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SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
--------
Form 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934
Date of report (Date of earliest event reported): January 24, 1997
GRUBB & ELLIS COMPANY
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(Exact name of registrant as specified in its charter)
Delaware 1-8122 94-1424307
- ------------------ ------------------------ -------------------
(State of (Commission File Number) (IRS Employer
Incorporation) Identification No.)
2215 Sanders Road, 4th Floor, Northbrook, Illinois 60062
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(Address of principal executive offices) (Zip Code)
(847) 753-9010
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(Registrant's telephone number, including area code)
10275 West Higgins Road, Suite 300, Rosemont, Illinois 60018
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(former name or former address, if changed since last report)
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Item 5. OTHER EVENTS.
THE OPTION AGREEMENT
As previously reported on December 11, 1996, Warburg, Pincus
Investors, L.P., a Delaware limited partnership ("Warburg"), granted Grubb &
Ellis Company, a Delaware corporation (the "Company"), an option (the "Option")
until April 16, 1997 (which may be extended to July 15, 1997 under certain
circumstances) to acquire an aggregate of $15 million principal amount of
the Senior Notes (as defined below) for $13 million, plus interest. On
January 22, 1997, the Company notified Warburg of its election to exercise the
Option.
PURCHASE AGREEMENT
On January 24, 1997, the Company and Warburg entered into that certain
Purchase Agreement dated as of January 24, 1997 (the "Purchase Agreement"),
pursuant to which Warburg sold to the Company the Senior Notes for an aggregate
purchase price of $13,000,000 plus accrued interest of $96,428.57.
"Senior Notes" means the (i) $5 million Principal Amount Amended
and Restated Revolving Credit Note due November 1, 1999, (ii) $6.5 million
Principal Amount Amended and Restated 9.9% Senior Note due November 1, 1998, and
(iii) $3.5 million Principal Amount Amended and Restated 9.9% Senior Note due
November 1, 1998.
The Senior Notes were issued by the Company pursuant to that certain
Senior Note, the Subordinated Note and Revolving Credit Note Agreement between
the Company and The Prudential Insurance Company of America ("Prudential") dated
as of November 2, 1992, as amended from time to time, and that certain
Securities Purchase Agreement between the Company and Prudential dated as of
November 2, 1992. The Senior Notes were subsequently acquired by Warburg from
Prudential, among other things, pursuant to that certain Sale and Assignment
Agreement dated as of October 21, 1996 by and between Warburg and Prudential.
The foregoing transactions as set forth in the Purchase Agreement
resulted in approximately $2.0 million of extraordinary gain to the Company.
STOCK PURCHASE AGREEMENT
The Company entered into the Stock Purchase Agreement (the "Stock
Purchase Agreement") dated as of January 24, 1997 with Archon Group, L.P., a
Delaware limited partnership and a majority-owned subsidiary of the
international investment bank Goldman, Sachs & Co. (the "Purchaser"), pursuant
to which the Purchaser acquired from the Company an aggregate of 2,500,000
shares (the "Purchased Shares") of common stock, par value $0.01 per share, of
the Company (the "Common Stock") at a purchase price of $11,250,000. Pursuant
to the Stock Purchase Agreement, Todd A. Williams, Vice President of Goldman,
Sachs & Co., was elected to the Board of Directors of the Company, subject to
his re-election at the annual
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meeting of the stockholders. The $11,250,000, together with existing cash, was
used by the Company to exercise the Option to purchase, and then retire, the
Senior Notes.
REGISTRATION RIGHTS AGREEMENT
Also on January 24, 1997, the Company and the Purchaser entered into
the Registration Rights Agreement dated as of January 24, 1997 (the
"Registration Rights Agreement"). The Registration Rights Agreement provides
that at any time after the earlier of (i) the date a Triggering Event (as
defined below) occurs and (ii) July 24, 1998, the holder or holders of at least
30% of the aggregate amount of the Registrable Securities (as defined below) may
make three written requests to the Company to effect a registration under and in
accordance with the provisions of the Securities Act of 1933, as amended, of all
or part of the Registrable Securities; PROVIDED, HOWEVER, that if a request for
demand registration is made pursuant to the Existing Registration Rights
Agreement (as defined below), the Company must include in such registration all
such Registrable Securities of any holder with respect to which the Company has
received written requests for inclusion therein, subject to certain limitations,
and the inclusion of such Registrable Securities shall be counted as a demand
for purposes of the Registration Rights Agreement.
"Triggering Event" means either (i) any person other than Warburg
having the right, directly or indirectly, to elect a majority of the Board of
Directors of the Company, or (ii) the sale or other disposition of 50% or more
of the Warburg Registrable Securities (as defined in the Existing Registration
Rights Agreement).
"Registrable Securities" means the Purchased Shares and all shares of
Common Stock issued or issuable upon conversion or exercise of any securities of
the Company, which may be issued or distributed with respect to, or in exchange
for, the Purchased Shares pursuant to a stock dividend, stock split or other
distribution, merger, consolidation, recapitalization or reclassification or
otherwise, and any securities of the Company which may be issued or distributed
with respect to, or in exchange for, any such Common Stock or such other
securities pursuant to a stock dividend, stock split or other distribution,
merger, consolidation, recapitalization or reclassification or otherwise.
"Existing Registration Rights Agreement" means the Registration Rights
Agreement dated as of December 11, 1996 by and among the Company, Warburg, Joe
F. Hanauer and C. Michael Kojaian, Mike Kojaian and Kenneth J. Kojaian
(collectively, the "Kojaian Investors").
Pursuant to the Registration Rights Agreement, the holders of
Registrable Securities also have certain "piggyback" registration rights to
include their securities, subject to certain limitations, in registration
statements filed by the Company with respect to any offering of any equity
securities for its own account or for the account of any of its equity holders.
All expenses incident to the Company's performance of or compliance with the
Registration Rights Agreement will be borne by the Company, including, among
other things, all reasonable fees and disbursements of one counsel selected by
the holders of a majority of the "piggyback" securities being registered in the
case of a piggyback registration, or one counsel selected by the
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holder or holders of at least a majority of the Registrable Securities in the
case of a demand registration requested by the Purchaser; PROVIDED, HOWEVER,
that the Company will not be responsible for the underwriting discounts and
commissions and transfer taxes, if any, and certain fees and disbursements of
counsel to the underwriters. The Registration Rights Agreement contains
customary indemnification and contribution provisions relating to the exercise
by the holders of Registrable Securities of their registration rights
thereunder.
SHAREHOLDERS AGREEMENT
In connection with the Stock Purchase Agreement, the Purchaser,
Warburg and the Kojaian Investors (collectively, the "Shareholders") entered
into a letter agreement dated as of January 24, 1997 (the "Shareholders
Agreement"), pursuant to which each of the Shareholders agreed to vote all of
the shares of Common Stock owned by them, and to cause the directors nominated
by them to vote, as follows: (A) to nominate and elect to the Company's Board
of Directors a director selected by a majority of the Kojaian Investors, who
shall be a Kojaian Investor or an officer or partner of any entity owned or
controlled by any of the Kojaian Investors, so long as the Kojaian Investors, or
any transferee owned or controlled by them that agrees to be bound by the
Shareholders Agreement, beneficially owns 1,250,000 shares of Common Stock,
(B) to nominate and elect to the Company's Board of Directors the directors
designated by Warburg, who shall be officers of Warburg or any of its venture
banking affiliates, so long as Warburg beneficially owns 5,509,169 shares of
Common Stock, and (C) to nominate and elect to the Company's Board of Directors
a director designated by the Purchaser, who shall be an employee of the
Purchaser, Goldman, Sachs & Co. or an affiliate thereof, so long as the
Purchaser beneficially owns 1,250,000 shares of Common Stock.
In the event that all directors nominated by any of the Purchaser,
Warburg or the Kojaian Investors either resign or decline to be nominated for
reelection and no nominees are nominated by such Shareholder or such Shareholder
fails to nominate any director or directors for election (a "Terminated
Shareholder"), then (i) the rights and obligations of such Terminated
Shareholder under the Shareholders Agreement shall terminate with respect to
such Terminated Shareholder, and (ii) each remaining Shareholder shall have no
obligation under the Shareholders Agreement toward such Terminated Shareholder.
A copy of each of the Purchase Agreement, Stock Purchase Agreement,
the Registration Rights Agreement and a Press Release of the Company dated
January 24, 1997 is attached hereto as Exhibits 4.1, 4.2, 4.3 and 99.1,
respectively, and is incorporated herein by reference in its entirety. Each of
the summaries of Exhibits 4.1, 4.2 and 4.3 contained in this Report is subject
to, and is qualified in its entirety by, all of the provisions contained in the
respective Exhibit.
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Item 7. FINANCIAL STATEMENTS, PRO FORMA FINANCIAL INFORMATION AND EXHIBITS.
(c) The following exhibits are filed as part of this Report:
4.1 Purchase Agreement dated as of January 24, 1997 by and among
Grubb & Ellis Company, a Delaware corporation, and Warburg,
Pincus Investors, L.P., a Delaware limited partnership.
4.2 Stock Purchase Agreement dated as of January 24, 1997 by and
among Grubb & Ellis Company, a Delaware corporation, and Archon
Group, L.P., a Delaware limited partnership.
4.3 Registration Rights Agreement dated as of January 24, 1997 by and
among Grubb & Ellis Company, a Delaware corporation, and Archon
Group, L.P., a Delaware limited partnership.
99.1 Press Release of Grubb & Ellis Company dated January 27, 1997.
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SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934,
the registrant has duly caused this report to be signed on its behalf by the
undersigned hereunto duly authorized.
Dated: February 4, 1997
GRUBB & ELLIS COMPANY
By: /s/ Robert J. Walner
-------------------------------------
Name: Robert J. Walner
Title: Senior Vice President and
General Counsel
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EXHIBIT INDEX
EXHIBITS.
4.1 Purchase Agreement dated as of January 24, 1997 by and among
Grubb & Ellis Company, a Delaware corporation, and Warburg,
Pincus Investors, L.P., a Delaware limited partnership.
4.2 Stock Purchase Agreement dated as of January 24, 1997 by and
among Grubb & Ellis Company, a Delaware corporation, and Archon
Group, L.P., a Delaware limited partnership.
4.3 Registration Rights Agreement dated as of January 24, 1997 by and
among Grubb & Ellis Company, a Delaware corporation, and Archon
Group, L.P., a Delaware limited partnership.
99.1 Press Release of Grubb & Ellis Company dated January 27, 1997.
7
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Exhibit 4.1
PURCHASE AGREEMENT
This agreement (the "Agreement") is dated as of January 24, 1997 by and between
Grubb & Ellis Company (the "Company") and Warburg Pincus Investors, L.P.
("Warburg").
RECITALS
I. On October 22, 1996, pursuant to an agreement dated October 21, 1996
between Warburg and The Prudential Insurance Company of America ("Prudential")
(the "Prudential/Warburg Agreement"), Warburg acquired from Prudential the
following securities of the Company for $23,000,000 (plus accrued interest of
$318,034.72 which was paid by the Company):
(a) $5,000,000 Principal Amount Amended and Restated Revolving Credit Note
due November 1, 1999; (b) $6,500,000 Principal Amount Amended and Restated 9.90%
Senior Note due November 1, 1998; (c) $3,500,000 Principal Amount Amended and
Restated 9.90% Senior Note due November 1, 1998 ((a), (b) and (c) above are
sometimes collectively referred to hereinafter as the "Senior Notes"); (d)
$10,900,834.33 Principal Amount Amended and Restated 10.65% Subordinated
Payment-In-Kind Note due November 1, 2001; (e) $1,520,058.79 Principal Amount
11.65% Subordinated Payment-In-Kind Note, due November 1, 2001; (f) $723,517.03
Principal Amount 11.65% Subordinated Payment-In-Kind Note, due November 1, 2001
((d), (e) and (f) above are sometimes collectively referred to hereinafter as
the "PIK Notes"); (g) 130,233 shares of Junior Convertible Preferred Stock; (h)
Restated Stock Subscription Warrant No. 16 to subscribe for 200,000 shares of
the Company's Common Stock ("Pru Warrant No. 16"); and (i) New Stock
Subscription Warrant No. 17 to subscribe for 150,000 shares of the Company's
Common Stock ("Pru Warrant No. 17") ((h) and (i) above are sometimes
collectively referred to hereinafter as the "Prudential Warrants") issued
pursuant to (i) that certain Senior Note, the Subordinated Note and Revolving
Credit Note Agreement between the Company and Prudential, dated as of November
2, 1992, as amended from time to time (the "Note Agreement") and (ii) that
certain Securities Purchase Agreement between the Company and Prudential, dated
as of November 2, 1992 (the "Securities Purchase Agreement").
II. Also, on October 22, 1996, Warburg granted an option, through April 16,
1997, for the Company to acquire as an entirety, all of the securities in the
Company purchased by Warburg from Prudential as set forth in (a) through (i)
above (the "First Option") at a purchase price equal to Warburg's cost ($23
million) plus interest in an amount equal to 10% per annum through January 31,
1997 and 12% per annum thereafter through April 16, 1997.
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III. On December 11, 1996, the Company acquired from Warburg (i) the PIK Notes,
which were marked "canceled" and (ii) 130,233 shares of Junior Convertible
Preferred Stock, which were retired, for an aggregate purchase price of
$10,000,000 plus accrued interest of $69,315.07.
IV. Also on December 11, 1996, Warburg granted an option, through April 16,
1997 (which can be extended through July 15, 1997 under certain circumstances),
for the Company to acquire the Senior Notes as an entirety at a purchase price
equal to Warburg's cost of $13 million plus interest in an amount equal to 10%
per annum on the purchase price through January 31, 1997 and 12% per annum
thereafter through the end of the option term (the "Second Option"), and the
First Option was canceled.
V. Warburg is the beneficial holder of 10,443,339 shares of the Company's
Common Stock through its ownership of (i) 9,105,981 shares of Common Stock, and
(ii) currently exercisable warrants to purchase an aggregate of 1,337,358 shares
of the Company's Common Stock.
In consideration of the premises, and for good and valuable consideration,
the receipt of which is hereby acknowledged, the parties hereto desire to
complete the transactions set forth herein in this Agreement and agree as
follows:
1. Subject to the terms and conditions hereof, on the Closing Date (as
defined below): Warburg hereby agrees to sell, transfer and assign to the
Company, without recourse, representation or warranty of any kind except as set
forth herein, and the Company hereby agrees to purchase from Warburg, the Senior
Notes for an aggregate purchase price equal to $13,000,000 plus accrued interest
of $96,428.57 (the "Purchase Price"); The Senior Notes shall be marked
"Canceled".
2. The Closing will take place on January 24, 1997 or such other date
as the parties hereto shall mutually agree (the "Closing Date") and on the
Closing Date the parties shall complete the matters set forth in Paragraph 1
above, and Warburg will deliver the Senior Notes to the Company, together with
duly executed bond powers, payable to the order of the Company, an incumbency
certificate and such other documents as the Company may reasonably request to
terminate all of the Company's obligations under the Note Agreement, against
payment of $13,096,428.57 in immediately available funds to Warburg's account
number, as prescribed by Warburg, and (ii) Warburg shall assign to the Company
all of its right, title and interest in Prudential's warranties and
representations made to Warburg as set forth in the Prudential/Warburg
Agreement.
3. Warburg hereby represents and warrants as of the date hereof and as of
the Closing Date that: (a) Warburg is the sole legal, record and beneficial
owner of the Senior Notes, and to the best of Warburg's knowledge, Warburg has
good title thereto; Warburg has no knowledge of any lien, claim, option or other
encumbrance by any person against the Senior Notes being transferred herein to
the Company; to Warburg's
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knowledge, the representations and warranties of Prudential pursuant to the
Prudential/Warburg Agreement were true and correct at the closing of the
transactions under the Prudential/Warburg Agreement; Warburg did not, prior to
or during the period of time Warburg held the Senior Notes, by any action or
inaction, directly or indirectly, in whole or in part, cause any lien, claim,
option or other encumbrance to occur with respect to the Senior Notes, or any of
them; at the Closing, Warburg will assign all of its right, title and interest
in Prudential's warranties and representations made to Warburg as set forth in
the Prudential/Warburg Agreement to the Company; (b) Warburg has full power,
authority and legal right to sell the Senior Notes; and (c) Warburg has been the
sole beneficial owner of the Senior Notes since October 22, 1996.
4. As of the date hereof and as of the Closing Date, the Company hereby
represents that it has full power, authority and legal right to acquire the
Senior Notes.
5. Warburg hereby represents and warrants that as of the date hereof and,
as of the Closing Date, its ownership of the Company's securities as set forth
in Recital V is true and correct;
6. (a) Warburg hereby irrevocably waives any claims against the Company
or any of its affiliates or representatives based upon any matter arising out of
or related to the transactions contemplated by this Agreement, including non-
disclosure of any information relating to the Company, except with respect to
the representations contained in this Agreement and in the documents delivered
pursuant to this Agreement.
(b) Warburg, on behalf of itself and for all of its affiliates,
hereby waives any and all Defaults or Events of Default (each as defined in the
Note Agreement) that exist or may exist as of the Closing Date under the Note
Agreement.
7. The obligations of each of the Company and Warburg under this
Agreement are subject to and conditioned upon the satisfaction at or prior to
the Closing of each of the following conditions (unless waived by such party in
writing):
(a) REPRESENTATIONS AND WARRANTIES. All representations and
warranties of each other party contained in this Agreement and in any agreements
or instruments to be delivered pursuant hereto shall be true and correct at and
as of the Closing Date; and
(b) PERFORMANCE. Each other party shall have performed and complied
with all agreements and conditions required by this Agreement to be performed or
complied with by it on or prior to the Closing Date, including execution and
delivery of the documents contemplated by this Agreement; and
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(c) NO PROCEEDINGS. No action, suit, investigation or legal or
administrative claim or proceeding shall be pending or threatened before any
court, governmental agency or regulatory authority which may result in the
restraint, prohibition, or the obtaining of damages or other relief in respect
of, or which is related to or arises out of, the consummation of transactions
contemplated by this Agreement.
8. Each party hereto shall execute and deliver all further documents or
instruments reasonably requested by the other party in order to effect the
intent and purposes of this Agreement and obtain the full benefit of this
Agreement.
9. THIS AGREEMENT SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH
THE LAWS OF THE STATE OF NEW YORK WITHOUT REFERENCE TO THE CONFLICTS OF LAWS
PROVISIONS THEREOF AND SHALL BE BINDING UPON AND INURE TO THE BENEFIT OF THE
PARTIES HERETO AND THEIR RESPECTIVE SUCCESSORS AND ASSIGNS.
10. This Agreement, together with the exhibits hereof, if any, constitutes
the complete agreement of the parties with respect to the subject matter hereof,
and supersedes all prior communications and agreements of the parties with
respect thereto, all of which have become merged and integrated into this
Agreement. This Agreement cannot be amended, modified or waived, except by a
writing executed by each of the parties hereto.
11. This Agreement may be executed in two or more counterparts, each of
which shall be deemed an original but which together shall constitute one and
the same instrument.
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IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
executed as of the date first above written.
WARBURG, PINCUS INVESTORS, L.P.
By: Warburg, Pincus & Co.
its General Partner
By: /s/ John Santoleri
______________________________
Name: John Santoleri
Title: Partner
GRUBB & ELLIS COMPANY
By: /s/ Robert J. Walner
______________________________
Name: Robert J. Walner
Title: Senior Vice President and
General Counsel
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Exhibit 4.2
STOCK PURCHASE AGREEMENT
This Stock Purchase Agreement (the "Agreement") is dated this 24th day of
January, 1997, by and between Grubb & Ellis Company, a Delaware corporation (the
"Company"), and Archon Group. L.P., a Delaware limited partnership (the
"Purchaser").
RECITAL:
The Company desires to sell to the Purchaser 2,500,000 shares of the
Company's Common Stock, $0.01 par value per share (the "Purchased Shares"), for
a purchase price of $4.50 per Purchased Share and an aggregate consideration of
$11,250,000, on the terms and subject to the conditions set forth herein.
In consideration of the foregoing, the Purchaser and the Company agree as
follows:
I. PURCHASE OF PURCHASED SHARES
At the Closing (as described in Section VII(A) of this Agreement), and
subject to the conditions set forth in Section VII(B) and VII(C) of this
Agreement, the Purchaser shall purchase the Purchased Shares for the Company at
a purchase price of $4.50 per Purchased Share. Such purchase price shall be
paid by wire transfer in immediately available funds to a bank account
designated by the Company.
II. PURCHASER ACKNOWLEDGMENTS
A. Purchaser understands and acknowledges that: (i) no federal or state
agency had made any finding or determination as to the fairness of this offering
for investment, nor any recommendation or endorsement of the Purchased Shares;
(ii) the Purchased Shares have not been registered under the Securities Act of
1933, as amended (the "Securities Act") or, any applicable state securities
laws, are being offered and sold to the Purchaser pursuant to an exemption from
such registration laws, and the Purchased Shares cannot be sold by the Purchaser
unless subsequently registered under the Securities Act and such state laws or,
in the opinion of counsel for the Company, an exemption for such registration is
available; (iii) except as set forth in the Registration Rights Agreement
described in Section VII(B)(viii) below, such registration under the Securities
Act and such state laws is unlikely at any time in the future; and (iv) except
pursuant to the Registration Rights Agreement described in Section VII(B)(viii)
below, the Company is not obligated to file a registration statement under the
Securities Act.
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B. Purchaser (i) is acquiring the Purchased Shares for investment for
its own account and not with a view to distribution or resale, (ii) has not
subdivided the Purchased Shares with, nor is it holding all or any portion of
the Purchased Shares, for any other person, (iii) does not have any contract,
undertaking, agreement or arrangement with any person to sell, transfer or grant
participations to such person or to any third person, with respect to the
Purchased Shares, (iv) agrees not to sell, hypothecate or otherwise dispose of
all or any of the Purchased Shares unless the Purchased Shares have been
registered under the Securities Act and applicable state securities laws or, in
the opinion of counsel to the Purchaser (which opinion shall be provided to the
Company), an exemption from the registration requirements of the Securities Act
and such state laws is available, and (v) does not currently own any Common
Stock of the Company.
C. The Company has made available to the Purchaser and/or its
professional advisers all documents that they have requested relating to an
investment in the Company and has provided satisfactory answers to all of their
questions concerning the business, management and financial affairs of the
Company, the offering and an investment in the Company. The Purchaser
understands that such discussions, as well as written information issued by the
Company, were intended to describe certain aspects of the Company's business and
prospects but were not a thorough or exhaustive description. Representatives of
the Purchaser have visited, or have had the opportunity to visit, the Company's
facilities.
D. Purchaser recognizes that an investment in the Company involves a
high degree of risk, and it has taken full cognizance of and understands all of
the risk factors related to an investment in the Purchased Shares. Purchaser
understands that it may lose its entire investment in the Purchased Shares.
E. Purchaser understands and acknowledges that the Company is relying
on representations, warranties and agreements made by the Purchaser to the
Company herein and, thus, Purchaser hereby agrees to indemnify and hold harmless
each of the Company, its affiliates and its present or future directors,
officers, shareholders, partners, affiliates, agents, attorneys and employees
(collectively, the "Company Indemnified Parties") from and against any and all
losses, claims, damages, liabilities or expenses, including reasonable
attorneys' fees (collectively, the "Losses"), which they or any of them may
suffer, sustain or incur by reason of or in connection with any
misrepresentation or breach of warranty or agreement made by the Purchaser under
this Stock Purchase Agreement.
F. Purchaser and the Company agree that, to the extent permitted by
law, (i) the obligations imposed on Purchaser and the Company in this Agreement
are special, unique and of an extraordinary character, and that in the event of
a breach of this Stock Purchase Agreement by Purchaser or the Company, damages
alone would
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not be an adequate remedy; and (ii) if Purchaser or the Company breach this
contract, the non-breaching party shall be entitled to specific performance and
injunctive and other equitable relief in addition to any other remedy to which
it may be entitled at law or in equity, without posting any bond.
G. Purchaser acknowledges that the Purchased Shares must be held
indefinitely unless subsequently registered under the Securities Act or unless
an exemption from such registration is available. Purchaser is aware of the
provisions of Rule 144 promulgated under the Securities Act which permit limited
resale of shares purchased in a private placement without registration under the
Securities Act subject to the satisfaction of certain conditions, including,
among other things, the existence of a public market for the shares, the
availability of certain current public information about the Company, and the
resale occurring not less than two years after a party had purchased and paid
for the securities to be sold.
H. Purchaser hereby represents and warrants to the Company as of the
date hereof and as of the date of Closing, as follows: Purchaser:
(i) is a limited partnership duly organized, validly existing,
authorized to exercise all its partnership powers, rights, and privileges, and
is in good standing in the State of Delaware;
(ii) has all requisite partnership power and authority to own,
lease and operate it properties and to carry on its business as now conducted
and possesses all business licenses, franchises, rights and privileges material
to the conduct of its business; and
(iii) is registered to do business and is in good standing in all
jurisdictions in which such registration is required, except where the failure
to be so registered or in good standing would not have a material adverse effect
on the Purchaser and its subsidiaries taken as a whole.
I. The foregoing acknowledgments and the Purchaser's due diligence
investigation are not intended, and shall not be construed, to limit or qualify
the representations and warranties of the Company set forth herein.
III. ACCREDITATION
A. Purchaser hereby acknowledges that it is an "accredited investor" as
that term is defined in Rule 501 promulgated pursuant to the Securities Act in
that Purchaser is a corporation NOT formed for the specific purpose of investing
in the Company, with total assets in excess of $5,000,000.
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B. Purchaser further represents that (i) its overall commitment to
investments which are not readily marketable is not disproportionate to its net
worth, and its investment in the Purchased Shares will not cause such overall
commitment to become excessive; (ii) it has adequate net worth and means of
providing for its current needs and to sustain a complete loss of investment in
the Purchased Shares, and it has no need for liquidity in its investment in the
Purchased Shares, (iii) it has such knowledge and experience in financial and
business matters in general and in particular with respect to this type of
investment that it is capable of evaluating the merits and risks of an
investment in the Company, and (iv) it has evaluated and understands the risks
and terms of investment in the Purchased Shares.
C. The execution, delivery and performance by Purchaser of this
Purchase Agreement will not result in any violation of and will not conflict
with, or result in a breach of any of the terms of or constitute a default
under, any provision of federal or state law to which Purchaser is subject, or
any mortgage, indenture, agreement, instrument, judgment, decree, order, rule or
regulation or other restriction to which Purchaser is a party or by which it is
bound.
IV. COVENANTS.
A. BOARD REPRESENTATION. If and so long as the Purchaser owns at least
1,500,000 shares of the Company's Common Stock outstanding, (i) the Company
shall use its reasonable efforts (subject to the fiduciary obligations of the
Board of Directors of the Company to the Company's stockholders) to cause the
Purchaser Nominee to be included in the slate of nominees recommended by such
Board to the Company's stockholders for election as directors at each annual
meeting of the stockholders of the Company and shall use its reasonable efforts
to cause the election of such Purchaser Nominee, including soliciting proxies in
favor of the election of such persons and (ii) in the event that any Purchaser
Nominee elected to the Company's Board of Directors shall cease to serve as a
director for any reason, the vacancy resulting therefrom shall be filled by such
Board with a substitute Purchaser Nominee. As used in this section, the term
"Purchaser Nominee" shall mean Todd Williams or any other person nominated by
the Purchaser who is employed by the Purchaser or Goldman, Sachs & Co.
B. FEES AND EXPENSES. All fees and expenses incurred in connection
with the preparation of this Agreement and the transactions contemplated hereby
will be paid by the party incurring the same.
C. PUBLICITY. The Company will seek the approval of the Purchaser
before making any public announcement respecting the nature of the relationship
between the Company and the Purchaser, which approval will not be unreasonably
withheld, subject to the Company's obligations under applicable law and stock
exchange policy.
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D. FURTHER ASSURANCES. The Company and the Purchaser agree that, from
time to time after the Closing Date, each of them will execute and deliver or
cause the execution and delivery of such further instruments of conveyance and
transfer and take such other action as may be reasonably necessary to carry out
the purposes and intents of this Agreement.
V. COMPANY REPRESENTATIONS
The Company hereby represents and warrants to the Purchaser as of the
date hereof and as of the date of the Closing as follows:
A. Corporate Organization and Authority. The Company:
(i) is a corporation duly organized, validly existing,
authorized to exercise all its corporate powers, rights and privileges, and in
good standing in the State of Delaware;
(ii) has all requisite corporate power and corporate authority to
own, lease and operate it properties and to carry on its business as now
conducted and possesses all business licenses, franchises, rights and privileges
material to the conduct of its business;
(iii) is qualified as a foreign corporation and is in good
standing in all jurisdictions in which such qualification is required, except
where the failure to be so qualified or in good standing would not have a
material adverse effect on the Company and its subsidiaries taken as a whole;
and
(iv) has made available or delivered to the Purchaser a true,
complete and correct copy of its Certificate of Incorporation and By-laws and
any shareholder agreements of which the Company is aware, each as amended to
date, and each of which so delivered is in full force and effect.
B. Capitalization
(i) As of January 15, 1997, the authorized and outstanding
capital stock of the Company consists solely of:
(a) Preferred Stock. 1,000,000 shares of Preferred Stock
authorized, of which none are issued or outstanding.
(b) Common Stock. 25,000,000 shares of Common Stock authorized,
of which 16,949,019 shares are issued and outstanding. All such issued and
outstanding shares of Common Stock have been duly authorized and validly
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issued (including, without limitation, issued in compliance with all applicable
federal and state securities laws), have been approved for listing on the New
York Stock Exchange and are fully paid and nonassessable.
(ii) Other Securities. In addition to the Common Stock, as of
January 15, 1997, the Company had outstanding warrants, options and stock
appreciation rights to purchase 3,197,099 shares of the Company's Common Stock.
All such issued and outstanding warrants and options have been duly authorized
and validly issued (including, without limitation, issued in compliance with all
applicable federal and state securities laws). Other than as set forth in this
paragraph (ii), there are no shares of capital stock or other securities of the
Company (i) reserved for issuance (other than shares issuable under employee or
director benefit plans) or (ii) subject to preemptive rights or any outstanding
subscriptions, options, warrants, calls, rights, convertible securities or other
agreements or other instruments outstanding or in effect giving any Person the
right to acquire any shares of capital stock or other securities of the Company
or any commitments of any character relating to the issued or unissued capital
stock or other securities of the Company. The Company does not have outstanding
any bonds, debentures, notes or other obligations the holders of which have the
right to vote (or any other securities that are convertible into or exercisable
for securities having the right to vote) with the stockholders of the Company on
any matter. For purposes of this Agreement, the term "PERSON" shall mean any
individual, corporation (including any non-profit corporation), general or
limited partnership, limited liability company, Governmental Entity (as defined
below), joint venture, estate, trust, association, organization or other entity
of any kind or nature.
(iii) The Company shall on the Closing Date convey to the
Purchaser all of the legal and beneficial ownership in and to the Purchased
Shares, free and clear of all liens, encumbrances or third party rights.
C. Authorization. All corporate action on the part of the Company, its
officers, directors and stockholders necessary for the authorization, execution,
delivery and performance of all obligations under this Agreement, and for the
issuance and delivery of the Purchased Shares has been taken, and this Agreement
constitutes a legally binding, valid obligation of the Company enforceable in
accordance with its terms.
D. Validity of the Securities. The Purchased Shares, when issued, sold
and delivered in accordance with the terms and for the consideration expressed
in this Agreement, shall be duly authorized and validly issued (including,
without limitation, issued in compliance with applicable federal and state
securities laws assuming the accuracy of the Purchaser's representations
herein), fully-paid, nonassessable, and
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neither the Company nor the holder thereof shall be subject to any preemptive or
similar right with respect thereto.
E. No Conflict with other Instruments. The execution, delivery and
performance of this Agreement will not contravene, result in any violation of,
be in conflict with, constitute or result in a breach or default under, result
in the acceleration of the Company's obligations or in the creation of any lien
under, or cause or require the cancellation, termination or modification of
(with or without the passage of time or the giving of notice or both): (i) any
provision of the Company's certificate of incorporation or by-laws; (ii) any
provision of any judgment, decree or order to which the Company is a party or by
which it or any of its assets is or may be bound; (iii) any lease, instrument,
mortgage, indenture, contract, license, permit, note or other obligation or
commitment to which the Company is a party or by which it is or may be bound; or
(iv) any law, statute, rule or governmental regulation applicable to the
Company, except in the case of clauses (ii), (iii) and (iv) for any such
violation, conflict or default which would neither, individually or in the
aggregate, have a material adverse effect on the Company and its subsidiaries
taken as a whole nor prevent the Company from performing its obligations under
this Agreement in any material respect.
F. Securities Act. Subject to the accuracy of the Purchaser's
representations herein, the offer, sale and issuance of the Purchased Shares
constitute transactions exempt from the registration requirements of Section 5
of the Securities Act.
G. Registration Rights. Except for the registration rights set forth
in the Registration Rights Agreement defined in Section VII(B)(viii), and in the
Registration Rights Agreement among Warburg, Pincus Investors, L.P. ("Warburg"),
Joe F. Hanauer, C. Michael Kojaian, Mike Kojaian and Kenneth J. Kojaian
(collectively, the "Kojaians"), and the Company, dated December 11, 1996, and
except for the Company's obligation to register securities on Form S-8, at the
Closing the Company will be under no contractual obligation to register under
the Securities Act any of its presently outstanding securities.
H. Consents and Approvals. Except for any filings required to be made
with the SEC, state securities regulators or the stock exchanges on which the
Company's Common Stock is listed, no notices, reports or other filings are
required to be made by the Company with, nor are any consents, registrations,
approvals, declarations, permits, expiration of any applicable waiting periods
or authorizations required to be obtained by the Company from any Governmental
Entity in connection with the execution or delivery of this Agreement by the
Company, the performance by the Company of its obligations hereunder or the
consummation by the Company of the transactions contemplated herein. As used in
this Agreement, the term
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"GOVERNMENTAL ENTITY" shall mean any foreign, federal, state, local, municipal,
county or other governmental, quasi-governmental, administrative or regulatory
authority, body, agency, court, tribunal, commission or other similar entity
(including any branch, department or official thereof).
I. No Subsidiaries. The Company has no subsidiaries other than those
listed in Exhibit A.
J. SEC Reports. The Company has filed all proxy statements, reports
and other documents required to be filed by it under the Exchange Act after
December 31, 1995 (collectively, the "SEC Reports"); and the Company has
furnished Purchaser copies of its Annual Report on Form 10-K for the fiscal year
ended June 30, 1996, and all proxy statements and reports under Section 13 of
the Exchange Act filed by the Company after such date, each as filed with the
Commission. Each SEC Report at the time of filing was in compliance in all
material respects with the requirements of its respective report form and did
not on the date of filing contain any untrue statement of a material fact or
omit to state a material fact required to be stated therein or necessary to make
the statements therein, in the light of the circumstances under which they were
made, not misleading.
K. Financial Statements. The financial statements (including any
related schedules and/or notes) included in the SEC Reports have been prepared
in accordance with generally accepted accounting principles ("GAAP")
consistently followed (except as indicated in the notes thereto) throughout the
periods involved and fairly present in all material respects the consolidated
financial condition, results of operations and changes in the financial position
of the Company and its subsidiaries as of the dates thereof and for the periods
ended on such dates (in each case subject, as to interim statements, to changes
resulting from year-end adjustments (none of which will be material in amount or
effect)), and, to the best of the Company's knowledge, the Company has no
material liabilities, contingent or otherwise (whether or not such liabilities
are required to be disclosed in accordance with GAAP) not reflected in the
balance sheet as of September 30, 1996, included in the SEC Reports or otherwise
disclosed to the Purchaser in writing prior to the execution by the Purchaser of
this Agreement, other than any such liabilities incurred in the ordinary course
of business since September 30, 1996. To the best of the Company's knowledge,
there has been no material adverse change in the business, condition or
operations (financial or otherwise) of the Company and its subsidiaries taken as
a whole from that set forth in the balance sheet as of September 30, 1996,
included in the SEC Reports other than changes referred to in the SEC Reports or
otherwise disclosed to Purchaser in writing prior to the execution by Purchaser
of this Agreement.
L. Disclosure. There is no fact known to the Company which the Company
has intentionally not disclosed to the Purchaser in writing which materially
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affects adversely or, so far as the Company can now reasonably foresee, will
materially affect adversely the properties, business, or financial condition of
the Company and its subsidiaries taken as a whole or the ability of the Company
to perform this Agreement, the Registration Rights Agreement or its obligations
in respect of the Purchaser.
VI. SURVIVAL AND INDEMNIFICATION
6.1. Survival of Representations and Warranties. No action or
claim resulting from breaches of the representations and warranties of any of
the parties hereto shall be brought or made unless, prior to August 15, 1998,
the action or claim shall have been the subject of a good faith written notice
from either party hereto to the other party which notice specifies in reasonable
detail the nature of the claim and identifies the representation or warranty
alleged to have been breached.
6.2. Indemnification by the Company. From and after the Closing
Date, the Company agrees to indemnify and hold harmless the Purchaser, its
affiliates and each of its present and former directors, officers, shareholders,
partners, affiliates, attorneys, employees and agents (collectively, the
"PURCHASER INDEMNIFIED PARTIES") from and against any and all Losses, which they
or any of them may suffer, sustain or incur by reason of or in connection with
any misrepresentation or breach of warranty or agreement made by the Company
under this Stock Purchase Agreement.
6.3. Third Party Claims. If a third party claim is made against a
Company Indemnified Party or a Purchaser Indemnified Party (the "INDEMNIFIED
PARTY"), and if such Indemnified Party intends to seek indemnity with respect
thereto under this Section VI or Section II(E), such Indemnified Party must
promptly notify Purchaser or the Company, as the case may be (an "INDEMNIFYING
PARTY") of such claim, but any failure to give such notice shall not relieve the
Indemnifying Party from any liability it may have to such Indemnified Party
under this Agreement. The Indemnifying Party shall have 30 days after receipt
of such notice to undertake, conduct and control, through counsel of its own
choosing and at its own expense, the settlement or defense thereof, and the
Indemnified Party shall cooperate with it in connection therewith; PROVIDED that
the Indemnifying Party shall permit the Indemnified Party to participate in such
settlement or defense through counsel chosen by such Indemnified Party, provided
that the fees and expenses of such counsel shall be borne by such Indemnified
Party. The Indemnified Party shall not pay or settle any such claim without the
prior written consent of the Indemnifying Party, which consent shall not be
unreasonably withheld. Notwithstanding the foregoing, the Indemnified Party
shall have the right to pay or settle any such claim, provided that in such
event it shall waive any right to indemnity therefor by the Indemnifying Party
for such claim. If the Indemnifying Party does not notify the Indemnified Party
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within 30 days after the receipt of the Indemnified Party's notice of a claim of
indemnity hereunder that it elects to undertake the defense thereof, the
Indemnified Party shall have the right to contest, settle or compromise the
claim but shall not thereby waive any right to indemnity therefor pursuant to
this Agreement. The Indemnifying Party shall not, except with the consent of
the Indemnified Party, enter into any settlement that does not include as an
unconditional term thereof the giving by the Person or Persons asserting such
claim to such Indemnified Party of an unconditional release from all liabilities
with respect to such claim.
VII. CLOSING AND CONDITIONS TO CLOSING
A. The closing of the purchase and sale of the Purchased Shares shall
take place at the offices of Grubb & Ellis Company, 2215 Sanders Road,
Northbrook, IL 60062, on January 24, 1997 at 4:00 p.m. or at such other place
and time as the Company and the Purchaser mutually agree (which date, time and
place are designated the "Closing"). At the Closing, the Purchaser shall pay
the purchase price as specified in Article I and the Company shall thereafter
promptly issue to the Purchaser a certificate registered in the Purchaser's name
representing the Purchased Shares, which will contain appropriate restrictive
legends. From time to time following the closing, the Company will remove such
restrictive legends upon request of Purchaser, provided that the restrictions
described in such legends are no longer applicable and the Purchaser has
provided the Company with an opinion of counsel satisfactory to the Company that
the conditions to the termination of such restrictions have been met.
B. The Purchaser's obligation to purchase the Purchased Shares shall be
subject to the occurrence of the following at or prior to the Closing:
(i) A Purchaser Nominee shall have been elected to the Board of
Directors of the Company to a term expiring at the next annual meeting of
Stockholders of the Company.
(ii) The representations and warranties of the Company contained
in Article V shall be true in all material respects on and as of the Closing
with the same effect as if made on and as of the Closing.
(iii) The Company shall have complied with all state securities or
Blue Sky laws applicable to the offer and sale of the Purchased Shares to the
Purchaser.
(iv) All corporate and legal proceedings taken by the Company in
connection with the transactions contemplated by this Agreement and all
documents
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relating to such transactions shall be reasonably satisfactory to the Purchaser
and its counsel. The Company shall have delivered to the Purchaser a
certificate dated as of the Closing, signed by the Company's President,
certifying that the conditions set forth in Article VII(B) have been satisfied.
(v) Purchaser shall have received the following:
(a) Copies of resolutions of the Board of Directors of the
Company, certified by the Secretary of the Company, authorizing and approving
the execution, delivery and performance of this Agreement and the other
documents and instruments to be delivered pursuant hereto; and
(b) Such additional supporting documentation and other
information with respect to the transactions contemplated hereby as the
Purchaser or its counsel may reasonably request.
(vi) Purchaser shall receive a copy of the opinions of counsel
for the Company, which are delivered to the New York Stock Exchange in
connection with this transaction, which Purchaser may rely on.
(vii) Warburg, the Kojaians shall have executed and delivered an
agreement in favor of the Purchaser in the form attached herewith as Exhibit B.
(viii) The Company and the Purchaser shall have entered into a
Registration Rights Agreement substantially in the form of Exhibit C hereto.
C. The Company's obligation to sell the Purchased Shares to the
Purchaser shall be subject to the occurrence of the following at or prior to the
Closing:
(i) The representations and warranties of the Purchaser
contained in this Agreement shall be true in all material respects on and as of
the Closing with the same effect as if made on and as of the Closing.
(ii) Purchaser shall have complied with all state securities or
Blue Sky laws applicable to the offer an sale of the Purchased Shares to the
Purchaser.
(iii) All individual and legal proceedings taken by the Purchaser
in connection with the transactions contemplated by this Agreement and all
documents relating to such transactions shall be reasonably satisfactory to the
Company and its counsel. The Purchaser shall have delivered to the Company a
certificate dated as of the Closing, certifying that the conditions set forth in
Article VII(C) have been satisfied.
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(iv) The Company shall have received such additional supporting
documentation and other information with respect to the transactions
contemplated hereby as the Company or its counsel may reasonably request.
VIII. MISCELLANEOUS
A. The provisions of this Agreement shall survive the issuance of the
Purchased Shares and continue in full force and effect.
B. This Agreement shall be enforced, governed and construed in all
respects in accordance with the laws of this State of Delaware without regard to
its conflicts of laws provisions. This Agreement and the rights, powers and
duties set forth herein shall be binding upon the Purchaser and its respective
successors and assigns and shall inure to the benefit of the Company, and its
successors and assigns. In the event that any provision of this Agreement is
invalid or unenforceable under any applicable statute or rule of law, then such
provision shall be deemed inoperative to the extent that it may conflict
therewith and shall be deemed modified to conform with such statute or rule of
law. Any provision hereof which may prove invalid or unenforceable under any
law shall not affect the validity or enforceability of any other provision
hereof. The unsuccessful party in any dispute arising out of or related to this
Agreement shall pay the costs, expenses and reasonable attorneys' fees of the
successful party.
C. Neither the Company nor the Purchaser has engaged any brokers,
finders or agents, and neither party will incur, directly or indirectly, any
liability for brokerage or finders' fees or agents' commissions or any similar
charges in connection with this Agreement and the transactions contemplated
hereby.
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<PAGE>
D. Notices. All notices and other communications provided for herein
shall be in writing and shall be delivered by hand or overnight courier service
or by facsimile with electronic confirmation, as follows:
(a) If to the Company:
Grubb & Ellis Company
2215 Sanders Road, 4th Floor
Northbrook, IL 60018
Attention: General Counsel
facsimile number: (847) 753-9034
(b) If to the Purchaser:
Archon Group, L.P.
600 Las Colinas Blvd., Suite 1980
Irving, TX 75039
Attention: Ron Barger
facsimile number: (972) 831-2377
with a copy to:
Archon Group, L.P.
c/o Goldman, Sachs & Co.
100 Crescent Court
Dallas, TX 75201
Attention: Todd Williams
facsimile number: (214) 855-6305
Sullivan & Cromwell
125 Broad Street
New York, New York 10004
Attention: Anthony Colletta
facsimile number: (212) 558-3588
or to such other address or attention of such other person as either party shall
advise the other party in writing. All notices and other communications given
pursuant to this Agreement shall be deemed to have been given on the date of
receipt.
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E. This Agreement may be executed in two or more counterparts, each of
which shall be deemed an original but which together shall constitute one and
the same instrument.
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IN WITNESS WHEREOF, the undersigned have executed this Agreement this
24th day of January, 1997.
ARCHON GROUP, L.P., GRUBB & ELLIS COMPANY,
a Delaware limited partnership a Delaware corporation
By: Archon Gen-Par, Inc., By: /s/ Neil Young
a Delaware corporation, --------------------------------
its General Partner Neil Young
President and CEO
By: /s/ Todd Williams
---------------------------
Todd Williams
Vice President
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EXHIBIT A
STATE OF
NAME AND TRADE NAMES (IF ANY) INCORPORATION
Adams-Cates Company Georgia
Axiom Real Estate Management, Inc. Delaware
Collective Services, Inc. Pennsylvania
Grubb & Ellis Affiliates, Inc. Delaware
Grubb & Ellis Asset Services Company Delaware
Grubb & Ellis Colorado, Inc. California
TRADE NAME: Grubb & Ellis Company
Grubb & Ellis Europe, Inc. California
Grubb & Ellis Mortgage Group, Inc. California
Grubb & Ellis Mortgage Services, Inc. California
TRADE NAME: GEMS
Grubb & Ellis New York, Inc. New York
TRADE NAMES: James Felt Realty Services
Wm. A. White/Grubb & Ellis
Grubb & Ellis Institutional Properties, Inc. California
Grubb & Ellis of Nevada, Inc. Nevada
Grubb & Ellis of Oregon, Inc. Washington
Grubb & Ellis Realty Advisers, Inc. California
Grubb & Ellis Services Corporation Florida
Grubb & Ellis Southeast Partners, Inc. California
G&E Investor Properties I, Inc. California
G&E Investor Properties III, Inc. California
G&E Investor Properties IV, Inc. California
HSM Inc. Texas
Leggat McCall/Grubb & Ellis, Inc. Massachusetts
Montclair Insurance Company Ltd. Bermuda
Oliver Realty, Inc. Delaware
The Schuck Commercial Brokerage Company Colorado
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STATE OF
NAME AND TRADE NAMES (IF ANY) INCORPORATION
Wm. A. White/Grubb & Ellis Inc. New York
Wm. A. White/Tishman East Inc. New York
Axiom Real Estate Management of Colorado, Inc. Colorado
SUBSIDIARIES OF HSM INC.
STATE OF
NAME AND TRADE NAMES (IF ANY) INCORPORATION
Henry S. Miller Financial Corporation Texas
HSM Condominium Corporation Texas
HSM Real Estate Securities Corporation Texas
Miller Capital Corporation Texas
Miller Real Estate Services Corporation Texas
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EXHIBIT B
January 24, 1997
[LETTERHEAD OF ARCHON GROUP L.P.]
[Inside Address of WPI
and the Kojaians]
Re: Grubb & Ellis - Voting Agreement
Gentlemen:
This letter shall confirm our understanding that, in connection with
the $11,250,000 investment in Grubb & Ellis Company (the "Company") by Archon
Group L.P. ("Archon"), Mike Kojaian, Kenneth J. Kojaian, C. Michael Kojaian
(collectively, "the Kojaian Shareholders") and Warburg, Pincus Investors, L.P.
("WPI") and Archon (collectively, the "Shareholders") hereby agree to (i) vote
all of the shares of common stock of the Company owned by such Shareholder, and
(ii) cause directors nominated by such Shareholder to vote to nominate
directors, as follows:
(i) if and so long as the Kojaian Shareholders, or any transferee
owned or controlled by them that agrees to be bound by the terms of this letter
agreement, beneficially owns 1,250,000 shares of the Company's common stock, for
a director nominee selected by a majority of the Kojaian Shareholders, who shall
be a Kojaian Shareholder or an officer or partner of any entity owned or
controlled by any of the Kojaian Shareholders, to be nominated and elected to
the Company's Board of Directors;
(ii) if and so long as WPI beneficially owns 5,059,169 shares of the
Company's common stock, for those nominees designated by WPI, who shall be
officers of WPI or any of its venture banking affiliates, to be nominated and
elected to the Company's Board of Directors; and
(iii) if and so long as Archon beneficially owns 1,250,000 shares of
the Company's common stock, for a director nominee designated by Archon who
shall be an employee of Archon, Goldman, Sachs & Co. or an affiliate thereof, to
be nominated and elected to the Company's Board of Directors.
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None of the Shareholders shall enter into any other voting
arrangement or proxy whereby its voting rights would be vested in any other
party, except if such party agrees to be bound by the above.
In the event that all directors nominated by any of WPI, the Kojaian
Shareholders, or Archon either resign or decline to be nominated for reelection
and no other nominees are nominated by such Shareholder or such Shareholder
fails to nominate any director or directors for election (a "Terminated
Shareholder"), then (i) the rights and obligations of such Terminated
Shareholder under this Agreement shall terminate with respect to such Terminated
Shareholder and (ii) each remaining Shareholder shall have no obligation
hereunder toward or with respect to such Terminated Shareholder or its nominees.
This Agreement may only be varied by an instrument in writing, and
shall be governed under the laws of the State of Delaware.
This Agreement may be executed in one or more counterparts, each of
which shall be deemed an original but which together shall constitute one and
the same instrument.
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Please countersign one copy indicating your agreement to the above.
Sincerely,
Todd Williams
Archon Gen-Par, Inc.
ACCEPTED AND AGREED
WARBURG, PINCUS INVESTORS, L.P.:
- ------------------
Warburg, Pincus & Co.
By:
Name:
Title:
KOJAIAN SHAREHOLDERS:
- ------------------
By: Mike Kojaian
- ------------------
By: Kenneth J. Kojaian
- ------------------
By: C. Michael Kojaian
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EXHIBIT C
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Exhibit 4.3
REGISTRATION RIGHTS AGREEMENT
This Registration Rights Agreement (this "Agreement"), dated as of
January 24, 1997, is by and among Grubb & Ellis Company, a Delaware corporation
(the "Company"), and Archon Group, L.P., a Delaware limited partnership (the
"Investor").
WHEREAS, the Investor and the Company have entered into the Stock
Purchase Agreement dated as of January 24, 1997 (the "Stock Purchase Agreement")
pursuant to which the Investor agreed to purchase shares of common stock of the
Company (the "Common Stock").
WHEREAS, the parties hereto desire to provide for certain rights
to register such shares of Common Stock under the Securities Act of 1933, as
amended, in the manner and upon the terms and conditions set forth in this
Agreement.
NOW, THEREFORE, in consideration of the premises and of the terms
and conditions herein contained, the parties hereto mutually agree as follows:
1. DEFINITIONS.
1.1 DEFINED TERMS. In addition to the capitalized terms defined
elsewhere in this Agreement, as used in this Agreement the following terms shall
have the following meanings (with the singular to include the plural, except
where the context otherwise requires):
(a) "Affiliate" of a Person shall mean any Person directly or
indirectly controlling, controlled by, or under common control with such Person.
(b) "Board of Directors" shall mean the Board of Directors of
the Company.
(c) "Change of Control" shall mean any Person other than
Warburg shall have the right, directly or indirectly, to elect a majority of the
Board of Directors of the Company.
(d) "Commission" shall mean the Securities and Exchange
Commission.
(e) "Exchange Act" shall mean the Securities Exchange Act of
1934, as amended.
(f) "Existing Registration Rights Agreement" shall mean the
Registration Rights Agreement dated as of December 11, 1996 by and among the
Company, Warburg, Hanauer and the Kojaian Investors.
(g) "Hanauer" shall mean Joe F. Hanauer.
<PAGE>
(h) "Investor Shares" shall mean the aggregate of 2,500,000
shares of Common Stock issued to the Investor pursuant to the Stock Purchase
Agreement.
(i) "Investor Securities" shall mean the Investor Shares and
any and all issued shares of Registrable Securities.
(j) "Kojaian Investors" shall mean collectively C. Michael
Kojaian, Mike Kojaian and Kenneth J. Kojaian.
(k) "Person" shall mean any individual, corporation,
partnership, association, trust or other entity or organization, including a
government or political subdivision or agency or instrumentality thereof.
(l) "Prospectus" shall mean the prospectus included in any
Registration Statement, as amended or supplemented by any prospectus supplement
with respect to the terms of the offering of any portion of the Registrable
Securities covered by such Registration Statement and by all other amendments
and supplements to the prospectus, including post-effective amendments and all
material incorporated by reference in such prospectus.
(m) "Registration" shall mean a Demand Registration or a
Piggyback Registration.
(n) "Registration Statement" shall mean any registration
statement of the Company which covers any of the Registrable Securities pursuant
to the provisions of this Agreement, including the Prospectus, amendments and
supplements to such Registration Statement, including post-effective amendments,
all exhibits and all material incorporated by reference in such Registration
Statement.
(o) "Securities Act" shall mean the Securities Act of 1933, as
amended.
(p) "Subsidiary" shall mean any corporation, partnership, joint
venture or other entity of which the Company owns, directly or indirectly, a
majority of the capital stock or a majority of the partnership or other equity
interests, or is a general partner.
(q) "Triggering Event" shall mean either (i) a Change in
Control or (ii) the sale or other disposition of 50% or more of the Warburg
Registrable Securities (as defined in the Existing Registration Rights
Agreement) by a means other than pursuant to a registration statement under the
Existing Registration Rights Agreement.
(r) "underwritten registration" or "underwritten offering"
shall mean a sale of securities of the Company to an underwriter for reoffering
to the public.
(s) "Warburg" shall mean Warburg, Pincus Investors, L.P, a
Delaware limited partnership.
2
<PAGE>
(t) "Warburg/Kojaian Registrable Securities" shall mean
collectively the Warburg Registrable Securities and the Kojaian Registrable
Securities as such terms are defined in the Existing Registration Rights
Agreement.
2. REGISTRATION RIGHTS.
2.1 DEMAND REGISTRATIONS.
(a) Subject to Section 2.1(b), at any time after the earlier of
(i) the date a Triggering Event occurs and (ii) July 24, 1998, the holder or
holders of at least 30% of the aggregate amount of Registrable Securities may
make three written requests to the Company to effect a registration under and in
accordance with the provisions of the Securities Act of all or part of the
Registrable Securities.
For purposes of this Section 2, a Person is deemed to be a holder
of Registrable Securities whenever such Person owns Registrable Securities or
has the right to acquire such Registrable Securities, whether or not such
acquisition has actually been effected and disregarding any legal restrictions
upon the exercise of such right.
"Registrable Securities" shall mean the Investor Shares and all
shares of Common Stock issued or issuable upon conversion or exercise of any
securities of the Company, which may be issued or distributed with respect to,
or in exchange for, the Investor Shares pursuant to a stock dividend, stock
split or other distribution, merger, consolidation, recapitalization or
reclassification or otherwise, and any securities of the Company which may be
issued or distributed with respect to, or in exchange for, any such Common Stock
or such other securities pursuant to a stock dividend, stock split or other
distribution, merger, consolidation, recapitalization or reclassification or
otherwise; PROVIDED, HOWEVER, that any such Registrable Securities shall cease
to be Registrable Securities when (i) a Registration Statement with respect to
the sale of such Registrable Securities has been declared effective under the
Securities Act and such Registrable Securities have been disposed of in
accordance with the plan of distribution set forth in such Registration
Statement, (ii) such Registrable Securities are distributed pursuant to Rule 144
or Rule 144A (or any similar provision then in force) under the Securities Act
or (iii) such Registrable Securities shall have been otherwise transferred, new
certificates for them not bearing a legend restricting further transfer under
the Securities Act shall have been delivered by the Company and they may be
resold without subsequent registration under the Securities Act; PROVIDED,
FURTHER, HOWEVER, that any securities that have ceased to be Registrable
Securities cannot thereafter become Registrable Securities, and any security
that is issued or distributed in respect to securities that have ceased to be
Registrable Securities are not Registrable Securities.
Any registration requested pursuant to Section 2.1(a) shall
hereinafter be referred to as a "Demand Registration." Each request for a
Demand Registration shall specify the kind and aggregate amount of Registrable
Securities to be registered and the intended methods of disposition thereof,
which may be stated in the alternative if a shelf Registration Statement is
requested pursuant to Rule 415 under the Securities Act. The
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Company shall be deemed to have effected a Demand Registration if (i) the
Registration Statement relating to such Demand Registration is declared
effective by the Commission and remains effective for at least 30 days;
PROVIDED, HOWEVER, that no Demand Registration shall be deemed to have been
effected if (x) such registration, after it has become effective, is interfered
with by any stop order, injunction or other order or requirement of the
Commission or other governmental agency or court or (y) the conditions to
closing specified in the purchase agreement or underwriting agreement entered
into in connection with such registration are not satisfied or (ii) at any time
after the requisite holders request a Demand Registration and prior to the
effectiveness of the Registration Statement, the preparation of such
Registration Statement is discontinued or such Registration Statement is
withdrawn or abandoned at the request of the holders of a majority of the
Registrable Securities sought to be registered in such Registration Statement
pursuant to Section 2.1(a), unless either (x) the holders of such Registrable
Securities have elected to pay and have paid to the Company in full the
Registration Expenses (as hereinafter defined) in connection with such
Registration Statement, or (y) such discontinuation, withdrawal or abandonment
is requested by such holders because of the occurrence of a significant negative
change in market conditions or the Company's business condition or prospects
since the date of the initial request for a Demand Registration.
(b) DEMAND NOTICES. Promptly upon receipt of any request for a
demand registration pursuant to Section 2.1(a) of the Existing Registration
Rights Agreement (but in no event more than five business days thereafter), the
Company will serve written notice, which notice shall specify whether the
offering is to be underwritten or is to be on another basis (a "Demand Notice")
of any such Registration request to the beneficial holders of Registrable
Securities who then have the right to request a Demand Registration pursuant to
this Agreement, and the Company will include in such registration all such
Registrable Securities of any holder with respect to which the Company has
received written requests for inclusion therein, in which the holder has
specified that such inclusion is to be deemed a Demand Registration pursuant to
Section 2.1(a) hereof, within 30 days after the Demand Notice has been given to
the applicable holders of Registrable Securities. Notwithstanding anything in
Section 2.1(a) to the contrary, the Investor may make such a demand pursuant to
this Section 2.1(b) after the effective date hereof. All requests made pursuant
to this Section 2.1(b) shall specify the kind and aggregate amount of
Registrable Securities to be registered, and shall be counted as a demand for
purposes of Section 2.1(a). If such initial request for a Demand Registration
has specified that the offering pursuant thereto shall be underwritten, then
each holder making a request pursuant to this Section 2.1(b) must participate in
such underwritten offering and shall not be permitted to make any other offering
in connection with such demand registration. If such initial request for a
demand registration has specified that the offering pursuant thereto shall be on
any other basis, then each holder making a request pursuant to this Section
2.1(b) must participate in such offering on such basis and shall not be
permitted to make an underwritten offering in connection with such demand
registration.
(c) PRIORITY OF DEMAND REGISTRATIONS. If the managing
underwriter or agent of a Demand Registration (or, in the case of a Demand
Registration not being underwritten, holders of a majority of the Registrable
Securities sought to be registered
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therein pursuant to Section 2.1), advises the Company in writing that in its or
their opinion the number of securities requested to be included in such Demand
Registration exceeds the number which can be sold in such offering without a
significant adverse effect on the price, timing or distribution of the
securities offered, the Company will include in such Registration only the
number of securities that, in the opinion of such underwriter or agent (or
holders, as the case may be), can be sold without a significant adverse effect
on the price, timing or distribution of the securities offered, selected pro
rata among the holders that have requested to be included in such Demand
Registration pursuant to Sections 2.1(a) or 2.1(b) or pursuant to other demand
registration rights, based on the number of shares of Registrable Securities,
Warburg/Kojaian Registrable Securities or other securities requested to be
registered by each such holder.
The Company and other holders of securities of the Company may
include other securities in such Registration if, but only if, such underwriter
or agent (or holders of Registrable Securities, as the case may be) concludes
that such inclusion will not have a significant adverse effect on the price,
timing or distribution of all the securities requested to be included in such
Registration.
(d) THE COMPANY'S RIGHT TO DEFER REGISTRATION. If the Company
is requested to effect a Demand Registration and the Company furnishes to the
holders of Registrable Securities requesting such Registration a copy of a
resolution of the Board of Directors certified by the Secretary of the Company
stating that in the good faith judgment of the Board of Directors it would be
adverse to the Company and its securityholders for such Registration Statement
to be filed on or before the date such filing would otherwise be required
hereunder because such registration would interfere with any financing,
acquisition, corporate reorganization or other material transaction involving
the Company or any of its Subsidiaries or would require premature disclosure
thereof, or would require disclosure of material information which the Company
would be justified in not disclosing in the absence of such Registration, the
Company shall have the right to defer such filing for a reasonable period not to
exceed 90 days after receipt of the request for such Registration from such
holders of Registrable Securities. If the Company shall so postpone the filing
of a Registration Statement and if any holder of Registrable Securities
requesting such Demand Registration pursuant to Section 2.1 within 30 days after
receipt of the notice of postponement advises the Company in writing that it has
determined to withdraw its request for Registration, then such Demand
Registration shall be deemed to be withdrawn by it and such request shall be
deemed not to have been exercised for purposes of determining whether such
holder retains the right to Demand Registrations pursuant to this Section 2.1.
In addition, if any holder of Registrable Securities so notifies the Company of
its determination to withdraw its request for Registration and, within the 60
days immediately following the deferral period, any holders of Registrable
Securities make a written request to the Company for Registration of the same
class of Registrable Securities that were subject to the Registration withdrawn
pursuant to the preceding sentence, the Company shall have no right to defer
such Registration pursuant to this paragraph (c).
(e) REGISTRATION STATEMENT FORM. Registrations under this
Section 2.1 shall be on such appropriate registration form of the Commission
(i) as shall be selected by
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the Company and as shall be reasonably acceptable to the holders of a majority
of the Registrable Securities requesting a Demand Registration and (ii) as shall
permit the disposition of such Registrable Securities in accordance with the
intended method or methods of disposition specified in such holders' requests
for such Registration. If, in connection with any Registration under this
Section 2.1 which is proposed by the Company to be on Form S-3 or any successor
form to such Form, the managing underwriter, if any, shall advise the Company in
writing that in its opinion the use of another permitted form is of material
importance to the success of the offering, then such Registration shall be on
such other permitted form.
(f) SELECTION OF UNDERWRITERS. If any offering pursuant to a
Demand Registration involves an underwritten offering, the holders of a majority
of the Registrable Securities included in such Demand Registration pursuant to
Section 2.1(a) shall have the right to select the managing underwriter or
underwriters to administer the offering, subject to the consent of the Company,
which consent shall not be unreasonably withheld.
2.2 PIGGYBACK REGISTRATIONS.
(a) PARTICIPATION. Subject to Section 2.2(b) hereof, if at any
time and from time to time after the date hereof, the Company files a
Registration Statement under the Securities Act with respect to any offering of
any equity securities by the Company for its own account or for the account of
any of its equity holders (other than (i) a registration on Form S-4 or S-8 or
any successor form to such Forms or (ii) any registration of securities as it
relates to an offering and sale to management of the Company pursuant to any
employee stock plan or other employee benefit plan arrangement) then, as soon as
practicable (but in no event less than ten days prior to the proposed date of
filing such Registration Statement, unless notice has been given under Section
2.1(b)), the Company shall give written notice of such proposed filing to all
beneficial holders of Registrable Securities, which notice may be the same as
the Demand Notice given pursuant to Section 2.1(b) if applicable, and such
notice shall offer the holders of Registrable Securities the opportunity to
register such number of Registrable Securities as each such holder may request
(a "Piggyback Registration") and shall specify whether the offering is to be
underwritten or is to on another basis. Subject to Section 2.2(b), the Company
shall include in such Registration Statement all Registrable Securities
requested within 30 days after the receipt of any such notice (which request
shall specify the Registrable Securities intended to be disposed of by such
holder) to be included in the Registration for such offering pursuant to a
Piggyback Registration; PROVIDED, HOWEVER, that if, at any time after giving
written notice of its intention to register any securities and prior to the
effective date of the Registration Statement filed in connection with such
Registration, the Company shall determine for any reason not to register or to
delay registration of such securities, the Company may, at its election, give
written notice of such determination to each holder of Registrable Securities
and, thereupon, (i) in the case of a determination not to register, shall be
relieved of its obligation to register any Registrable Securities in connection
with such Registration (but not from its obligation to pay the Registration
Expenses in connection therewith), without prejudice, however, to the rights of
any holders of Registrable Securities
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entitled to do so to request that such Registration be effected as a
Registration under Section 2.1, and (ii) in the case of a determination to delay
registering, shall be permitted to delay registering any Registrable Securities,
for the same period as the delay in registering such other securities. If the
offering pursuant to such Registration Statement is to be underwritten, then
each holder making a request for a Piggyback Registration pursuant to this
Section 2.2(a) must participate in such underwritten offering and shall not be
permitted to make any other offering in connection with such Registration. If
the offering pursuant to such Registration Statement is to be on any other
basis, then each holder making a request for a Piggyback Registration pursuant
to this Section 2.2(a) must participate in such offering on such basis and shall
not be permitted to make an underwritten offering in connection with such
Registration. Each holder of Registrable Securities shall be permitted to
withdraw all or part of such holder's Registrable Securities from a Piggyback
Registration at any time prior to the effective date thereof.
(b) UNDERWRITER'S CUTBACK. The Company shall use its best
efforts to cause the managing underwriter or underwriters of a proposed
underwritten offering to permit the Registrable Securities requested to be
included in the Registration for such offering under Section 2.2(a) or pursuant
to other piggyback registration rights granted by the Company, if any
("Piggyback Securities"), to be included on the same terms and conditions as any
similar securities included therein. Notwithstanding the foregoing, if the
managing underwriter or underwriters of any such proposed underwritten offerings
informs the Company and the holders of such Registrable Securities in writing
that the total amount or kind of securities, including Piggyback Securities,
which such holders and any other persons or entities intend to include in such
offering would be reasonably likely to adversely affect the price or
distribution of the securities offered in such offering or the timing thereof,
then the securities to be included in such Registration shall be (i) first, 100%
of the securities that the Company or the holder or holders making a request for
a Demand Registration pursuant to Section 2.1 or pursuant to other demand
registration rights, as the case may be, proposes to sell, subject to the
provisions of Section 2.1(c) and (ii) second, the number of securities that, in
the opinion of such underwriter or underwriters, can be sold without an adverse
effect on the price, timing or distribution of the securities to be included,
selected pro rata among holders of Registrable Securities and holders of
Piggyback Securities to the extent any of such holders has requested pursuant to
Section 2.2(a) or pursuant to other incidental registration rights to be
included in such Piggyback Registration, based on the number of shares of
Registrable Securities or Piggyback Securities requested to be registered by
each such holder.
(c) NO EFFECT ON DEMAND REGISTRATIONS. No Registration of
Registrable Securities effected pursuant to a request under this Section 2.2
shall be deemed to have been effected pursuant to Section 2.1 hereof or shall
relieve the Company of its obligation to effect any Registration upon request
under Section 2.1 hereof.
2.3 HOLD-BACK AGREEMENTS.
(a) RESTRICTIONS ON PUBLIC SALE BY HOLDER OF REGISTRABLE
SECURITIES. Each holder of Registrable Securities agrees, if requested by
(i) the Company, (ii) the managing
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underwriters in an underwritten offering or (iii) the holders of a majority of
the Registrable Securities included pursuant to Section 2.1 hereof in a Demand
Registration not being underwritten, not to effect any public sale or
distribution of securities of the Company the same as or similar to those being
registered, or any securities convertible into or exchangeable or exercisable
for such securities, in any Registration Statement, including a sale pursuant to
Rule 144 under the Securities Act (except as part of such underwritten
registration), during the 14-day period prior to, and during the 90-day period
(or, with respect to a Piggyback Registration, such longer period of up to 180
days as may be required by such underwriter) beginning on, the effective date of
any Registration Statement (except as part of such registration) or the
commencement of the public distribution of securities, to the extent timely
notified in writing by the Company or the managing underwriters (or the holders,
as the case may be).
(b) RESTRICTIONS ON PUBLIC SALE BY THE COMPANY AND OTHERS. The
Company agrees, if requested by the managing underwriter in an underwritten
offering, not to effect any public sale or distribution of any securities the
same as or similar to those being registered by the Company, or any securities
convertible into or exchangeable or exercisable for such securities, during the
14-day period prior to, and during the 90-day period (or, with respect to a
Piggyback Registration, such longer period of up to 180 days as may be required
by the underwriter) beginning on, the effective date of a Registration Statement
filed under Section 2.1 or Section 2.2 hereof or the commencement of the public
distribution of securities to the extent timely notified in writing by a holder
of Registrable Securities covered by such Registration Statement or the managing
underwriters (except as part of such registration, if permitted, or pursuant to
registrations on Forms S-4 or S-8 or any successor form to such Forms or any
registration of securities for offering and sale to management of the Company
pursuant to any employee stock plan or other employee benefit plan arrangement).
The Company agrees to use reasonable efforts to obtain from each holder of
restricted securities of the Company the same as or similar to those being
registered by the Company, or any restricted securities convertible into or
exchangeable or exercisable for any of its securities, an agreement not to
effect any public sale or distribution of such securities (other than securities
purchased in a public offering) during such period, except as part of any such
registration if permitted.
(c) OTHER REGISTRATION RIGHTS AGREEMENTS. The Company is
presently a party to the Existing Registration Rights Agreement with respect to
the registration under the Securities Act of certain securities of the Company.
The Company may enter into any other such agreement; PROVIDED, HOWEVER, that the
rights and benefits of a securityholder with respect to registration of the
Company's securities as contained in any such other agreement shall be no more
favorable than the rights and benefits of holders of Registrable Securities as
contained in this Agreement.
2.4 REGISTRATION PROCEDURES. In connection with the Company's
Registration obligations pursuant to Sections 2.1 and 2.2 hereof, the Company
will use its best efforts to effect such registration to permit the sale of such
Registrable Securities in accordance with the intended method or methods of
distribution thereof, and pursuant thereto the Company will as expeditiously as
possible:
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(a) prepare and, not later than 45 days after receipt of any
request for a Demand Registration, file with the Commission a Registration
Statement or Registration Statements relating to the applicable Demand
Registration or Piggyback Registration including all exhibits and financial
statements required by the Commission to be filed therewith, and use its best
efforts to cause such Registration Statement to become effective under the
Securities Act; PROVIDED, HOWEVER, that the Company may discontinue any
Registration of its securities which are not Registrable Securities (and, under
the circumstances specified in Section 2.1(d), may delay and, under the
circumstances specified in Section 2.2(a), may delay or discontinue Registration
of its securities which are Registrable Securities) at any time prior to the
effective date of the Registration Statement relating thereto;
(b) prepare and file with the Commission such amendments and
post-effective amendments to the Registration Statement as may be requested by
the holders of a majority of the Registrable Securities or as may be necessary
to keep the Registration Statement effective for a period of not less than 270
days (or such shorter period which will terminate when all Registrable
Securities covered by such Registration Statement have been sold or withdrawn),
or, if such Registration Statement relates to an underwritten offering, such
longer period as in the opinion of counsel for the underwriters a Prospectus is
required by law to be delivered in connection with sales of Registrable
Securities by an underwriter or dealer; cause the Prospectus to be supplemented
by any required Prospectus supplement, and as so supplemented to be filed
pursuant to Rule 424 under the Securities Act; and comply with the provisions of
the Securities Act, the Exchange Act, and the rules and regulations promulgated
thereunder with respect to the disposition of all securities covered by such
Registration Statement during the applicable period in accordance with the
intended method or methods of distribution by the sellers thereof set forth in
such Registration Statement or supplement to the Prospectus;
(c) notify the selling holders of Registrable Securities and
the managing underwriters, if any, and (if requested) confirm such advice in
writing, as soon as practicable after notice thereof is received by the Company
(i) when the Registration Statement or any amendment thereto has been filed or
becomes effective, the Prospectus or any amendment or supplement to the
Prospectus has been filed, and, to furnish such selling holders and managing
underwriters with copies thereof, (ii) of any request by the Commission or any
other federal or state governmental authority for amendments or supplements to
the Registration Statement or the Prospectus or for additional information,
(iii) of the issuance by the Commission of any stop order suspending the
effectiveness of the Registration Statement or any order preventing or
suspending the use of any preliminary Prospectus or Prospectus or the initiation
or threatening of any proceedings for such purposes, (iv) if at any time the
representations and warranties of the Company contemplated by paragraph (m)
below cease to be true and correct and (v) of the receipt by the Company of any
notification with respect to the suspension of the qualification of the
Registrable Securities for offering or sale in any jurisdiction or the
initiation or threatening of any proceeding for such purpose;
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(d) promptly notify the selling holders of Registrable
Securities and the managing underwriters, if any, when the Company becomes aware
of the happening of any event as a result of which the Registration Statement or
the Prospectus included in such Registration Statement (as then in effect)
contains any untrue statement of a material fact or omits to state a material
fact necessary to make the statements therein (in the case of the Prospectus and
any preliminary prospectus, in the light of the circumstances under which they
were made) not misleading or, if for any other reason it shall be necessary
during such time period to amend or supplement the Registration Statement or the
Prospectus in order to comply with the Securities Act and, in either case as
promptly as practicable thereafter, prepare and file with the Commission, and
furnish without charge to the selling holders and the managing underwriters, if
any, a supplement or amendment to such Registration Statement or Prospectus
which will correct such statement or omission or effect such compliance;
(e) make every reasonable effort to prevent the issuance of or
to obtain the withdrawal of any stop order or other order suspending the use of
any preliminary Prospectus or Prospectus or suspending any qualification of the
Registrable Securities;
(f) if requested by the managing underwriter or underwriters or
a holder of Registrable Securities being sold in connection with an underwritten
offering, promptly incorporate in a Prospectus supplement or post-effective
amendment such information as the managing underwriters and the holders of a
majority of the Registrable Securities being sold agree should be included
therein relating to the plan of distribution with respect to such Registrable
Securities, including, without limitation, information with respect to the
number of Registrable Securities being sold to such underwriters, the purchase
price being paid therefor by such underwriters and with respect to any other
terms of the underwritten (or best efforts underwritten) offering of the
Registrable Securities to be sold in such offering; and make all required
filings of such Prospectus supplement or post-effective amendment as soon as
practicable after being notified of the matters to be incorporated in such
Prospectus supplement or post-effective amendment;
(g) furnish to each selling holder of Registrable Securities
and each managing underwriter, without charge, one executed copy and as many
conformed copies as they may reasonably request, of the Registration Statement
and any amendment or post-effective amendment thereto, including financial
statements and schedules, all documents incorporated therein by reference and
all exhibits (including those incorporated by reference);
(h) deliver to each selling holder of Registrable Securities
and the underwriters, if any, without charge, as many copies of the Prospectus
(including each preliminary prospectus) and any amendment or supplement thereto
as such Persons may reasonably request (it being understood that the Company
consents to the use of the Prospectus or any amendment or supplement thereto by
each of the selling holders of Registrable Securities and the underwriters, if
any, in connection with the offering and sale of the Registrable Securities
covered by the Prospectus or any amendment or supplement
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thereto) and such other documents as such selling holder may reasonably request
in order to facilitate the disposition of the Registrable Securities by such
holder;
(i) on or prior to the date on which the Registration Statement
is declared effective, use its best efforts to register or qualify, and
cooperate with the selling holders of Registrable Securities, the managing
underwriter or agent, if any, and their respective counsel in connection with
the registration or qualification of such Registrable Securities for offer and
sale under the securities or blue sky laws of each state and other jurisdiction
of the United States as any such seller, underwriter or agent reasonably
requests in writing and do any and all other acts or things reasonably necessary
or advisable to keep such registration or qualification in effect for so long as
such Registration Statement remains in effect and so as to permit the
continuance of sales and dealings therein for as long as may be necessary to
complete the distribution of the Registrable Securities covered by the
Registration Statement; PROVIDED that the Company will not be required to
qualify generally to do business in any jurisdiction where it is not then so
qualified or to take any action which would subject it to taxation or general
service of process in any such jurisdiction where it is not then so subject;
(j) cooperate with the selling holders of Registrable
Securities and the managing underwriter or agent, if any, to facilitate the
timely preparation and delivery of certificates representing Registrable
Securities to be sold and not bearing any restrictive legends; and enable such
Registrable Securities to be in such denominations and registered in such names
as the managing underwriters may request at least two business days prior to any
sale of Registrable Securities to the underwriters;
(k) use its best efforts to cause the Registrable Securities
covered by the applicable Registration Statement to be registered with or
approved by such other governmental agencies or authorities as may be necessary
to enable the seller or sellers thereof or the underwriters, if any, to
consummate the disposition of such Registrable Securities;
(l) not later than the effective date of the applicable
Registration Statement, provide a CUSIP number for all Registrable Securities
and provide the applicable transfer agent with printed certificates for the
Registerable Securities which are in a form eligible for deposit with The
Depository Trust Company;
(m) make such representations and warranties to the holders of
Registrable Securities being registered, and the underwriters or agents, if any,
in form, substance and scope as are customarily made by issuers in primary
underwritten public offerings;
(n) enter into such customary agreements (including a purchase
agreement or underwriting agreement) and take all such other actions as the
holders of at least a majority of any Registrable Securities being sold or the
managing underwriter or agent, if any, reasonably request in order to expedite
or facilitate the registration and disposition of such Registrable Securities;
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(o) obtain for delivery to the holders of Registrable
Securities being registered and to the underwriter or agent an opinion or
opinions from counsel for the Company, upon consummation of the sale of such
Registrable Securities to the underwriters (the "Closing Date") in customary
form and in form, substance and scope reasonably satisfactory to such holders,
underwriters or agents and their counsel;
(p) obtain for delivery to the Company and the underwriter or
agent, with copies to the holders of Registrable Securities, a cold comfort
letter from the Company's independent public accountants in customary form and
covering such matters of the type customarily covered by cold comfort letters as
the managing underwriter or the holders of at least a majority of the
Registrable Securities being sold reasonably request, dated the effective date
of the Registration Statement and brought down to the Closing Date;
(q) cooperate with each seller of Registrable Securities and
each underwriter or agent participating in the disposition of such Registrable
Securities and their respective counsel in connection with any filings required
to be made with the National Association of Securities Dealers, Inc. (the
"NASD");
(r) use its best efforts to comply with all applicable rules
and regulations of the Commission and make generally available to its security
holders, as soon as reasonably practicable (but not more than fifteen months)
after the effective date of the Registration Statement, an earnings statement
satisfying the provisions of Section 11(a) of the Securities Act and the rules
and regulations promulgated thereunder;
(s) as promptly as practicable after filing with the Commission
of any document which is incorporated by reference into the Registration
Statement or the Prospectus, provide copies of such document to counsel for the
selling holders of Registrable Securities and to the managing underwriters, if
any;
(t) provide and cause to be maintained a transfer agent and
registrar for all Registrable Securities covered by such Registration Statement
from and after a date not later than the effective date of such Registration
Statement; and
(u) use its best efforts to cause all Registrable Securities
covered by the Registration Statement to be listed on each securities exchange
on which any of the Company's securities are then listed or quoted on each
inter-dealer quotation system on which any of the Company's securities are then
quoted.
The Company may require each seller of Registrable Securities as
to which any registration is being effected to furnish to the Company such
information regarding the distribution of such securities and such other
information relating to such holder and its ownership of Registrable Securities
as the Company may from time to time reasonably request in writing. Each holder
of Registrable Securities agrees to furnish such information to the Company and
to cooperate with the Company as necessary to enable the Company to comply with
the provisions of this Agreement.
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Each holder of Registrable Securities agrees by acquisition of
such Registrable Securities that, upon receipt of any notice from the Company of
the happening of any event of the kind described in Section 2.4(d) hereof, such
holder will forthwith discontinue disposition of Registrable Securities pursuant
to such Registration Statement until such holder's receipt of the copies of the
supplemented or amended Prospectus contemplated by Section 2.4(d) hereof, or
until it is advised in writing by the Company that the use of the Prospectus may
be resumed, and has received copies of any additional or supplemental filings
which are incorporated by reference in the Prospectus, and, if so directed by
the Company, such holder will deliver to the Company (at the Company's expense)
all copies, other than permanent file copies then in such holder's possession,
of the Prospectus covering such Registrable Securities current at the time of
receipt of such notice. In the event the Company shall give any such notice,
the time periods during which such Registration Statement shall be maintained
effective (including the period referred to in Section 2.4(b) hereof) shall be
extended by the number of days during the period from and including the date of
the giving of such notice to and including the date when each seller of
Registrable Securities covered by such Registration Statement either receives
the copies of the supplemented or amended Prospectus contemplated by Section
2.4(d) hereof or is advised in writing by the Company that the use of the
Prospectus may be resumed.
2.5 UNDERWRITTEN OFFERINGS.
(a) REQUESTED UNDERWRITTEN OFFERINGS. If requested by the
underwriters for any underwritten offering by holders of Registrable Securities
pursuant to a Registration requested under Section 2.1, the Company will use
reasonable efforts to enter into an underwriting agreement with such
underwriters for such offering, such agreement to be reasonably satisfactory in
substance and form to the Company, each such holder and the underwriters and to
contain such representations and warranties by the Company and such other terms
as are generally prevailing in agreements of that type, including, without
limitation, indemnities to the effect and to the extent provided in Section 2.8.
The holders of the Registrable Securities proposed to be distributed by such
underwriters will cooperate with the Company in the negotiation of the
underwriting agreement and will give consideration to the reasonable suggestion
of the Company regarding the form thereof. Such holders of Registrable
Securities to be distributed by such underwriters shall be parties to such
underwriting agreement and may, at their option, require that any or all of the
representations and warranties by, and the other agreements on the part of, the
Company to and for the benefit of such underwriters shall also be made to and
for the benefit of such holders of Registrable Securities and that any or all of
the conditions precedent to the obligations of such underwriters under such
underwriting agreement be conditions precedent to the obligations of such
holders of Registrable Securities. Any such holder of Registrable Securities
shall not be required to make any representations or warranties to or agreements
with the Company or the underwriters other than representations, warranties or
agreements regarding such holder, such holder's Registrable Securities, such
holder's intended method of distribution and any other representations required
by law.
(b) INCIDENTAL UNDERWRITTEN OFFERINGS. If the Company proposes
to register any of its securities under the Securities Act as contemplated by
Section 2.2 and
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such securities are to be distributed by or through one or more underwriters,
the Company, will, if requested by any holder of Registrable Securities pursuant
to Section 2.2 and subject to the provisions of Section 2.2(b), use its best
efforts to arrange for such underwriters to include all the Registrable
Securities to be offered and sold by such holder among the securities of the
Company to be distributed by such underwriters. The holders of Registrable
Securities to be distributed by such underwriters shall be parties to the
underwriting agreement between the Company and such underwriters and may, at
their option, require that any or all of the representations and warranties by,
and the other agreements on the part of, the Company to and for the benefit of
such underwriters shall also be made to and for the benefit of such holders of
Registrable Securities and that any or all of the conditions precedent to the
obligations of such underwriters under such underwriting agreement be conditions
precedent to the obligations of such holders of Registrable Securities. Any
such holder of Registrable Securities shall not be required to make any
representations or warranties to or agreements with the Company or the
underwriters other than representations, warranties or agreements regarding such
holder, such holders' Registrable Securities and such holder's intended method
of distribution or any other representations required by law.
(c) PARTICIPATION IN UNDERWRITTEN REGISTRATIONS. No Person may
participate in any underwritten registration hereunder unless such Person
(i) agrees to sell such Person's securities on the basis provided in any
underwriting arrangements approved by the Persons entitled to approve such
arrangements and (ii) completes and executes all questionnaires, powers of
attorney, indemnities, underwriting agreements and other documents required
under the terms of such underwriting arrangements.
2.6 PREPARATION; REASONABLE INVESTIGATION. In connection with
the preparation and filing of each Registration Statement, the Company will give
the holders of Registrable Securities registered under such Registration
Statement, their underwriters, if any, and their respective counsel and
accountants the opportunity to participate in the preparation of such
Registration Statement, each Prospectus included therein or filed with the
Commission, and, to the extent practicable, each amendment thereof or supplement
thereto, and give each of them such access to its books and records (to the
extent customarily given to underwriters of the Company's securities) and such
opportunities to discuss the business of the Company with its officers and the
independent public accountants who have certified its financial statements as
shall be necessary, in the opinion of such holders' and such underwriters'
respective counsel, to conduct a reasonable investigation within the meaning of
the Securities Act; PROVIDED, HOWEVER, that any books, records, information or
documents that are designated by the Company in writing as confidential shall be
kept confidential by such Persons unless disclosure thereof is required by law.
2.7 REGISTRATION EXPENSES. All expenses incident to the
Company's performance of or compliance with this Agreement, including without
limitation (i) all registration and filing fees, and any other fees and expenses
associated with filings required to be made with the Commission or the NASD
(including, if applicable, the fees and expenses of any "qualified independent
underwriter" and its counsel as may be required by
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the rules and regulations of the NASD), (ii) all fees and expenses of compliance
with state securities or blue sky laws (including fees and disbursements of
counsel for the underwriters or selling holders in connection with blue sky
qualifications of the Registrable Securities and determination of their
eligibility for investment under the laws of such jurisdictions as the managing
underwriters or holders of a majority of the Registrable Securities being sold
may designate), (iii) all printing and related messenger and delivery expenses
(including expenses of printing certificates for the Registrable Securities in a
form eligible for deposit with The Depository Trust Company and of printing
prospectuses), (iv) all fees and disbursements of counsel for the Company and of
all independent certified public accountants of the Company (including the
expenses of any special audit and cold comfort letters required by or incident
to such performance), (v) reasonable premiums for Securities Act liability
insurance if the Company so desires or the underwriters so reasonably require in
accordance with then customary underwriting practice, (vi) all fees and expenses
incurred in connection with the listing of the Registrable Securities on any
securities exchange or quotation of the Registrable Securities on any inter-
dealer quotation system, (vii) all reasonable fees and disbursements of one
counsel selected by the holders of a majority of the Piggyback Securities being
registered in the case of a Piggyback Registration, or one counsel selected by
the holder or holders of at least a majority of the Registrable Securities in
the case of a Demand Registration requested by the Investor pursuant to Section
2.1, in each case to represent such holders in connection with such
registration, (viii) all fees and disbursements of underwriters customarily paid
by the issuers or sellers of securities, excluding underwriting discounts and
commissions and transfer taxes, if any, and excluding fees and disbursements of
counsel to such underwriters (other than such fees and disbursements incurred in
connection with any registration or qualification of Registrable Securities
under the securities or blue sky laws of any state), (ix) all fees and expenses
of accountants to the holders of Registrable Securities being sold and (x) fees
and expenses of other Persons retained by the Company (all such expenses being
herein called "Registration Expenses"), will be borne by the Company, regardless
of whether the Registration Statement becomes effective (except as provided in
Section 2.1 hereof). The Company will, in any event, pay its internal expenses
(including, without limitation, all salaries and expenses of its officers and
employees performing legal or accounting duties), the expense of any audit and
the fees and expenses of any Person, including special experts, retained by the
Company.
2.8 INDEMNIFICATION.
(a) INDEMNIFICATION BY THE COMPANY. The Company agrees to
indemnify and hold harmless, to the full extent permitted by law, each holder of
Registrable Securities, its officers, directors, employees, partners,
shareholders and agents and each Person who controls such holder (within the
meaning of the Securities Act or the Exchange Act) from and against all losses,
claims, damages, liabilities and expenses (including reasonable costs of
investigation and legal expenses) arising out of or based upon any untrue or
alleged untrue statement of a material fact contained in any Registration
Statement, Prospectus or preliminary Prospectus or any omission or alleged
omission to state therein a material fact required to be stated therein or
necessary to make the statements therein not misleading, except insofar as the
same are caused by or contained in any information furnished in
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writing to the Company by such holder expressly for use therein; PROVIDED,
HOWEVER, that the Company shall not be liable in any such case to the extent
that any such loss, claim, damage, liability or expense arises out of or is
based upon an untrue statement or alleged untrue statement or omission or
alleged omission made in any such preliminary Prospectus if (i) it is determined
that it was the responsibility of such holder to provide the Person asserting
such loss, claim, damage, liability or expense with a current copy of the
Prospectus and such holder failed to deliver or cause to be delivered a copy of
the Prospectus to such Person after the Company had furnished such holder with a
sufficient number of copies of the same and (ii) the Prospectus completely
corrected in a timely manner such untrue statement or omission. This indemnity
shall be in addition to any liability the Company may otherwise have, shall
remain in full force and effect regardless of any investigation made by or on
behalf of such holder or any such officer, director, employee, agent, partner,
shareholder or controlling Person and shall survive termination of this
Agreement and the transfer of Registrable Securities by such holder. The
Company will also indemnify underwriters, selling brokers, dealer managers and
similar securities industry professionals participating in the distribution,
their officers, directors, partners, shareholders and each Person who controls
such Persons (within the meaning of the Securities Act and the Exchange Act) to
the same extent as provided above (with appropriate modification) with respect
to the indemnification of the holders of Registrable Securities, if requested.
(b) INDEMNIFICATION BY THE SELLING HOLDER OF REGISTRABLE
SECURITIES. Each selling holder of Registrable Securities agrees to indemnify
and hold harmless, to the full extent permitted by law, the Company, its
directors and officers and each Person who controls the Company (within the
meaning of the Securities Act or the Exchange Act) from and against any losses,
claims, damages, liabilities and expenses resulting from any untrue statement of
a material fact or any omission of a material fact required to be stated in the
Registration Statement, Prospectus or preliminary Prospectus or necessary to
make the statements therein not misleading, to the extent, but only to the
extent, that such untrue statement or omission is caused by or contained in any
information furnished in writing by such selling holder to the Company
specifically for inclusion in such Registration Statement or Prospectus and has
not been corrected in a subsequent writing prior to or concurrently with the
sale of the Registrable Securities to the Person asserting such loss, claim,
damage, liability or expense. This indemnity shall be in addition to any
liability such selling holder may otherwise have, shall remain in full force and
effect regardless of any investigation made by or on behalf of the Company or
any such officer, director or controlling Person and shall survive termination
of this Agreement and the transfer of Registrable Securities by such selling
holder. The Company shall be entitled to receive indemnities from underwriters,
selling brokers, dealer managers and similar securities industry professionals
participating in the distribution, to the same extent as provided above (with
appropriate modification) with respect to information so furnished in writing by
such Persons specifically for inclusion in any Prospectus or Registration
Statement.
(c) CONDUCT OF INDEMNIFICATION PROCEEDINGS. Any Person
entitled to indemnification hereunder will (i) give prompt written notice to the
indemnifying party of any claim with respect to which it seeks indemnification
and (ii) permit such indemnifying
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party to assume the defense of such claim with counsel reasonably satisfactory
to the indemnified party; PROVIDED, HOWEVER, that any delay or failure to so
notify the indemnifying party shall relieve the indemnifying party of its
obligations hereunder only to the extent, if at all, that it is prejudiced by
reason of such delay or failure; PROVIDED FURTHER, HOWEVER, that any Person
entitled to indemnification hereunder shall have the right to select and employ
separate counsel and to participate in the defense of such claim, but the fees
and expenses of such counsel shall be at the expense of such Person unless
(i) the indemnifying party has agreed in writing to pay such fees or expenses,
or (ii) the indemnifying party shall have failed to assume the defense of such
claim within a reasonable time after receipt of notice of such claim from the
Person entitled to indemnification hereunder and employ counsel reasonably
satisfactory to such Person, or (iii) in the reasonable judgment of any such
Person, based upon advice of its counsel, a conflict of interest may exist
between such Person and the indemnifying party with respect to such claims (in
which case, if the Person notifies the indemnifying party in writing that such
Person elects to employ separate counsel at the expense of the indemnifying
party, the indemnifying party shall not have the right to assume the defense of
such claim on behalf of such Person). If such defense is not assumed by the
indemnifying party, the indemnifying party will not be subject to any liability
for any settlement made without its consent (but such consent will not be
unreasonably withheld), PROVIDED that an indemnifying party shall not be
required to consent to any settlement involving the imposition of equitable
remedies or involving the imposition of any material obligations on such
indemnifying party other than financial obligations for which such indemnified
party will be indemnified hereunder. No indemnifying party shall consent to
entry of any judgment or enter into any settlement which does not include as an
unconditional term thereof the giving by the claimant or plaintiff to such
indemnified party of a release from all liability in respect to such claim or
litigation. Whenever the indemnified party or the indemnifying party receives a
firm offer to settle a claim for which indemnification is sought hereunder, it
shall promptly notify the other of such offer. If the indemnifying party
refuses to accept such offer within 20 business days after receipt of such offer
(or of notice thereof), such claim shall continue to be contested and, if such
claim is within the scope of the indemnifying party's indemnity contained
herein, the indemnified party shall be indemnified pursuant to the terms hereof.
If the indemnifying party notifies the indemnified party in writing that the
indemnifying party desires to accept such offer, but the indemnified party
refuses to accept such offer within 20 business days after receipt of such
notice, the indemnified party may continue to contest such claim and, in such
event, the total maximum liability of the indemnifying party to indemnify or
otherwise reimburse the indemnified party hereunder with respect to such claim
shall be limited to and shall not exceed the amount of such offer, plus
reasonable out-of-pocket costs and expenses (including reasonable attorneys'
fees and disbursements) to the date of notice that the indemnifying party
desires to accept such offer, PROVIDED that this sentence shall not apply to any
settlement of any claim involving the imposition of equitable remedies or to any
settlement imposing any material obligations on such indemnified party other
than financial obligations for which such indemnified party will be indemnified
hereunder. An indemnifying party who is not entitled to, or elects not to,
assume the defense of a claim will not be obligated to pay the fees and expenses
of more than one counsel for all parties indemnified by such indemnifying party
with respect to such claim, unless in the written
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<PAGE>
opinion of counsel to the indemnified party reasonably satisfactory to the
indemnifying party, use of one counsel by the underwriters on the one hand, and
by the securityholders on the other, would be expected to give rise to a
conflict of interest between such underwriters, on the one hand and such
securityholders on the other with respect to such claim, in which event the
indemnifying party shall be obligated to pay the fees and expenses of one such
additional counsel.
(d) CONTRIBUTION. If for any reason the indemnification
provided for in the preceding paragraphs (a) and (b) is unavailable to an
indemnified party or insufficient to hold it harmless as contemplated by the
preceding paragraphs (a) and (b), then the indemnifying party shall contribute
to the amount paid or payable by the indemnified party as a result of such loss,
claim, damage or liability in such proportion as is appropriate to reflect not
only the relative benefits received by the indemnified party and the
indemnifying party, but also the relative fault of the indemnified party and the
indemnifying party, as well as any other relevant equitable considerations,
provided that no selling holder of Registrable Securities shall be required to
contribute in an amount greater than the dollar amount of the proceeds received
by such selling holder with respect to the sale of any such Registrable
Securities. No person guilty of fraudulent misrepresentation (within the
meaning of Section 11(f) of the Securities Act) shall be entitled to
contribution from any person who was not guilty of such fraudulent
misrepresentation.
2.9 RULES 144 AND 144A. The Company covenants that it will
file the reports required to be filed by it under the Securities Act and the
Exchange Act and the rules and regulations adopted by the Commission thereunder
(or, if the Company is not required to file such reports, it will, upon the
request of any holder of Registrable Securities after the date that is the
second anniversary of the date hereof, make publicly available other information
so long as necessary to permit sales pursuant to Rules 144 or 144A under the
Securities Act), and it will take such further action as any holder of
Registrable Securities may reasonably request, all to the extent required from
time to time to enable such holder to sell Registrable Securities without
registration under the Securities Act within the limitation of the exemptions
provided by (i) Rules 144 or 144A under the Securities Act, as such Rules may be
amended from time to time, or (ii) any similar rule or regulation hereafter
adopted by the Commission. Upon the request of any holder of Registrable
Securities, the Company will deliver to such holder a written statement as to
whether it has complied with such requirements.
3. TRANSFER OF SECURITIES.
3.1 NOTICE OF PROPOSED TRANSFER. At the time of any transfer or sale
or proposed transfer or sale of any Investor Securities, the Company may require
written notice describing briefly the manner of such transfer or sale and a
written opinion of counsel for the holder thereof (who may be inside counsel) to
the effect that such transfer or sale may be effected without the registration
of such Investor Securities under the Securities Act and will be made in
compliance with applicable state securities and blue sky laws. The Company
shall thereupon permit or cause its transfer agent (if any) to permit such
transfer or sale to be effected unless the Company, within five days after
receipt of such notice and
18
<PAGE>
opinion, shall furnish to such holder and such holder's counsel (if any) an
opinion of the Company's outside counsel which (i) states that such sale or
transfer may not be effected without the registration of such Investor
Securities under the Securities Act (or will not be made in compliance with
applicable securities and blue sky laws) and (ii) specifies the reasons,
factual, legal or both, why such counsel's opinion differs from that of holder's
counsel. However, if in such written notice to the Company the transferring
holder informs the Company that the transfer or sale is to a purchaser or
transferee whom the transferring holder knows or reasonably believes to be a
"qualified institutional buyer," as that term is defined in Rule 144A
promulgated under the Securities Act, no opinion of counsel shall be required.
3.2 TERMINATION OF RESTRICTIONS. Notwithstanding the foregoing
provisions of this Section 3, the restrictions imposed by this Section 3 upon
the transferability of the Investor Securities shall terminate as to any
particular Investor Securities when (i) such Investor Securities shall have been
effectively registered under the Securities Act and sold by the holder thereof
in accordance with such registration, (ii) such Investor Securities have been
sold in accordance with Rule 144 or Rule 144A promulgated under the Securities
Act, or (iii) written opinions to the effect that such restrictions are no
longer required or necessary under any federal or state law or regulation have
been received from counsel for the holder thereof (who may be inside counsel)
and, if the Company shall so require, from counsel for the Company.
3.3 EXCHANGE, TRANSFER AND REPLACEMENT OF CERTIFICATES. Subject to
the foregoing provisions of this Section 3, upon surrender of any certificate
representing Investor Securities duly endorsed for exchange or transfer, the
Company will, at its expense, or will cause its transfer agent, at the Company's
expense, to issue in exchange therefor new certificates in such denominations as
may be requested representing in the aggregate the same number of Investor
Securities represented by the certificate so surrendered and registered as such
stockholder may request. Upon receipt of evidence reasonably satisfactory to
the Company of the loss, theft, destruction or mutilation of any certificate
representing Investor Securities and, in the case of any such loss, theft or
destruction, upon delivery of an agreement of indemnity satisfactory to the
Company or, in the case of any such mutilation, upon surrender and cancellation
of such certificate, the Company will issue, at its expense, or will cause its
transfer agent, at the Company's expense, to issue a new certificate
representing the same aggregate number of Investor Securities represented by
such lost, stolen, destroyed or mutilated certificate; PROVIDED, HOWEVER, that
in the event of any loss, theft or destruction of any certificate representing
Investor Securities registered in the name of the Investor or any of its
Affiliates, or in the name of any other holder which is an institutional
investor or its nominee, the Company shall not require such person or Affiliate
or any other holder which is an institutional investor or its nominee to furnish
any indemnity or surety bond in connection with the issuance of a new
certificate therefor if the Company is furnished with an affidavit of the holder
(if the holder is an individual) or, otherwise, the Chairman of the Board,
President, any Vice President, Treasurer or any Assistant Treasurer of the
holder (or, in the case of a nominee, the beneficial owner for which such holder
is serving as nominee) setting forth the fact of such loss, theft or destruction
and, together with such affidavit, such holder furnishes (or, in the case of a
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nominee, the beneficial owner for which such holder is serving as nominee
furnishes) to the Company its written agreement to indemnify the Company with
respect to such loss, theft or destruction; the Company shall, however, have the
right to require any holder of Investor Securities other than the Investor or
any of its Affiliates or any other holder which is an institutional investor or
its nominee to furnish such an indemnity or surety bond. The party delivering
any certificate representing Investor Securities pursuant to this Section 3.3
will pay the cost of such delivery (including the cost of insurance against loss
or theft in an amount satisfactory to the sender).
4. MISCELLANEOUS.
4.1. INJUNCTIVE RELIEF. Remedies for breach by the Company of
its obligations to register the Registrable Securities shall be as otherwise set
forth herein. It is hereby agreed and acknowledged that it will be impossible
to measure in money the damages that would be suffered if the parties fail to
comply with any of the obligations herein imposed on them and that in the event
of any such failure, an aggrieved Person will be irreparably damaged and will
not have an adequate remedy at law. Any such Person shall, therefore, be
entitled to injunctive relief, including specific performance, to enforce such
obligations, and if any action should be brought in equity to enforce any of the
provisions of this Agreement, none of the parties hereto shall raise the defense
that there is an adequate remedy at law.
4.2. NOTICES. All notices, other communications or documents
provided for or permitted to be given hereunder, shall be made in writing and
shall be given either personally by hand-delivery, by facsimile transmission, by
mailing the same in a sealed envelope, registered first-class mail, postage
prepaid, return receipt requested, or by air courier guaranteeing overnight
delivery:
(a) If to the Company: Grubb & Ellis Company
2215 Sanders Road, 4th Floor
Northbrook, Illinois 60062
Attention: General Counsel
Telecopy number: (847) 753-9034
With a copy to: Latham & Watkins
505 Montgomery Street, Suite 1900
San Francisco, California 94111
Attention: Scott R. Haber, Esq.
Telecopy number: (415) 395-8095
(b) If to the Investor: Archon Group, L.P.
600 Las Colinas Blvd.
Irving, Texas 75039
Attention: General Counsel
Telecopy number: (972) 831-2377
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With copies to: Goldman, Sachs & Co.
100 Crescent Court, Suite 1000
Dallas, Texas 75201
Attention: Todd Williams
Telecopy number: (214) 855-6305
Sullivan & Cromwell
125 Broad Street
New York, New York 10004
Attention: Anthony Colletta, Esq.
Telecopy number: (212) 558-3588
Each party hereto, by written notice given to the other parties
hereto in accordance with this Section 4.2 may change the address to which
notices, other communications or documents are to be sent to such party. All
notices, other communications or documents shall be deemed to have been duly
given: (i) at the time delivered by hand, if personally delivered; (ii) when
receipt is acknowledged by electronic confirmation, if by facsimile
transmission; (iii) four business days after being deposited in the mail,
postage prepaid, if mailed; and (iv) on the next business day, if timely
delivered to an air courier guaranteeing overnight delivery; PROVIDED, HOWEVER,
that notices of a change of address shall be effective only upon receipt.
4.3. SUCCESSORS AND ASSIGNS.
(a) This Agreement shall inure to the benefit of and be binding
upon the parties, and successors and assigns of each of the parties.
(b) All of the terms, covenants and agreements contained in
this Agreement are solely for the benefit of the parties hereto and their
respective successors and assigns as provided in Section 4.3(a), and no other
parties (including, without limitation, any other stockholder or creditor of the
Company, or any director, officer or employee of the Company) are intended to be
benefitted by, or entitled to enforce, this Agreement.
4.4. GOVERNING LAW. This Agreement shall be governed by and
construed in accordance with the laws of the State of New York, without regard
to the principles of conflicts of laws.
4.5. HEADINGS. The headings in this Agreement are inserted
herein for convenience of reference only and shall not limit or otherwise affect
the meaning hereof.
4.6. SEVERABILITY. In the event that any one or more of the
provisions contained herein, or the application thereof in any circumstance, is
held invalid, illegal or unenforceable, the validity, legality and
enforceability of any such provision in every other respect and of the remaining
provisions contained herein shall not be affected or impaired thereby.
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4.7. ENTIRE AGREEMENT; AMENDMENT. This Agreement contains the
entire agreement among the parties hereto with respect to the subject matter
contained herein, supersedes all prior agreements, negotiations and
understandings, whether written or oral, with respect to the subject matter
hereof, and may not be amended, modified or supplemented, and waivers and
consents to departures from the provisions hereof may not be given, except by an
instrument in writing signed the holders of not less than a majority of the
Registrable Securities and by the Company. There are no restrictions, promises,
warranties or undertakings, other than those set forth in this Agreement.
4.8. WAIVER. No action taken pursuant to this Agreement shall
be deemed to constitute a waiver by the party taking such action of compliance
with any covenants or agreements contained herein. No failure to exercise and
no delay in exercising any right, power or privilege of a party hereunder shall
operate as a waiver nor a consent to the modification of the terms hereof unless
given by that party in writing. The waiver by any party hereto of a breach of
any provision of this Agreement shall not operate or be construed as a waiver of
any preceding or succeeding breach.
4.9. INSPECTION. So long as this Agreement shall be in effect,
this Agreement shall be made available for inspection by any stockholder of the
Company at the principal offices of the Company.
4.10. COUNTERPARTS. This Agreement may be executed in any number
of counterparts and by the parties hereto in separate counterparts each of which
when so executed shall be deemed to be an original and all of which together
shall constitute one and the same agreement.
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IN WITNESS WHEREOF, the parties hereto have caused this instrument
to be duly executed as of the date first written above.
GRUBB & ELLIS COMPANY
By: /s/ Robert J. Walner
------------------------------
Its: Senior Vice President
--------------------------
ARCHON GROUP, L.P.
By Archon Gen-Par, Inc.
General Partner
By: /s/ Todd Williams
------------------------------
Its: Vice President
--------------------------
<PAGE>
Exhibit 99.1
[LOGO]
NEWS RELEASE
CONTACT:
Mark R. Friedlander
Grubb & Ellis Company
847/753-9010, ext. 3013
FOR IMMEDIATE RELEASE
GRUBB & ELLIS ANNOUNCES SALE OF 2.5 MILLION SHARES
OF COMMON STOCK TO ARCHON GROUP FOR $11.25 MILLION
NORTHBROOK, Ill., Jan. 27, 1997 --- Grubb & Ellis Company (NYSE: GBE)
announced today that it has sold 2.5 million shares of its common stock,
equivalent to approximately an 11 percent interest in the Company, for
$11,250,000 to a strategic investor, Archon Group, L.P.
A majority-owned subsidiary of the international investment bank Goldman
Sachs & Co., and headquartered near Dallas in Irving, Texas, Archon Group is one
of the nation's largest real estate service companies, currently managing over
$4 billion of assets on a cost basis.
Additionally, Northbrook, Ill.-based Grubb & Ellis announced that Todd A.
Williams, a vice president at Goldman Sachs, has been elected to the Grubb &
Ellis board of directors.
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ARCHON INVESTMENT---Page 2
The $11,250,000, together with existing cash, will be used by Grubb & Ellis
to exercise an option to purchase, and then retire, Grubb & Ellis' remaining
debt of $15 million face amount senior notes, at a price equal to $13 million
plus interest. The debt was purchased from Warburg, Pincus Investors, L.P.,
Grubb & Ellis' principal stockholder. This transaction will result in a non-
recurring gain to Grubb & Ellis due to extinguishment of debt in an amount equal
to approximately $2 million.
Grubb & Ellis is also in negotiations to secure a bank line of credit for
general corporate purposes and acquisitions.
Archon Group was formed by Goldman Sachs when it acquired and consolidated
the investment, asset and development functions previously performed by the J.E.
Robert Companies. Archon Group manages over 1,500 loan and real estate assets
covering approximately 58,000 multi-family units, 24 million square feet of
commercial, 11 million square feet of retail, 12 million square feet of
industrial properties, 3,900 hotel rooms and more than 1,200 acres of land.
The Archon Group investment is the second significant common stock
transaction announced by Grubb & Ellis in recent weeks. On Dec. 11, 1996, Grubb
& Ellis sold 2.5 million shares of its common stock to principals of the Kojaian
Companies, Southfield, Mich.
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ARCHON INVESTMENT---Page 3
"These two transactions have allowed us to eliminate our debt and
significantly enhance our balance sheet," said Neil Young, president and CEO,
Grubb & Ellis. "These investments will enable us to continue to move forward
with the customer-focused business initiatives that we began in 1996. Over the
past year, our debt has been eliminated completely after a high point of more
than $28 million."
Grubb & Ellis Company, one of the nation's largest publicly traded full-
service commercial real estate firms, has nearly 3,000 sales associates and
staff nationwide. Through its 87 offices in 60 cities, Grubb & Ellis services
every major metropolitan area in the United States. In 1996, the firm completed
over 13,000 transactions valued in excess of $9 billion.
Through its wholly-owned subsidiary, Axiom Real Estate Management, Inc.,
Grubb & Ellis provides traditional third-party property management and
facilities management services. Grubb & Ellis/Axiom manages over 80 million
square feet of facilities and commercial space nationwide with a total portfolio
value of $8.6 billion.
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