<PAGE>
FORM 10-Q
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF
THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended December 31, 1996
---------------------------
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF
THE SECURITIES EXCHANGE ACT OF 1934
For the transition period from to
------------------ -------------------
Commission File Number: 1-8122
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GRUBB & ELLIS COMPANY
----------------------------------------------------
(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.)
2215 Sanders Road, 4th Floor,
Northbrook, IL 60062
--------------------------------------
(Address of Principal Executive Offices)
(Zip Code)
(847) 753-9010
--------------------------------------------------
(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
--- ---
19,457,643
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(Number of Shares Outstanding of the Registrant's
Common Stock at February 2, 1997)
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)
<TABLE>
<CAPTION>
For the Three Months For the Six Months
Ended December 31, Ended December 31,
------------------------ ------------------------
1996 1995 1996 1995
--------- --------- --------- ---------
<S> <C> <C> <C> <C>
Revenue:
Commercial real estate
brokerage commissions $ 56,510 $ 50,329 $ 99,301 $ 89,015
Real estate services fees,
commissions and other 11,524 10,052 20,660 18,728
--------- --------- --------- ---------
Total revenue 68,034 60,381 119,961 107,743
--------- --------- --------- ---------
Costs and Expenses:
Real estate brokerage
and other commissions 35,214 30,652 61,153 53,614
Selling, general and administrative 11,598 11,904 22,288 23,088
Salaries and wages 13,933 10,978 26,610 23,380
Depreciation and amortization 885 608 1,652 1,173
Special charges and unusual items 993 234 900 76
--------- --------- --------- ---------
Total costs and expenses 62,623 54,376 112,603 101,331
--------- --------- --------- ---------
Total operating income 5,411 6,005 7,358 6,412
Other income and expenses:
Interest income 221 217 351 356
Other income, net 151 (203) 126 789
Interest expense to
related parties (599) (741) (1,325) (1,471)
--------- --------- --------- ---------
Income before income taxes 5,184 5,278 6,510 6,086
and extraordinary item
Provision for income taxes (37) 54 (67) (158)
--------- --------- --------- ---------
Income before extraordinary item 5,147 5,332 6,443 5,928
Extraordinary item - gain
on extinguishment of debt, net
of income taxes 3,576 - 3,576 -
--------- --------- --------- ---------
Net income $ 8,723 $ 5,332 $ 10,019 $ 5,928
--------- --------- --------- ---------
--------- --------- --------- ---------
</TABLE>
See notes to condensed consolidated financial statements.
3
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GRUBB & ELLIS COMPANY AND SUBSIDIARIES
Condensed Consolidated Statements of Operations, Continued
(in thousands, except per share amounts and shares)
(unaudited)
<TABLE>
<CAPTION>
For the Three Months For the Six Months
Ended December 31, Ended December 31,
------------------------ ------------------------
1996 1995 1996 1995
--------- --------- --------- ---------
<S> <C> <C> <C> <C>
Net income applicable to common
stockholders net of undeclared
dividends earned on preferred stock $ 8,087 $ 4,609 $ 8,588 $ 4,482
--------- --------- --------- ---------
--------- --------- --------- ---------
Net income per common share
and equivalents:
Primary -
- from operations $ .35 $ .42 $ .43 $ .42
- from extra-
ordinary gain .27 - .28 -
--------- --------- --------- ---------
$ .62 $ .42 $ .71 $ .42
--------- --------- --------- ---------
--------- --------- --------- ---------
Weighted average common
shares and equivalents
outstanding 13,334,656 8,827,675 12,669,232 8,850,416
---------- --------- ---------- ---------
---------- --------- ---------- ---------
Fully diluted -
- from operations $ .30 $ .32 $ .37 $ .36
- from extra-
ordinary gain .20 - .21 -
--------- --------- --------- ---------
$ .50 $ .32 $ .58 $ .36
--------- --------- --------- ---------
--------- --------- --------- ---------
Weighted average common
shares and equivalents
outstanding 17,343,642 8,827,675 17,366,724 8,850,416
---------- --------- ---------- ---------
---------- --------- ---------- ---------
</TABLE>
See notes to condensed consolidated financial statements.
4
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GRUBB & ELLIS COMPANY AND SUBSIDIARIES
Condensed Consolidated Balance Sheets
(in thousands)
ASSETS
(unaudited)
<TABLE>
<CAPTION>
December 31, June 30, December 31,
1996 1996 1995
------------ --------- ------------
<S> <C> <C> <C>
Current Assets:
Cash and cash equivalents $ 28,530 $ 13,547 $ 26,611
Real estate brokerage
commissions receivable 2,533 206 3,313
Real estate services fees and
other commissions receivable 2,713 3,172 3,669
Other receivables 3,209 4,326 3,923
Prepaids and other current
assets 1,508 1,484 1,295
------------ --------- ------------
Total current assets 38,493 22,735 38,811
Noncurrent Assets:
Real estate brokerage
commissions receivable 61 100 272
Real estate investments held
for sale and real estate owned 666 537 579
Equipment and leasehold
improvements, net 4,828 5,194 5,563
Other assets 1,611 1,092 951
------------ --------- ------------
Total assets $ 45,659 $ 29,658 $ 46,176
------------ --------- ------------
------------ --------- ------------
</TABLE>
See notes to condensed consolidated financial statements.
5
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GRUBB & ELLIS COMPANY AND SUBSIDIARIES
Condensed Consolidated Balance Sheets, continued
(in thousands, except per share amounts and shares)
(unaudited)
<TABLE>
<CAPTION>
December 31, June 30, December 31,
1996 1996 1995
------------ --------- ------------
<S> <C> <C> <C>
LIABILITIES
Current Liabilities:
Notes payable and current portion
of long-term debt $ 22 $ 28 $ 276
Accounts payable 1,508 1,624 1,498
Compensation and employee benefits
payable 7,104 5,380 9,552
Deferred commissions payable 8,411 201 7,451
Accrued severance obligations 890 98 776
Accrued office closure costs 1,137 623 867
Accrued claims and settlements 1,449 1,779 2,132
Other accrued expenses 5,147 6,717 6,377
------------ --------- ------------
Total current liabilities 25,668 16,450 28,929
Long-Term Liabilities:
Long-term debt, net of current
portion 291 336 351
Long-term debt to related party 15,000 27,514 26,698
Accrued claims and settlements 11,190 11,804 12,802
Accrued office closure costs 497 960 1,099
Other 406 69 16
------------ --------- ------------
Total liabilities 53,052 57,133 69,895
------------ --------- ------------
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
Common stock, $.01 par value:
25,000,000 shares authorized;
16,948,619, 8,916,415 and 8,883,970
shares issued and outstanding at
December 31, 1996, June 30, 1996
and December 31, 1995, respectively 170 90 90
Additional paid-in capital 99,280 57,154 57,084
Retained earnings (deficit) (106,843) (116,862) (113,036)
------------ --------- ------------
Total stockholders' equity (deficit) (7,393) (27,475) (23,719)
------------ --------- ------------
Total liabilities and
stockholders' equity (deficit) $ 45,659 $ 29,658 $ 46,176
------------ --------- ------------
------------ --------- ------------
</TABLE>
See notes to condensed consolidated financial statements.
6
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GRUBB & ELLIS COMPANY AND SUBSIDIARIES
Condensed Consolidated Statements of Cash Flows
(unaudited - in thousands)
For the Six Months
Ended December 31,
----------------------
1996 1995
--------- ----------
Cash Flows from Operating Activities:
Net income $ 10,019 $ 5,928
Extraordinary item - gain on
extinguishment of debt (3,576) -
Other adjustments to reconcile net income to net
cash used in operating activities 9,251 9,404
--------- ----------
Net cash provided by operating activities 15,694 15,332
--------- ----------
--------- ----------
Cash Flows from Investing Activities:
Proceeds from disposition and distributions from
real estate joint ventures and real estate owned 95 1,188
Purchases of equipment and leasehold improvements (792) (1,207)
--------- ----------
Net cash used in investing activities (697) (19)
--------- ----------
Cash Flows from Financing Activities:
Repayment of notes payable (14) (108)
Repayment of long-term debt to related party (10,000) -
Issuance of common stock 10,000 -
--------- ----------
Net cash used in financing activities (14) (108)
--------- ----------
Net increase in cash and cash equivalents 14,983 15,205
Cash and cash equivalents at beginning of period 13,547 11,406
--------- ----------
Cash and cash equivalents at end of period $ 28,530 $ 26,611
--------- ----------
--------- ----------
--------------------------------
Supplemental Disclosure of Cash Flow Information:
Cash paid during the period for:
Interest $ 1,357 $ 716
Income taxes 16 561
See notes to condensed consolidated financial statements.
7
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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, increasing its ownership to 100%. Prior to the acquisition, the
minority interest was immaterial and was included in other long-term
liabilities on the Condensed Consolidated Balance Sheets 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 three months or six months ended December 31,
1996 are not necessarily indicative of the results that may be expected for
future periods.
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
natural 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.
8
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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 three months and six months ended
December 31, 1995 included federal income taxes related solely to Axiom
which filed on a separate company basis for tax purposes.
3. FINANCING TRANSACTIONS
SALE AGREEMENT - LONG-TERM DEBT -
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 included: (a) $5 million Revolving Credit Note
due November 1, 1999; (b) $10 million 9.9% Senior Notes due in equal
installments on 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 (the "PIK
Notes"); (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 provided that in the event that Warburg converts its
Senior Convertible Preferred Stock to common stock, Prudential will convert
its remaining Junior Convertible Preferred Stock to common stock as well.
As of the date of the Sale Agreement, Prudential continued 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.
9
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GRUBB & ELLIS COMPANY AND SUBSIDIARIES
Notes to Condensed Consolidated Financial Statements
3. FINANCING TRANSACTIONS (CONTINUED)
While the Option remained unexercised during the Option period, no interest
or dividends were to accrue or be due or payable on the Prudential
Securities; however, the Company was obligated to pay 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. In consideration of receipt of the Option, the Company 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.
EQUITY INVESTMENTS -
On December 11, 1996, the Company sold 2.5 million shares of its common
stock for $10 million to the principals of the Kojaian Companies,
Southfield, Michigan. The $10 million was used to purchase from Warburg,
and then retire, all of the outstanding PIK Notes (approximately $13.5
million principal amount) and 130,233 shares of Junior Convertible
Preferred Stock (convertible into approximately 2.3 million shares of
common stock). The repurchase of the PIK Notes resulted in a $3.6 million
extraordinary gain on the extinguishment of debt. There were no income
taxes recorded with respect to the extraordinary gain due to the Company's
available net operating loss carryforward. In connection with these
transactions, Warburg retained warrants to purchase an aggregate of 325,000
shares of common stock and Joe F. Hanauer received warrants to purchase an
aggregate of 25,000 shares of common stock, which Warburg acquired from
Prudential. At the same time, Warburg granted the Company a second option
(the "Second Option") to purchase the 9.9% Senior Notes and Revolving
Credit Note held by Warburg until April 16, 1997 (which may be extended to
July 15, 1997 under certain circumstances) for $13 million, plus interest,
and the Option was canceled. In addition, Warburg and Joe F. Hanauer
converted all of their shares of Senior Convertible Preferred Stock and
Prudential converted all of its remaining shares of Junior Convertible
Preferred Stock to purchase an aggregate of 5,520,624 shares of common
stock.
SUBSEQUENT EVENT -
On January 24, 1997, the Company sold 2.5 million shares of its common
stock for $11.25 million to Archon Group, L.P., a majority owned subsidiary
of the international investment bank, Goldman, Sachs & Co. The $11.25
million, together with existing cash, was used to purchase from Warburg,
and then retire, the $10 million of outstanding 9.9% Senior Notes and $5
million Revolving Credit Note, at a price equal
10
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GRUBB & ELLIS COMPANY AND SUBSIDIARIES
Notes to Condensed Consolidated Financial Statements
3. FINANCING TRANSACTIONS (CONTINUED)
to $13 million plus accrued interest of approximately $96,000. This
transaction will result in an extraordinary gain on the extinguishment of
debt in an amount equal to approximately $2 million for the quarter ending
March 31, 1997.
As a result of the above mentioned transactions, all shares of Senior and
Junior Convertible Preferred Stock of the Company have been either
converted to common stock or retired as of December 31, 1996, extinguishing
accrued and unpaid dividends on such stock. Additionally, all long-term
debt has been eliminated as of January 27, 1997.
4. NET INCOME PER COMMON SHARE AND EQUIVALENTS
Net income 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 net income per common share includes net income,
adjusted for amounts applicable to the Senior and Junior Convertible
Preferred Stock related to undeclared dividends earned as shown below (in
thousands). Since all of the preferred stock was either retired or
converted to common stock on December 11, 1996 (see Note 3), undeclared
dividends were only calculated through that date.
For the For the
Three Months Ended Six Months Ended
December 31, December 31,
------------------- --------------------
1996 1995 1996 1995
------ ------ -------- --------
Senior Convertible
Preferred Stock $ 454 $ 516 $ 1,032 $ 1,032
Junior Convertible
Preferred Stock 182 207 399 414
------ ------ -------- --------
$ 636 $ 723 $ 1,431 $ 1,446
------ ------ -------- --------
------ ------ -------- --------
11
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GRUBB & ELLIS COMPANY AND SUBSIDIARIES
Notes to Condensed Consolidated Financial Statements
4. NET INCOME PER COMMON SHARE AND EQUIVALENTS (CONTINUED)
PRO FORMA INFORMATION -
The information presented below presents the pro forma impact to net income
per common share and equivalents assuming (a) the equity investments of $10
million in December 1996 and
$11.25 million in January 1997 described in Note 3 above were made at the
beginning of the respective periods, then concurrently (b) all outstanding
long-term debt to Prudential was immediately retired and (c) all
outstanding Senior and Junior Convertible Preferred Stock was also
immediately retired or converted into common stock. The primary and fully
diluted pro forma net income per common share calculations are the same
within each period presented.
<TABLE>
<CAPTION>
For the Three Months For the Six Months
Ended December 31, Ended December 31,
------------------------- -------------------------
1996 1995 1996 1995
---------- ---------- ---------- ----------
<S> <C> <C> <C> <C>
Net income applicable to
common stockholders $ 8,087 $ 4,609 $ 8,588 $ 4,482
Add pro forma adjustments -
Dividends applicable to
preferred stock 636 723 1,431 1,446
Interest expense to
related parties 599 741 1,325 1,471
---------- ---------- ---------- ----------
Pro forma net income applicable
to common stockholders $ 9,322 $ 6,073 $ 11,344 $ 7,399
---------- ---------- ---------- ----------
---------- ---------- ---------- ----------
Pro forma weighted average common
shares and equivalents
outstanding 19,926,207 19,226,215 19,884,170 19,306,090
---------- ---------- ---------- ----------
---------- ---------- ---------- ----------
Pro forma net income per
common share:
From operations $ 0.29 $ 0.32 $ 0.39 $ 0.38
From extraordinary
gain 0.18 - 0.18 -
---------- ---------- ---------- ----------
$ 0.47 0.32 $ 0.57 $ 0.38
---------- ---------- ---------- ----------
---------- ---------- ---------- ----------
</TABLE>
The pro forma information is not necessarily indicative of the results of
the Company had such transactions occurred on the days discussed above, nor
does such information purport to represent the expected results for future
periods.
12
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GRUBB & ELLIS COMPANY AND SUBSIDIARIES
Notes to Condensed Consolidated Financial Statements
5. 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
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.
13
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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, appraisal and
consulting fees provide substantially all of the remaining revenue.
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. 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. 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.
For the six months ended December 31, 1996, total revenue of $120.0 million
increased by $12.2 million, or 11.3%, compared to the same period last year.
Commercial brokerage revenue increased $10.3 million, or 11.6%, over the
comparable 1995 period, reflecting improving conditions for commercial real
estate and the Company's increasing market share in specific locations. Other
real estate services fees of $20.7 million for the six months ended December 31,
1996 increased by $1.9 million, or 10.3%, as a result of higher fees for
appraisal and consulting services and property management.
Total revenue for the quarter ended December 31, 1996 was $68.0 million, an
increase of 12.7% over revenue of $60.4 million for the same period last year.
Commercial brokerage revenue increased $6.2 million or 12.3% over the comparable
1995 period. Other real estate service fees of $11.5 million increased $1.5
million, or 14.6%, over the prior year period as described above.
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 six months and the second quarter of fiscal year 1997
increased by 65 and 70 basis points, respectively, over the comparable periods
in fiscal year 1996. The increased participation expense percentages were
primarily related to
14
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performance of top producers who earned commissions at higher levels.
Total costs and expenses, other than real estate brokerage commission expense
and special charges and unusual items, increased by $2.9 million or 6.1%, for
the first six months of fiscal year 1997 compared to the same period in fiscal
year 1996. The increase in costs and expenses was primarily attributable to the
$3.2 million increase in salary and wages. Approximately one-half of this
increase was due to changes in reserves related to partially self-insured
employee benefit programs. The balance of the increase was due to (a) higher
salary costs for Axiom related to increased property management activities, (b)
the hiring costs and salaries related to additional senior level executives for
the Institutional Services and Corporate Services Groups of the commercial
brokerage operations, (c) increased salary cost, as opposed to participation
expense, due to guarantees provided to commercial brokerage office District and
Sales Managers in their initial year of service and (d) the impact of normal
annual salary increases.
Total costs and expenses, other than real estate brokerage commission expense
and special charges and unusual items, for the quarter ended December 31, 1996
increased by $2.9 million, or 12.5%, compared to the same quarter in 1995 for
the same reasons identified above.
Special charges and unusual items reflect a net charge of $900,000 and $993,000,
respectively, for the six and three month periods ended December 31, 1996.
These amounts included a $1.2 million charge for incremental non-recurring costs
related to the relocation of the Company's corporate headquarters from San
Francisco, California to Northbrook, Illinois. The Company estimates that an
additional $1.3 million charge will be incurred over the six month period ending
June 30, 1997, for similar costs related to the relocation.
As of December 31, 1996, the Company had current accrued severance and office
closure costs of approximately $2.0 million, of which $890,000 of accrued
severance costs and $903,000 of accrued office closure costs, net of expected
sublease income, are expected to be paid in cash. All of the $497,000 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
The net income of $10.0 million or $.71 per common share for the six months
ended December 31, 1996 compared favorably to the net income of $5.9 million or
$.42 per common share for the same period in 1995. The increase over the prior
year's performance was related to the $3.6 million extraordinary gain on the
extinguishment of debt in connection with the financing transactions described
above in Note 3 to the Condensed Consolidated Financial Statements and higher
earnings from commercial brokerage activities, offset by $824,000 more in
special
15
<PAGE>
charges and unusual items, primarily related to the relocation of the Company's
corporate headquarters, and $663,000 less in other income.
The net income of $8.7 million or $.62 per common share for the quarter ended
December 31, 1996 compared favorably to the net income of $5.3 million or a $.42
per common share for the same period in 1995. The increase over the prior
year's performance was related to the $3.6 million extraordinary gain on the
extinguishment of debt and higher earnings from commercial brokerage activities,
offset by higher special charges and unusual items, primarily related to the
relocation of the Company's corporate headquarters.
LIQUIDITY AND CAPITAL RESOURCES
Working capital increased by $6.5 million to $12.8 million during the six months
ended December 31, 1996. Cash and cash equivalents increased by $15.0 from June
30, 1996 to December 31, 1996. The increase was primarily attributable to cash
provided by operations of $15.7 million net of purchases of equipment and
leasehold improvements of $792,000.
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.
For discussion regarding certain financing transactions, see Note 3 to Condensed
Consolidated Financial Statements, which is hereby incorporated herein by
reference.
The Company believes that its short-term and long-term cash requirements will be
met by operating cash flow. Significant progress has been made over the seven
month period ended January 31, 1997 towards improving the Company's financial
condition. During the six months ended December 31, 1996, the Company sold 2.5
million shares of its common stock for aggregate proceeds of $10 million,
retired all of the outstanding PIK Notes (approximately $13.5 million principal
amount), retired 130,233 shares of Junior Convertible Preferred Stock
(convertible into approximately 2.3 million shares of common stock) and retired
all outstanding shares of Senior Convertible Preferred Stock and all remaining
shares of Junior Convertible Preferred Stock which were converted into an
aggregate 5,520,624 shares of common stock. In January 1997, the Company raised
an additional $11.25 million of equity through the sale of 2.5 million shares of
its common stock and retired the $10 million of outstanding 9.9% Senior Notes
and $5 million Revolving Credit Note. As of January 27, 1997, the Company had
no outstanding long-term debt. The Company is
16
<PAGE>
currently in negotiations to secure a bank line of credit for general corporate
purposes and acquisitions.
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 reduce expense levels or undertake other
actions as may be appropriate.
17
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PART II
OTHER INFORMATION
(Items 1, 3, 4 and 5 are not applicable
for the quarter ended December 31, 1996)
18
<PAGE>
ITEM 2. CHANGES IN SECURITIES
(c) Sales of Unregistered Securities during the three month period ended
December 31, 1996:
All of the following transactions were consummated in reliance on Section
4(2) of the Securities Act of 1933, as amended, in that they did not involve a
public offering or sale of the Company's securities. None of the sales was
underwritten.
On December 11, 1996, the Company sold 833,334 shares of Common Stock to
Mike Kojaian, and 833,333 shares of Common Stock to each of Kenneth J. Kojaian
and C. Michael Kojaian, for a purchase price of $4.00 per share, or $10,000,000
in the aggregate. The purchase price was paid in cash.
Also on December 11, 1996, the Company issued to Warburg 4,828,548 shares
of Common Stock upon Warburg's conversion of 128,266 shares of Series B Senior
Convertible Preferred Stock. On the same date, the Company issued to the Joe F.
Hanauer Trust, 339,629 shares of Common Stock upon the conversion of 8,894
shares of Series A Senior Convertible Preferred Stock held by the trust.
On December 16, 1996, the Company issued to Prudential 352,447 shares of
Common Stock upon the conversion of 19,767 shares of Junior Convertible
Preferred Stock.
SUBSEQUENT EVENT. On January 24, 1997, the Company sold 2,500,000 shares
of Common Stock to Archon Group, L.P. for a purchase price of $4.50 per share,
or $11,250,000 in the aggregate. The purchase price was paid in cash.
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).
19
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3.2 Grubb & Ellis Company Bylaws, as amended and restated effective June
1, 1994, incorporated herein by reference to Exhibit 3.2 to the
Registrant's Quarterly Report on Form 10-Q filed on November 13, 1996
(Commission File No. 1-8122).
3.3 Certificate of Retirement with Respect to 130,233 Shares of Junior
Convertible Preferred Stock of Grubb & Ellis Company, filed with the
Delaware Secretary of State on January 22, 1997.
3.4 Certificate of Retirement with Respect to 8,894 Shares of Series A
Senior Convertible Preferred Stock, 128,266 Shares of Series B Senior
Convertible Preferred Stock, and 19,767 Shares of Junior Convertible
Preferred Stock of Grubb & Ellis Company.
(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, incorporated herein
by reference to Exhibit 4.2 to the Registrant's Quarterly Report on
Form 10-Q filed on November 13, 1996 (Commission File No. 1-8122).
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, incorporated herein
by reference to Exhibit 4.3 to the Registrant's Quarterly Report on
Form 10-Q filed on November 13, 1996 (Commission File No. 1-8122).
4.4 Tri-Party Agreement dated as of December 11, 1996 by and among the
Registrant, Warburg, Pincus Investors, L.P., Joe F. Hanauer, Mike
Kojaian, Kenneth J. Kojaian and C. Michael Kojaian, incorporated
herein by reference to Exhibit 4.1 to the Registrant's Current Report
on Form 8-K filed on December 20, 1996 (Commission File No. 1-8122).
4.5 Option Agreement dated as of December 11, 1996 by and between the
Registrant and Warburg, Pincus Investors, L.P., incorporated herein by
reference to Exhibit 4.2 to the Registrant's Current Report on Form
8-K filed on December 20, 1996 (Commission file No. 1-8122).
4.6 Stock Purchase Agreement dated as of December 11, 1996 by and among
the registrant, Mike Kojaian, Kenneth J. Kojaian and C. Michael
Kojaian, incorporated herein by reference to Exhibit
20
<PAGE>
4.3 to the Registrant's Current Report on Form 8-K filed on December
20, 1996 (Commission File No. 1-8122).
4.7 Registration Rights agreement dated as of December 11, 1996 by and
among the Registrant, Warburg, Pincus Investors, L.P., Joe F. Hanauer,
Mike Kojaian, Kenneth J. Kojaian and C. Michael Kojaian, incorporated
herein by reference to Exhibit 4.1 to the Registrant's Current Report
on Form 8-K filed on December 20, 1996 (Commission File No. 1-8122).
4.8 Purchase Agreement dated as of January 24, 1997 by and among the
Registrant, and Warburg, Pincus Investors, L.P., incorporated herein
by reference to Exhibit 4.1 to the Registrant's Current Report on Form
8-K filed on February 4, 1997 (Commission File No. 1-8122).
4.9 Stock Purchase Agreement dated as of January 24, 1997 by and between
the Registrant and Archon Group, L.P., incorporated herein by
reference to Exhibit 4.2 to the Registrant's Current Report on Form
8-K filed on February 4, 1997 (Commission File No. 1-8122).
4.10 Registration Rights agreement dated as of January 24, 1997 by and
between the Registrant and Archon Group, L.P., incorporated herein by
reference to Exhibit 4.3 to the Registrant's Current Report on Form
8-K filed on February 4, 1997 (Commission File No. 1-8122).
4.11 Stock Subscription Warrant No. 20 dated December 11, 1996 issued to
Joe F. Hanauer Trust.
4.12 Stock Subscription Warrant No. 21 dated December 11, 1996 issued to
Warburg, Pincus Investors, L.P.
4.13 Stock Subscription Warrant No. 22 dated December 11, 1996 issued to
Joe F. Hanauer Trust.
4.14 Stock Subscription Warrant No. 23 dated December 11, 1996 issued to
Warburg, Pincus Investors, L.P.
4.15 Form of Amendment No. 1 to Stock Subscription Warrants No. 8, 9, 13
and 15 issued to Joe F. Hanauer Trust.
4.16 Termination of Stockholders Agreement dated as of December 11, 1996 by
and among the Registrant, Warburg, Pincus Investors, L.P. and Joe F.
Hanauer.
(10) MATERIAL CONTRACTS
10.1 Property Management Services Agreement between Axiom Real Estate
Management, Inc., a wholly-owned subsidiary of the Registrant, and The
Chase Manhattan Bank dated as of January 1, 1997.
(11) STATEMENT REGARDING COMPUTATION OF PER SHARE EARNINGS
(27) FINANCIAL DATA SCHEDULE
21
<PAGE>
ITEM 6(b) REPORTS ON FORM 8-K
A Current Report on Form 8-K dated October 21, 1996 was filed, reporting
under Item 5 the sale of certain notes, common stock warrants and preferred
stock (the "Prudential Securities") held in the Company by The Prudential
Insurance Company of America to Warburg, Pincus Investors, L.P. ("Warburg"), and
the issuance of an option by Warburg to the Company for the sale by Warburg to
the Company of the Prudential Securities.
A Current Report on Form 8-K dated December 4, 1996 was filed, reporting
under Item 5 the relocation of the Company's principal offices from San
Francisco, California to Northbrook, Illinois.
A Current Report on Form 8-K dated December 11, 1996 was filed, reporting
under Item 5 a series of transactions whereby a portion of the Prudential
Securities was purchased by the Company, a new option was issued by Warburg to
the Company relating to the purchase of the remainder of the Prudential
Securities, and the sale of 2,500,000 shares of Common Stock to the principals
of the Kojaian Companies, Southfield, Michigan was consummated.
SUBSEQUENT EVENT. A Current Report on Form 8-K dated January 24, 1997 was
filed, reporting under Item 5 a series of transactions whereby the second option
to purchase the remainder of the Prudential Securities was exercised by the
Company and the sale of 2,500,000 shares of Common Stock to Archon Group, L.P.
was consummated.
22
<PAGE>
SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
GRUBB & ELLIS COMPANY
---------------------
(Registrant)
Date: February 13, 1997 /s/ Brian D. Parker
-------------------------------
Brian D. Parker
Senior Vice President and
Chief Financial Officer
23
<PAGE>
Grubb & Ellis Company and Subsidiaries
EXHIBIT INDEX (A)
FOR THE QUARTER ENDED DECEMBER 31, 1996
EXHIBIT
(3) ARTICLES OF INCORPORATION AND BYLAWS
3.3 Certificate of Retirement with Respect to 130,233 shares of Junior
Convertible Preferred Stock of Grubb & Ellis Company, filed with the
Delaware Secretary of State on January 22, 1997.
3.4 Certificate of Retirement with Respect to 8,894 Shares of Series A
Senior Convertible Preferred Stock, 128,266 Shares of Series B Senior
Convertible Preferred Stock, and 19,767 Shares of Junior Convertible
Preferred Stock of Grubb & Ellis Company.
(4) INSTRUMENTS DEFINING THE RIGHTS OF SECURITY HOLDERS, INCLUDING INDENTURES
4.11 Stock Subscription Warrant No. 20 dated December 11, 1996 issued to
Joe F. Hanauer Trust.
4.12 Stock Subscription Warrant No. 21 dated December 11, 1996 issued to
Warburg, Pincus Investors, L.P.
4.13 Stock Subscription Warrant No. 22 dated December 11, 1996 issued to
Joe F. Hanauer Trust.
4.14 Stock Subscription Warrant No. 23 dated December 11, 1996 issued to
Warburg, Pincus Investors, L.P.
4.15 Form of Amendment No. 1 to Stock Subscription Warrants No. 8, 9, 13
and 15 issued to Joe F. Hanauer Trust.
4.16 Termination of Stockholders' Agreement dated as of December 11, 1996
by and among the Registrant, Warburg, Pincus Investors, L.P. and Joe
F. Hanauer.
(10) MATERIAL CONTRACTS
10.1 Property Management Services Agreement between Axiom Real Estate
Management, Inc., a wholly-owned subsidiary of the Registrant, and The
Chase Manhattan Bank dated as of January 1, 1997.
(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.
24
<PAGE>
EXHIBIT 3.3
STATE OF DELAWARE
SECRETARY OF STATE
DIVISION OF CORPORATIONS
FILED 01:01 PM 01/22/1997
971021664 - 904032
CERTIFICATE OF RETIREMENT
WITH RESPECT TO 130,233 SHARES OF
JUNIOR CONVERTIBLE PREFERRED STOCK OF
GRUBB & ELLIS COMPANY
Under Section 243 of the
Delaware General Corporation Law
GRUBB & ELLIS COMPANY, a corporation organized and existing under the
General Corporation Law of the State of Delaware (the "Corporation"), DOES
HEREBY CERTIFY:
FIRST: That by unanimous written consent taken as of December 17,
1996, the Board of the Directors duly adopted resolutions that identified shares
of the capital stock of the Corporation which, to the extent hereinafter set
forth, had the status of retired and canceled shares.
SECOND: That the Restated Certificate of Incorporation of Grubb &
Ellis Company (the "Restated Certificate") authorizes the issuance of 1,000,000
shares of Preferred Stock (the "Preferred Stock"), of which Preferred Stock
200,000 shares are designated Junior Convertible Preferred Stock (the "Junior
Preferred Stock").
THIRD: That on December 11, 1996, the Corporation purchased 130,233
shares of Junior Convertible Preferred Stock in exchange for cash. Therefore,
the 130,233 of Junior Preferred Stock so acquired have, pursuant to the
provisions of Section 243 of the General Corporation Law of the State of
Delaware (the "GCL"), attained the status of retired shares.
FOURTH: That the Restated Certificate prohibits the reissue of the
shares of Junior Preferred Stock when so retired and provides that such retired
shares shall have the status of authorized and unissued shares of Preferred
Stock, undesignated as to series. Therefore, pursuant to Section 243 of the
GCL, this Certificate shall, when it becomes effective, have the effect of
amending the Restated Certificate so as to reduce the authorized number of
shares of the Junior Preferred Stock to 69,767 shares, but not to reduce the
total authorized number of shares of the Preferred Stock.
-1-
<PAGE>
IN WITNESS WHEREOF, GRUBB & ELLIS COMPANY has caused this certificate
to be signed by Robert J. Walner, its authorized officer, this 15 day of
January, 1997.
GRUBB & ELLIS COMPANY
/s/ Robert J. Walner
-----------------------------
Robert J. Walner
Secretary
-2-
<PAGE>
EXHIBIT 3.4
STATE OF DELAWARE
SECRETARY OF STATE
DIVISION OF CORPORATIONS
FILED 01:00 PM 01/22/1997
971021659 - 0904032
CERTIFICATE OF RETIREMENT
WITH RESPECT TO
8,894 SHARES OF SERIES A SENIOR CONVERTIBLE PREFERRED STOCK,
128,266 SHARES OF SERIES B SENIOR CONVERTIBLE PREFERRED STOCK, AND
19,767 SHARES OF JUNIOR CONVERTIBLE PREFERRED STOCK OF
GRUBB & ELLIS COMPANY
Under Section 243 of the
Delaware General Corporation Law
GRUBB & ELLIS COMPANY, a corporation organized and existing under the
General Corporation Law of the State of Delaware (the "Corporation"), DOES
HEREBY CERTIFY:
FIRST: That by unanimous written consent taken as of December 17,
1996, the Board of the Directors duly adopted resolutions that identified shares
of the capital stock of the Corporation which, to the extent hereinafter set
forth, had the status of retired and canceled shares.
SECOND: That the Restated Certificate of Incorporation of Grubb &
Ellis Company (the "Restated Certificate") authorizes the issuance of 25,000,000
shares of Common Stock (the "Common Stock") and 1,000,000 shares of Preferred
Stock (the "Preferred Stock"), of which Preferred Stock 50,000 shares are
designated Series A Senior Convertible Preferred Stock (the "Series A Preferred
Stock"), 200,000 shares are designated Series B Senior Convertible Preferred
Stock (the "Series B Preferred Stock") and 200,000 shares are designated Junior
Convertible Preferred Stock (the "Junior Preferred Stock", and together with the
Series A Preferred Stock and Series B Preferred Stock, the "Convertible
Preferred Stock").
THIRD: That on December 11, 1996, 8,894 shares of Series A Preferred
Stock were converted into an aggregate of 339,629 shares of Common Stock and
128,266 shares of Series B Preferred Stock were converted into an aggregate of
4,828,548 shares of Common Stock; and that on December 16, 1996, 19,767 shares
of Junior Preferred Stock were converted into an aggregate of 352,447 shares of
Common Stock.
FOURTH: That pursuant to the Restated Certificate any shares of
Convertible Preferred Stock so converted shall be retired and cancelled and
shall not be reissued as shares of Convertible Preferred Stock. Therefore,
pursuant to Section 243 of the General Corporation Law of the State of Delaware,
this Certificate shall, when it becomes effective, have the effect of amending
the Restated Certificate so as to reduce the authorized number of shares of the
Series A Preferred Stock to 41,106 shares, to reduce the authorized number of
shares of Series B Preferred Stock to 71,734 shares, to reduce the authorized
number of shares of Junior Preferred Stock to 50,000 shares, but not to reduce
the total authorized number of shares of the Preferred Stock.
-1-
<PAGE>
IN WITNESS WHEREOF, GRUBB & ELLIS COMPANY has caused this certificate
to be signed by Robert J. Walner, its authorized officer, this 15 day of
January, 1997.
GRUBB & ELLIS COMPANY
/s/ Robert J. Walner
---------------------------
Robert J. Walner
Secretary
-2-
<PAGE>
EXHIBIT 4.11
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 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
<PAGE>
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
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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
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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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<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
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<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
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<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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<PAGE>
"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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<PAGE>
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
------------------------------
Name: Robert J. Walner
Title: Senior Vice President
Attest:
By /s/ Carol Vanairsdale
--------------------------
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<PAGE>
FORM OF EXERCISE AGREEMENT
Date
To:
The undersigned, pursuant to the provisions set forth in the within
Stock Subscription Warrant, hereby agrees to subscribe for and purchase ________
shares of Common Stock covered by such Stock Subscription Warrant, and makes
payment herewith in full therefor at the price per share provided by such Stock
Subscription Warrant [in cash] [by delivery of $_____ principal amount of ______
Notes] [by cancellation of $______ of accrued and unpaid interest on ______
Notes].
Name__________________________
Title_________________________
Company_______________________
Signature_____________________
Address_______________________
______________________________
<PAGE>
ASSIGNMENT
FOR VALUE RECEIVED
hereby sells, assigns and transfers all of the rights of the undersigned under
the within Stock Subscription Warrant, with respect to the number of Warrant
Shares covered thereby set forth hereinbelow to:
Name of Assignee Address No. of Shares
- ---------------- ------- -------------
Dated: ___________, 19__.
Name__________________________
Title_________________________
Company_______________________
Signature_____________________
Witness_______________________
<PAGE>
EXHIBIT 4.12
Stock Subscription Warrant to Subscribe for
185,714 Shares of Common Stock
Stock Subscription Warrant No. 21
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,
WARBURG, PINCUS INVESTORS, L.P. or registered assigns, is entitled to
subscribe for and purchase from GRUBB & ELLIS COMPANY (herein called the
"Company"), a corporation organized and existing under the laws of the State of
Delaware, at any time or from time to time during the period specified in
paragraph 2 hereof, up to
ONE HUNDRED EIGHTY FIVE 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 $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 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
<PAGE>
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 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
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covenants and agrees that it will, at any time, at its expense, promptly list on
each national securities exchange on which any Capital Stock is at the time
listed, upon official notice of issuance, Common Stock issuable upon the
exercise of any Warrant as provided in paragraph 1 hereof, and maintain such
listing of all shares of Common Stock from time to time issuable upon such
exercise, and will, at any time, register under the Securities Exchange Act of
1934, as amended, all shares of Common Stock from time to time issuable upon
such exercise if and at the time that any existing shares of Capital Stock are
so registered.
4. ANTI-DILUTION PROVISIONS. The Exercise Price set forth above
shall be subject to adjustment from time to time as hereinafter provided. For
purposes of this paragraph 4, the term "Capital Stock" as used herein includes
the Company's Common Stock and shall also include any capital stock of any class
of the Company hereafter authorized which shall not be limited to a fixed sum or
percentage in respect of the rights of the holders thereof to participate in
dividends and in the distribution of assets upon the voluntary or involuntary
liquidation, dissolution or winding up of the Company; provided that the shares
purchasable pursuant to this Warrant shall include only Common Stock. Upon each
adjustment of the Exercise Price, this Warrant shall thereafter represent the
right to purchase, at the Exercise Price resulting from such adjustment, the
largest number of shares of Common Stock obtained by multiplying the Exercise
Price in effect immediately prior to such adjustment by the number of shares of
Common Stock purchasable thereunder immediately prior to such adjustment and
dividing the product thereof by the Exercise Price resulting from such
adjustment.
In case the Company, at any time, shall be a party to any Transaction,
each holder hereof, upon the exercise hereof at any time on or after the
Consummation Date shall be entitled to receive, and this Warrant shall
thereafter represent the right to receive, in lieu of the Common Stock issuable
upon exercise prior to the Consummation Date, the kind and amount of securities
or property (including cash) which it would have owned or have been entitled to
receive after the happening of such Transaction had this Warrant been exercised
immediately prior to such Transaction.
Notwithstanding anything contained herein to the contrary, the Company
shall not effect any Transaction unless prior to the consummation thereof each
corporation or entity (other than the Company) which may be required to deliver
any securities or other property upon the exercise of Warrants, the surrender of
Warrants or the satisfaction of exercise rights as provided herein, shall
assume, by written instrument delivered to each holder of Warrants, the
obligation to deliver to such holder such securities or other property to which,
in accordance with the foregoing provisions, such holder may be entitled, and
such corporation or entity shall have similarly delivered to each holder of
Warrants an opinion of counsel for such corporation or entity, satisfactory to
each holder of Warrants, which opinion shall state that all the outstanding
Warrants, including, without limitation, the exercise provisions applicable
thereto, if any, shall thereafter continue in full force and effect and shall be
enforceable against such corporation or entity in accordance with the terms
hereof and thereof and, together with such other matters as such holders may
reasonably request.
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<PAGE>
In case the Company shall (i) pay a dividend in shares of Capital
Stock or securities convertible into Capital Stock or make a distribution to all
holders of shares of Capital Stock in shares of Capital Stock or securities
convertible into Capital Stock, (ii) subdivide its outstanding shares of Capital
Stock, (iii) combine its outstanding shares of Capital Stock into a smaller
number of shares of Capital Stock or (iv) issue by reclassification of its
shares of Capital Stock other securities of the Corporation, the Exercise Price
shall be adjusted (to the nearest cent) by multiplying the Exercise Price
immediately prior to such adjustment by a fraction, of which the numerator shall
be the number of shares of Capital Stock outstanding immediately prior to the
occurrence of such event, and of which the denominator shall be the number of
shares of Capital Stock outstanding (including any convertible securities issued
pursuant to clause (i) or (iv) above on an as converted basis) immediately
thereafter. An adjustment made pursuant to the foregoing sentence shall become
effective immediately after the effective date of such event retroactive to the
record date, if any, for such event.
(d) NOTICE OF ADJUSTMENT. Upon the occurrence of any event requiring
an adjustment of the Exercise Price, then and in each such case the Company
shall promptly deliver to each holder of Warrants a certificate signed by the
President or any Vice President and the Secretary or any Assistant Secretary of
the Company (an "Officers' Certificate") stating the Exercise Price resulting
from such adjustment and the increase or decrease, if any, in the number of
shares of Common Stock issuable upon exercise of the Warrants, setting forth in
reasonable detail the method of calculation and the facts upon which such
calculation is based. Within 90 days after each fiscal year in which any such
adjustment shall have occurred, or within 30 days after any request therefor by
any holder of Warrants stating that such holder contemplates exercise of such
Warrants, the Company will obtain and deliver to each holder of Warrants the
opinion of its regular independent auditors or another firm of independent
public accountants of recognized national standing selected by the Company's
Board of Directors who are satisfactory to the registered holder of this
Warrant, which opinion shall confirm the statements in the most recent Officers'
Certificate delivered under this paragraph 4(d).
(e) OTHER NOTICES. In case at any time:
(i) the Company shall declare or pay to the holders of Capital Stock
any dividend other than a regular periodic cash dividend or any periodic
cash dividend in excess of 115% of the cash dividend for the comparable
fiscal period in the immediately preceding fiscal year;
(ii) the Company shall declare or pay any dividend upon Capital Stock
payable in stock or make any special dividend or other distribution (other
than regular cash dividends) to the holders of Capital Stock;
(iii) the Company shall offer for subscription pro rata to the
holders of Capital Stock any additional shares of stock of any class or
other rights;
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<PAGE>
(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 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
5
<PAGE>
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 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.
6
<PAGE>
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.
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
7
<PAGE>
(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 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
8
<PAGE>
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 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
9
<PAGE>
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.
"WARBURG/HANAUER WARRANTS" shall mean (i) this Stock Subscription
Warrant No. 21, (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. 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
10
<PAGE>
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.
11
<PAGE>
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
---------------------------------
Name: Robert J. Walner
Title: Senior Vice President
Attest:
By /s/ Carol Vanairsdale
------------------------------
12
<PAGE>
FORM OF EXERCISE AGREEMENT
Date
To:
The undersigned, pursuant to the provisions set forth in the within
Stock Subscription Warrant, hereby agrees to subscribe for and purchase ________
shares of Common Stock covered by such Stock Subscription Warrant, and makes
payment herewith in full therefor at the price per share provided by such Stock
Subscription Warrant [in cash] [by delivery of $_____ principal amount of ______
Notes] [by cancellation of $______ of accrued and unpaid interest on ______
Notes].
Name__________________________
Title_________________________
Company_______________________
Signature_____________________
Address_______________________
______________________________
<PAGE>
ASSIGNMENT
FOR VALUE RECEIVED
hereby sells, assigns and transfers all of the rights of the undersigned under
the within Stock Subscription Warrant, with respect to the number of Warrant
Shares covered thereby set forth hereinbelow to:
Name of Assignee Address No. of Shares
- ---------------- ------- -------------
Dated: ___________, 19__.
Name__________________________
Title_________________________
Company_______________________
Signature_____________________
Witness_______________________
<PAGE>
EXHIBIT 4.13
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 a fractional Warrant Share), by the surrender of
this Warrant, together with a completed Exercise
<PAGE>
Agreement in the form attached hereto, during normal business hours on any
business day at the principal office of the Company (or such other office or
agency of the Company in New York, New York or San Francisco, California as it
may designate by notice in writing to the holder hereof at the address of such
holder appearing on the books of the Company) at any time during the period set
forth in paragraph 2 hereof and upon payment to the Company by certified check
or bank draft of the Exercise Price for such shares, or, at the election of the
holder hereof, by delivery of other Warrants equal in value to the aggregate
Exercise Price with respect to such Warrants being exercised, the value of which
other Warrants shall be deemed to equal the difference between the Market Price
of a share of Common Stock on the date immediately preceding the date of
exercise and the then current Exercise Price. The Company agrees that the
shares so purchased shall be and are deemed to be issued to the holder hereof or
its designee as the record owner of such shares as of the close of business on
the date on which this Warrant shall have been surrendered and payment made for
such shares as aforesaid. Certificates for the Warrant Shares so purchased,
representing the aggregate number of shares specified in said Exercise
Agreement, shall be delivered to the holder hereof within a reasonable time, not
exceeding five business days, after the rights represented by this Warrant shall
have been so exercised. Each stock certificate so delivered shall be in such
denominations as may be requested by the holder hereof and shall be registered
in the name of said holder or such other name (upon compliance with the transfer
requirements hereinafter set forth) as shall be designated by said holder. If
this Warrant shall have been exercised only in part, then, unless this Warrant
has expired, the Company shall, at its expense, at the time of delivery of said
stock certificates, deliver to said holder a new Warrant representing the number
of shares with respect to which this Warrant shall not then have been exercised.
The Company shall pay all taxes and other expenses and charges payable in
connection with the preparation, execution and delivery of stock certificates
(and any new Warrants) pursuant to this paragraph except that, in case such
stock certificates shall be registered in a name or names other than the holder
of this Warrant or its nominee, funds sufficient to pay all stock transfer taxes
which shall be payable in connection with the execution and delivery of such
stock certificates shall be paid by the holder hereof to the Company at the time
of the delivery of such stock certificates by the Company as mentioned above.
2. PERIOD OF EXERCISE. This Warrant is exercisable at any time or
from time to time prior to 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 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
2
<PAGE>
domestic securities exchange upon which the Common Stock may be listed. The
Company further covenants and agrees that it will, at any time, at its expense,
promptly list on each national securities exchange on which any Capital Stock is
at the time listed, upon official notice of issuance, Common Stock issuable upon
the exercise of any Warrant as provided in paragraph 1 hereof, and maintain such
listing of all shares of Common Stock from time to time issuable upon such
exercise, and will, at any time, register under the Securities Exchange Act of
1934, as amended, all shares of Common Stock from time to time issuable upon
such exercise if and at the time that any existing shares of Capital Stock are
so registered.
4. ANTI-DILUTION PROVISIONS. The Exercise Price set forth above
shall be subject to adjustment from time to time as hereinafter provided. For
purposes of this paragraph 4, the term "Capital Stock" as used herein includes
the Company's Common Stock and shall also include any capital stock of any class
of the Company hereafter authorized which shall not be limited to a fixed sum or
percentage in respect of the rights of the holders thereof to participate in
dividends and in the distribution of assets upon the voluntary or involuntary
liquidation, dissolution or winding up of the Company; provided that the shares
purchasable pursuant to this Warrant shall include only Common Stock. Upon each
adjustment of the Exercise Price, this Warrant shall thereafter represent the
right to purchase, at the Exercise Price resulting from such adjustment, the
largest number of shares of Common Stock obtained by multiplying the Exercise
Price in effect immediately prior to such adjustment by the number of shares of
Common Stock purchasable thereunder immediately prior to such adjustment and
dividing the product thereof by the Exercise Price resulting from such
adjustment.
In case the Company, at any time, shall be a party to any Transaction,
each holder hereof, upon the exercise hereof at any time on or after the
Consummation Date shall be entitled to receive, and this Warrant shall
thereafter represent the right to receive, in lieu of the Common Stock issuable
upon exercise prior to the Consummation Date, the kind and amount of securities
or property (including cash) which it would have owned or have been entitled to
receive after the happening of such Transaction had this Warrant been exercised
immediately prior to such Transaction.
Notwithstanding anything contained herein to the contrary, the Company
shall not effect any Transaction unless prior to the consummation thereof each
corporation or entity (other than the Company) which may be required to deliver
any securities or other property upon the exercise of Warrants, the surrender of
Warrants or the satisfaction of exercise rights as provided herein, shall
assume, by written instrument delivered to each holder of Warrants, the
obligation to deliver to such holder such securities or other property to which,
in accordance with the foregoing provisions, such holder may be entitled, and
such corporation or entity shall have similarly delivered to each holder of
Warrants an opinion of counsel for such corporation or entity, satisfactory to
each holder of Warrants, which opinion shall state that all the outstanding
Warrants, including, without limitation, the exercise provisions applicable
thereto, if any, shall thereafter continue in full force and effect and shall be
enforceable against such corporation or entity in accordance with the terms
hereof and thereof and, together with such other matters as such holders may
reasonably request.
3
<PAGE>
In case the Company shall (i) pay a dividend in shares of Capital
Stock or securities convertible into Capital Stock or make a distribution to all
holders of shares of Capital Stock in shares of Capital Stock or securities
convertible into Capital Stock, (ii) subdivide its outstanding shares of Capital
Stock, (iii) combine its outstanding shares of Capital Stock into a smaller
number of shares of Capital Stock or (iv) issue by reclassification of its
shares of Capital Stock other securities of the Corporation, the Exercise Price
shall be adjusted (to the nearest cent) by multiplying the Exercise Price
immediately prior to such adjustment by a fraction, of which the numerator shall
be the number of shares of Capital Stock outstanding immediately prior to the
occurrence of such event, and of which the denominator shall be the number of
shares of Capital Stock outstanding (including any convertible securities issued
pursuant to clause (i) or (iv) above on an as converted basis) immediately
thereafter. An adjustment made pursuant to the foregoing sentence shall become
effective immediately after the effective date of such event retroactive to the
record date, if any, for such event.
(d) NOTICE OF ADJUSTMENT. Upon the occurrence of any event requiring
an adjustment of the Exercise Price, then and in each such case the Company
shall promptly deliver to each holder of Warrants a certificate signed by the
President or any Vice President and the Secretary or any Assistant Secretary of
the Company (an "Officers' Certificate") stating the Exercise Price resulting
from such adjustment and the increase or decrease, if any, in the number of
shares of Common Stock issuable upon exercise of the Warrants, setting forth in
reasonable detail the method of calculation and the facts upon which such
calculation is based. Within 90 days after each fiscal year in which any such
adjustment shall have occurred, or within 30 days after any request therefor by
any holder of Warrants stating that such holder contemplates exercise of such
Warrants, the Company will obtain and deliver to each holder of Warrants the
opinion of its regular independent auditors or another firm of independent
public accountants of recognized national standing selected by the Company's
Board of Directors who are satisfactory to the registered holder of this
Warrant, which opinion shall confirm the statements in the most recent Officers'
Certificate delivered under this paragraph 4(d).
(e) OTHER NOTICES. In case at any time:
(i) the Company shall declare or pay to the holders of Capital Stock
any dividend other than a regular periodic cash dividend or any periodic
cash dividend in excess of 115% of the cash dividend for the comparable
fiscal period in the immediately preceding fiscal year;
(ii) the Company shall declare or pay any dividend upon Capital Stock
payable in stock or make any special dividend or other distribution (other
than regular cash dividends) to the holders of Capital Stock;
(iii) the Company shall offer for subscription pro rata to the
holders of Capital Stock any additional shares of stock of any class or
other rights;
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(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 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
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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 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.
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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.
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
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<PAGE>
(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 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
8
<PAGE>
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 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
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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.
"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
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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.
11
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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
--------------------------
Name: Robert J. Walner
Title: Senior Vice President
Attest:
By /s/ Carol Vanairsdale
---------------------------
12
<PAGE>
FORM OF EXERCISE AGREEMENT
Date
To:
The undersigned, pursuant to the provisions set forth in the within
Stock Subscription Warrant, hereby agrees to subscribe for and purchase ________
shares of Common Stock covered by such Stock Subscription Warrant, and makes
payment herewith in full therefor at the price per share provided by such Stock
Subscription Warrant [in cash] [by delivery of $_____ principal amount of ______
Notes] [by cancellation of $______ of accrued and unpaid interest on ______
Notes].
Name__________________________
Title_________________________
Company_______________________
Signature_____________________
Address_______________________
______________________________
<PAGE>
ASSIGNMENT
FOR VALUE RECEIVED
hereby sells, assigns and transfers all of the rights of the undersigned under
the within Stock Subscription Warrant, with respect to the number of Warrant
Shares covered thereby set forth hereinbelow to:
Name of Assignee Address No. of Shares
- ---------------- ------- -------------
Dated: ___________, 19__.
Name__________________________
Title_________________________
Company_______________________
Signature_____________________
Witness_______________________
<PAGE>
EXHIBIT 4.14
Stock Subscription Warrant to Subscribe for
139,286 Shares of Common Stock
Stock Subscription Warrant No. 23
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,
WARBURG, PINCUS INVESTORS, L.P. or registered assigns, is entitled to
subscribe for and purchase from GRUBB & ELLIS COMPANY (herein called the
"Company"), a corporation organized and existing under the laws of the State of
Delaware, at any time or from time to time during the period specified in
paragraph 2 hereof, up to
ONE HUNDRED THIRTY NINE 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 $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 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
<PAGE>
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 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
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covenants and agrees that it will, at any time, at its expense, promptly list
on each national securities exchange on which any Capital Stock is at the
time listed, upon official notice of issuance, Common Stock issuable upon the
exercise of any Warrant as provided in paragraph 1 hereof, and maintain such
listing of all shares of Common Stock from time to time issuable upon such
exercise, and will, at any time, register under the Securities Exchange Act
of 1934, as amended, all shares of Common Stock from time to time issuable
upon such exercise if and at the time that any existing shares of Capital
Stock are so registered.
4. ANTI-DILUTION PROVISIONS. The Exercise Price set forth above
shall be subject to adjustment from time to time as hereinafter provided. For
purposes of this paragraph 4, the term "Capital Stock" as used herein includes
the Company's Common Stock and shall also include any capital stock of any class
of the Company hereafter authorized which shall not be limited to a fixed sum or
percentage in respect of the rights of the holders thereof to participate in
dividends and in the distribution of assets upon the voluntary or involuntary
liquidation, dissolution or winding up of the Company; provided that the shares
purchasable pursuant to this Warrant shall include only Common Stock. Upon each
adjustment of the Exercise Price, this Warrant shall thereafter represent the
right to purchase, at the Exercise Price resulting from such adjustment, the
largest number of shares of Common Stock obtained by multiplying the Exercise
Price in effect immediately prior to such adjustment by the number of shares of
Common Stock purchasable thereunder immediately prior to such adjustment and
dividing the product thereof by the Exercise Price resulting from such
adjustment.
In case the Company, at any time, shall be a party to any Transaction,
each holder hereof, upon the exercise hereof at any time on or after the
Consummation Date shall be entitled to receive, and this Warrant shall
thereafter represent the right to receive, in lieu of the Common Stock issuable
upon exercise prior to the Consummation Date, the kind and amount of securities
or property (including cash) which it would have owned or have been entitled to
receive after the happening of such Transaction had this Warrant been exercised
immediately prior to such Transaction.
Notwithstanding anything contained herein to the contrary, the Company
shall not effect any Transaction unless prior to the consummation thereof each
corporation or entity (other than the Company) which may be required to deliver
any securities or other property upon the exercise of Warrants, the surrender of
Warrants or the satisfaction of exercise rights as provided herein, shall
assume, by written instrument delivered to each holder of Warrants, the
obligation to deliver to such holder such securities or other property to which,
in accordance with the foregoing provisions, such holder may be entitled, and
such corporation or entity shall have similarly delivered to each holder of
Warrants an opinion of counsel for such corporation or entity, satisfactory to
each holder of Warrants, which opinion shall state that all the outstanding
Warrants, including, without limitation, the exercise provisions applicable
thereto, if any, shall thereafter continue in full force and effect and shall be
enforceable against such corporation or entity in accordance with the terms
hereof and thereof and, together with such other matters as such holders may
reasonably request.
3
<PAGE>
In case the Company shall (i) pay a dividend in shares of Capital
Stock or securities convertible into Capital Stock or make a distribution to all
holders of shares of Capital Stock in shares of Capital Stock or securities
convertible into Capital Stock, (ii) subdivide its outstanding shares of Capital
Stock, (iii) combine its outstanding shares of Capital Stock into a smaller
number of shares of Capital Stock or (iv) issue by reclassification of its
shares of Capital Stock other securities of the Corporation, the Exercise Price
shall be adjusted (to the nearest cent) by multiplying the Exercise Price
immediately prior to such adjustment by a fraction, of which the numerator shall
be the number of shares of Capital Stock outstanding immediately prior to the
occurrence of such event, and of which the denominator shall be the number of
shares of Capital Stock outstanding (including any convertible securities issued
pursuant to clause (i) or (iv) above on an as converted basis) immediately
thereafter. An adjustment made pursuant to the foregoing sentence shall become
effective immediately after the effective date of such event retroactive to the
record date, if any, for such event.
(d) NOTICE OF ADJUSTMENT. Upon the occurrence of any event requiring
an adjustment of the Exercise Price, then and in each such case the Company
shall promptly deliver to each holder of Warrants a certificate signed by the
President or any Vice President and the Secretary or any Assistant Secretary of
the Company (an "Officers' Certificate") stating the Exercise Price resulting
from such adjustment and the increase or decrease, if any, in the number of
shares of Common Stock issuable upon exercise of the Warrants, setting forth in
reasonable detail the method of calculation and the facts upon which such
calculation is based. Within 90 days after each fiscal year in which any such
adjustment shall have occurred, or within 30 days after any request therefor by
any holder of Warrants stating that such holder contemplates exercise of such
Warrants, the Company will obtain and deliver to each holder of Warrants the
opinion of its regular independent auditors or another firm of independent
public accountants of recognized national standing selected by the Company's
Board of Directors who are satisfactory to the registered holder of this
Warrant, which opinion shall confirm the statements in the most recent Officers'
Certificate delivered under this paragraph 4(d).
(e) OTHER NOTICES. In case at any time:
(i) the Company shall declare or pay to the holders of Capital Stock
any dividend other than a regular periodic cash dividend or any periodic
cash dividend in excess of 115% of the cash dividend for the comparable
fiscal period in the immediately preceding fiscal year;
(ii) the Company shall declare or pay any dividend upon Capital Stock
payable in stock or make any special dividend or other distribution (other
than regular cash dividends) to the holders of Capital Stock;
(iii) the Company shall offer for subscription pro rata to the
holders of Capital Stock any additional shares of stock of any class or
other rights;
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(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 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
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<PAGE>
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 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.
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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.
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
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(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 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
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<PAGE>
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 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
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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.
"WARBURG/HANAUER WARRANTS" shall mean (i) this Stock Subscription
Warrant No. 23, (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. 22 issued to Joe F. Hanauer Trust to purchase 10,714 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
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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
----------------------------
Name: Robert J. Walner
Title: Senior Vice President
Attest:
By /s/ Carol Vanairsdale
-------------------------
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<PAGE>
FORM OF EXERCISE AGREEMENT
Date
To:
The undersigned, pursuant to the provisions set forth in the within
Stock Subscription Warrant, hereby agrees to subscribe for and purchase ________
shares of Common Stock covered by such Stock Subscription Warrant, and makes
payment herewith in full therefor at the price per share provided by such Stock
Subscription Warrant [in cash] [by delivery of $_____ principal amount of ______
Notes] [by cancellation of $______ of accrued and unpaid interest on ______
Notes].
Name__________________________
Title_________________________
Company_______________________
Signature_____________________
Address_______________________
______________________________
<PAGE>
ASSIGNMENT
FOR VALUE RECEIVED
hereby sells, assigns and transfers all of the rights of the undersigned under
the within Stock Subscription Warrant, with respect to the number of Warrant
Shares covered thereby set forth hereinbelow to:
Name of Assignee Address No. of Shares
- ---------------- ------- -------------
Dated: ___________, 19__.
Name__________________________
Title_________________________
Company_______________________
Signature_____________________
Witness_______________________
<PAGE>
EXHIBIT 4.15
AMENDMENT NO. 1 TO WARRANT NO.
----------------------------------
Reference is made to the Stock Subscription Warrant No. ___ (the
"Warrant No. ___") of Grubb & Ellis Company (the "COMPANY"), issued to Joe F.
Hanauer Trust.
WHEREAS, pursuant to paragraph 1(b) of the Tri-Party Agreement dated
December 11, 1996 by and among the Company, Warburg, Pincus Investors, L.P. and
Joe F. Hanauer, certain amendments to the Warrant No. ___ shall be effected.
NOW, THEREFORE, in consideration of the foregoing, and for other good
and valuable consideration, the receipt and adequacy of which are hereby
acknowledged, the parties agree as follows:
1. Paragraph 2 of the Warrant No. ___ shall be amended in its
entirety to read as follows:
"2. PERIOD OF EXERCISE. This Stock Warrant is exercisable at any time
or from time to time prior to January 29, 2002."
2. Paragraph 4 of the Warrant No. ___ shall be amended in its
entirety to read as follows:
"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 Stock Warrant shall include only Common Stock.
Upon each adjustment of the Exercise Price, this Stock 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 Stock 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 Stock Warrant been
exercised immediately prior to such Transaction.
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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 Stock Warrants, the
surrender of Stock Warrants or the satisfaction of exercise rights as provided
herein, shall assume, by written instrument delivered to each holder of Stock
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 Stock Warrants an opinion of counsel for such corporation or
entity, satisfactory to each holder of Stock Warrants, which opinion shall state
that all the outstanding Stock Warrants, including, without limitation, the
exercise provisions applicable thereto, if any, shall thereafter continue in
full force and effect and shall be enforceable against such corporation or
entity in accordance with the terms hereof and thereof and, together with such
other matters as such holders may reasonably request.
In case the Company shall (i) pay a dividend in shares of Capital
Stock or securities convertible into Capital Stock or make a distribution to all
holders of shares of Capital Stock in shares of Capital Stock or securities
convertible into Capital Stock, (ii) subdivide its outstanding shares of Capital
Stock, (iii) combine its outstanding shares of Capital Stock into a smaller
number of shares of Capital Stock or (iv) issue by reclassification of its
shares of Capital Stock other securities of the Corporation, the Exercise Price
shall be adjusted (to the nearest cent) by multiplying the Exercise Price
immediately prior to such adjustment by a fraction, of which the numerator shall
be the number of shares of Capital Stock outstanding immediately prior to the
occurrence of such event, and of which the denominator shall be the number of
shares of Capital Stock outstanding (including any convertible securities issued
pursuant to clause (i) or (iv) above on an as converted basis) immediately
thereafter. An adjustment made pursuant to the foregoing sentence shall become
effective immediately after the effective date of such event retroactive to the
record date, if any, for such event.
(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 Stock 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 Stock 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 Stock Warrants stating that such holder contemplates
exercise of such Stock Warrants, the Company will obtain and deliver to each
holder of Stock 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 Stock Warrant, which opinion shall confirm the
statements in the most recent Officers' Certificate delivered under this
paragraph 4(d).
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(e) OTHER NOTICES. In case at any time:
(i) the Company shall declare or pay to the holders of Capital Stock
any dividend other than a regular periodic cash dividend or any periodic
cash dividend in excess of 115% of the cash dividend for the comparable
fiscal period in the immediately preceding fiscal year;
(ii) the Company shall declare or pay any dividend upon Capital Stock
payable in stock or make any special dividend or other distribution (other
than regular cash dividends) to the holders of Capital Stock;
(iii) the Company shall offer for subscription pro rata to the
holders of Capital Stock any additional shares of stock of any class or
other rights;
(iv) there shall be any capital reorganization, or reclassification
of the Capital Stock of the Company, or consolidation or merger of the
Company with, or sale of all or substantially all of its assets to, another
corporation or other entity;
(v) there shall be a voluntary or involuntary dissolution,
liquidation or winding-up of the Company; or
(vi) there shall be any other Transaction;
then, in any one or more of such cases, the Company shall give to the holder of
each Stock 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."
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3. Paragraph 15 of the Warrant No. ___ shall be amended to include
the following definitions:
"CONSUMMATION DATE" shall mean the date of the consummation of a
Transaction.
"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.
4. Except as amended hereby, Warrant No. ___ is fully ratified and
remain in full force and effect.
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IN WITNESS WHEREOF, the parties have executed this Amendment No. 1 to
Warrant No. ___ this 11th day of December, 1996.
GRUBB & ELLIS COMPANY
By: /s/ Robert J. Walner
--------------------
Name: Robert J. Walner
Title: Senior Vice President and
General Counsel
Joe F. Hanauer Trust
By: /s/ Joe F. Hanauer
------------------
Name: Joe F. Hanauer
Title: Trustee
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EXHIBIT 4.16
TERMINATION OF THE STOCKHOLDERS' AGREEMENT
Reference is made to that certain Stockholders' Agreement dated as of
January 29, 1993, as amended as of July 1, 1993, November 1, 1994 and October
22, 1996 (the "Stockholders' Agreement"), by and among Grubb & Ellis Company, a
Delaware corporation (the "Company"), Warburg, Pincus Investors, L.P., a
Delaware limited partnership ("Warburg"), Joe F. Hanauer ("Hanauer"), and The
Prudential Insurance Company of America, a New Jersey insurance corporation
("Prudential").
RECITALS
A. The Company, Prudential, Warburg and Hanauer executed the Third
Amendment to Stockholders' Agreement dated as of October 22, 1996 terminating
all of Prudential's obligations under the Stockholders' Agreement and pursuant
to which Prudential released all of its rights under the Stockholders' Agreement
as a condition of closing the transactions contemplated by the Sale and
Assignment Agreement dated October 21, 1996 by and between Prudential and
Warburg.
B. As a condition of closing the transactions contemplated by the
Tri-Party Agreement dated as of December ___, 1996 by and among the Company,
Warburg and Hanauer, the Stockholders' Agreement shall be terminated.
NOW, THEREFORE, in acknowledgement of the foregoing recitals, the
parties hereby agree that:
1. All of the obligations of each of the Company, Warburg and
Hanauer under the Stockholders' Agreement are hereby terminated.
2. All of the rights of each of the Company, Warburg and Hanauer
under the Stockholders' Agreement are hereby terminated and released.
3. The Stockholders' Agreement shall have no further force or effect
as of the date hereof.
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IN WITNESS WHEREOF, the parties have executed this Termination of the
Stockholders' Agreement this 11th day of December, 1996.
GRUBB & ELLIS COMPANY
By: /s/ Robert J. Walner
---------------------------------
Name: Robert J. Walner
Title: Senior Vice President
WARBURG, PINCUS INVESTORS, L.P.,
By: Warburg, Pincus & Co.,
its General Partner
By: /s/ John D. Santoleri
---------------------------------
Name: John D. Santoleri
Title: Partner
/s/ Joe F. Hanauer
----------------------------------------
Joe F. Hanauer
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EXHIBIT 10.1
Property Management Services Agreement
made effective as of the First day of January in the year of Nineteen Hundred
and Ninety Seven by and between
The Chase Manhattan Bank ("Chase")
Facilities Management
2 Chase Manhattan Plaza, 9th Floor
New York, New York 10081
and
Axiom Real Estate Management, Inc. ("Axiom")
55 E. 59th Street
New York, New York 10022
WITNESSETH:
Whereas, Chase for itself and on behalf of its Parent, subsidiaries and
affiliates, and Axiom wish to enter into an Agreement providing for the
furnishing of services by Axiom to Chase in/at the premises owned/leased by
Chase set forth in Exhibit A attached hereto and incorporated herein (the
"Properties"); and
Whereas, Contractor and Chase wish to formalize the terms and conditions of such
Agreement and place them in one written document.
NOW, THEREFORE, in consideration of the mutual promises and covenants herein
contained and in accordance with Axiom's Proposal dated July 11, 1996 modified
as agreed, the parties agree as follows:
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ARTICLE I
AXIOM'S SERVICES AND
RESPONSLBILLTLES
Chase hereby appoints Axiom to assist in the management of the Properties set
forth in Exhibit A.
Axiom shall use its best efforts to manage the various Properties in accordance
with the provisions of this Agreement. In carrying out the services required by
this Agreement, Axiom shall at all times exercise the care, skill and diligence
exercised by prudent and experienced property managers.
Axiom is responsible to assist Chase in its management, coordination and
supervision of the operation, maintenance and management of the Properties in a
manner consistent with industry standards compatible with first class office
buildings in New York City.
To the maximum extent practicable, Axiom shall maintain such standards in
accordance with the Annual Plan agreed to between Chase and Axiom.
1.1 BASIC SERVICES
Axiom's Basic Services consist of the services set forth below and those
services stated in Article 16 as Basic Services.
1.1.1 Develop an overall plan to effectively manage the maintenance and
operations of each Property within thirty (30) days (the "Plan). This Plan
shall include (i) a staffing plan detailing on-site employee positions
(including detailed job descriptions and salary ranges for employees selected to
fill key operating positions) which Axiom deems necessary for the proper
operation, maintenance and management of the Properties (hereinafter Employees
of the Properties).
Once approved in writing by Chase, Axiom shall implement the Plan. Axiom shall
alter or change this Plan as needed to meet the changing needs of the
Properties. It is understood and agreed that the number of and positions of
Employees of the Properties shall be subject to change during the term of this
Agreement as mutually agreed by and between Axiom and Chase.
1.1.2 To the extent Axiom deems it necessary for the proper operation,
maintenance and management of the Properties, Axiom shall select, assign, hire
and supervise Employees of the Properties who, in each instance, shall be
employees of Axiom or one of Axiom's affiliates or subsidiaries (and not of
Chase). Axiom shall train, direct and supervise all Employees of the Properties
in the performance of their duties. In addition, prior to assignment to Chase's
Properties of Employees of the Properties, Axiom will assure processing and
compliance with Chase's requirements for any individual assigned to work on
Chase's premises. These requirements are subject to all applicable statutes,
ordinances, rules, and regulations and not violative of any collective
bargaining agreement and are set out in Exhibit C (as the same may be amended
from time to time by Chase on notice to Axiom (the "Chase Requirements"). Chase
Requirements may be amended by Chase from time to time.
1.1.2.1 Axiom shall perform this Agreement in the following manner:
(i) Axiom agrees that at all times herein, from and after the effective
hire date of any Employees of the Properties, it will be the employer of the
Employees of the Properties in the performance of this Agreement, except to the
extent that it utilizes, hires or contracts agents, sub-contractors, servants or
any other third party to assist it in the performance of all or any part of the
Basic Services (hereinafter collectively referred to as "Others retained by
Axiom"). Such Employees of the Properties and Others retained by Axiom shall
not be considered to be the agents or employees of Chase for any purpose
whatsoever. Chase shall be advised of, and shall have the right to request
reassignment of any such Employees of the Properties or Others retained by Axiom
to perform
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any of the Basic Services, and it is expressly understood that Chase's exercise
of its discretion to seek reassignment of any such Employees of the Properties
or Others retained by Axiom is not intended to affect the employment or
employmentability of any such Employees of the Properties or Others retained by
Axiom and such request shall be advisory in nature only. All Basic Services
performed by Employees of the Properties or Others retained by Axiom, must
conform to the level of technical expertise and performance maintained by Chase.
(ii) The manner and means of accomplishing all the Basic Services shall be
entirely under the direction and control of Axiom; PROVIDED, HOWEVER, that Axiom
shall collaborate with Chase or its employees or agents when Chase determines
the circumstances warrant and shall notify Chase of circumstances where policy
issues may be of particular sensitivity or concern to Chase; and further
PROVIDED, HOWEVER, that Chase may, at any time and without articulating or
demonstrating any reason, request reassignment of Employees of the Properties or
Others retained by Axiom assigned to perform Basic Services subject to the terms
of any applicable collective bargaining agreements. Axiom will be solely and
entirely responsible for acts of Employees of the Properties, and Others
retained by Axiom that Axiom supervises during the terms of this Agreement.
(iii) The execution of this Agreement shall not create the relationship of a
partnership or joint venture by and between Chase and Axiom.
1.1.2.2 Axiom shall at a minimum: (i) pay all wages and other benefits
properly payable to Employees of the Properties hired by Axiom, (ii) maintain
proper payroll records, (iii) remit to the proper authorities all required
income and social security withholding taxes, unemployment insurance payments,
workmen's compensation payments, sales tax (if applicable), and such other
amounts with respect to wages and other benefits payable to such Employees of
the Properties as may be required under applicable laws, together in each case
with all required reports or other filings, (iv) remit to all Employees of the
Properties IRS W2 forms and any other statements required by applicable laws,
within the time periods required by such laws, and (v) obtain, maintain and
administer all medical, disability and other insurance benefits and other fringe
benefits as may from time to time be required under any union or other
agreements or arrangements pertaining to Axiom's employment of such Employees of
the Properties.
1.1.3 Within forty-five (45) days after the commencement of this
Agreement, Axiom shall develop a preventive maintenance schedule for each piece
of equipment in the Properties and thereafter shall maintain and supervise such
schedules.
Axiom shall cause such ordinary and necessary repairs to be made to the
Properties and all equipment and systems located in or servicing the Properties
as shall be necessary or advisable for proper operation and maintenance.
Notwithstanding the cost limitations set forth herein, Axiom shall cause to be
made all repairs which are immediately necessary for the preservation or
protection of the Properties or the safety of users, tenants and other persons
in or on the Properties, or are otherwise immediately required to avoid the
suspension of any necessary services in the Properties without Chase's prior
approval and without limitation as to cost, provided, however, that in each such
instance Axiom shall (i) before causing any such emergency repair to be made,
use reasonable efforts under the circumstances to notify Chase of the emergency
situation and obtain Chase's approval of such repair, and (ii) immediately after
such emergency repair, fully apprise Chase in writing of the emergency and the
repairs made and account to Chase for the costs thereof.
1.1.4 Develop and maintain a system of dealing with service requests
and complaints from the users and/or tenants, including a method to ensure that
each building management function has been satisfied. Once approved by Chase,
Axiom shall implement the system.
Axiom shall use its best efforts to attend to and resolve all complaints of the
users and/or tenants of which Axiom shall become aware and shall attempt to
resolve any complaints, disputes or disagreements by or among users/tenants.
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1.1.5 Develop a system of quality control inspections to ensure that
contracted services as well as in-house manpower services are being performed in
a first-class manner. Once approved by Chase, Axiom shall implement the system.
1.1.6 Develop and maintain a Building Management Manual for each
Property. At a minimum, this manual should include procedures and telephone
numbers for service requests, emergency notification lists, actions to be taken
in the event of fire, flood, other natural disasters and first-aid procedures
including location of emergency equipment and such other items as may be
directed by Chase.
1.1.7 Develop and maintain a system for ensuring compliance with all
Federal, State and Local statutes applicable to the services being provided
under this Agreement.
1.1.8 Ensure that all licenses necessary to operate each facility are
held by individuals or staff members as required by law. Axiom shall
immediately notify Chase in writing of its inability to obtain any such license
or permit.
Notwithstanding the cost limitations set forth herein, Axiom may, without
Chase's prior written approval, take or cause to be taken any such actions
without limitation as to cost if failure to do so immediately would or might, in
Axiom's reasonable judgment, expose Chase or Axiom to criminal liability,
provided, however, that in each such instance Axiom shall, before taking or
causing to be taken any such action, use Axiom's best efforts under the
circumstances to notify Chase of the need for such action and obtain Chase's
approval. Axiom and Chase shall each promptly notify the other of any
violation, order, rule or determination affecting the Properties of any
governmental authority or Board of Fire Underwriters or similar agency.
1.1.9 Interface as needed with Chase's project management staff and any
independent contractors retained by Chase or its construction managers on
capital projects.
Axiom shall plan and coordinate the moving in and moving out of the
users/tenants in the Properties at the option and direction of Chase, in order
to ensure a minimum of disturbance to the operation of the Properties and to
other users/tenants then occupying or preparing to occupy space in the
Properties.
1.1.10 Interface with Chase's security staff ensuring building
management participation as necessary in the security process.
1.1.11 Continuously keep Chase advised of methods for lowering occupancy
costs by recommending upgrading/changing equipment, energy conservation, or
contracting methods.
1.1.12 Evaluate service contracts versus "in-house" manpower with
performance and economy as major concerns.
Within thirty (30) days of Axiom's receipt of any service and maintenance
contract for the Properties, Axiom shall provide Chase with a written analysis
of such contracts, including Axiom's recommendations with respect to the rebid,
restructuring or elimination of any or all of such contracts. If Chase shall
decide to rebid any such contract then, within thirty (30) after Chase advises
Axiom of such decision, Axiom shall complete and submit to Chase a proposed bid
package for same.
From time to time during the term of this Agreement, Chase can require Axiom to
rebid any or all of the service and maintenance contracts, in which case the
foregoing procedure shall be applicable.
Service contracts are to include a thirty (30) day cancellation clause
exercisable by Chase. All service contracts shall be between Chase and the
Vendor (unless otherwise agreed between Chase and Axiom to be between Axiom and
the Vendor); Axiom will administer these contracts (including payment of all
invoices).
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1.1.13 Within sixty (60) days after the commencement of this Agreement
and on or before July 1 of each year thereafter during the term of this
Agreement, Axiom shall prepare and submit to Chase, for Chase's review and
approval, a comprehensive written plan ("Annual Plan") setting forth the program
planned by Axiom for the operation, maintenance and management of the Properties
during the next following calendar year (or portion thereof in the case of the
first Annual Plan). Each Annual Plan shall be prepared in a format requested by
Chase and shall contain at a minimum (i) a proposed budget for each Property
with a comparison of the previous year's "estimated actual" versus budget for
the Plan year, (ii) an analysis of major changes in expenses, previous year vs.
Plan year, (iii) cost per square foot comparison by category, (iv) a full
narrative for each budget category, (v) annual operating budget schedules, (vi)
capital improvements narrative, (vii) cash requirements by month, and (viii)
such other information as may be reasonably requested by Chase.
As part of each Annual Plan, Axiom shall prepare and submit for Chase's approval
a pro forma budget in form satisfactory to Chase, setting forth anticipated
expenditures (capital, operating and other) pertaining to the Properties. The
proposed budget shall also include explanatory notes where any item varies
materially from the corresponding item in the previous year's budget or where
any item was not included in the last year's budget or where an item so included
has been excluded from the proposed budget.
Axiom shall manage the Properties consistent with and subject to the cost
limitations set forth in the approved Annual Plan.
Axiom shall make such reasonable modifications to each proposed budget as may be
requested by Chase from time to time.
1.1.14 Develop a system to receive, process and pay all properly
documented and approved invoices for all services required to operate and
maintain the facilities in a first class condition.
Obtain prior approval for all invoices exceeding $10,000 except for payment of
previously approved service contracts, i.e. monthly cleaning, HVAC, etc.
This system must ensure purchasing efficiency and provide a readily auditable
"trail" acceptable to Chase. This system also includes creation of an imprest
account for needed disbursements. Once approved by Chase, Axiom shall implement
the system.
Axiom shall establish and maintain proper, complete and current books and
accounts, records and other documentation (collectively "Records") pertaining to
the operation and maintenance of each of the Properties in the manner specified
by Chase from time to time, and same shall be available for inspection by Chase
and their authorized representatives during normal business and at other
reasonable times upon reasonable notice. The Records shall be the property of
Chase and shall be delivered to Chase immediately upon the termination of this
Agreement without any payment or additional consideration to Axiom.
1.1.15 Axiom shall open and maintain, in Axiom's name, an account or
accounts (collectively, "Operating Accounts") in a Chase Branch Bank in the type
of account or accounts designated from time to time by Chase. Axiom shall make
only those withdrawals from the Operating Accounts as necessary to pay the
Reimbursable Costs when due in accordance with this Agreement. All funds
deposited in the Operating Accounts and any interest thereon shall be and remain
Chase's property. All other withdrawals by Axiom from the Operating Accounts
shall be made only with Chase's prior approval. In the event that at any time
there be insufficient funds available in the Operating Accounts to be disbursed
as hereinabove set forth, Chase agrees to supply Axiom immediately with funds
required to make such payments. Chase agrees to reimburse Axiom promptly for
any disbursement which Axiom may elect to advance for the account of Chase.
Nothing herein shall be construed to obligate Axiom to make any such advances.
1.1.16 Develop and when directed by Chase implement a semi-annual
performance critique by the user community. Results shall be tabulated by Axiom
and submitted for review by Chase's Director of Property Management and Axiom's
executives.
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1.1.17 Develop an audit program in which two independent auditors,
previously approved by Chase, will when directed by Chase semi-annually review
all expenses disbursed by Axiom. The auditors shall submit results of their
audits directly to Chase's Occupancy Accounting Department. The auditors shall
be independent auditors (out-of-house and non-Axiom affiliated) approved by
Chase.
1.1.18 The providing of the needed project management services stated in
Article 16 for Capital Projects with Construction Cost less than $150,000.
1.1.18.1 If/when any bid package is estimated to be over $10,000,
competitive bids shall be solicited, subject to protocols and procedures
established by Chase for competitive bidding.
1.1.19 Axiom shall furnish any and all business administration and
management services that are needed to provide the Basic Services in an
expeditious and economical manner consistent with the interests of Chase.
1.1.20 Axiom shall interface with Labor Union activities in all phases
of building operations. Axiom shall negotiate all union labor contracts
affecting all employees of Axiom (including, but not limited to, Employees of
the Properties) who are rendering services in connection with this Agreement,
and shall use its best efforts to settle and compromise all controversies and
disputes arising under such contracts upon such terms and conditions as Axiom
may deem to be in Chase's best interests, subject to Chase's written approval.
1.1.21 Axiom shall monitor the performance of all work performed under
service and maintenance contracts and shall evaluate if any such work should be
performed by Employees of the Properties. Axiom shall make an appropriate
recommendation to Chase.
Axiom shall implement a system of quality control inspections (which shall be
available for review and approval by Chase) to ensure that all services are
performed in a first class manner.
1.1.22 Ensure all trade and volume discounts available are passed on to
Chase.
1.1.23 Ensure that each purchase or contract exceeding $9,999 is
competitively bid (except as otherwise approved by Chase), subject to protocols
and procedures established by Chase for competitive bidding.
1.1.24 Axiom shall prepare and deliver to Chase prior to the 15th day of
each month a monthly report in form acceptable to Chase setting forth at a
minimum: (i) a cost report detailing budget as projected in the approved Annual
Plan versus actual expense for the latest complete month and for the current
year to date in sufficient detail to allow thorough analysis. It shall include
explanations of any variance exceeding the lesser of five percent (5%) or
$4,999.99 in any budget category, (ii) a cash disbursement statement for the
previous month with supporting documentation, and (iii) monthly bank statements
as to the Operating Accounts, copies of checks and Chase reconciliation
statement on software compatible with that utilized by Chase from time to time,
(iv) A report delineating charges against Chase's Chart of Accounts for all
disbursements made the previous month as well as for charges year to date, and
(v) Minority/Women Business Enterprise ("MWBE") Report showing amount of MWBE
participation in contracted work.
All reports shall be in sufficient detail and in a computerized format
compatible with Chase's systems.
Within fifteen (15) days after the end of each month, Axiom shall remit to Chase
all unexpended funds in the Operating Accounts at the end of the previous month.
1.1.25 Schedule and conduct quarterly conferences between Axiom's
executives and the Directors of Chase's Facility Management Unit and Property
Management Group. These conferences will include a comprehensive inspection of
each Property and a review of Axiom's performance.
1.1.26 Subcontract awards to MWBEs are crucial to achieving goals for
participation by these Disadvantaged Business Enterprises. The goals are
currently 20% for MWBEs. Axiom shall establish and monitor a plan on
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how it intends to meet and, if possible, exceed the stated goals. The actual
results of this plan are to be tabulated monthly for inclusion in the Monthly
Report.
1.1.27 Within thirty (30) days of Axiom's receipt of a Lease and or
modification thereto from Chase, Axiom shall provide Chase with an abstract of
same.
1.1.28 Any other service that is customarily provided by a property
management services firm doing business in the location of the Properties.
1.2 ADDITIONAL SERVICES
The following Additional Services shall be performed upon authorization in
writing from Chase and shall be paid for as provided in this Agreement.
1.2.1 As directed by Chase, Axiom shall provide only such additional
services that are within their competence to provide.
1.2.2 Additional services shall be any service requested by Chase that
is not set forth as part of Basic Services.
1.2.2.1 Additional Services could include but are not limited to:
1.2.2.1.1 Basic Services for the amount of Rentable Square Feet (RSF) in
excess of the specific quantity set forth in Exhibit A of this Agreement.
1.2.2.1.2 The providing of the project management services stated in
Article 16 for Capital Projects greater than $150,000.
1.2.2.1.2.1 There is no guarantee that Chase will use Axiom to provide such
project management services. Chase will consider Axiom for such projects but
reserves the right to either manage the work in-house or have a consultant
provide such services.
1.2.2.1.2.2 Consultation on replacement of work damaged by fire or other
cause during construction, and furnishing services in conjunction with the
replacement of such work which damage impacts the critical path of the Project
Schedule.
1.2.2.1.2.3 Services made necessary by the default of a contractor, which
default impacts the critical path of the Project Schedule.
1.2.2.1.3 An extension of the Basic Services beyond a 3 year duration.
1.3 TIME
1.3.1 Axiom shall perform Basic and Additional Services as
expeditiously as is consistent with reasonable skill and care. The duration of
Basic Services is three years from the effective date of this Agreement.
ARTICLE 2
CHASE'S RESPONSIBILITIES
2.1 Chase shall work with Axiom in managing the Properties.
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Chase shall provide information regarding the requirements of the Properties,
which shall set forth Chase's objectives, constraints and criteria, special
equipment and systems, and site requirements.
2.2 Based on consultation with and recommendation of Axiom, Chase
shall approve an Annual Plan for each Property.
2.3 Chase shall designate a representative authorized to act in
Chase's behalf with respect to this Agreement. Chase's authorized
representative shall examine documents submitted by Axiom and shall render
decisions pertaining thereto promptly to avoid unreasonable delay in the
progress of the services provided by Axiom.
2.4 If Chase observes or otherwise becomes aware of any deficiency of
Axiom in performing any of the services stated herein, prompt notice thereof
shall be given by Chase to Axiom.
2.5 Chase reserves the right to perform work related to the
Properties with Chase's own resources, and to award contracts in connection with
the Properties which are not part of Axiom's responsibilities under this
Agreement. Axiom shall notify Chase if any such independent action in any way
compromises Axiom's ability to meet Axiom's responsibilities under this
Agreement.
2.6 Chase shall furnish required information and services and shall
render approvals and decisions as expeditiously as necessary for the orderly
progress of Axiom's services.
2.7 Chase shall provide Axiom with a complete copy of all then
effective leases, subleases and license, occupancy or similar agreements
(individually a "Lease" and collectively "Leases") with all persons, agents and
entities occupying or using portions of the Properties (individually a "tenant"
and collectively "tenants") under Leases with Chase. In addition, Chase shall
provide Axiom with a complete copy of all then effective leases and licenses,
occupancy or similar agreements between Chase, as lessee, and the owners of the
Properties ("Chase Leases").
Chase shall supply Axiom with a complete copy of any new Lease, modification of
Lease, new Chase Lease or modification of Chase Lease entered into by Chase
during the term of this Agreement.
2.8 Chase shall provide Axiom with a copy of all then effective
service and maintenance contracts for the Properties, including, but not limited
to, contracts for utilities, elevator maintenance, telephone service, office
cleaning, window cleaning, landscape maintenance, rubbish removal, fuel, and
vermin extermination.
2.9 During the term of this Agreement Chase will provide, at no cost
to Axiom (or shall reimburse Axiom for the costs associated with the provision
of suitable space at the Properties (such space is hereinafter referred to as
the "Property Offices") to be utilized by Axiom for the purposes of performing
its services under this Agreement and for no other purpose.
The Property Offices shall be properly equipped with necessary office supplies,
business machines and telephones. Chase will reimburse Axiom for all costs
incurred with respect to such office supplies, business machines and telephones
including, but not limited to, acquisition, installation and reasonable usage
charges incurred in carrying out the services required under this Agreement.
ARTICLE 3
KEY PERSONNEL
3.1 Axiom shall appoint a single individual, the Portfolio Manager,
who shall be the person primarily responsible for Axiom's proper execution of
the Services required by this Agreement. Such individual shall have sufficient
experience and stature to effectively discharge all responsibilities.
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3.2 In addition to the Portfolio Manager, the Property Management
Axiom shall also propose other Key Personnel to handle the day to day services
for the Properties.
3.3 All Key Personnel proposed by Axiom must be approved in writing
by Chase prior to their working for any of the Properties.
3.4 Axiom shall remove from the Properties any of the Key Personnel
Chase so directs Axiom to remove.
3.5 Axiom may not remove any Key Personnel associated with this
Agreement unless Axiom receives prior written approval from Chase. The only
exception is if the Key Person ceases to be in the employ of Axiom or any of its
affiliates.
ARTICLE 4
PROPERTIES
4.1 This Agreement covers the Properties set forth on Exhibit A,
attached hereto.
ARTICLE 5
DIRECT PERSONNEL EXPENSE
5.1 Direct Personnel Expense is defined as the direct salaries of all
of Axiom's personnel engaged for this Agreement, excluding those whose
compensation is included in the fee, and the portion of the cost of their
mandatory and customary contributions and benefits related thereto such as
employment taxes, sales and use taxes, and other statutory employee benefits,
insurance, sick leave, holidays, vacations, pensions, all benefits under the
terms of any applicable bargaining agreements and severance benefits under Axiom
policy, consistently applied as changed from time to time, and similar
contributions and benefits.
ARTICLE 6
REIMBURSABLE COSTS
6.1 The term Reimbursable Costs shall mean all costs necessarily
incurred in the proper performance of Basic Services and paid by Axiom from the
imprest account established under this Agreement. Such costs shall be at rates
not higher than the standard paid in the locality of the Properties, except with
prior consent of Chase. Reimbursable Costs and costs not to be reimbursed shall
be further enumerated in Article 15.
6.2 Trade discounts, rebates and refunds, and returns from sale of
surplus materials and equipment shall accrue to Chase, and Axiom shall make
provisions so that they can be secured, to the extent possible.
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ARTICLE 7
PAYMENTS TO AXIOM
7.1 PAYMENTS ON ACCOUNT OF BASIC SERVICES
7.1.1 Payments for Basic Services Fee shall be made monthly and shall
be on the basis set forth in Article 15.
7.1.1.1 The Basic Services Fee shall include and be limited to all costs
associated with:
1. The provision of the Portfolio Manager.
2. All overhead and profit as well as any Axiom office overhead
and other support services including data processing support for
bill paying functions and generation of all reports consistent
with the Basic Services. This includes all direct and indirect
overhead except for salary expenses and benefits associated with
on site personnel below the level of Portfolio Manager.
3. All time spent by Axiom's personnel in any office not at one
of the Properties. This also includes the time of any of Axiom's
personnel above the level of Portfolio Manager.
4. Any other costs specifically stated to be a nonreimbursable
expense.
7.2 PAYMENTS ON ACCOUNT OF REIMBURSABLE COSTS
7.2.1 Chase shall fund the imprest account to the level agreed by and
between Chase and Axiom.
Axiom may disburse amounts from the imprest account for all reimbursable costs.
Prior approval by Chase is required for disbursement of a reimbursable cost
exceeding $10,000 except for payment of previously approved service contracts,
i.e. monthly cleaning, HVAC, etc.
7.3 PAYMENTS ON ACCOUNT OF ADDITIONAL SERVICES
7.3.1 Chase shall compensate Axiom for Additional Services and
Reimbursable Expenses associated therewith.
7.4 PAYMENTS WITHHELD
7.4.1 No deductions shall be made from Axiom's Basic Services Fee on
account of penalty, liquidated damages or other sums withheld from payments to
Vendors, or on account of the cost of changes in Work other than those for which
Axiom is held legally liable.
ARTICLE 8
AXIOM'S ACCOUNTING RECORDS
8.1 Records of Reimbursable Costs and costs pertaining to services
performed on an hourly basis or on the basis of a Multiple of Direct Personnel
Expense shall be kept on the basis of generally accepted accounting principles
and shall be available to Chase or Chase's authorized representative at mutually
convenient times.
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ARTICLE 9
ARBITRATION
9.1 All claims, disputes and other matters in question between the
parties to this Agreement arising out of or relating to this Agreement or the
breach thereof, shall be decided by arbitration in accordance with the
Arbitration Rules of the American Arbitration Association then obtaining unless
the parties mutually agree otherwise. No arbitration arising out of or relating
to this Agreement shall include, by consolidation, joinder or in any other
manner, any additional person not a party to this Agreement except by written
consent containing a specific reference to this Agreement and signed by Axiom,
Chase and any other person or party sought to be joined. Any consent to
arbitration involving an additional person or party shall not constitute consent
to arbitration of any dispute not described therein. This agreement to
arbitrate and any agreement to arbitrate with an additional person or party duly
consented to by the parties to this Agreement shall be specifically enforceable
under the prevailing arbitration law.
9.2 Notice of demand for arbitration shall be filed in writing with
the other party to this Agreement and with the American Arbitration Association.
The demand shall be made within a reasonable time after the claim, dispute or
other matter in question has arisen. In no event shall the demand for
arbitration be made after the date when institution of legal or equitable
proceedings based on such claim, dispute or other matter in question would be
barred by the applicable statute of limitations.
9.3 The award rendered by the arbitrators shall be final, and
judgment may be entered upon it in accordance with applicable law in any court
having jurisdiction thereof.
ARTICLE 10
TERMINATION OF AGREEMENT
10.1 This agreement may be terminated at any time by mutual consent of
both parties.
10.2 TERMINATION FOR CAUSE
Chase may terminate this agreement for cause.
Chase shall deliver written notice of deficiency to Axiom.
Axiom shall respond to the deficiency notice within ten days and advise what
steps will be taken to cure the deficiency.
If in the sole judgment of Chase, Axiom is not taking adequate action to assure
the deficiency will be cured within another thirty (30) days or if the
deficiency remains uncured for another thirty (30) days, Chase may immediately
terminate the Contract for cause.
10.3 TERMINATION FOR CONVENIENCE
Chase shall have the right to terminate this Agreement without cause only after
this Agreement has been in force for one (1) year or more and at any time
thereafter upon thirty (30) days prior written notice.
10.4 This Agreement and the term and interest hereby granted are
subject to the limitations that:
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(i) In the event a petition in bankruptcy is filed by or against
either Chase or Axiom, or in the event that either shall make an assignment for
the benefit of creditors or take advantage of any insolvency act, either party
hereto may forthwith terminate this Agreement upon ten (10) days' notice in
writing.
(ii) If Axiom makes an assignment of its property for the benefit or
creditors or files a voluntary petition under any bankruptcy or insolvency law
or if an involuntary petition under any bankruptcy or insolvency law is filed
against Axiom and Axiom had theretofore committed an act of bankruptcy or
insolvency as alleged in such petition;
(iii) If a petition is filed by or against Axiom under the
reorganization provisions of the United States Bankruptcy Act or under the
provision of any law of a like import;
(iv) If Axiom files a petition under the arrangement provision of the
United States Bankruptcy Act or under the provisions of any of like import;
(v) If a receiver is appointed for Axiom or for the property of
Axiom;
(vi) If Axiom does anything or permits to be done anything, whether by
action or inaction, contrary to any covenant, agreement, term, provision or
condition of this Agreement on the part of Axiom;
Then, if any of said contingencies occur, Chase may give to Axiom a notice of
intention to terminate this Agreement and, at the expiration of five (5) days
from the date of giving of notice, this Agreement will expire and terminate with
the same effect as if that day were the date hereinafter set for the expiration
of the term of this Agreement and Chase will have no further obligation under
this Agreement whatsoever; provided, however, that Axiom will remain liable for
damages as hereinafter provided. In addition to all of Chase's other rights and
remedies, Chase will be entitled to such other damages, consequential and
otherwise as Chase may sustain by reason of Axiom's default. In the event of
breach or threatened breach of this Agreement or any of the covenants,
agreements, terms, provision or conditions hereof, Chase will have the right of
injunction, the right to invoke any remedy of that law or in equity as if other
remedies were not herein provided for.
10.5 This Agreement or part thereof shall automatically terminate in
the event that Chase sells, leases and otherwise vacates some or all of the
Premises for which the Services are being rendered and Chase will have no
further liability or obligation whatsoever.
If all or part of any Property is sold, its lease terminated or otherwise
vacated, upon notice by Chase, Axiom shall discontinue its Services as directed
by Chase. Compensation otherwise due Axiom shall be adjusted based on the
annual square foot rate multiplied by the number of RSF taken out of service
prorated to the effective date of Chase's notice.
Any reduction in the number of Properties due to this Article l0.5 shall not
affect this Agreement as it pertains to the remainder of the Properties for
which Axiom is providing Services.
10.6 In the event of termination not the fault of Axiom, Axiom shall
be compensated for all services performed and payments requested by Chase to the
termination date.
ARTICLE 11
MISCELLANEOUS PROVISIONS
11.1 Unless otherwise specified, this Agreement shall be governed by
the laws of the State of New York.
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11.2 As to all acts or failures to act by either party to this
Agreement, any applicable statute of limitations shall commence to run, and any
alleged cause of action shall be deemed to have accrued, in any and all events
not later than the actual termination date of this agreement.
11.3 Except as provided elsewhere in this Agreement or where the law
imposes a legal duty or penalty upon Axiom, or upon Axiom and Chase, as
distinguished from Chase alone, Axiom shall not make repairs, additions or
alterations to the Properties or comply with orders of public authority
affecting the Properties without first obtaining prior written consent of Chase.
11.4 All notices referred to herein, shall be deemed to be
sufficiently given if in writing and sent by United States registered or
certified mail (return receipt requested) to Chase's Director of Property
Management or to Axiom, as the case may be, at their respective business
addresses first hereinabove given or at such other address or addresses as
either party shall hereafter designate by written notice.
11.5 Axiom represents that it is an Equal Opportunity Employer in
accordance with Executive Order No. 11246, dated September 24, 1965, as amended
by Executive Order No. 11375, dated October 13, 1967.
In addition, during the performance of this Agreement, Axiom agrees as follows:
(i) Axiom will not discriminate against any employee or applicant for
employment because of race, color, religion, sex, or national origin, age,
disability, sexual orientation, creed, alienage, citizenship status, marital
status or any other protected status. Axiom will take affirmative action to
ensure that applicants are employed, and that employees are treated during
employment, without regard to their race, color, religion, sex or national
origin, age, disability, sexual orientation, creed, alienage, citizenship
status, marital status or any other protected status. Such action may include,
but not be limited to, the following: employment, upgrading, demotion or
transfer, recruitment or recruitment advertising; layoff or termination; rates
of pay or other forms of compensation; and selection for training, including
apprenticeship. Axiom agrees to post in conspicuous places, available to the
employees and applicants for employment, notices setting forth the provisions of
this nondiscrimination clause.
(ii) Axiom will in all solicitations or advertisements for employees
placed by or on behalf of Axiom, state that all qualified applicants will
receive consideration for employment without regard to race, color, religion,
sex, national origin, age, disability, sexual orientation, creed, alienage,
citizenship status, marital status or any other protected status.
(iii) If applicable to Axiom, Axiom shall comply with all provisions of
the Equal Opportunity/Affirmative Action clauses of and the implementing
regulations for:
(a) Executive Order 11246, as amended;
(b) Affirmative Action Regulations for minorities and women - 41
CFR 60-1 et seq.
(c) Section 503 of the Rehabilitation Act of 1973;
(d) Affirmative Action Regulations for Handicapped Workers - 41
CFR 60-741;
(e) Section 402 of the Vietnam-Era Veterans Readjustment
Assistant Act of 1974; and
(f) Affirmative Action Regulations for Special Disabled and
Vietnam-Era Veterans - 41 CFR 60-250
These above six provisions are hereby incorporated by reference into this
Agreement.
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Axiom also agrees to comply with Federal, State and Local non-discrimination
laws, to ensure that its employment policies and practices are
non-discriminatory, and to take affirmative action efforts, where appropriate.
Further, Axiom agrees to comply with the Americans with Disabilities Act
("ADA"), identify issues of compliance with the ADA (including Titles I and III)
for both Chase and Axiom and ensure Chase and Axiom's compliance with the ADA
including Titles I and III to the extent such compliance is covered by this
Agreement.
11.6 It is the policy of Chase through its Minority and Women-Owned
Business Development Program ("Vendor Program") (the terms of which are
incorporated herein) that registered minority owned business enterprises
("MBE's") and women owned business enterprises ("WBE's") (together referred to
as "MWBE's") shall have equal opportunity to bid on Chase contracts and to
participate in the performance of contracts for goods and services with Chase.
Axiom is asked to share in this commitment and to work with Chase to achieve
this.
11.6.1 Axiom shall take all Necessary and Reasonable Steps to seek to
achieve the purposes of Chase's Vendor Program and to achieve the Plan described
below, including the MWBE Utilization Goal.
11.6.1.1 Chase's MWBE utilization goal for this Agreement is 20%.
11.6.1.2 If either Chase or Axiom determine that there are subcontracting
opportunities for portions of the Work specifically identifiable with the
services provided and/or goods purchased under this Agreement, Axiom shall
propose, establish, implement and monitor an approved Plan, identifying the
Necessary and Reasonable Steps to be undertaken to seek to achieve the purposes
of the Vendor Program and the Plan including the Utilization Goal.
11.6.1.2.1 The actual results of this Plan are to be tabulated monthly by
Axiom and submitted to Chase. If Axiom does not achieve compliance with the
Plan and Utilization Goal, Chase will evaluate whether Axiom has taken all
Necessary and Reasonable Steps to seek to achieve the purposes of the Vendor
Program and the Plan.
11.6.2 Failure to comply with this Article 11.6 of the Agreement may
constitute a material breach.
11.7 Any provisions of this Agreement which is prohibited or
unenforceable in any jurisdiction shall, as to such jurisdiction, be ineffective
to the extent of such prohibition or unenforceability without invalidating the
remaining provisions hereof and no such prohibition or unenforceability in any
jurisdiction shall invalidate such provision in any other jurisdiction.
11.8 The term "Axiom" as used in this Agreement shall include any
corporate subsidiaries or affiliates of Axiom who perform services in, on, or
about the Properties or the land on which the Properties are located, arising
out of or in connection with this Agreement.
11.9 Non-Waiver. No course of dealing or failure of either party to
strictly enforce any term, right or condition of this Agreement shall be
construed as a waiver of such term, right or condition.
The failure of Chase to insist in any one or more instances upon the strict
performance of any of the covenants, agreements, terms, provisions or conditions
of this Agreement or to exercise any election herein contained will not be
construed as a waiver or a relinquishment of the future enforceability of such
covenant, agreement, term, provision, condition or election. Any waiver by
Chase of any covenant, agreement, term, provision or election will only be
deemed effective when expressed in writing and signed by Chase.
Mention in this Agreement of any particular remedy will not preclude Chase from
any other remedy in law or equity.
11.10 If any provision of this Agreement is found to be invalid for any
reason, the invalidity of such provision will not affect the validity of any
other provision of this Agreement.
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11.11 The descriptions of the provisions of this Agreement which are
contained in the margins hereof are for descriptive purposes only and have no
legal significance.
11.11 All rights and remedies afforded under this Agreement will be
cumulative and in addition to such other rights and remedies as may be available
to Axiom and Chase at law and/or in equity.
11.12 Axiom shall not except for a generic listing of Axiom's clients
which Axiom may disseminate in the ordinary course of business, without first
obtaining the written consent of Chase, advertise or publish the fact that Axiom
has furnished or contracted to furnish to Chase, work contracted hereunder.
11.16 Chase's determination of the meaning of such terms as "necessary"
"as necessary" "as required" "as needed" "if necessary" and terms of similar
import shall be final and binding upon Axiom.
11.17 Axiom acknowledges that some or all of the facilities set forth
on Exhibit A may contain hazardous materials (including asbestos containing
materials) in various places through the facilities. Axiom shall comply with
all federal, state, and local statutes, rules and regulations regarding
hazardous materials and, as appropriate, it shall take all necessary precautions
to safeguard its employees and occupants of the facilities if it encounters any
hazardous material while providing the Services required by this Agreement.
11.18 If in performing the Services, Axiom infringes on a patent and/or
copyright it knows of or should know of, Axiom shall fully indemnify and hold
Chase harmless from any claim made by the lawful owner of the patent and/or
copyright (made either during the term of this Agreement or in the future).
This paragraph shall survive the termination of this Agreement.
11.19 If Axiom sells all or a substantial part of its business within
the first year this Agreement is in effect, not withstanding other language to
the contrary, Chase shall have the right to terminate this Agreement for its
convenience by giving Axiom 30 days' notice.
11.20 While on Chase's Properties, Employees of the Properties will
comply with all of Chase's security regulations upon reasonable notice of such
requirements and when deemed appropriate by Chase, Employees of the Properties
will be issued visitor identification cards, which cards will be surrendered to
Chase upon demand or at the termination of this Agreement, whichever occurs
first.
11.21 If there is a conflict between Axiom's Proposal and this
Agreement, the terms and conditions of this Agreement shall govern.
ARTLCLE 12
SUCCESSORS AND ASSIGNS
12.1 Chase and Axiom, respectively, bind themselves, their partners,
successors, assigns and legal representatives to the other party to this
Agreement, and to the partners, successors, assigns and legal representatives of
such other party with respect to all covenants of this Agreement. Axiom shall
not assign, sublet or transfer any interest in this Agreement without the
written consent of Chase.
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ARTICLE 13
EXTENT OF AGREEMENT
13.1 This Agreement including any Exhibits attached hereto represents
the entire and integrated agreement between Chase and Axiom and supersedes all
prior negotiations, representations or agreements, either written or oral. This
Agreement may be amended only by written instrument signed by both Chase and
Axiom.
ARTICLE 14
INSURANCE
14.1 INSURANCE CARRIED BY AXIOM
Axiom, within five (5) business days after the execution of the Agreement or
before commencing work or permitting any subcontractor to commence work prior to
the expiration of five (5) business days after the execution of the Agreement,
whichever is the earliest, shall procure and maintain, the following insurance
of the kinds and limits enumerated hereunder, with companies acceptable to
Chase. Should Axiom at any time neglect or refuse to provide the required
insurance, or should such insurance be canceled, Chase shall have the right to
procure such insurance and the cost thereof shall be deducted from moneys then
due or thereafter to become due Axiom. Axiom may carry, at its own expense,
such additional insurance as it may deem necessary. Axiom shall not be deemed to
be relieved on any responsibility by the fact that it carries insurance.
14.1.1 REQUIRED INSURANCE
(a) Workers' Compensation and Employer's Liability Insurance in
accordance with the applicable laws of the State of New York or the state in
which the work is to be performed or of the state in which Axiom is obligated to
pay compensation to employees engaged in the performance of the work. The
policy limit under Employer's Liability Insurance section shall not be less than
One Million Dollars ($1,000,000.00) for any one accident. The insurance
required by this paragraph 14.1.1.a shall be nonreimbursable except for the
personnel stationed full time at a Chase facility.
(b) Comprehensive crime policy covering its employees who deal with
the Properties or bank accounts hereunder having a policy limit of no less than
Two Million and Five Hundred Thousand Dollars ($2,500,000.00). The insurance
required by this paragraph shall be nonreimbursable.
14.1.2 CERTIFICATES OF INSURANCE
(a) Axiom shall have its insurance carrier or carriers certify to
Chase that all insurance required is in force. Such certificates shall
stipulate that the insurance will not be canceled or substantially changed
without thirty (30) days' prior notice and shall be sent by certified mail to
Chase at 2 Chase Plaza, 23rd Floor, New York, New York, 10081, Attention:
Corporate Insurance Services. Certificates shall be sent to aforementioned
address with a copy to the Property Services Group at Chase Facilities
Management.
(b) In the event that service under Agreement is rendered by persons
other than Axiom, Axiom shall arrange to have such subcontractors furnish to
Axiom evidence of insurance, subject to the same terms and conditions set forth
above and applicable to Axiom, at least two (2) weeks prior to commencing such
work.
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14.2 NOTICE TO CHASE
Axiom shall promptly advise Chase's authorized representative of all damages to
property of Chase or of others, or injuries incurred by persons other than
employees of Axiom (or any subcontractor) in any manner relating, either
directly or indirectly, to the work.
14.3 MATERIALS USED BY AXIOM
(a) Axiom or subcontractors will be responsible for insurance
coverage on their equipment, tools, supplies and any other materials which they
may use in the course of the work or store on Chase's premise; and (b) in work
done by Axiom requiring the use of floor finishes, Axiom shall use Underwriters
Laboratories approved finishes only.
14.4 INSURANCE CARRIED BY CHASE
(a) Chase agrees to carry general liability insurance with a minimum
limit of at least $5,000,000.00 including elevator liability and contractual
liability insurance (specifically insuring the indemnity provisions set forth
below in paragraph 14.5, and such other insurance as may be necessary for the
protection of the interests of Chase and Axiom. In each such policy of
insurance, Chase agrees to designate Axiom and its corporate subsidiaries and
affiliates, who are performing services under this Agreement, as parties insured
with Chase. The general liability, elevator and contractual liability insurance
must contain a severability of interest clause and coverage for Personal Injury
Insurance. A certificate of each policy issued by the carrier shall be
delivered to Axiom by Chase.
(b) Chase shall procure an appropriate clause in, or endorsement on,
each of its policies for fire or extended coverage insurance and on all other
forms of property damage insurance covering the Properties or personal property,
fixtures or equipment whereby the insurer waives subrogation or consents to a
waiver of the right of recovery against Axiom, and to the extent permitted by
law, Chase hereby agrees that it will not make any claim against or seek to
recover from Axiom for any loss or damage to property of the type covered by
such insurance.
(c) It is understood and agreed that with respect to any insurance to
be provided hereunder and covering Axiom's interest, Chase shall be responsible
for the payment of all premiums thereon. All dividends or return premiums in
connection with such insurance shall be paid to Chase.
14.5 INDEMNITY AGREEMENT
14.5.1 Chase agrees (a) to hold and save Axiom free and harmless from
any claim for damages or injuries to persons or property by reason of any cause
whatsoever either in or about the Properties or elsewhere when Axiom is properly
carrying out the provisions of this Agreement or acting under the express or
implied directions of Chase; or due to Chase's failure or refusal to comply with
or abide by any rule, order, determination, ordinance or law of any Federal,
State or Municipal Authority and (b) to defend promptly and diligently, at
Chase's sole expense, any claim, action or preceding brought against Axiom or
Axiom and Chase, jointly or severally, arising out of or connected with any of
the foregoing, and to hold harmless and fully indemnify Axiom from any judgment,
loss or settlement on account thereof. The foregoing provisions of this
paragraph shall survive the expiration or termination of this Agreement.
Nothing contained in this paragraph shall relieve Axiom from responsibility to
Chase for the gross negligence and/or willful misconduct of Axiom.
14.5.2.1 Axiom agrees to defend (with counsel satisfactory to Chase),
indemnify and save harmless Chase, its officers, directors and employees, from
any and all claims, expenses (including reasonable attorneys' fees), damages,
suits, costs or judgments whatsoever, whether groundless or otherwise, arising
from or out of employment-related claims (including third party action arising
out of Worker's Compensation claims of Axiom employees against Chase) arising
after the effective date of hiring of any such Employees of the Properties and
unrelated to any claim being asserted against Chase as to employment prior to
the effective date of hiring or benefits-related claim prior to the effective
date of hiring arising out of, incident to, or in connection with, in
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whole or in part, this Agreement relating to employment related claims
(including but not limited to a breach by the Axiom of any term or condition of
this Agreement relating to employment related claims or any act or omission of
Axiom or of the Employees of the Properties or Others retained by Axiom relating
to employment related claims), PROVIDED, HOWEVER, that Axiom shall not be
required to indemnify Chase for that portion of damage attributable to Chase's
gross negligence or willful misconduct, or where Axiom followed an express
instruction by Chase and the instruction is the basis for such damages, in which
case Chase will defend and indemnify Axiom except with respect to claims arising
from Worker's Compensation claims.
14.5.2.2 As a condition to indemnification, Chase and Axiom agree that
each will grant the indemnifying party complete control of the defense of any
action and all negotiation in its settlement or compromise, provided that any
settlement or compromise shall be reasonably acceptable to the other, and does
not adversely affect any rights of or create any obligation on the part of the
other.
14.5.2.3 Axiom agrees to indemnify Chase for any loss arising out of
fraud, theft, misappropriation or any similar act by Axiom, its officers,
directors, employees and Agents.
14.6 The terms of this Paragraph 14 shall survive the termination of
this Agreement regardless of the party which terminated or the reasons therefor.
ARTICLE L5
BASIS OF COMPENSATION
Chase shall compensate Axiom for the Services provided, in accordance with the
Terms and Conditions of this Agreement, as follows:
15.1 BASIC SERVICES COMPENSATION
15.1.1 FOR BASIC SERVICES, as described elsewhere in this Agreement,
Basic Compensation shall be computed as follows:
15.1.1.1 The annual Basic Services Compensation shall be:
A Lump Sum of Six Hundred Fifty Eight Thousand Eight Hundred Twenty Four Dollars
($658,824) for Year One ($0.065 for Regions 1 thru 4 and $0.085 for Region 7
times the square feet in Exhibit A);
A Lump Sum of Six Hundred Seventy Nine Thousand Two Hundred Eighty Four Dollars
($679,284) for Year Two ($0.067 for Regions 1 thru 4 and $0.088 for Region 7
times the square feet in Exhibit A); and
A Lump Sum of Seven Hundred Thousand Two Hundred Fourty Eight Dollars ($700,248)
for Year Three ($0.069 for Regions 1 thru 4 and $0.092 for Region 7 times the
square feet in Exhibit A);
which amounts shall be paid in the following installments:
15.1.1.1.1 Schedule of Payments:
Axiom shall be paid monthly in arrears as follows:
1. Months 1-12 A total of Six Hundred Fifty Eight Thousand
Eight Hundred Twenty Four Dollars ($658,824) payable in equal monthly
installments of Fifty Four Thousand Nine Hundred and Two Dollars ($54,902) in
arrears.
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2. Months 13-24 A total of Six Hundred Seventy Nine Thousand
Two Hundred Eighty Four Dollars ($679,284) payable in equal monthly installments
of Fifty Six Thousand Six Hundred Seven Dollars ($56,607) in arrears.
3. Months 25-36 A total of Seven Hundred Thousand Two Hundred
FoUrty Eight Dollars ($700,248) payable in equal monthly installments of Fifty
Eight Thousand Three Hundred Fifty Four Dollars ($58,354) in arrears.
15.1.1.2 REIMBURSABLE EXPENSES - BASIC SERVICES
Axiom shall be reimbursed for all expenses incurred associated with the
performance of Basic Services except for those costs included in the Basic
Services Fee. Axiom may withdraw from the Imprest Account the actual costs of
all Reimbursable Expenses incurred by Axiom in the interest of this Agreement
with no mark-up.
15.2 ADDITIONAL SERVICES COMPENSATION
15.2.1 For additional services of Axiom, approved in writing by Chase
and provided by Axiom in accordance with the Terms and Conditions of this
Agreement, compensation shall be computed as follows:
15.2.1.1 The amount of Additional Services Compensation to be paid to
Axiom shall be set forth in a written amendment to this Agreement and executed
by Chase and Axiom. In the event no agreement is reached as to the amount of
Additional Services Compensation to be paid to Axiom, Chase may issue a written
order to Axiom to proceed with the work and Axiom must proceed with the
Additional Services, and such Additional Services Compensation shall be
determined as follows:
15.2.1.1.1 For Managing a quantity of RSF which differs from the quantity
stated in Exhibit A, Axiom's Basic Services Fee shall be adjusted and paid at
the RSF rate stated in 15.1.1.1 prorated by month and contract year the quantity
of space changed.
15.2.1.1.2 For Services related to project management services for capital
projects costing in excess of $150,000, Chase will compensate Axiom for all
actual construction costs plus fee to be negotiated the maximum of which would
be 5% of the construction costs.
15.2.1.1.3 REIMBURSABLE EXPENSES - ADDITIONAL SERVICES
In connection with Additional Services, Reimbursable Expenses are those actual
expenditures made by Axiom, its employees, or its professional consultants in
the interest of this Agreement including but not limited to, field office,
furniture, equipment and utilities, all out-of-pocket expenses for travel and
living expenses, long distance telephone, telex, overnight package express, and
any direct labor and materials for the construction, if any, that are purchased
on Chase's behalf, computer time, photocopies, professional consultants, and
document reproduction. This shall include cost of professional consultants
retained by Axiom with regard to such Additional Services. Reimbursable
Expenses shall be drawn from the Imprest Account as they are paid by Axiom.
ARTICLE 16
OTHER CONDITIONS OR SERVICES
16.1 The following services are also considered Basic Services:
16.1.1 Axiom shall provide adequate staff to be able to control and to
respond timely to Chase, Chase's other Architects, Engineers, separate vendors,
contractors (and their subcontractors), building officials, etc. and to complete
all services within the agreed durations and budgets.
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16.1.2 When Axiom is to administer separate Vendor Contracts, Axiom
shall use the appropriate standard Chase Contract. Axiom is responsible for
completion of said contract, execution by the separate Vendors and return to
Chase (2 signed copies) prior to the Vendor commencing work.
16.1.3 Axiom is to provide to Chase all requests for change orders from
the separate vendors, utilizing Change Order forms and procedures approved by
Chase. Verbal authorization of change orders to the vendor is restricted to an
officer of the Facilities Management Department of Chase. Such authorization if
provided verbally must be followed within 5 business days by written notice.
16.1.4 Axiom is responsible to obtain from the separate vendors and
their subcontractors releases of lien within thirty (30) days after completion
of contract work. (Exhibit B)
16.1.5 All services provided by Axiom under this Agreement shall be
coordinated with Chase's Project and Property Management Procedures.
16.2 On all capital projects costing less than $150,000 for which
Chase requests Axiom to manage on Chase's Behalf, Axiom shall provide any/all
the following Project Management Services that are needed with the level of
detail that is appropriate for the specific Project.
16.2.1 PRECONSTRUCTION PHASE
16.2.1.1 Engage the services of approved design consultant(s).
16.2.1.2 Provide and coordinate the preliminary evaluation of the program
and Project budget requirements. With the Architect's and Engineer's
assistance, prepare preliminary estimates of Construction Costs for early
schematic designs based on area, volume or other customary standards. Assist
Chase and the Architect and Engineer in achieving mutually agreed upon program
and Project budget requirements and other design parameters. Provide cost
evaluations of alternative materials and systems.
16.2.1.2.1 Axiom shall take certain provisions contained in Leases between
various Landlords and Chase into consideration in the preparation of the budget
and schedules.
16.2.1.2.2 Evaluate Chase's Project budget and cost estimates prepared by
Axiom in Axiom's best judgment as a professional familiar with the construction
industry. It is recognized, however, that neither Axiom nor Chase has control
over the cost of labor, materials or equipment, over Contractors' methods of
determining bid prices or other competitive bidding or negotiating conditions.
Accordingly, Axiom cannot and does not warrant or represent that bids or
negotiated prices will not vary from the Project budget proposed, established or
approved by Chase, or from any cost estimate or evaluation prepared by Axiom.
16.2.1.2.3 If a fixed limit of Construction Cost has been established, Axiom
shall include contingencies for design, bidding and price escalation, and shall
determine what materials, equipment, component systems and types of construction
are to be included in the Contract Documents, reasonable adjustments in the
scope of the Project, and to suggest alternate Bids in the Construction
Documents to adjust the Construction Cost to the fixed limit. Any such fixed
limit shall be increased in the amount of any increase in the Contract Sums
occurring after the execution of the Contracts for Construction.
16.2.1.2.4 If due to causes beyond Axiom's control, bids are not received
within the time scheduled at the time the fixed limit of Construction Cost was
established, the fixed limit of Construction Cost shall be adjusted to reflect
any change in the general level of prices in the construction industry occurring
between the originally scheduled date and the date on which bids are actually
received.
16.2.1.2.5 If a fixed limit of Construction Cost or the approved budget is
exceeded by the sum of the lowest figures from bona fide bids or negotiated
proposals plus Axiom's estimate of other elements of Construction Cost for the
Project, Chase shall (1) give written approval of an increase in such fixed
limit, (2) authorize rebidding or
20
<PAGE>
renegotiation of the Project or portions of the Project within a reasonable
time, (3) if the Project is abandoned, terminate Axiom's services for the
specific project, or (4) cooperate in revising the scope and quality of the work
as required to reduce the Construction Cost. In the case of item (4), Axiom,
without additional Fee compensation, shall cooperate as necessary to bring the
Construction Cost within the fixed limit or the approved budget.
16.2.1.3 Review designs during their development. Advise on site use and
improvements, selection of materials, building systems and equipment and methods
of Project delivery. Provide recommendations on relative feasibility of
construction methods, availability of materials and labor, time requirements for
procurement, installation and construction, and factors related to costs
including, but not limited to, costs of alternative designs or materials,
preliminary budgets, and possible economies.
16.2.1.4 Provide for the Architect's and Engineer's and Chase's review and
acceptance, and periodically update, a Project Schedule that coordinates and
integrates Axiom's services, the Architect's and Engineer's services and Chase's
responsibilities with anticipated construction schedules.
16.2.1.5 Prepare for Chase's approval a more detailed estimate of
Construction Cost(s), developed by using estimating techniques which anticipate
the various elements of the Project, and based on Schematic Design Documents
prepared by the Architect. Update and refine this estimate periodically as the
Architect and Engineer prepares Design Development and Construction Documents.
Advise Chase and the Architect and Engineer if it appears that the Construction
Cost may exceed the Project budget. Make recommendations for corrective action.
16.2.1.6 Coordinate Contract Documents by consulting with Chase and the
Architect and Engineer regarding Drawings and Specifications as they are being
prepared, and recommend alternative solutions whenever design details affect
construction feasibility, cost or schedules.
16.2.1.6.1 Provide recommendations and information to Chase and the
Architect and Engineer regarding the assignment of responsibilities for safety
precautions and programs; temporary Project facilities; and equipment, materials
and services for common use of contractors. Verify that the requirements and
assignment of responsibilities are included in the proposed Contract Documents.
16.2.1.6.2 Advise on the separation of the Project into contracts for
various categories of work. Advise on the method to be used for selecting
contractors and awarding contracts. If separate contracts are to be awarded,
review the Drawings and Specifications and make recommendations as required to
provide that (1) the work of the separate contractors is coordinated, (2) all
requirements for the Project have been assigned to the appropriate separate
contract, (3) the likelihood of jurisdictional disputes has been minimized, and
(4) proper coordination has been provided for phased construction.
16.2.1.6.3 Develop a Project Schedule providing for all major elements such
as phasing of construction and times of commencement and completion required of
each separate contractor. Provide the Project Construction Schedule for each
set of bidding documents.
16.2.1.6.4 Investigate and recommend a schedule for Chase's purchase of
materials and equipment requiring long lead time procurement, and coordinate the
schedule with the early preparation of portions of the Contract Documents by the
architect. Expedite and coordinate delivery of these purchases.
16.2.1.7 Provide an analysis of the types and quantities of labor required
for the Project and review the availability of appropriate categories of labor
required for critical phases. Make recommendations for actions designed to
minimize adverse effects of labor shortages.
16.2.1.7.1 Identify or verify applicable requirements for equal employment
opportunity programs and MWBE participation for inclusion in the proposed
Contract Documents.
21
<PAGE>
16.2.1.8 Make recommendations for pre-qualification criteria for bidders
and develop bidders' interest in the Project. Establish bidding schedules.
Assist Chase in issuing Bidding Documents to bidders. Conduct pre-bid
conferences to familiarize bidders with the Bidding Documents and management
techniques and with any special systems, materials or methods. Assist Chase and
the Architect and Engineer with the receipt of questions from bidders, and with
the issuance of addenda.
16.2.1.8.1 If/when any bid package is estimated to be over $10,000,
competitive bids shall be solicited, subject to protocols and procedures
established by Chase for competitive bidding. In accordance with Chase's
procurement procedures, assist in bid receipt, prepare bid analyses and make
recommendations to Chase for award of Contracts or rejection of bids.
16.2.1.9 With Chase and the Architect's and Engineer's assistance, conduct
pre-award conferences with successful bidders. Assist Chase in preparing
Construction Contracts and advise Chase on the acceptability of subcontractors
and material suppliers proposed by contractors. After execution by Chase issue
and administer construction contracts between Chase and the separate
contractors.
16.2.2 CONSTRUCTION PHASE
The Construction Phase will commence with the award of the initial Construction
Contract or purchase order and will end thirty (30) days after final payment to
all contractors is due.
16.2.2.1 Axiom, in cooperation with Chase, shall provide administration of
the Contracts for Construction as set forth below and in the Chase General
Conditions of the Contract for Construction.
16.2.2.2 Provide administrative, management and related services as
required to coordinate work of the contractors with each other and with the
activities and responsibilities of Axiom, Chase and the architect and engineer
to complete the Project in accordance with Chase objectives for cost, time and
quality. Provide sufficient organization, personnel and management to carry out
the requirements of this Agreement.
16.2.2.2.1 Schedule and conduct pre-construction, construction and progress
meetings to discuss such matters as procedures, progress, problems and
scheduling. Prepare and promptly distribute minutes.
16.2.2.2.2 Consistent with the Project Construction Schedule issued with the
Bidding Documents, and utilizing the Contractors' Construction Schedules
provided by the separate contractors, update the Project Construction Schedule
incorporating the activities of contractors on the Project, including activity
sequences and durations, allocation of labor and materials, processing of Shop
Drawings, Product Data and Samples, and delivery of products requiring long lead
time procurement. Include Chase occupancy requirements showing portions of the
Project having occupancy priority. Update and reissue the Project Construction
Schedule as required to show current conditions and revisions required by actual
experience.
16.2.2.2.3 Endeavor to achieve satisfactory performance from each of the
contractors. Recommend courses of action to Chase when requirements of a
contract are not being fulfilled, and the non performing party will not take
satisfactory corrective action.
16.2.2.3 Revise and refine the approved estimate of construction cost,
incorporate approved changes as they occur, and develop cash flow reports and
forecasts as needed.
16.2.2.3.1 Provide regular monitoring of the approved estimate of
construction cost, showing actual costs for activities in progress and estimates
for uncompleted tasks. Identify variances between actual and budgeted or
estimated costs, and advise Chase whenever projected costs exceed budgets or
estimates.
16.2.2.3.2 Maintain cost accounting records on authorized work performed
under unit costs, additional work performed on the basis of actual costs of
labor and materials, or other work requiring accounting records.
22
<PAGE>
16.2.2.3.3 Recommend necessary or desirable changes to the architect and
engineer and Chase, review requests for changes, assist in negotiating
Contractors' proposals, submit recommendations to Chase, and if they are
accepted, prepare a Change Order for Chase's authorization.
16.2.2.3.4 Develop and implement procedures for the review and processing of
Applications by contractors for progress and final payments. Make
recommendations to Chase for payment.
16.2.2.4 Review the safety programs developed by each of the contractors
as required by their Contract Documents and coordinate the safety programs for
the Project.
16.2.2.5 Assist in obtaining building permits and special permits for
permanent improvements, excluding permits required to be obtained directly by
the various contractors. Verify that Chase has paid applicable fees and
assessments. Assist in obtaining approvals from authorities having jurisdiction
over the Project.
16.2.2.6 If required, assist Chase in selecting and retaining the
professional services of surveyors, special consultants and testing
laboratories. Coordinate their services.
16.2.2.7 Determine in general that the work of each contractor is being
performed in accordance with the requirements of the Contract Documents.
Endeavor to guard Chase against defects and deficiencies in the work. As
appropriate, require special inspection or testing, or make recommendations to
the architect and engineer regarding special inspection or testing, of work not
in accordance with the provisions of the Contract Documents whether or not such
work be then fabricated, installed or completed. Subject to review by Chase,
reject work which does not conform to the requirements of the Contract
Documents.
16.2.2.7.1 Axiom shall not be responsible for construction means, methods,
techniques, sequences and procedures employed by Contractors in the performance
of their Contracts, and shall not be responsible for the failure of any
contractor to carry out work in accordance with the Contract Documents.
16.2.2.8 Consult with the architect and engineer and Chase if any
contractor requests interpretations of the meaning and intent of the Drawings
and Specifications, and assist in the resolution of questions which may arise.
16.2.2.9 Receive and assure that current and satisfactory Certificates of
Insurance are provided from the contractors, prior to the inception of any
contract and forward them to Chase's insurance services department on an as
requested basis.
16.2.2.10 Receive from the contractors and review all Shop Drawings,
Product Data, Samples and other submittals. Coordinate them with information
contained in related documents and transmit to the architect and engineer those
recommended for approval. In collaboration with the architect and engineer,
establish and implement procedures for expediting the processing and approval of
Shop Drawings, Product Data, Samples and other submittals.
16.2.2.11 Record the progress if the Project. Submit written progress
reports to Chase, the architect and engineer including information on each
contractor and each contractor's work, as well as the entire Project, showing
percentages of completion and the number and amounts of all Change Orders. Keep
a daily log containing a record of weather, contractors' work on the site,
number of workers, Work accomplished, problems encountered, and other similar
relevant data as Chase may require. Make the log available to Chase.
16.2.2.11.1 Maintain at the Project site, on a current basis: a record copy
of all contracts, drawings, specifications, addenda, change orders and other
modifications, in good order and marked to record all changes made during
construction; Shop Drawings; Product Data; Samples; submittals; purchases;
materials; equipment; applicable handbooks; maintenance and operating manuals
and instructions; other related documents and revisions which arise out of the
contracts or work. Maintain records, in duplicate, of principal building layout
lines, elevations of the bottom of footings, floor levels and key site
elevations certified by a qualified surveyor or
23
<PAGE>
professional engineer. Make all records available to Chase, the architect and
engineer. At the completion of the Project, deliver all such records to Chase.
16.2.2.12 Arrange for delivery and storage, protection and security for
Chase purchased materials, systems and equipment which are a part of the
Project, until such items are incorporated into the Project.
16.2.2.13 With Chase Property Management personnel, observe the
contractors' checkout of utilities, operational systems and equipment for
readiness and assist in their initial start-up and testing.
16.2.2.14 When Axiom considers each contractor's work or a designated
portion thereof substantially complete, Axiom shall prepare for the architect,
engineer and Chase a list of incomplete or unsatisfactory items and a schedule
for their completion. Axiom shall assist the architect, engineer and Chase in
conducting inspections. After the architect, engineer and Chase certify the
Dates of Substantial Completion of the work, Axiom shall coordinate the
correction and completion of the work.
16.2.2.15 Assist the architect and engineer and Chase in determining when
the Project or a designated portion thereof is substantially complete. Prepare
for the architect and engineer a summary of the status of the work of each
contractor, listing changes in the previously issued Certificates of Substantial
Completion of the Work and recommending the times within which contractors shall
complete uncompleted items on their Certificate of Substantial Completion of the
work.
16.2.2.16 Following the architect's issuance of a Certificate of
Substantial Completion of the Project or designated portion thereof, evaluate
the completion of the work of the contractors and make recommendations to the
architect, engineer and Chase when work is ready for final inspection. Assist
the architect, engineer and Chase in conducting final inspections. Secure and
transmit to Chase required guarantees, affidavits, releases, bonds and waivers.
Deliver all keys, manuals, record drawings and maintenance stocks to Chase.
16.2.2.17 The extent of the duties, responsibilities and limitations of
authority of Axiom as a representative of Chase during construction shall not be
modified or extended without the written consent of Chase and Axiom, which
consent shall not be unreasonably withheld.
16.2.2.18 Axiom shall prepare and distribute, at a minimum, monthly
construction schedule updates. After an evaluation of the actual progress as
observed by Axiom; schedule activities shall then be assigned
percentage-complete values in conjunction with the Contractor. The report shall
reflect actual progress as compared to schedule progress noting variances (if
any) as negative float. This report shall also be the basis for determining
implementation of certain Chase prerogatives concerning progress of the Project,
when required.
16.2.2.19 Axiom shall be the recipient of all notices of claims by
Contractors against Chase for additional cost or time due to any alleged cause.
Axiom shall perform a preliminary evaluation of the contents of the claim,
obtain factual information concerning the claim, and make recommendations to
Chase.
16.2.2.19.1 Axiom shall analyze the claims for extension of time and impact
cost, using the schedule reports. An impact evaluation report shall be prepared
which shall reflect the actual impact to the schedule. The report shall also
provide a narrative including a recommendation for action to Chase.
16.2.2.19.2 Axiom shall prepare estimates based on the alleged cause of
claims submitted by the Contractor and Axiom shall prepare alternate estimates
based on varying scenarios of the claim cause. These estimates shall be
transmitted to Chase and shall be used in claim rulings and negotiations.
16.2.2.19.3 Axiom shall negotiate claims with the Contractor on behalf of
Chase at Chase's instructions. Axiom shall make a final recommendation to Chase
concerning settlement or other appropriate action.
24
<PAGE>
16.2.3 POST CONSTRUCTION SERVICES:
16.2.3.1 Occupancy Permit (Building Department Sign-off). Axiom shall
obtain for Chase the necessary occupancy permits. This task may encompass
accompanying governmental officials during inspections of the facility, assist
in preparing and submitting proper documentation to the appropriate approving
agencies, assisting in final testing and other necessary and reasonable
activities.
16.2.3.2 Support of Chase's Furniture/Equipment Installation Activities.
Axiom shall assist Chase's Furniture and Fine Arts Group as requested to prepare
requests for proposals, solicit quotes, prepare contracts, obtain execution of
contracts, conduct pre-moving conferences and administer the contract for moving
activities in conjunction with move-in for the Project. Axiom shall provide
on-site personnel to oversee the relocation of all furniture, equipment, and
other articles by the movers while actual move-in is in progress. Axiom shall
make a final report to Chase concerning the move-in and make recommendations as
to payment to the movers.
16.2.3.3 Move-in Coordination. Axiom shall prepare an occupancy plan
which shall include a schedule indicating critical interfaces for relocation of
furniture, equipment, new furniture and equipment and the relocation of Chase's
personnel. This schedule shall be distributed to the moving contractors,
Chase's affected departments, and other appropriate parties.
Axiom shall prepare and distribute reports associated with move-in occupancy
plan and other contracts as required by Chase.
16.2.3.4 Claims Evaluation. Axiom shall continue to evaluate any
remaining Contractor claims during the Post-Construction Phase.
16.2.3.5 Final Project Report. At the conclusion of the project, Axiom
shall prepare final Project accounting and close-out reports of all above
indicated report systems. These reports shall summarize for historical purposes
any items which are not self-explanatory.
16.2.3.6 Warranty Period. During the warranty period of the Project,
Axiom shall conduct warranty inspections every three months and shall report
deficiencies which should be covered by the warranty.
16.2.4 CONSTRUCTION COSTS
16.2.4.1 Construction Cost shall be the total of the final contract sums
of all separate contracts including general conditions, and other approved
Reimbursable Costs relating to the Project.
16.2.4.2 Construction Cost does not include the compensation of the
architect and engineer and the architect's and engineer's consultants, the cost
of the land, rights-of-way or other costs which are the responsibility of Chase
unless Chase specifically requires Axiom to manage and provide those services.
25
<PAGE>
This Agreement entered into as of the day and year first written above.
CHASE AXIOM
The Chase Manhattan Bank
/s/ Walter E. Mystkowski /s/ Philip Rogers
- ---------------------------- --------------------------------
Walter E. Mystkowski Philip Rogers
Senior Vice President Senior Vice President
26
<PAGE>
GRUBB & ELLIS COMPANY AND SUBSIDIARIES
EXHIBIT (11) STATEMENT RE COMPUTATION OF
PER SHARE EARNINGS - FORM 10-Q
for the three and six months periods ended
December 31, 1996 and 1995
(Unaudited)
(in thousands, except for shares and per share amounts)
<TABLE>
<CAPTION>
Three Months Six Months
Ended December 31, Ended December 31,
-------------------------- -------------------------
1996 1995 1996 1995
----------- ----------- ---------- ----------
<S> <C> <C> <C> <C>
Primary income per share applicable
to Common Stock:
Weighted average common
shares and equivalents outstanding 13,334,656 8,827,675 12,669,232 8,850,416
----------- ----------- ---------- ----------
----------- ----------- ---------- ----------
Net income $ 8,723 $ 5,332 $ 10,019 $ 5,928
Earnings applicable to Preferred Stock (636) (723) (1,431) (1,446)
----------- ----------- ---------- ----------
Net income applicable to Common
Stockholders $ 8,087 $ 4,609 $ 8,588 $ 4,482
----------- ----------- ---------- ----------
----------- ----------- ---------- ----------
Net income per common shares and equivalents
applicable to Common Stock -
From operations $ .35 $ .42 $ .43 $ .42
From extraordinary gain .27 - .28 -
----------- ----------- ---------- ----------
$ .62 $ .42 $ .71 $ .42
----------- ----------- ---------- ----------
----------- ----------- ---------- ----------
Fully-diluted income per share applicable
to Common Stock:
Weighted average common shares and
equivalents outstanding 17,343,642 8,827,675 17,366,724 8,850,416
----------- ----------- ---------- ----------
----------- ----------- ---------- ----------
Net income applicable to Common
Stockholders $ 8,087 $ 4,609 $ 8,588 $ 4,482
----------- ----------- ---------- ----------
----------- ----------- ---------- ----------
Net income per common share and equivalents
applicable to Common Stock -
From operations $ .30 $ .32 $ .37 $ .36
From extraordinary gain .20 - .21 -
----------- ----------- ---------- ----------
$ .50 $ .32 $ .58 $ .36
----------- ----------- ---------- ----------
----------- ----------- ---------- ----------
</TABLE>
25
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 5
<LEGEND>
THIS 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> 6-MOS
<FISCAL-YEAR-END> JUN-30-1997
<PERIOD-START> JUL-01-1996
<PERIOD-END> DEC-31-1996
<CASH> 28,530
<SECURITIES> 0
<RECEIVABLES> 8,308
<ALLOWANCES> 3,001
<INVENTORY> 0
<CURRENT-ASSETS> 38,493
<PP&E> 21,239
<DEPRECIATION> 16,411
<TOTAL-ASSETS> 45,659
<CURRENT-LIABILITIES> 25,668
<BONDS> 0
0
0
<COMMON> 170
<OTHER-SE> 99,280
<TOTAL-LIABILITY-AND-EQUITY> 45,659
<SALES> 0
<TOTAL-REVENUES> 120,438<F1>
<CGS> 0
<TOTAL-COSTS> 61,153
<OTHER-EXPENSES> 51,450
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 1,325
<INCOME-PRETAX> 6,510
<INCOME-TAX> 67
<INCOME-CONTINUING> 6,443
<DISCONTINUED> 0
<EXTRAORDINARY> 3,576
<CHANGES> 0
<NET-INCOME> 10,019
<EPS-PRIMARY> .71
<EPS-DILUTED> .58
<FN>
<F1>INTEREST INCOME AND OTHER INCOME, NET ARE INCLUDED UNDER TOTAL REVENUES.
</FN>
</TABLE>
