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SCHEDULE 14A
Proxy Statement Pursuant to Section 14(a) of the Securities
Exchange Act of 1934 (Amendment No. )
Filed by the Registrant [X]
Filed by a Party other than the Registrant [_]
Check the appropriate box:
[_] Preliminary Proxy Statement
[_] CONFIDENTIAL, FOR USE OF THE
COMMISSION ONLY (AS PERMITTED BY
RULE 14A-6(E)(2))
[X] Definitive Proxy Statement
[_] Definitive Additional Materials
[_] Soliciting Material Pursuant to (S) 240.14a-11(c) or (S) 240.14a-12
Grubb & Ellis Company
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(Name of Registrant as Specified In Its Charter)
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(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
Payment of Filing Fee (Check the appropriate box):
[X] No fee required.
[_] Fee computed on table below per Exchange Act Rules 14a-6(i)(4) and 0-11.
(1) Title of each class of securities to which transaction applies:
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(2) Aggregate number of securities to which transaction applies:
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(3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (set forth the amount on which
the filing fee is calculated and state how it was determined):
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(4) Proposed maximum aggregate value of transaction:
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(5) Total fee paid:
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[_] Fee paid previously with preliminary materials.
[_] Check box if any part of the fee is offset as provided by Exchange
Act Rule 0-11(a)(2) and identify the filing for which the offsetting fee
was paid previously. Identify the previous filing by registration statement
number, or the Form or Schedule and the date of its filing.
(1) Amount Previously Paid:
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(2) Form, Schedule or Registration Statement No.:
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(3) Filing Party:
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(4) Date Filed:
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Notes:
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NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
Dear Grubb & Ellis Stockholder:
You are invited to attend the Annual Meeting of Stockholders of Grubb & Ellis
Company (the "Company") to be held at 10:00 a.m., local time, on Thursday,
November 16, 2000 in the Almond Room of the Northbrook Hilton Hotel, 2855
North Milwaukee Avenue, Northbrook, Illinois.
Stockholders of record at the close of business on September 21, 2000 (the
"Record Date") may vote at the Annual Meeting.
A list of the stockholders who are entitled to vote at the meeting will be
available for inspection by any stockholder for any purpose related to the
meeting, during ordinary business hours, for ten days prior to the Annual
Meeting, at the corporate headquarters.
The purposes of the meeting are:
1. To elect seven (7) directors to the Board of Directors to serve for one
year and until their successors are elected and qualified;
2. To act upon a new stock option plan; and
3. To transact any other business properly brought before the meeting.
The meeting will also provide an opportunity to review with you the business
of the Company during the 2000 fiscal year and give you a chance to meet your
directors.
Your vote is important to the Company. To be sure that your shares are
represented at the meeting, whether or not you plan to attend, please
complete, sign and date the enclosed proxy card and mail it as soon as
possible in the enclosed reply envelope. If you do attend the meeting and wish
to vote in person, you may withdraw your proxy and vote your shares
personally.
We look forward to seeing you at the meeting.
BY ORDER OF THE BOARD OF
DIRECTORS
[LOGO OF WALNER SIGNATURE]
Robert J. Walner
Corporate Secretary
Grubb & Ellis Company
2215 Sanders Road, Suite 400
Northbrook, IL 60062
October 12, 2000
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GRUBB & ELLIS COMPANY
2215 Sanders Road, Suite 400
Northbrook, Illinois 60062
PROXY STATEMENT
TABLE OF CONTENTS
<TABLE>
<CAPTION>
TOPIC PAGE
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<C> <S> <C>
QUESTIONS AND ANSWERS ABOUT VOTING 2
ELECTION OF DIRECTORS 5
A. Information About the Board and its Compensation 5
B. Information About the Nominees for Director 6
APPROVAL OF THE GRUBB & ELLIS 2000 STOCK OPTION PLAN 9
A. The Proposal 9
B. Description of the Plan 9
C. Tax Information 10
STOCK OWNERSHIP INFORMATION 12
A. Stock Ownership Table 12
B. Section 16(a) Beneficial Ownership Reporting Compliance 14
EXECUTIVE OFFICERS 15
A. Information About Executive Officers 15
B. Executive Compensation 17
C. Employment Contracts, and Termination of Employment and Change-
in-Control Arrangements 19
D. Compensation Committee Interlocks and Insider Participation 22
E. Compensation Committee Report on Executive Compensation 22
F. Grubb & Ellis Stock Performance 24
RELATED PARTY TRANSACTIONS 26
</TABLE>
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QUESTIONS AND ANSWERS ABOUT VOTING
1.Q: What will I be voting on?
A:(1)the election of seven directors;
(2) a proposed new stock option plan; and
(3) any other business properly before the meeting.
2.Q:How are directors nominated?
A: Our Bylaws provide that nominations for director are made by written
notice to the Secretary of the Company at least 14 days before the
stockholders' meeting at which directors are to be elected. The Board of
Directors nominated the candidates listed in this proxy statement at a
regular Board meeting, and submitted the required notice. The Board has
no reason to believe that any of the nominees will be unable to serve as
a director of the Company. If someone is nominated and becomes unable to
serve, then your signed proxy card will authorize Robert J. Walner and
Blake W. Harbaugh, officers of the Company who are the proxy holders, to
nominate someone else.
3.Q:What other business will be acted upon at the annual meeting?
A: We know of no other business for the meeting. Your signed proxy card
will authorize the proxy holders to vote on your behalf in their
discretion on any other business that may properly be brought before the
meeting.
4.Q:Who is soliciting my vote and how much does it cost the Company?
A: Our Board of Directors is asking you to vote in favor of the nominees
for director who were selected by the Board and identified in this proxy
statement, and to vote in favor of the proposed stock option plan.
Morrow & Co., Inc. was engaged to assist in distribution of the proxy
materials to holders of stock brokerage accounts, at a fee of $2,000
plus expenses estimated at $2,000. Also, our employees and directors may
solicit proxies as part of their assigned duties, at no extra
compensation. The Company will pay the expenses related to this proxy
solicitation.
5.Q:What information will I receive with this solicitation?
A: You should have received with this proxy statement an annual report to
stockholders for the 2000 fiscal year. Stockholders may request another
copy of the annual report from Investor Relations, Grubb & Ellis
Company, 2215 Sanders Road, Suite 400, Northbrook, IL 60062.
6.Q:Who has the right to vote?
A: Stockholders as of the close of business on September 21, 2000 can vote.
On that date, there were 19,881,027 outstanding shares of common stock
of the Company. Each share is entitled to one vote. A majority of the
outstanding shares is a quorum. Note: references to "shares," "common
stock" or "stock" elsewhere in this proxy statement mean shares of
common stock of the Company.
7.Q:How do I vote?
A: Mark the boxes that show how you want to vote, sign and date each proxy
card you receive and return it in the prepaid envelope. If you return
your signed proxy card
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but do not mark the boxes showing how you wish to vote, your shares will
be voted FOR the nominees listed on the card and FOR the stock option
plan. You can cancel your vote by:
.sending in another proxy card with a later date;
.attending the meeting and voting by ballot; or
.sending written notice to the Secretary of the Company.
8.Q:What does it mean if I get more than one proxy card?
A: You should vote on each proxy card you receive. If you have an account
"on record" with Computershare Investor Services, L.L.C., our stock
registrar and transfer agent ("Computershare"), you will receive a proxy
card with a reply envelope addressed to Computershare. For any accounts
held in different ways, such as jointly with another person or in trust,
you will receive separate proxy cards. If you have more than one account
at Computershare and wish to consolidate the accounts, please call
Shareholder Services at Computershare: Ph. (312) 360-5100. If you hold
shares in a stock brokerage account, you will receive a proxy card or
information about other methods of voting from your broker, and you will
send your vote to your broker according to the broker's instructions. If
you hold shares in our Employee Stock Purchase Plan, you will receive
voting materials directly from E*TRADE--and you will send your vote back
to E*TRADE (as you would for any stock brokerage account). For Grubb &
Ellis shares held in your 401(k) plan account, you will receive voting
instructions from the plan trustee, Fidelity Management Trust Company.
If you do not vote your 401(k) plan shares, the trustee will not vote
your shares.
9.Q:Who will count the votes?
A: Computershare will act as inspector of election and tabulate the votes.
10.Q:What vote is needed to elect a director?
A: A vote in favor of a nominee by a plurality of the shares voting at the
meeting is needed to elect a director. Cumulative voting is not
permitted. Where a proxy card has been voted "abstain," "withhold
authority," or "broker non-vote," the shares are counted for quorum
purposes, but are not considered cast for voting on a proposal or an
election. "Broker non-vote" means that shares are held by a broker or in
nominee name and the broker or nominee has signed and returned a proxy
card to us, but for which the broker has no authority to vote because no
instructions have been received from its customer.
11.Q:What vote is needed to approve the stock option plan?
A: A vote in favor of the proposal by a majority of the shares voting is
needed to adopt the plan.
12.Q:Do any stockholders have agreements about how they will vote their
shares?
A: Yes. Here is some information about two voting agreements involving
certain principal stockholders and directors of the Company.
There is an agreement ("1997 Voting Agreement") dated January 24, 1997,
among Warburg, Pincus Investors, L.P. ("Warburg"); C. Michael Kojaian,
a director of the
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Company, and Mike Kojaian (collectively, the "Kojaian Investors"); and
The Goldman Sachs Group, Inc., successor to The Goldman Sachs Group,
L.P. ("GS Group"), which was entered into in connection with certain
financing transactions of the Company in 1996 and 1997. Under this
agreement, the parties agreed to vote all of their shares of common
stock for one director nominee designated by the Kojaian Investors
("Kojaian Nominee"), one director nominee designated by GS Group ("GS
Nominee"), and all director nominees designated by Warburg ("Warburg
Nominees"). The 1997 Voting Agreement provides that the Kojaian Nominee
must be a Kojaian Investor or an officer or partner of a firm
affiliated with the Kojaian Investors; each Warburg Nominee must be an
officer of Warburg or one of its venture banking affiliates; and the GS
Nominee must be an employee of Archon Group, L.P. or Goldman, Sachs &
Co. ("Goldman Sachs"), or an affiliate of either firm. In order for the
parties to this agreement to have the right to designate nominees, they
must beneficially own the following minimum amounts of common stock:
the Kojaian Investors or a controlled transferee (1,250,000 shares);
Warburg (5,509,169 shares); and GS Group (1,250,000 shares). For the
2000 election of directors, Reuben S. Leibowitz and Ian C. Morgan have
been designated as Warburg Nominees, C. Michael Kojaian has been
designated as the Kojaian Nominee, and Todd A. Williams has been
designated as the GS Nominee.
A voting agreement entered into between Warburg and the Company in
December 1997 ("Warburg Voting Agreement") provides that any time a
matter is brought to a vote of our stockholders and Warburg holds more
than 50% of the voting power of our common stock entitled to vote on
the matter, then Warburg will vote its shares up to 50% of such voting
power (the "Limit") in its discretion, subject to the 1997 Voting
Agreement, and any shares in excess of the Limit will be voted in the
same proportion as the other stockholders vote their shares.
See also "Stock Ownership Information."
To our knowledge, Warburg, the Kojaian Investors and GS Group intend to
vote all of their shares of common stock in favor of all nominees for
director listed in this proxy statement. Together, they have the power,
without the vote of other stockholders, to elect all nominees to the
Board.
13.Q: How can I as a stockholder arrange for a proposal to be included in
next year's Company proxy statement?
A: For your proposal to be considered for inclusion in NEXT YEAR's proxy
statement, you can submit a proposal in writing to our Corporate
Secretary at our headquarters by June 14, 2001. If you are eligible to
submit the proposal, and if it is an appropriate proposal under proxy
rules of the Securities and Exchange Commission ("SEC") and our Bylaws,
it will be included.
14.Q: Will my proxy confer discretionary authority to vote on shareholder
proposals next year?
A: If we receive notice of a stockholder proposal after June 14, 2001 and
before August 28, 2001, then the proposal does not need to be included
in next year's proxy statement and the proxy holders would have
discretionary authority to vote on the matter only under certain
circumstances, provided that the matter is discussed in the proxy
statement. If we receive notice of a stockholder proposal after August
28,
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2001, then the proxy holders can vote on such a proposal in their
discretion based upon the signed proxy cards which have been returned to
us, but the matter will not be discussed in the proxy statement and will
not be listed on the proxy card (because the submission deadline will
have been missed).
15.Q: Who are our auditors?
A: Ernst & Young LLP, independent public accountants, served as our
auditors for the 2000 and 1999 fiscal years. It is anticipated that
Ernst & Young LLP will be appointed by the Board of Directors as our
auditors for the 2001 fiscal year as well. Representatives of Ernst &
Young LLP are expected to attend the annual meeting and will be
available to answer questions. They will have an opportunity to make a
statement if they wish.
ELECTION OF DIRECTORS
A. Information About the Board and its Compensation
The Board of Directors was reduced to eight members when Neil Young resigned
as Chairman of the Board, President and Chief Executive Officer effective May
25, 2000. John D. Santoleri and Sidney Lapidus, Warburg representatives on the
Board, have declined to stand for re-election to the Board. Warburg has
designated Ian C. Morgan as a Warburg Nominee, and the size of the Board will
be further reduced to seven members, effective on the date of the Annual
Meeting. The Board held six meetings during the fiscal year ended June 30,
2000. Each incumbent director attended at least 75% of the meetings of the
Board and any Board committees on which he served, except Messrs. Lapidus and
Santoleri. The Board has standing Audit and Compensation Committees, which are
described below, and does not have a Nominating Committee.
Audit Committee. The charter of the Audit Committee was revised effective May
11, 2000. The primary function of the Committee is to provide assistance to
the Board in fulfilling its oversight responsibility to the stockholders and
others, relating to the corporate accounting functions, the systems of
internal controls, and the quality and integrity of the financial reports of
the Company. The responsibilities of the Committee include recommending to the
Board the appointment of auditors, approval of the scope of the annual audit,
and review of the following: a) the independence and performance of the
auditors; b) the audit results and compliance with the auditors'
recommendations; and c) financial reports to stockholders. In addition, the
Committee approves the selection of any vendor utilized for internal auditing;
and monitors our internal audit function, our accounting and the effectiveness
of internal controls, and compliance with certain aspects of our conflicts-of-
interest policy. The current members of the Audit Committee are R. David
Anacker, Chairman, Joe F. Hanauer and Robert J. McLaughlin. The Audit
Committee met twice during the 2000 fiscal year and otherwise conducted its
business informally.
Compensation Committee. The functions of the Compensation Committee are the
approval of compensation arrangements for our executive officers,
administration of certain stock option and other compensation plans, and
making recommendations to the Board regarding both the adoption of equity
compensation plans in which directors and officers are eligible to participate
and the award of equity incentives to our officers. The current members of the
Compensation Committee are Reuben S. Leibowitz, Chairman, and Robert J.
McLaughlin. During the 2000 fiscal year, the Compensation Committee met four
times.
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Compensation of Directors. Only outside directors (who are unaffiliated with
the Company as officers or representatives of principal stockholders) receive
compensation for serving on the Board and on its committees. Such compensation
currently consists of an annual retainer fee of $20,000, a fee of $1,500 for
each Audit Committee meeting attended, and a fee of $1,000 for each Board or
other committee meeting attended. These fees are set by the Board. Under the
1993 Stock Option Plan for Outside Directors, outside directors each receive
an option to purchase 10,000 shares of common stock upon the date of first
election to the Board, with an exercise price equal to market value on such
date. In addition, each outside director receives an option to purchase 8,000
shares of common stock upon successive fourth-year anniversaries of service.
Directors other than members of the Compensation Committee are also eligible
to receive stock options under the 1990 Amended and Restated Stock Option
Plan.
B. Information About the Nominees for Director
The names of the persons who have been nominated by the Board for election as
directors at the Annual Meeting are set forth below. There are no other
nominees. Nominations for director are made by written notice to our Corporate
Secretary, generally at least 14 days prior to the stockholders' meeting at
which directors are to be elected. All nominees have consented to serve as
directors if elected.
If any nominee becomes unable to serve as a director, the proxies will be
voted by the proxy holders for a substitute person nominated by the Board, and
authority to do so is included in the proxy. The Board has no reason to
believe that any of the nominees will be unable to serve as a director of the
Company.
The term of office of each nominee who is elected extends until the annual
stockholders' meeting in 2001 and until his successor is elected and
qualified.
R. David Anacker 65, has been Vice Chairman of Veriflo Corporation, an
industrial equipment manufacturing firm located in
Richmond, California, since November 1991. From November
1959 to November 1991, he was associated with ABM
Industries, Inc. ("ABMI"), a property maintenance
service firm located in San Francisco, California,
serving as director from 1979 and as President and Chief
Executive Officer from March 1984 through October 1991.
He has also served as a consultant to ABMI. He served as
a director of Grubb & Ellis Management Services, Inc.
("Management Services") from August 1992 to July 1994.
Mr. Anacker has served as a director of the Company
since May 1994.
Joe F. Hanauer 63, has been a general partner of Combined Investments,
L.P., an investment management business located in
Laguna Beach, California whose investments include real
estate, since December 1988. He served as Chairman of
the Board of the Company from January 1993 to April
1997, as Executive Chairman from June 1994 to September
1994 and as Chief Executive Officer from July 1994 to
December 1995. Mr. Hanauer served as a director of
Management Services from June 1993 until April 1997, and
served
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as a director and/or officer of certain other
subsidiaries of the Company from February 1993 to
December 1995. From February 1993 until July 1994, Mr.
Hanauer, through Combined Investments, L.P., also
provided operational and management services to the
Company. From 1977 to December 1988, Mr. Hanauer was
associated with Coldwell Banker Residential Group, Inc.,
serving as Chairman and Chief Executive Officer from
1984. He is also a director of MAF Bancorp,
homestore.com, Inc., and LoopNet, Inc. Mr. Hanauer has
served as a director of the Company since January 1993.
C. Michael Kojaian 38, the Kojaian Nominee, has been Executive Vice
President, a director and a shareholder of Kojaian
Management Corporation, a real estate investment firm
headquartered in Bloomfield Hills, Michigan, since
January 1988. He is also a director of Flagstar Bancorp,
Inc. and JPE, Inc., d/b/a ASCET, Inc. Mr. Kojaian was
first elected as a director of the Company in December
1996 as a representative of the Kojaian Investors.
Reuben S. Leibowitz 53, a Warburg Nominee, has served as Chairman of the
Board of Directors of the Company since May 2000. He is
also a Managing Director and member of E.M. Warburg,
Pincus & Co., LLC (and its predecessor) ("Warburg
Pincus"), a private equity investment firm located in
New York City. Warburg Pincus manages Warburg, the
Company's principal stockholder. Mr. Leibowitz is also a
general partner of Warburg, Pincus & Co. ("WP"), a firm
which acts as general partner of Warburg. He has been
associated with Warburg Pincus since 1984. He is also a
director of Chelsea GCA Realty, Inc., Lennar Corporation
and a number of private companies. Mr. Leibowitz was
first elected as a director of the Company in January
1993 as a representative of Warburg.
Robert J. McLaughlin 67, is President of The Sutter Group, a management
consulting firm located in Larkspur, California which he
founded in 1982. Mr. McLaughlin has served as a director
of the Company since September 1994.
Ian C. Morgan 29, a Warburg Nominee, has been an Associate at Warburg
Pincus since May 2000. He also serves as a director of
WP Storage Mart, a Warburg Pincus portfolio company
which invests in and develops self-storage facilities,
and as Vice President of WP Storage Inc., a real estate
investment trust sponsored by an affiliate of Warburg
Pincus. From July 1999 to May 2000, Mr. Morgan was an
Associate in the Finance Group of Lend Lease Real Estate
Investments in New York City. During the summer of 1998,
he was a Summer Associate in the Principal Transaction
group of Credit Suisse First Boston, in New York. From
January 1994 through December 1997, he served as a
Supervisor in the Corporate Financial Services division
of Coopers & Lybrand in Riga, Latvia.
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Todd A. Williams 40, the GS Nominee, has been a Managing Director since
December 1997 within the Real Estate Principalling
Investment Area ("REPIA") of Goldman Sachs & Co., an
investment banking firm located in New York City which
is an affiliate of The Goldman Sachs Group, Inc., a
principal stockholder of the Company ("Goldman Sachs").
Prior to that time, he served as a Vice President of
REPIA. He is responsible for portfolio management,
development/redevelopment and disposition of investments
of Whitehall Street Real Estate Funds, a series of funds
sponsored by Goldman Sachs ("Whitehall"), and the
Goldman Sachs Emerging Markets Fund. Prior to the
formation of REPIA in 1991, Mr. Williams served as an
associate of the Real Estate Investment Banking Group of
Goldman Sachs, in New York and Los Angeles. Mr. Williams
serves on the Whitehall Investment Committee and as a
director of Archon Group, L.P., Wellsford Commercial
Properties Trust, Troon Golf Corp., and Bangkok Capital
Alliance Co., Ltd. Mr. Williams was elected as a
director of the Company in January 1997 as a
representative of Goldman Sachs.
The Board unanimously recommends that the stockholders vote FOR the election
of all nominees to the Board of Directors.
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APPROVAL OF THE GRUBB & ELLIS 2000 STOCK OPTION PLAN
A. The Proposal
The Grubb & Ellis 2000 Stock Option Plan was approved by the Board on
September 12, 2000 and will be effective November 16, 2000, if approved by the
stockholders. The proposed plan authorizes the grant to our key employees of
options to buy an aggregate of 1,500,000 shares of our common stock.
The Board recommends that you approve this plan. The Board believes that stock
options provide an important incentive in attracting and retaining key
employees. As of October 6, 2000, there were outstanding options to purchase
3,185,530 shares and 1,164,874 shares available for grant under our existing
employee stock option plans. The Board believes that the employees who will be
eligible to receive options granted under the plan will be people who are in
positions to make significant contributions to our business and future
performance. In addition, we believe that having an adequate pool of shares
available for stock options will be an important recruitment and retention
tool for us.
B. Description of the Plan
The following summary of the plan is qualified in its entirety by the complete
text of the plan, copies of which have been filed with the SEC and which may
also be obtained from us by any stockholder.
Eligibility. Approximately 500 of our employees would be considered "key
employees," including the six executive officers, and therefore eligible for
the grant of options under the plan. Because the plan has not yet been adopted
and no options have yet been granted thereunder, the benefits to be received
by the persons who are eligible are not able to be determined as of the date
of this proxy statement.
Types of Options That Can Be Granted. Under the plan, either "incentive stock
options" ("ISOs") as defined in Section 422 of the Internal Revenue Code, as
amended (the "Code"), or non-qualified options, which do not qualify for
treatment as incentive stock options, may be granted.
Incentive Stock Options. Each ISO may have a term no longer than ten years
from the date of grant, except that ISOs granted to an optionee who owns
stock representing more than 10% of the total voting power of all classes
of stock of the Company ("Ten-Percent Holder") at the date of grant may not
be exercisable more than five years after the date of grant. The exercise
price of each ISO granted must be 100% of the fair market value per share
of the common stock on the date of grant, subject to the requirement that
the exercise price of ISOs granted to a Ten-Percent Holder must not be less
than 110% of the fair market value per share at the date of grant. No ISO
may be granted after November 16, 2010 under the plan. To the extent that
the fair market value of the stock with respect to which an ISO is
exercisable exceeds $100,000 for each calendar year, it will not receive
ISO treatment.
Non-Qualified Options. Under the plan, non-qualified options ("NQSOs") may
be granted with such terms as the administrator determines, including terms
related to the exercise price, vesting and expiration of the options.
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Both ISOs and NQSOs. The aggregate exercise price may be payable in cash,
by delivery of common stock, or by a combination of both. Certain forms of
cashless exercise approved by the administrator will be available as well.
Vesting of options will accelerate upon certain conditions related to a
change of control of the Company or at the discretion of the administrator.
No option granted under the plan may be assigned or transferred by the
optionee except to immediate family members under certain circumstances
approved by the administrator, or upon death.
Administration of the Plan. The plan will be administered by the Compensation
Committee of the Board, except that the Board of Directors will be the
administrator with respect to those officers who are subject to Section 16 of
the Securities Exchange Act of 1934, as amended ("Exchange Act"). The
administrator is authorized, among other powers, to determine the persons to
whom options will be granted, the number of option shares to be granted, and
the exercise price, term and vesting requirements of options, subject to the
terms of the plan.
Amendment and Termination of the Plan. The plan will terminate upon issuance
of all shares reserved for the plan or earlier upon termination by the Board.
The administrator may amend the plan.
Adjustments to the Securities Subject to the Plan. The plan provides for
appropriate adjustments in the number and kind of securities authorized for
the plan and will also permit similar adjustments to outstanding options in
the event of a stock split, stock dividend or certain other types of
recapitalizations. In addition, the administrator will be authorized to
provide such adjustments or other benefits in certain circumstances related to
a change of control of the Company.
Current Market Price. The closing market price of our stock as reported on the
New York Stock Exchange Composite Tape as of October 6, 2000 was $5.50 per
share.
C. Tax Information
The plan is neither a qualified pension, profit sharing or stock bonus plan
under Section 401(a) of the Code, nor an "employee benefit plan" subject to
the provisions of the Employee Retirement Income Security Act of 1974, as
amended ("ERISA"). The following summary is for general information only and
is limited to the federal income tax consequences of the grant and exercise by
cash payment of options granted under the plan, and the sale of shares upon
option exercise, based upon current tax laws and regulations, which are
subject to change. The summary does not discuss all aspects of income taxation
that may be relevant to a participant in light of his or her personal
circumstances.
Incentive Stock Options. There is no taxable event to either the Company or
the optionee at the date of grant or exercise of an ISO; however, the amount
by which the fair market value of the shares at the time of exercise exceeds
the option price will be an "item of tax preference" for the optionee for
purposes of the alternative minimum tax. The amount realized by an optionee
upon the sale of stock issued on exercise of an ISO over the aggregate
exercise price of the shares is taxable as long-term capital gain, and no
deduction is available to the Company, provided that the sale occurs at least
two years from the date of grant and at least one year from the date of
exercise of the option ("Holding Period"). If an optionee sells the shares
acquired through exercise of the option prior to the end of the
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Holding Period ("disqualifying disposition"), then the optionee will realize
ordinary income to the extent that the lower of the fair market value of the
shares at the date of exercise or the sales price exceeds the exercise price,
and the Company has a corresponding tax deduction. Such ordinary income
realized by an optionee who is an employee is subject to withholding of taxes.
Any additional gain realized upon sale would be taxable as capital gain.
Non-Qualified Stock Options. There is no taxable event to either the Company
or the optionee at the date of grant of an NQSO. Upon exercise of an NQSO
under the plan, the optionee will realize ordinary income based upon the
difference between the fair market value of the underlying common stock at the
date of exercise and the exercise price, and the Company will have a
corresponding tax deduction. Such ordinary income realized by an optionee who
is an employee is subject to withholding of taxes. An optionee's basis in the
stock for purposes of determining his gain or loss on the subsequent
disposition of the shares will generally be the fair market value of the
underlying common stock on the date of the exercise of the option. Such gain
or loss upon sale will be treated as short- or long-term capital gain or loss
depending upon the holding period.
The Code differentiates between ordinary income tax rates and the tax rates on
capital gains and losses.
The Board unanimously recommends that the stockholders vote FOR the Grubb &
Ellis 2000 Stock Option Plan.
11
<PAGE>
STOCK OWNERSHIP INFORMATION
A. Stock Ownership Table
The following table shows the share ownership as of August 18, 2000 by persons
known by us to be beneficial holders of more than 5% of our outstanding common
stock, directors, named executive officers, and all current directors and
executive officers as a group. Unless otherwise noted, the persons listed have
sole voting and disposition powers over the shares held in their names,
subject to community property laws if applicable.
<TABLE>
<CAPTION>
Amount and Nature of Percent of Percent of
Beneficial Ownership Class(/1/) Voting Power(/2/)
----------------------------------------------------------------------------------------
----------------------------------------------------------------------------------------
<S> <C> <C> <C>
Principal Stockholders:
----------------------------------------------------------------------------------------
----------------------------------------------------------------------------------------
Warburg, Pincus
Investors, L.P. 10,443,339(/3/) 49.2% 45.8%
The Goldman Sachs Group,
Inc. 2,500,000(/4/) 12.5% 12.5%
C. Michael Kojaian (also
a director) 1,536,855(/5/) 7.7% 7.3%
Mike Kojaian 1,536,857(/5/) 7.7% 7.3%
Robert Fleming Inc. 1,677,998(/6/) 8.4% 8.4%
----------------------------------------------------------------------------------------
----------------------------------------------------------------------------------------
Directors and Nominees:
----------------------------------------------------------------------------------------
----------------------------------------------------------------------------------------
R. David Anacker 10,000(/7/) * *
Joe F. Hanauer 1,008,323(/7/)(/8/) 4.9% 2.1%
Sidney Lapidus 0(/3/) -- --
Reuben S. Leibowitz 7,000(/3/)(/9/) * *
Robert J. McLaughlin 5,000(/7/) * *
Ian C. Morgan 0 -- --
John D. Santoleri 0(/3/) -- --
Todd A. Williams 0(/4/) -- --
----------------------------------------------------------------------------------------
----------------------------------------------------------------------------------------
Named Executive
Officers:
----------------------------------------------------------------------------------------
----------------------------------------------------------------------------------------
Neil Young 3,372 * *
Maureen A. Ehrenberg 62,546(/7/) * *
Douglas P. Frye 80,418(/7/) * *
Steven J. Kaplan 32,500(/7/) * *
John G. Orrico 65,641(/7/) * *
Brian D. Parker 59,324(/7/) * *
----------------------------------------------------------------------------------------
----------------------------------------------------------------------------------------
All Current Directors
and Executive
Officers as a Group (14
persons): 2,998,812(/7/)(/9/)(/10/) 14.4% 10.4%
</TABLE>
---------------------
* Does not exceed 1.0%.
(1) The percentage of shares of Company common stock shown for each person in
this column assumes that such person, and no one else, has exercised any
currently outstanding warrants, options or convertible securities held by
him or her.
(2) The percentage of voting power means the amount of common stock actually
held by each person on August 18, 2000, in relation to the total number of
shares of common stock held by all stockholders on that date. In this
method, no options or warrants are counted either for that person or
others. The Record Date for purposes of voting at the 2000 Annual Meeting
is September 21, 2000, and therefore, the voting power may be different on
that date.
12
<PAGE>
(3) Warburg, Pincus Investors, L.P., 466 Lexington Avenue, New York, NY 10017.
At August 18, 2000, Warburg beneficially owned 10,443,339 shares of common
stock through its ownership of 9,105,981 shares of common stock and
currently exercisable warrants to purchase an aggregate of 1,337,358
shares of common stock. The sole general partner of Warburg is Warburg,
Pincus & Co., a New York general partnership ("WP"). E.M. Warburg, Pincus
& Co., LLC, a New York limited liability company ("Warburg Pincus"),
manages Warburg. Lionel I. Pincus is the managing partner of WP and the
managing member of Warburg Pincus and may be deemed to control both of
them. Each of Messrs. Lapidus, Leibowitz and Santoleri, directors of the
Company, is a Managing Director and member of Warburg Pincus and a general
partner of WP. As such, they may each be deemed to have an indirect
pecuniary interest (within the meaning of Rule 16a-1 under the Exchange
Act) in an indeterminate portion of the shares of common stock
beneficially owned by Warburg. Messrs. Lapidus, Leibowitz and Santoleri
disclaim beneficial ownership of these shares.
(4) The Goldman Sachs Group, Inc., 85 Broad Street, New York, NY 10004. Shares
reported for GS Group include 175,000 shares of common stock held by
Archon Group, L.P. ("Archon"). Archon is a majority-owned subsidiary of GS
Group. The general partner of Archon is Archon Gen-Par, Inc. ("AGP"),
which is a wholly owned subsidiary of GS Group. Mr. Williams, an officer
of Goldman Sachs, an officer of AGP, and a director of Archon, disclaims
beneficial ownership of shares beneficially owned by GS Group. 20 shares
of common stock held in discretionary client accounts by Goldman Sachs are
excluded.
(5) The Kojaian Companies, 39400 Woodward Avenue, Suite 250, Bloomfield Hills,
MI 48304. At August 18, 2000, C. Michael Kojaian beneficially owned
1,536,855 shares of common stock through his direct ownership of 1,393,427
shares of common stock and through his joint ownership of 143,428 shares
of stock with Mike Kojaian, his father. Mike Kojaian beneficially owned
1,536,857 shares of common stock through his direct ownership of 1,393,429
shares of common stock and through his joint ownership of the above-
referenced 143,428 shares. Pursuant to the rules established under the
Exchange Act, the Kojaian Investors may be deemed to be a "group," as
defined in Section 13(d) of such Act. Each of the Kojaian Investors does
not affirm the existence of such a group and disclaims beneficial
ownership of shares of common stock solely owned by the other Kojaian
Investor. For purposes of calculating voting power, the number of shares
jointly owned was divided in half between the two Kojaian Investors.
(6) Robert Fleming Inc., 320 Park Avenue, 11th and 12th Floors, New York, NY
10022. The voting power with respect to these shares is shared with Robert
Fleming Holdings, Ltd., the parent company of Robert Fleming Inc.
(7) Includes options under our stock option plans which are currently or by
October 19, 2000 will be exercisable for the following numbers of shares:
Mr. Anacker - 2,000; Mr. Hanauer - 237,850; Mr. McLaughlin - 2,000; Ms.
Ehrenberg - 58,500; Mr. Frye - 52,500; Mr. Kaplan - 32,500; Mr. Orrico -
61,000; Mr. Parker - 52,500; and all current directors and executive
officers as a group - 576,850.
(8) At August 18, 2000, Mr. Hanauer beneficially owned 1,008,323 shares of
common stock, which consisted of the following: his direct ownership of
14,497 shares of common stock and an option granted under a Company stock
option plan which is exercisable for 237,850 shares; and his indirect
ownership of a) 319,607 shares of common stock and currently exercisable
warrants to purchase an aggregate of 348,541 shares of common stock held
in a trust of which Mr. Hanauer is the trustee and he, his wife and
children are beneficiaries; and b) 87,828 shares held by a charitable
remainder trust of which Mr. Hanauer and his wife are beneficiaries during
their lives, and his daughter is a trustee. Mr. Hanauer disclaims
beneficial ownership of the 87,828 shares held in the charitable remainder
trust, except to the extent of his pecuniary interest in them.
(9) Includes 2,000 shares owned by Mr. Leibowitz' mother-in law and wife, and
5,000 shares owned by a trust in which the same relatives are trustees.
Mr. Leibowitz disclaims beneficial ownership of all 7,000 shares.
13
<PAGE>
(10) Excludes shares beneficially owned by: a) Warburg as to which Messrs.
Lapidus, Leibowitz, Morgan and Santoleri disclaim beneficial ownership;
b) GS Group as to which Mr. Williams disclaims beneficial ownership; and
c) Mike Kojaian, as to which Mr. C. Michael Kojaian disclaims beneficial
ownership; as described above.
B. Section 16(a) Beneficial Ownership Reporting Compliance
Section 16(a) of the Exchange Act requires our directors, executive officers,
the chief accounting officer and 10+% stockholders ("Insiders") to file
reports with the SEC and the New York Stock Exchange showing their ownership
and changes in ownership of Company securities, and to send copies of these
filings to us. To our knowledge, based upon review of copies of such reports
we have received and based upon written representations that no other reports
were required, during the year ended June 30, 2000, the Insiders complied with
all Section 16(a) filing requirements applicable to them, except that Douglas
P. Frye filed a Form 5 after its due date to report one transaction that
should have been reported on Form 4; and Neil Young filed a Form 4 late to
report the cancellation of his stock options and a related cash payment.
14
<PAGE>
EXECUTIVE OFFICERS
A. Information About Executive Officers
Maureen A. Ehrenberg 41, has served as a member of the Office of the
President of the Company since May 2000, and as
President of Management Services since February 1998.
She also serves as a director and/or officer of certain
subsidiaries of the Company. From July 1997 to February
1998 Ms. Ehrenberg served as Central Regional President
of Management Services. From September 1991 to June
1997, she was associated with PREMISYS Real Estate
Service Inc. ("PREMISYS"), a property management firm
headquartered in Houston, Texas, serving as Regional
Vice President for the Midwest from June 1992, and as
District Vice President prior to that time. PREMISYS was
acquired by Cushman & Wakefield in September 1997. From
January 1989 to September 1991, Ms. Ehrenberg served as
Regional Vice President of the Midwest and West Regions
of First Office Management, a subsidiary of The Equity
Group located in Chicago, Illinois. From July 1986 to
January 1989, she served as Vice President Asset
Management for Rubloff Inc. in Chicago, and from
December 1983 to June 1986 she was associated with The
Balcor Company, the real estate investment subsidiary of
American Express Company located in Skokie, Illinois,
serving, from latest to earliest, as Director of
Financial Training, District Manager Trainee and
Commercial Financial Analyst.
Douglas P. Frye 40, has served as President of the Company's Financial
Services Group (formerly named the Institutional
Services Group) since July 1997 and as Director of such
Group from March 1995 to July 1997. He also serves as a
director and/or officer of certain subsidiaries of the
Company. Mr. Frye served as Director of the Investment
Properties Division in the Rosemont, Illinois office of
the Company from April 1990 to March 1995. From November
1988 to April 1990, he served as Vice President of
Acquisitions for The Shidler Group, a real estate
services firm located in Chicago, Illinois. From
September 1984 to November 1988, he served as Investment
Specialist in the Rosemont office of the Company.
Blake W. Harbaugh 36, has served as Senior Vice President and Chief
Financial Officer for the Company since January 2000. He
also serves as a director and/or officer of certain
subsidiaries of the Company. Mr. Harbaugh served as Vice
President and Corporate Controller of the Company from
April 1997 to January 2000. From May 1993 to April 1997,
he was associated with Management Services, serving as
Vice President and Controller from October 1996 to April
1997, and as Director of Corporate Accounting prior to
that time. He was an audit manager for Coopers &
Lybrand, LLP from September 1986 to April 1993.
15
<PAGE>
John G. Orrico 44, has served as a member of the Office of the
President of the Company since May 2000. He has also
served as President, Real Estate Advisory Services
(formerly called Transaction Services) for the Company
since February 1998, and as President of the Eastern
Region of the Company from July 1997 to February 1998.
He also serves as a director and/or officer of certain
subsidiaries of the Company. From July 1994 through June
1997, he served as Senior Vice President and District
Manager of the central and northern New Jersey
commercial offices of the Company. From May 1990 through
May 1994, Mr. Orrico served as President of the
Commercial Real Estate Division of K. Hovnanian
Investment Properties, Inc., a real estate development
firm located in Red Bank, New Jersey, and from September
1982 to May 1990 he served as Executive Vice President
of National Realty & Development Corp., a real estate
development firm located in Purchase, New York.
Brian D. Parker 49, has served as a member of the Office of the
President of the Company since May 2000. He has also
served as Executive Vice President since February 1999
and as Senior Vice President prior to that time. He was
the Chief Financial Officer of the Company from October
1996 to January 2000. He also serves as a director
and/or officer of certain subsidiaries of the Company.
From March 1986 to October 1996, Mr. Parker was
associated with The Balcor Company, the real estate
investment subsidiary of American Express Company
located in Skokie, Illinois, serving as Chief Financial
Officer and Senior Vice President from April 1995 to
October 1996, and serving in various other financial
management positions prior to that time. During his
association with The Balcor Company, he also served as
director of several of its subsidiaries.
Robert J. Walner 53, has been Senior Vice President, General Counsel and
Corporate Secretary of the Company since January 1994.
He also serves as a director and/or officer of certain
subsidiaries of the Company, including Management
Services, serving as a director since May 1997 and as a
Senior Vice President since October 1996. From August
1992 to January 1994, Mr. Walner was engaged in a
private law and consulting practice, and was of counsel
to Lawrence Walner & Associates, Ltd. in Chicago,
Illinois, a law firm specializing in state and federal
class action litigation on a national basis. From
November 1979 to August 1992, he was Senior Vice
President, General Counsel and Corporate Secretary of
The Balcor Company, the real estate investment
subsidiary of American Express Company located in
Skokie, Illinois.
16
<PAGE>
B. Executive Compensation
The table below shows compensation earned, including deferred compensation,
for services in all capacities with the Company and its subsidiaries for the
fiscal years ended June 30, 2000, 1999 and 1998 by the following executives:
a) the person who served as Chief Executive Officer for the 2000 fiscal
year;
b) each of the other four most highly-compensated executive officers of the
Company as of June 30, 2000; and
c) one other person who served as an executive officer during the 2000
fiscal year and for whom information would have been provided had he
been serving as an executive officer at the end of the fiscal year.
The bonuses for every executive other than Mr. Young represent payments made
during the fiscal year indicated for services rendered during the previous
calendar year.
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
Long-Term
Compensation
Annual Compensation Awards
-------------------- ------------
Securities
Underlying All Other
Name and Principal Salary Bonus Options/SARs Compensation
Position(/1/) Year ($) ($) (#)(/2/) ($)(/3/)
----------------------------- ---- ------- ------- ------------ ------------
<S> <C> <C> <C> <C> <C>
Neil Young 2000 450,000 491,000 0 814,000
Chairman and Chief Executive 1999 425,000 250,000 0 3,000
Officer(/4/) 1998 425,000 270,000 0 3,000
Maureen A. Ehrenberg 2000 288,000 185,000 112,000 3,000
Member, Office of the 1999 263,000 150,000 12,000 3,000
President
and President, Management 1998 218,000 30,000 100,000 2,000
Services
Douglas P. Frye 2000 275,000 137,000 50,000 3,000
President, Financial 1999 225,000 135,000 25,000 3,000
Services Group 1998 200,000 40,000 0 3,000
Steven J. Kaplan(/5/) 2000 275,000 93,000 200,000 1,000
Executive Vice President and 1999 -- -- -- --
Chief Operating Officer 1998 -- -- -- --
John G. Orrico 2000 313,000 185,000 112,000 2,000
Member, Office of the 1999 275,000 150,000 12,000 3,000
President and President, 1998 219,000 40,000 50,000 3,000
Real Estate Advisory
Services
Brian D. Parker 2000 213,000 148,000 50,000 3,000
Member, Office of the 1999 188,000 100,000 25,000 3,000
President and Executive Vice 1998 175,000 35,000 0 3,000
President
</TABLE>
17
<PAGE>
---------------------
(1) Mr. Young resigned as Chairman, President and Chief Executive Officer on
May 25, 2000. Messrs. Orrico and Parker and Ms. Ehrenberg were then
appointed by the Board as members of the Office of the President. Ms.
Ehrenberg was appointed President, Management Services in February 1998.
Prior to that time, she served as Central Regional President of Management
Services. Mr. Orrico was appointed President, Real Estate Advisory
Services in February 1998. He served as President, Transaction Services,
Eastern Region from July 1997 to February 1998. Mr. Kaplan was appointed
as Executive Vice President and Chief Operating Officer effective August
2, 1999 and resigned his positions effective May 15, 2000. Mr. Frye has
served as President of the Financial Services Group (and its predecessor
group) for the entire reported periods. Mr. Parker has served as Executive
Vice President since February 1999, and he was Chief Financial Officer
from October 1996 to January 2000, and Senior Vice President from October
1996 to February 1999.
(2) The amounts represent options to purchase the numbers of shares of common
stock indicated.
(3) The amounts represent Company contributions made during each calendar year
following the 1999, 1998, and 1997 plan years (calendar years) to the
401(k) plan accounts of the designated individuals, unless otherwise
indicated in these footnotes.
(4) Pursuant to Mr. Young's separation agreement, he will serve as a
consultant to the Company from July 1 through December 31, 2000, at a fee
of $225,000, payable in installments; received payment of $1,622,125 by
the Company for repurchase of his stock options (of which $811,063 was
paid in the 2000 fiscal year and included in All Other Compensation in the
table); and will receive payments equivalent to one year's base pay,
perquisites and benefits at various dates through December 31, 2001.
Please see Employment Contracts, and Termination of Employment and Change-
in-Control Arrangements below, for more information.
(5) Pursuant to Mr. Kaplan's separation agreement, he will provide
transitional services to the Company through December 31, 2000, unless he
accepts a position with another company prior to that time. In addition,
he received certain contingent rights to cash payments in respect of the
option to purchase 130,000 shares of the 200,000-share option set forth in
the table, in return for cancellation of the remainder of the option.
Please see Employment Contracts, and Termination of Employment and Change-
in-Control Arrangements below, for additional information.
OPTION/SAR GRANTS IN LAST FISCAL YEAR
<TABLE>
<CAPTION>
Potential
Realizable Value at
Assumed Annual
Rates of Stock
Price Appreciation
For Option
Individual Grants Term(/1/)
----------------------------------------------------------------------------------------
Number of Percent of
Securities Total
Underlying Options/SARs Exercise
Options/SARs Granted to or Base
Granted(/2/) Employees in Price Expiration
Name (#) Fiscal Year ($/Sh) Date 5% ($) 10% ($)
--------------------- ------------ ------------ -------- ---------- -------- ----------
<S> <C> <C> <C> <C> <C> <C>
Neil Young 0 -- -- -- -- --
Maureen A. Ehrenberg 112,000 13.25% $5.8125 11/18/09 $409,410 $1,037,526
Douglas P. Frye 50,000 5.91% $5.8125 11/18/09 $182,773 $ 463,181
Steven J. Kaplan(/3/) 200,000 15.38% $4.7500 08/19/09 $388,342 $ 984,136
John G. Orrico 112,000 13.25% $5.8125 11/18/09 $409,410 $1,037,526
Brian D. Parker 50,000 5.91% $5.8125 11/18/09 $182,773 $ 463,181
</TABLE>
---------------------
(1) The potential realizable value is calculated from the market price per
share on the date of grant, assuming the common stock appreciates in value
at the stated percentage rate from the date of
18
<PAGE>
grant of an option to the expiration date. The exercise prices of the
options set forth in the table were equal to the market prices on the dates
of grant. Actual gains, if any, are dependent on the future market price of
the common stock. The closing market price of the common stock on the New
York Stock Exchange Composite Tape on October 6, 2000 was $5.50 per share.
(2) The amounts represent options to purchase the specified numbers of shares
of common stock granted under Company stock option plans at exercise
prices based upon the fair market value on the dates of grant. All the
options were granted on November 18, 1999 except that Mr. Kaplan's option
was granted on August 19, 1999. Each option vests in four equal, annual
installments and expires ten years from the date of grant. Vesting
accelerates upon certain conditions related to changes of control of the
Company or at the discretion of the Board. Pursuant to Mr. Kaplan's
separation agreement, a portion of his option representing the right to
purchase 70,000 shares was cancelled effective May 11, 2000.
(3) Upon termination of Mr. Kaplan's employment on or before December 31,
2000, his unvested options will lapse and his vested options will be
exercisable for 3 months.
AGGREGATED OPTION/SAR EXERCISES IN LAST FISCAL YEAR AND FY-END
OPTION/SAR VALUES
<TABLE>
<CAPTION>
Number of Securities Value of Unexercised
Underlying Unexercised In-the-Money
Shares Options/SARs at Options/SARs at
Acquired FY-End (#) FY-End ($)
on Value ---------------------- --------------------
Exercise Realized Exercisable/ Exercisable/
Name # ($) Unexercisable Unexercisable(/1/)
-------------------- -------- ---------- ---------------------- --------------------
<S> <C> <C> <C> <C>
Neil Young(/2/) 465,000 $1,622,125 0/0 $0/$0
Maureen A. Ehrenberg 0 -- 50,500/173,500 $0/$7,000
Douglas P. Frye 0 -- 36,250/88,750 $37,500/$28,125
Steven J. Kaplan 0 -- 0/130,000 $0/$146,250
John G. Orrico 0 -- 58,000/166,000 $0/$7,000
Brian D. Parker 0 -- 36,250/88,750 $48,750/$35,625
</TABLE>
--------------------
(1) The value of the in-the-money options at fiscal year-end was calculated
based on the closing price of the common stock as reported on the New York
Stock Exchange on June 30, 2000 ($5.8750 per share).
(2) Represents options to purchase 465,000 shares which were acquired by the
Company for cash payments described below.
C. Employment Contracts, and Termination of Employment and Change-in-Control
Arrangements
CEO Employment and Separation Agreements. Neil Young was Chairman of the Board
of the Company from April 1997, and President and Chief Executive Officer of
the Company from February 22, 1996, until his resignation from such positions
on May 25, 2000. He had an employment contract with the Company during the
term of his service as Chief Executive Officer. When the initial term expired
in June 1999, the agreement was extended through June 2000. Under the
agreement, for each of the 1998 and 1999 fiscal years, Mr. Young received an
annual salary of $425,000, and bonuses of $270,000 and $250,000, respectively.
For the 2000 fiscal year, he received an annual salary of $450,000, and his
incentive compensation program included eligibility to receive a bonus equal
to 100% of his salary, subject to a minimum of $200,000, and was otherwise
based upon Company performance with respect to its EBITDA margin, net income
and revenue. He received a bonus of $491,000 for the 2000 fiscal year.
19
<PAGE>
In 1996, Mr. Young also received, under his employment contract, a non-
qualified option to purchase 450,000 shares of common stock at an exercise
price of $2.375 per share, which was the fair market value of the common stock
at the date of grant of the option. The option had a ten-year term; vested in
five, equal annual installments, beginning with December 31, 1996; and
provided for acceleration of vesting upon termination of Mr. Young's
employment a) after June 29, 2000, or b) upon a material reduction in his
responsibilities following an event which results in a stockholder other than
Warburg or its affiliates owning more than 25% of the outstanding common
stock. The agreement also provided that in the event that the Company
terminated the employment of Mr. Young prior to expiration of the agreement as
extended for any reason, he would receive the equivalent of one year's salary
and benefits and a pro-rata share of his bonus, and if the Company did not
renew Mr. Young's employment agreement beyond its expiration in June 2000, he
would receive the equivalent of one year's salary.
In May 2000, in connection with his resignation, the Company and Mr. Young
entered into a separation agreement pursuant to which he: a) was paid his
regular salary and benefits through June 30, 2000; b) will serve as a
consultant to the Company from July 1 through December 31, 2000, at a fee of
$225,000, payable in installments; c) received payment of $1,622,125 by the
Company in two equal installments in June and August 2000 for repurchase of
his options to purchase 465,000 shares; and d) will receive payments
("Separation Pay") at various dates through December 31, 2001 equivalent to
one year's base salary, benefits and perquisites. In addition, in the event
that the closing prices of our common stock exceed $7.00 per share for twenty
consecutive days prior to December 31, 2000, Mr. Young will receive a payment
of $302,250. The separation agreement also provided that the bonus that Mr.
Young would receive for services during the 2000 fiscal year would be the sum
of 1) the bonus calculated pursuant to the above-described terms of his
employment contract, pro-rated through April 30, 2000, and 2) because Company
performance results were not available for the final two months of the fiscal
year, two months' salary. The separation agreement also provides that if the
Company contracts for a "Change of Control," as that term is defined in the
Executive Change of Control Plan (see below), prior to December 31, 2000,
which results in such a Change of Control, then Mr. Young will receive the
benefits of such plan less the Separation Pay.
COO Separation Agreement. Steven J. Kaplan joined the Company as Executive
Vice President and Chief Operating Officer in August 1999, and resigned such
positions effective May 15, 2000. The Company and Mr. Kaplan entered into a
separation agreement which provides for the continuation of his employment at
his existing salary through the earlier of the date that he secures a position
with another company or December 31, 2000. In addition, in return for
cancellation of his option to purchase 70,000 shares of Company common stock
at an exercise price of $4.75 per share, the Company agreed that in the event
of a change of control of the Company, as described in the 1998 Stock Option
Plan, prior to December 31, 2000, vesting of the option to purchase the
130,000 shares would be accelerated. Moreover, if Mr. Kaplan's employment has
terminated prior to December 31, 2000, and his option has expired wholly or
partly unexercised, and if such a change of control occurs or is contracted
for prior to December 31, 2000, then Mr. Kaplan will receive a cash payment
per expired option share equal to the spread between the consideration per
share paid to other option holders on account of such a change of control and
his exercise price per share.
20
<PAGE>
Executive Change of Control Plan. Pursuant to a plan approved by our Board of
Directors effective May 10, 1999, and as amended effective February 10 and
June 1, 2000, our executive officers, the Vice President/Human Resources and
the Vice President/Chief Information Officer are eligible to receive certain
compensation and benefits if their employment with the Company is affected by
a "Change of Control" of the Company ("COC Plan"). A "Change of Control," for
purposes of the plan, includes the acquisition of 25% or more of our
outstanding common stock, a change of a majority of directors on the Board, a
merger, a sale or liquidation of the Company, subject to certain exceptions
related to current principal stockholders and directors; or a reduction in the
ownership by current principal stockholders to under 45%. If a Change of
Control occurs, we have committed to employ each covered executive for two
years, or otherwise to compensate the executive if his or her employment is
terminated without cause during that period. The plan gives each executive
officer the opportunity to terminate employment during a 30-day window period
after six months have elapsed from a Change of Control, and receive benefits
under the plan. During the two-year employment period, each covered executive
is to receive compensation and benefits commensurate with levels existing
before the Change of Control. Upon termination of employment within the two-
year period, other than for cause, the executive will receive compensation
equal to two years' salary and two years of the highest previous bonus
("Highest Annual Bonus" as defined in the plan); provided that if an executive
resigns during the 30-day window period without his or her employment having
been adversely affected as a result of the Change of Control, then he or she
will receive the two years' salary and one year's bonus. In addition, standard
benefits and perquisites or their equivalents are to be provided for two years
if the executive's employment is terminated during the two-year period. The
plan is effective for three years, and will generally be renewed automatically
on an annual basis for a three-year period rolling forward. The plan can only
be terminated with respect to an affected executive by mutual agreement of the
executive and the Company.
Executive Incentive Bonus and Severance Plan. Effective June 1, 2000, our
Board of Directors also approved an Executive Incentive Bonus and Severance
Plan, pursuant to which the executive officers and the Vice President/Human
Resources of the Company ("participants") received incentive compensation
equal to 20% of their respective annual salaries on September 15, 2000,
provided they each continued in the employ of the Company through that date or
were otherwise terminated without cause. In addition, the plan provides for
payments equal to the greater of 80% of the participant's calendar year 2000
target bonus or the bonus actually earned by the participant for the calendar
year 2000, without taking into account non-recurring charges of the Company.
In addition, the plan provides that if a participant is terminated without
cause or if his or her position is reduced or otherwise adversely affected,
then the participant will be entitled to the following ("Severance Pay"): a)
base salary and earned bonus pro-rated to the date of termination; b) one
year's base pay; c) continuation of benefits and perquisites or their
equivalent for one year; and d) with respect to vested options held by the
participant at termination -- one of the following alternatives to be elected
by the Company, or if not elected, then chosen by the participant: 1) we will
repurchase the vested options at a cash price per share equal to the spread
between the average closing price on the New York Stock Exchange for the five
days prior to termination and the exercise price(s) of the options; 2) we will
attempt to facilitate a purchase of the shares exercised; or 3) we will extend
the expiration date of the options to twelve months after termination of
employment and permit payment of
21
<PAGE>
the exercise price of the options by deduction of a sufficient number of the
shares exercised to cover the purchase price. If the participant becomes
entitled to benefits under the COC Plan, the participant will not be entitled
to this Severance Pay.
D. Compensation Committee Interlocks and Insider Participation
The members of the Compensation Committee are Reuben S. Leibowitz (Chairman)
and Robert J. McLaughlin. Neither of them has served as an officer or employee
of the Company.
Mr. Leibowitz is a Managing Director and member of Warburg Pincus, and a
general partner of WP, each of which is an affiliate of Warburg. See also,
"Information About the Nominees for Director" and "Stock Ownership
Information" above. Warburg is the principal stockholder of the Company.
Warburg currently owns 9,105,981 shares of common stock. Warburg also owns
warrants to purchase an aggregate of 873,072 shares of common stock at an
exercise price of $3.50 per share, and warrants to purchase an aggregate of
464,286 shares of common stock at an exercise price of $2.375 per share.
Pursuant to the 1997 Voting Agreement described above in "Questions and
Answers About Voting," Warburg, the Kojaian Investors and GS Group have agreed
to vote all their shares of common stock in favor of the election to the Board
of one nominee designated by the Kojaian Investors, one nominee designated by
GS Group, and all nominees designated by Warburg. Messrs. Leibowitz and Morgan
have been designated as Warburg Nominees with respect to the 2000 election of
directors.
E. Compensation Committee Report on Executive Compensation
Notwithstanding anything to the contrary set forth in any of the Company's
filings under the Securities Act of 1933, as amended, or the Exchange Act,
that might incorporate other filings, including this proxy statement, in whole
or in part, the following Compensation Committee Report and the section
entitled, "Grubb & Ellis Stock Performance" shall not be incorporated by
reference into any such filings.
We, as a committee, have developed and implemented compensation policies,
plans and programs which seek to reward achievement of positive financial
results for the Company, and in doing so enhance stockholder value.
In order to attract and retain outstanding executives with the potential to
contribute significantly to the success of the Company, our policies have
sought to compensate executives commensurate with executives of equivalent-
sized firms in terms of revenues and with similar responsibilities, but not
necessarily the Peer Group companies referred to below under "Grubb & Ellis
Stock Performance."
Our policies include the objective of assuring the qualification of each
executive's compensation for deductibility under Section 162(m) of the
Internal Revenue Code, if we believe that such qualification is appropriate in
each case. Section 162(m) generally imposes a limit of $1 million per taxable
year on deducting from taxable income of the Company the compensation paid to
each of the chief executive officer and the other four most highly compensated
executive officers.
22
<PAGE>
The compensation of Mr. Young, former Chairman of the Board, President and
Chief Executive Officer, during the 2000 fiscal year, pursuant to his
employment agreement, as amended and extended through June 30, 2000, consisted
of an annual base salary of $450,000 and eligibility for a bonus. His
incentive compensation program for the 2000 fiscal year included eligibility
to receive a bonus equal to 100% of his salary, subject to a minimum of
$200,000, and was otherwise based upon Company performance with respect to its
EBITDA margin, net income and revenue (the "Formula"). Mr. Young received a
bonus of $491,000 for the 2000 fiscal year, which was calculated by applying
the Formula to 10 months' Company results and then adding two months' salary,
due to the unavailability of the final two months' results at the time of his
resignation. In approving the compensation terms of his employment agreement,
including its extension, we took into consideration our knowledge of
competitive compensation programs for chief executive officers and Mr. Young's
level of responsibility and expectations of future performance.
During the 2000 fiscal year, executive officers other than Mr. Young were
eligible to receive compensation consisting of three components: base salary,
bonus and longer-term equity incentives. The programs for these executives
were based on a calendar year. Base salaries were approved based on the
recommendations of the Chief Executive Officer and the Human Resources
Department, and on our knowledge of competitive salaries as described above
and our judgment about the executives' individual past performance,
expectations of future performance, and most importantly, level of
responsibilities. Bonuses were calculated as a designated percentage of salary
for each executive, and earned upon achievement of annual targeted levels of
Company-wide, and applicable business unit, revenue, EBITDA margin and net
income, and performance to unit budgets. No one factor was a prerequisite to
receiving a bonus.
Stock options are designed to align the interests of executives with those of
stockholders, and further the growth, development and financial success of the
Company. We believe that granting equity incentives to our management helps
retain and motivate management. In recommending grants of stock options by the
Board, we take into account the scope of responsibility, the performance
requirements and anticipated contributions to the Company of each proposed
optionee. In addition, stock options are awarded from time to time in
connection with hiring or promoting executives. Our decision to recommend the
award of equity incentives at the time of hiring or promotion is based upon
the circumstances of a particular hiring or promotion, including the level of
responsibility of the executive. Seven executive officers who held office
during the 2000 fiscal year received options during that year to purchase
common stock, with exercise prices set at fair market value at the dates of
grant. The options vest over four years. We determined the recommended number
of shares for the options given to each executive, primarily based upon the
executive's level of responsibility.
THE COMPENSATION COMMITTEE
Reuben S. Leibowitz
Robert J. McLaughlin
23
<PAGE>
F. Grubb & Ellis Stock Performance
The following graph shows a five-year comparison of cumulative total
stockholder return on our common stock against the cumulative total return on
the S&P 500 Stock Index, and a peer group of the Company ("Peer Group"). The
comparison assumes $100 was invested on June 30, 1995 in each of the foregoing
and that all dividends, if any, were reinvested.
Method of Selection of Peer Group. We believe that the following commercial
real estate firms are our primary, nationwide competitors having publicly-
traded stock: CB Richard Ellis Services, Inc. ("CB"); Insignia Financial
Group, Inc.; Jones Lang LaSalle Incorporated ("LaSalle"); and Trammell Crow
Company. None of these firms has been public long enough to have a five-year
stock price history. The dates on which they began public trading of their
stock are November 26, 1996, September 21, 1998, July 17, 1997 and November
25, 1997, respectively. Therefore, the Peer Group we have used consists of the
public companies with the same company-level Standard Industrial
Classification ("SIC") Code as the Company, as reported by Media General
Financial Services as of June 30, 2000, excluding firms whose business is real
estate investment, such as real estate investment trusts. Our company-level
SIC Code is 6531--real estate agents and managers. They are, in addition to
the Company: Capital Title Group, Inc.; CB; The DeWolfe Companies, Inc.;
HomeServices.com Inc.; Israel Land Development Company, Ltd.; Kennedy-Wilson,
Inc.; LaSalle; and Monmouth Capital Corporation. Some of these companies do
not have a five-year stock history.
24
<PAGE>
Comparison of Five-Year Cumulative Total Return*
Grubb & Ellis Company, S&P 500 and a Peer Group
(Performance Results Through June 30, 2000)
[PERFORMANCE CHART APPEARS HERE]
<TABLE>
<CAPTION>
6/30/95 6/30/96 6/30/97 6/30/98 6/30/99 6/30/00
-----------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Grubb & Ellis Company $100.00 $200.00 $806.00 $670.59 $238.00 $276.00
S & P 500 $100.00 $126.00 $170.00 $221.00 $271.00 $291.00
Peer Group $100.00 $101.00 $112.00 $134.00 $122.00 $ 91.00
</TABLE>
* Total return assumes reinvestment of dividends on a quarterly basis. The
figures are rounded to the nearest dollar. The comparisons in this table are
not intended to forecast or to be indicative of possible future performance
of our common stock.
25
<PAGE>
RELATED PARTY TRANSACTIONS
The following are descriptions of certain transactions and business
relationships between the Company and our directors, executive officers, and
principal stockholders. On a quarterly basis, the Audit Committee reviews
information about transactions involving Archon Group, L.P. and its affiliates
and the Kojaian Companies and their affiliates, as described below, compared
to transactions with other parties, and makes an independent recommendation to
the Board as to the benefit to stockholders from such transactions. We believe
that the fees and commissions paid to the Company as described below were
comparable to those that would have been paid to unaffiliated third parties.
See also "Questions and Answers About Voting" regarding the 1997 Voting
Agreement and "Compensation Committee Interlocks and Insider Participation"
above.
Archon, an affiliate of GS Group, a principal stockholder of the Company, is
engaged in the asset management business, and performs asset management
services for various parties. Mr. Williams, a director of the Company, is also
a director of Archon and an officer of Archon Gen-Par, Inc., the general
partner of Archon. During the 2000 fiscal year, Archon, its affiliates and
portfolio property owners paid the Company and its subsidiaries the following
approximate amounts in connection with real estate services rendered to Archon
and its portfolio properties: $2,387,000 in management fees, $8,385,000 in
real estate sale and leasing commissions and $226,000 in fees for other real
estate and business services. In addition, Archon, its affiliates and
portfolio companies were involved in transactions as purchasers and lessees
during the 2000 fiscal year, for which the Company received approximately
$352,000 in real estate commissions from the sellers and property owners.
The Kojaian Companies, Kojaian Management Corporation and their affiliates
(collectively, "KMC") are controlled by the Kojaian Investors. C. Michael
Kojaian, a director and principal stockholder of the Company, is a director,
shareholder and an Executive Vice President of Kojaian Management Corporation.
Mike Kojaian, his father, and also a principal stockholder of the Company, is
also a director, shareholder and officer of the Kojaian Management
Corporation. KMC is engaged in the business of investing in and managing real
property both for its own account and for third parties. During the 2000
fiscal year, KMC and its portfolio companies paid the Company and its
subsidiaries approximately $1,927,000 for management of their properties, and
approximately $2,119,000 in real estate sale and leasing commissions. In
addition, a KMC portfolio company was involved in a transaction as lessee
during the 2000 fiscal year, for which the Company received a real estate
commission of approximately $76,000 from the lessor.
AMLI Commercial Properties Trust, a real estate investment trust for which Mr.
Meador, a former director of the Company who served for a portion of the 2000
fiscal year, serves as a director, paid the Company approximately $75,000 in
real estate sales and leasing commissions in the 2000 fiscal year. In
addition, American Express Company, for which Mr. Meador serves as Senior Vice
President of Worldwide Real Estate, leased several properties for which
landlords paid the Company approximately $93,000 in real estate commissions
during the 2000 fiscal year. The Company paid American Express Company or its
affiliates approximately $222,000 in the same fiscal year for travel services.
homestore.com, Inc., for which Mr. Hanauer, a director of the Company, serves
as a director and is a shareholder, leased office space during the 2000 fiscal
year, for which the Company was paid a real estate commission of approximately
$1,174,000 by a landlord.
26
<PAGE>
homestore.com, Inc. is the parent company of RealSelect, Inc. During the 2000
fiscal year, RealSelect, Inc. leased office space for which the Company was
paid a real estate commission in the approximate amount of $123,000 by the
landlord, which was an Archon portfolio company and the amount is included in
the above disclosure. RealSelect, Inc. also owns an interest in LoopNet, Inc.,
an internet-based commercial listing service. Mr. Hanauer is a director of
LoopNet, Inc., and Mr. Frye, the President of our Financial Services Group, is
the Company's representative on the LoopNet Governance Board. In November
1999, the Company entered into certain agreements with LoopNet, Inc., whereby
the Company invested approximately $1.5 million in cash and made additional
in-kind contributions, for which it acquired preferred and common stock and a
warrant to purchase preferred stock, representing approximately 2.5% of the
equity of LoopNet. The in-kind contributions included non-exclusive rights to
use certain trademarks of the Company and contributions, listings of property,
and certain endorsements of LoopNet. The Company regularly contributes
commercial property listings to LoopNet.
----------------
This concludes our proxy statement. We hope that you found it informative and
look forward to seeing you at our annual meeting.
BY ORDER OF THE BOARD
OF DIRECTORS
[LOGO OF WALNER SIGNATURE]
Robert J. Walner
Corporate Secretary
27
<PAGE>
GRUBB & ELLIS COMPANY
2000 STOCK OPTION PLAN
Effective November 16, 2000
Grubb & Ellis Company, a corporation organized under the laws of the State
of Delaware (the "Company") hereby adopts this Grubb & Ellis Company 2000 Stock
Option Plan.
The purposes of this Plan are as follows:
(1) To promote the interests of the Company, its subsidiaries and its
stockholders, in attracting and retaining key employees of the Company and its
subsidiaries, by granting options to such persons to purchase shares of its
common stock.
(2) To enable the Company to obtain and retain the services of the type of
professional, technical and managerial employees considered essential to the
long-range success of the Company by providing to them an opportunity to become
owners of capital stock of the Company.
ARTICLE I.
DEFINITIONS
Whenever the following terms are used in this Plan, they shall have the
meaning specified below unless the context clearly indicates to the contrary.
The masculine pronoun shall include the feminine and neuter and the singular
shall include the plural, where the context so indicates.
Section 1.1 - Administrator
----------- -------------
"Administrator" shall mean the entity that conducts the general
administration of the Plan as provided in Article VI.
Section 1.2 - Board
----------- -----
"Board" shall mean the Board of Directors of the Company.
Section 1.3 - Change of Control
----------- -----------------
"Change of Control" shall mean:
(a) The acquisition by any individual, entity or group (within the meaning
of Section 13(d)(3) or 14(d)(2) of the Exchange Act) (a "Person") of beneficial
ownership (within the meaning of Rule 13d-3 promulgated under the Exchange Act)
of 25% or more of either (i) the
1
<PAGE>
then outstanding shares of Common Stock of the Company (the "Outstanding Company
Common Stock") or (ii) the combined voting power of the then outstanding voting
securities of the Company entitled to vote generally in the election of
directors (the "Outstanding Company Voting Securities"); provided, however, that
for purposes of this subsection (a), the following acquisitions shall not
constitute a Change of Control: (i) any acquisition by the Company, provided
however, that after such acquisition, the Company is not eligible for
deregistration under Section 12 of the Exchange Act; (ii) any acquisition by any
employee benefit plan (or related trust) sponsored or maintained by the Company
or any corporation controlled by the Company, provided however, that after such
acquisition, the Company is not eligible for deregistration under Section 12 of
the Exchange Act; (iii) any acquisition by any corporation pursuant to a
transaction which complies with clauses (i), (ii) and (iii) of subsection (c) of
this Section 1.3; or (iv) any acquisition by Warburg, Pincus Investors, L.P.
("Warburg"), The Goldman Sachs Group, Inc. ("GS Group") or C. Michael Kojaian
and Mike Kojaian (the "Kojaian Investors") or any affiliates thereof
(collectively the "Current Investors") of additional securities beyond their
present holdings unless such acquisition results in either (x) the termination
of the Voting Agreement dated January 24, 1997 by and among the Current
Investors as in effect on the date hereof, resulting in any one of the Current
Investors obtaining the power to elect all or a majority of the Directors of the
Company or (y) the Company being eligible for deregistration under Section 12 of
the Exchange Act. For purposes hereof, "affiliate" of a Current Investor shall
include all Persons controlled by or under common control with a Current
Investor, or any trusts, partnerships or other entity for the benefit of a
Current Investor which is an individual or for the benefit of such individual's
family members; or
(b) Individuals who, as of November 16, 2000, constitute the Board (the
"Incumbent Board") cease for any reason to constitute at least a majority of the
Board; provided, however, that any individual becoming a Director subsequent to
the date hereof whose election, or nomination for election by the Company's
stockholders, was approved by a vote of at least a majority of the Directors
then comprising the Incumbent Board shall be considered as though such
individual were a member of the Incumbent Board, but excluding, for this
purpose, any such individual whose initial assumption of office occurs as a
result of an actual or threatened election contest with respect to the election
or removal of Directors or other actual or threatened solicitation of proxies or
consents by or on behalf of a Person other than the Board; or
(c) Consummation of a reorganization, merger or consolidation or the
acquisition of assets of another entity (a "Business Combination"), in each
case, unless, following such Business Combination, (i) all or substantially all
of the Persons who were the beneficial owners, respectively, of the Outstanding
Company Common Stock and Outstanding Company Voting Securities immediately prior
to such Business Combination beneficially own, directly or indirectly, more than
50% of, respectively, the then outstanding shares of common stock and the
combined voting power of the then outstanding voting securities entitled to vote
generally in the election of directors, or more than 50% of the ownership
interests, as the case may be, of the corporation or other entity resulting from
such Business Combination (including, without limitation, a corporation or other
entity which as a result of such transaction owns the Company
2
<PAGE>
or all or substantially all of the Company's assets either directly or through
one or more subsidiaries) in substantially the same proportions as their
ownership, immediately prior to such Business Combination, of the Outstanding
Company Common Stock and Outstanding Company Voting Securities, as the case may
be, (ii) no Person (excluding any entity resulting from such Business
Combination or any employee benefit plan (or related trust) of the Company or
any entity resulting from such Business Combination) beneficially owns, directly
or indirectly, 25% or more of, respectively, the then outstanding shares of
common stock of the corporation (or ownership interests of the entity) resulting
from such Business Combination or the combined voting power of the then
outstanding voting securities of such corporation (or such entity) except to the
extent that such ownership existed prior to the Business Combination and (iii)
at least a majority of the members of the board of directors of the corporation
(or other such entity) resulting from such Business Combination were members of
the Incumbent Board at the time of the execution of the initial agreement, or of
the action of the Board, providing for such Business Combination; or
(d) A substantial partial or complete liquidation or dissolution of the
Company or approval of same by the stockholders of the Company; or
(e) A sale or other disposition of all or substantially all of the assets
of the Company; or
(f) The Current Investors in the aggregate cease to own beneficially at
least 45% of the Outstanding Company Common Stock or the Outstanding Company
Voting Securities, other than by reason of an underwritten offering of shares to
the public pursuant to a registration statement under the Securities Act,
provided that immediately following such sale, no Person owns 25% or more of the
Outstanding Company Common Stock or the Outstanding Company Voting Securities.
3
<PAGE>
Section 1.4 - Code
----------- ----
"Code" shall mean the Internal Revenue Code of 1986, as amended.
Section 1.5 - Common Stock
----------- ------------
"Common Stock" shall mean the Common Stock, par value $.01 per share, of
the Company and any equity security of the Company issued or authorized to be
issued in the future, but excluding any preferred stock and any warrants,
options or other rights to purchase Common Stock. Debt securities of the
Company convertible into Common Stock shall be deemed equity securities of the
Company.
Section 1.6 - Company
------------ -------
"Company" shall mean Grubb & Ellis Company, a Delaware corporation.
Section 1.7 - Compensation Committee
----------- ----------------------
"Compensation Committee" shall mean the Compensation Committee of the
Board.
Section 1.8 - Director
----------- --------
"Director" shall mean a member of the Board.
Section 1.9 - Disability
----------- ----------
"Disability" shall have the meaning set forth in Section 22(e)(3) of the
Code.
Section 1.10 - Employee
------------ --------
"Employee" shall mean any Employee (as defined in accordance with the
regulations and revenue rulings then applicable under Section 3401(c) of the
Code) of the Company, or of any entity which is then a Parent Corporation or a
Subsidiary, whether such Employee is so employed at the time this Plan is
adopted or becomes so employed subsequent to the adoption of this Plan.
Section 1.11 - Exchange Act
------------ ------------
"Exchange Act" shall mean the Securities Exchange Act of 1934, as amended.
Section 1.12 - Fair Market Value
------------ -----------------
"Fair Market Value" of a share of Common Stock as of any given date shall
mean: (i) the closing price of the Common Stock on the New York Stock Exchange
(as reported for regular trading hours and not extended hours) on the trading
day preceding such date or, if shares of
4
<PAGE>
Common Stock were not traded on such date, then on the next preceding trading
day during which a sale occurred; or (ii) if such stock is not traded on an
exchange but is quoted on NASDAQ or a successor quotation system, (1) the last
sales price (if the stock is then listed as a National Market Issue under the
NASD National Market System) or (2) the mean between the closing representative
bid and asked prices (in all other cases) for the stock on such date as reported
by NASDAQ or such successor quotation system; or (iii) if such stock is not
publicly traded on an exchange and not quoted on NASDAQ or a successor quotation
system, the mean between the closing bid and asked prices for the stock, on such
date, as determined in good faith by the Administrator; or (iv) if the Common
Stock is not publicly traded, the Fair Market Value established by the
Administrator acting in good faith. In determining the Fair Market Value of the
Common Stock under subsection (i) of this Section 1.13, the Administrator may
rely on the closing price as reported in the New York Stock Exchange composite
transactions published in a) the Wall Street Journal; b) the Yahoo Finance
internet site, or c) such other reliable source of information as the
Administrator deems appropriate.
Section 1.13 - Immediate Family
------------ ----------------
"Immediate Family" shall mean parents, siblings, spouse and issue, spouses
of such issue and any trust for the benefit of, or the legal representative of,
any of the preceding persons, or any partnership substantially all of the
partners of which are one or more of such persons or the Optionee or any limited
liability company substantially all of the members of which are one or more of
such persons or the Optionee.
Section 1.14 - ISO
------------ ---
"ISO" shall mean an incentive stock option within the meaning of Section
422 of the Code.
Section 1.15 - NQSO
------------ ----
"NQSO" shall mean an Option that does not qualify as an incentive stock
option under Section 422 of the Code.
Section 1.16 - Officer
------------- -------
"Officer" shall mean an Executive Officer designated as such by the Board
and other corporate officers who are elected by the Board.
Section 1.17 - Option
------------ ------
"Option" shall mean an option to purchase Common Stock of the Company,
granted under this Plan. Options shall be ISOs or NQSOs.
5
<PAGE>
Section 1.18 - Optionee
------------ --------
"Optionee" shall mean an Employee to whom an Option is granted under this
Plan.
Section 1.19 - Parent Corporation
------------ ------------------
"Parent Corporation" shall mean any corporation in an unbroken chain of
corporations ending with the Company if each of the corporations other than the
Company then owns stock possessing 50% or more of the total combined voting
power of all classes of stock in one of the other corporations in such chain.
Section 1.20 - Person
------------ ------
"Person" shall mean any of the following: an individual, a partnership, a
corporation, an association, a joint stock company, a trust, a joint venture, an
unincorporated organization or a governmental entity or any department, agency
or political subdivision thereof.
Section 1.21 - Plan
------------ ----
"Plan" shall mean this Grubb & Ellis Company 2000 Stock Option Plan.
Section 1.22 - Rule 16b-3
------------ ----------
"Rule 16b-3" shall mean that certain Rule 16b-3 promulgated under the
Exchange Act, or any successor rule to such rule, and as such rule may be
amended from time to time.
Section 1.23 - Secretary
------------ ---------
"Secretary" shall mean the Secretary of the Company.
Section 1.24 - Section 16 Insider
------------ ------------------
"Section 16 Insider" shall mean any Employee who is subject to the
reporting requirements and trading restrictions of Section 16 of the Exchange
Act.
Section 1.25 - Securities Act
------------ --------------
"Securities Act" shall mean the Securities Act of 1933, as amended.
Section 1.26 - Subsidiary
------------ ----------
"Subsidiary" shall mean any corporation in an unbroken chain of
corporations beginning with the Company if each of the corporations other than
the last corporation in the unbroken
6
<PAGE>
chain then owns stock possessing 50% or more of the total combined voting power
of all classes of stock in one of the other corporations in such chain.
Section 1.27 - Term of Plan; Effective Date
------------ ----------------------------
Subject to approval by the holders of a majority of the outstanding shares
of Common Stock of the Company voting on or before November 16, 2000, this Plan
shall be effective as of November 16, 2000 ("Effective Date"). Upon becoming
effective, this Plan shall continue in effect until such date as the Board
discontinues the Plan; provided, however, that no ISO shall be granted under the
Plan after November 15, 2010. Any such termination of the Plan shall not affect
Options previously granted and such Options shall remain in full force and
effect as if this Plan had not been terminated.
Section 1.28 - Termination of Employment
------------ -------------------------
"Termination of Employment," for purposes of the Plan, shall mean the time
when the Employee-employer relationship between the Optionee and the Company, a
Parent Corporation or a Subsidiary is terminated for any reason, with or without
cause, including, but not by way of limitation, a termination by resignation,
discharge, death or retirement, but excluding (i) terminations where there is a
simultaneous reemployment or continuing employment of an Optionee by the
Company; and (ii) at the discretion of the Administrator, terminations which
result in a temporary severance of the Employee-employer relationship not
exceeding 180 calendar days. The Administrator, in its absolute discretion,
shall determine the effect of all matters and questions relating to Termination
of Employment with respect to the Plan and the Options granted thereunder,
including, but not limited to, all questions of whether particular leaves of
absence constitute Terminations of Employment. However, nothing in this Plan
shall be construed to modify the employment relationship between the Company and
the Employee, which is an at-will employment relationship except to the extent
expressly provided otherwise in writing.
ARTICLE II.
SHARES SUBJECT TO PLAN
Section 2.1 - Shares Subject to Plan
----------- ----------------------
The shares of stock subject to Options shall be shares of the Company's
Common Stock. The aggregate number of such shares which may be issued upon
exercise of Options shall not exceed one million five - hundred thousand
(1,500,000).
Section 2.2 - Unexercised Options
----------- -------------------
If any Option expires or is canceled without having been fully exercised,
the number of shares subject to such Option but as to which such Option was not
exercised prior to its
7
<PAGE>
expiration or cancellation may again be available for the grant of Options
hereunder, subject to the limitations of Section 2.1.
Section 2.3 - Changes in Common Stock
----------- -----------------------
In the event that the outstanding shares of Common Stock are hereafter
changed into or exchanged for a different number or kind of shares or other
securities of the Company, or of another corporation, by reason of
reorganization, merger, consolidation, recapitalization, reclassification, stock
split-up, stock dividend, combination of shares or otherwise, appropriate
adjustments shall be made by the Administrator in the number and kind of shares
for the purchase of which Options may be granted.
ARTICLE III.
GRANTING OF OPTIONS
Section 3.1 - Eligibility
----------- -----------
The Administrator may grant Options to any key Employee of the Company or
of any of its Subsidiaries, whether presently in existence or hereinafter
organized or acquired. Independent contractors are not eligible to be granted
Options under the Plan. A key Employee with the Company is one whose duties
and/or authority are such that, in the judgment of the Administrator, he is in a
position to contribute significantly to the success of the Company or any of its
Subsidiaries.
Section 3.2 - Types of Options
----------- ----------------
(a) Options may be granted pursuant to this Plan at any time during its
term. Options granted may be either ISOs or NQSOs.
(b) ISOs shall be granted only to eligible Employees. The aggregate fair
market value (determined as of the respective date or dates of grant) of the
shares with respect to which ISOs may first be exercisable under the Plan (or
any other plan of the Optionee's employer corporation or its Parent Corporation
or Subsidiary) during any one calendar year shall not exceed the sum of
$100,000. To the extent that an Option granted under this Plan exceeds these
limits, that portion of the Option which does not qualify as an ISO shall be
treated as an NQSO.
8
<PAGE>
Section 3.3 - Granting of Options
----------- -------------------
(a) The Administrator shall from time to time, in its absolute discretion,
and subject to applicable limitations of this Plan:
(i) Determine which Employees in its opinion should be granted
Options;
(ii) Determine the number of shares to be subject to such Options
granted to such selected Employees;
(iii) Determine the terms and conditions of such Options,
consistent with the Plan; and
(iv) Determine whether such options shall be ISOs or NQSOs.
(b) Upon the selection of an Employee to be granted an Option, the
Administrator shall instruct the Secretary to issue such Option and may impose
such conditions on the grant of such Option as it deems appropriate.
ARTICLE IV.
TERMS OF OPTIONS
Section 4.1 - Option Agreement
----------- ----------------
Each Option shall be evidenced by a written Stock Option Grant, which shall
be executed by an authorized Officer of the Company and which shall contain such
terms and conditions as the Administrator shall determine, consistent with the
Plan.
Section 4.2 - Option Price
----------- ------------
The price per share of the Common Stock subject to each Option granted to
Employees shall be set by the Administrator; provided, however, that such price
shall be no less than the par value of a share of Common Stock, unless otherwise
permitted by applicable state law, and in the case of ISOs, such price shall not
be a) less than 110% of the Fair Market Value of a share of Common Stock on the
date such ISO is granted if the optionee owns stock representing more than 10%
of the total voting power of all classes of stock of the Company at the grant
date, or b) less than 100% of the Fair Market Value of a share of Common Stock
on the date such ISO is granted for all other Employees.
Section 4.3 - Option Vesting
----------- --------------
(a) Options shall become exercisable at such times and in such installments
(which may be cumulative) as the Administrator shall provide in the terms of
each individual Stock Option Grant; provided, however, that unless the
-------- -------
Administrator otherwise provides, in the Stock
9
<PAGE>
Option Grant or otherwise, no Option shall be exercisable by any Optionee until
the Optionee has remained in employment for one year after the date the Option
is granted. At any time after the grant of an Option, the Administrator may, on
such terms and conditions as it may determine to be appropriate, accelerate the
time at which such Option or any portion thereof may be exercised.
(b) No portion of an Option which is unexercisable at Termination of
Employment shall thereafter become exercisable, unless otherwise determined by
the Administrator.
Section 4.4 - Option Term
----------- -----------
The term of an Option shall be set by the Administrator in its discretion;
provided, however, that the term for an ISO shall not be more than ten (10)
years from the date of the Option is granted; and provided further, that no ISO
granted to an Optionee who owns stock possessing more than 10% of the total
combined voting power of all classes of stock of the Company at the date of
grant shall be exercisable more than five (5) years after the date of grant. The
Administrator may extend the term of any outstanding Option in connection with
any Termination of Employment of the Optionee, or amend any other term or
condition of such Option relating to such a termination; provided that an ISO
may not be exercisable more than three months following Termination of
Employment.
Section 4.5 - Adjustments in Outstanding Options
----------- ----------------------------------
In the event that the outstanding shares of Common Stock subject to Options
are changed into or exchanged for a different number or kind of shares of the
Company or other securities of the Company by reason of merger, consolidation,
recapitalization, reclassification, stock split-up, stock dividend, combination
of shares or otherwise, the Administrator shall make an appropriate and
equitable adjustment in the number and kind of securities as to which all
outstanding Options, or portions thereof then unexercised, shall be exercisable,
to the end that after such event the Optionee's proportionate interest shall be
maintained as before the occurrence of such event. Such adjustment in an
outstanding Option shall be made without change in the total price applicable to
the Option or the unexercised portion of the Option (except for any change in
the aggregate price resulting from rounding-off of share quantities or prices)
and with any necessary corresponding adjustment in Option price per share. Any
such adjustment made by the Administrator shall be final and binding upon all
Optionees, the Company and all other interested persons.
10
<PAGE>
ARTICLE V.
EXERCISE OF OPTIONS
Section 5.1 - Person Eligible to Exercise
----------- ---------------------------
During the lifetime of the Optionee, only he may exercise an Option granted
to him, or any portion thereof; provided, however, if such Option is transferred
pursuant to Section 8.1, such Option may be exercised by the Immediate Family
member to whom such Option was so transferred. After the death of the Optionee,
any exercisable portion of an Option may, prior to the time when such portion
becomes unexercisable, be exercised by his personal representative or by any
person empowered to do so under the deceased Optionee's will or under the then
applicable laws of descent and distribution.
Section 5.2 - Partial Exercise
----------- ----------------
At any time and from time to time prior to the time when any exercisable
Option or exercisable portion thereof becomes unexercisable, such Option or
portion thereof may be exercised in whole or in part; provided, however, that
the Company shall not be required to issue fractional shares and the
Administrator may, by the terms of the Option, require any partial exercise to
be with respect to a specified minimum number of shares.
Section 5.3 - Manner of Exercise
----------- ------------------
An exercisable Option, or any exercisable portion thereof, may be exercised
solely by delivery to the Secretary or his office of all of the following prior
to the time when such Option or such portion becomes unexercisable:
(a) Notice in writing signed by the Optionee or other person then entitled
to exercise such Option or portion, stating that such Option or portion is
exercised, such notice complying with all applicable rules established by the
Administrator or its delegate; and
(b) (i) Full payment (in cash or by check) for the shares with
respect to which such Option or portion is thereby exercised; or
(ii) Subject to the Administrator's consent, shares of Common
Stock owned by the Optionee duly endorsed for transfer to the Company with a
Fair Market Value on the date of delivery equal to the aggregate Option price of
the shares with respect to which such Option or portion is thereby exercised; or
submission of proof of such owned shares satisfactory to the Administrator
followed by issuance of shares upon such exercise from which a number of such
previously owned shares of appropriate value have been deducted;
(iii) Subject to the Administrator's consent, payment, in whole or
in part, through the surrender of shares of Common Stock then issuable upon
exercise of the Option
11
<PAGE>
having a Fair Market Value on the date of Option exercise equal to the aggregate
exercise price of the Option or exercised portion thereof;
(iv) Subject to the Administrator's consent, full payment in any
other form approved by the Administrator, consistent with applicable law and the
Plan; or
(v) Any combination of the consideration provided in the
foregoing subsections (i), (ii), (iii) and (iv); and
(c) On or prior to the date the same is required to be withheld:
(i) Full payment (in cash or by check) of any amount that must
be withheld by the Company for federal, state and/or local tax purposes; or
(ii) Subject to the Administrator's consent, full payment by
delivery to the Company of shares of the Common Stock owned by the Optionee duly
endorsed for transfer to the Company by the Optionee or other person then
entitled to exercise such Option or portion with an aggregate Fair Market Value
equal to the amount that must be withheld by the Company for federal, state
and/or local tax purposes; or
(iii) Subject to the Administrator's consent, full payment by
retention by the Company of shares of Common Stock to be issued pursuant to such
Option exercise with an aggregate Fair Market Value equal to the amount that
must be withheld by the Company for federal, state and/or local tax purposes; or
(iv) Any combination of payments provided for in the foregoing
subsections (i), (ii) or (iii).
(d) Such representations and documents as the Administrator, in its
absolute discretion, deems necessary or advisable to effect compliance with all
applicable provisions of the Securities Act and any other federal or state
securities laws or regulations. The Administrator may, in its absolute
discretion, also take whatever additional actions it deems appropriate to effect
such compliance including, without limitation, placing legends on share
certificates and issuing stop-transfer orders to transfer agents and registrars;
and
(e) In the event that the Option or portion thereof shall be exercised by
any person or persons other than the Optionee, appropriate proof of the right of
such person or persons to exercise the Option or portion thereof.
Section 5.4 - Conditions to Issuance of Stock and/or Stock Certificates
----------- ----------------------------------------------------------
The shares of stock issuable and deliverable upon the exercise of an
Option, or any portion thereof, may be either previously authorized but unissued
shares or issued shares which have then been reacquired by the Company. The
Company shall not be required to issue any
12
<PAGE>
shares of Common Stock or deliver any certificate or certificates for shares of
Common Stock or other evidence of ownership of shares purchased upon the
exercise of any Option or portion thereof prior to fulfillment of all of the
following conditions:
(a) The admission of such shares to listing on all stock exchanges on
which such class of stock is then listed; and
(b) The completion of any registration or other qualification of such
shares under any state or federal law or under the rulings or regulations of the
Securities and Exchange Commission or any other governmental regulatory body,
which the Administrator shall, in its absolute discretion, deem necessary or
advisable; and
(c) The obtaining of any approval or other clearance from any state or
federal governmental agency which the Administrator shall, in its absolute
discretion, determine to be necessary or advisable; and
(d) The payment to the Company (or other employer corporation) of all
amounts which it is required to withhold under federal, state or local law in
connection with the exercise of the Option; and
(e) The lapse of such reasonable period of time following the exercise of
the Option as the Administrator may establish from time to time for reasons of
administrative convenience.
Section 5.5 - Expiration of Options
----------- ---------------------
(a) Subject to the provisions of Section 5.5(b), the Administrator shall
provide, in the terms of each individual Option, when such Option expires and
becomes unexercisable; and (without limiting the generality of the foregoing)
the Administrator may provide in the terms of individual Options that the
unvested portion of said Option expires immediately upon a Termination of
Employment for any reason.
(b) In the event of Termination of Employment of an Optionee by reason of
death or Disability, his Option(s) may not be exercised to any extent by anyone
after the expiration of twelve (12) months from such Termination of Employment,
unless otherwise determined by the Administrator for a specifically designated
Option.
Section 5.6 - Rights as Stockholders
----------- ----------------------
The holders of Options shall not be, nor have any of the rights or
privileges of, stockholders of the Company in respect of any shares purchasable
upon the exercise of any part of an Option unless and until such shares have
been issued by the Company to such holders.
13
<PAGE>
Section 5.7 - Transfer Restrictions on Shares
----------- -------------------------------
The Administrator, in its absolute discretion, may impose such restrictions
on the transferability of the shares purchasable upon the exercise of an Option
as it deems appropriate. Any such restriction shall be set forth in the
respective Stock Option Grant and may be referred to on the certificates
evidencing such shares and/or through the issuance of stop-transfer orders to
transfer agents and registrars. The Administrator may require the Optionee to
give the Company prompt notice of any disposition of shares of stock, acquired
by exercise of any stock options, within two years from the date of granting
such option or one year after the transfer of such shares to such Optionee. The
Administrator may direct that certificates evidencing shares or other evidence
of ownership of such shares acquired by exercise of any stock options refer to
such requirement to give prompt notice of disposition.
ARTICLE VI.
ADMINISTRATION
Section 6.1 - Committee
----------- ---------
The Administrator of the Plan with respect to Options granted to Employees
who are not Section 16 Insiders shall be the Compensation Committee. The
Administrator of the Plan with respect to Options granted to Section 16 Insiders
shall be the Board; provided, that the Board is authorized to delegate to the
Compensation Committee or other Board committee designated as the Administrator
such administrative powers with respect to the Plan as it deems appropriate but
only to the extent that the requirements of the exemption under Rule 16b-3 are
met with respect to Options granted to Section 16 Insiders. In either case, the
Board has the authority to designate another committee or a subcommittee of the
Board to administer the Plan, consisting solely of two or more Directors
appointed by, and serving on such committee at the pleasure of, the Board.
Appointment of members of such committee shall be effective upon acceptance of
appointment. Such members may resign at any time by delivering written notice
to the Board. Vacancies in such committee shall be filled by the Board.
Section 6.2 - Duties and Powers of the Administrator
----------- --------------------------------------
(a) The Administrator is authorized to grant Options, including
determining the terms of the Options, granted under the Plan. It shall be the
duty of the Administrator to conduct the general administration of the Plan in
accordance with its provisions. The Administrator shall have the power to
interpret the Plan and the Stock Option Grants, and to adopt such rules for the
administration, interpretation and application of the Plan and the Stock Option
Grants as are consistent therewith and to interpret, amend or revoke any such
rules.
14
<PAGE>
Section 6.3 - Majority Rule; Written Consent
----------- ------------------------------
The Administrator shall act by a majority of its members in office. The
Administrator may act either by vote at a meeting at which a quorum is present
or by a memorandum or other written instrument signed by a majority of the
members of the Administrator.
Section 6.4 - Compensation; Professional Assistance; Good Faith Actions
----------- ---------------------------------------------------------
Members of the Administrator shall receive such compensation, if any, for
their services as members as may be determined by the Board. All expenses and
liabilities incurred by members of the Administrator in connection with the
administration of the Plan shall be borne by the Company. The Administrator may
employ attorneys, consultants, accountants, appraisers, brokers, administrative
service providers or other persons. The Administrator, the Company and its
Officers and Directors shall be entitled to rely upon the advice, opinions or
valuations of any such persons. All actions taken and all interpretations and
determinations made by the Administrator in good faith shall be final and
binding upon all Optionees, the Company and all other interested persons. No
member of the Administrator shall be personally liable for any action,
determination or interpretation made in good faith with respect to the Plan or
the Options, and all members of the Administrator shall be fully protected by
the Company in respect to any such action, determination or interpretation.
ARTICLE VII.
CHANGE OF CONTROL
Section 7.1 - Automatic Acceleration of Vesting of Options
----------- --------------------------------------------
Notwithstanding the provisions of Section 4.3, all outstanding Options
which are at least 50% vested prior to a Change of Control, shall vest
immediately upon the occurrence of a Change of Control; subject to the
provisions of Sections 7.2 and 7.4 hereunder.
Section 7.2 - Administrator's Powers Upon a Change of Control
----------- -----------------------------------------------
In the event of a Change of Control, the Administrator, in its sole
discretion, and on such terms and conditions as it deems appropriate, either by
the terms of the Option, or by action taken prior to the occurrence of such
transaction or event and either automatically or upon the Optionee's request, is
hereby authorized to take any one or more of the following actions whenever the
Administrator determines that such action is appropriate in order to prevent
dilution or enlargement of the benefits or potential benefits intended by the
Company to be made available under the Plan or with respect to any Option,
granted or issued under the Plan or to facilitate such transaction or event:
(i) To provide for either the purchase of any such Option, for an amount
of cash equal to the amount that could have been obtained upon the exercise of
such Option or
15
<PAGE>
realization of the Optionee's rights had such Option been currently exercisable
or payable or fully vested or the replacement of such Option, with other rights
or property selected by the Administrator in its sole discretion;
(ii) To provide that such Option shall be exercisable as to all shares
covered thereby, notwithstanding anything to the contrary in the Plan or the
provisions of such Option;
(iii) To provide that such Option be assumed by the successor or survivor
corporation, or a parent or subsidiary thereof, or shall be substituted for by
similar options, rights or awards covering the stock of the successor or
survivor corporation, or a parent or subsidiary thereof, with appropriate
adjustments as to the number and kind of shares and prices;
(iv) To make adjustments in the number and type of shares of Common Stock
(or other securities or property) subject to outstanding Options, and/or in the
terms and conditions of (including the grant or exercise price), and the
criteria included in, outstanding Options, or Options which may be granted in
the future; and
(v) To provide that immediately upon the consummation of such event,
such Option shall not be exercisable and shall terminate; provided, that for a
specified period of time prior to such event, such Option shall be exercisable
in full, notwithstanding anything to the contrary in the Plan or the provisions
of such Option.
Section 7.3 - Assumption of Options or Substitutions of Equity Awards by
----------- ----------------------------------------------------------
Successors
----------
If the Company undergoes an Change of Control, then any surviving
corporation or entity or acquiring corporation or entity, or affiliate of such
corporation or entity, may assume any Options outstanding under the Plan or may
substitute similar stock awards (including an award to acquire the same
consideration paid to the stockholders in the Change of Control transaction)for
Options outstanding under the Plan.
Section 7.4 - Impact of Options Upon Pooling of Interests
----------- -------------------------------------------
Notwithstanding the foregoing, in the event that the Company becomes a
party to a transaction that is intended to qualify for "pooling of interests"
accounting treatment and, but for one or more of the provisions of this Plan or
any Option would so qualify, then this Plan and any such agreement shall be
interpreted so as to preserve such accounting treatment, and to the extent that
any provision of the Plan or any such agreement would disqualify the transaction
from pooling of interests accounting treatment then such provision shall be null
and void. All determinations to be made in connection with the preceding
sentence shall be made by the independent accounting firm whose opinion with
respect to "pooling of interests" treatment is required as a condition to the
Company's consummation of such transaction. The existence of the Plan, any
Option shall not affect or restrict in any way the right or power of the Company
or the stockholders of the Company to make or authorize any adjustment,
recapitalization, reorganization or other change in the Company's capital
structure or its business, any merger or
16
<PAGE>
consolidation of the Company, any issue of stock or of options, warrants or
rights to purchase stock or of bonds, debentures, preferred or prior preference
stocks whose rights are superior to or affect the Common Stock or the rights
thereof or which are convertible into or exchangeable for Common Stock, or the
dissolution or liquidation of the Company, or any sale or transfer of all or any
part of its assets or business, or any other corporate act or proceeding,
whether of a similar character or otherwise.
ARTICLE VIII.
OTHER PROVISIONS
Section 8.1 - Transferability of Options
----------- --------------------------
Options granted under this Plan may not be sold, pledged, assigned, or
transferred in any manner otherwise than by will or the laws of descent or
distribution. Notwithstanding the foregoing provisions of this Section 8.1, the
Administrator may provide that an Option may be transferred to an Immediate
Family member; provided, however, that any such transfer is without payment of
any consideration whatsoever, that no such transfer shall be valid unless first
approved by the Administrator, acting in its sole discretion, and that any
Option so transferred shall remain subject to the terms and conditions of this
Plan and the Stock Option Grant.
Section 8.2 - Amendment, Suspension or Termination of the Plan
------------ ------------------------------------------------
The Plan may be wholly or partially amended or otherwise modified or
suspended by the Administrator; provided, that stockholder approval shall be
required for any amendments or modifications which change the number of shares
of Common Stock or otherwise are required to be submitted to a vote of
stockholders of the Company pursuant to the requirements of any exchange on
which the Company's shares are then listed, the Exchange Act or pursuant to
Section 422 of the Code. In such event, the amendment or modification shall be
effective upon the affirmative vote of a majority of shares voting. The Plan
may be terminated at any time or from time to time by the Board. However,
neither the amendment, suspension nor termination of the Plan shall, without the
consent of the holder of the each outstanding Option granted hereunder, impair
any rights or obligations under any Option theretofore granted. No Option may
be granted during any period of suspension nor after termination of the Plan.
Section 8.3 - Effect of Plan Upon Other Option and Compensation Plans
----------- -------------------------------------------------------
The adoption of this Plan shall not affect any other compensation or
incentive plans in effect for the Company, any Parent Corporation or any
Subsidiary. Nothing in this Plan shall be construed to limit the right of the
Company, any Parent Corporation or any Subsidiary (a) to establish any other
forms of incentives or compensation for Employees of the Company, any Parent
Corporation or any Subsidiary or (b) to grant or assume options or other rights
otherwise than under this Plan in connection with any proper corporate purpose,
including, but not by way
17
<PAGE>
of limitation, the grant or assumption of options in connection with the
acquisition by purchase, lease, merger, consolidation or otherwise, of the
business, stock or assets of any corporation, firm or association.
Section 8.4 - Miscellaneous
----------- -------------
(a) No person shall have any claim or right to be granted an Option under
this Plan. The grant of an Option under this Plan shall not confer any right on
the Optionee to continue in the employ of or association with the Company or
limit in any way the right of the Company to terminate such employment.
(b) The Company shall have the right to condition exercise of Options
granted pursuant to this Plan upon satisfactory arrangements to assure that, to
the extent the exercise of such Options shall result in realization by the
person exercising such Options of income subject to a requirement that taxes be
withheld with respect to such income, the amount of such taxes shall be provided
by the Optionee at the time of exercise of the Options or the number of Shares
issuable upon such exercise shall be reduced and withheld to satisfy such tax
obligations.
Section 8.5 - Compliance with Laws
----------- --------------------
The Plan, the granting and vesting of Options under the Plan and the
issuance and delivery of shares of Common Stock and the payment of money under
the Plan or in connection with options granted or awarded hereunder are subject
to compliance with all applicable federal and state laws, rules and regulations
(including but not limited to state and federal securities law and federal
margin requirements) and to such approvals by any listing, regulatory or
governmental authority as may, in the opinion of counsel for the Company, be
necessary or advisable in connection therewith. Any securities delivered under
the Plan shall be subject to such restrictions, and the person acquiring such
securities shall, if requested by the Company, provide such assurances and
representations to the Company as the Company may deem necessary or desirable to
assure compliance with all applicable legal requirements. To the extent
permitted by applicable law, the Plan and Options granted or awarded hereunder
shall be deemed amended to the extent necessary to conform to such laws, rules
and regulations.
Section 8.6 - Titles
----------- ------
Titles are provided herein for convenience only and are not to serve as a
basis for interpretation or construction of the Plan.
18
<PAGE>
Section 8.7 - Governing Law
----------- -------------
This Plan and any agreements hereunder shall be administered, interpreted
and enforced under the internal laws of the State of Delaware, without regard to
conflicts of laws thereof.
**********
I hereby certify that the foregoing Grubb & Ellis Company 2000 Stock Option
Plan was duly adopted by the holders of the Common Stock of the Company as of
November 16, 2000.
Executed on this _____ day of_______________, 2000.
Carol Vanairsdale
Vice President and Assistant General
Counsel
19
<PAGE>
PROXY GRUBB & ELLIS COMPANY PROXY
For the Annual Meeting of Stockholders - November 16, 2000
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
I am a stockholder of Grubb & Ellis Company (the "Company") and I have received
the Notice of Annual Meeting of Stockholders dated October 12, 2000 and the
accompanying Proxy Statement. I appoint Robert J. Walner and Blake W. Harbaugh
and each or any of them as Proxy Holders, with full power of substitution, to
represent and vote all the shares of Common Stock which I may be entitled to
vote at the Annual Meeting of Stockholders to be held at the Northbrook Hilton
Hotel, 2855 North Milwaukee Avenue, Northbrook, Illinois, in the Almond Room on
Thursday, November 16, 2000 at 10:00 a.m. or at any and all adjournments
thereof, with all powers which I would have if I were personally present at the
meeting.
The shares represented by this Proxy will be voted in the way that I direct. If
no direction is made, the Proxy will be voted "FOR" all nominees listed under
the "Election of Directors," all of whom have been nominated by the Board of
Directors and "FOR" the stock option plan as described in the accompanying proxy
statement. If any of the nominees listed becomes unavailable to serve as a
director prior to the Annual Meeting, the Proxy will be voted for any substitute
nominee(s) designated by the Board of Directors. I ratify and confirm all that
the above Proxy Holders may legally do in relation to this Proxy.
(Continued and to be signed on reverse side.)
<PAGE>
GRUBB & ELLIS COMPANY
PLEASE MARK VOTE IN THE OVAL IN THE FOLLOWING MANNER USING DARK INK ONLY. [ ]
[ ]
The Board of Directors recommends a vote FOR all nominees for Directors and FOR
the stock option plan.
<TABLE>
<CAPTION>
1. Election of Directors-- 2. Approval of the Grubb & Ellis 2000
Stock Option Plan--
<S> <C> <C> <C> <C> <C> <C>
Nominees: For Withhold For All For Against Abstain
01-R. David Anacker, 02-Joe F. Hanauer, All All Except* [ ] [ ] [ ]
03-C. Michael Kojaian, 04-Reuben S. Leibowitz, [ ] [ ] [ ]
05-Ian C. Morgan, 06-Robert J. McLaughlin and
07-Todd A. Williams
3. In accordance with the judgments of the Proxy
Holders upon such other business as may properly
------------------------------------- come before the meeting and at any and all
*Except nominee(s) written above adjournments thereof.
Mark here for address change and indicate: [ ]
Date:________________________________________
Signature(s)_________________________________
_____________________________________________
Please date and sign exactly as your name
appears on this Proxy Card. Joint owners should
each sign. The full title or capacity of any
person signing for a corporation, partnership,
trust or estate should be indicated.
-----------------------------------------------------------------------------------------------------------------------------------
</TABLE>
. FOLD AND DETACH HERE .
YOUR VOTE IS IMPORTANT!
PLEASE MARK, SIGN, DATE AND RETURN THIS PROXY PROMPTLY
USING THE ENCLOSED POSTMARKED ENVELOPE.
