-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, FK8p+knxv5dkn/khn8/Xk6TWrb+F57LCAk/CErJiIBkSE7o3JNQeZZ+VHwuBwEg+ tK+98vQa0Pl55f49Vt0Llg== 0000899140-02-000200.txt : 20020415 0000899140-02-000200.hdr.sgml : 20020415 ACCESSION NUMBER: 0000899140-02-000200 CONFORMED SUBMISSION TYPE: SC 13D/A PUBLIC DOCUMENT COUNT: 7 FILED AS OF DATE: 20020313 SUBJECT COMPANY: COMPANY DATA: COMPANY CONFORMED NAME: GRUBB & ELLIS CO CENTRAL INDEX KEY: 0000216039 STANDARD INDUSTRIAL CLASSIFICATION: REAL ESTATE AGENTS & MANAGERS (FOR OTHERS) [6531] IRS NUMBER: 941424307 STATE OF INCORPORATION: DE FISCAL YEAR END: 0630 FILING VALUES: FORM TYPE: SC 13D/A SEC ACT: 1934 Act SEC FILE NUMBER: 005-32339 FILM NUMBER: 02574485 BUSINESS ADDRESS: STREET 1: 2215 SANDERS RD STREET 2: STE 400 CITY: NORTHBROOK STATE: IL ZIP: 60062 BUSINESS PHONE: 4159561990 MAIL ADDRESS: STREET 1: ONE MONTGOMERY ST STE 3100 STREET 2: TELESIS TWR 9TH FLR CITY: SAN FRANCISCO STATE: CA ZIP: 94104 FILED BY: COMPANY DATA: COMPANY CONFORMED NAME: WARBURG PINCUS INVESTORS LP CENTRAL INDEX KEY: 0000929658 STANDARD INDUSTRIAL CLASSIFICATION: UNKNOWN SIC - 0000 [0000] IRS NUMBER: 133549187 STATE OF INCORPORATION: DE FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: SC 13D/A BUSINESS ADDRESS: STREET 1: 466 LEXINGTON AVENUE CITY: NEW YORK STATE: NY ZIP: 10017-3147 BUSINESS PHONE: 2128780600 MAIL ADDRESS: STREET 1: 466 LEXINGTON AVENUE CITY: NEW YORK STATE: NY ZIP: 10017-3147 SC 13D/A 1 wpi1016014.txt AMENDMENT NO. 10 TO SCHEDULE 13D Schedule 13D Page 1 of 8 - -------------------------------------------------------------------------------- SEC 1746 (2- 98) - -------------------------------------------------------------------------------- Securities and Exchange Commission Washington D.C. 20549 SCHEDULE 13D Under the Securities Exchange Act of 1934 (Amendment No. 10)* - -------------------------------------------------------------------------------- GRUBB & ELLIS COMPANY - -------------------------------------------------------------------------------- (Name of Issuer) Common Stock, $0.01 par value - -------------------------------------------------------------------------------- (Title of Class of Securities) 40009-52-0 - -------------------------------------------------------------------------------- (CUSIP Number) Steven A. Seidman, Esq. Willkie Farr & Gallagher 787 Seventh Avenue New York, NY 10019-6099 (212) 728-8000 - -------------------------------------------------------------------------------- (Name, Address and Telephone Number of Person Authorized to Receive Notices and Communications) March 8, 2002 - -------------------------------------------------------------------------------- (Date of Event which Requires Filing of this Statement) If the filing person has previously filed a statement on Schedule 13G to report the acquisition that is the subject of this Schedule 13D, and is filing this schedule because of ss.ss.240.13d-l(e), 240.13d-l(f) or 240.13d-1(g), check the following box. [ ] Note: Schedules filed in paper format shall include a signed original and five copies of the schedule, including all exhibits. Seess.240.13d-7 for other parties to whom copies are to be sent. * The remainder of this cover page shall be filled out for a reporting person's initial filing on this form with respect to the subject class of securities, and for any subsequent amendment containing information which would alter disclosures provided in a prior cover page. The information required on the remainder of this cover page shall not be deemed to be "filed" for the purpose of Section 18 of the Securities Exchange Act of 1934 ("Act") or otherwise subject to the liabilities of that section of the Act but shall be subject to all other provisions of the Act (however, see the Notes). Schedule 13D Page 2 of 8 CUSIP No. 40009-52-0 - ------------ ------------------------------------------------------------------- 1. Names of Reporting Persons. I.R.S. Nos. of above persons (entities only). Warburg, Pincus Investors, L.P. - ------------ ------------------------------------------------------------------- 2. Check the Appropriate Box if a Member of a Group (See Instructions) (a) (b)X - ------------ ------------------------------------------------------------------- 3. SEC Use Only - ------------ ------------------------------------------------------------------- 4. Source of Funds Not Applicable - ------------ ------------------------------------------------------------------- 5. Check if Disclosure of Legal Proceedings is Required Pursuant to Items 2(d) or 2(e) - ------------ ------------------------------------------------------------------- 6. Citizenship or Place of Organization Delaware - -------------------- ----------------------------------------------------------- Number of Shares 7. Sole Voting Power Beneficially Owned by Each Reporting Person With ----------------------------------------------------------- 8. Shared Voting Power 7,199,260 ----------------------------------------------------------- 9. Sole Dispositive Power ----------------------------------------------------------- 10. Shared Dispositive Power 7,199,260 - ------------ ------------------------------------------------------------------- 11. Aggregate Amount Beneficially Owned by Each Reporting Person 7,199,260 - ------------ ------------------------------------------------------------------- 12. Check if the Aggregate Amount in Row (11) Excludes Certain Shares (See Instructions) - ------------ ------------------------------------------------------------------- 13. Percent of Class Represented by Amount in Row (11) 48.2% - ------------ ------------------------------------------------------------------- 14. Type of Reporting Person (See Instructions) PN - ------------ ------------------------------------------------------------------- Schedule 13D Page 3 of 8 CUSIP No. 40009-52-0 - ------------ ------------------------------------------------------------------- 1. Names of Reporting Persons. I.R.S. Nos. of above persons (entities only). Warburg Pincus LLC (formerly E.M. Warburg, Pincus & Co., LLC) - ------------ ------------------------------------------------------------------- 2. Check the Appropriate Box if a Member of a Group (See Instructions) (a) (b)X - ------------ ------------------------------------------------------------------- 3. SEC Use Only - ------------ ------------------------------------------------------------------- 4. Source of Funds (See Instructions) Not Applicable - ------------ ------------------------------------------------------------------- 5. Check if Disclosure of Legal Proceedings is Required Pursuant to Items 2(d) or 2(e) - ------------ ------------------------------------------------------------------- 6. Citizenship or Place of Organization New York - -------------------- ----------------------------------------------------------- Number of Shares 7. Sole Voting Power Beneficially Owned by Each Reporting Person With ----------------------------------------------------------- 8. Shared Voting Power 7,199,260 ----------------------------------------------------------- 9. Sole Dispositive Power ----------------------------------------------------------- 10. Shared Dispositive Power 7,199,260 - ------------ ------------------------------------------------------------------- 11. Aggregate Amount Beneficially Owned by Each Reporting Person 7,199,260 - ------------ ------------------------------------------------------------------- 12. Check if the Aggregate Amount in Row (11) Excludes Certain Shares (See Instructions) - ------------ ------------------------------------------------------------------- 13. Percent of Class Represented by Amount in Row (11) 48.2% - ------------ ------------------------------------------------------------------- 14. Type of Reporting Person (See Instructions) OO - ------------ ------------------------------------------------------------------- CUSIP No. 40009-52-0 Page 4 of 8 - ------------ ------------------------------------------------------------------- 1. Names of Reporting Persons. I.R.S. Nos. of above persons (entities only). Warburg, Pincus & Co - ------------ ------------------------------------------------------------------- 2. Check the Appropriate Box if a Member of a Group (See Instructions) (a) (b)X - ------------ ------------------------------------------------------------------- 3. SEC Use Only - ------------ ------------------------------------------------------------------- 4. Source of Funds (See Instructions) Not Applicable - ------------ ------------------------------------------------------------------- 5. Check if Disclosure of Legal Proceedings is Required Pursuant to Items 2(d) or 2(e) - ------------ ------------------------------------------------------------------- 6. Citizenship or Place of Organization New York - -------------------- ----------------------------------------------------------- Number of Shares 7. Sole Voting Power Beneficially Owned by Each Reporting Person With ----------------------------------------------------------- 8. Shared Voting Power 7,199,260 ----------------------------------------------------------- 9. Sole Dispositive Power ----------------------------------------------------------- 10. Shared Dispositive Power 7,199,260 - ------------ ------------------------------------------------------------------- 11. Aggregate Amount Beneficially Owned by Each Reporting Person 7,199,260 - ------------ ------------------------------------------------------------------- 12. Check if the Aggregate Amount in Row (11) Excludes Certain Shares (See Instructions) - ------------ ------------------------------------------------------------------- 13. Percent of Class Represented by Amount in Row (11) 48.2% - ------------ ------------------------------------------------------------------- 14. Type of Reporting Person (See Instructions) PN - ------------ ------------------------------------------------------------------- Schedule 13D Page 5 of 8 This Amendment No. 10 to Schedule 13D is being filed on behalf of Warburg, Pincus Investors, L.P. ("WPI"), Warburg, Pincus & Co. ("WPC") and Warburg Pincus LLC ("WP LLC" and together with WPI and WPC, the "Reporting Entities") relating to the common stock, par value $.01 per share ("Common Stock"), of Grubb & Ellis Company (the "Company") a Delaware corporation. Terms defined in the original Schedule 13D, as amended, shall have the same meaning when used herein. This Amendment is being filed pursuant to Rule 13d-2 of the General Rules and Regulations under the Securities Exchange Act of 1934, as amended. Item 5. Interest in Securities of the Issuer WPI is the beneficial owner of 7,199,260 shares of Common Stock through its direct ownership of 7,199,260 shares of Common Stock. This total includes 1,337,358 shares of Common Stock that WPI obtained through the exercise in January 2002 of warrants that were obtained by WPI on or before October 21, 1996. The shares of Common Stock represent approximately 48.2% of the shares of Common Stock calculated in accordance with Rule 13d-3(1)(i). The calculation of percentage ownership assumes that 14,948,384 shares of Common Stock are outstanding, as represented by the Company in the Option Agreement, dated as of March 7, 2002, by and among the Company, WPI and Bank of America, N.A., (the "Option Agreement"), filed as Exhibit 6 to this Schedule 13D Amendment. WPC and WP LLC may be deemed to own beneficially the shares of Common Stock beneficially owned by WPI. Item 6. Contracts, Arrangements, Understandings or Relationships with respect to Securities of the Issuer. WPI has entered into the Third Amendment, dated as of March 7, 2002 ("Third Amendment"), to the Amended and Restated Credit Agreement, dated as of December 31, 2000 (the "Credit Agreement"), by and among the Company, various financial institutions and the Bank of America, N.A., as administrative agent (the "Administrative Agent" and together with the financial institutions, the "Banks"). Pursuant to the Third Amendment, WPI became an additional, junior lender under the Credit Agreement, pursuant to a secured promissory note issued to WPI (the "$5,000,000 Subordinated Note"). Under the Option Agreement, WPI may be required by the Company (which may assign its right to the Banks), to deliver to the Company an additional $6,000,000 on June 3, 2002 upon substantially the same terms and conditions as set forth in the $5,000,000 Subordinated Note (the "Put Right"). Any such additional $6,000,000 loan is to be evidenced by a separate secured promissory note (the "$6,000,000 Subordinated Note"). Upon exercise of the Put Right by the Company, or the Banks, as its assignee, as the case may be, WPI's obligation to execute and deliver the $6,000,000 Subordinated Note is unconditional and irrevocable. All sums evidenced by the $5,000,000 Subordinated Note and the $6,000,000 Subordinated Note (collectively, the "Subordinated Notes") are subordinate to all indebtedness under the Credit Agreement in accordance with the terms of the Third Amendment and the Option Agreement. The Subordinated Notes are demand obligations that bear interest at the rate of 15% per annum, compounded quarterly, although no payments of interest or principal may be made pursuant to the Subordinated Notes until such time as the applicable provisions in the Credit Agreement has been Schedule 13D Page 6 of 8 terminated, other than in connection with the Company's "Refinancing Right" as described below. The Credit Agreement is currently due to terminate on December 31, 2005. All principal, interest and reasonable costs evidenced by the Subordinated Notes are subject to conversion (the "Conversion Amount"), generally at the option of the holder, into 11,000 shares of the Company's newly created Series A Preferred Stock, having a stated value of $1,000 per share (plus such additional shares of Series A Preferred Stock representing the amount of interest incurred and reasonable costs related to the Subordinated Notes). Each of the shares of the Company's Series A Preferred Stock accrue interest at 15% per annum, compounded quarterly, are not convertible into any other securities of the Company or subject to redemption under any circumstances whatsoever, and vote with the Common Stock on all matters as if each share of Series A Preferred Stock were the equivalent of 1887 shares of Common Stock, subject to adjustment. The Series A Preferred Stock has a preference upon liquidation, dissolution and certain change of control transactions equal to the greater of two (2) times the Conversion Amount, or the equivalent of 50% of the consideration to be paid to all equity holders of the Company on a fully diluted basis as if the liquidation, dissolution or change of control transaction had occurred on March 7, 2002, subject to adjustment. The holders of the Series A Preferred Stock have veto rights over certain corporate actions of the Company, including but not limited to the payment of dividends, issuance of capital stock, and change in control transactions. The rights and obligations of WPI under the Third Amendment, the Subordinated Notes and the Option Agreement are assignable and transferable subject to the consent of Bank of America, which consent shall not be unreasonably withheld. The Option Agreement also provides the Company with a right (the Refinancing Right") to replace the financing arrangement contemplated by the Option Agreement. Specifically, upon the receipt of at least approximately $15,000,000 from the sale of equity or subordinated debt securities and the tendering to WPI and/or its assigns on or before April 30, 2002 of (i) the entire principal amount of the $5,000,000 Subordinated Note, plus accrued interest thereon and reasonable costs with respect thereto and (ii) the sum of $4,158,431 to repurchase 1,337,358 shares of common stock held by WPI and/or its assigns, the Option Agreement, and all of the debt and equity securities issued and issuable thereunder, automatically will be terminated; provided further however, that in the event the Company receives on or before April 30, 2002, a non-binding letter of intent, term sheet or similar documentation that sets forth the terms of a transaction that the Company in good faith reasonably believes will provide the Company with the requisite funds to effect the Refinancing Right, then the Company will have until May 14, 2002 to effect the Refinancing Right. Pursuant to the Option Agreement, the terms of that certain Voting Trust Agreement, dated as of December 30, 1997, by and between WPI and the Company was terminated in accordance with its terms. The foregoing is a summary of the terms of each of the Third Amendment, the Option Agreement and the Subordinated Notes, and does not purport to be a complete discussion of any of these documents. Accordingly, the foregoing is qualified in its entirety by reference to the full text of each of the foregoing documents, all of which are filed as exhibits to this Schedule 13D Amendment and incorporated by reference in this Schedule 13D by reference. Item 7. Material to Be Filed as Exhibits Schedule 13D Page 7 of 8 Exhibit 1 Third Amendment to the Amended and Restated Credit Agreement, dated as of March 7, 2002, by and among the Company, the Lenders and Bank of America. Exhibit 2 Amended and Restated Credit Agreement, dated as of December 31, 2000, by and among the Company, the Lenders and Bank of America (the "Credit Agreement") is incorporated by reference to exhibit 99.(B)(1) of the SC-TO-I/A, filed by the Company on January 10, 2001. Exhibit 3 First Amendment to the Credit Agreement, dated as of August 22, 2001, is incorporated by reference to Exhibit 4.19 of the Form 10-K of the Company, filed September 28, 2001. Exhibit 4 Second Amendment to the Credit Agreement, dated as of December 4, 2001, is incorporated by reference to Exhibit 4.1 of the Form 10-Q filed by the Company on February 14, 2002. Exhibit 5 Promissory Note ($5,000,000), dated as of March 7, 2002, by and between the Company and WPI. Exhibit 6 Option Agreement, dated as of March 7, 2002, by and between the Company, a Delaware corporation and WPI. Exhibit 7 Form of Promissory Note ($6,000,000), by and between the Company and WPI (Exhibit B to Option Agreement). Exhibit 8 Certificate of Designation, Number, Voting Power Preferences and Rights of Series A Preferred Stock of the Company, dated March 7, 2002. Exhibit 9 Form of Subordination Agreement by Warburg Pincus Investors, L.P. in favor of Bank of America, N.A., and the Lenders (Exhibit C to Option Agreement) Schedule 13D Page 8 of 8 Signature After reasonable inquiry and to the best of my knowledge and belief, I certify that the information set forth in this statement is true, complete and correct. WARBURG, PINCUS INVESTORS, L.P. By: WARBURG, PINCUS & Co. General Partner By: /s/ Reuben S. Leibowitz ------------------------------ Name: Reuben S. Leibowitz Title: Partner WARBURG PINCUS LLC By: /s/ Reuben S. Leibowitz ------------------------------ Name: Reuben S. Leibowitz Title: Partner WARBURG, PINCUS & CO. By: /s/ Reuben S. Leibowitz ------------------------------ Name: Reuben S. Leibowitz Title: Managing Director Dated: March 13, 2002 EX-1 4 wpi1017680.txt THIRD AMENDMENT THIRD AMENDMENT --------------- THIS THIRD AMENDMENT dated as of March 7, 2002 (this "Amendment") amends the Amended and Restated Credit Agreement dated as of December 31, 2000 (as previously amended, the "Credit Agreement") among Grubb & Ellis Company (the "Borrower"), various financial institutions (the "Lenders") and Bank of America, N.A., as administrative agent (in such capacity, the "Administrative Agent"). Terms defined in the Credit Agreement are, unless otherwise defined herein or the context otherwise requires, used herein as defined therein. WHEREAS, the Borrower, the Lenders and the Administrative Agent have entered into the Credit Agreement; and WHEREAS, the parties hereto desire to amend the Credit Agreement in certain respects as more fully set forth herein; NOW, THEREFORE, the parties hereto agree as follows: SECTION 1. Amendments. Subject to the satisfaction of the conditions precedent set forth in Section 4 of this Amendment, the Credit Agreement is amended as follows: 1.1. Amendments to Definitions. ------------------------- (a) The pricing grid set forth in the definition of "Applicable Margin" is amended in its entirety to read as follows: ============================================================== Leverage Applicable Applicable Applicable Commitment Ratio Margin for Margin for Margin for Fee Rate Eurodollar Base Rate Swingline Loans Loans Loans -------------------------------------------------------------- Greater 3.75% 2.75% 2.75% 1.50% than or equal to 1.75:1.00 -------------------------------------------------------------- Greater 3.25% 2.50% 2.50% 1.50% than or equal to 1.25:1.00 but less than 1.75:1.00 -------------------------------------------------------------- Less than 3.00% 2.25% 2.25% 1.50% 1.25:1.00 ============================================================== (b) The definition of "Consolidated EBITDA" is amended in its entirety to read as follows: "'Consolidated EBITDA' means, for any period, the consolidated EBITDA of the Borrower and its Restricted Subsidiaries for such period, as determined on a consolidated basis in accordance with GAAP plus the EBITDA attributable during such period (a) to any Person, in the case of an Acquisition of all or substantially all of the capital stock or equity of such Person, or (b) to any assets of a Person, in the case of an Acquisition of all or substantially all of the assets of such Person, in each case in clauses (a) and (b) above, acquired in connection with a Permitted Acquisition to the extent that the Administrative Agent, in its reasonable discretion, deems such EBITDA to be appropriate given all the facts and circumstances surrounding such Permitted Acquisition." (c) The definition of "EBITDA" is amended in its entirety to read as follows: "'EBITDA' means, for any period, Consolidated Net Income for such period plus, without duplication and to the extent reflected as a charge in the statement of Consolidated Net Income for such period, the sum of (a) total income tax expense, (b) interest expense, amortization or write-off of debt discount and debt issuance costs and commissions, discounts and other fees and charges associated with Indebtedness (including the Loans), (c) depreciation expense, (d) amortization of intangibles (including goodwill) and organization costs, (e) any non-cash Restructuring Charges and (f) non-cash charges relating to Signing Bonus Payments; minus, to the extent included in the statement of such Consolidated Net Income for such period, the sum of (i) interest income, (ii) any extraordinary income or gains (including, whether or not otherwise includable as a separate item in the statement of Consolidated Net Income for such period, gains on the sales of assets outside of the ordinary course of business) and (iii) any other non-cash income, all as determined in accordance with GAAP." (d) The definition of "Excess Cash Flow" is amended in its entirety to read as follows: "'Excess Cash Flow' means, for any period an amount equal to the result of (a) Consolidated EBITDA for such period less (b) Consolidated Fixed Charges for such period." (e) The definition of "Permitted Acquisition" is amended in its entirety to read as follows: "Permitted Acquisition' means any Acquisition approved in writing by all Lenders." 2 (f) The definition of "Revolving Credit Commitment" is amended by deleting the reference to "$15,000,000" therein and substituting "$6,000,000" therefor. (g) The definition of "Specified Percentage" is amended in its entirety to read as follows: "'Specified Percentage' means 50%." (h) The definition of "Subordination Agreement" is amended in its entirety to read as follows: "'Subordination Agreement' means any subordination agreement relating to Subordinated Debt." 1.2. Addition of Definitions. The following new definitions are added to the Credit Agreement in appropriate alphabetical sequence to read as follows: "'Additional Term Lender' means Warburg, Pincus Investors, L.P. and its successors and assigns. `Deferred Installment Amounts' means (a) $625,000 of the principal amount of Term Loans scheduled to be repaid on March 31, 2004, (b) $1,250,000 of the principal amount of Term Loans scheduled to be repaid on June 30, 2004, (c) $1,250,000 of the principal amount of Term Loans scheduled to be repaid on September 30, 2004 and (d) $1,875,000 of the principal amount of Term Loans scheduled to be repaid on December 31, 2004. `Equity Offering' means the issuance of equity of the Borrower to one or more Persons in an amount not less than $11,000,000 having terms reasonably acceptable to the Required Lenders. `Option Agreement' means the Option Agreement dated as of March 7, 2002 among the Borrower, Warburg, Pincus Investors, L.P. and various other parties. `Restructuring Charges' means charges taken by the Borrower in connection with the closing of various locations of the Borrower and its Subsidiaries. `Subordinated Debt' means (a) the Subordinated Notes and (b) any other Indebtedness of the Borrower which has maturities and other terms, and which is subordinated to the obligations of the Borrower and its Subsidiaries hereunder and under the other Loan Documents in a manner, approved in writing by the Required Lenders." 3 1.3. Deletion of Definition. The definition of "Acquired Pro Forma EBITDA" is deleted in its entirety. 1.4. Amendments to Section 4.2. Section 4.2 is amended in its entirety to read as follows: "4.2 Reduction or Termination of the Revolving Credit Commitments. ------------------------------------------------------------ (a) The Borrower shall have the right, upon not less than three Business Days' notice to the Administrative Agent, to terminate the Revolving Credit Commitments or, from time to time, to reduce the amount of the Revolving Credit Commitments; provided that no such termination or reduction of the Revolving Credit Commitments shall be permitted if after giving effect thereto and to any prepayments of the Revolving Credit Loans made on the effective date thereof, the Total Revolving Extensions of Credit would exceed the Total Revolving Credit Commitments. Any such reduction shall be in an amount equal to $1,000,000 or a whole multiple thereof, and shall reduce permanently the Revolving Credit Commitments then in effect. (b) The amount of the Revolving Credit Commitments shall be permanently reduced to $5,000,000 upon the earlier to occur of (i) June 3, 2002 or (ii) the receipt by the Borrower of the proceeds of the Equity Offering." 1.5. Amendments to Section 4.3. ------------------------- (a) The first parenthetical phrase contained in Section 4.3(b)(iii) is amended in its entirety to read as follows: "(other than the issuance of any equity securities in connection with the Equity Offering, the exercise of warrants or employee stock options or the Borrower's employee stock purchase plan)". (b) Section 4.3(b)(iv) is amended in its entirety to read as follows: "(iv) Within 60 days following the end of (A) the six-month period ending September 30, 2002, (B) the calendar year ending December 31, 2002 (but only if Consolidated EBITDA for such year is greater than $8,000,000) and (C) each period beginning with January 1st of any calendar year (beginning January 1, 2003) and ending on the last day of a calendar quarter in such calendar year, the Borrower shall prepay Term Loans by an amount (rounded down, if necessary, to an integral multiple of $50,000) equal to the Specified Percentage of Excess Cash Flow for such period minus (x) in the case of clause (B), any prepayment previously made pursuant to clause (A) and (y) in the case of clause (C), any prepayment previously made pursuant to clause (C) during such calendar year." (c) The first parenthetical phrase contained in Section 4.3(c)(ii) is amended in its entirety to read as follows: 4 "(other than (x) the first $5,000,000 of Net Cash Proceeds from the issuance of Subordinated Indebtedness after the effectiveness of the Third Amendment to this Agreement (less the amount of Net Cash Proceeds referred to in clause (y) of the first parenthetical phrase of Section 4.3(c)(iii)) and (y) Net Cash Proceeds from the issuance of other Indebtedness permitted by Section 8.2)". (d) The first parenthetical phrase contained in Section 4.3(c)(iii) is amended in its entirety to read as follows: "(other than (x) Net Cash Proceeds from the issuance of equity securities issued in connection with the Equity Offering, the exercise of warrants or employee stock options or the Borrower=s employee stock purchase plan and (y) the first $5,000,000 of Net Cash Proceeds from the issuance of other equity securities after the effectiveness of the Third Amendment to this Agreement (less the amount of Net Cash Proceeds referred to in clause (x) of the first parenthetical phrase of Section 4.3(c)(ii))". (e) Section 4.3(c)(iv) is amended in its entirety to read as follows: "(iv) Within 60 days following the end of (A) the six-month period ending September 30, 2002, (B) the calendar year ending December 31, 2002 (but only if Consolidated EBITDA for such year is greater than $8,000,000) and (C) each period beginning with January 1st of any calendar year (beginning January 1, 2003) and ending on the last day of a calendar quarter in such calendar year, the Borrower shall prepay Revolving Loans by an amount (rounded down, if necessary, to an integral multiple of $50,000) equal to the Specified Percentage of Excess Cash Flow for such period minus (x) in the case of clause (A), any prepayment required to be made pursuant to Section 4.3(b)(iv)(A); (y) in the case of clause (B), any prepayment previously made pursuant to Section 4.3(b)(iv)(A) or (B) or pursuant to clause (A) above; and (z) in the case of clause (C), any prepayment previously made, or concurrently required to be made, pursuant to Section 4.3(b)(iv)(C) or pursuant to clause (C) above during such calendar year." 1.6. Amendment to Section 4.4. Section 4.4 is amended in its entirety to read as follows: "4.4 Application of Prepayments of Term Loans. Each prepayment of Term Loans shall be applied first, pro rata to repay the Deferred Installment Amounts until paid in full and, then, pro rata to the remaining installments of the Term Loans." 1.7. Amendments to Section 7.2. Section 7.2 is amended by (a) redesignating clause "(g)" as clause "(i)", (b) deleting the word "and" at the end of clause (f) and (c) inserting the following new clauses (g) and (h) in proper sequence: "(g) Within 30 days after the end of each month, monthly operating and cash flow statements for such month, including a comparison of actual results against those set forth in the applicable budget delivered pursuant to clause (c); and (h) Within seven days after the end of each week, a rolling 13-week cash flow forecast in form and substance acceptable to the Administrative Agent;". 5 1.8. Addition of new Sections 7.12 and 7.13. The following new Sections 7.12 and 7.13 are added to the Credit Agreement in proper sequence: "7.12 Cleandown of Revolving Credit Loans. Cause the aggregate principal amount of all Revolving Credit Loans to be zero for at least 30 consecutive days during December of each year. 7.13 Financial Advisor. Pay the reasonable expenses of a financial advisor retained by counsel to the Administrative Agent to provide, without limitation, (a) an evaluation of the forecast delivered to the Administrative Agent and the Lenders prior to the execution and delivery of the Third Amendment to this Agreement and a report to the Administrative Agent and the Lenders setting forth a detailed analysis of such forecast, (b) a monthly report to the Administrative Agent and the Lenders which shall include (i) a comparison of the financial results for such month (as set forth in the operating and cash flow statements delivered by the Borrower pursuant to Section 7.2(g)) against the forecast described in clause (a) and (ii) an evaluation of the financial condition of the Borrower and its Subsidiaries and (c) such other information as the Administrative Agent or any Lender may reasonably request in connection with the foregoing; provided that, so long as no Event of Default exists, the Borrower shall have the right to approve the scope of the services to be performed by the financial advisor (such approval not to be unreasonably withheld)." 1.9. Amendments to Section 8.1. ------------------------- (a) Section 8.1(a) is amended in its entirety to read as follows: "(a) [Intentionally Deleted]." (b) Section 8.1(b) is amended in its entirety to read as follows: "(b) Consolidated Fixed Charge Coverage Ratio. Permit the Consolidated Fixed Charge Coverage Ratio for the period of four consecutive fiscal quarters ending on the last day of any fiscal quarter to be less than the applicable ratio set forth below: Minimum Consolidated Fixed Fiscal Quarter Ending Charge Coverage Ratio --------------------- --------------------- 12/31/03 1.00 to 1.0 3/31/04 and thereafter 1.05 to 1.0." (c) Section 8.1(c) is amended in its entirety to read as follows: "(c) Adjusted EBITDA. Permit Adjusted EBITDA for any period set forth below to be less than the applicable amount set forth below: 6 Period (Inclusive) Minimum Adjusted EBITDA ------------------ ----------------------- 1/1/02 through 3/31/02 $ (8,700,000) 1/1/02 through 6/30/02 $ (10,400,000) 1/1/02 through 9/30/02 $ (7,600,000) 1/1/02 through 12/31/02 $ 4,200,000 4/1/02 through 3/31/03 $ 7,500,000 7/1/02 through 6/30/03 $ 12,100,000 10/1/02 through 9/30/03 $ 16,600,000 Any period of four consecutive fiscal quarters ending thereafter $ 18,800,000." 1.10. Amendment to Section 8.2. Section 8.2 is amended by: ------------------------ (a) amending clause (j) in its entirety to read as follows: "(j) other Subordinated Debt not to exceed $5,000,000 at any time outstanding having subordination provisions and other terms reasonably acceptable to the Required Lenders;" (b) amending the proviso at the end thereof to read in its entirety as follows: "provided, however, that notwithstanding the provisions of subsections 8.2(a) through 8.2(j) above, (i) the aggregate amount of all Indebtedness described in subsections 8.2(c), (f), (g), (h) and (i) that is secured by Liens shall at no time exceed $250,000 and (ii) the aggregate amount of an Indebtedness described in subsections 8.2(c), (f), (g), (h) and (i) shall at no time exceed $750,000." 1.11. Amendment to Section 8.8. Section 8.8 is amended by (a) deleting the word "and" at the end of clause (j), (b) inserting a semicolon and the word "and" at the end of clause (k) and (c) inserting the following new clause (l): "(l) deposit accounts maintained with any Lender and deposit accounts maintained on the effective date of the Third Amendment to this Agreement; provided that, notwithstanding the foregoing, the Borrower may not maintain after June 3, 2002 any deposit account with any financial institution that is not a Lender unless such financial institution shall have executed an account control agreement in form and substance reasonably satisfactory to the Administrative Agent". 1.12. Amendment to Section 8.11. Clause (a)(i) of Section 8.11 is amended in its entirety to read as follows: "(a) (i) Make or offer to make any payment, prepayment, purchase or redemption of, or otherwise defease or segregate funds with respect to the principal of, any Subordinated Debt; provided that the Borrower may convert convertible notes pursuant to, and pay with the proceeds of the Equity Offering (or with the proceeds of the issuance of any other Indebtedness or equity of the Borrower having terms reasonably satisfactory to the Required Lenders) any Subordinated Debt issued in connection with, the Option Agreement". 7 1.13. Amendment to Section 8.17. Section 8.17 is amended in its entirety to read as follows: "8.17 Capital Expenditures. The Borrower will not permit the aggregate amount of all Capital Expenditures made by the Borrower and its Subsidiaries during either of the 2002 or the 2003 calendar year to exceed $5,000,000." 1.14. Amendment to Section 11.6. Clause (c) of Section 11.6 is amended in its entirety to read as follows: "(c) Any Lender (an "Assignor") may, in accordance with applicable law, at any time and from time to time assign, with the consent of the Administrative Agent (and, in the case of assignments of Revolving Credit Commitments, the Issuing Lender), which consent in each case will not be unreasonably withheld or delayed, to any other Person (an "Assignee") all or any part of its rights and obligations under this Agreement (which assignment and delegation shall be of a constant, and not a varying, percentage of all the assigning Lender's Loans and Commitment) pursuant to an Assignment and Acceptance, substantially in the form of Exhibit F, executed by such Assignee and such Assignor, the Administrative Agent and, if applicable, the Issuing Lender) and delivered to the Administrative Agent for its acceptance; provided that no such assignment to an Assignee (other than any Lender or any affiliate thereof) shall be in an aggregate principal amount of less than $1,000,000 (other than in the case of an assignment from a Lender to an Affiliate of such Lender or to another Lender or an assignment of all of a Lender's interests under this Agreement), unless otherwise agreed by the Administrative Agent. Upon such execution, delivery, acceptance and recording, from and after the effective date determined pursuant to such Assignment and Acceptance, (x) the Assignee thereunder shall be a party hereto and, to the extent provided in such Assignment and Acceptance, have the rights and obligations of a Lender hereunder with a Commitment and/or Loans as set forth therein, and (y) the Assignor thereunder shall, to the extent provided in such Assignment and Acceptance, be released from its obligations under this Agreement (and, in the case of an Assignment and Acceptance covering all of an Assignor's rights and obligations under this Agreement, such assigning Lender shall cease to be a party hereto)." 1.15. Addition of New Section 12. The following new Section 12 is added to the Credit Agreement in proper sequence: "SECTION 12. AMOUNT AND TERMS OF ADDITIONAL TERM LOAN 12.1 Making and Payment of Additional Term Loan. (a) The Additional Term Lender will make a single term loan (the "Additional Term Loan") on March7, 2002 in the principal amount of $5,000,000. The Additional Term Loan shall be evidenced by a promissory note substantially in the form of Exhibit C to the Third Amendment to this Agreement. 8 (b) Subject to Sections 12.2 and 12.3, the Borrower hereby unconditionally promises to pay to the Administrative Agent for the account of the Additional Term Lender the principal amount of the Additional Term Loan on January 2, 2006. Amounts repaid with respect to the Additional Term Loan may not be reborrowed. 12.2 Subordination of Additional Term Loan. Notwithstanding anything to the contrary contained in this Agreement, but subject to Section 12.3, the Additional Term Lender hereby acknowledges and agrees that no payment of any Borrower Obligations owing in respect of the Additional Term Loan (other than any payment of interest by an increase in the principal amount of the Additional Term Loans) shall be made prior to the payment in full in cash of all other Borrower Obligations (collectively, the "Senior Claims"). If any amount paid to the Additional Term Lender in violation of the preceding sentence at any time prior to the payment in full in cash of all Senior Claims, such amount shall be held in trust for the benefit of the Lenders (other than the Additional Term Lender) and shall promptly be paid to the Administrative Agent for the ratable benefit of the Lenders (other than the Additional Term Lender). 12.3 Prepayment of Additional Term Loan. The Borrower may prepay the Additional Term Loan (a) after all other Borrower Obligations have been paid in full in cash; or (b) so long as no Default or Event of Default exists or would result therefrom, with the proceeds of the Equity Offering. 12.4 Incorporation by Reference of Certain Defined Terms and Agreement Sections. Other than in respect of (i) the terms "Required Lenders", "Specified Revolver Proceeds", "Specified Term Proceeds", "Term Commitment", "Term Percentage" and "Total Percentage" contained in Section 1 and (ii) Sections 1.3(b), 2.1(f)(ii), 4.3(a) and (b), 4.7, 4.8, 4.10(b), 5.17(b), 7.10, 11.1 (other than with respect to clause (i) of the proviso to the second sentence thereof), 11.6(b), (c) and (d) and 11.7, (x) references to the terms "Lenders" and "Term Lenders" shall be deemed to include by reference the Additional Term Lender and (y) references to the terms "Loans" and "Term Loans" shall be deemed to include by reference the Additional Term Loan, in each appropriate case as the context permits." 1.16. Amendment to Schedule 2.1(f). Schedule 2.1(f) is amended to read as set forth as Schedule 2.1(f) hereto. SECTION 2. Waivers. Subject to the satisfaction of the conditions precedent set forth in Section 4, the Required Lenders hereby waive any Event of Default arising from (a) the Borrower's non-compliance with Section 8.1(a) (maximum Leverage Ratio) of the Credit Agreement at any time prior to the date hereof and (b) the Borrower's non-compliance with Sections 8.1(b) (minimum Fixed Charge Coverage Ratio) and 8.1(c) (minimum Adjusted EBITDA) of the Credit Agreement for the fiscal quarter ended December 31, 2001. SECTION 3. Representations and Warranties. The Borrower represents and warrants to the Administrative Agent and the Lenders that, after giving effect to the effectiveness hereof, (a) each warranty set forth in Section 5 of the Credit Agreement (other than those which speak as of a particular earlier date) is true and correct as of the date of the execution and delivery of this 9 Amendment by the Borrower, with the same effect as if made on such date, and (b) no Event of Default or Default exists. SECTION 4. Effectiveness. The amendments set forth in Section 1 and the waivers set forth in Section 2 above shall become effective when the Administrative Agent shall have received (a) counterparts of this Amendment executed by the Borrower and the Required Lenders, (b) a Confirmation, substantially in the form of Exhibit A, signed by the Borrower and each Subsidiary Guarantor, (c) an amendment fee for each Lender which, on or before March 7, 2002, executes and delivers to the Administrative Agent a counterpart hereof, such fee to be in an amount equal to 0.375% of such Lender's Commitment as of the date of this Amendment (after giving effect to this Amendment), (d) an option agreement substantially in the form of Exhibit B (the "Option Agreement") executed by Warburg, Pincus Investors, L.P. ("Warburg"), the Borrower and various other Persons and (e) evidence that Warburg has made an additional term loan under the Credit Agreement in the amount of $5,000,000. SECTION 5. Miscellaneous. ------------- 5.1. Continuing Effectiveness, etc. As herein amended, the Credit Agreement shall remain in full force and effect and is hereby ratified and confirmed in all respects. After the effectiveness of this Amendment, all references in the Credit Agreement and the other Loan Documents to "Credit Agreement" or similar terms shall refer to the Credit Agreement as amended hereby. 5.2. Counterparts. This Amendment may be executed in any number of counterparts and by the different parties on separate counterparts, and each such counterpart shall be deemed to be an original but all such counterparts shall together constitute one and the same Amendment. 5.3. Governing Law. This Amendment shall be a contract made under and governed by the laws of the State of Illinois applicable to contracts made and to be performed entirely within such state. 5.4. Successors and Assigns. This Amendment shall be binding upon the Borrower, the Lenders and the Administrative Agent and their respective successors and assigns, and shall inure to the benefit of the Borrower, the Lenders and the Administrative Agent and the respective successors and assigns of the Lenders and the Administrative Agent. 5.5. Option Agreement. The Required Lenders consent to the execution and delivery by the Company of the Option Agreement, and authorize the Administrative Agent to enter into the Option Agreement on behalf of the Lenders. 10 Delivered at Chicago, Illinois, as of the day and year first above written. GRUBB & ELLIS COMPANY By /s/ Ian Bress --------------------------- Title: Chief Financial Officer BANK OF AMERICA, N.A., as Administrative Agent By /s/ W. Thomas Barnett --------------------------- Title: Managing Director LENDERS: ------- BANK OF AMERICA, N.A., as a Lender By /s/ W. Thomas Barnett --------------------------- Title: Managing Director LASALLE BANK NATIONAL ASSOCIATION, as Documentation Agent and as a Lender By /s/ David Pelaia --------------------------- Title: Loan Officer AMERICAN NATIONAL BANK AND TRUST COMPANY OF CHICAGO, as Syndication Agent and as a Lender By /s/ Dennis Saletta --------------------------- Title: First Vice President 11 ADDITIONAL TERM LENDER: ---------------------- WARBURG, PINCUS INVESTORS, L.P. By /s/ John D. Santoleri ---------------------------- Title: Partner 12 Exhibit A CONFIRMATION Dated as of March 7, 2002 To: Bank of America, N.A., individually and as Agent, and the other financial institutions party to the Credit Agreement referred to below Please refer to (a) the Amended and Restated Credit Agreement dated as of December 31, 2000 (as amended, the ACredit Agreement") among Grubb & Ellis Company, various financial institutions (the ALenders") and Bank of America, N.A., as administrative agent (the AAdministrative Agent"); (b) the other ALoan Documents" (as defined in the Credit Agreement), including the Guaranty and Collateral Agreement; and (c) the Third Amendment dated as of the date hereof to the Credit Agreement (the AThird Amendment"). Each of the undersigned hereby confirms to the Administrative Agent and the Lenders that, after giving effect to the Third Amendment and the transactions contemplated thereby, each Loan Document to which such undersigned is a party continues in full force and effect and is the legal, valid and binding obligation of such undersigned, enforceable against such undersigned in accordance with its terms. GRUBB & ELLIS COMPANY GRUBB & ELLIS NEW YORK, INC. GRUBB & ELLIS OF MICHIGAN, INC. GRUBB & ELLIS OF NEVADA, INC. GRUBB & ELLIS OF OREGON, INC. GRUBB & ELLIS AFFILIATES, INC. GRUBB & ELLIS MANAGEMENT SERVICES, INC. GRUBB & ELLIS MANAGEMENT SERVICES OF MICHIGAN, INC. HSM INC. LANDAUER HOSPITALITY INTERNATIONAL, INC. LANDAUER REALTY GROUP, INC. By: ______________________________________ Name: Ian Y. Bress Title: Chief Financial Officer A-1 EXHIBIT B FORM OF OPTION AGREEMENT B-1 EXHIBIT C FORM OF NOTE C-1 SCHEDULE 2.1(f) AMORTIZATION OF TERM LOANS - ------------------------------------------------------------------------- DATE PRINCIPAL PAYMENT - ------------------------------------------------------------------------- March 31, 2001 $1,000,000 - ------------------------------------------------------------------------- June 30, 2001 $2,000,000 - ------------------------------------------------------------------------- September 30, 2001 $2,000,000 - ------------------------------------------------------------------------- December 31, 2001 $3,000,000 - ------------------------------------------------------------------------- March 31, 2002 0 - ------------------------------------------------------------------------- June 30, 2002 $250,000 - ------------------------------------------------------------------------- July 31, 2002 $150,000 - ------------------------------------------------------------------------- August 31, 2002 $150,000 - ------------------------------------------------------------------------- September 30, 2002 $150,000 - ------------------------------------------------------------------------- October 31, 2002 $150,000 - ------------------------------------------------------------------------- November 30, 2002 $150,000 - ------------------------------------------------------------------------- December 31, 2002 $2,000,000 - ------------------------------------------------------------------------- March 31, 2003 $1,000,000 - ------------------------------------------------------------------------- June 30, 2003 $2,000,000 - ------------------------------------------------------------------------- September 30, 2003 $2,000,000 - ------------------------------------------------------------------------- December 31, 2003 $3,000,000 - ------------------------------------------------------------------------- March 31, 2004 $1,625,000 - ------------------------------------------------------------------------- June 30, 2004 $3,250,000 - ------------------------------------------------------------------------- September 30, 2004 $3,250,000 - ------------------------------------------------------------------------- December 31, 2004 $4,875,000 - ------------------------------------------------------------------------- March 31, 2005 $1,000,000 - ------------------------------------------------------------------------- June 30, 2005 $2,000,000 - ------------------------------------------------------------------------- September 30, 2005 $2,000,000 - ------------------------------------------------------------------------- December 31, 2005 $3,000,000 - ------------------------------------------------------------------------- TOTAL $40,000,000 - ------------------------------------------------------------------------- EX-5 5 wpi1016531.txt PROMISSORY NOTE THIS CONVERTIBLE PROMISSORY NOTE AND THE SECURITIES ISSUABLE UPON ITS CONVERSION HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE "ACT"), OR ANY STATE SECURITIES LAW, AND MAY NOT BE TRANSFERRED EXCEPT PURSUANT TO AN EFFECTIVE REGISTRATION UNDER THE ACT OR IN A TRANSACTION WHICH, IN THE OPINION OF COUNSEL REASONABLY SATISFACTORY TO GRUBB & ELLIS COMPANY, QUALIFIES AS AN EXEMPT TRANSACTION UNDER THE ACT AND THE RULES AND REGULATIONS PROMULGATED THEREUNDER. CONVERTIBLE PROMISSORY NOTE --------------------------- March 7, 2002 $5,000,000 FOR VALUE RECEIVED, Grubb & Ellis Company (the "Borrower"), hereby unconditionally promises to pay to the order of Warburg, Pincus Investors, L.P. (the "Lender"), having an address at 466 Lexington Avenue, New York, New York 10017, at the office of the Administrative Agent located at 100 North Tryon Street, 7th Floor, Charlotte, North Carolina 28255-00001, the original aggregate principal sum of Five Million Dollars ($5,000,000), together with interest on the unpaid principal balance of this Note outstanding at a rate per annum equal to fifteen percent (15%) (computed on the basis of the actual number of days elapsed in a 360-day year) compounded quarterly. All principal and accrued interest, plus reasonable, documented out-of-pocket expenses of the Lender incurred in connection with the issuance of this Note ("reasonable expenses"), shall be paid at the earlier of (a) subject to Section 12.2 of the Credit Agreement (as defined below) at the option of the Lender, in cash to the Lender, or (b) at the Option of the Lender, by conversion of some or all of the principal amount then outstanding and accrued interest thereon plus reasonable expenses into shares of the Borrower's Series A Preferred Stock (as such term is defined in the Borrower's Certificate of Designations, Number, Voting Powers, Preferences and Rights of Series A Convertible Preferred Stock (the "Certificate of Designation"), or (c) January 1, 2006 (the "Maturity Date"). All cash payments by the Borrower under this Note shall be in immediately available funds. The number of shares of Series A Preferred Stock to be issued to the Lender upon any conversion of principal and interest plus reasonable expenses hereunder shall be equal to the quotient obtained by dividing (i) the aggregate principal amount outstanding of this Note plus accrued and unpaid interest plus reasonable expenses to the date of conversion by (ii) the "Stated Value" (as defined in the Certificate of Designation) rounded up to the nearest whole share. In addition, notwithstanding anything set forth herein to the contrary, Lender expressly agrees to convert the entire principal amount of this Note, plus all accrued interest thereon plus all reasonable expenses with respect thereto, into Series A Preferred Stock upon receipt of written notice from Borrower (the "Conversion Notice") that, in the absence of Lender effecting such conversion, the Borrower will not be able to maintain the listing of its securities on the New York Stock Exchange. Any such conversion of the Series A Preferred Stock in accordance with the provisions of the immediately preceding sentence shall be deemed to be effected upon the giving of the Conversion Notice. Unless otherwise defined herein, terms defined in the Credit Agreement and used herein shall have the meanings given to them in the Credit Agreement. In lieu of cash payment of interest hereon, on each date on which interest shall be payable, except in the case of interest due on the Maturity Date and upon an Event of Default of this Note, the principal amount of this Note shall be increased by an amount equal to the amount of interest payable on such interest payment date plus reasonable expenses. Every amount overdue under this Note shall bear interest from and after the date on which such amount first became overdue at an annual rate which is two (2) percentage points above the rate per year specified in the first paragraph of this Note (the "Default Interest Rate"). The Default Interest Rate shall be increased at an annual rate which is two (2) percentage points above the then current Default Interest Rate on the thirtieth day after the date on which the Note first became overdue and for each month thereafter that the Note remains overdue; provided, however that the Default Interest Rate shall not exceed a maximum annual rate of 18%. Subject to Section 12.2 of the Credit Agreement, such interest on overdue amounts under this Note shall be payable on demand and shall accrue and be compounded monthly until the obligation of the Borrower with respect to the payment of such interest has been discharged (whether before or after judgment). In no event shall any interest charged, collected or reserved under this Note exceed the maximum rate then permitted by applicable law and if any such payment is paid by the Borrower, then such excess sum shall be credited by the Lender as a payment of principal. The Lender of this Note is authorized to endorse on the schedules annexed hereto and made a part hereof or on a continuation thereof which shall be attached hereto and made a part hereof the date, the Type and amount of the Additional Term Loan of the Lender and the date and amount of each payment or prepayment of principal thereof, each continuation thereof as the same Type in accordance with the Credit Agreement, each conversion of all or a portion thereof to another Type in accordance with the Credit Agreement and, in the case of Eurodollar Loans, the length of each Interest Period with respect thereto. Each such endorsement shall constitute prima facie evidence of the accuracy of the information endorsed. The failure to make an such endorsement (or any error therein) shall not affect the obligations of the Borrower in respect of any Loan. This Note (a) is one of the notes referred to in the Amended and Restated Credit Agreement, dated as of December 31, 2000 (as amended, restated, supplemented or otherwise 2 modified from time to time, the "Credit Agreement"), among the Borrower, the Lender, the other financial institutions from time to time parties thereto and Bank of America, N.A., as Administrative Agent, evidencing a Loan, (b) is subject to, the provisions of the Credit Agreement and (c) is subject to optional prepayment in whole or in part as provided in the Credit Agreement. This Note is secured and guaranteed as provided in the Loan Documents. Reference is hereby made to the Loan Documents for a description of the properties and assets in which a security interest has been granted, the nature and extent of the security and the guarantees, the terms and conditions upon which the security interests and each guarantee were granted and the rights of the Lender of this Note in respect thereof. Upon the occurrence and during the continuance of any one or more of the Events of Default, all amounts then remaining unpaid on this Note shall become, or may be declared to be, immediately due and payable, all as provided in the Credit Agreement. All parties now and hereafter liable with respect to this Note, whether Borrower, principal, surety, guarantor, endorser or otherwise, hereby waive presentment, demand, protest and all other notices of any kind. THIS NOTE SHALL BE GOVERNED BY, AND CONSTRUED AND INTERPRETED IN ACCORDANCE WITH, THE LAW OF THE STATE OF ILLINOIS If at the time of conversion of this Note into shares of the Borrower's capital stock, there are insufficient authorized shares of equity securities to permit conversion of this Note in full, then the Borrower shall take all corporate action necessary to authorize a sufficient number of shares of equity securities to permit such conversion in full. No fractional shares of the Borrower's capital stock will be issued upon conversion of this Note. In lieu of any fractional share to which the Lender would otherwise be entitled, the Borrower will pay to the Lender in cash the amount of the unconverted principal and interest balance of this Note that would otherwise be converted into such fractional share. Upon conversion of this Note, the Lender shall surrender this Note, duly endorsed, at the principal offices of the Borrower or any transfer agent of the Borrower. At its expense, the Borrower will, as soon as practicable thereafter, issue and deliver to such Lender, at such principal office, a certificate or certificates for the number of shares to which such Lender is entitled upon such conversion, together with other securities and property to which the Lender is entitled upon such conversion under the terms of this Note, including a check payable to the Lender for any cash amounts payable as described herein. Upon conversion of this Note and payment for fractional shares as provided above, the Borrower will be forever released from all of its payment obligations and liabilities under this Note with regard to that portion of the principal amount and accrued interest being converted. 3 IN WITNESS WHEREOF, the undersigned has caused this Note to be duly executed and delivered as of the date first written above. GRUBB & ELLIS COMPANY By: /s/ Ian Bress ---------------- Name: Ian Bress Title: CFO 4 EX-6 6 wpi1015338.txt OPTION AGREEMENT OPTION AGREEMENT ---------------- THIS OPTION PURCHASE AGREEMENT is made as of March 7, 2002, by and among Grubb & Ellis Company, a Delaware corporation (the "Company"), the persons and entities listed on Schedule A (individually, a "Lender" and collectively, the "Lenders") and Bank of America, N.A., as Administrative Agent under the Credit Agreement referred below (in such capacity, the "Administrative Agent"). RECITALS -------- WHEREAS, pursuant to the terms of the Third Amendment, dated as of March 7, 2002, to the Amended and Restated Credit Agreement, dated as of December 31, 2000, as amended, among the Company, various financial institutions (the "Banks") and the Administrative Agent (the "Credit Agreement"), the Lenders agreed to make an Additional Term Loan (as defined in the Credit Agreement) to the Company; WHEREAS, in consideration for the making of the Additional Term Loan, the Company intends to issue convertible promissory notes (the "Bank Note") in connection with the potential issuance of the Company's series A preferred stock, par value $.01 per share ("Series A Preferred Stock"), as set forth in the Certificate of Designations, Number, Voting Powers, Preferences and Rights of Series A Preferred Stock attached hereto as Exhibit A; WHEREAS, the Company wishes to acquire, and the Lenders have agreed to grant to the Company, an option to sell additional promissory notes to the Lenders, on the terms and subject to the conditions set forth herein; WHEREAS, the Lenders have agreed to grant the Company the right under certain circumstances to terminate this Agreement by purchasing from the Lenders (a) the outstanding Bank Note (or the shares of Series A Preferred Stock issued upon the conversion thereof) and (b) a certain number of shares of common stock, par value $.01 per share ("Common Stock"), all on the terms and subject to the conditions set forth herein; and WHEREAS, the Company has assigned to the Administrative Agent, for the benefit of the Banks, all of its personal property, including all of its rights under this Agreement. NOW, THEREFORE, in consideration of the foregoing and the mutual premises and covenants made herein, and other good and valuable consideration the receipt and sufficiency of which are hereby acknowledged, the parties hereto hereby agree as follows: 1. Grant of Option. --------------- 1.1 Put Right. Subject to the terms and conditions set forth herein, each Lender (and/or one or more of its permitted assigns) severally, irrevocably and unconditionally agrees to purchase from the Company, and the Company irrevocably and unconditionally agrees to sell to each Lender (and/or one or more of its permitted assigns), on June 3, 2002 (the "Closing Date"), a convertible promissory note containing the same terms and conditions, and with the same conversion features, as set forth in the form of note attached hereto as Exhibit B (each a "Put Note" and collectively the "Notes"), in the amount set forth opposite such Lender's name on Schedule A hereto. The right of the Company to require such purchases is herein called the "Put Right". 1.2 Exercise of Put Right. In order to exercise the Put Right, the Company shall deliver written notice of exercise (the "Notice of Exercise") by 5:00 PM New York time on May 30, 2002, in the manner prescribed in Section 7.4 hereto, to the Lenders. 1.3 Refinancing Option. Prior to April 30, 2002 (the "Refinancing Option Termination Date"), the Company shall have the right to purchase from the Lenders (a) the Bank Note (or the shares of Series A Preferred Stock issued upon conversion of the Bank Note) and (b) 1,337,358 shares of Common Stock held by the Lenders ((a) and (b) collectively, the "Refinancing Option") for an aggregate amount equal to (i) the $5,000,000 principal amount of the Bank Note and accrued interest thereon (assuming that the full $5,000,000 principal amount of the Bank Note was outstanding on the payment date) plus reasonable expenses (as defined in the Bank Note) to the date of purchase and (ii) $4,158,431 (the sum of (i) and (ii) the "Refinancing Option Price"); provided, that in the event that (x) the Company shall not have exercised the Refinancing Option prior to the Refinancing Option Termination Date, (y) the Company has obtained a non-binding letter of intent, term sheet or similar documentation which sets forth the terms of a transaction that the Company in good faith reasonably believes will provide the Company with the requisite funds to effect the Refinancing Option on or before May 14, 2002 and (z) the Company has provided the Lender with a copy of such documentation, then the Refinancing Option shall automatically and irrevocably be extended to May 14, 2002. In the event that the Refinancing Option is exercised and the Refinancing Option Price is paid in full by the rendering of payment thereof by April 30, 2002 or May 14, 2002, as applicable, then this Agreement shall terminate and have no further effect (other than Section 7.2 hereof which shall survive). Notwithstanding the foregoing, the Company shall not have the right to exercise the Refinancing Option unless it has received, after the date of this Agreement, proceeds from the issuance of subordinated debt or equity of the Company (in each case having terms reasonably acceptable to the Required Lenders (as defined in the Credit Agreement)) at least equal to the sum of (x) the Refinancing Option Price plus (y) $6,000,000. 1.4 Purchase Obligations Unconditional. Subject to the terms of this Agreement (including Section 1.3 hereof), the obligation of each Lender to make the purchase described in Section 1.1 is absolute, unconditional and irrevocable, and such purchase shall be made strictly in accordance with the terms of this Agreement under all circumstances, notwithstanding: (a) any breach by the Company of any representation, warranty or covenant set forth in this Agreement or any related document; (b) the existence of any claim, set-off, defense or counterclaim that such Lender may have against the Company or any other person or entity; (c) any change in or restructuring of the corporate structure of, or termination of the existence of, the Company; 2 (d) the existence of any Event of Default or Default (as each such term is defined in the Credit Agreement); (e) the existence of any bankruptcy, insolvency, liquidation, winding up, reorganization, relief or similar proceeding with respect to the Company or any of its subsidiaries; (f) any material adverse change in the business, condition (financial or otherwise), assets, operations or prospects of the Company or any of its subsidiaries; or (g) any other circumstance or event, whether or not similar to any of the foregoing, that might otherwise constitute a defense available to, or a discharge of, such Lender's obligation to make the purchase required hereunder. 2. Conversion of Notes. ------------------- (a) Each Note purchased hereunder shall be convertible into Series A Preferred Stock, in accordance with the provisions of such Note. (b) The holder of any Note to be converted shall surrender such Note to the Company at its principal office and shall indicate the name or the names in which the certificate or certificates for Series A Preferred Stock which shall be issuable on such conversion shall be issued. As soon as practicable after the surrender of the Note or Notes as aforesaid, the Company shall cause to be issued and delivered at such office to such holder, or on its written order, a certificate or certificates, in the name or names specified by such holder, for the full number of Series A Preferred Stock issuable on such exchange in accordance with the provisions hereof. 3. Closing. The closing of the purchase and sale of the Put Notes to the Lenders hereunder (the "Closing") shall take place at the offices of Willkie Farr & Gallagher, 787 Seventh Avenue, New York, NY, at 10:00 A.M. on the Closing Date, or at such other place as the Company, the Lenders and the Administrative Agent mutually agree upon in writing. At the Closing, (i) the Company shall deliver to each Lender a Put Note, representing its pro rata portion of $6,000,000, (ii) each Lender shall cause to be delivered to the Company, by wire transfer to an account specified by the Administrative Agent, an amount equal to the original principal amount of its Put Note and (iii) each Lender shall sign, and the Company shall acknowledge, a Subordination Agreement in the form of Exhibit C hereto. All of the parties hereto acknowledge and agree that the proceeds of the purchase and sale of the Put Notes will be applied to prepay Revolving Credit Loans under and as defined in the Credit Agreement until the Revolving Credit Loans are repaid in full, and any balance may be retained by the Company for use in the business of the Company and its subsidiaries; provided that, if an Event of Default exists under and as defined in the Credit Agreement at the time of receipt of any such proceeds, such proceeds shall be applied to prepay Term Loans under and as defined in the Credit Agreement. 3 4. Representations, Warranties and Covenants of the Company. The Company hereby represents and warrants to each Lender the following: 4.1 Organization, Good Standing and Qualification. The Company is a corporation duly organized, validly existing and in good standing under the laws of the State of Delaware and has all requisite corporate power and authority to carry on its business as now being conducted and proposed to be conducted in the future. The Company is duly qualified to transact business and is in good standing in each jurisdiction where failure to so qualify would have a material adverse effect on its business or properties. 4.2 Capitalization. All issued and outstanding shares of the Company's capital stock have been duly authorized and validly issued and are fully paid and nonassessable. All of the outstanding shares of preferred stock, common stock, options and warrants have been duly and validly issued in compliance with applicable state and federal securities laws. Upon the consummation of the transactions contemplated hereby and effective as of the Closing, the authorized capital of the Company will consist of (a) 50,000,000 shares of common stock, $.01 par value ("Common Stock"), and (b) 60,000 shares of Series A Preferred Stock. As of the Closing, there shall be no declared but unpaid dividends or undeclared dividend arrearages on any shares of common stock of the Company. Immediately prior to giving effect to the consummation of the transactions contemplated by this Agreement, the only shares of the Company's capital stock issued and outstanding or reserved for issuance or committed to be issued will be as follows: (a) 14,948,384 fully paid and non-assessable shares of Common Stock, duly and validly issued and outstanding; (b) an additional 2,727,863 shares of Common Stock reserved for issuance upon the exercise of issued and outstanding stock options; (c) 600,000 shares of Common Stock reserved for issuance upon the exercise of issued and outstanding warrants; (d) 2,371,601 shares of Common Stock reserved for issuance upon the issuance and exercise of stock options that have been authorized but have not been granted; (e) no shares of the Company's preferred stock that are issued and outstanding; and (f) up to 60,000 shares of the Company's preferred stock reserved for designation as shares of Series A Preferred Stock. 4.3 Authorization. All corporate actions on the part of the Company and its officers, directors, and shareholders necessary for the authorization, execution, and delivery of this Agreement, the Series A Preferred Stock and the Notes, the performance of all obligations of the Company hereunder and thereunder, and the authorization, issuance (or reservation for issuance), and delivery of the Notes and the Series A Preferred Stock (collectively, the "Securities") have been taken or will be taken prior to the Closing. This Agreement and the Notes constitute the valid and legally binding obligations of the Company, enforceable in 4 accordance with their respective terms, except as limited by (a) applicable bankruptcy, insolvency, reorganization, moratorium, and other laws of general application affecting enforcement of creditors' rights generally, (b) laws relating to the availability of specific performance, injunctive relief or other equitable remedies and (c) state and federal securities laws with respect to rights to indemnification or contribution. 4.4 Valid Issuance of Equity Securities. The Securities, when authorized, issued, sold and delivered in accordance with the terms hereof for the consideration expressed herein, will be duly and validly issued, fully paid and nonassessable and, based in part upon the representations of the Lenders in this Agreement, will be issued in compliance with all applicable federal and state securities laws. 4.5 No Conflict. Except as set forth in the Disclosure Schedule, the execution and delivery by the Company of this Agreement and the performance by the Company of its obligations hereunder (including the issuance and sale of the Securities) do not require the Company to obtain any consent, approval or action of, or make any filing with or give any notice to, any corporation, person or firm or any public, governmental or judicial authority that has not already been obtained prior to the date hereof. 4.6 Absence of Defaults. Except as set forth in the Disclosure Schedule, the execution and delivery of this Agreement and the performance of its obligations hereunder (including the issuance and sale of the Securities) will not result in a breach of any of the terms, conditions or provisions of, or constitute a default under, or permit the acceleration of rights under or termination of, any material indenture, mortgage, deed of trust, credit agreement, note or other evidence of indebtedness, or other material agreement of the Company or the Certificate of Incorporation or Bylaws of the Company (all of the foregoing, the "Material Documents"). No event has occurred and no condition exists which, upon notice or the passage of time (or both), would constitute a default under any Material Document or in any license, permit or authorization to which the Company is a party or by which it may be bound. 4.7 Litigation. Except as set forth in the Disclosure Schedule, there is no action, suit, proceeding or investigation pending or, to the Company's knowledge, currently threatened against the Company that questions the validity of this Agreement or the Notes or the right of the Company to enter into them, or to consummate the transactions contemplated hereby or thereby, or that might result, either individually or in the aggregate, in any material adverse change in the assets, condition or affairs of the Company, financially or otherwise, nor is the Company aware that there is any basis for the foregoing. The Company is not a party or subject to the provisions of any order, writ, injunction, judgment or decree of any court or government agency or instrumentality. Except as set forth in the Company's annual report on Form 10-K for the period ending June 30, 2001, or in the ordinary course of business, there is no material action, suit, proceeding or investigation by the Company currently pending or which the Company intends to initiate. 4.8 Compliance with Laws. Except as set forth in the Disclosure Schedule, the Company has conducted its business in compliance with all applicable (i) laws, statutes, ordinances, regulations, rules, notice requirements, common law, agency guidelines and orders (together, "Regulations") of any foreign, federal, state or local courts or governmental agencies, 5 departments or authorities ("Authorities") and (ii) judgments, decisions, consent decrees, injunctions, rulings or orders of any Authorities that are binding on any person (as such term is broadly defined) or its property under applicable law (together, "Court Orders"), except as would not reasonably be expected to cause a material adverse effect on the Company's business. The Company has not received any notice to the effect that, and has not otherwise been advised that, the Company is not in compliance with any such Regulation or Court Order, and the Company does not anticipate that any existing circumstances are reasonably likely to result in any material violation of any of the foregoing. 4.9 Certain Changes and Conduct of Business. From and after the date of this Agreement and until the Notes are no longer outstanding, the Company shall inform the Lenders of all material developments with respect to the Company, including without limitation (i) entering into material agreements, (ii) any issuance of debt securities or the incurrence of any other indebtedness, (iii) a change in the number of Directors of the Company and (iv) a sale, lease or transfer of any material portion of the assets of the Company. The Company shall provide the Lenders with any written information provided to the Company's Board of Directors. 4.10 Solvency. Immediately after the Closing and after giving effect to the purchase and sale of the Notes, the fair value of the assets of the Company will exceed its debts and liabilities, subordinated, contingent or otherwise. 5. Representations, Warranties and Covenants of the Lenders. This Agreement is made with each Lender in reliance upon such Lender's representations to the Company and the Administrative Agent, which by such Lender's execution of this Agreement such Lender hereby confirms, that: 5.1 Purchase Entirely for Own Account. The Securities will be acquired for investment for such Lender's own account, not as a nominee or agent, and not with a view to the resale or distribution of any part thereof, and such Lender has no present intention of selling, granting any participation in, or otherwise distributing the same. By executing this Agreement, such Lender further represents that such Lender does not have any contract, undertaking, agreement or arrangement with any person to sell, transfer or grant participations, to such person or to any third person, with respect to any of the Securities. 5.2 Disclosure of Information. Such Lender believes it has received all the information it considers necessary or appropriate for deciding whether to acquire the Securities. Such Lender further represents that it has had an opportunity to ask questions and receive answers from the Company regarding the terms and conditions of the offering of the Securities. The foregoing, however, does not limit or modify the representations and warranties of the Company in Section 4 of this Agreement or the right of the Lenders to rely thereon. 5.3 Investment Experience. Such Lender is an investor in securities of companies in the development stage and acknowledges that it is able to fend for itself, can bear the economic risk of its investment and has such knowledge and experience in financial or business matters that it is capable of evaluating the merits and risks of the investment in the Securities. Such Lender also represents, unless such Lender is an individual, it has not been organized for the purpose of acquiring the Securities. 6 5.4 Accredited Investor. Such Lender is an "accredited investor" within the meaning of Rule 501 of Regulation D under the Securities Act of 1933, as amended (the "Act"), as presently in effect. 5.5 Restricted Securities. Such Lender understands that the Securities are characterized as "restricted securities" under the federal securities laws inasmuch as they are being acquired from the Company in a transaction not involving a public offering and that under such laws and applicable regulations such securities may be resold without registration under the Act only in certain limited circumstances. In this connection, such Lender represents that it is familiar with Rule 144 under the Act, as presently in effect, and understands the resale limitations imposed thereby and by the Act. 5.6 Ability to Make Purchase. Such Lender has, and will at all times prior to the Closing maintain, (a) cash, (b) cash equivalent investments, (c) undrawn subscription or other rights to obtain equity investments, (d) undrawn availability under one or more credit facilities and/or (e) other sources or immediately available funds in an amount at least equal to the amount of the Put Note that such Lender is required to purchase hereunder. 6. Separate Undertaking of the Lenders. ----------------------------------- 6.1 Effect of Rejection, etc. Without limiting the generality of any of the foregoing provisions of this Agreement, each Lender irrevocably waives, to the full extent permitted by applicable law and for the benefit of, and as a separate undertaking with, the Banks and the Administrative Agent, any defense to the performance of this Agreement which may be available to such Lender as a consequence of this Agreement being rejected or otherwise not assumed by the Company or any trustee or other similar official for the Company or for any substantial part of the property of the Company, or as a consequence of this Agreement being otherwise terminated or modified, in any proceeding seeking to adjudicate the Company a bankrupt or insolvent, or seeking liquidation, winding up, reorganization, relief or composition of the Company or the debts of the Company under any law relating to bankruptcy, insolvency or reorganization or relief of debtors, whether such rejection, non-assumption, termination or modification is by reason of this Agreement being held to be an executory contract or by reason of any other circumstance. If this Agreement shall be so rejected or otherwise not assumed, or so terminated or modified, each Lender unconditionally and irrevocably agrees for the benefit of, and as a separate undertaking with, the Banks and the Administrative Agent that it will pay to the Administrative Agent an amount equal to each payment which would otherwise be payable by the Lender under this Agreement if this Agreement were not so rejected or otherwise not assumed or were otherwise not so terminated or modified, such amount to be payable to the Administrative Agent at its office specified in Section 11.2 of the Credit Agreement or otherwise in accordance with the instructions of the Administrative Agent, as and when such payment would otherwise be payable hereunder and such amount shall be applied to the payment of Borrower Obligations under and as defined in the Credit Agreement. 6.2 Rights of the Banks and Administrative Agent. The Administrative Agent or any Bank may, from time to time, at its sole discretion and without notice to the Lenders (or any of them), without affecting any of the obligations of the Lenders hereunder, take any or all of the following actions: (a) retain or obtain a security interest in any property to 7 secure any of the Borrower Obligations, (b) retain or obtain the primary or secondary obligation of any obligor or obligors with respect to any of the Borrower Obligations, (c) extend or renew any of the Borrower Obligations for one or more periods (whether or not longer than the original period), alter or exchange any of the Borrower Obligations, or release or compromise any obligation of any nature of any obligor with respect to any of the Borrower Obligations and (d) release its security interest in, or surrender, release or permit any substitution or exchange for, all or any part of any property securing any of the Borrower Obligations, or extend or renew for one or more periods (whether or not longer than the original period) or release, compromise, alter or exchange any obligations of any nature of any obligor with respect to any such property. 6.3 Delay of Subrogation. Each of the Lenders agrees that it shall not exercise any right of subrogation to any right of the Administrative Agent or any Bank arising as a result of any payment made by such Lender hereunder until such time as the Borrower Obligations (other than obligations with respect to the Bank Note) have been paid in full and all Commitments under and as defined in the Credit Agreement have terminated. 7. Miscellaneous. ------------- 7.1 Legends. It is understood that the Securities may bear one or all of the following legends: (a) "THE SECURITIES REPRESENTED HEREBY HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE "ACT"), OR UNDER THE SECURITIES LAWS OF CERTAIN STATES. THESE SECURITIES ARE SUBJECT TO RESTRICTIONS ON TRANSFERABILITY AND RESALE AND MAY NOT BE TRANSFERRED OR RESOLD EXCEPT AS PERMITTED UNDER THE ACT AND APPLICABLE STATE SECURITIES LAWS, PURSUANT TO REGISTRATION OR EXEMPTION THEREFROM. INVESTORS SHOULD BE AWARE THAT THEY MAY BE REQUIRED TO BEAR THE FINANCIAL RISKS OF THIS INVESTMENT FOR AN INDEFINITE PERIOD OF TIME. THE ISSUER OF THESE SECURITIES MAY REQUIRE AN OPINION OF COUNSEL IN FORM AND SUBSTANCE REASONABLY SATISFACTORY TO THE ISSUER TO THE EFFECT THAT ANY PROPOSED TRANSFER OR RESALE IS IN COMPLIANCE WITH THE ACT AND ANY APPLICABLE STATE SECURITIES LAWS." (b) Any legend required by the Blue Sky laws of any state to the extent such laws are applicable to the securities represented by the certificate so legended. 7.2 1997 Voting Agreement Termination. In accordance with the terms of that certain Voting Trust Agreement, dated as of December 30, 1997 (the "1997 Voting Agreement"), by and between the Lenders and the Company, the parties hereto hereby terminate the 1997 Voting Agreement, which termination the Company represents has been approved by a majority of the members of the Board of Directors of the Company that are not employees, members or partners of any Lender or the Company. 7.3 Successors and Assigns. Except as otherwise provided herein, the terms and conditions of this Agreement shall inure to the benefit of and be binding upon the respective 8 successors and assigns of the parties (including transferees of any securities); provided that no Lender shall assign its obligations hereunder without the prior written consent of the Administrative Agent (which consent shall not be unreasonably withheld or delayed). Nothing in this Agreement, express or implied, is intended to confer upon any party other than the parties hereto or their respective successors and assigns any rights, remedies, obligations, or liabilities under or by reason of this Agreement, except as expressly provided in this Agreement; provided that all rights and remedies granted to the Administrative Agent pursuant hereto are intended to be for the benefit of the Banks. 7.4 Governing Law. This Agreement is made in accordance with and shall be construed under the laws of the State of New York, other than the conflicts of laws principles thereof. 7.5 Counterparts. This Agreement may be executed in two or more counterparts, and by facsimile, each of which shall be deemed an original, but all of which together shall constitute one and the same instrument. 7.6 Notices. Any notice required or permitted under this Agreement shall be given in writing and shall be deemed effectively given upon personal delivery to the party to be notified or four (4) business days after deposit with the United States Post Office, by registered or certified mail, postage prepaid and addressed to the party to be notified at the address indicated for such party, in the case of the Company and the Administrative Agent, on the signature page hereto, and in the case of each Lender, on Schedule A hereto, or at such other address as such party may designate by advance written notice to the other parties. 7.7 Entire Agreement. This Agreement and the Notes, and the documents delivered pursuant hereto or thereto, constitute the entire agreement among the parties hereto and no party shall be liable or bound to any other party in any manner by any warranties, representations, or covenants except as specifically set forth herein or therein. 7.8 Amendment and Waiver. Any provision of this Agreement may be amended or waived if, but only if, such amendment or waiver is in writing and is signed, in the case of an amendment, by each party to this Agreement, or in the case of a waiver, by the party against whom the waiver is to be effective. No failure or delay by any party in exercising any right, power or privilege hereunder shall operate as a waiver thereof nor shall any single or partial exercise thereof preclude any other or further exercise thereof or the exercise of any other right, power or privilege. The rights and remedies herein provided shall be cumulative and not exclusive of any rights or remedies provided by law. This Agreement shall inure to the benefit of and bind the successors, permitted assigns, heirs, executors, and administrators of the Company, each Lender and the Administrative Agent. Failure of any party hereto to assert any right herein shall not be deemed to be a waiver thereof. 7.9 Severability. If one or more provisions of this Agreement are held to be unenforceable under applicable law, such provision shall be excluded from this Agreement and the balance of the Agreement shall be interpreted as if such provision were so excluded and shall be enforceable in accordance with its terms. 9 7.10 Survival. The representations, warranties, covenants and agreements made herein shall survive the Closing of the transactions contemplated hereby. 7.11 Assignment to Administrative Agent. The Lenders acknowledge that the Company has previously assigned to the Administrative Agent, and granted the Administrative Agent a continuing security interest in, all of its personal property, including its rights under this Agreement. In furtherance of the foregoing (and without limiting any right of the Administrative Agent under the Guaranty and Collateral Agreement (as defined in the Credit Agreement) or applicable law), the Company hereby assigns to the Administrative Agent, and grants to the Administrative Agent a security interest in, all of its rights under this Agreement, including, without limitation, the right to exercise the Put Right, the right to give notice of the exercise of the Put Right and the right to receive the proceeds of the purchase and sale of the Notes. The Lenders hereby acknowledge the foregoing assignment and grant, and the Company and the Lenders agree that the Administrative Agent shall have, and be permitted to exercise, all of the rights of the Company hereunder without any consent of the Company, any Lender or any other person or entity. 7.12 WAIVER OF JURY TRIAL. THE LENDERS, THE COMPANY, THE ADMINISTRATIVE AGENT AND (BY ACCEPTING THE BENEFITS HEREOF) THE BANKS HEREBY WAIVE ANY RIGHT TO A TRIAL BY JURY IN ANY ACTION OR PROCEEDING TO ENFORCE OR DEFEND ANY RIGHTS UNDER THIS AGREEMENT AND ANY AMENDMENT, INSTRUMENT, DOCUMENT OR AGREEMENT DELIVERED OR WHICH MAY IN THE FUTURE BE DELIVERED IN CONNECTION HEREWITH OR ARISING FROM ANY FINANCING RELATIONSHIP EXISTING IN CONNECTION WITH ANY OF THE FOREGOING, AND AGREE THAT ANY SUCH ACTION OR PROCEEDING SHALL BE TRIED BEFORE A COURT AND NOT BEFORE A JURY. * * * * * 10 IN WITNESS WHEREOF, the parties have executed this Option Agreement as of the date first above written. GRUBB & ELLIS COMPANY By:/s/ Ian Bress ------------------ Name: Ian Bress Title: CFO Address: ACCEPTED AND AGREED: WARBURG, PINCUS INVESTORS, L.P. By:/s/ John C. Santoleri ------------------------- Name: John C. Santoleri Title: Partner BANK OF AMERICA, N.A., as Administrative Agent By:/s/ W. Thomas Barnett ------------------------- Name: W. Thomas Barnett Title: Managing Director Address: 11 SCHEDULE A Principal Amount of Investor Name and Address Notes --------------------------------- ------------------- Warburg, Pincus Investors, L.P. $6,000,000 Total $6,000,000 ------------------------------------------------------------- 12 EXHIBIT A --------- Form of Certificate of Designation ---------------------------------- 13 EXHIBIT B --------- Form of Convertible Promissory Note ----------------------------------- 14 DISCLOSURE SCHEDULE The Company's equity securities are currently listed on the New York Stock Exchange pursuant to a listing agreement (the "Listing Agreement"). The Company does not intend to obtain stockholder approval in connection with the transactions contemplated by the Option Agreement to which this Disclosure Schedule is annexed. 15 EX-7 7 wpi1016530.txt FORM OF PROMISSORY NOTE EXHIBIT B to Option Agreement [PUT NOTE] THIS CONVERTIBLE PROMISSORY NOTE AND THE SECURITIES ISSUABLE UPON ITS CONVERSION HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE "ACT"), OR ANY STATE SECURITIES LAW, AND MAY NOT BE TRANSFERRED EXCEPT PURSUANT TO AN EFFECTIVE REGISTRATION UNDER THE ACT OR IN A TRANSACTION WHICH, IN THE OPINION OF COUNSEL REASONABLY SATISFACTORY TO GRUBB & ELLIS COMPANY, QUALIFIES AS AN EXEMPT TRANSACTION UNDER THE ACT AND THE RULES AND REGULATIONS PROMULGATED THEREUNDER. THE OBLIGATIONS OF THE MAKER UNDER THIS NOTE ARE SUBORDINATED PURSUANT TO A SUBORDINATION AGREEMENT DATED AS OF EVEN DATE HEREWITH IN FAVOR OF CERTAIN LENDERS TO THE MAKER CONVERTIBLE SUBORDINATED PROMISSORY NOTE AND SECURITY AGREEMENT --------------------------------------------------------------- _____, 2002 $6,000,000 FOR VALUE RECEIVED, Grubb & Ellis Company (the "Maker"), hereby unconditionally promises to pay to the order of Warburg, Pincus Investors, L.P. (the "Holder"), having an address at 466 Lexington Avenue, New York, New York 10017, at such address or at such other place as may be designated in writing by the Holder, or its assigns, the original aggregate principal sum of Six Million Dollars ($6,000,000), together with interest on the unpaid principal balance of this Note outstanding at a rate per annum equal to fifteen percent (15%) (computed on the basis of the actual number of days elapsed in a 360-day year) compounded quarterly. All principal and accrued interest, plus reasonable, documented out-of-pocket expenses of the Holder incurred in connection with the issuance of this Note ("reasonable expenses"), shall be paid at the earlier of (a) at the option of the Holder, in cash to the Holder, or (b) at the Option of the Holder, by conversion of some or all of the principal amount then outstanding and accrued interest thereon plus reasonable expenses into shares of the Maker's newly created Series A Preferred Stock (as such term is defined in the Maker's Certificate of Designations, Number, Voting Powers, Preferences and Rights of Series A Preferred Stock (the "Certificate of Designation"), or (c) when such amounts are made automatically due and payable upon the occurrence of an Event of Default (as defined below) or (d) January 1, 2006 (the "Maturity Date); provided, however, that no payments of any nature whatsoever shall be made with respect to the Note in contravention of the terms and provisions of the Amended and Restated Credit Agreement, dated as of December 31, 2000, as amended, among the Company, Various Financial Institutions, LaSalle Bank National Association, American National Bank and Trust Company of Chicago and Bank of America as same may be modified, extended, amended or supplemented at any time or from time to time (the "Credit Agreement"). Subject to the provisions of the Credit Agreement, the principal amount of this Note, plus accrued interest thereon and reasonable expenses with respect thereto, may be prepaid in cash, in whole or in part, at anytime and from time to time by Maker by the tendering of payment thereof to Holder. In addition, notwithstanding anything set forth herein to the contrary, Holder expressly agrees to convert the entire principal amount of this Note, plus all accrued interest thereon plus all reasonable expenses with respect thereto, into Series A Preferred Stock upon receipt of written notice from Maker (the "Conversion Notice") that, in the absence of Holder effecting such conversion, the Company will not be able to maintain the listing of its securities on the New York Stock Exchange. Any such conversion of the Series A Preferred Stock in accordance with the provisions of the immediately preceding sentence shall be deemed to be effected upon the giving of the Conversion Notice. All cash payments by the Maker under this Note shall be in immediately available funds. The number of shares of Series A Preferred Stock to be issued to the Holder upon any conversion of principal and interest plus reasonable expenses hereunder shall be equal to the quotient obtained by dividing (i) the aggregate principal amount outstanding of this Note plus accrued and unpaid interest plus reasonable expenses to the date of conversion by (ii) the "Stated Value" (as defined in the Certificate of Designation) rounded up to the nearest whole share. In lieu of cash payment of interest hereon, on each date on which interest shall be payable, except in the case of interest due on the Maturity Date and upon an Event of Default of this Note, the principal amount of this Note shall be increased by an amount equal to the amount of interest payable on such interest payment date plus reasonable expenses. The Note is transferable and assignable to any person to whom such transfer is permissible under applicable law. The Maker agrees to issue from time to time replacement Notes in the form hereof to facilitate such transfers and assignments. In addition, after delivery of an indemnity in form and substance satisfactory to the Maker, the Maker also agrees to issue a replacement Note if the Note is lost, stolen, mutilated or destroyed. As collateral for the repayment in full of the principal of and interest this Note, together with all costs of enforcement of this Note whenever incurred including prior to the date hereof (collectively, the "Obligations"), the undersigned does hereby grant to the Holder a security interest in the property set forth on Schedule I hereto together with all proceeds thereof (the "Collateral"). The title to the Collateral shall be held in escrow by the Maker. Upon the occurrence and continuance of an Event of Default (as defined below), the Holder shall have all the rights and remedies of a secured party under the Uniform Commercial Code of the State of New York (the "UCC"). The security interest created hereunder is a continuing security interest and shall remain in effect until the indefeasible payment in full of all the Obligations. The Maker shall take such steps from time to time as may be requested by the Holder to ensure that 2 the security interest created hereby shall constitute a first priority security interest under applicable law, including the UCC. In particular, it shall immediately notify Holder if Maker shall have any commercial tort claims (as defined in the UCC) against any person and shall amend this Note to add such claims to the collateral listed on Schedule I. Every amount overdue under this Note shall bear interest from and after the date on which such amount first became overdue at an annual rate which is two (2) percentage points above the rate per year specified in the first paragraph of this Note (the "Default Interest Rate"). The Default Interest Rate shall be increased at an annual rate which is two (2) percentage points above the then current Default Interest Rate on the thirtieth day after the date on which the Note first became overdue and for each month thereafter that the Note remains overdue; provided, however that the Default Interest Rate shall not exceed a maximum annual rate of 18%. Such interest on overdue amounts under this Note shall be payable on demand and shall accrue and be compounded monthly until the obligation of the Maker with respect to the payment of such interest has been discharged (whether before or after judgment). In no event shall any interest charged, collected or reserved under this Note exceed the maximum rate then permitted by applicable law and if any such payment is paid by the Maker, then such excess sum shall be credited by the Holder as a payment of principal. If at the time of conversion of this Note into shares of the Maker's capital stock, there are insufficient authorized shares of equity securities to permit conversion of this Note in full, then the Maker shall take all corporate action necessary to authorize a sufficient number of shares of equity securities to permit such conversion in full. No fractional shares of the Maker's capital stock will be issued upon conversion of this Note. In lieu of any fractional share to which the Holder would otherwise be entitled, the Maker will pay to the Holder in cash the amount of the unconverted principal and interest balance of this Note that would otherwise be converted into such fractional share. Upon conversion of this Note, the Holder shall surrender this Note, duly endorsed, at the principal offices of the Maker or any transfer agent of the Maker. At its expense, the Maker will, as soon as practicable thereafter, issue and deliver to such Holder, at such principal office, a certificate or certificates for the number of shares to which such Holder is entitled upon such conversion, together with other securities and property to which the Holder is entitled upon such conversion under the terms of this Note, including a check payable to the Holder for any cash amounts payable as described herein. Upon conversion of this Note and payment for fractional shares as provided above, the Maker will be forever released from all of its payment obligations and liabilities under this Note with regard to that portion of the principal amount and accrued interest being converted. All payments by the Maker under this Note shall be made without set-off, defense or counterclaim and be free and clear and without any deduction or withholding for any taxes or fees of any nature whatever, unless the obligation to make such deduction or withholding is imposed by law. No delay or omission on the part of the Holder in exercising any right under this Note shall operate as a waiver of such right or of any other right of the Holder, nor shall any delay, omission or waiver on any one occasion be deemed a bar to or waiver of the same or any other right on any future occasion. 3 Maker agrees that: (i) upon the failure to pay when due the then outstanding principal balance, accrued interest and reasonable expenses hereunder; (ii) if Maker (1) commences any voluntary proceeding under any provision of Title 11 of the United States Code, as now or hereafter amended, or commences any other proceeding, under any law, now or hereafter in force, relating to bankruptcy, insolvency, reorganization, liquidation, or otherwise to the relief of debtors or the readjustment of indebtedness, (2) makes any assignment for the benefit of creditors or a composition or similar arrangement with such creditors, or (3) appoints a receiver, trustee or similar judicial officer or agent to take charge of or liquidate any of its property or assets; (iii) upon the commencement against Maker of any involuntary proceeding of the kind described in paragraph (ii); (iv) the default by the Maker of any of its other debt obligations, including the breach of any provision of the Credit Agreement, all unpaid principal and accrued interest under this Note shall become immediately due and payable upon demand with ten (10) days written notice (any of (i) through (v), an "Event of Default"). The term "Person" means an individual, a corporation, a partnership, a limited liability company, an associate, a trust or any other entity or organization, including a government or political subdivision or an agency or instrumentality thereof. Upon the occurrence and continuance of an Event of Default, the Holder shall (a) be entitled to vote all Investment Property (as defined in the UCC) constituting Collateral, (b) be entitled to receive, hold and/or apply to the payment of the Obligations any dividends payable in respect of the Collateral, and (c) have all the rights and remedies of a secured party under the UCC. The Maker shall take such steps from time to time as may be requested by the Holder to ensure that the security interest created hereby shall constitute a first priority security interest under applicable law, including the UCC. This Note may be prepaid in whole or in part at any time or from time to time without premium or penalty. Any voluntary or mandatory prepayment of this Note shall be applied first to the payment of interest accrued and unpaid on this Note and second to the payment of principal. None of the terms or provisions of this Note may be excluded, modified or amended except by a written instrument duly executed by the Holder and the Maker expressly referring to this Note and setting forth the provision so excluded, modified or amended. Maker hereby forever waives presentment, demand, presentment for payment, protest, notice of protest, notice of dishonor of this Note and all other demands and notices in connection with the delivery, acceptance, performance and enforcement of this Note upon ten (10) days written notice. If action is instituted to collect on this Note, the Maker promises to pay all costs and expenses, including reasonable attorney's fees, incurred in connection with such action. 4 This Note shall be governed and construed in accordance with the laws of the State of Illinois applicable to agreements made and performed entirely in such State, without regard to conflict of laws principles thereof, and shall be binding upon the successors or assigns of the Maker and shall inure to the benefit of the successors and assigns of the Holder. GRUBB & ELLIS COMPANY By:___________________________ Name: Title: 5 Schedule I Description of Collateral The Collateral includes the following items or types of property, whether now owned or hereafter acquired and wherever located: All tangible and intangible property now owned or hereafter acquired wherever located, including equipment, inventory, goods, general intangibles (including patents, trademarks, copyrights, and other intellectual property), instruments, chattel paper, investment property, commercial tort claims (including those specified below), letter-of-credit rights, deposit accounts, electronic chattel paper, notes, and proceeds thereof. EX-8 8 wpi1015626.txt CERTIFICATE OF DESIGNATION CERTIFICATE OF DESIGNATIONS, NUMBER, VOTING POWERS, PREFERENCES AND RIGHTS OF SERIES A PREFERRED STOCK OF GRUBB & ELLIS COMPANY Pursuant to Section 151 of the General Corporation Law of the State of Delaware The undersigned DOES HEREBY CERTIFY that the following resolution was duly adopted by the Board of Directors of Grubb & Ellis Company, a Delaware corporation (hereinafter called the "Corporation"), with the preferences and rights set forth therein relating to dividends, redemption, dissolution and distribution of assets of the Corporation having been fixed by the Board of Directors pursuant to authority granted to it under the Corporation's Certificate of Incorporation and in accordance with the provisions of Section 151 of the General Corporation Law of the State of Delaware: RESOLVED: That, pursuant to authority conferred upon the Board of Directors by the Certificate of Incorporation of the Corporation, hereby fixes the designations, powers, preferences and relative, participating, optional or other special rights, and the qualifications, limitations or restrictions thereof, of such shares, in addition to those set forth in the Certificate of Incorporation of the Corporation, as follows: 1. DESIGNATION AND AMOUNT. The shares of such series shall be designated "Series A Preferred Stock" (the "Series A Preferred Stock") and the number of shares constituting such series shall be up to 60,000 shares. 2. DIVIDENDS. --------- (a) The holders of Series A Preferred Stock shall be entitled to receive, when and as declared by the Board of Directors of the Corporation (the "Board of Directors"), out of the net profits of the Corporation, dividends per share equal to 15% per annum of the Stated Value (as herein defined) of such Series A Preferred Stock, before any dividends shall be declared, set apart for or paid upon the Common Stock or any other stock ranking with respect to dividends or on liquidation junior to the Series A Preferred Stock (such stock being referred to hereinafter collectively as "Junior Stock") in any year. All dividends declared upon the Series A Preferred Stock shall be declared pro rata per share and compounded quarterly. For purposes hereof, the term "Stated Value" shall mean $1000.00 per share subject to appropriate adjustment in the event of any stock dividend, stock split, stock distribution or combination with respect to the Series A Preferred Stock. (b) Dividends on the Series A Preferred Stock shall be cumulative and shall continue to accrue whether or not declared and whether or not in any fiscal year there shall be net profits or surplus available for the payment of dividends in such fiscal year, so that if in any fiscal year or years, dividends in whole or in part are not paid upon the Series A Preferred Stock, unpaid dividends shall accumulate as against the holders of the Junior Stock. (c) In the event dividends on the Series A Preferred Stock are paid in additional shares of Series A Preferred Stock, the number of shares of Series A Preferred Stock to be issued in payment of the dividend with respect to each outstanding share of Series A Preferred Stock shall be determined by dividing the amount of the dividend per share that would have been payable had such dividend been paid in cash by the Stated Value. To the extent that any such dividend would result in the issuance of a fractional share of Series A Preferred Stock (which shall be determined with respect to the aggregate number of shares of Series A Preferred Stock held of record by each holder) then the amount of such fraction multiplied by the Stated Value shall be paid in cash (unless there are no legally available funds with which to make such cash payment, in which event such cash payment shall be made as soon as possible). (d) For so long as the Series A Preferred Stock remains outstanding, the Corporation shall not, without the prior consent of the holders of a majority of the outstanding shares of Series A Preferred Stock, pay any dividend upon the Junior Stock, whether in cash or other property (other than shares of Junior Stock), or purchase, redeem or otherwise acquire any such Junior Stock unless it has paid the dividend to the holders of the Series A Preferred Stock as described above. Notwithstanding the provisions of this Section 2(d), without declaring or paying dividends on the Series A Preferred Stock, the Corporation may, subject to applicable law, repurchase or redeem shares of capital stock of the Corporation from current or former officers or employees of the Corporation pursuant to the terms of repurchase or similar agreements in effect from time to time, provided that such agreements have been approved by the Board of Directors and the terms of such agreements provide for a repurchase or redemption price not in excess of the price per share paid by such employee for such share. 3. LIQUIDATION, DISSOLUTION OR WINDING UP. -------------------------------------- (a) In the event of any voluntary or involuntary liquidation, dissolution or winding up of the Corporation (a "Liquidation") , the holders of shares of Series A Preferred Stock then outstanding shall be entitled to be paid out of the assets of the Corporation available for distribution to its stockholders, after and subject to the payment in full of all amounts required to be distributed to the holders of any other series of preferred stock of the Corporation ranking on liquidation prior and in preference to the Series A Preferred Stock (any such preferred stock being referred to hereinafter as "Senior Preferred Stock") upon such Liquidation, but before payment of any consideration shall be made to the holders of Junior Stock, consideration equal to the greater of (i) 200% of the Stated Value per share, plus any dividends thereon accrued but unpaid or (ii) the amount such holder would have received assuming that each share of Series A Preferred Stock equaled 1887 shares (the "Assumed Share Number") of Common Stock, which Assumed Share Number is subject to adjustment pursuant to Section 5 and Section 6). If upon any Liquidation, the remaining assets of the Corporation available for the distribution to its stockholders after payment in full of amounts required to be paid or distributed to holders of 2 Senior Preferred Stock shall be insufficient to pay the holders of shares of Series A Preferred Stock the full amount to which they shall be entitled, the holders of shares of Series A Preferred Stock, and any class of stock ranking on liquidation on a parity with the Series A Preferred Stock, shall share ratably in any distribution of the remaining assets and funds of the Corporation in proportion to the respective amounts which would otherwise be payable in respect to the shares held by them upon such distribution if all amounts payable on or with respect to said shares were paid in full. (b) After the payment of all preferential amounts required to be paid to the holders of Senior Preferred Stock and Series A Preferred Stock and any other series of preferred stock ("Preferred Stock") upon Liquidation, the holders of shares of Common Stock then outstanding shall be entitled to receive the remaining assets and funds of the Corporation available for distribution to its stockholders. (c) Liquidation as used in this Section 3 shall be deemed to be include any transaction which is referred to in any one or more of the following clauses (i) through (iii): (i) any merger or consolidation involving the Corporation which meets the criteria set forth in clause (iii) below; (ii) the sale, conveyance, mortgage, pledge or lease of all or substantially all the assets of the Corporation; or (iii) any transaction or series of transactions, where any "person" or "group" (as such terms are used in Sections 13(d) and 14(d) of the Securities Exchange Act of 1934, as amended (the "Exchange Act")), other than the Warburg, Pincus Investors, L.P. or any of its affiliates, is or becomes the "beneficial owner" (as defined by Rules 13d-3 and 13d-5 of the Exchange Act, except that a person shall be deemed to have beneficial ownership of all securities that such person has the right to acquire, whether such right is exercisable immediately or only after the passage of time), directly or indirectly, of 50% or more of the outstanding capital stock of the Corporation. (d) In any such event, each holder of Series A Preferred Stock shall have the right to elect to receive the benefits of Section 6(e) in lieu of receiving payment in Liquidation, pursuant to this Section 3. Upon payment of all amounts due under this Section 3, the holder of any shares of Series A Preferred Stock shall have no further rights in respect of such shares. 4. VOTING. ------ (a) Each issued and outstanding share of Series A Preferred Stock shall be entitled to the number of votes equal to the Assumed Share Number (as adjusted from time to time pursuant to Section 5 and Section 6), at each meeting of stockholders of the Corporation (or pursuant to any action by written consent) with respect to any and all matters presented to the stockholders of the Corporation (including increasing or decreasing the number of authorized shares of capital stock of the Corporation) for their action or consideration. 3 (b) In addition to any other rights provided by law, the Corporation shall not, without first obtaining the affirmative vote or written consent of the holders of a majority of the outstanding shares of Series A Preferred Stock: (i) amend or repeal any provision of the Corporation's Certificate of Incorporation or By-Laws; (ii) authorize or effect the payment of dividends or the redemption or repurchase of any capital stock of the Corporation or rights to acquire capital stock of the Corporation; (iii) authorize or effect the issuance by the Corporation of any shares of capital stock or rights to acquire capital stock other than (x) pursuant to options, warrants, conversion or subscription rights in existence on March 7, 2002 (the "Initial Issuance Date") or thereafter approved with the consent of the holders of a majority of the then outstanding shares of Series A Preferred Stock or (y) pursuant to stock option, stock bonus or other employee stock plans for the benefit of the employees and consultants and outside directors of the Corporation or its subsidiaries in existence as of such date or thereafter approved with the consent of the holders of a majority of the then outstanding shares of Series A Preferred Stock; or (iv) authorize or effect (a) any sale, lease, transfer or other disposition of all or substantially all the assets of the Corporation; (b) any merger or consolidation or other reorganization of the Corporation with or into another corporation, (c) the acquisition by the Corporation of another entity by means of a purchase of all or substantially all of the capital stock or assets of such entity, or (d) a liquidation, winding up, dissolution or adoption of any plan for the same. (c) The Corporation shall not amend, alter or repeal the preferences, special rights or other powers of the Series A Preferred Stock so as to affect adversely the Series A Preferred Stock, without the written consent or affirmative vote of the holders of at least a majority of the then outstanding shares of Series A Preferred Stock, given in writing or by vote at a meeting, consenting or voting (as the case may be) separately as a class. For this purpose, the authorization or issuance of any series of Preferred Stock with preference or priority over, or being on a parity with the Series A Preferred Stock as to the right to receive either dividends or amounts distributable upon liquidation, dissolution or winding up of the Corporation shall be deemed so to affect adversely the Series A Preferred Stock. 5. CALCULATION OF ASSUMED SHARE NUMBER. The Assumed Share Number shall be determined by dividing the Stated Value by the Strike Price then in effect. (a) The initial strike price, subject to adjustment as provided herein, is equal to $.53 (the "Strike Price"). The applicable Assumed Share Number and Strike Price from time to time in effect is subject to adjustment as hereinafter provided. The Assumed Share Number shall be calculated to the nearest share of Common Stock. 4 (b) Whenever the Assumed Share Number and Strike Price shall be adjusted as provided in Section 6 hereof, the Corporation shall forthwith file at each office designated for the conversion of Series A Preferred Stock, a statement, signed by the Chairman of the Board, the President, any Vice President or Treasurer of the Corporation, showing in reasonable detail the facts requiring such adjustment and the Assumed Share Number that will be effective after such adjustment. The Corporation shall also cause a notice setting forth any such adjustments to be sent by mail, first class, postage prepaid, to each record holder of Series A Preferred Stock at his or its address appearing on the stock register. 6. ANTI-DILUTION PROVISIONS. ------------------------ (a) The Strike Price shall be subject to adjustment from time to time in accordance with this Section 6 commencing on March 7, 2002 (whether shares of the Series A Preferred Stock are outstanding or not). For purposes of this Section 6, the term "Number of Common Shares Deemed Outstanding" at any given time shall mean the number of shares of Common Stock outstanding at such time on a fully diluted basis (including (x) all options, warrants and securities convertible into or exchangeable for shares of Common Stock and (y) without duplication, the number of shares of the Common Stock deemed to be outstanding under paragraphs 6(b)(1) to (9), inclusive, at such time). (b) Except as provided in Section 6(c), 6(d) or 6(f) hereof, if and whenever on or after the Initial Issuance Date, the Corporation shall issue or sell, or shall in accordance with paragraphs 6(b)(1) to (9), inclusive, be deemed to have issued or sold any shares of its Common Stock for a consideration per share less than the Strike Price in effect immediately prior to the time of such issue or sale, then forthwith upon such issue or sale (the "Triggering Transaction"), the Strike Price shall, subject to paragraphs (1) to (9) of this Section 6(b), be reduced to the Strike Price (calculated to the nearest tenth of a cent) determined by dividing: (i) an amount equal to the sum of (x) the product derived by multiplying the Number of Common Shares Deemed Outstanding immediately prior to such Triggering Transaction by the Strike Price then in effect, plus (y) the consideration, if any, received by the Corporation upon consummation of such Triggering Transaction, by (ii) an amount equal to the sum of (x) the Number of Common Shares Deemed Outstanding immediately prior to such Triggering Transaction plus (y) the number of shares of Common Stock issued (or deemed to be issued in accordance with paragraphs 6(b)(1) to (9)) in connection with the Triggering Transaction. For purposes of determining the adjusted Strike Price under this Section 6(b), the following paragraphs (1) to (9), inclusive, shall be applicable: (1) In case the Corporation at any time shall in any manner grant (whether directly or by assumption in a merger or otherwise) any rights to subscribe for or to purchase, or any options for the purchase of, Common Stock or any stock or other securities convertible into or exchangeable for Common Stock (such rights or options being herein called "Options" and such convertible or exchangeable stock or securities being herein called "Convertible Securities"), 5 whether or not such Options or the right to convert or exchange any such Convertible Securities are immediately exercisable and the price per share for which the Common Stock is issuable upon exercise, conversion or exchange (determined by dividing (x) the total amount, if any, received or receivable by the Corporation as consideration for the granting of such Options, plus the minimum aggregate amount of additional consideration payable to the Corporation upon the exercise of all such Options, plus, in the case of such Options which relate to Convertible Securities, the minimum aggregate amount of additional consideration, if any, payable upon the issue or sale of such Convertible Securities and upon the conversion or exchange thereof, by (y) the total maximum number of shares of Common Stock issuable upon the exercise of such Options or the conversion or exchange of such Convertible Securities) shall be less than the Strike Price in effect immediately prior to the time of the granting of such Option, then the total maximum amount of Common Stock issuable upon the exercise of such Options or in the case of Options for Convertible Securities, upon the conversion or exchange of such Convertible Securities shall (as of the date of granting of such Options) be deemed to be outstanding and to have been issued and sold by the Corporation for such price per share. No adjustment of the Strike Price shall be made upon the actual issue of such shares of Common Stock or such Convertible Securities upon the exercise of such Options, except as otherwise provided in paragraph (3) below. (2) In case the Corporation at any time shall in any manner issue (whether directly or by assumption in a merger or otherwise) or sell any Convertible Securities, whether or not the rights to exchange or convert thereunder are immediately exercisable, and the price per share for which Common Stock is issuable upon such conversion or exchange (determined by dividing (x) the total amount received or receivable by the Corporation as consideration for the issue or sale of such Convertible Securities, plus the minimum aggregate amount of additional consideration, if any, payable to the Corporation upon the conversion or exchange thereof, by (y) the total maximum number of shares of Common Stock issuable upon the conversion or exchange of all such Convertible Securities) shall be less than the Strike Price in effect immediately prior to the time of such issue or sale, then the total maximum number of shares of Common Stock issuable upon conversion or exchange of all such Convertible Securities shall (as of the date of the issue or sale of such Convertible Securities) be deemed to be outstanding and to have been issued and sold by the Corporation for such price per share. No adjustment of the Strike Price shall be made upon the actual issue of such Common Stock upon exercise of the rights to exchange or convert under such Convertible Securities, except as otherwise provided in paragraph (3) below. (3) If the purchase price provided for in any Options referred to in paragraph (1), the additional consideration, if any, payable upon the conversion or exchange of any Convertible Securities referred to in paragraphs (1) or (2), or the rate at which any Convertible Securities referred to in paragraphs (1) or (2) are 6 convertible into or exchangeable for Common Stock shall change at any time, the Strike Price in effect at the time of such change shall forthwith be readjusted to the Strike Price which would have been in effect at such time had such Options or Convertible Securities still outstanding provided for such changed purchase price, additional consideration or conversion rate, as the case may be, at the time initially granted, issued or sold. (4) On the expiration of any Option, the issuance of which initially caused a reduction in the Conversion Price in accordance with the provisions of this Section 6(b), or the termination of any right to convert or exchange any Convertible Securities, the issuance of which initially caused a reduction in the Conversion Price in accordance with the provisions of this Section 6(b), the Strike Price then in effect hereunder shall forthwith be increased to the Strike Price which would have been in effect at the time of such expiration or termination had such Option or Convertible Securities, to the extent outstanding immediately prior to such expiration or termination, never been issued. (5) In case any Options shall be issued in connection with the issue or sale of other securities of the Corporation, together comprising one integral transaction in which no specific consideration is allocated to such Options by the parties thereto, such Options shall be deemed to have been issued without consideration. (6) In case any shares of Common Stock, Options or Convertible Securities shall be issued or sold or deemed to have been issued or sold for cash, the consideration received therefor shall be deemed to be the amount received by the Corporation therefor. In case any shares of Common Stock, Options or Convertible Securities shall be issued or sold for a consideration other than cash, the amount of the consideration other than cash received by the Corporation shall be the fair value of such consideration as determined in good faith by the Board of Directors. In case any shares of Common Stock, Options or Convertible Securities shall be issued in connection with any merger or acquisition in which the Corporation is the surviving corporation, the amount of consideration therefor shall be deemed to be the fair value of such portion of the net assets and business of the non-surviving corporation as shall be attributable to such Common Stock, Options or Convertible Securities, as the case may be. (7) The number of shares of Common Stock outstanding at any given time shall not include shares owned or held by or for the account of the Corporation, and the disposition of any shares so owned or held shall be considered an issue or sale of Common Stock for the purpose of this Section 6(b). (8) In case the Corporation shall declare a dividend or make any other distribution upon the stock of the Corporation payable in Options or Convertible Securities, then in such case any Options or Convertible Securities, as the case 7 may be, issuable in payment of such dividend or distribution shall be deemed to have been issued or sold without consideration. (9) For purposes of this Section 6(b), in case the Corporation shall take a record of the holders of its Common Stock for the purpose of entitling them (x) to receive a dividend or other distribution payable in Common Stock, Options or in Convertible Securities, or (y) to subscribe for or purchase Common Stock, Options or Convertible Securities, then such record date shall be deemed to be the date of the issue or sale of the shares of Common Stock deemed to have been issued or sold upon the declaration of such dividend or the making of such other distribution or the date of the granting of such right or subscription or purchase, as the case may be. (c) In the event the Corporation shall declare a dividend upon the Common Stock (other than a dividend payable in Common Stock) payable otherwise than out of earnings or earned surplus, determined in accordance with generally accepted accounting principles, including the making of appropriate deductions for minority interests, if any, in subsidiaries (herein referred to as "Liquidating Dividends"), then, Corporation shall pay the holders of the Series A Preferred Stock an amount equal to the aggregate value at the time of such exercise of all Liquidating Dividends based upon the Assumed Share Number, at the then applicable Strike Price prior to any payment to holders of Common Stock. For the purposes of this Section 6(c), a dividend other than in cash shall be considered payable out of earnings or earned surplus only to the extent that such earnings or earned surplus are charged an amount equal to the fair value of such dividend as determined in good faith by the Board of Directors. (d) In case the Corporation shall at any time (i) subdivide the outstanding Common Stock or (ii) issue a dividend on its outstanding Common Stock payable in shares of Common Stock, the Assumed Share Number in effect immediately prior to such dividend or combination shall be proportionately increased by the same ratio as the subdivision or dividend (with appropriate adjustments to the Strike Price in effect immediately prior to such subdivision or dividend). In case the Corporation shall at any time combine its outstanding Common Stock, the Assumed Share Number in effect immediately prior to such combination shall be proportionately decreased by the same ratio as the combination (with appropriate adjustments to the Strike Price in effect immediately prior to such combination). (e) If any capital reorganization or reclassification of the capital stock of the Corporation, or consolidation or merger of the Corporation with another corporation, or the sale of all or substantially all of its assets to another corporation shall be effected in such a way that holders of Common Stock shall be entitled to receive stock, securities, cash or other property with respect to or in exchange for Common Stock, then, as a condition of such reorganization, reclassification, consolidation, merger or sale, lawful and adequate provision shall be made whereby the holders of the Series A Preferred Stock shall have the right to acquire and receive, which right shall be prior to the rights of the holders of Junior Stock (but after and subject to the rights of holders of Senior Preferred Stock, if any), such shares of stock, securities, cash or other property issuable or payable (as part of the reorganization, reclassification, consolidation, merger or sale) with respect to or in exchange for such number of outstanding shares of Common Stock as would have been received based upon the Assumed Share Number at the Strike Price then in 8 effect. The Corporation will not effect any such consolidation, merger or sale, unless prior to the consummation thereof the successor corporation (if other than the Corporation) resulting from such consolidation or merger or the corporation purchasing such assets shall assume by written instrument mailed or delivered to the holders of the Series A Preferred Stock at the last address of each such holder appearing on the books of the Corporation, the obligation to deliver to each such holder such shares of stock, securities or assets as, in accordance with the foregoing provisions, such holder may be entitled to purchase. (f) The provisions of this Section 6 shall not apply to any Common Stock issued, issuable or deemed outstanding under paragraphs 6(b)(1) to (9) inclusive: (i) pursuant to options, warrants and conversion rights in existence on the Initial Issuance Date, (ii) on conversion of the Series A Preferred Stock or the sale of any additional shares of Series A Preferred Stock, or (iii) any issuance of stock for which the holders of a majority of the outstanding shares of Series A Preferred Stock have waived in writing the rights contained in this Section 6. (g) If at any time or from time to time on or after the Initial Issuance Date, the Corporation shall grant, issue or sell any Options, Convertible Securities or rights to purchase property (the "Purchase Rights") pro rata to the record holders of any class of Common Stock and such grants, issuances or sales do not result in an adjustment of the Strike Price under Section 6(b) hereof, then each holder of Series A Preferred Stock shall be entitled to acquire (within thirty (30) days after the later to occur of the initial exercise date of such Purchase Rights or receipt by such holder of the notice concerning Purchase Rights to which such holder shall be entitled under Section 6(g)) and upon the terms applicable to such Purchase Rights either: (i) the aggregate Purchase Rights which such holder could have acquired if it had held the Assumed Share Number of shares of Common Stock immediately before the grant, issuance or sale of such Purchase Rights; provided that if any Purchase Rights were distributed to holders of Common Stock without the payment of additional consideration by such holders, corresponding Purchase Rights shall be distributed to the exercising holders of the Series A Preferred Stock as soon as possible [after such exercise] and it shall not be necessary for the exercising holder of the Series A Preferred Stock specifically to request delivery of such rights; or (ii) in the event that any such Purchase Rights shall have expired or shall expire prior to the end of said thirty (30) day period, the number of shares of Common Stock or the amount of property which such holder could have acquired upon such exercise at the time or times at which the Corporation granted, issued or sold such expired Purchase Rights. (h) If any event occurs as to which, in the opinion of the Board of Directors, the provisions of this Section 6 are not strictly applicable or if strictly applicable would not fairly protect the rights of the holders of the Series A Preferred Stock in accordance with the essential intent and principles of such provisions, then the Board of Directors shall make an adjustment in the application of such provisions, in accordance with such essential intent and principles, so as 9 to protect such rights as aforesaid, but in no event shall any adjustment have the effect of increasing the Strike Price as otherwise determined pursuant to any of the provisions of this Section 6 except in the case of a combination of shares of a type contemplated in Section 6(d) hereof and then in no event to an amount larger than the Strike Price as adjusted pursuant to Section 6(d) hereof. 7. LEGENDS. Add shares of Series A Preferred Stock and Common Stock issuance upon conversion of the Series A Preferred Stock shall bear one or all of the following legends: (a) The Securities Represented hereby have not been registered under the Securities Act of 1933, as amended (the "Act"), or under the Securities Laws of certain states. These securities are subject to restrictions on transferability and resale and may not be transferred or resold except as permitted under the act and applicable state securities laws, pursuant to registration or exemption therefrom. Investors should be aware that they may be required to bear the financial risks of this investment for an indefinite period of time. The issuer of these securities may require an opinion of counsel in form and substance reasonably satisfactory to the issuer to the effect that any proposed transfer or resale is in compliance with the act and any applicable state securities laws." (b) Any legend required by the Blue Sky laws of any state to the extent such laws are applicable to the securities represented by the certificate so legended. 10 IN WITNESS WHEREOF, Grubb & Ellis Company has caused this Certificate of Designations, Number, Voting Powers, Preferences and Rights of Series A Convertible Preferred Stock to be duly executed by its CFO this 7th day of March, 2002. GRUBB & ELLIS COMPANY By:/s/ Ian Bress ------------------ Name: Ian Bress Title: CFO 11 EX-9 9 wpi1017682.txt FORM OF SUBORDINATION AGREEMENT SUBORDINATION AGREEMENT THIS SUBORDINATION AGREEMENT (this "Agreement") dated as of ____________, 2002 is given by the undersigned in favor of Bank of America, N.A., as Agent (as defined below), and the Lenders (as defined below). WHEREAS, Grubb & Ellis Company (the "Company"), various financial institutions (together with their respective successors and assigns, the "Lenders") and Bank of America, N.A., as administrative agent (in such capacity, the "Agent"), have entered into a Credit Agreement dated as of December 31, 2000 (as amended, restated or refinanced or otherwise modified from time to time, the "Credit Agreement") pursuant to which the Lenders may make loans and other financial accommodations to the Company from time to time; WHEREAS, the Company may from time to time enter into Hedge Agreements (as defined in the Guaranty and Collateral Agreement referred to in the Credit Agreement) with one or more Lenders or affiliates thereof (the Lenders, together with all affiliates thereof which are parties to Hedge Agreements with the Company, are collectively called the "Lender Parties"); WHEREAS, the Company has issued a promissory note dated the date hereof in the original principal amount of $6,000,000 (as amended or otherwise modified from time to time, the "Note") to the undersigned; WHEREAS, all obligations of the Company to the undersigned under the Note are to be subordinated to the obligations of the Company to the Agent and the Lender Parties as more fully set forth below; NOW, THEREFORE, for good and valuable consideration, receipt whereof is hereby acknowledged, the undersigned agrees as follows: 1. All obligations of the Company, howsoever created, arising or evidenced, whether direct or indirect, absolute or contingent, now or hereafter existing, or due or to become due, are called "Liabilities". All Liabilities to the Agent and the Lender Parties under or in connection with the Credit Agreement are called "Senior Liabilities"; and all Liabilities to the undersigned under or in connection with the Note are called "Junior Liabilities"; it being expressly understood and agreed that the term "Senior Liabilities", as used herein, shall include, without limitation, any and all interest accruing on any of the Senior Liabilities after the commencement of any proceedings referred to in Section 3, notwithstanding any provision or rule of law which might restrict the rights of the Agent or any Lender Party, as against the Company or anyone else, to collect such interest. 2. Except as expressly otherwise provided herein or as the Agent may hereafter otherwise expressly consent in writing, the payment of all Junior Liabilities shall be postponed and subordinated to the payment in full in cash of all Senior Liabilities, and no payment or other distribution whatsoever in respect of any Junior Liabilities shall be made, nor shall any property or assets of the Company be applied to the purchase or other acquisition or retirement of any Junior Liabilities until all Senior Liabilities have been paid in full in cash. 3. In the event of any dissolution, winding up, liquidation, reorganization or other similar proceeding relating to the Company or to its creditors, as such, or to its property (whether voluntary or involuntary, partial or complete, and whether in bankruptcy, insolvency or receivership, or upon an assignment for the benefit of creditors, or any other marshalling of the assets and liabilities of the Company, or any sale of all or substantially all of the assets of the Company, or otherwise), all Senior Liabilities shall first be paid in full in cash before the undersigned shall be entitled to receive and to retain any payment or distribution in respect of any of the Junior Liabilities, and, in order to implement the foregoing, a. the undersigned shall cause all payments and distributions of any kind or character in respect of the Junior Liabilities to which the undersigned would be entitled if the Junior Liabilities were not subordinated pursuant to this Agreement to be made directly to the Agent, b. the undersigned shall promptly file a claim or claims, in the form required in such proceeding, for the full outstanding amount of the Junior Liabilities, and shall cause said claim or claims to be approved and all payments and other distributions in respect thereof to be made directly to the Agent and c. the undersigned hereby irrevocably agrees that the Agent may, at its sole discretion, in the name of the undersigned or otherwise, demand, sue for, collect, receive and receipt for any and all such payments or distributions, and file and prove, and vote or consent in any such proceedings with respect to, any and all claims of the undersigned relating to the Junior Liabilities. 4. In the event that the undersigned receives any payment or other distribution of any kind or character from the Company or from any other source whatsoever in respect of any of the Junior Liabilities, other than as expressly permitted by the terms of this Agreement, such payment or other distribution shall be received in trust for the Agent and the Lender Parties and promptly turned over by the undersigned to the Agent. The undersigned will cause to be clearly inserted in the Note or in any other promissory note or other instrument which at any time evidences any of the Junior Liabilities a statement to the effect that the payment thereof is subordinated in accordance with the terms of this Agreement. The undersigned will execute such further documents or instruments and take such further action as the Agent may reasonably from time to time request to carry out the intent of this Agreement. 5. All payments and distributions received by the Agent in respect of the Junior Liabilities, to the extent received in or converted into cash, may be applied by the Agent first to the payment of any and all expenses (including reasonable attorneys' fees and legal expenses) paid or incurred by the Agent in enforcing this Agreement or in endeavoring to collect or realize upon any of the Junior Liabilities or any security therefor, and any balance thereof shall, solely as between the undersigned and the Agent, be applied by the Agent, in such order of application as the Agent may from time to time select, toward the payment of the Senior Liabilities remaining unpaid; but, as between the Company and its creditors, no such payment or distribution of any kind or character shall be deemed to be 2 a payment or distribution in respect of the Senior Liabilities; and, notwithstanding any such payment or distribution received by the Agent in respect of the Junior Liabilities and so applied by the Agent toward the payment of the Senior Liabilities, the undersigned shall be subrogated to the then existing rights of the Agent and Lender Parties, if any, in respect of the Senior Liabilities only at such time as this Agreement shall have been discontinued and the Senior Liabilities shall have been finally paid in full in cash. 6. The undersigned hereby waives: a. notice of acceptance by the Agent or any Lender Party of this Agreement; b. notice of the existence or creation or non-payment of all or any of the Senior Liabilities; and c. all diligence in collection or protection of or realization upon the Senior Liabilities or any thereof or any security therefor. 7. The undersigned will not without the prior written consent of the Agent: a. cancel, waive, forgive, transfer or assign, or attempt to enforce or collect, or subordinate to any Liabilities other than the Senior Liabilities, any Junior Liabilities or any rights in respect thereof; b. take any action to foreclose upon, or exercise any other right with respect to, any collateral securing the Junior Liabilities; or c. commence, or join with any other creditor in commencing, any bankruptcy, reorganization or insolvency proceeding with respect to the Company. 8. This Agreement shall in all respects be a continuing agreement and shall remain in full force and effect (notwithstanding, without limitation, the dissolution of the undersigned or that at any time or from time to time all Senior Liabilities may have been paid in full) until all Senior Liabilities shall have been finally paid in full in cash and all Commitments under and as defined in the Credit Agreement shall have terminated. 9. The Agent or any Lender Party may, from time to time, at its sole discretion and without notice to the undersigned, take any or all of the following actions: a. retain or obtain security interest in any property to secure any of the Senior Liabilities, b. retain or obtain the primary or secondary obligation of any other obligor or obligors with respect to any of the Senior Liabilities, c. extend or renew for one or more periods (whether or not longer than the original period), alter or exchange any of the Senior Liabilities, or release or compromise any obligation of any nature of any obligor with respect to any of the Senior Liabilities, and 3 d. release its security interest in, or surrender, release or permit any substitution or exchange for, all or any part of any property securing any of the Senior Liabilities, or extend or renew for one or more periods (whether or not longer than the original period) or release, compromise, alter or exchange any obligation of any nature of any obligor with respect to any such property. 10. Any Lender Party may, from time to time, without notice to the undersigned, assign or transfer its interest in any or all of the Senior Liabilities; and, notwithstanding any such assignment or transfer or any subsequent assignment or transfer thereof, such Senior Liabilities shall be and remain Senior Liabilities for the purposes of this Agreement, and every immediate and successive assignee or transferee of any of the Senior Liabilities or of any interest therein shall, to the extent of the interest of such assignee or transferee in the Senior Liabilities, be entitled to the benefits of this Agreement to the same extent as the applicable assignor or transferor. 11. Neither the Agent nor any Lender Party shall be prejudiced in its rights under this Agreement by any act or failure to act of the Company or the undersigned, or any noncompliance of the Company or the undersigned with any agreement or obligation, regardless of any knowledge thereof which the Agent or any Lender Party may have or with which the Agent or any Lender Party may be charged; and no action of the Agent or any Lender Party permitted hereunder shall in any way affect or impair the rights of the Agent or any Lender Party and the obligations of the undersigned under this Agreement. 12. No delay on the part of the Agent or any Lender Party in the exercise of any right or remedy shall operate as a waiver thereof, and no single or partial exercise by the Agent or any Lender Party of any right or remedy shall preclude other or further exercise thereof or the exercise of any other right or remedy; nor shall any modification or waiver of any provision of this Agreement be binding upon the Agent or any Lender Party except as expressly set forth in a writing duly signed and delivered on behalf of the Agent. 13. This Agreement shall be binding upon the undersigned and upon the successors and assigns of the undersigned; and all references herein to the Company and to the undersigned, respectively, shall be deemed to include any successor or assign to such entity. 14. This Agreement shall be construed in accordance with and governed by the laws of the State of Illinois applicable to contracts made and to be performed entirely within such State. Wherever possible each provision of this Agreement shall be interpreted in such manner as to be effective and valid under applicable law, but if any provision of this Agreement shall be prohibited by or invalid under such law, such provision shall be ineffective to the extent of such prohibition or invalidity, without invalidating the remainder of such provision or the remaining provisions of this Agreement. 4 15. The undersigned (and, by accepting the benefits hereof, the Agent and each Lender Party) expressly waives any right to a trial by jury in any action or proceeding to enforce or defend any rights under this Agreement or under any amendment, instrument, document or agreement delivered or which may in the future be delivered in connection herewith or arising from any banking relationship existing in connection with this Agreement and agrees that any such action or proceeding shall be tried before a court and not before a jury. 5 IN WITNESS WHEREOF, this Agreement has been delivered as of the day first above written. WARBURG, PINCUS INVESTORS, L.P. By __________________________________ Title _______________________________ 6 The Company hereby acknowledges receipt of a copy of the foregoing Subordination Agreement, waives notice of acceptance thereof by the Agent or any Lender Party, and agrees to be bound by the terms and provisions thereof, to make no payments or distributions contrary to the terms and provisions thereof, and to do every other act and thing necessary or appropriate to carry out such terms and provisions. Dated: ______________, 2002 GRUBB & ELLIS COMPANY By __________________________________ Title _______________________________ 7 -----END PRIVACY-ENHANCED MESSAGE-----