warrant.
Within 10 days after any holder of Warrants shall by notice request the same,
the Company will deliver to such holder a certificate, signed by one of its
officers, listing the name and address of every other holder of Warrants and/or
Warrant Shares, as such information appears in said register and in the stock
transfer books of the Company at the close of business on the day before such
certificate is signed.
(c) WARRANTS EXCHANGEABLE FOR DIFFERENT DENOMINATIONS. This Warrant
is exchangeable, upon the surrender hereof by the holder hereof at the office or
agency of the Company referred to in paragraph 11(b), for new Warrants of like
tenor representing in the aggregate the right to subscribe for and purchase the
number of shares which may be subscribed for and purchased hereunder of Common
Stock, each of such new Warrants to represent the right to subscribe for and
purchase such number of shares as shall be designated by said holder hereof at
the time of such surrender.
(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
8
<PAGE>
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
10275 West Higgins Road, Suite 300, Rosemont, Illinois 60018, Attention: Chief
Financial Officer, with a copy to General Counsel, or at such other address as
shall have been furnished to the holders of Warrants by notice from the Company.
Any such notice, request or other communication may be sent by telegram or
telex, but shall in such case be subsequently confirmed by a writing delivered
or sent by certified or registered mail as provided above. All notices shall be
deemed to have been given either at the time of the delivery thereof to (or the
receipt by, in the case of a telegram or telex) any officer or employee of the
person entitled to receive such notice at the address of such person for
purposes of this paragraph 12, or, if mailed, at the completion of the third
full day following the time of such mailing thereof to such address, as the case
may be.
13. GOVERNING LAW. This Warrant shall be construed in accordance
with and governed by the laws of the State of New York without regard to the
principles of conflicts of laws.
14. REMEDIES. The Company stipulates that the remedies at law of the
holder of this Warrant in the event of any default or threatened default by the
Company in the performance of or compliance with any of the terms of this
Warrant are not and will not be adequate, and that such terms may be
specifically enforced by a decree for the specific performance of any agreement
contained herein or by an injunction against a violation of any of the terms
hereof or otherwise.
15. DEFINITIONS. For the purpose of this Warrant, the following
terms shall have the following meanings:
"AGREEMENT" shall mean the Tri-Party Agreement dated December 11, 1996
by and among the Company, Warburg, Pincus Investors, L.P. and Joe F. Hanauer.
"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.
"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
9
<PAGE>
price of shares of each such class of Capital Stock or if no such sale takes
place on such date, the average of the highest closing bid and lowest closing
asked prices thereof on such date, in each case as officially reported on all
national securities exchanges on which each such class of Capital Stock is then
listed or admitted to trading, or (B) if no shares of any class of Capital Stock
are then listed or admitted to trading on any national securities exchange, the
highest closing price of any class of Capital Stock on such date in the
over-the-counter market as shown by NASDAQ or, if no such shares of any class of
Capital Stock are then quoted in such system, as published by the National
Quotation Bureau, Incorporated or any similar successor organization, and in
either case as reported by any member firm of the New York Stock Exchange
selected by the Company. If no shares of any class of Capital Stock are then
listed or admitted to trading on any national securities exchange and if no
closing bid and asked prices thereof are then so quoted or published in the
over-the-counter market, "Market Price" shall mean the higher of (x) the book
value per share of Capital Stock (assuming for the purposes of this calculation
the economic equivalence of all shares of all classes of Capital Stock) as
determined on a fully diluted basis in accordance with generally accepted
accounting principles by a firm of independent public accountants of recognized
standing (which may be its regular auditors) selected by the Board of Directors
of the Company as of the last day of any month ending within 60 days preceding
the date as of which the determination is to be made or (y) the fair value per
share of Capital Stock (assuming for the purposes of this calculation the
economic equivalence of all shares of all classes of Capital Stock), as
determined on a fully diluted basis in good faith by an independent brokerage
firm or Standard & Poor's Corporation (as selected by the Board of Directors of
the Company), as of a date which is 15 days preceding the date as of which the
determination is to be made.
"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.
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"WARBURG/HANAUER WARRANTS" shall mean (i) this Stock Subscription
Warrant No. 22, (ii) the Stock Subscription Warrant No. 20 issued to Joe F.
Hanauer Trust to purchase 14,286 shares of Common Stock, (iii) the Stock
Subscription Warrant No. 21 issued to Warburg, Pincus Investors, L.P. to
purchase 185,714 shares of Common Stock, and (iv) the Stock Subscription Warrant
No. 23 issued to Warburg, Pincus Investors, L.P. to purchase 139,286 shares of
Common Stock, and including any amendments to the warrants referred to in (i),
(ii), (iii) and (iv) of this definition.
"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 Warburg/Hanauer 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/Hanauer 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.
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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 December 11, 1996.
GRUBB & ELLIS COMPANY
By /s/ Robert J. Walner
-------------------------
Attest:
By /s/ Carol Vangirsdale
--------------------------
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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
[LETTERHEAD]
December 9, 1996
Mr. Joe Hanauer
Combined Investments
361 Forest Avenue
Suite #200
Laguna Beach, CA 92651
Dear Joe:
This letter shall confirm our understanding in connection with the Closing
of the transactions contemplated by the Tri-Party Agreement dated as of December
11, 1996 by and among Grubb & Ellis Company ("GBE"), Warburg, Pincus Investors,
L.P. ("WPI") and yourself that WPI will cause GBE Directors nominated by WPI to
nominate you for election as a Director of GBE at the 1997 and 1998 annual
meetings of shareholders of GBE to serve until the following annual meeting of
shareholders. WPI further agrees to vote all of its shares of Common Stock of
GBE in favor of your election as a Director.
Very truly yours,
Warburg, Pincus Investors, L.P.
by: Warburg, Pincus & Co.
/s/ Reuben S. Leibowitz
---------------------------------
by: Reuben S. Leibowitz
General Partner
<PAGE>
Exhibit 5
REGISTRATION RIGHTS AGREEMENT
This Registration Rights Agreement (this "Agreement"), dated as of
December 11, 1996, is 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"), C. Michael Kojaian, Mike Kojaian and
Kenneth J. Kojaian (collectively, the "Kojaian Investors").
WHEREAS, Warburg, Hanauer and the Kojaian Investors have entered into
certain agreements with the Company pursuant to which they purchased shares of
common stock of the Company (the "Common Stock") and/or securities convertible
into or exercisable for shares of Common Stock.
WHEREAS, the parties desire to provide for certain rights to register
such shares of Common Stock and such shares of Common Stock issued or issuable
upon conversion or exercise of any such securities under the Securities Act of
1933, as amended, in the manner and upon the terms and conditions set forth in
this Agreement.
NOW, THEREFORE, in consideration of the premises and of the terms and
conditions herein contained, the parties hereto mutually agree as follows:
1. DEFINITIONS.
1.1 DEFINED TERMS. In addition to the capitalized terms defined elsewhere
in this Agreement, as used in this Agreement the following terms shall have the
following meanings (with the singular to include the plural, except where the
context otherwise requires):
(a) "Affiliate" of a Person shall mean any Person directly or
indirectly controlling, controlled by, or under common control with such Person.
(b) "Board of Directors" shall mean the Board of Directors of the
Company.
(c) "Commission" shall mean the Securities and Exchange Commission.
(d) "Exchange Act" shall mean the Securities Exchange Act of 1934, as
amended.
(e) "Hanauer Securities" shall mean the Hanauer Shares, the Hanauer
Warrants and any and all issued shares of Hanauer Registrable Securities.
(f) "Hanauer Shares" shall mean all shares of Common Stock held by
Hanauer or the Joe F. Hanauer Trust dated June 15, 1988 (the "Hanauer Trust") on
the date hereof.
<PAGE>
(g) "Hanauer Warrants" shall mean all warrants held by Hanauer or the
Hanauer Trust on the date hereof to purchase shares of Common Stock.
(h) "Kojaian Shares" shall mean the aggregate of 2,500,000 shares of
Common Stock issued to the Kojaian Investors pursuant to the Stock Purchase
Agreement dated as of December 11, 1996 between the Kojaian Investors and the
Company.
(i) "Kojaian Securities" shall mean the Kojaian Shares and any and
all issued shares of Kojaian Registrable Securities.
(j) "Person" shall mean any individual, corporation, partnership,
association, trust or other entity or organization, including a government or
political subdivision or agency or instrumentality thereof.
(k) "Prospectus" shall mean the prospectus included in any
Registration Statement, as amended or supplemented by any prospectus supplement
with respect to the terms of the offering of any portion of the Registrable
Securities covered by such Registration Statement and by all other amendments
and supplements to the prospectus, including post-effective amendments and all
material incorporated by reference in such prospectus.
(l) "Registration" shall mean a Demand Registration or a Piggyback
Registration.
(m) "Registration Statement" shall mean any registration statement of
the Company which covers any of the Registrable Securities pursuant to the
provisions of this Agreement, including the Prospectus, amendments and
supplements to such Registration Statement, including post-effective amendments,
all exhibits and all material incorporated by reference in such Registration
Statement.
(n) "Securities" shall mean the Hanauer Securities, the Kojaian
Securities and the Warburg Securities.
(o) "Securities Act" shall mean the Securities Act of 1933, as
amended.
(p) "Subsidiary" shall mean any corporation, partnership, joint
venture or other entity of which the Company owns, directly or indirectly, a
majority of the capital stock or a majority of the partnership or other equity
interests, or is a general partner.
(q) "underwritten registration" or "underwritten offering" shall mean
a sale of securities of the Company to an underwriter for reoffering to the
public.
(r) "Warburg Securities" shall mean the Warburg Shares, the Warburg
Warrants and any and all issued shares of Warburg Registrable Securities.
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(s) "Warburg Shares" shall mean all shares of Common Stock held by
Warburg on the date hereof.
(t) "Warburg Warrants" shall mean all warrants held by Warburg on the
date hereof to purchase shares of Common Stock.
2. REGISTRATION RIGHTS.
2.1 DEMAND REGISTRATIONS.
(a) At any time after the date hereof the holder or holders of at
least 30% of the aggregate amount of Warburg Registrable Securities (based on
the amount of Warburg Registrable Securities beneficially owned by Warburg as of
the date hereof, as adjusted pursuant to the terms hereof) may make three
written requests to the Company for registration under and in accordance with
the provisions of the Securities Act of all or part of the Warburg Registrable
Securities; PROVIDED, HOWEVER, that Warburg may make any of such three requests
for registration regardless of the percentage of Warburg Registrable Securities
it holds. At any time after the date hereof, the holder or holders of at least
30% of the aggregate amount of Kojaian Registrable Securities may make three
written requests to the Company for registration under and in accordance with
the provisions of the Securities Act of all or part of the Kojaian Registrable
Securities.
For purposes of this Section 2, a Person is deemed to be a holder of
Registrable Securities whenever such Person owns Registrable Securities or has
the right to acquire such Registrable Securities, whether or not such
acquisition has actually been effected and disregarding any legal restrictions
upon the exercise of such right.
"Warburg Registrable Securities" shall include the Warburg Shares and
all shares of Common Stock issued or issuable upon exercise of any of the
Warburg Warrants, "Hanauer Registrable Securities" shall include the Hanauer
Shares and all shares of Common Stock issued or issuable upon exercise of any of
the Hanauer Warrants and "Kojaian Registrable Securities" shall include the
Kojaian Shares (Warburg Registrable Securities, Hanauer Registrable Securities
and Kojaian 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 Warburg Warrants, the Hanauer Warrants or
any 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; PROVIDED, HOWEVER, that any such Registrable
Securities shall cease to be Registrable Securities when (i) a Registration
Statement with respect to the sale of such Registrable Securities has been
declared effective under the Securities Act and such Registrable Securities have
been disposed of in accordance with the plan of distribution set
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<PAGE>
forth in such Registration Statement, (ii) such Registrable Securities are
distributed pursuant to Rule 144 or Rule 144A (or any similar provision then in
force) under the Securities Act or (iii) such Registrable Securities shall have
been otherwise transferred, new certificates for them not bearing a legend
restricting further transfer under the Securities Act shall have been delivered
by the Company and they may be resold without subsequent registration under the
Securities Act; PROVIDED, FURTHER, HOWEVER, that any securities that have ceased
to be Registrable Securities cannot thereafter become Registrable Securities,
and any security that is issued or distributed in respect to securities that
have ceased to be Registrable Securities are not Registrable Securities.
Any registration requested pursuant to Section 2.1(a) shall
hereinafter be referred to as a "Demand Registration." Each request for a
Demand Registration shall specify the kind and aggregate amount of Registrable
Securities to be registered and the intended methods of disposition thereof,
which may be stated in the alternative if a shelf Registration Statement is
requested pursuant to Rule 415 under the Securities Act. The Company shall be
deemed to have effected a Demand Registration if (i) the Registration Statement
relating to such Demand Registration is declared effective by the Commission and
remains effective for at least 30 days; PROVIDED, HOWEVER, that no Demand
Registration shall be deemed to have been effected if (x) such registration,
after it has become effective, is interfered with by any stop order, injunction
or other order or requirement of the Commission or other governmental agency or
court or (y) the conditions to closing specified in the purchase agreement or
underwriting agreement entered into in connection with such registration are not
satisfied or (ii) at any time after the requisite holders request a Demand
Registration and prior to the effectiveness of the Registration Statement, the
preparation of such Registration Statement is discontinued or such Registration
Statement is withdrawn or abandoned at the request of the holders of a majority
of the Registrable Securities sought to be registered in such Registration
Statement pursuant to Section 2.1(a), unless either (x) the holders of such
Registrable Securities have elected to pay and have paid to the Company in full
the Registration Expenses (as hereinafter defined) in connection with such
Registration Statement, or (y) such discontinuation, withdrawal or abandonment
is requested by such holders because of the occurrence of a significant negative
change in market conditions or the Company's business condition or prospects
since the date of the initial request for a Demand Registration.
(b) DEMAND NOTICES. Promptly upon receipt of any request for a
Demand Registration pursuant to Section 2.1(a) (but in no event more than five
business days thereafter), the Company will serve written notice (a "Demand
Notice") of any such Registration request to all other beneficial holders of
Registrable Securities who then have the right to request a Demand Registration,
and the Company will include in such Registration all such Registrable
Securities of any holder with respect to which the Company has received written
requests for inclusion therein, in which the holder has specified that such
inclusion is to be deemed a Demand Registration pursuant to Section 2.1(a)
hereof, within 30 days after the Demand Notice has been given to the applicable
holders of Registrable Securities. All requests made pursuant to this Section
2.1(b) shall specify the kind and aggregate amount of Registrable Securities to
be registered. If such initial request for a Demand Registration has specified
that the offering pursuant thereto
4
<PAGE>
shall be underwritten, then each holder making a request pursuant to this
Section 2.1(b) must participate in such underwritten offering and shall not be
permitted to make any other offering in connection with such Demand
Registration. If such initial request for a Demand Registration has specified
that the offering pursuant thereto shall be on any other basis, then each holder
making a request pursuant to this Section 2.1(b) must participate in such
offering on such basis and shall not be permitted to make an underwritten
offering in connection with such Demand Registration.
(c) PRIORITY OF DEMAND REGISTRATIONS. If the managing underwriter or
agent of a Demand Registration (or, in the case of a Demand Registration not
being underwritten, holders of a majority of the Registrable Securities sought
to be registered therein pursuant to Section 2.1), advises the Company in
writing that in its or their opinion the number of securities requested to be
included in such Demand Registration exceeds the number which can be sold in
such offering without a significant adverse effect on the price, timing or
distribution of the securities offered, the Company will include in such
Registration only the number of securities that, in the opinion of such
underwriter or agent (or holders, as the case may be), can be sold without a
significant adverse effect on the price, timing or distribution of the
securities offered, selected pro rata among the holders that have requested to
be included in such Demand Registration pursuant to Sections 2.1(a) or 2.1(g) or
pursuant to other demand registration rights, based on the number of shares of
Registrable Securities or other securities requested to be registered by each
such holder.
The Company and other holders of securities of the Company may include
other securities in such Registration if, but only if, such underwriter or agent
(or holders of Registrable Securities, as the case may be) concludes that such
inclusion will not have a significant adverse effect on the price, timing or
distribution of all the securities requested to be included in such
Registration.
(d) THE COMPANY'S RIGHT TO DEFER REGISTRATION. If the Company is
requested to effect a Demand Registration and the Company furnishes to the
holders of Registrable Securities requesting such Registration a copy of a
resolution of the Board of Directors certified by the Secretary of the Company
stating that in the good faith judgment of the Board of Directors it would be
adverse to the Company and its securityholders for such Registration Statement
to be filed on or before the date such filing would otherwise be required
hereunder because such registration would interfere with any financing,
acquisition, corporate reorganization or other material transaction involving
the Company or any of its Subsidiaries or would require premature disclosure
thereof, or would require disclosure of material information which the Company
would be justified in not disclosing in the absence of such Registration, the
Company shall have the right to defer such filing for a reasonable period not to
exceed 90 days after receipt of the request for such Registration from such
holders of Registrable Securities. If the Company shall so postpone the filing
of a Registration Statement and if any holder of Registrable Securities
requesting such Demand Registration pursuant to Section 2.1 within 30 days after
receipt of the notice of postponement advises the Company in writing that it has
determined to withdraw its request for Registration, then such Demand
Registration shall be deemed to be withdrawn by it and such request shall be
deemed not to have been exercised for purposes of determining
5
<PAGE>
whether such holder retains the right to Demand Registrations pursuant to this
Section 2.1. In addition, if any holder of Registrable Securities so notifies
the Company of its determination to withdraw its request for Registration and,
within the 60 days immediately following the deferral period, any holders of
Registrable Securities make a written request to the Company for Registration of
the same class of Registrable Securities that were subject to the Registration
withdrawn pursuant to the preceding sentence, the Company shall have no right to
defer such Registration pursuant to this paragraph (d).
(e) REGISTRATION STATEMENT FORM. Registrations under this Section
2.1 shall be on such appropriate registration form of the Commission (i) as
shall be selected by the Company and as shall be reasonably acceptable to the
holders of a majority of the Registrable Securities requesting a Demand
Registration and (ii) as shall permit the disposition of such Registrable
Securities in accordance with the intended method or methods of disposition
specified in such holders' requests for such Registration. If, in connection
with any Registration under this Section 2.1 which is proposed by the Company to
be on Form S-3 or any successor form to such Form, the managing underwriter, if
any, shall advise the Company in writing that in its opinion the use of another
permitted form is of material importance to the success of the offering, then
such Registration shall be on such other permitted form.
(f) SELECTION OF UNDERWRITERS. If any offering pursuant to a Demand
Registration involves an underwritten offering, the holders of a majority of the
Registrable Securities included in such Demand Registration pursuant to Section
2.1(a) shall have the right to select the managing underwriter or underwriters
to administer the offering, subject to the consent of the Company, which consent
shall not be unreasonably withheld.
(g) HANAUER PARTICIPATION. In the event that a holder or holders of
Warburg Registrable Securities requests a Demand Registration, the parties
hereto agree that Hanauer and the Hanauer Trust may elect to include a
proportionate share of the Hanauer Registrable Securities held by them in such
Registration, in which case Hanauer (or the Hanauer Trust) shall be permitted to
sell such Hanauer Registrable Securities in the same manner and on the same
basis as such holder or holders of Warburg Registrable Securities, including for
purposes of receiving notice pursuant to Section 2.1(b) and for determining
pursuant to Section 2.1(c) the number of Registrable Securities to be selected
for inclusion in such Registration.
2.2 PIGGYBACK REGISTRATIONS.
(a) PARTICIPATION. Subject to Section 2.2(b) hereof, if at any time
and from time to time after the date hereof, the Company files a Registration
Statement under the Securities Act with respect to any offering of any equity
securities by the Company for its own account or for the account of any of its
equity holders (other than (i) a registration on Form S-4 or S-8 or any
successor form to such Forms or (ii) any registration of securities as it
relates to an offering and sale to management of the Company pursuant to any
employee stock plan or other employee benefit plan arrangement) then, as soon as
practicable (but in no event less than ten days prior to the proposed date of
filing such
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<PAGE>
Registration Statement, unless notice has been given under Section 2.1(b)), the
Company shall give written notice of such proposed filing to all beneficial
holders of Registrable Securities, which notice may be the same as the Demand
Notice given pursuant to Section 2.1(b) if applicable, and such notice shall
offer the holders of Registrable Securities the opportunity to register such
number of Registrable Securities as each such holder may request (a "Piggyback
Registration"). Subject to Section 2.2(b), the Company shall include in such
Registration Statement all Registrable Securities requested within 30 days after
the receipt of any such notice (which request shall specify the Registrable
Securities intended to be disposed of by such holder) to be included in the
Registration for such offering pursuant to a Piggyback Registration; PROVIDED,
HOWEVER, that if, at any time after giving written notice of its intention to
register any securities and prior to the effective date of the Registration
Statement filed in connection with such Registration, the Company shall
determine for any reason not to register or to delay registration of such
securities, the Company may, at its election, give written notice of such
determination to each holder of Registrable Securities and, thereupon, (i) in
the case of a determination not to register, shall be relieved of its obligation
to register any Registrable Securities in connection with such Registration (but
not from its obligation to pay the Registration Expenses in connection
therewith), without prejudice, however, to the rights of any holders of
Registrable Securities entitled to do so to request that such Registration be
effected as a Registration under Section 2.1, and (ii) in the case of a
determination to delay registering, shall be permitted to delay registering any
Registrable Securities, for the same period as the delay in registering such
other securities. If the offering pursuant to such Registration Statement is to
be underwritten, then each holder making a request for a Piggyback Registration
pursuant to this Section 2.2(a) must participate in such underwritten offering
and shall not be permitted to make any other offering in connection with such
Registration. If the offering pursuant to such Registration Statement is to be
on any other basis, then each holder making a request for a Piggyback
Registration pursuant to this Section 2.2(a) must participate in such offering
on such basis and shall not be permitted to make an underwritten offering in
connection with such Registration. Each holder of Registrable Securities shall
be permitted to withdraw all or part of such holder's Registrable Securities
from a Piggyback Registration at any time prior to the effective date thereof.
(b) UNDERWRITER'S CUTBACK. The Company shall use its best efforts to
cause the managing underwriter or underwriters of a proposed underwritten
offering to permit the Registrable Securities requested to be included in the
Registration for such offering under Section 2.2(a) or pursuant to other
piggyback registration rights granted by the Company, if any ("Piggyback
Securities"), to be included on the same terms and conditions as any similar
securities included therein. Notwithstanding the foregoing, if the managing
underwriter or underwriters of any such proposed underwritten offerings informs
the Company and the holders of such Registrable Securities in writing that the
total amount or kind of securities, including Piggyback Securities, which such
holders and any other persons or entities intend to include in such offering
would be reasonably likely to adversely affect the price or distribution of the
securities offered in such offering or the timing thereof, then the securities
to be included in such Registration shall be (i) first, 100% of the securities
that the Company or the holder or holders making a request for a Demand
Registration pursuant to Section 2.1 or pursuant to other demand registration
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<PAGE>
rights, as the case may be, proposes to sell, subject to the provisions of
Section 2.1(c), and (ii) second, the number of securities that, in the opinion
of such underwriter or underwriters, can be sold without an adverse effect on
the price, timing or distribution of the securities to be included, selected pro
rata among holders of Registrable Securities and holders of Piggyback Securities
to the extent any of such holders has requested pursuant to Section 2.2(a) or
pursuant to other incidental registration rights to be included in such
Piggyback Registration, based on the number of shares of Registrable Securities
or Piggyback Securities requested to be registered by each such holder.
(c) NO EFFECT ON DEMAND REGISTRATIONS. No Registration of
Registrable Securities effected pursuant to a request under this Section 2.2
shall be deemed to have been effected pursuant to Section 2.1 hereof or shall
relieve the Company of its obligation to effect any Registration upon request
under Section 2.1 hereof.
2.3 HOLD-BACK AGREEMENTS.
(a) RESTRICTIONS ON PUBLIC SALE BY HOLDER OF REGISTRABLE SECURITIES.
Each holder of Registrable Securities agrees, if requested by (i) the Company,
(ii) the managing underwriters in an underwritten offering or (iii) the holders
of a majority of the Registrable Securities included pursuant to Section 2.1
hereof in a Demand Registration not being underwritten, not to effect any public
sale or distribution of securities of the Company the same as or similar to
those being registered, or any securities convertible into or exchangeable or
exercisable for such securities, in any Registration Statement, including a sale
pursuant to Rule 144 under the Securities Act (except as part of such
underwritten registration), during the 14-day period prior to, and during the
90-day period (or, with respect to a Piggyback Registration, such longer period
of up to 180 days as may be required by such underwriter) beginning on, the
effective date of any Registration Statement (except as part of such
registration) or the commencement of the public distribution of securities, to
the extent timely notified in writing by the Company or the managing
underwriters (or the holders, as the case may be).
(b) RESTRICTIONS ON PUBLIC SALE BY THE COMPANY AND OTHERS. The
Company agrees, if requested by the managing underwriter in an underwritten
offering, not to effect any public sale or distribution of any securities the
same as or similar to those being registered by the Company, or any securities
convertible into or exchangeable or exercisable for such securities, during the
14-day period prior to, and during the 90-day period (or, with respect to a
Piggyback Registration, such longer period of up to 180 days as may be required
by the underwriter) beginning on, the effective date of a Registration Statement
filed under Section 2.1 or Section 2.2 hereof or the commencement of the public
distribution of securities to the extent timely notified in writing by a holder
of Registrable Securities covered by such Registration Statement or the managing
underwriters (except as part of such registration, if permitted, or pursuant to
registrations on Forms S-4 or S-8 or any successor form to such Forms or any
registration of securities for offering and sale to management of the Company
pursuant to any employee stock plan or other employee benefit plan arrangement).
The Company agrees to use reasonable efforts to obtain from each holder of
restricted securities of the Company the same as or similar to those being
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<PAGE>
registered by the Company, or any restricted securities convertible into or
exchangeable or exercisable for any of its securities, an agreement not to
effect any public sale or distribution of such securities (other than securities
purchased in a public offering) during such period, except as part of any such
registration if permitted.
(c) NO INCONSISTENT AGREEMENTS. The Company is not presently a party
to any other agreement with respect to the registration under the Securities Act
of any of its securities. The Company may enter into any other such agreement;
PROVIDED, HOWEVER, that the rights and benefits of a securityholder with respect
to registration of the Company's securities as contained in any such other
agreement shall be no more favorable than the rights and benefits of holders of
Registrable Securities as contained in this Agreement.
2.4 REGISTRATION PROCEDURES. In connection with the Company's
Registration obligations pursuant to Sections 2.1 and 2.2 hereof, the Company
will use its best efforts to effect such registration to permit the sale of such
Registrable Securities in accordance with the intended method or methods of
distribution thereof, and pursuant thereto the Company will as expeditiously as
possible:
(a) prepare and, not later than 45 days after receipt of any request
for a Demand Registration, file with the Commission a Registration Statement or
Registration Statements relating to the applicable Demand Registration or
Piggyback Registration including all exhibits and financial statements required
by the Commission to be filed therewith, and use its best efforts to cause such
Registration Statement to become effective under the Securities Act; PROVIDED,
HOWEVER, that the Company may discontinue any Registration of its securities
which are not Registrable Securities (and, under the circumstances specified in
Section 2.1(d), may delay and, under the circumstances specified in Section
2.2(a), may delay or discontinue Registration of its securities which are
Registrable Securities) at any time prior to the effective date of the
Registration Statement relating thereto;
(b) prepare and file with the Commission such amendments and
post-effective amendments to the Registration Statement as may be requested by
the holders of a majority of the Registrable Securities or as may be necessary
to keep the Registration Statement effective for a period of not less than 270
days (or such shorter period which will terminate when all Registrable
Securities covered by such Registration Statement have been sold or withdrawn),
or, if such Registration Statement relates to an underwritten offering, such
longer period as in the opinion of counsel for the underwriters a Prospectus is
required by law to be delivered in connection with sales of Registrable
Securities by an underwriter or dealer; cause the Prospectus to be supplemented
by any required Prospectus supplement, and as so supplemented to be filed
pursuant to Rule 424 under the Securities Act; and comply with the provisions of
the Securities Act, the Exchange Act, and the rules and regulations promulgated
thereunder with respect to the disposition of all securities covered by such
Registration Statement during the applicable period in accordance with the
intended method or methods of distribution by the sellers thereof set forth in
such Registration Statement or supplement to the Prospectus;
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(c) notify the selling holders of Registrable Securities and the
managing underwriters, if any, and (if requested) confirm such advice in
writing, as soon as practicable after notice thereof is received by the Company
(i) when the Registration Statement or any amendment thereto has been filed or
becomes effective, the Prospectus or any amendment or supplement to the
Prospectus has been filed, and, to furnish such selling holders and managing
underwriters with copies thereof, (ii) of any request by the Commission or any
other federal or state governmental authority for amendments or supplements to
the Registration Statement or the Prospectus or for additional information,
(iii) of the issuance by the Commission of any stop order suspending the
effectiveness of the Registration Statement or any order preventing or
suspending the use of any preliminary Prospectus or Prospectus or the initiation
or threatening of any proceedings for such purposes, (iv) if at any time the
representations and warranties of the Company contemplated by paragraph (m)
below cease to be true and correct and (v) of the receipt by the Company of any
notification with respect to the suspension of the qualification of the
Registrable Securities for offering or sale in any jurisdiction or the
initiation or threatening of any proceeding for such purpose;
(d) promptly notify the selling holders of Registrable Securities and
the managing underwriters, if any, when the Company becomes aware of the
happening of any event as a result of which the Registration Statement or the
Prospectus included in such Registration Statement (as then in effect) contains
any untrue statement of a material fact or omits to state a material fact
necessary to make the statements therein (in the case of the Prospectus and any
preliminary prospectus, in the light of the circumstances under which they were
made) not misleading or, if for any other reason it shall be necessary during
such time period to amend or supplement the Registration Statement or the
Prospectus in order to comply with the Securities Act and, in either case as
promptly as practicable thereafter, prepare and file with the Commission, and
furnish without charge to the selling holders and the managing underwriters, if
any, a supplement or amendment to such Registration Statement or Prospectus
which will correct such statement or omission or effect such compliance;
(e) make every reasonable effort to obtain the withdrawal of any stop
order or other order suspending the use of any preliminary Prospectus or
Prospectus or suspending any qualification of the Registrable Securities;
(f) if requested by the managing underwriter or underwriters or a
holder of Registrable Securities being sold in connection with an underwritten
offering, promptly incorporate in a Prospectus supplement or post-effective
amendment such information as the managing underwriters and the holders of a
majority of the Registrable Securities being sold agree should be included
therein relating to the plan of distribution with respect to such Registrable
Securities, including, without limitation, information with respect to the
number of Registrable Securities being sold to such underwriters, the purchase
price being paid therefor by such underwriters and with respect to any other
terms of the underwritten (or best efforts underwritten) offering of the
Registrable Securities to be sold in such offering; and make all required
filings of such Prospectus supplement or post-effective
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amendment as soon as practicable after being notified of the matters to be
incorporated in such Prospectus supplement or post-effective amendment;
(g) furnish to each selling holder of Registrable Securities and each
managing underwriter, without charge, one executed copy and as many conformed
copies as they may reasonably request, of the Registration Statement and any
amendment or post-effective amendment thereto, including financial statements
and schedules, all documents incorporated therein by reference and all exhibits
(including those incorporated by reference);
(h) deliver to each selling holder of Registrable Securities and the
underwriters, if any, without charge, as many copies of the Prospectus
(including each preliminary prospectus) and any amendment or supplement thereto
as such Persons may reasonably request (it being understood that the Company
consents to the use of the Prospectus or any amendment or supplement thereto by
each of the selling holders of Registrable Securities and the underwriters, if
any, in connection with the offering and sale of the Registrable Securities
covered by the Prospectus or any amendment or supplement thereto) and such other
documents as such selling holder may reasonably request in order to facilitate
the disposition of the Registrable Securities by such holder;
(i) on or prior to the date on which the Registration Statement is
declared effective, use its best efforts to register or qualify, and cooperate
with the selling holders of Registrable Securities, the managing underwriter or
agent, if any, and their respective counsel in connection with the registration
or qualification of such Registrable Securities for offer and sale under the
securities or blue sky laws of each state and other jurisdiction of the United
States as any such seller, underwriter or agent reasonably requests in writing
and do any and all other acts or things reasonably necessary or advisable to
keep such registration or qualification in effect for so long as such
Registration Statement remains in effect and so as to permit the continuance of
sales and dealings therein for as long as may be necessary to complete the
distribution of the Registrable Securities covered by the Registration
Statement; PROVIDED that the Company will not be required to qualify generally
to do business in any jurisdiction where it is not then so qualified or to take
any action which would subject it to taxation or general service of process in
any such jurisdiction where it is not then so subject;
(j) cooperate with the selling holders of Registrable Securities and
the managing underwriter or agent, if any, to facilitate the timely preparation
and delivery of certificates representing Registrable Securities to be sold and
not bearing any restrictive legends; and enable such Registrable Securities to
be in such denominations and registered in such names as the managing
underwriters may request at least two business days prior to any sale of
Registrable Securities to the underwriters;
(k) use its best efforts to cause the Registrable Securities covered
by the applicable Registration Statement to be registered with or approved by
such other governmental agencies or authorities as may be necessary to enable
the seller or sellers
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thereof or the underwriters, if any, to consummate the disposition of such
Registrable Securities;
(l) not later than the effective date of the applicable Registration
Statement, provide a CUSIP number for all Registrable Securities and provide the
applicable transfer agent with printed certificates for the Registerable
Securities which are in a form eligible for deposit with The Depository Trust
Company;
(m) make such representations and warranties to the holders of
Registrable Securities being registered, and the underwriters or agents, if any,
in form, substance and scope as are customarily made by issuers in primary
underwritten public offerings;
(n) enter into such customary agreements (including a purchase
agreement or underwriting agreement) and take all such other actions as the
holders of at least a majority of any Registrable Securities being sold or the
managing underwriter or agent, if any, reasonably request in order to expedite
or facilitate the registration and disposition of such Registrable Securities;
(o) obtain for delivery to the holders of Registrable Securities
being registered and to the underwriter or agent an opinion or opinions from
counsel for the Company, upon consummation of the sale of such Registrable
Securities to the underwriters (the "Closing Date") in customary form and in
form, substance and scope reasonably satisfactory to such holders, underwriters
or agents and their counsel;
(p) obtain for delivery to the Company and the underwriter or agent,
with copies to the holders of Registrable Securities, a cold comfort letter from
the Company's independent public accountants in customary form and covering such
matters of the type customarily covered by cold comfort letters as the managing
underwriter or the holders of at least a majority of the Registrable Securities
being sold reasonably request, dated the effective date of the Registration
Statement and brought down to the Closing Date;
(q) cooperate with each seller of Registrable Securities and each
underwriter or agent participating in the disposition of such Registrable
Securities and their respective counsel in connection with any filings required
to be made with the National Association of Securities Dealers, Inc. (the
"NASD");
(r) use its best efforts to comply with all applicable rules and
regulations of the Commission and make generally available to its security
holders, as soon as reasonably practicable (but not more than fifteen months)
after the effective date of the Registration Statement, an earnings statement
satisfying the provisions of Section 11(a) of the Securities Act and the rules
and regulations promulgated thereunder;
(s) as promptly as practicable after filing with the Commission of
any document which is incorporated by reference into the Registration Statement
or the Prospectus, provide copies of such document to counsel for the selling
holders of Registrable Securities and to the managing underwriters, if any;
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(t) provide and cause to be maintained a transfer agent and registrar
for all Registrable Securities covered by such Registration Statement from and
after a date not later than the effective date of such Registration Statement;
and
(u) use its best efforts to cause all Registrable Securities covered
by the Registration Statement to be listed on each securities exchange on which
any of the Company's securities are then listed or quoted on each inter-dealer
quotation system on which any of the Company's securities are then quoted.
The Company may require each seller of Registrable Securities as to
which any registration is being effected to furnish to the Company such
information regarding the distribution of such securities and such other
information relating to such holder and its ownership of Registrable Securities
as the Company may from time to time reasonably request in writing. Each holder
of Registrable Securities agrees to furnish such information to the Company and
to cooperate with the Company as necessary to enable the Company to comply with
the provisions of this Agreement.
Each holder of Registrable Securities agrees by acquisition of such
Registrable Securities that, upon receipt of any notice from the Company of the
happening of any event of the kind described in Section 2.4(d) hereof, such
holder will forthwith discontinue disposition of Registrable Securities pursuant
to such Registration Statement until such holder's receipt of the copies of the
supplemented or amended Prospectus contemplated by Section 2.4(d) hereof, or
until it is advised in writing by the Company that the use of the Prospectus may
be resumed, and has received copies of any additional or supplemental filings
which are incorporated by reference in the Prospectus, and, if so directed by
the Company, such holder will deliver to the Company (at the Company's expense)
all copies, other than permanent file copies then in such holder's possession,
of the Prospectus covering such Registrable Securities current at the time of
receipt of such notice. In the event the Company shall give any such notice,
the time periods during which such Registration Statement shall be maintained
effective (including the period referred to in Section 2.4(b) hereof) shall be
extended by the number of days during the period from and including the date of
the giving of such notice to and including the date when each seller of
Registrable Securities covered by such Registration Statement either receives
the copies of the supplemented or amended Prospectus contemplated by Section
2.4(d) hereof or is advised in writing by the Company that the use of the
Prospectus may be resumed.
2.5 UNDERWRITTEN OFFERINGS.
(a) REQUESTED UNDERWRITTEN OFFERINGS. If requested by the
underwriters for any underwritten offering by holders of Registrable Securities
pursuant to a Registration requested under Section 2.1, the Company will use
reasonable efforts to enter into an underwriting agreement with such
underwriters for such offering, such agreement to be reasonably satisfactory in
substance and form to the Company, each such holder and the underwriters and to
contain such representations and warranties by the Company and such other terms
as are generally prevailing in agreements of that type, including, without
limitation, indemnities to the effect and to the extent provided in Section 2.8.
The holders
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of the Registrable Securities proposed to be distributed by such underwriters
will cooperate with the Company in the negotiation of the underwriting agreement
and will give consideration to the reasonable suggestion of the Company
regarding the form thereof. Such holders of Registrable Securities to be
distributed by such underwriters shall be parties to such underwriting agreement
and may, at their option, require that any or all of the representations and
warranties by, and the other agreements on the part of, the Company to and for
the benefit of such underwriters shall also be made to and for the benefit of
such holders of Registrable Securities and that any or all of the conditions
precedent to the obligations of such underwriters under such underwriting
agreement be conditions precedent to the obligations of such holders of
Registrable Securities. Any such holder of Registrable Securities shall not be
required to make any representations or warranties to or agreements with the
Company or the underwriters other than representations, warranties or agreements
regarding such holder, such holder's Registrable Securities, such holder's
intended method of distribution and any other representations required by law.
(b) INCIDENTAL UNDERWRITTEN OFFERINGS. If the Company proposes to
register any of its securities under the Securities Act as contemplated by
Section 2.2 and such securities are to be distributed by or through one or more
underwriters, the Company, will, if requested by any holder of Registrable
Securities pursuant to Section 2.2 and subject to the provisions of Section
2.2(b), use its best efforts to arrange for such underwriters to include all the
Registrable Securities to be offered and sold by such holder among the
securities of the Company to be distributed by such underwriters. The holders
of Registrable Securities to be distributed by such underwriters shall be
parties to the underwriting agreement between the Company and such underwriters
and may, at their option, require that any or all of the representations and
warranties by, and the other agreements on the part of, the Company to and for
the benefit of such underwriters shall also be made to and for the benefit of
such holders of Registrable Securities and that any or all of the conditions
precedent to the obligations of such underwriters under such underwriting
agreement be conditions precedent to the obligations of such holders of
Registrable Securities. Any such holder of Registrable Securities shall not be
required to make any representations or warranties to or agreements with the
Company or the underwriters other than representations, warranties or agreements
regarding such holder, such holders' Registrable Securities and such holder's
intended method of distribution or any other representations required by law.
(c) PARTICIPATION IN UNDERWRITTEN REGISTRATIONS. No Person may
participate in any underwritten registration hereunder unless such Person
(i) agrees to sell such Person's securities on the basis provided in any
underwriting arrangements approved by the Persons entitled to approve such
arrangements and (ii) completes and executes all questionnaires, powers of
attorney, indemnities, underwriting agreements and other documents required
under the terms of such underwriting arrangements.
2.6 PREPARATION; REASONABLE INVESTIGATION. In connection with the
preparation and filing of each Registration Statement, the Company will give the
holders of Registrable Securities registered under such Registration Statement,
their underwriters, if any, and their respective counsel and accountants the
opportunity to participate in the
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preparation of such Registration Statement, each Prospectus included therein or
filed with the Commission, and, to the extent practicable, each amendment
thereof or supplement thereto, and give each of them such access to its books
and records (to the extent customarily given to underwriters of the Company's
securities) and such opportunities to discuss the business of the Company with
its officers and the independent public accountants who have certified its
financial statements as shall be necessary, in the opinion of such holders' and
such underwriters' respective counsel, to conduct a reasonable investigation
within the meaning of the Securities Act; PROVIDED, HOWEVER, that any books,
records, information or documents that are designated by the Company in writing
as confidential shall be kept confidential by such Persons unless disclosure
thereof is required by law.
2.7 REGISTRATION EXPENSES. All expenses incident to the Company's
performance of or compliance with this Agreement, including without limitation
(i) all registration and filing fees, and any other fees and expenses associated
with filings required to be made with the Commission or the NASD (including, if
applicable, the fees and expenses of any "qualified independent underwriter" and
its counsel as may be required by the rules and regulations of the NASD), (ii)
all fees and expenses of compliance with state securities or blue sky laws
(including fees and disbursements of counsel for the underwriters or selling
holders in connection with blue sky qualifications of the Registrable Securities
and determination of their eligibility for investment under the laws of such
jurisdictions as the managing underwriters or holders of a majority of the
Registrable Securities being sold may designate), (iii) all printing and related
messenger and delivery expenses (including expenses of printing certificates for
the Registrable Securities in a form eligible for deposit with The Depository
Trust Company and of printing prospectuses), (iv) all fees and disbursements of
counsel for the Company and of all independent certified public accountants of
the Company (including the expenses of any special audit and cold comfort
letters required by or incident to such performance), (v) reasonable premiums
for Securities Act liability insurance if the Company so desires or the
underwriters so reasonably require in accordance with then customary
underwriting practice, (vi) all fees and expenses incurred in connection with
the listing of the Registrable Securities on any securities exchange or
quotation of the Registrable Securities on any inter-dealer quotation system,
(vii) all reasonable fees and disbursements of one counsel selected by the
holders of a majority of the Registrable Securities being registered in the case
of a Piggyback Registration, or one counsel selected by Warburg in the case of a
Demand Registration requested by Warburg pursuant to Section 2.1 and one counsel
selected by the holder or holders of at least a majority of the Kojaian
Registrable Securities in the case of a Demand Registration requested by the
Kojaian Investors pursuant to Section 2.1, in each case to represent such
holders in connection with such registration, (viii) all fees and disbursements
of underwriters customarily paid by the issuers or sellers of securities,
excluding underwriting discounts and commissions and transfer taxes, if any, and
excluding fees and disbursements of counsel to such underwriters (other than
such fees and disbursements incurred in connection with any registration or
qualification of Registrable Securities under the securities or blue sky laws of
any state), (ix) all fees and expenses of accountants to the holders of
Registrable Securities being sold and (x) fees and expenses of other Persons
retained by the Company (all such expenses being herein called "Registration
Expenses"),
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will be borne by the Company, regardless of whether the Registration Statement
becomes effective (except as provided in Section 2.1 hereof). The Company will,
in any event, pay its internal expenses (including, without limitation, all
salaries and expenses of its officers and employees performing legal or
accounting duties), the expense of any audit and the fees and expenses of any
Person, including special experts, retained by the Company.
2.8 INDEMNIFICATION.
(a) INDEMNIFICATION BY THE COMPANY. The Company agrees to indemnify
and hold harmless, to the full extent permitted by law, each holder of
Registrable Securities, its officers, directors, employees and agents and each
Person who controls such holder (within the meaning of the Securities Act or the
Exchange Act) from and against all losses, claims, damages, liabilities and
expenses (including reasonable costs of investigation and legal expenses)
arising out of or based upon any untrue or alleged untrue statement of a
material fact contained in any Registration Statement, Prospectus or preliminary
Prospectus or any omission or alleged omission to state therein a material fact
required to be stated therein or necessary to make the statements therein not
misleading, except insofar as the same are caused by or contained in any
information furnished in writing to the Company by such holder expressly for use
therein; PROVIDED, HOWEVER, that the Company shall not be liable in any such
case to the extent that any such loss, claim, damage, liability or expense
arises out of or is based upon an untrue statement or alleged untrue statement
or omission or alleged omission made in any such preliminary Prospectus if (i)
it is determined that it was the responsibility of such holder to provide the
Person asserting such loss, claim, damage, liability or expense with a current
copy of the Prospectus and such holder failed to deliver or cause to be
delivered a copy of the Prospectus to such Person after the Company had
furnished such holder with a sufficient number of copies of the same and (ii)
the Prospectus completely corrected in a timely manner such untrue statement or
omission. This indemnity shall be in addition to any liability the Company may
otherwise have, shall remain in full force and effect regardless of any
investigation made by or on behalf of such holder or any such officer, director,
employee, agent or controlling Person and shall survive termination of this
Agreement and the transfer of Registrable Securities by such holder. The
Company will also indemnify underwriters, selling brokers, dealer managers and
similar securities industry professionals participating in the distribution,
their officers and directors and each Person who controls such Persons (within
the meaning of the Securities Act and the Exchange Act) to the same extent as
provided above (with appropriate modification) with respect to the
indemnification of the holders of Registrable Securities, if requested.
(b) INDEMNIFICATION BY THE SELLING HOLDER OF REGISTRABLE SECURITIES.
Each selling holder of Registrable Securities agrees to indemnify and hold
harmless, to the full extent permitted by law, the Company, its directors and
officers and each Person who controls the Company (within the meaning of the
Securities Act or the Exchange Act) from and against any losses, claims,
damages, liabilities and expenses resulting from any untrue statement of a
material fact or any omission of a material fact required to be stated in the
Registration Statement, Prospectus or preliminary Prospectus or necessary to
make the statements therein not misleading, to the extent, but only to the
extent, that such untrue
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statement or omission is contained in any information furnished in writing by
such selling holder to the Company specifically for inclusion in such
Registration Statement or Prospectus and has not been corrected in a subsequent
writing prior to or concurrently with the sale of the Registrable Securities to
the Person asserting such loss, claim, damage, liability or expense. This
indemnity shall be in addition to any liability such selling holder may
otherwise have, shall remain in full force and effect regardless of any
investigation made by or on behalf of the Company or any such officer, director
or controlling Person and shall survive termination of this Agreement and the
transfer of Registrable Securities by such selling holder. The Company shall be
entitled to receive indemnities from underwriters, selling brokers, dealer
managers and similar securities industry professionals participating in the
distribution, to the same extent as provided above (with appropriate
modification) with respect to information so furnished in writing by such
Persons specifically for inclusion in any Prospectus or Registration Statement.
(c) CONDUCT OF INDEMNIFICATION PROCEEDINGS. Any Person entitled to
indemnification hereunder will (i) give prompt written notice to the
indemnifying party of any claim with respect to which it seeks indemnification
and (ii) permit such indemnifying party to assume the defense of such claim with
counsel reasonably satisfactory to the indemnified party; PROVIDED, HOWEVER,
that any delay or failure to so notify the indemnifying party shall relieve the
indemnifying party of its obligations hereunder only to the extent, if at all,
that it is prejudiced by reason of such delay or failure; PROVIDED FURTHER,
HOWEVER, that any Person entitled to indemnification hereunder shall have the
right to select and employ separate counsel and to participate in the defense of
such claim, but the fees and expenses of such counsel shall be at the expense of
such Person unless (i) the indemnifying party has agreed in writing to pay such
fees or expenses, or (ii) the indemnifying party shall have failed to assume the
defense of such claim within a reasonable time after receipt of notice of such
claim from the Person entitled to indemnification hereunder and employ counsel
reasonably satisfactory to such Person, or (iii) in the reasonable judgment of
any such Person, based upon advice of its counsel, a conflict of interest may
exist between such Person and the indemnifying party with respect to such claims
(in which case, if the Person notifies the indemnifying party in writing that
such Person elects to employ separate counsel at the expense of the indemnifying
party, the indemnifying party shall not have the right to assume the defense of
such claim on behalf of such Person). If such defense is not assumed by the
indemnifying party, the indemnifying party will not be subject to any liability
for any settlement made without its consent (but such consent will not be
unreasonably withheld), PROVIDED that an indemnifying party shall not be
required to consent to any settlement involving the imposition of equitable
remedies or involving the imposition of any material obligations on such
indemnifying party other than financial obligations for which such indemnified
party will be indemnified hereunder. No indemnifying party shall consent to
entry of any judgment or enter into any settlement which does not include as an
unconditional term thereof the giving by the claimant or plaintiff to such
indemnified party of a release from all liability in respect to such claim or
litigation. Whenever the indemnified party or the indemnifying party receives a
firm offer to settle a claim for which indemnification is sought hereunder, it
shall promptly notify the other of such offer. If the indemnifying party
refuses to accept such offer within 20 business days after receipt of such offer
(or of notice
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thereof), such claim shall continue to be contested and, if such claim is within
the scope of the indemnifying party's indemnity contained herein, the
indemnified party shall be indemnified pursuant to the terms hereof. If the
indemnifying party notifies the indemnified party in writing that the
indemnifying party desires to accept such offer, but the indemnified party
refuses to accept such offer within 20 business days after receipt of such
notice, the indemnified party may continue to contest such claim and, in such
event, the total maximum liability of the indemnifying party to indemnify or
otherwise reimburse the indemnified party hereunder with respect to such claim
shall be limited to and shall not exceed the amount of such offer, plus
reasonable out-of-pocket costs and expenses (including reasonable attorneys'
fees and disbursements) to the date of notice that the indemnifying party
desires to accept such offer, PROVIDED that this sentence shall not apply to any
settlement of any claim involving the imposition of equitable remedies or to any
settlement imposing any material obligations on such indemnified party other
than financial obligations for which such indemnified party will be indemnified
hereunder. An indemnifying party who is not entitled to, or elects not to,
assume the defense of a claim will not be obligated to pay the fees and expenses
of more than one counsel for all parties indemnified by such indemnifying party
with respect to such claim, unless in the written opinion of counsel to the
indemnified party reasonably satisfactory to the indemnifying party, use of one
counsel by the underwriters on the one hand, and by the securityholders on the
other, would be expected to give rise to a conflict of interest between such
underwriters, on the one hand and such securityholders on the other with respect
to such claim, in which event the indemnifying party shall be obligated to pay
the fees and expenses of one such additional counsel.
(d) CONTRIBUTION. If for any reason the indemnification provided for
in the preceding paragraphs (a) and (b) is unavailable to an indemnified party
or insufficient to hold it harmless as contemplated by the preceding paragraphs
(a) and (b), then the indemnifying party shall contribute to the amount paid or
payable by the indemnified party as a result of such loss, claim, damage or
liability in such proportion as is appropriate to reflect not only the relative
benefits received by the indemnified party and the indemnifying party, but also
the relative fault of the indemnified party and the indemnifying party, as well
as any other relevant equitable considerations, provided that no selling holder
of Registrable Securities shall be required to contribute in an amount greater
than the dollar amount of the proceeds received by such selling holder with
respect to the sale of any such Registrable Securities. No person guilty of
fraudulent misrepresentation (within the meaning of Section 11(f) of the
Securities Act) shall be entitled to contribution from any person who was not
guilty of such fraudulent misrepresentation.
2.9 RULES 144 AND 144A. The Company covenants that it will file the
reports required to be filed by it under the Securities Act and the Exchange Act
and the rules and regulations adopted by the Commission thereunder (or, if the
Company is not required to file such reports, it will, upon the request of any
holder of Registrable Securities after the date that is the second anniversary
of the date hereof, make publicly available other information so long as
necessary to permit sales pursuant to Rules 144 or 144A under the Securities
Act), and it will take such further action as any holder of Registrable
Securities may reasonably request, all to the extent required from time to time
to enable
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such holder to sell Registrable Securities without registration under the
Securities Act within the limitation of the exemptions provided by (i) Rules 144
or 144A under the Securities Act, as such Rules may be amended from time to
time, or (ii) any similar rule or regulation hereafter adopted by the
Commission. Upon the request of any holder of Registrable Securities, the
Company will deliver to such holder a written statement as to whether it has
complied with such requirements.
3. TRANSFER OF SECURITIES.
3.1 NOTICE OF PROPOSED TRANSFER. At the time of any transfer or sale or
proposed transfer or sale of any Securities, the Company may require written
notice describing briefly the manner of such transfer or sale and a written
opinion of counsel for the holder thereof (who may be inside counsel) to the
effect that such transfer or sale may be effected without the registration of
such Securities under the Securities Act and will be made in compliance with
applicable state securities and blue sky laws. The Company shall thereupon
permit or cause its transfer agent (if any) to permit such transfer or sale to
be effected unless the Company, within five days after receipt of such notice
and opinion, shall furnish to such holder and such holder's counsel (if any) an
opinion of the Company's outside counsel which (i) states that such sale or
transfer may not be effected without the registration of such Securities under
the Securities Act (or will not be made in compliance with applicable securities
and blue sky laws) and (ii) specifies the reasons, factual, legal or both, why
such counsel's opinion differs from that of holder's counsel. However, if in
such written notice to the Company the transferring holder informs the Company
that the transfer or sale is to a purchaser or transferee whom the transferring
holder knows or reasonably believes to be a "qualified institutional buyer," as
that term is defined in Rule 144A promulgated under the Securities Act, no
opinion of counsel shall be required.
3.2 TERMINATION OF RESTRICTIONS. Notwithstanding the foregoing provisions
of this Section 3, the restrictions imposed by this Section 3 upon the
transferability of the Securities shall terminate as to any particular
Securities when (i) such Securities shall have been effectively registered under
the Securities Act and sold by the holder thereof in accordance with such
registration, (ii) such Securities have been sold in accordance with Rule 144 or
Rule 144A promulgated under the Securities Act, or (iii) written opinions to the
effect that such restrictions are no longer required or necessary under any
federal or state law or regulation have been received from counsel for the
holder thereof (who may be inside counsel) and, if the Company shall so require,
from counsel for the Company.
3.3 EXCHANGE, TRANSFER AND REPLACEMENT OF CERTIFICATES. Subject to the
foregoing provisions of this Section 3, upon surrender of any certificate
representing Securities duly endorsed for exchange or transfer, the Company
will, at its expense, or will cause its transfer agent, at the Company's
expense, to issue in exchange therefor new certificates in such denominations as
may be requested representing in the aggregate the same number of Securities
represented by the certificate so surrendered and registered as such stockholder
may request. Upon receipt of evidence reasonably satisfactory to the Company of
the loss, theft, destruction or mutilation of any certificate representing
Securities and, in the case of any such loss, theft or destruction, upon
delivery of an agreement of indemnity satisfactory
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to the Company or, in the case of any such mutilation, upon surrender and
cancellation of such certificate, the Company will issue, at its expense, or
will cause its transfer agent, at the Company's expense, to issue a new
certificate representing the same aggregate number of Securities represented by
such lost, stolen, destroyed or mutilated certificate; PROVIDED, HOWEVER, that
in the event of any loss, theft or destruction of any certificate representing
Securities registered in the name of Warburg, Hanauer or the Kojaian Investors
or any of their respective Affiliates, or in the name of any other holder which
is an institutional investor or its nominee, the Company shall not require such
person or Affiliate or any other holder which is an institutional investor or
its nominee to furnish any indemnity or surety bond in connection with the
issuance of a new certificate therefor if the Company is furnished with an
affidavit of the holder (if the holder is an individual) or, otherwise, the
Chairman of the Board, President, any Vice President, Treasurer or any Assistant
Treasurer of the holder (or, in the case of a nominee, the beneficial owner for
which such holder is serving as nominee) setting forth the fact of such loss,
theft or destruction and, together with such affidavit, such holder furnishes
(or, in the case of a nominee, the beneficial owner for which such holder is
serving as nominee furnishes) to the Company its written agreement to indemnify
the Company with respect to such loss, theft or destruction; the Company shall,
however, have the right to require any holder of Securities other than Warburg,
Hanauer or the Kojaian Investors or any of their respective Affiliates or any
other holder which is an institutional investor or its nominee to furnish such
an indemnity or surety bond. The party delivering any certificate representing
Securities pursuant to this Section 3.3 will pay the cost of such delivery
(including the cost of insurance against loss or theft in an amount satisfactory
to the sender).
4. MISCELLANEOUS.
4.1. INJUNCTIVE RELIEF. Remedies for breach by the Company of its
obligations to register the Registrable Securities shall be as otherwise set
forth herein. It is hereby agreed and acknowledged that it will be impossible
to measure in money the damages that would be suffered if the parties fail to
comply with any of the obligations herein imposed on them and that in the event
of any such failure, an aggrieved Person will be irreparably damaged and will
not have an adequate remedy at law. Any such Person shall, therefore, be
entitled to injunctive relief, including specific performance, to enforce such
obligations, and if any action should be brought in equity to enforce any of the
provisions of this Agreement, none of the parties hereto shall raise the defense
that there is an adequate remedy at law.
4.2. NOTICES. All notices, other communications or documents provided
for or permitted to be given hereunder, shall be made in writing and shall be
given either personally by hand-delivery, by facsimile transmission, by mailing
the same in a sealed envelope, registered first-class mail, postage prepaid,
return receipt requested, or by air courier guaranteeing overnight delivery:
(a) If to the Company: Grubb & Ellis Company
10275 W. Higgins Road, Suite 300
Rosemont, Illinois 60018
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Attention: General Counsel
Telecopy number: (847) 390-8718
With 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: Warburg, Pincus Investors, L.P.
c/o E. M. Warburg, Pincus & Co., Inc.
466 Lexington Avenue, 10th Floor
New York, New York 10023
Attention: Reuben S. Leibowitz
Telecopy number: (212) 878-9351
With a copy to: Wachtell, Lipton, Rosen & Katz
51 W. 52nd Street
New York, New York 10019
Attention: Andrew Brownstein, Esq.
Telecopy number: (212) 403-2000
(c) If to the Kojaian Investors: Mr. C. Michael Kojaian
Mr. Mike Kojaian
Mr. Kenneth J. Kojaian
c/o Kojaian Management Corporation
26600 Telegraph Road, Suite 450
Southfield, Michigan 48034-5300
Telecopy number: (810) 827-7550
With a copy to: Honigman, Miller, Schwartz & Cohn
2290 First National Building
660 Woodward Avenue
Detroit, Michigan 48226
Attention: Don Kunz
Telecopy number: (313) 962-0176
(d) If to Hanauer: Joe F. Hanauer
Combined Investments, L.P.
361 Forest Avenue, Suite 200
Laguna Beach, CA 92651
Telecopy number: (714) 494-3085
Each party hereto, by written notice given to the other parties hereto
in accordance with this Section 4.2 may change the address to which notices,
other communications or documents are to be sent to such party. All notices,
other
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communications or documents shall be deemed to have been duly given: (i) at the
time delivered by hand, if personally delivered; (ii) when receipt is
acknowledged by electronic confirmation, if by facsimile transmission; (iii)
four business days after being deposited in the mail, postage prepaid, if
mailed; and (iv) on the next business day, if timely delivered to an air courier
guaranteeing overnight delivery; PROVIDED, HOWEVER, that notices of a change of
address shall be effective only upon receipt.
4.3. SUCCESSORS AND ASSIGNS.
(a) This Agreement shall inure to the benefit of and be binding upon
the parties, and successors and assigns of each of the parties.
(b) All of the terms, covenants and agreements contained in this
Agreement are solely for the benefit of the parties hereto and their respective
successors and assigns as provided in Section 4.3(a), and no other parties
(including, without limitation, any other stockholder or creditor of the
Company, or any director, officer or employee of the Company) are intended to be
benefitted by, or entitled to enforce, this Agreement.
4.4. GOVERNING LAW. This Agreement shall be governed by and construed
in accordance with the laws of the State of New York, without regard to the
principles of conflicts of laws.
4.5. HEADINGS. The headings in this Agreement are inserted herein for
convenience of reference only and shall not limit or otherwise affect the
meaning hereof.
4.6. SEVERABILITY. In the event that any one or more of the
provisions contained herein, or the application thereof in any circumstance, is
held invalid, illegal or unenforceable, the validity, legality and
enforceability of any such provision in every other respect and of the remaining
provisions contained herein shall not be affected or impaired thereby.
4.7. ENTIRE AGREEMENT; AMENDMENT. This Agreement contains the entire
agreement among the parties hereto with respect to the subject matter contained
herein, supersedes all prior agreements, negotiations and understandings,
whether written or oral, with respect to the subject matter hereof, and may not
be amended, modified or supplemented, and waivers and consents to departures
from the provisions hereof may not be given, except by an instrument in writing
signed the holders of not less than a majority of the Warburg Registrable
Securities, the Hanauer Registrable Securities and the Kojaian Registrable
Securities, treated as one class, and by the Company. There are no
restrictions, promises, warranties or undertakings, other than those set forth
in this Agreement.
4.8. WAIVER. No action taken pursuant to this Agreement shall be
deemed to constitute a waiver by the party taking such action of compliance with
any covenants or agreements contained herein. No failure to exercise and no
delay in exercising any right, power or privilege of a party hereunder shall
operate as a waiver nor a consent to the
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modification of the terms hereof unless given by that party in writing. The
waiver by any party hereto of a breach of any provision of this Agreement shall
not operate or be construed as a waiver of any preceding or succeeding breach.
4.9. INSPECTION. So long as this Agreement shall be in effect, this
Agreement shall be made available for inspection by any stockholder of the
Company at the principal offices of the Company.
4.10. COUNTERPARTS. This Agreement may be executed in any number of
counterparts and by the parties hereto in separate counterparts each of which
when so executed shall be deemed to be an original and all of which together
shall constitute one and the same agreement.
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IN WITNESS WHEREOF, the parties hereto have caused this instrument to
be duly executed as of the date first written above.
GRUBB & ELLIS COMPANY
By: /s/ Robert J. Walner
-----------------------------------------------
Its: Senior Vice President and General Counsel
-------------------------------------------
WARBURG, PINCUS INVESTORS, L.P.
By Warburg, Pincus & Co.,
General Partner
By: /s/ John Santoleri
----------------------------------------------
Its: Partner
-------------------------------------------
/s/ Joe F. Hanauer
- --------------------------------------------------
JOE F. HANAUER
/s/ C. Michael Kojaian
- --------------------------------------------------
C. MICHAEL KOJAIAN
/s/ Mike Kojaian
- --------------------------------------------------
MIKE KOJAIAN
/s/ Kenneth J. Kojaian
- --------------------------------------------------
KENNETH J. KOJAIAN
