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FORM 10-Q
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF
THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended September 30, 1996
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OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF
THE SECURITIES EXCHANGE ACT OF 1934
For the transition period from to
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Commission File Number: 1-8122
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GRUBB & ELLIS COMPANY
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(Exact Name of Registrant as Specified in Its Charter)
Delaware 94-1424307
- ------------------------------- --------------------------
(State or Other Jurisdiction of (I.R.S. Employer
Incorporation or Organization) Identification No.)
One Montgomery Street, Telesis Tower,
San Francisco, CA 94104
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(Address of Principal Executive Offices)
(Zip Code)
(415) 956-1990
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(Registrant's Telephone Number, Including Area Code)
No Change
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(Former Name, Former Address and Former Fiscal Year, if Changed
Since Last Report)
Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange
Act of 1934 during the preceding 12 months (or for such shorter period
that the registrant was required to file such reports), and (2) has
been subject to such filing requirements for the past 90 days.
Yes X No
--- ---
8,935,570
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(Number of Shares Outstanding of the Registrant's
Common Stock at November 1, 1996)
1
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PART I
FINANCIAL INFORMATION
2
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ITEM 1. FINANCIAL STATEMENTS
GRUBB & ELLIS COMPANY AND SUBSIDIARIES
Condensed Consolidated Statements of Operations
(in thousands, except per share amounts and shares)
(unaudited)
For the Three Months
Ended September 30,
---------------------
1996 1995
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Revenue:
Commercial real estate brokerage commissions $42,791 $38,686
Real estate services fees, commissions and other 9,136 8,676
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Total Revenue 51,927 47,362
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Costs and Expenses:
Real estate brokerage and other commissions 25,939 22,962
Selling, general and administrative 10,690 11,184
Salaries and wages 12,677 12,402
Depreciation and amortization 767 565
Special charges and unusual items (93) (158)
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Total costs and expenses 49,980 46,955
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Total operating income 1,947 407
Other income and expenses:
Interest income 130 139
Other income, net (25) 992
Interest expense to related parties (726) (730)
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Income before income taxes 1,326 808
Provision for income taxes 30 212
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Net income $ 1,296 $ 596
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------- -------
Net income (loss) applicable to common stockholders
net of undeclared dividends earned on
preferred stock $ 501 $ (127)
Net income (loss) per common share and equivalents $ .06 $ (.01)
Weighted average common shares outstanding 8,916,567 8,814,832
See notes to condensed consolidated financial statements.
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GRUBB & ELLIS COMPANY AND SUBSIDIARIES
Condensed Consolidated Balance Sheets
(in thousands)
ASSETS
September 30, June 30, September 30,
1996 1996 1995
------------ -------- -------------
(unaudited) (unaudited)
Current Assets:
Cash and cash equivalents $ 14,443 $ 13,547 $ 14,498
Real estate brokerage
commissions receivable 779 206 2,896
Real estate services fees and
other commissions receivable 3,308 3,172 3,158
Other receivables 3,514 4,326 4,047
Prepaids and other current
assets 1,490 1,484 1,811
--------- --------- ---------
Total current assets 23,534 22,735 26,410
Noncurrent Assets:
Real estate brokerage
commissions receivable 42 100 554
Real estate investments held
for sale and real estate owned 506 537 604
Equipment and leasehold
improvements, net 4,841 5,194 5,354
Other assets 1,806 1,092 714
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Total assets $ 30,729 $ 29,658 $ 33,636
--------- --------- ---------
--------- --------- ---------
See notes to condensed consolidated financial statements.
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GRUBB & ELLIS COMPANY AND SUBSIDIARIES
Condensed Consolidated Balance Sheets, continued
(in thousands, except per share amounts and shares)
September 30, June 30, September 30,
1996 1996 1995
------------ -------- -------------
(unaudited) (unaudited)
LIABILITIES
Current Liabilities:
Notes payable and current
portion of long-term debt $ 28 $ 28 $ 269
Accounts payable 1,683 1,624 1,534
Compensation and employee
benefits payable 5,398 5,380 8,719
Deferred commissions payable 1,110 201 1,073
Accrued severance obligations 140 98 468
Accrued office closure costs 486 623 1,031
Accrued claims and settlements 1,555 1,779 2,372
Other accrued expenses 5,408 6,717 5,556
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Total current liabilities 15,808 16,450 21,022
Long-Term Liabilities:
Long-term debt, net of current
portion 331 336 362
Long-term debt to related party,
net of current portion 28,230 27,514 26,403
Accrued claims and settlements 11,487 11,804 13,432
Accrued office closure costs 926 960 1,349
Other 98 69 138
-------- -------- --------
Total liabilities 56,880 57,133 62,706
-------- -------- --------
Commitments and contingencies
(Note 4) - - -
-------- -------- --------
STOCKHOLDERS' EQUITY (DEFICIT)
Preferred stock, $.01 par value:
1,000,000 shares authorized;
137,160 shares of 12% Senior
Convertible Preferred Stock
and 150,000 shares of 5%
Junior Convertible Preferred
Stock outstanding 32,143 32,143 32,143
Common stock, $.01 par value:
25,000,000 shares authorized;
8,924,370, 8,916,415 and
8,873,156 shares issued
and outstanding at
September 30, 1996,
June 30, 1996
and September 30, 1995,
respectively 90 90 90
Additional paid-in capital 57,182 57,154 57,065
Retained earnings (deficit) (115,566) (116,862) (118,368)
-------- -------- --------
Total stockholders' equity
(deficit) (26,151) (27,475) (29,070)
-------- -------- --------
Total liabilities and
stockholders' equity
(deficit) $ 30,729 $ 29,658 $ 33,636
-------- -------- --------
-------- -------- --------
See notes to condensed consolidated financial statements.
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GRUBB & ELLIS COMPANY AND SUBSIDIARIES
Condensed Consolidated Statements of Cash Flows
(unaudited - in thousands)
For the Three Months
Ended September 30,
----------------------
1996 1995
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Cash Flows from Operating Activities:
Net income $ 1,296 $ 596
Adjustments to reconcile net income to net
cash used in operating activities (118) 1,933
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Net cash provided by operating activities 1,178 2,529
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Cash Flows from Investing Activities:
Proceeds from disposition and distribution from
real estate joint ventures and real estate
owned 10 1,136
Purchases of equipment and leasehold
improvements (287) (457)
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Net cash provided by (used in)
investing activities (277) 679
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Cash Flows from Financing Activities:
Repayment of notes payable (5) (116)
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Net cash used in financing activities (5) (116)
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Net increase in cash and cash equivalents 896 3,092
Cash and cash equivalents at beginning of period 13,547 11,406
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Cash and cash equivalents at end of period $14,443 $14,498
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------- -------
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Supplemental Disclosure of Cash Flow Information:
Cash paid during the period for:
Interest $ 605 $ 609
Income taxes 33 352
See notes to condensed consolidated financial statements.
6
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GRUBB & ELLIS COMPANY AND SUBSIDIARIES
Notes to Condensed Consolidated Financial Statements
1. INTERIM PERIOD REPORTING
The accompanying unaudited condensed consolidated financial statements
include the accounts of Grubb & Ellis Company, its wholly and majority owned
and controlled subsidiaries and controlled partnerships (the "Company"). The
Company consolidates Axiom Real Estate Management, Inc. ("Axiom"), which
provides real estate property and facilities management services. The
Company acquired the minority interest in Axiom in January 1996. Prior to
the acquisition, the minority interest was immaterial and has been included
in other long-term liabilities on the Condensed Consolidated Balance Sheet
and the related minority interest in operating results has been included in
"Other income, net" on the Condensed Consolidated Statements of Operations
through the date it was acquired.
The accompanying unaudited condensed consolidated financial statements are
prepared in accordance with generally accepted accounting principles for
interim financial information and with the instructions to Form 10-Q and
Article 10 of Regulation S-X. Accordingly, they do not include all of the
information and footnotes required by generally accepted accounting
principles for complete financial statements and therefore, should be read
in conjunction with the Company's Annual Report on Form 10-K, as amended by
Amendment No. 1 thereto on Form 10-K/A for the year ended June 30, 1996 and
footnotes thereto.
In the opinion of management, all adjustments (consisting of normal
recurring accruals) considered necessary for a fair presentation have been
included. Certain amounts in prior periods have been reclassified to conform
to the current presentation.
Operating results for the quarter ended September 30, 1996 are not
necessarily indicative of the results that may be expected for future
periods. Any adjustments to reserves provided in prior periods in connection
with offices which management determined in 1993 to close in 1994 are
reflected as "Special charges and unusual items".
On February 5, 1996, the Board of Directors of the Company determined to
change the Company's fiscal year from a calendar year to a fiscal year ending
June 30 commencing in 1996. This change is intended to enable management to
improve the Company's planning capability related to its seasonal business
cycle, as well as enable it to adjust operations earlier in the fiscal year
based on the cash flows generated during its typically strongest revenue
quarter which ends December 31.
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GRUBB & ELLIS COMPANY AND SUBSIDIARIES
Notes to Condensed Consolidated Financial Statements
2. INCOME TAXES
The Company's tax provision is attributable to state and local income taxes
assessed on profitable subsidiaries of the Company. Additionally the
provision for income taxes for the quarter ended September 30, 1995 included
federal income taxes related solely to Axiom which filed on a separate
company basis for tax purposes.
3. EARNINGS (LOSS) PER COMMON SHARE AND EQUIVALENTS
Earnings (loss) per common share and equivalents computations are based on
the weighted average number of common shares outstanding. Common equivalent
shares from stock options and warrants are excluded from the computation if
their effect is anti-dilutive.
The calculation of earnings (loss) per common share includes net income
(loss), adjusted for amounts applicable to the Senior and Junior Convertible
Preferred Stock related to undeclared dividends earned as follows (in
thousands):
1996 1995
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Senior Convertible Preferred Stock $ 578 $ 516
Junior Convertible Preferred Stock 217 207
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$ 795 $ 723
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4. COMMITMENTS AND CONTINGENCIES
The Company has guaranteed, in the aggregate amount of $4 million, the
contingent liabilities of one of its wholly-owned subsidiaries with
respect to two limited partnerships in which the subsidiary formerly
acted as general partner.
The Company is involved in various claims and lawsuits arising out of the
conduct of its business, as well as in connection with its participation in
various joint ventures, partnerships, and a trust, many of which may not be
covered by the Company's insurance policies. In the opinion of management,
the eventual outcome of such claims and lawsuits is not expected to have a
material adverse effect on the Company's financial position or results of
operations.
The Company previously disclosed in its Annual Report on Form 10-K, as
amended by Amendment No. 1 thereto on Form 10-K/A for the year ended June 30,
1996, information concerning
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GRUBB & ELLIS COMPANY AND SUBSIDIARIES
Notes to Condensed Consolidated Financial Statements
4. COMMITMENTS AND CONTINGENCIES (CONTINUED)
a lawsuit entitled JOHSZ ET AL. V. KOLL COMPANY, ET AL., and a
related lawsuit entitled YOUNKIN, MAIONA, ET AL. V. KOLL COMPANY,
ET AL. and a class action lawsuit, JOHN W. MATTHEWS, ET AL. V.
KIDDER, PEABODY & CO., ET AL. and HSM INC., ET AL. There has been
no material change with respect to these matters.
5. SUBSEQUENT EVENT
On October 21, 1996, Warburg, Pincus Investors, L.P. ("Warburg") and The
Prudential Insurance Company of America ("Prudential") entered into an
agreement (the "Sale Agreement") pursuant to which Warburg acquired from
Prudential all of the outstanding debt, common stock warrants, and
substantially all of the Junior Convertible Preferred Stock held by
Prudential in the Company (together, the "Prudential Securities"), for $23
million plus accrued but unpaid interest on the debt. The closing occurred
on October 22, 1996. Concurrently, Warburg granted the Company an option,
(the "Option") until April 16, 1997, to acquire all of the Prudential
Securities which Warburg acquired from Prudential, at Warburg's cost, plus
interest.
The Prudential Securities include: (a) $5.0 million Revolving Credit Note
due November 1, 1999; (b) $10.0 million 9.90% Senior Notes due in equal
installments November 1, 1997 and 1998; (c) $10.9 million 10.65% Subordinated
Payment-In-Kind Note due November 1, 2001; (d) $2.2 million 11.65%
Subordinated Payment-In-Kind Notes, due November 1, 2001; (e) 130,233 shares
of Junior Convertible Preferred Stock; and (f) stock subscription warrants to
subscribe for 350,000 shares of common stock.
The Sale Agreement provides that in the event that Warburg converts its
Senior Convertible Preferred Stock to common stock, Prudential will convert
its Junior Convertible Preferred Stock to common stock as well.
Prudential continues to hold 397,549 shares of common stock and 19,767 shares
of Junior Convertible Preferred Stock convertible into 352,447 shares of
common stock. Prudential is no longer a party to a stockholders' agreement
among Prudential, Warburg, the Company and Joe F. Hanauer, a director and
stockholder of the Company, which was entered into in January 1993.
While the Option remains unexercised during the Option period, no interest or
dividends will accrue or be due or payable on the Prudential Securities;
however, the Company will pay to Warburg interest at an initial rate of 10%
per annum, increasing to 12% per annum, as of February 1, 1997, on Warburg's
$23 million investment in the Prudential Securities. The Company reimbursed
9
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GRUBB & ELLIS COMPANY AND SUBSIDIARIES
Notes to Condensed Consolidated Financial Statements
5. SUBSEQUENT EVENT (CONTINUED)
Warburg for accrued interest paid to Prudential at the date of closing of
Warburg's purchase of the Prudential Securities of approximately $318,000.
In consideration of receipt of the Option, the Company has agreed to extend
the expiration date of warrants to purchase an aggregate of 1,012,358 shares
of common stock of the Company, currently held by Warburg, to January 29,
2002.
The Company is currently seeking financing with which to exercise the Option,
although there can be no assurance that financing can be obtained or the
Option exercised. If the Option is exercised, the Company would acquire and
cancel the Junior Convertible Preferred Stock, Revolving Credit Note, 9.90%
Senior Notes and the 10.65% and 11.65% Payment-In-Kind-Notes.
10
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Item 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS
RESULTS OF OPERATIONS
REVENUE
The Company's revenue is derived principally from commercial brokerage
activities. Property and asset management, mortgage brokerage and appraisal
and consulting fees provide substantially all of the remaining revenue.
The Company has historically experienced its lowest quarterly revenue in the
quarter ending March 31 of each year with historically higher and more
consistent revenue in the quarters ending June 30 and September 30. The
quarter ending December 31 has historically provided the highest quarterly
revenue due to increased activity caused by the desire of clients to complete
transactions by calendar year-end. Revenue in any given quarter during the
three fiscal year period ended June 30, 1996, as a percentage of total annual
revenue, ranged from a high of 31.2% to a low of 19.0%, as adjusted to
eliminate the effect of operations sold or closed. Additionally, the Company
operates in an industry that may be affected by various economic conditions,
such as interest rates, and tax and environmental laws.
Total revenue for the quarter ended September 30, 1996 was $51.9 million, an
increase of 9.6% over revenue of $47.4 million for the same period last year.
Commercial brokerage revenue increased $4.1 million or 10.6% over the
comparable 1995 period. Commercial brokerage revenues for the quarter ended
September 30, 1996 reflected an improving commercial real estate marketplace.
Other real estate service fees of $9.1 million increased slightly over the
prior year period.
COSTS AND EXPENSES
Real estate brokerage and other commission expense (salespersons'
participation) is the Company's major expense and is a direct function of
gross brokerage commission revenue levels. As a percentage of total
commercial real estate brokerage commission revenue, commercial brokerage
salespersons' participation expense for the first three months of fiscal year
1997 increased by 80 basis points over the comparable period in fiscal year
1996. The increased participation expense percentage was primarily related
to performance of top producers who earned commissions at higher levels.
Total costs and expenses, other than real estate brokerage commission
expense, for the quarter ended September 30, 1996 were $24.0 million, level
with the comparable prior year quarter.
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COSTS AND EXPENSES (CONTINUED)
Special charges and unusual items reflect net favorable adjustments of
$93,000 and $158,000 for the quarters ended September 30, 1996 and 1995,
respectively, primarily related to the non-cash reversal of the remaining net
office lease liability of the Southern California residential brokerage
operations sold in November 1994.
As of September 30, 1996, the Company had current accrued severance and
office closure costs of approximately $626,000 of which $123,000 of accrued
severance costs and $308,000 of accrued office closure costs, net of expected
sublease income, are expected to be paid in cash. Approximately $566,000 of
the $926,000 of long-term accrued office closure costs, net of expected
sublease income, are expected to be paid in cash over the next five years.
NET INCOME (LOSS)
The net income of $1.3 million or $.06 per common share for the quarter ended
September 30, 1996 compared favorably to the net income of $596,000 or a $.01
loss per common share for the same period in 1995. The increase from prior
year's performance was solely related to higher earnings from commercial
brokerage activities.
LIQUIDITY AND CAPITAL RESOURCES
Working capital increased by $1.4 million to $7.8 million during the quarter
ended September 30, 1996. Cash and cash equivalents increased by $896,000
from June 30, 1996 to September 30, 1996. The increase was primarily
attributable to cash provided by operations of $1.2 million net of purchases
of equipment and leasehold improvements of $287,000.
The Company has historically experienced the highest use of operating cash in
the quarter ending March 31, primarily related to the payment of incentive
and deferred commission payable balances which attain peak levels as a result
of business activity levels during the quarter ending December 31.
Historically, operating cash requirements reduce significantly with higher
and more consistent revenue in the subsequent quarters.
Operating cash flow is expected to be sufficient to meet the Company's
anticipated normal operating expenses. The Company's long-term cash
requirements include annual principal payments on its long-term debt of
approximately $5.0 million in the year ending June 30, 1998 through the year
ending June 30, 2000, $6.3 million in the year ending June 30, 2001 and $6.4
million in the year ending June 30, 2002. The actual principal payments in
the years ending June 30, 2001 and 2002 may be greater if future interest due
on the 11.65% Payment-In-Kind Notes is paid in kind by the issuance of
additional notes. Also, the Revolving Credit Note, which matures on November
1, 1999, requires the repayment of all outstanding principal for a sixty day
period during each
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fiscal year beginning July 1, 1997. Pursuant to its debt
agreement with Warburg, beginning on April 1, 1997, the Company will be
required to meet certain financial covenants and beginning July 1, 1997, the
Company will be required to comply with certain covenants restricting capital
expenditures. The Company's long-term debt is described in greater detail in
the Company's Annual Report on Form 10-K, as amended by Amendment No. 1
thereto on Form 10-K/A for the year ended June 30, 1996 and footnotes
thereto. The Company is currently seeking financing with respect to the
Company's purchase of its long-term debt securities, certain warrants and
Junior Preferred stock as described in Note 5 to the Condensed Consolidated
Financial Statements.
To the extent that the Company's cash requirements are not met by
operating cash flow, due to adverse economic conditions or other
unfavorable events, the Company may find it necessary to further
reduce expense levels, seek financing, or undertake other actions
as may be appropriate. In such event, the Company anticipates
that its ability to raise financing on acceptable terms would be
severely limited and there can be no assurance that the Company
would be able to raise additional financing.
13
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PART II
OTHER INFORMATION
(Items 2, 3, 4 and 5 are not applicable
for the quarter ended September 30, 1996)
14
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ITEM 1. LEGAL PROCEEDINGS
The Company previously disclosed in its Annual Report on Form
10-K, as amended by Amendment No. 1 thereto on Form 10-K/A for the
year ended June 30, 1996, information concerning a lawsuit entitled
JOHSZ ET AL. V. KOLL COMPANY, ET AL., and a related lawsuit entitled
YOUNKIN, MAIONA, ET AL. V. KOLL COMPANY, ET AL. and a class action
lawsuit, JOHN W. MATTHEWS, ET AL. V. KIDDER, PEABODY & CO., ET AL.
AND HSM INC., ET AL. There has been no material change with respect
to these matters.
ITEM 6(a). EXHIBITS
(2) PLAN OF ACQUISITION, REORGANIZATION, ARRANGEMENT
LIQUIDATION OR SUCCESSION
2.1 Sale and Assignment Agreement between Warburg, Pincus
Investors, L.P. and The Prudential Insurance Company of
America dated October 21, 1996, incorporated herein by
reference to Exhibit 99.1 to the Current Report on Form
8-K filed by the Registrant on November 5, 1996
(Commission File No. 1-8122).
2.2 Option Agreement between Warburg, Pincus Investors, L.P.
and the Registrant dated October 21, 1996, incorporated
herein by reference to Exhibit 99.2 to the Current
Report on Form 8-K filed by the Registrant on November
5, 1996 (Commission File No. 1-8122).
(3) ARTICLES OF INCORPORATION AND BYLAWS
3.1 Certificate of Incorporation of the Registrant, as
restated effective November 1, 1994, incorporated herein
by reference to Exhibit 3.2 to the Registrant's Annual
Report on Form 10-K filed on March 31, 1995 (Commission
File No. 1-8122).
3.2 Grubb & Ellis Company Bylaws, as amended and restated
effective June 1, 1994.
(4) INSTRUMENTS DEFINING THE RIGHTS OF SECURITY HOLDERS,
INCLUDING INDENTURES
4.1 Third Amendment to Stockholders' Agreement by and among
the Registrant, Warburg, Pincus Investors, L.P., Joe F.
Hanauer and The Prudential Insurance Company of America,
dated October 22, 1996, incorporated herein by reference
to Exhibit 99.3 to the Current Report on Form 8-K filed
by the Registrant on November 5, 1996 (Commission File
No. 1-8122).
4.2 First Amendment to Warrant No. 18, held by Warburg,
Pincus Investors, L.P., exercisable for 687,358 shares
of common stock of the Registrant extending the
expiration date to January 29, 2002.
4.3 First Amendment to Warrant No. 19, held by Warburg,
Pincus Investors, L.P., exercisable for 325,000 shares
15
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of common stock of the Registrant extending the
expiration date to January 29, 2002.
(11) STATEMENT REGARDING COMPUTATION OF PER SHARE EARNINGS
(27) FINANCIAL DATA SCHEDULE
ITEM 6(b) REPORTS ON FORM 8-K
None
16
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SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934,
the registrant has duly caused this report to be signed on its
behalf by the undersigned thereunto duly authorized.
GRUBB & ELLIS COMPANY
---------------------
(Registrant)
Date: November 14, 1996 /s/ Brian D. Parker
---------------------------------
Brian D. Parker
Senior Vice President and
Chief Financial Officer
17
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Grubb & Ellis Company and Subsidiaries
EXHIBIT INDEX (A)
FOR THE QUARTER ENDED SEPTEMBER 30, 1996
EXHIBIT
(3) ARTICLES OF INCORPORATION AND BYLAWS
3.1 Certificate of Incorporation of the Registrant, as
restated effective November 1, 1994, incorporated herein
by reference to Exhibit 3.2 to the Registrant's Annual
Report on Form 10-K filed on March 31, 1995 (Commission
File No. 1-8122).
3.2 Grubb & Ellis Company Bylaws, as amended and restated
effective June 1, 1994.
(4) INSTRUMENTS DEFINING THE RIGHTS OF SECURITY HOLDERS,
INCLUDING INDENTURES
4.1 Third Amendment to Stockholders' Agreement by and among
the Registrant, Warburg, Pincus Investors, L.P., Joe F.
Hanauer and The Prudential Insurance Company of America,
dated October 22, 1996, incorporated herein by reference
to Exhibit 99.3 to the Current Report on Form 8-K filed
by the Registrant on November 5, 1996 (Commission File
No. 1-8122).
4.2 First Amendment to Warrant No. 18, held by Warburg,
Pincus Investors, L.P., exercisable for 687,358 shares
of common stock of the Registrant extending the
expiration date to January 29, 2002.
4.3 First Amendment to Warrant No. 19, held by Warburg,
Pincus Investors, L.P., exercisable for 325,000 shares
of common stock of the Registrant extending the
expiration date to January 29, 2002.
(11) STATEMENT REGARDING COMPUTATION OF PER SHARE EARNINGS
(27) FINANCIAL DATA SCHEDULE
(A) Exhibits incorporated by reference are listed in Item 6(a) of
this report.
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GRUBB & ELLIS COMPANY AND SUBSIDIARIES
EXHIBIT (11) STATEMENT RE COMPUTATION OF
PER SHARE EARNINGS - FORM 10-Q
for the three-months ended
September 30, 1996 and 1995
(Unaudited)
(in thousands, except for shares and per share amounts)
Three Months
Ended September 30,
-----------------------
1996 1995
-------- -------
Primary income (loss) per share applicable
to Common Stock:
Weighted average common
shares outstanding 8,916,567 8,814,832
--------- ---------
Net income $ 1,296 $ 596
Earnings applicable to Preferred Stock (795) (723)
--------- ---------
Net income (loss) applicable to Common
Stockholders $ 501 $ (127)
--------- ---------
Net income (loss) per common share
and equivalents applicable to
Common Stock $ .06 $ (.01)
--------- ---------
Fully-diluted income (loss) per share
applicable to Common Stock:
Weighted average common shares outstanding 8,916,567 8,814,832
--------- ---------
Net income (loss) $ 501 $ (127)
--------- ---------
Net income (loss) per common share and
equivalents applicable to Common Stock $ .06 $ (.01)
--------- ---------
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EXHIBIT 3.2
GRUBB & ELLIS
BYLAWS
Amended and Restated as of June 1, 1994
ARTICLE I
OFFICES
Section 1.01 PRINCIPAL OFFICE. The principal office for the
transaction of the business of Grubb & Ellis Company (hereinafter called the
"Corporation") shall be at One Montgomery Street, Telesis Tower, San
Francisco, California 94104. The Board of Directors (hereinafter called the
"Board") is hereby granted full power and authority to change said principal
office from one location to another, either within or without the State of
Delaware.
ARTICLE II
MEETING OF STOCKHOLDERS
Section 2.01 ANNUAL MEETINGS. Annual Meetings of the stockholders of
the Corporation for the purpose of electing directors and for the transaction
of such other proper business as may come before such meetings may be held at
such time, date and place as the Board shall determine by resolution.
Section 2.02 SPECIAL MEETINGS. Special meetings of the stockholders
of the Corporation for any purpose or purposes may be called at any time by
the Board, or by a majority of the members of the Board or by a committee of
the Board which has been duly designated by the Board, whose powers and
authority, as provided in a resolution of the Board or in the Bylaws of the
Corporation, include the power to call such meetings, or by the affirmative
vote of the holders of at least a majority of the outstanding shares of
capital stock of the Corporation entitled to vote generally in the election
of directors (considered for this purpose as one class), but such special
meetings may not be called by any other person or persons.
Section 2.03 PLACE OF BUSINESS. All meetings of the stockholders
shall be held at such places, within or without the State of Delaware, as may
from time to time be designated by the person or persons calling the
respective meetings and specified in the respective notices thereof.
Section 2.04 NOTICE OF MEETINGS. Except as otherwise expressly
required by law, notice of each meeting of the stockholders, whether annual
or special, shall be given not less than ten nor more than sixty days before
the date of the meeting, to each stockholder of record entitled to vote at
such meeting by
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delivering a typewritten or printed notice thereof to him
personally, or by depositing such notice in the United States mail, in a
postage prepaid envelope, directed to him at his post office address
furnished by him to the Secretary of the Corporation for such purpose or, if
he shall not have furnished to the Secretary his address for such purposes,
then at his post office address as it appears on the records of the
Corporation, or by transmitting a notice thereof to him at such address by
telegraph, cable or wireless. Except as otherwise expressly required by law,
no publication of any notice of a meeting of the stockholders shall be
required. Every notice of a meeting of the stockholders shall state the
time, date and place of the meeting and, in the case of a special meeting, or
as otherwise expressly required by law, shall state the purpose or purposes
for which the meeting is called. Notice of any meeting of stockholders shall
not be required to be given to any stockholder who shall have waived such
notice and such notice shall be deemed waived by any stockholder who shall
attend such meeting in person or by proxy, except a stockholder who shall
attend such meeting for the express purpose of objecting, at the beginning of
the meeting, to the transaction of any business because the meeting is not
lawfully called or convened. Neither the business to be transacted at, nor
the purpose of, any regular or special meeting of stockholders need be
specified in any written waiver of notice. When a meeting is adjourned to
another time, date or place, written notice need not be given of the
adjourned meeting if the time, date and place thereof are announced at the
meeting at which the adjournment is taken; provided, however, that if the
date of any adjourned meeting is more than thirty days after the date for
which the meeting was originally noticed, or if a new record date is fixed
for the adjourned meeting, written notice of the time, date, and place of the
adjourned meeting shall be given in conformity herewith. At any adjourned
meeting, any business may be transacted which might have been transacted at
the original meeting.
Section 2.05 QUORUM. Except in the case of any meeting
for the election of directors summarily ordered as provided by
law, or as otherwise specified in the Certificate of Incorporation
or these Bylaws, the holders of record of a majority in voting
interest of the shares of stock of the Corporation entitled to be
voted thereat, present in person or by proxy, shall constitute a
quorum for the transaction of business at any meeting of the
stockholders of the Corporation or any adjournment thereof. In
the absence of a quorum at any meeting or any adjournment thereof,
a majority in voting interest of the stockholders present in
person or by proxy and entitled to vote thereat or, in the absence
therefrom of all the stockholders, any officer entitled to preside
at, or to act as secretary of, such meeting may adjourn such
meeting from time to time, but no other business may be
transacted. At any adjourned meeting at which a quorum is present
any business may be transacted which might have been transacted at
the meeting as originally called. The stockholders present at a
duly called or held meeting at which a quorum is present may
continue to do business until adjournment notwithstanding the
withdrawal of enough stockholders to leave less than a quorum.
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Section 2.06 VOTING. (a) Each stockholder shall, at
each meeting of the stockholders, be entitled to vote in person or
by proxy each share or fractional share of the stock of the
Corporation having voting rights on the matter in question and
which shall have been held by him and registered in his name on
the books of the Corporation:
(i) on the date fixed pursuant to Section 6.05 of
these Bylaws as the record date for the determination
of stockholders entitled to notice of and to vote at
such meeting, or
(ii) if no such date shall have been so fixed,
then (aa) at the close of business on the day next
preceding the day on which notice of the meeting shall
be given or (bb) if notice of the meeting shall be
waived, at the close of business on the day next
preceding the day on which the meeting shall be held.
(b) Shares of its own stock belonging to the
Corporation or to another corporation if a majority of the
shares entitled to vote in the election of directors in such
other corporation is held, directly or indirectly, by the
Corporation, shall neither be entitled to vote nor be counted
for quorum purposes. Persons holding stock of the
Corporation in a fiduciary capacity shall be entitled to vote
such stock. Persons whose stock is pledged shall be entitled
to vote, unless in the transfer by the pledgor on the books
of the Corporation he shall have expressly empowered the
pledgee to vote thereon, in which case only the pledgee, or
his proxy, may represent such stock and vote thereon. Stock
having voting power standing of record in the names of two or
more persons, whether fiduciaries, members of a partnership,
joint tenants, tenants in common, tenants by the entirety or
otherwise, or with respect to which two or more persons have
the same fiduciary relationship, shall be voted in accordance
with the provisions of the General Corporation Law of the
State of Delaware.
(c) Any such voting rights may be exercised by the
stockholder entitled thereto in person or by his proxy
appointed by an instrument in writing, subscribed by such
stockholder or by his attorney thereunto authorized and
delivered to the Secretary of the meeting; provided, however,
that no proxy shall be voted or acted upon after three years
from its date unless said proxy shall provide for a longer
period. The attendance at any meeting of a stockholder who
may theretofore have given a proxy shall not have the effect
of revoking the same unless he shall in writing so notify the
secretary of the meeting prior to the voting of the proxy.
At any meeting of the stockholders all matters, except as
otherwise provided in the Certificate of Incorporation, in
these Bylaws or by law, shall be decided by the vote of a
majority in voting interest of the stockholders present in
person or by proxy and entitled to vote thereat and thereon,
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subject to the requirements concerning a quorum set forth in
Section 2.05. The vote at any meeting of the stockholders on
any question need not be by written ballot, unless so
directed by the chairman of the meeting. On a vote by ballot
each ballot shall be signed by the stockholder voting, or by
his proxy, if there be such proxy, and it shall state the
number of shares voted.
Shares represented by proxies that reflect, with
respect to a proposal, abstentions or limited voting
authority, including "broker non-votes" (i.e., shares held by
a broker or nominee which are represented at the meeting, but
with respect to which such broker or nominee is not empowered
to vote on a particular proposal or proposals), shall be
counted as shares that are present and entitled to vote for
purposes of determining the presence of a quorum. For
purposes of determining the outcome of any proposal, shares
represented by such proxies will be treated as not present
and not entitled to vote with respect to the proposal.
Section 2.07 LIST OF STOCKHOLDERS. The Secretary of the
Corporation and persons authorized by the Secretary shall prepare and make,
at least ten days before every meeting of stockholders, a complete list of
the stockholders entitled to vote at the meeting, arranged in alphabetical
order, and showing the address of each stockholder and the number of shares
registered in the name of each stockholder. Such list shall be open to the
examination of any stockholder, for any purpose germane to the meeting,
during ordinary business hours, for a period of at least ten days prior to
the meeting, either at a place within the city where the meeting is to be
held, which place shall be specified in the notice of the meeting, or, if not
so specified, at the place where the meeting is to be held. The list shall
also be produced and kept at the time and place of the meeting during the
entire duration thereof and may be inspected by any stockholder who is
present.
Section 2.08 JUDGES. If at any meeting of the stockholders a vote by
written ballot shall be taken on any question, the chairman of such meeting
may appoint a judge or judges to act with respect to such vote. If no judge
is appointed, the chairman of such meeting or his designee shall serve as
judge. Such judges shall decide upon the qualification of the voters and
shall report the number of shares represented at the meeting and entitled to
vote on such question, shall conduct and accept the votes, and, when the
voting is completed, shall ascertain and report the number of shares voted
respectively for and against the question. Reports of the judges shall be in
writing and subscribed and delivered by them to the Secretary of the
Corporation. The judges need not be stockholders of the Corporation, and any
officer of the Corporation may be a judge on any question other than a vote
for or against a proposal in which he shall have a material interest.
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Section 2.09 ORGANIZATION. At every meeting of the
stockholders the Chairman of the Board, or in his absence the
President, or in his absence the Vice President designated by the
Chairman of the Board or in the absence of such designation a
chairman (who shall be one of the Vice Presidents, if any is
present) chosen by a majority in interest of the stockholders of
the Corporation present in person or by proxy and entitled to
vote, shall act as Chairman. The Secretary of the Corporation, or
his designee, shall act as Secretary of all meetings of the
stockholders. In the absence at any such meeting of the Secretary
or Assistant Secretary, the Chairman may appoint another person to
act as Secretary of the meeting.
ARTICLE III
BOARD OF DIRECTORS
Section 3.01. GENERAL POWERS. The property, business and affairs of
the Corporation shall be managed by or under the direction of the Board.
Individual directors shall not have the authority to act and shall not act as
agents for the Corporation, nor otherwise to manage its business or affairs,
nor to direct any officer or employee in the manner in which he shall
discharge his duties, unless such director is a duly elected officer of the
Corporation or is specifically authorized by special resolution of the Board
to act on behalf of the Corporation in a specific matter for a limited
purpose.
Section 3.02 NUMBER AND TERM OF OFFICE. The number of directors of
the Corporation (exclusive of directors to be elected, if any, by the holders
of any one or more series of Preferred Stock voting separately as a class or
classes) shall not be less than six nor more than eighteen, the exact number
of directors to be determined from time to time by a resolution adopted by
the Board. Unless these Bylaws are amended by the stockholders of the
Corporation to provide for the division of the directors into classes, at
each annual meeting all directors shall be elected to hold office until their
respective successors are elected and qualified or until their earlier
resignation or removal. Any vacancies in the Board for any reason, and any
newly created directorships resulting from any increase in the number of
directors, may be filled by the Board, acting by a majority of the directors
then in office, although less than a quorum, and any directors so chosen
shall hold office until the next election of directors and until their
successors shall have been duly elected and qualified. No decrease in the
number of directors shall shorten the term of any incumbent director.
Notwithstanding the foregoing, and except as otherwise required by law,
whenever the holders of any one or more series of Preferred Stock shall have
the right, voting separately as a class, to elect one or more directors of
the Corporation, the terms of the director or directors elected by such
holders shall expire at the next succeeding annual meeting of stockholders.
The stockholders of the Corporation shall not have cumulative voting rights.
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Section 3.03 DIRECTOR NOMINATIONS. Nominations for the election to
the Board may be made by the Board or by any stockholder of any outstanding
class of capital stock of the Corporation entitled to vote for the election
of directors. In all cases, such nominations shall be made by notice in
writing delivered or mailed by first class United States mail, postage
prepaid, to the Secretary of the Corporation. Written notice of nominations
by the Board of Directors shall be given by the Chairman of the Board to the
Secretary of the Corporation in the manner prescribed herein. Any other
written notice shall be given by the notifying stockholder to the Secretary
of the Corporation in the manner prescribed herein. Such written notice
shall be so mailed or delivered not less than fourteen days nor more than
fifty days prior to any meeting of the stockholders called for the election
of directors; provided, however, that if less than twenty-one days' notice of
the meeting is given to stockholders, such written notice shall be delivered
or mailed, as prescribed, to the Secretary of the Corporation not later than
the close of the seventh day following the day on which notice of the meeting
was mailed to stockholders. The Secretary shall file each notice with the
corporate records, and such notices shall be open to inspection by the
stockholders at all reasonable times during office hours.
Such written notice must contain the following information to
the extent known:
(a) The name, age, business address or, if known,
residence address of each proposed nominee;
(b) The principal occupation or employment of each
proposed nominee; and
(c) The name and residence address of the Chairman of
the Board for the notice by the Board of Directors, or the
name and residence address of the notifying shareholder for
notice by said shareholder; and
(d) The total number of shares that to the best of the
knowledge and belief of the person giving the notice will be
voted for each of the proposed nominees.
Section 3.04 ELECTION OF DIRECTORS. The directors shall
be elected by the stockholders of the Corporation, and at each
election the persons receiving the greatest number of votes, up to
the number of directors then to be elected, shall be the persons
then elected. The election of directors is subject to any
provisions contained in the Certificate of Incorporation relating
thereto.
Section 3.05 RESIGNATIONS. Any director of the
Corporation may resign at any time by giving written notice to the
Board or to the Secretary of the Corporation. Any such
resignation shall take effect at the time specified therein, or if
the time be not specified, it shall take effect immediately upon
its receipt,
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and, unless otherwise specified therein, the acceptance of such resignation
shall not be necessary to make it effective.
Sections 3.06 VACANCIES. Except as otherwise provided in the
Certificate of Incorporation, any vacancy in the Board, whether because of
death, resignation, disqualification, an increase in the number of directors,
or any other cause, may be filled by vote of the majority of the remaining
directors, although less than a quorum. Each director so chosen to fill a
vacancy shall hold office until the next election of directors and until his
successor shall have been elected and shall qualify or until he shall resign
or shall have been removed.
Section 3.07 PLACE OF MEETING, ETC. The Board may hold any of its
meetings at such place or places within or without the State of Delaware as
designated from time to time by resolution of the Board or by written consent
of all members of the Board. Any meeting shall be valid wherever held, if
held by the written consent of all members of the Board, given either before
or after the meeting and filed with the minutes of the proceedings of the
Board. Directors may participate in any regular or special meeting of the
Board by means of conference telephone or similar communications equipment
pursuant to which all persons participating in the meeting of the Board can
hear each other, and such participation shall constitute presence in person
at such meeting.
Section 3.08 FIRST MEETING. The Board shall meet as soon as
practicable after each annual election of directors and notice of such first
meeting shall not be required.
Section 3.09 REGULAR MEETINGS. Regular meetings of the Board may be
held at such time, date and place as the Board shall from time to time by
resolution determine. If any day fixed for a meeting shall be a legal
holiday at the place where the meeting is to be held, then the meeting shall
be held at the same time and place on the next succeeding business day not a
legal holiday. Except as provided by law, notice of regular meetings need
not be given.
Section 3.10 SPECIAL MEETINGS. Special meetings of the Board may be
called at any time by the Chairman of the Board or the President, to be held
at the principal office of the Corporation, or at such other place or places,
within or without the State of Delaware, as the person or persons calling the
meeting may designate.
Notice of special meetings of the Board in which attendance in person is
required shall be given to each director by two days' service of the same by
telegram, by letter, or personally. In the case of a meeting in which
attendance in person is not required, notice of such special meeting of the
Board shall be given to each director twenty-four hours prior to such
meeting. Notice may be waived by any director and any meeting shall be a
legal meeting without notice having been given if all the directors shall be
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present there at or if those not present shall, either before or after the
meeting, sign a written waiver of notice of, or a consent to, such meeting or
shall after the meeting sign an approval of the minutes thereof. All such
waivers, consents or approvals shall be filed with the corporate records.
Section 3.11 QUORUM AND MANNER OF ACTING. Except as otherwise
provided in the Certificate of Incorporation, these Bylaws or by law, the
presence of a majority of the authorized number of directors shall be
required to constitute a quorum for the transaction of business at any
meeting of the Board, and all matters shall be decided at any such meeting, a
quorum being present, by the affirmative votes of a majority of the directors
present. In the absence of a quorum, a majority of directors present at any
meeting may adjourn the same from time to time until a quorum shall be
present. Notice of any adjourned meeting need not be given. The directors
shall act only as a Board, and the individual directors shall have no power
as such.
Section 3.12 ACTION BY CONSENT. Any action required or permitted to
be taken at any meeting of the Board or of any committee thereof may be taken
without a meeting if a written consent thereto is signed by all members of
the Board or of such committee, as the case may be, and such written consent
is filed with the corporate records of the proceedings of the Board or such
committee.
Section 3.13 ORGANIZATION. At every meeting of the Board, the
Chairman of the Board, or in his absence, the President or in the absence of
both, a director appointed by a majority of directors present shall preside.
The Secretary of the Corporation shall act, unless the presiding officer
appoints another to act, as Secretary of the Board of Directors.
Section 3.14 COMPENSATION. By resolution of the Board, directors in
their capacity as such may be allowed a reasonable annual retainer fee, in
addition to a reasonable fixed fee for attendance at the meetings of the
Board of Directors and expenses of attendance, if any. Members of special or
standing committees may be allowed such compensation for attending committee
meetings as the Board shall determine.
Section 3.15 COMMITTEES. The Board may, by resolution passed by the
Board, designate one or more committees, each committee to consist of one or
more of the directors of the Corporation. Any such committee, to the extent
provided in a resolution of the Board or these Bylaws, shall have and may
exercise all the powers and authority of the Board in the management of the
business and affairs of the Corporation but no such committee shall have any
power or authority to amend the Certificate of Incorporation, adopt an
agreement of merger or consolidation, recommend to the stockholders the sale,
lease or exchange of all or substantially all of the Corporation's property
and assets, recommend to the stockholders a dissolution of the Corporation or
a revocation of the dissolution, or amend these
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Bylaws of the Corporation. Any such committee shall keep written minutes of
its meetings and report the same to the Board at the next regular meetings of
the Board.
ARTICLE IV
OFFICERS
Section 4.01 NUMBER. The officers of the Corporation
shall be a President, one or more Vice Presidents, including a
Chief Financial Officer, a Secretary, a Controller and a
Treasurer, and such other officers as may be appointed in
accordance with the provisions of Section 4.02 of this ARTICLE IV.
The Board may also appoint a Chairman of the Board or a Vice
Chairman of the Board. Either the President or Chairman of the
Board of Directors shall be designated as the Chief Executive
Officer.
Section 4.02 SUBORDINATE OFFICERS, ETC. The Board may
appoint such other officers, committees or agents as the business
of the Corporation may require, including one or more Assistant
Treasurers, one or more Assistant Vice Presidents and one or more
Assistant Secretaries, each of whom shall hold office for such
period, have such authority and perform such duties as the Board
may from time to time determine by resolution which is not
inconsistent with these Bylaws. The Board may delegate to any
officer or committee appointed by it the power to appoint any such
subordinate officers, committees or agents.
Section 4.03 DIVISIONAL OFFICERS, ETC. The Board may
appoint such other officers, committee or agents as the business
of the Corporation may require for its divisions, including a
President, Chief Financial Officer, Secretary, Controller and
Treasurer of such divisions, each of whom shall hold office for
such period, have such authority and perform such duties as the
Board may from time to time determine by resolution. The Board
may delegate to any officer or committee appointed by it the power
to appoint any such divisional officers, committees or agents.
Section 4.04 ELECTION. TERM OF OFFICE AND
QUALIFICATIONS. Each officer shall hold his office until his
successor is appointed and qualified or until his earlier
resignation or removal. If an officer is appointed by the Board,
only the Board may remove such officer, unless otherwise specified
by the Board when such officer is appointed.
Section 4.05 REMOVAL. Any officer may be removed,
either with or without cause, by the vote of a majority of the
Board at any regular or special meeting of the Board, or, except
in the case of any officer appointed by the Board, or by any
superior officer or officers, if the power of removal is conferred
upon such committee or such officer or officers by the Board.
Section 4.06 RESIGNATIONS. Any officer may sign at any
time by giving written notice to the Board or to the Chairman of
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the Board, the President, or the Secretary of the Corporation. Any
such resignation shall take effect at the time specified therein;
and, unless otherwise specified therein, the acceptance of such
resignation shall not be necessary to make it effective.
Section 4.07 VACANCIES. A vacancy in any office because
of death, resignation, removal or disqualification or any other
cause, shall be filled in the manner prescribed in these Bylaws
for regular appointment or elections to such offices.
Section 4.08 CHAIRMAN OF THE BOARD. The Chairman of the
Board, Vice Chairman of the Board or, if none are appointed, the
President, shall preside at all meetings of the stockholders and
of the Board. The Chairman of the Board, if a person other than
the President, shall have such additional duties and
responsibilities and membership on such Committees of the Board as
may be prescribed by the Board or these Bylaws.
Section 4.09 CHIEF EXECUTIVE OFFICER. The Chairman of
the Board, if other than the President, may be designated as the
Chief Executive Officer. Otherwise the President shall be the
Chief Executive Officer. Subject to the control of the Board, the
Chief Executive Officer shall have general supervision, direction
and control of the business and officers of the Corporation.
Section 4.10 PRESIDENT. Subject to such supervisory
powers as may be given by the Board to the Chairman of the Board,
the President shall have the powers and duties of management
usually vested in the office of the president of a corporation and
shall have such other powers and duties as may be prescribed by
the Board or these Bylaws.
Section 4.11 VICE PRESIDENTS. The Vice Presidents shall
exercise and perform such powers and duties with respect to the
administration of the business and affairs of the Corporation as
may from time to time be assigned to each of them by the Chief
Executive Officer or by the Board or as is prescribed by these
Bylaws. One or more of them may, but need not, be designated as
an Executive Vice President. In the absence or disability of the
President, the Vice President, in order of their rank as fixed by
the Board, or if not ranked, the Vice President designated by the
Board, or failing such designation the Chief Financial Officer
shall until the return or replacement of the President perform all
of the duties of the President and when so acting shall have all
of the powers of and be subject to all the restrictions upon the
President.
Section 4.12 SECRETARY. The Secretary shall keep, or
cause to be kept, a book of minutes at the principal office for
the transaction of the business of the Corporation, or such other
place as the Board may order, of all meetings of directors and
stockholders, with the time, date and place of holding, whether
regular or special, and if special, how authorized, the names of
those present at directors' meetings, the number of shares present
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or represented at stockholders' meetings and the proceedings
thereof.
The Secretary shall keep, or cause to be kept, at the principal office
for the transaction of the business of the Corporation or at the office of
the Corporation's transfer agent, a share register, or a duplicate share
register, showing the names of the stockholders and their addresses; the
number and classes of shares held by each; the number and date of
certificates issued for the same; and the number and date of cancellation of
every certificate surrendered for cancellation.
The Secretary shall give, or cause to be given, notice of all the
meetings of the stockholders and of the Board required by these Bylaws or by
law to be given, and he shall keep the seal of the Corporation in safe
custody, and shall have such other powers and perform such other duties as
may be prescribed by the Board or these Bylaws. If for any reason the
Secretary shall fail to give notice of any special meeting of the Board
called by one or more of the persons identified in Section 3.10, or if he
shall fail to give notice of any special meeting of the stockholders called
by the Board, then any such person identified in Section 3.10 of these Bylaws
may give notice of any such special meeting.
Section 4.13 CHIEF FINANCIAL OFFICER. The Chief Financial Officer,
or in his absence, the Chief Executive Officer, shall have responsibility for
overall corporate financial planning. Subject to the control of the Board,
the Chief Financial Officer, or in his absence, the Chief Executive Officer,
shall have general supervision, direction and control of the functions of the
Treasurer and Controller of the Corporation, each of whom shall report to the
Chief Financial Officer or to such other officer as may be designated by the
Chief Executive Officer.
Section 4.14 TREASURER. The Treasurer shall keep and maintain, or
cause to be kept and maintained, adequate and correct accounts of the
properties and business transactions of the Corporation, including accounts
of its assets, liabilities, receipts, disbursements, gains, losses, capital,
surplus and shares. Any surplus, including earned surplus, paid-in surplus
and surplus arising from a reduction of capital, shall be classified
according to source and shown in a separate account. The books of account
shall at all reasonable times be open to inspection by the Board.
The Treasurer shall deposit all monies and other valuables in the name
and to the credit of the Corporation with such depositories or in the manner
as may be designated by the Board. He shall disburse the funds of the
Corporation as may be ordered by the Board and subject to any restrictions as
may be imposed by the Board, shall render to the President and Chief
Executive Officer, Chief Financial Officer and the Board, whenever they
request it, an account of all of his transactions as Treasurer and of the
financial condition of the Corporation, and shall have such other
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powers and perform such other duties as may be prescribed by
the Board or these Bylaws.
Section 4.15 CONTROLLER. The Controller shall supervise
the maintenance of adequate and correct accounts of the properties
and business transactions of all subsidiaries of the Corporation
and shall exercise and perform such powers and duties with respect
to the administration of the business and affairs of the
Corporation as may from time to time be assigned to him by the
President and Chief Executive Officer or by any Vice President or
by the Board or as is prescribed by these Bylaws.
Section 4.16 SALARIES. The salaries of the officers
shall be fixed from time to time by the Board, and no officer
shall be prevented from receiving such salary by reason of the
fact that he is also a director of the Corporation.
ARTICLE V
CONTRACTS, CHECKS, DRAFTS, BANK ACCOUNTS, ETC.
Section 5.01 EXECUTION OF CONTRACTS. The Board, except
as in these Bylaws otherwise provided, may authorize any officer
or officers, agent or agents, to enter into any contract or
execute and deliver any instrument in the name of and on behalf of
the Corporation, and such authority may be general or confined to
specific instances and, unless so authorized, no officer, agent,
or employee shall have any power or authority to bind the
Corporation by any contract or engagement or to pledge its credit
or to render it liable pecuniarily for any purpose or in any
amount.
Section 5.02 LOANS. No loans shall be contracted on
behalf of the Corporation and no negotiable papers shall be issued
in its name, unless and except as authorized by the Board. When
so authorized by the Board, any officer or agent of the
Corporation may effect loans and advances at any time for the
Corporation from any bank, trust company, or other institution, or
from any firm, corporation or individual, and for such loans and
advances may make, execute and deliver promissory notes, bonds or
other evidences of indebtedness of the Corporation, and when
authorized as aforesaid, as security for the payment of any and
all loans, advances, indebtedness, and liabilities of the
Corporation, may pledge, hypothecate or transfer any and all
stocks, securities, and other personal property at any time held
by the Corporation, and to that end endorse, assign and deliver
the same. Such authority may be general or confined to specific
instances.
Section 5.03 DEPOSITS. All funds of the Corporation
shall be deposited from time to time to the credit of the
Corporation with such banks, bankers, trust companies or other
depositaries as the Board may select or as may be selected by any
officer or officers, agent or agents of the Corporation to whom
such power may be delegated from time to time by the Board.
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Section 5.04 CHECKS, DRAFTS, ETC. All checks, drafts or
other orders for payment of money, notes, acceptances, or other
evidence of indebtedness issued in the name of the Corporation,
shall be signed by such officer or officers, agent or agents of
the Corporation and in such manner as shall be determined from
time to time by resolution of the Board.
Section 5.05 GENERAL AND SPECIAL BANK ACCOUNTS. The
Board may from time to time authorize the opening and keeping of
general and special bank accounts with such banks, trust companies
or other depositaries as the Board may select or as may be
selected by any officer or officers, assistant or assistants,
agent or agents, or attorney, or attorneys of the Corporation to
whom power shall have been delegated by the Board. The Board may
make such special rules and regulations with respect to such bank
accounts, not inconsistent with the provisions of these Bylaws, as
it may deem expedient.
ARTICLE VI
SHARES AND THEIR TRANSFERS
Section 6.01 CERTIFICATES FOR STOCK. Every owner of stock of the
Corporation shall be entitled to have a certificate or certificates, to be in
such form as the Board shall prescribe, certifying the number and class of
shares of the stock of the Corporation owned by him. The certificates
representing shares of such stock shall be numbered in the order in which
they shall be issued and shall be signed in the name of the Corporation by
the Chairman of the Board, the President, or a Vice President, and by the
Secretary or an Assistant Secretary or by the Treasurer or an Assistant
Treasurer. Any and all of the signatures on the certificates may be a
facsimile. In case any officer, transfer agent or registrar who has signed
or whose facsimile signature has been placed upon any such certificate shall
thereafter have ceased to be such officer, transfer agent or registrar before
such certificate is issued, such certificate may nevertheless be issued by
the Corporation with the same effect as though the person who signed such
certificate, or whose facsimile signature shall have been placed thereupon,
were such officer, transfer agent or registrar at the date of issue. A
record shall be kept of the respective names of the persons, firms or
corporations owning the stock represented by such certificates, the number
and class of shares represented by such certificates, and the respective
dates thereof, and in case of cancellation, the respective dates of
cancellation. Every certificate surrendered to the Corporation for exchange
or transfer shall be canceled, and no new certificate or certificates shall
be issued in exchange for any existing certificate until such existing
certificate shall have been so canceled, excepting cases provided for in
Section 6.04.
Section 6.02 TRANSFER OF STOCK. Transfers of shares of stock of the
Corporation shall be made only on the books of the Corporation by the
registered holder thereof, or by his attorney
32
<PAGE>
thereunto authorized by power of attorney duly executed and filed with the
Secretary, or with a transfer clerk or a transfer agent appointed as provided
in Section 6.03, and upon surrender of the certificate or certificates for
such shares properly endorsed and the payment of all taxes thereon. The
person in whose name shares of stock stand on the books of the Corporation
shall be deemed the owner thereof for all purposes as regards the
Corporation. Whenever any transfer of shares shall be made for collateral
security, and not absolutely, such fact shall be stated expressly in the
entry of transfer if, when the certificate or certificates shall be presented
to the Corporation for transfer, both the transferor and the transferee
request the Corporation to do so.
Section 6.03 REGULATIONS. The Board may make such rules and
regulations as it may deem expedient, not inconsistent with these Bylaws,
concerning the issue, transfer and registration of certificates for shares of
the stock of the Corporation. It may appoint, or authorize any officer or
officers to appoint, one or more transfer clerks or one or more transfer
agents and one or more registrars, and may require all certificates for stock
to bear the signature or signatures of any of them.
Section 6.04 LOST, STOLEN, DESTROYED, AND MUTILATED CERTIFICATES.
The holder of any certificate for stock of the Corporation shall immediately
notify the Corporation of any loss, theft, destruction, or mutilation of such
certificates, and the Corporation may issue a new certificate for stock in
the place of any certificate theretofore issued by it alleged to have been
lost, stolen, destroyed, or mutilated. The Board may, in its discretion,
require the owner of the certificate or his legal representatives to give the
Corporation a bond in such sum, not exceeding double the value of the stock,
and with such surety or sureties, as it may direct, sufficient to indemnify
the Corporation, its transfer agents, and registrar against any claim that
may be made against them on account of the alleged loss or destruction of any
such certificate; a new certificate may be so issued without requiring any
bond when, in the judgment of the Secretary, it is proper so to do.
Section 6.05 FIXING DATE OF DETERMINATION OF STOCKHOLDERS OF RECORD.
In order that the Corporation may determine the stockholders entitled to
notice of or to vote at any meeting of stockholders or any adjournment
thereof, or entitled to receive payment of any dividend or other distribution
or allotment of any rights, or entitled to exercise any rights in respect to
any other change, conversion or exchange of stock or for the purpose of any
other lawful action, the Board may fix, in advance, a record date, which
shall not be more than sixty nor less than ten days before the date of such
meeting, nor more than sixty days prior to any other action. If, in any case
involving the determination of stockholders for any purpose other than notice
of or voting at a meeting of stockholders, the Board shall not fix such a
record date, the record date for determining stockholders for such purpose
shall be the close of business on the day on which the Board shall adopt the
resolution relating thereto. A determination of
33
<PAGE>
stockholders entitled to notice of or to vote at a meeting of stockholders
shall apply to any adjournment of such meeting; provided, however, that the
Board may fix a new record date for the adjourned meeting.
ARTICLE VII
INDEMNIFICATION
Section 7.01 RIGHT TO INDEMNIFICATION. (a) Each person who was or
is made a party or is threatened to be made a party to or is involved in any
action, suit or proceeding, whether civil, criminal, administrative or
investigative (hereinafter, a "proceeding"), by reason of the fact that he or
she, or a person of whom he or she is the legal representative, is or was a
director, officer or employee of the Corporation or, as a director, officer
or employee of the Corporation, is or was serving at the request of the
Corporation as a director, officer or employee of another corporation or of a
partnership, joint venture, trust or other enterprise, including service with
respect to employee benefit plans, whether the basis of such proceeding is
alleged action in an official capacity as a director, officer, employee or
agent or in any other capacity while serving as a director, officer or
employee, shall be indemnified and held harmless by the Corporation to the
fullest extent authorized by the Delaware General Corporation Law, as the
same exists or may hereafter be amended (but, in the case of any such
amendment, only to the extent that such amendment permits the Corporation to
provide broader indemnification rights than said law permitted the
Corporation to provide prior to such amendment), against all expense,
liability and loss (including attorneys' fees, judgments, fines, ERISA excise
taxes or penalties and amounts paid or to be paid in settlement) reasonably
incurred or suffered by such person in connection therewith, and such
indemnification shall continue as to such person who has ceased to be a
director, officer or employee and shall inure to the benefit of his or her
heirs, executors and administrators; provided, however, that, except as
provided in paragraph (b) hereof, the Corporation shall indemnify any such
person seeking indemnification in connection with a proceeding (or part
thereof) initiated by such person only if such proceeding (or part thereof)
was authorized by the Board of Directors of the Corporation. The right to
indemnification conferred in this Section shall be a contract right and shall
include the right to be paid by the Corporation the expenses incurred in
defending any such proceeding in advance of its final disposition; provided,
however, that, if the Delaware General Corporation Law requires, the payment
of such expenses incurred by such person in his or her capacity as a director
or officer (and not any other capacity in which service was or is rendered by
such person while a director or officer, including, without limitation,
service to an employee benefit plan) in advance of the final disposition of a
proceeding shall be made only upon delivery to the Corporation of an
undertaking, by or on behalf of such person, to repay all amounts so advanced
if it shall ultimately be determined that such person is not entitled to be
34
<PAGE>
indemnified under this Section or otherwise. The Corporation may, by action
of its Board of Directors, provide indemnification and advance expenses to
any agent of the Corporation with the same scope and effect as the foregoing
indemnification of directors, officers and employees.
(b) RIGHT OF CLAIMANT TO BRING SUIT. If a claim under
paragraph (a) of this Section is not paid in full by the
Corporation within thirty days after a written claim has been
received by the Corporation, the claimant may at any time
thereafter bring suit against the Corporation to recover the
unpaid amount of the claim, and, if successful in whole or in
part, the claimant shall also be entitled to be paid the
expense of prosecuting such claim. It shall be a defense to
any such action (other than an action brought to enforce a
claim for expenses incurred in defending any proceeding in
advance of its final disposition where the required
undertaking, if any is required, has been tendered to the
Corporation) that the claimant has not met the standards of
conduct which make it permissible under the Delaware General
Corporation Law for the Corporation to indemnify the claimant
for the amount claimed, but the burden of proving such defense
shall be on the Corporation. Neither the failure of the
Corporation (including its Board of Directors, independent
legal counsel or its stockholders) to have made a
determination prior to the commencement of such action that
indemnification of the claimant is proper in the circumstances
because he or she has met the applicable standards of conduct
set forth in the Delaware General Corporation Law, nor an
actual determination by the Corporation (including its Board
of Directors, independent legal counsel or its stockholders)
that the claimant has not met such applicable standards of
conduct, shall be a defense to such action or create a
presumption that the claimant has not met the applicable
standards of conduct.
(c) NON-EXCLUSIVITY OF RIGHTS. The rights to
indemnification and the payment of expenses incurred in
defending a proceeding in advance of its final disposition
conferred in this Section shall not be exclusive of any other
right which any person may have or hereafter acquire under any
statute, provision of the Certificate of Incorporation, bylaw,
agreement, vote of stockholders or disinterested directors or
otherwise.
(d) INSURANCE. The Corporation may maintain
insurance, at its expense, to protect itself and any director,
officer or employee of the Corporation or another corporation,
partnership, joint venture, trust or other enterprise against
any such expense, liability or loss, whether or not the
Corporation would have the power to indemnify such person
against such expense, liability or loss under the Delaware
General Corporation Law.
35
<PAGE>
ARTICLE VIII
Section 8.01 SEAL. The Board shall provide a corporate
seal, which shall be in the form of a circle and shall bear the
name of the Corporation and word and figures showing that the
Corporation was incorporated in the State of Delaware and year of
incorporation.
Section 8.02 WAIVER OF NOTICES. Whenever notice is
required to be given by these Bylaws or the Certificate of
Incorporation or by law, the person entitled to said notice may
waive such notice in writing, either before or after the time
stated therein, and such waiver shall be deemed equivalent to
notice.
Section 8.03 FISCAL YEAR. The fiscal year of the
Corporation shall, unless otherwise fixed by resolution of the
Board of Directors, end on the last day of December in each year.
Section 8.04 INSPECTION OF BOOKS. All books and records
of the Corporation shall be open to inspection to the extent
expressly provided by law and not otherwise. Any permissible
inspection shall be arranged as far in advance as possible with
the President of the Corporation, or such other person as the
President may designate from time to time. Such inspection shall
not interrupt or interfere with the business and employees of the
Corporation. Confidential Information obtained by such inspection
shall be used only as provided in these Bylaws.
Section 8.05 AMENDMENTS. These Bylaws may be amended,
altered or repealed, and new Bylaws may be adopted, (i) by the
affirmative vote of the holders of at least a majority of the
outstanding shares of capital stock of the Corporation entitled to
vote generally in the election of directors (considered for this
purpose as one class) or (ii) by an affirmative vote of the
majority of the Board but such right of the directors shall not
divest or limit the right of the stockholders to adopt, alter or
repeal these Bylaws.
36
<PAGE>
Exhibit 4.2
FIRST AMENDMENT
TO STOCK SUBSCRIPTION WARRANT NO. 18
Effective October 22, 1996, Paragraph 2 of Stock Subscription Warrant No.
18 shall be amended to read in its entirety as follows:
2. PERIOD OF EXERCISE. This Warrant is exercisable at any
time or from time to time prior to January 29, 2002.
Except as so amended, all other terms and conditions of
Stock Subscription Warrant No. 18 shall remain in full force and
effect.
IN WITNESS WHEREOF, GRUBB & ELLIS COMPANY has caused this
First Amendment to Stock Subscription Warrant No. 18 to be signed
by its duly authorized officer under its corporate seal, attested
by its duly authorized officer, effective as of October 22, 1996.
GRUBB & ELLIS COMPANY
By /s/ Robert J. Walner
----------------------------
Robert J. Walner
Senior Vice President
Attest:
By /s/ Carol M. Vanairsdale
--------------------------------
Carol M. Vanairsdale
Assistant Secretary
37
<PAGE>
Exhibit 4.3
FIRST AMENDMENT
TO STOCK SUBSCRIPTION WARRANT NO. 19
Effective October 22, 1996, Paragraph 2 of Stock
Subscription Warrant No. 19 shall be amended to read in its
entirety as follows:
2. PERIOD OF EXERCISE. This Warrant is exercisable at any
time or from time to time prior to January 29, 2002.
Except as so amended, all other terms and conditions of
Stock Subscription Warrant No. 19 shall remain in full force and
effect.
IN WITNESS WHEREOF, GRUBB & ELLIS COMPANY has caused this
First Amendment to Stock Subscription Warrant No. 19 to be signed
by its duly authorized officer under its corporate seal, attested
by its duly authorized officer, effective as of October 22, 1996.
GRUBB & ELLIS COMPANY
By /s/ Robert J. Walner
----------------------------
Robert J. Walner
Senior Vice President
Attest:
By /s/ Carol M. Vanairsdale
-------------------------------
Carol M. Vanairsdale
Assistant Secretary
38
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 5
<LEGEND>
THE SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE
CONSOLIDATED BALANCE SHEETS AND THE CONSOLIDATED STATEMENTS OF OPERATIONS AND IS
QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS.
</LEGEND>
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> JUN-30-1997
<PERIOD-START> JUL-01-1996
<PERIOD-END> SEP-30-1996
<CASH> 14,443
<SECURITIES> 0
<RECEIVABLES> 9,051
<ALLOWANCES> 4,837
<INVENTORY> 0
<CURRENT-ASSETS> 23,534
<PP&E> 20,725
<DEPRECIATION> 15,884
<TOTAL-ASSETS> 30,729
<CURRENT-LIABILITIES> 15,808
<BONDS> 0
0
32,143
<COMMON> 90
<OTHER-SE> 57,182
<TOTAL-LIABILITY-AND-EQUITY> 30,729
<SALES> 0
<TOTAL-REVENUES> 52,032<F1>
<CGS> 0
<TOTAL-COSTS> 25,939
<OTHER-EXPENSES> 24,041
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 726
<INCOME-PRETAX> 1,326
<INCOME-TAX> 30
<INCOME-CONTINUING> 1,296
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 1,296
<EPS-PRIMARY> .06
<EPS-DILUTED> .06
<FN>
<F1>Interest income and other income, net are included under Total Revenues.
</FN>
</TABLE>
