-----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, FD66EzO9nWyzvdtdJecN21AlbeCYbzVtFjC2XT8WmjcwNjJX0GHUN922+GfZIROT DwKGBTEQmgpTHr4tKO5+ZQ== 0000912057-96-029687.txt : 19961220 0000912057-96-029687.hdr.sgml : 19961220 ACCESSION NUMBER: 0000912057-96-029687 CONFORMED SUBMISSION TYPE: SC 13D/A PUBLIC DOCUMENT COUNT: 6 FILED AS OF DATE: 19961219 SROS: NYSE 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: 96682926 BUSINESS ADDRESS: STREET 1: ONE MONTGOMERY ST STE 3100 STREET 2: TELESIS TWR 9TH FLR CITY: SAN FRANCISCO STATE: CA ZIP: 94104 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: HANAUER JOE F CENTRAL INDEX KEY: 0000904277 STANDARD INDUSTRIAL CLASSIFICATION: [] STATE OF INCORPORATION: CA FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: SC 13D/A BUSINESS ADDRESS: STREET 1: 361 FOREST AVENUE CITY: LAGUNA BEACH STATE: CA ZIP: 92651 BUSINESS PHONE: 7144942333 SC 13D/A 1 SCH 13D/A SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 ----------------------------------------- SCHEDULE 13D (Amendment No. 6) Under the Securities Exchange Act of 1934 GRUBB & ELLIS COMPANY ------------------ (Name of Issuer) Common Stock, par value $.01 per share --------------------------- (Title of Class of Securities) 40009-51-0 ------------- (CUSIP Number) Joe F. Hanauer 361 Forest Avenue Laguna Beach, California 92651 (714) 494-2333 ---------------------------------------------- (Name, Address and Telephone Number of Person Authorized to Receive Notices and Communications) December 11, 1996 -------------------------------------------------- (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 which is subject of this Schedule 13D, and is filing this statement because of Rule 13d-1(b)(3) or (4), check the following box: [ ] Check the following box if a fee is being paid with the statement: [ ] Page 1 of 69 Pages Exhibit Index is on Page 9 1 SCHEDULE 13D CUSIP No. 40009-51-0 Page 2 of 69 Pages ---------- 1. Name of Reporting Person Joe F. Hanauer 2. Check the Appropriate Box if a Member of a Group (a) [ ] (b) [X] 3. SEC Use Only 4. Source of Funds OO 5. Check Box if Disclosure of Legal Proceedings is Required Pursuant to Items 2(d) or 2(e) [ ] 6. Citizenship or Place of Organization United States 7. Sole Voting Power 972,836 shares of Common Stock (See Item 5) Number of Shares 8. Shared Voting Power Beneficially Owned By -0- shares of Common Stock (See Item 5) Each Reporting 9. Sole Dispositive Power Person With 972,836 shares of Common Stock (See Item 5) 10. Shared Dispositive Power -0- shares of Common Stock (See Item 5) 11. Aggregate Amount Beneficially Owned by Each Reporting Person See Item 5 below 12. Check Box if the Aggregate Amount in Row (11) Excludes Certain Shares [ ] 13. Percent of Class Represented by Amount in Row (11) See Item 5 below 14. Type of Reporting Person IN 2 This Amendment No. 6 to Schedule 13D is being filed on behalf of Joe F. Hanauer to amend the Schedule 13D dated November 11, 1992, as amended (the "Schedule 13D"), relating to the common stock, par value $.01 per share (the "Common Stock"), of Grubb & Ellis Company, a Delaware corporation (the "Company"). Unless otherwise indicated, all capitalized terms used herein but not defined herein shall have the same meaning as set forth in the Schedule 13D. ITEM 1. SECURITY AND ISSUER. Item 1 to Schedule 13D is hereby amended, in pertinent part, as follows: The Company's principal executive offices are located at 10275 West Higgins Road, Suite 300, Rosemont, Illinois 60018. ITEM 2. IDENTITY AND BACKGROUND. Item 2(a) to Schedule 13D is hereby amended and restated in its entirety as follows: (a) This statement is filed by Joe F. Hanauer. Mr. Hanauer holds all of the securities reported in this Schedule 13D as being held by Mr. Hanauer as trustee of the Joe F. Hanauer Trust dated June 15, 1988 (the "Hanauer Trust"), except for 13,293 shares of Common Stock and the Stock Option (as defined below), which Mr. Hanauer holds as an individual. Item 2(c) to Schedule 13D is hereby amended, in pertinent part, as follows: (c) Mr. Hanauer is Chairman of the Board of the Company. ITEM 3. SOURCE AND AMOUNT OF FUNDS OR OTHER CONSIDERATION. ITEM 4. PURPOSE OF TRANSACTION. Items 3 and 4 to Schedule 13D are hereby amended, in pertinent part, as follows: On December 11, 1996, the Company, Warburg, Pincus Investors, L.P. ("Warburg") and Mr. Hanauer entered into the Tri-Party Agreement (the "Tri-Party Agreement"), pursuant to which, among other things, (i) Mr. Hanauer converted his 8,894 shares of Series A Senior Preferred Stock into 339,629 shares of Common Stock, (ii) Warburg transferred to Mr. Hanauer a portion of the Pru Warrant No. 16 representing the right to purchase 14,286 shares of Common Stock (the "Warrant No. 20") and a portion of the Pru Warrant No. 17 representing the right to purchase 10,714 shares of Common Stock (the "Warrant No. 22"), (iii) Mr. Hanauer surrendered to the Company for cancellation his warrants to purchase an aggregate of 38,410 shares of Common Stock, which were exercisable only under certain circumstances, (iv) the Company amended Mr. Hanauer's existing warrants to purchase an aggregate of 323,541 shares of Common Stock to extend the expiration date thereof to January 29, 2002 and eliminate certain anti-dilution provisions (the "Existing Warrants"), and (v) Warburg, the Company and Mr. Hanauer terminated the Stockholders Agreement (the "Stockholders Agreement") dated as of January 29, 1993, as amended from time to time. 3 Warrant No. 20 and Warrant No. 22 (collectively, the "New Warrants") have an exercise price of $3.50 and 2.375, respectively, and are exercisable at any time prior to January 29, 2002. Payment of the aggregate exercise price may be made in cash or, at the election of the holder, by delivering warrants, the value of which will be deemed to equal to the difference between the current market price of a share of Common Stock on the date immediately preceding the date of exercise and the then current exercise price. The exercise price and the number of shares of Common Stock issuable upon exercise of the New Warrants are subject to adjustment from time to time upon the occurrence of certain stock dividends or distributions, stock splits, reverse stock splits or stock reclassifications. Warburg has executed a letter dated December 9, 1996 addressed to Mr. Hanauer (the "Warburg/Hanauer Letter") confirming their understanding that Warburg will cause the directors of the Company nominated by Warburg to nominate Mr. Hanauer for election to the Board of Directors of the Company at the 1997 and 1998 annual meetings of the stockholders. In addition, Warburg agreed to vote all of its shares of Common Stock in favor of Mr. Hanauer's election to the Board of Directors of the Company. Pursuant to the Tri-Party Agreement, the Company, Warburg, Mr. Hanauer and C. Michael Kojaian, Mike Kojaian and Kenneth J. Kojaian (collectively, the "Kojaian Purchasers") entered into the Registration Rights Agreement dated as of December 11, 1996 (the "Registration Rights Agreement"), as more fully described in Item 6 hereof. A copy of each of the Tri-Party Agreement, Warrant No. 20, Warrant No. 22 and the Warburg/Hanauer Letter is attached hereto as Exhibits 1, 2, 3 and 4, respectively, and is incorporated herein by reference in its entirety. Each of the summaries of Exhibits 1, 2, 3 and 4 contained in this Schedule 13D is subject to, and is qualified in its entirety by, all of the provisions contained in the respective Exhibit. ITEM 5. INTEREST IN SECURITIES OF THE ISSUER. Item 5 to Schedule 13D is hereby amended and restated in its entirety as follows: (a) As of the date of this Schedule 13D, Mr. Hanauer is the beneficial owner of 972,836 shares of Common Stock through ownership of (i) 420,728 shares of Common Stock, including 339,629 shares received by Mr. Hanauer upon conversion of 8,894 shares of Series A Senior Preferred Stock, (ii) currently exercisable New Warrants and Existing Warrants to purchase an aggregate of 348,541 shares of Common Stock, and (iii) a stock option under the Company's Amended and Restated Stock Option Plan (the "Stock Option") currently exercisable for 203,567 shares of Common Stock. In addition, the Stock Option entitles Mr. Hanauer to acquire an additional 34,283 shares of Common Stock, which have been excluded from Mr. Hanauer's beneficial holdings reported on this Schedule 13D as the Stock Option will not be exercisable with respect to the additional 34,283 shares within 60 days of the date hereof. Item 6 contains additional information concerning the Stock Option. The shares of Common Stock beneficially owned by Mr. Hanauer as described herein represent approximately 5.7% of the shares of Common Stock calculated in accordance with Rule 13d- 3(d)(1)(i) in the manner described below. The percentages used in this paragraph 5(a) are calculated based upon 16,603,987 shares of Common Stock issued and outstanding at the close of business on December 11, 1996. Such information has been provided to the Reporting Person by the Company. Pursuant to Rule 13d-3(d)(1)(i), shares of Common Stock which are not outstanding which are subject to convertible 4 securities are deemed to be outstanding for the purpose of computing the percentage of outstanding securities of the shares of Common Stock owned by the person holding such convertible securities, but are not deemed to be outstanding for purposes of computing the percentage of such shares owned by any other person. By reason of the provisions of Rule 13d-3 under the Securities Exchange Act of 1934, as amended (the "Act"), Mr. Hanauer and Warburg may be deemed to be a "group." By reason of the provisions of Rule 13d-5 under the Act, the group consisting of these entities may be deemed to own all shares of Common Stock beneficially owned by Warburg and Mr. Hanauer. Mr. Hanauer does not affirm the existence of such a group and disclaims beneficial ownership of shares of Common Stock beneficially owned by Warburg. (b) As of the date hereof, Mr. Hanauer has the sole power to vote and to dispose of the Common Stock, the New Warrants, the Existing Warrants and the Stock Option held by him, but does not have nor share such powers with respect to any shares beneficially owned by Warburg. (c) Except as set forth in this Schedule 13D, Mr. Hanauer has not effected any transactions in the Common Stock during the preceding 60 days. (d) Except as set forth in this Item 5, no person other than each respective record owner referred to herein of securities is known to have the right to receive or the power to direct the receipt of dividends from or the proceeds of sale of such securities. (e) Not applicable. ITEM 6. CONTRACTS, ARRANGEMENTS, UNDERSTANDING OR RELATIONSHIPS WITH RESPECT TO SECURITIES OF THE ISSUER. Item 6 to Schedule 13D is amended hereby, in pertinent part, as follows: On January 4, 1995, the Company granted Mr. Hanauer the Stock Option to purchase 102,850 shares of Common Stock at an exercise price of $1.875 per share under the Company's 1990 Amended and Restated Stock Option Plan. The exercise price represents market value at the date of grant. The option vests in three equal, annual installments commencing on the first anniversary of the date of grant. Mr. Hanauer, the Company, Warburg and the Kojaian Purchasers entered into the Registration Rights dated as of December 11, 1996 (the "Registration Rights Agreement"). The Registration Rights Agreement provides that at any time after December 11, 1996, (i) the holder or holders of at least 30% of the aggregate amount of Warburg Registrable Securities (as defined below) may make three written requests to the Company for registration under and in accordance with the provisions of the Securities Act of 1933, as amended (the "Securities Act"), of all or part of the Warburg Registrable Securities; PROVIDED, HOWEVER, that Warburg may make any of such three requests for registration regardless of the percentage of Warburg Registrable Securities it holds, and (ii) the holder or holders of at least 30% of the aggregate amount of Kojaian Registrable Securities (as defined below) may make three written requests to the Company for registration under and in accordance with the provisions of the Securities Act of all or part of the Kojaian Registrable Securities. "Warburg Registrable Securities" includes all shares of Common Stock held by Warburg on December 11, 1996 and all shares of Common Stock issued or issuable upon exercise of any of the warrants held by Warburg on December 11, 1996 to purchase shares of Common Stock. 5 "Hanauer Registrable Securities" includes all shares of Common Stock held by Mr. Hanauer or the Hanauer Trust on December 11, 1996 and all shares of Common Stock issued or issuable upon exercise of any of the warrants held by Mr. Hanauer or the Hanauer Trust on December 11, 1996 to purchase shares of Common Stock. "Kojaian Registrable Securities" includes the Kojaian Shares. Warburg Registrable Securities, Hanauer Registrable Securities and Kojaian Registrable Securities are sometimes collectively referred to herein as "Registrable Securities." The Registration Rights Agreement also provides that in the event that a holder or holders of Warburg Registrable Securities requests a registration pursuant to the foregoing provisions, Mr. Hanauer and the Hanauer Trust may elect to include a proportionate share of the Hanauer Registrable Securities held by them in such registration, in which case Mr. Hanauer (or the Hanauer Trust) shall be permitted to sell such Hanauer Registrable Securities in the same manner and on the same basis as such holder or holders of Warburg Registrable Securities. Pursuant to the Registration Rights Agreement, the holders of Registrable Securities also have certain "piggyback" registration rights to include their securities, subject to certain limitations, in registration statements filed by the Company with respect to any offering of any equity securities for its own account or for the account of any of its equity holders. All expenses incident to the Company's performance of or compliance with the Registration Rights Agreement will be borne by the Company, including, among other things, all reasonable fees and disbursements of one counsel selected by the holders of a majority of the Registrable Securities being registered in the case of a piggyback registration, or one counsel selected by Warburg in the case of a demand registration requested by Warburg and one counsel selected by the holder or holders of at least a majority of the Kojaian Registrable Securities in the case of a demand registration requested by the Kojaian Purchasers; PROVIDED, HOWEVER, that the Company will not be responsible for the underwriting discounts and commissions and transfer taxes, if any, and certain fees and disbursements of counsel to the underwriters. The Registration Rights Agreement contains customary indemnification and contribution provisions relating to the exercise by the holders of Registrable Securities of their registration rights thereunder. A copy of the Registration Rights Agreement is attached hereto as Exhibit 5 and is incorporated herein by reference in its entirety. The summary of the Registration Rights Agreement contained in this Schedule 13D is subject to, and is qualified in its entirety by, all of the provisions contained in the Registration Rights Agreement. A copy of each of the Tri-Party Agreement, Warrant No. 20, Warrant No. 22 and the Warburg/Hanauer Letter is attached hereto as Exhibits 1, 2, 3 and 4 respectively, and such agreements, and the descriptions contained in Item 4, are incorporated herein by reference in their entirety. Each of the summaries of Exhibits 1, 2, 3 and 4 contained in this Schedule 13D is subject to, and is qualified in its entirety by, all of the provisions contained in the respective Exhibit. Except as described above, there are no contracts, arrangements, understandings or relationships (legal or otherwise) between the person named in Item 2 hereof and any other person with respect to any securities of the Company, including but not limited to transfer or voting of any other securities, finder's fees, joint ventures, loan or option arrangements, puts or calls, guarantees of profits, divisions of profits or loss, or the giving or withholding of proxies. 6 ITEM 7. MATERIAL TO BE FILED AS EXHIBITS. Exhibit 1. Tri-Party Agreement dated as of December 11, 1996 by and among Grubb & Ellis Company, a Delaware corporation, Warburg, Pincus Investors, L.P., a Delaware limited partnership, and Joe F. Hanauer. Exhibit 2. Stock Subscription Warrant No. 20 issued to Joe F. Hanauer to purchase 14,286 shares of Common Stock of Grubb & Ellis Company, a Delaware corporation. Exhibit 3. Stock Subscription Warrant No. 22 issued to Joe F. Hanauer to purchase 10,714 shares of Common Stock of Grubb & Ellis Company, a Delaware corporation. Exhibit 4. Letter Agreement by and among Warburg, Pincus Investors, L.P., a Delaware limited partnership, and Joe F. Hanauer. Exhibit 5. Registration Rights Agreement dated as of December 11, 1996 by and among Grubb & Ellis Company, a Delaware corporation, Warburg, Pincus Investors, L.P., a Delaware limited partnership, Joe F. Hanauer, Mike Kojaian, Kenneth J. Kojaian and C. Michael Kojaian. 7 SIGNATURE After reasonable inquiry and to the best of his knowledge and belief, the undersigned certifies that the information set forth in this statement is true, complete and correct. Dated: December 19, 1996 By: /s/ Joe F. Hanauer ----------------------- Joe F. Hanauer 8 Exhibit Index Exhibit 1. Tri-Party Agreement dated as of December 11, 1996 by and among Grubb & Ellis Company, a Delaware corporation, Warburg, Pincus Investors, L.P., a Delaware limited partnership, and Joe F. Hanauer. Exhibit 2. Stock Subscription Warrant No. 20 issued to Joe F. Hanauer to purchase 14,286 shares of Common Stock of Grubb & Ellis Company, a Delaware corporation. Exhibit 3. Stock Subscription Warrant No. 22 issued to Joe F. Hanauer to purchase 10,714 shares of Common Stock of Grubb & Ellis Company, a Delaware corporation. Exhibit 4. Letter Agreement by and among Warburg, Pincus Investors, L.P., a Delaware limited partnership, and Joe F. Hanauer. Exhibit 5. Registration Rights Agreement dated as of December 11, 1996 by and among Grubb & Ellis Company, a Delaware corporation, Warburg, Pincus Investors, L.P., a Delaware limited partnership, Joe F. Hanauer, Mike Kojaian, Kenneth J. Kojaian and C. Michael Kojaian. EX-1 2 EXHIBIT 1 Exhibit 1 TRI-PARTY AGREEMENT This agreement (the "Agreement") is dated as of December 11, 1996 by and among Grubb & Ellis Company (the "Company"), Warburg Pincus Investors L.P. ("Warburg") and Joe F. Hanauer ("Hanauer"). RECITALS I. On October 22, 1996, pursuant to an agreement dated October 21, 1996 between Warburg and The Prudential Insurance Company of America ("Prudential") (the "Prudential/Warburg Agreement"), Warburg acquired from Prudential the following securities of the Company for $23,000,000 (plus accrued interest of $318,034.72 which was paid by the Company): (a) $5,000,000 Principal Amount Amended and Restated Revolving Credit Note due November 1, 1999; (b) $6,500,000 Principal Amount Amended and Restated 9.90% Senior Note due November 1, 1998; (c) $3,500,000 Principal Amount Amended and Restated 9.90% Senior Note due November 1, 1998 ((a), (b) and (c) above are sometimes collectively referred to hereinafter as the "Senior Notes"); (d) $10,900,834.33 Principal Amount Amended and Restated 10.65% Subordinated Payment-In-Kind Note due November 1, 2001; (e) $1,520,058.79 Principal Amount 11.65% Subordinated Payment-In-Kind Note, due November 1, 2001; (f) $723,517.03 Principal Amount 11.65% Subordinated Payment-In-Kind Note, due November 1, 2001 ((d), (e) and (f) above are sometimes collectively referred to hereinafter as the "PIK Notes"); (g) 130,233 shares of Junior Convertible Preferred Stock; (h) Restated Stock Subscription Warrant No. 16 to subscribe for 200,000 shares of the Company's Common Stock ("Pru Warrant No. 16"); and (i) New Stock Subscription Warrant No. 17 to subscribe for 150,000 shares of the Company's Common Stock ("Pru Warrant No. 17") ((h) and (i) above are sometimes collectively referred to hereinafter as the "Prudential Warrants") issued pursuant to (i) that certain Senior Note, the Subordinated Note and Revolving Credit Note Agreement between the Company and Prudential, dated as of November 2, 1992, as amended from time to time (the "Note Agreement") and (ii) that certain Securities Purchase Agreement between the Company and Prudential, dated as of November 2, 1992 (the "Securities Purchase Agreement"). The securities set forth in (d) through (g) above are sometimes collectively referred to hereinafter as the "Purchased Securities". II. Also, on October 22, 1996, Warburg granted an option, through April 16, 1997, for the Company to acquire as an entirety, all of the securities in the Company purchased by Warburg from Prudential as set forth in (a) through (i) above (the "Option") at a purchase price equal to Warburg's cost ($23 million) plus interest in an 1 amount equal to 10% per annum through January 31, 1997 and 12% per annum thereafter through April 16, 1997. III. Warburg is the beneficial holder of 10,118,339 shares of the Company's Common Stock through its ownership of (i) 4,277,433 shares of Common Stock, (ii) 128,266 shares of Series B Senior Preferred Stock which are convertible into an aggregate of 4,828,548 shares of the Company's Common Stock and (iii) currently exercisable warrants to purchase an aggregate of 1,012,358 shares of the Company's Common Stock. IV. Hanauer beneficially holds 951,963 shares of the Company's Common Stock through his direct ownership of 13,293 shares of the Company's Common Stock and through his ownership of the following securities held in a trust of which Mr. Hanauer is the trustee and he and his wife and children are beneficiaries: (i) 67,806 shares of Common Stock, (ii) 8,894 shares of Series A Senior Preferred Stock convertible into an aggregate of 339,629 shares of Common Stock, (iii) currently exercisable warrants to purchase an aggregate of 323,541 shares of Common Stock (the "Hanauer Warrants"), (iv) an option granted under a Company stock option plan which is exercisable for 169,284 shares, and (v) warrants to purchase 38,410 shares of Common Stock, which will be exercisable only under certain circumstances ("Contingent Warrants"). V. The Company has entered into an agreement to sell to C. Michael Kojaian, Mike Kojaian and Kenneth J. Kojaian 2,500,000 shares of the Company's Common Stock at $4.00 per share (the "Kojaian Stock Purchase Agreement"). In consideration of the premises, and for good and valuable consideration, the receipt of which is hereby acknowledged, the parties hereto desire to complete the transactions set forth herein in this Agreement and agree as follows: 1. Subject to the terms and conditions hereof, on the Closing Date (as defined below): (a) Warburg hereby agrees to sell, transfer and assign to the Company, without recourse, representation or warranty of any kind except as set forth herein, and the Company hereby agrees to purchase from Warburg, the Purchased Securities for an aggregate purchase price equal to $10,000,000 plus accrued interest of $69,315.07 (the "Purchase Price"); The PIK Notes shall be marked "Canceled"; (b) The Prudential Warrants shall be amended to extend the term and exercisability thereof to January 29, 2002; (c) In consideration for Hanauer (i) converting his shares of Senior Convertible Preferred Stock of the Company into Common Stock and (ii) surrendering to the Company the Contingent Warrants, as more particularly set forth below, Warburg agrees to transfer to Hanauer a portion of Pru Warrant No. 16, as amended pursuant to 2 paragraph 1(b), representing the right to purchase 14,286 shares of the Company's Common Stock, and a portion of Pru Warrant No. 17, as amended pursuant to paragraph 1(b), representing the right to purchase 10,714 shares of the Company's Common Stock; (d) Warburg and Hanauer shall convert all of their shares of Senior Convertible Preferred Stock of the Company into 4,828,548 and 339,629 shares, respectively, of Company Common Stock; (e) Warburg shall give notice to Prudential to convert all of the 19,767 shares of Junior Convertible Preferred Stock of the Company held by Prudential into 352,447 shares of Company Common Stock, and Warburg shall use reasonable efforts to cause Prudential to convert such Junior Convertible Preferred Stock into Common Stock; (f) Hanauer agrees to surrender to the Company the Contingent Warrants to purchase 37,823 shares of Company Common Stock; (g) The Company shall amend the Hanauer Warrants to extend the expiration date thereof to January 29, 2002 and the anti-dilution provisions of said warrants shall be amended to conform to the provisions of the Prudential Warrants. (h) The Stockholders' Agreement dated as of January 29, 1993, as amended, among Warburg, Prudential, Hanauer and the Company shall be terminated; (i) Warburg, the Company, Hanauer, C. Michael Kojaian, Mike Kojaian and Kenneth J. Kojaian shall enter into a Registration Rights Agreement in the form attached hereto as Exhibit A; (j) The Company shall cancel the Contingent Warrants; (k) The Company shall cancel the Purchased Securities; and (l) Warburg will grant to the Company a new option (the "New Option") attached hereto as Exhibit "B" and the Option will be canceled. 2. The Closing will take place on December 11, 1996 or such other date as the parties hereto shall mutually agree (the "Closing Date") and on the Closing Date the parties shall complete the matters set forth in Paragraph 1(b) through 1(j) above, and thereafter, following the closing under the Kojaian Stock Purchase Agreement, (i) Warburg will deliver the Purchased Securities to the Company, together with duly executed bond or stock powers, as applicable, payable to the order of the Company, an incumbency certificate and such other documents as the Company may reasonably request to terminate all of the Company's obligations under the Note Agreement, and the PIK Notes, against payment of $10,069,315.07 in immediately available funds to 3 Warburg's account number, as prescribed by Warburg, (ii) Warburg shall assign to the Company all of its right, title and interest in Prudential's warranties and representations made to Warburg as set forth in the Prudential/Warburg Agreement, and (iii) concurrently therewith, the parties shall complete the matters set forth in Paragraph 1(k) and 1(l) above. 3. Warburg hereby represents and warrants as of the date hereof and as of the Closing Date that: (a) Warburg is the sole legal, record and beneficial owner of the Purchased Securities, and to the best of Warburg's knowledge, Warburg has good title thereto; Warburg has no knowledge of any lien, claim, option or other encumbrance by any person against the Purchased Securities being transferred herein to the Company; to Warburg's knowledge, the representations and warranties of Prudential pursuant to the Prudential/Warburg Agreement were true and correct at the closing of the transactions under the Prudential/Warburg Agreement; Warburg did not, prior to or during the period of time Warburg held the Purchased Securities, by any action or inaction, directly or indirectly, in whole or in part, cause any lien, claim, option or other encumbrance to occur with respect to the Purchased Securities, or any of them; at the Closing, Warburg will assign all of its right, title and interest in Prudential's warranties and representations made to Warburg as set forth in the Prudential/Warburg Agreement to the Company; (b) Warburg has full power, authority and legal right to sell the Purchased Securities; and (c) Warburg has been the sole beneficial owner of the Purchased Securities since October 22, 1996. 4. As of the date hereof and as of the Closing Date, the Company hereby represents that: (a) it has full power, authority and legal right to acquire the Purchased Securities; and (b) with respect to the conversion of their Senior Convertible Preferred Stock of the Company into Common Stock, the Company is not receiving any consideration from Hanauer and Warburg for the issuance of the Common Stock of the Company to them other than the Senior Convertible Preferred Stock to be surrendered for conversion. The Common Stock to be issued hereunder will be validly issued, fully paid and nonassessable. 5. (a) Warburg hereby represents and warrants that as of the date hereof and, as of the Closing Date, its ownership of the Company's securities as set forth in Recital III is true and correct; (b) Hanauer hereby represents and warrants that as of the date hereof and, as of the Closing Date, his ownership of the Company's securities as set forth in Recital IV is true and correct. 6. (a) Warburg and Hanauer hereby irrevocably waive any claims against the Company or any of its affiliates or representatives based upon any matter arising out of or related to the transactions contemplated by this Agreement, including non-disclosure of any information relating to the Company, except with respect to the 4 representations contained in this Agreement and in the documents delivered pursuant to this Agreement. (b) Warburg, on behalf of itself and for all of its affiliates, hereby waives any and all Defaults or Events of Default (each as defined in the Note Agreement) that exist or may exist as of the Closing Date under the Note Agreement. 7. The obligations of each of the Company, Warburg and Hanauer under this Agreement are subject to and conditioned upon the satisfaction at or prior to the Closing of each of the following conditions (unless waived by such party in writing): (a) REPRESENTATIONS AND WARRANTIES. All representations and warranties of each other party contained in this Agreement and in any agreements or instruments to be delivered pursuant hereto shall be true and correct at and as of the Closing Date; and (b) PERFORMANCE. Each other party shall have performed and complied with all agreements and conditions required by this Agreement to be performed or complied with by it on or prior to the Closing Date, including execution and delivery of the documents contemplated by this Agreement; and (c) NO PROCEEDINGS. No action, suit, investigation or legal or administrative claim or proceeding shall be pending or threatened before any court, governmental agency or regulatory authority which may result in the restraint, prohibition, or the obtaining of damages or other relief in respect of, or which is related to or arises out of, the consummation of transactions contemplated by this Agreement; and (d) The Company shall have obtained equity financing of at least Ten Million Dollars ($10,000,000) pursuant to the closing of the Kojaian Stock Purchase Agreement. 8. Each party hereto shall execute and deliver all further documents or instruments reasonably requested by the other party in order to effect the intent and purposes of this Agreement and obtain the full benefit of this Agreement. 9. THIS AGREEMENT SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK WITHOUT REFERENCE TO THE CONFLICTS OF LAWS PROVISIONS THEREOF AND SHALL BE BINDING UPON AND INURE TO THE BENEFIT OF THE PARTIES HERETO AND THEIR RESPECTIVE SUCCESSORS AND ASSIGNS. 10. This Agreement, together with the exhibits hereof, constitutes the complete agreement of the parties with respect to the subject matter hereof, and supersedes all prior communications and agreements of the parties with respect 5 thereto, all of which have become merged and integrated into this Agreement. This Agreement cannot be amended, modified or waived, except by a writing executed by each of the parties hereto. 11. This Agreement may be executed in two or more counterparts, each of which shall be deemed an original but which together shall constitute one and the same instrument. 6 IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be executed as of the date first above written. WARBURG, PINCUS INVESTORS, L.P. By: Warburg, Pincus & Company, L.P. its General Partner By: /s/ John Santoleri ----------------------------------------------- Name: John Santoleri Title: Partner GRUBB & ELLIS COMPANY By: /s/ Robert J. Walner ----------------------------------------------- Name: Robert J. Walner Title: Senior Vice President and General Counsel /s/ Joe F. Hanauer -------------------------------------------------- JOE F. HANAUER 7 EX-2 3 EXHIBIT 2 Exhibit 2 Stock Subscription Warrant to Subscribe for 14,286 Shares of Common Stock Stock Subscription Warrant No. 20 THIS STOCK SUBSCRIPTION WARRANT AND ANY SHARES ACQUIRED UPON THE EXERCISE OF THIS STOCK SUBSCRIPTION WARRANT HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED. NEITHER THIS STOCK SUBSCRIPTION WARRANT NOR ANY OF SUCH SHARES MAY BE SOLD OR TRANSFERRED IN THE ABSENCE OF SUCH REGISTRATION OR AN EXEMPTION THEREFROM UNDER SAID ACT. STOCK SUBSCRIPTION WARRANT To Subscribe for and Purchase Shares of Common Stock of GRUBB & ELLIS COMPANY THIS CERTIFIES THAT, for value received, JOE F. HANAUER TRUST ("HANAUER") or registered assigns, is entitled to subscribe for and purchase from GRUBB & ELLIS COMPANY (herein called the "Company"), a corporation organized and existing under the laws of the State of Delaware, at any time or from time to time during the period specified in paragraph 2 hereof, up to FOURTEEN THOUSAND TWO HUNDRED EIGHTY SIX fully paid and nonassessable shares of the Company's common stock, par value $0.01 per share (the "Common Stock"), at an exercise price per share of $3.50 (the "Exercise Price"). The number of shares purchasable hereunder and the Exercise Price are subject to adjustment as provided in paragraph 4 hereof. This Stock Subscription Warrant is being issued pursuant to the Agreement. The term "Warrant," as used herein, shall mean this Stock Subscription Warrant, including all amendments hereto. The term "Warrant Shares," as used herein, refers to the shares purchasable upon the exercise of the Warrants. Certain terms used herein and not elsewhere defined are defined in paragraph 15 hereof. This Warrant is subject to the following provisions, terms and conditions: 1. MANNER OF EXERCISE; ISSUANCE OF CERTIFICATES; PAYMENT FOR SHARES. The rights represented by this Warrant may be exercised by the holder hereof in whole or in part (but not as to a fractional Warrant Share), by the surrender of this Warrant, together with a completed Exercise Agreement in the form attached hereto, during normal business hours on any business day at the principal office of the Company (or such other office or agency of the Company in New York, New York or San Francisco, California as it may designate by notice in writing to the holder hereof at the address of such holder appearing on the books of the Company) at any time during the period set forth in paragraph 2 hereof and upon payment to the Company by certified check or bank draft of the Exercise Price for such shares, or, at the election of the holder hereof, by delivery of other Warrants equal in value to the aggregate Exercise Price with respect to such Warrants being exercised, the value of which other Warrants shall be deemed to equal the difference between the Market Price of a share of Common Stock on the date immediately preceding the date of exercise and the then current Exercise Price. The Company agrees that the shares so purchased shall be and are deemed to be issued to the holder hereof or its designee as the record owner of such shares as of the close of business on the date on which this Warrant shall have been surrendered and payment made for such shares as aforesaid. Certificates for the Warrant Shares so purchased, representing the aggregate number of shares specified in said Exercise Agreement, shall be delivered to the holder hereof within a reasonable time, not exceeding five business days, after the rights represented by this Warrant shall have been so exercised. Each stock certificate so delivered shall be in such denominations as may be requested by the holder hereof and shall be registered in the name of said holder or such other name (upon compliance with the transfer requirements hereinafter set forth) as shall be designated by said holder. If this Warrant shall have been exercised only in part, then, unless this Warrant has expired, the Company shall, at its expense, at the time of delivery of said stock certificates, deliver to said holder a new Warrant representing the number of shares with respect to which this Warrant shall not then have been exercised. The Company shall pay all taxes and other expenses and charges payable in connection with the preparation, execution and delivery of stock certificates (and any new Warrants) pursuant to this paragraph except that, in case such stock certificates shall be registered in a name or names other than the holder of this Warrant or its nominee, funds sufficient to pay all stock transfer taxes which shall be payable in connection with the execution and delivery of such stock certificates shall be paid by the holder hereof to the Company at the time of the delivery of such stock certificates by the Company as mentioned above. 2. PERIOD OF EXERCISE. This Warrant is exercisable at any time or from time to time prior to January 29, 2002. 3. SHARES TO BE FULLY PAID; RESERVATION OF SHARES. The Company covenants and agrees that all Warrant Shares will, upon issuance, be fully paid and nonassessable and free from preemptive rights and all taxes, liens and charges with respect to the issue thereof; and without limiting the generality of the foregoing, the Company covenants and agrees that it will from time to time take all such action as may be required to assure that the par value per Warrant Share is at all times equal to or less than the effective Exercise Price. The Company further covenants and agrees that during the period within which the rights represented by this Warrant may be exercised, the Company will at all times have authorized, and reserved for the purpose of issue upon exercise of the subscription rights evidenced by this Warrant, a sufficient number of shares of Common Stock to provide for the exercise of the rights represented by this Warrant. The Company shall take all 2 such action as may be necessary to assure that such shares of Common Stock may be so issued without violation of any applicable law or regulation and will be approved for listing on any domestic securities exchange upon which the Common Stock may be listed. The Company further covenants and agrees that it will, at any time, at its expense, promptly list on each national securities exchange on which any Capital Stock is at the time listed, upon official notice of issuance, Common Stock issuable upon the exercise of any Warrant as provided in paragraph 1 hereof, and maintain such listing of all shares of Common Stock from time to time issuable upon such exercise, and will, at any time, register under the Securities Exchange Act of 1934, as amended, all shares of Common Stock from time to time issuable upon such exercise if and at the time that any existing shares of Capital Stock are so registered. 4. ANTI-DILUTION PROVISIONS. The Exercise Price set forth above shall be subject to adjustment from time to time as hereinafter provided. For purposes of this paragraph 4, the term "Capital Stock" as used herein includes the Company's Common Stock and shall also include any capital stock of any class of the Company hereafter authorized which shall not be limited to a fixed sum or percentage in respect of the rights of the holders thereof to participate in dividends and in the distribution of assets upon the voluntary or involuntary liquidation, dissolution or winding up of the Company; provided that the shares purchasable pursuant to this Warrant shall include only Common Stock. Upon each adjustment of the Exercise Price, this Warrant shall thereafter represent the right to purchase, at the Exercise Price resulting from such adjustment, the largest number of shares of Common Stock obtained by multiplying the Exercise Price in effect immediately prior to such adjustment by the number of shares of Common Stock purchasable thereunder immediately prior to such adjustment and dividing the product thereof by the Exercise Price resulting from such adjustment. In case the Company, at any time, shall be a party to any Transaction, each holder hereof, upon the exercise hereof at any time on or after the Consummation Date shall be entitled to receive, and this Warrant shall thereafter represent the right to receive, in lieu of the Common Stock issuable upon exercise prior to the Consummation Date, the kind and amount of securities or property (including cash) which it would have owned or have been entitled to receive after the happening of such Transaction had this Warrant been exercised immediately prior to such Transaction. Notwithstanding anything contained herein to the contrary, the Company shall not effect any Transaction unless prior to the consummation thereof each corporation or entity (other than the Company) which may be required to deliver any securities or other property upon the exercise of Warrants, the surrender of Warrants or the satisfaction of exercise rights as provided herein, shall assume, by written instrument delivered to each holder of Warrants, the obligation to deliver to such holder such securities or other property to which, in accordance with the foregoing provisions, such holder may be entitled, and such corporation or entity shall have similarly delivered to each holder of Warrants an opinion of counsel for such corporation or entity, satisfactory to each holder of Warrants, which opinion shall state that all the outstanding Warrants, including, without limitation, the exercise provisions applicable thereto, if any, shall thereafter continue in full force and effect and shall be enforceable against such corporation or entity in 3 accordance with the terms hereof and thereof and, together with such other matters as such holders may reasonably request. In case the Company shall (i) pay a dividend in shares of Capital Stock or securities convertible into Capital Stock or make a distribution to all holders of shares of Capital Stock in shares of Capital Stock or securities convertible into Capital Stock, (ii) subdivide its outstanding shares of Capital Stock, (iii) combine its outstanding shares of Capital Stock into a smaller number of shares of Capital Stock or (iv) issue by reclassification of its shares of Capital Stock other securities of the Corporation, the Exercise Price shall be adjusted (to the nearest cent) by multiplying the Exercise Price immediately prior to such adjustment by a fraction, of which the numerator shall be the number of shares of Capital Stock outstanding immediately prior to the occurrence of such event, and of which the denominator shall be the number of shares of Capital Stock outstanding (including any convertible securities issued pursuant to clause (i) or (iv) above on an as converted basis) immediately thereafter. An adjustment made pursuant to the foregoing sentence shall become effective immediately after the effective date of such event retroactive to the record date, if any, for such event. (d) NOTICE OF ADJUSTMENT. Upon the occurrence of any event requiring an adjustment of the Exercise Price, then and in each such case the Company shall promptly deliver to each holder of Warrants a certificate signed by the President or any Vice President and the Secretary or any Assistant Secretary of the Company (an "Officers' Certificate") stating the Exercise Price resulting from such adjustment and the increase or decrease, if any, in the number of shares of Common Stock issuable upon exercise of the Warrants, setting forth in reasonable detail the method of calculation and the facts upon which such calculation is based. Within 90 days after each fiscal year in which any such adjustment shall have occurred, or within 30 days after any request therefor by any holder of Warrants stating that such holder contemplates exercise of such Warrants, the Company will obtain and deliver to each holder of Warrants the opinion of its regular independent auditors or another firm of independent public accountants of recognized national standing selected by the Company's Board of Directors who are satisfactory to the registered holder of this Warrant, which opinion shall confirm the statements in the most recent Officers' Certificate delivered under this paragraph 4(d). (e) OTHER NOTICES. In case at any time: (i) the Company shall declare or pay to the holders of Capital Stock any dividend other than a regular periodic cash dividend or any periodic cash dividend in excess of 115% of the cash dividend for the comparable fiscal period in the immediately preceding fiscal year; (ii) the Company shall declare or pay any dividend upon Capital Stock payable in stock or make any special dividend or other distribution (other than regular cash dividends) to the holders of Capital Stock; 4 (iii) the Company shall offer for subscription pro rata to the holders of Capital Stock any additional shares of stock of any class or other rights; (iv) there shall be any capital reorganization, or reclassification of the Capital Stock of the Company, or consolidation or merger of the Company with, or sale of all or substantially all of its assets to, another corporation or other entity; (v) there shall be a voluntary or involuntary dissolution, liquidation or winding-up of the Company; or (vi) there shall be any other Transaction; then, in any one or more of such cases, the Company shall give to the holder of each Warrant (a) at least 15 days prior to any event referred to in clause (i) or (ii) above, at least 30 days prior to any event referred to in clause (iii), (iv) or (v) above, and within five business days after it has knowledge of any pending Transaction, written notice of the date on which the books of the Company shall close or a record shall be taken for such dividend, distribution or subscription rights or for determining rights to vote in respect of any such reorganization, reclassification, consolidation, merger, sale, dissolution, liquidation, winding-up or Transaction and (b) in the case of any such reorganization, reclassification, consolidation, merger, sale, dissolution, liquidation, winding-up or Transaction known to the Company, at least 30 days prior written notice of the date (or, if not then known, a reasonable approximation thereof by the Company) when the same shall take place. Such notice in accordance with the foregoing clause (a) shall also specify, in the case of any such dividend, distribution or subscription rights, the date on which the holders of Capital Stock shall be entitled thereto, and such notice in accordance with the foregoing clause (b) shall also specify the date on which the holders of Capital Stock shall be entitled to exchange their Capital Stock for securities or other property deliverable upon such reorganization, reclassification, consolidation, merger, sale, dissolution, liquidation, winding-up or Transaction, as the case may be. Such notice shall also state that the action in question or the record date is subject to the effectiveness of a registration statement under the Securities Act or to a favorable vote of security holders, if either is required. 5. CERTAIN AGREEMENTS OF THE COMPANY. The Company covenants and agrees that: (a) CERTAIN ACTIONS PROHIBITED. The Company will not by amendment of its certificate of incorporation or through any reorganization, transfer of assets, consolidation, merger, dissolution, issue or sale of securities or any other voluntary action, avoid or seek to avoid the observance or performance of any of the terms to be observed or performed hereunder by the Company, but will at all times in good faith assist in the carrying out of all the provisions of this Warrant and in the taking of all such action as may reasonably be requested by the holder of any Warrant in order to protect the exercise rights of the holders of the Warrants. Without limiting the generality of the foregoing, the Company (i) will not increase the par value of any shares of Common Stock receivable upon the exercise of the Warrants above the Exercise Price then in effect, (ii) will take all such actions as may be necessary or appropriate in order that the Company 5 may validly and legally issue fully paid and nonassessable shares of Common Stock upon the exercise of all Warrants from time to time outstanding, (iii) will not take any action which results in any adjustment of the number of shares of Common Stock issuable after the action upon the exercise of all of the Warrants would exceed the total number of shares of Common Stock then authorized by the Company's certificate of incorporation and available for the purpose of issue upon such exercise, and (iv) will not issue any capital stock of any class which has the right to more than one vote per share or any capital stock of any class which is preferred as to dividends or as to the distribution of assets upon voluntary or involuntary dissolution, liquidation or winding-up, unless the rights of the holders thereof shall be limited to a fixed sum or percentage (or floating rate related to market yields) of par value or stated value in aspect of participation in dividends and a fixed sum or percentage of par value or stated value in any such distribution of assets. (b) SUCCESSORS AND ASSIGNS. This Warrant will be binding upon any entity succeeding to the Company by merger, consolidation or acquisition of all or substantially all of the Company's assets. (c) ISSUANCE OF WARRANT SECURITIES. If the issuance of any Warrant Shares required to be reserved for purposes of exercise of this Warrant or for the conversion of such Warrant Shares requires registration with or approval of any Federal governmental authority under any Federal or state law (other than any registration under the Securities Act) or listing on any national securities exchange, before such shares may be issued upon exercise of this Warrant, the Company will, at its expense, use its best efforts to cause such shares to be duly registered or approved, or listed on the relevant national securities exchange, as the case may be, at such time, so that such shares may be issued in accordance with the terms hereof and so converted. 6. ISSUE TAX. The issuance of certificates for Warrant Shares upon the exercise of Warrants shall be made without charge to the holders of such Warrants or such shares for any issuance tax in respect thereof, provided that the Company shall not be required to pay any tax which may be payable in respect of any transfer involved in the issuance and delivery of any certificate in a name other than the holder of the Warrant exercised. 7. CLOSING OF BOOKS. The Company will at no time close its transfer books against the transfer of any Warrant, of any Warrant Shares issued or issuable upon the exercise of any Warrant or in any manner which interferes with the timely exercise of this Warrant. 8. AMENDMENTS TO TERMS OF WARRANT SHARES. The Company will not amend the terms of the Warrant Shares. 9. AVAILABILITY OF INFORMATION. The Company will cooperate with each holder of any Warrants or Warrant Shares in supplying such information as may be necessary for such holder to complete and file any information reporting forms presently or hereafter required by the Securities and Exchange Commission as a condition to the availability of an exemption from the Securities Act for the sale of any Warrants or Warrant Shares. The Company will deliver to any person at the time holding any Warrants, promptly upon their becoming available, copies of all 6 financial statements, reports, notices and proxy statements sent or made available generally by the Company to its stockholders, and copies of all regular and periodic reports and all registration statements and prospectuses filed by the Company with any securities exchange or with the Securities and Exchange Commission. 10. NO RIGHTS OR LIABILITIES AS A STOCKHOLDER. This Warrant shall not entitle the holder hereof to any voting rights or other rights as a stockholder of the Company. No provision of this Warrant, in the absence of affirmative action by the holder hereof to purchase Warrant Shares, and no mere enumeration herein of the rights or privileges of the holder hereof, shall give rise to any liability of such holder for the Exercise Price or as a stockholder of the Company, whether such liability is asserted by the Company or by creditors of the Company. 11. TRANSFER AND EXCHANGE. (a) (1) The transfer of this Warrant and all rights hereunder, in whole or in part, is registrable at the office or agency of the Company referred to below by the holder hereof in person or by his duly authorized attorney, upon surrender of this Warrant properly endorsed. Each taker and holder of this Warrant, by taking or holding the same, consents and agrees that this Warrant, when endorsed in blank, shall be deemed negotiable, and that the holder hereof, when this Warrant shall have been so endorsed, may be treated by the Company and all other persons dealing with this Warrant as the absolute owner and holder hereof for any purpose and as the person entitled to exercise the rights represented by this Warrant, or to the registration of transfer hereof on the books of the Company; and until due presentment for registration of transfer on such books the Company may treat the registered holder hereof as the owner and holder for all purposes, and the Company shall not be affected by notice to the contrary. (2) The holder of this Warrant, by acceptance hereof, understands that the Warrant Securities are characterized as "restricted securities" under the federal securities laws inasmuch as they are being or will be acquired from the Company in a transaction not involving a public offering and that under such laws and applicable regulations such Warrant Securities may be resold without registration under the Securities Act only in certain limited circumstances. The holder of this Warrant, by acceptance hereof, agrees to comply with all applicable laws (including, without limitation, any filing required by the Hart-Scott-Rodino Antitrust Improvements Act of 1976) upon exercise hereof. The holder of this Warrant, by acceptance hereof, represents that such holder is acquiring this Warrant and any Warrant Shares to be issued upon exercise hereof for its own account (including any separate account) for the purpose of investment and not with a view to or for sale in connection with any distribution thereof. The holder hereof further represents that such holder has had an opportunity to ask questions and receive answers from the Company regarding the terms and conditions of the offering of the Warrant Securities as required by Section (b)(2)(v) of Rule 502 of Regulation D under the Securities Act. 7 Without in any way limiting the foregoing, the holder hereof further agrees not to make any disposition of all or any portion of the Warrant Securities unless and until: (x) There is then in effect a Registration Statement under the Securities Act covering such proposed disposition and such disposition is made in accordance with such Registration Statement; or (y) (i) The holder hereof shall have notified the Company of the proposed disposition and shall have furnished the Company with a detailed statement of the circumstances surrounding the proposed disposition, and (ii) shall have furnished the Company with an opinion of counsel, reasonably satisfactory to the Company (it being understood that if the holder of this Warrant is a party to the Agreement, counsel who is such party's employee shall be deemed reasonably satisfactory to the Company), that such disposition will not require registration of such Warrant Securities under the Securities Act. (b) REGISTER. The Company shall maintain, at the principal office of the Company (or such other office or agency of the Company in New York, New York or San Francisco, California as it may designate by notice to the holder hereof), a register for the Warrants, in which the Company shall record the name and address of the person in whose name a Warrant has been issued, as well as the name and address of each transferee and each prior owner of such Warrant. Within 10 days after any holder of Warrants shall by notice request the same, the Company will deliver to such holder a certificate, signed by one of its officers, listing the name and address of every other holder of Warrants and/or Warrant Shares, as such information appears in said register and in the stock transfer books of the Company at the close of business on the day before such certificate is signed. (c) WARRANTS EXCHANGEABLE FOR DIFFERENT DENOMINATIONS. This Warrant is exchangeable, upon the surrender hereof by the holder hereof at the office or agency of the Company referred to in paragraph 11(b), for new Warrants of like tenor representing in the aggregate the right to subscribe for and purchase the number of shares which may be subscribed for and purchased hereunder of Common Stock, each of such new Warrants to represent the right to subscribe for and purchase such number of shares as shall be designated by said holder hereof at the time of such surrender. (d) REPLACEMENT OF WARRANTS. Upon receipt of evidence reasonably satisfactory to the Company of the loss, theft, destruction or mutilation of this Warrant and, in the case of any such loss, theft or destruction, upon delivery of an indemnity bond (or, in the case of any institutional holder, an indemnity agreement) reasonably satisfactory in form and amount to the Company or, in the case of any such mutilation, upon surrender and cancellation of such Warrant, the Company at its expense will execute and deliver, in lieu thereof, a new Warrant of like tenor. (e) CANCELLATION; PAYMENT OF EXPENSES. Upon the surrender of this Warrant in connection with any exchange, transfer or replacement as provided in this paragraph 11, this Warrant shall be promptly canceled by the Company. The Company shall pay all taxes (other than 8 securities transfer taxes) and all other expenses and charges payable in connection with the preparation, execution and delivery of Warrants pursuant to this paragraph 11. 12. NOTICES. All notices, requests and other communications required or permitted to be given or delivered to the holders of Warrants shall be in writing, and shall be delivered, or shall be sent by certified or registered mail, postage prepaid and addressed, to each holder at the address shown on the register for the Warrants, or at such other address as shall have been furnished to the Company by notice from such holder. All notices, requests and other communications required or permitted to be given or delivered to the Company shall be in writing, and shall be delivered, or shall be sent by certified or registered mail, postage prepaid and addressed, to the office of the Company, at 10275 West Higgins Road, Suite 300, Rosemont, Illinois 60018, Attention: Chief Financial Officer, with a copy to General Counsel, or at such other address as shall have been furnished to the holders of Warrants by notice from the Company. Any such notice, request or other communication may be sent by telegram or telex, but shall in such case be subsequently confirmed by a writing delivered or sent by certified or registered mail as provided above. All notices shall be deemed to have been given either at the time of the delivery thereof to (or the receipt by, in the case of a telegram or telex) any officer or employee of the person entitled to receive such notice at the address of such person for purposes of this paragraph 12, or, if mailed, at the completion of the third full day following the time of such mailing thereof to such address, as the case may be. 13. GOVERNING LAW. This Warrant shall be construed in accordance with and governed by the laws of the State of New York without regard to the principles of conflicts of laws. 14. REMEDIES. The Company stipulates that the remedies at law of the holder of this Warrant in the event of any default or threatened default by the Company in the performance of or compliance with any of the terms of this Warrant are not and will not be adequate, and that such terms may be specifically enforced by a decree for the specific performance of any agreement contained herein or by an injunction against a violation of any of the terms hereof or otherwise. 15. DEFINITIONS. For the purpose of this Warrant, the following terms shall have the following meanings: "AGREEMENT" shall mean the Tri-Party Agreement dated December 11, 1996 by and among the Company, Warburg, Pincus Investors, L.P. and Joe F. Hanauer. "CAPITAL STOCK" shall have the meaning assigned to such term in paragraph 4. "CONSUMMATION DATE" shall mean the date of the consummation of a Transaction. "MARKET PRICE" shall mean, on any date specified herein, (A) if any class of Capital Stock is listed or admitted to trading on any national securities exchange, the highest price obtained by taking the arithmetic mean over a period of twenty consecutive Trading Days ending the second Trading Day prior to such date of the average, on each such Trading Day, of the high and low sale 9 price of shares of each such class of Capital Stock or if no such sale takes place on such date, the average of the highest closing bid and lowest closing asked prices thereof on such date, in each case as officially reported on all national securities exchanges on which each such class of Capital Stock is then listed or admitted to trading, or (B) if no shares of any class of Capital Stock are then listed or admitted to trading on any national securities exchange, the highest closing price of any class of Capital Stock on such date in the over-the-counter market as shown by NASDAQ or, if no such shares of any class of Capital Stock are then quoted in such system, as published by the National Quotation Bureau, Incorporated or any similar successor organization, and in either case as reported by any member firm of the New York Stock Exchange selected by the Company. If no shares of any class of Capital Stock are then listed or admitted to trading on any national securities exchange and if no closing bid and asked prices thereof are then so quoted or published in the over-the-counter market, "Market Price" shall mean the higher of (x) the book value per share of Capital Stock (assuming for the purposes of this calculation the economic equivalence of all shares of all classes of Capital Stock) as determined on a fully diluted basis in accordance with generally accepted accounting principles by a firm of independent public accountants of recognized standing (which may be its regular auditors) selected by the Board of Directors of the Company as of the last day of any month ending within 60 days preceding the date as of which the determination is to be made or (y) the fair value per share of Capital Stock (assuming for the purposes of this calculation the economic equivalence of all shares of all classes of Capital Stock), as determined on a fully diluted basis in good faith by an independent brokerage firm or Standard & Poor's Corporation (as selected by the Board of Directors of the Company), as of a date which is 15 days preceding the date as of which the determination is to be made. "SECURITIES ACT" shall mean the Securities Act of 1933, as amended. "TRADING DAY" shall mean any day on which the New York Stock Exchange is open for trading on a regular basis. "TRANSACTION" shall mean any transaction to which the Company is a party at any time (including, without limitation, a merger, consolidation, sale of all or substantially all of the Company's assets, liquidation or recapitalization of the Capital Stock) in which the previously outstanding Capital Stock shall be changed into or exchanged for different securities of the Company or common stock or other securities of another corporation or interests in a noncorporate entity or other property (including cash) or any combination of any of the foregoing or in which the Capital Stock ceases to be a publicly traded security either listed on the New York Stock Exchange or the American Stock Exchange or quoted by NASDAQ or any successor thereto or comparable system. 10 "WARBURG/HANAUER WARRANTS" shall mean (i) this Stock Subscription Warrant No. 20, (ii) the Stock Subscription Warrant No. 21 issued to Warburg, Pincus Investors, L.P. to purchase 185,714 shares of Common Stock, (iii) the Stock Subscription Warrant No. 22 issued to Joe F. Hanauer Trust to purchase 10,714 shares of Common Stock, and (iv) the Stock Subscription Warrant No. 23 issued to Warburg, Pincus Investors, L.P. to purchase 139,286 shares of Common Stock, and including any amendments to the warrants referred to in (i), (ii), (iii) and (iv) of this definition. "WARRANT SECURITIES" shall mean the Warrants and the Warrant Shares. 16. MISCELLANEOUS. (a) AMENDMENTS. This Warrant and any provision hereof may be amended or waived only by an instrument in writing signed by the holders of then outstanding Warburg/Hanauer Warrants representing the right to purchase not less than a majority of the total number of shares of Common Stock issuable upon exercise of all then outstanding Warburg/Hanauer Warrants then not transferable without registration under the Securities Act and, if it is to be bound thereby, by the Company. (b) DESCRIPTIVE HEADINGS. The descriptive headings of the several paragraphs of this Warrant are inserted for purposes of reference only, and shall not affect the meaning or construction of any of the provisions hereof. 11 IN WITNESS WHEREOF, GRUBB & ELLIS COMPANY has caused this Stock Subscription Warrant to be signed by its duly authorized officer under its corporate seal, attested by its duly authorized officer, and the Warrant to be dated as of December 11, 1996. GRUBB & ELLIS COMPANY By /s/ Robert J. Walner ---------------------------- Attest: By /s/ Carol Vanairsdale ---------------------------- 12 FORM OF EXERCISE AGREEMENT Date To: The undersigned, pursuant to the provisions set forth in the within Stock Subscription Warrant, hereby agrees to subscribe for and purchase ________ shares of Common Stock covered by such Stock Subscription Warrant, and makes payment herewith in full therefor at the price per share provided by such Stock Subscription Warrant [in cash] [by delivery of $_____ principal amount of ______ Notes] [by cancellation of $______ of accrued and unpaid interest on ______ Notes]. Name__________________________ Title_________________________ Company_______________________ Signature_____________________ Address_______________________ ______________________________ ASSIGNMENT FOR VALUE RECEIVED hereby sells, assigns and transfers all of the rights of the undersigned under the within Stock Subscription Warrant, with respect to the number of Warrant Shares covered thereby set forth hereinbelow to: Name of Assignee Address No. of Shares - ---------------- ------- ------------- Dated: ___________, 19__. Name__________________________ Title_________________________ Company_______________________ Signature_____________________ Witness_______________________ EX-3 4 EXHIBIT 3 Exhibit 3 --------- Stock Subscription Warrant to Subscribe for 10,714 Shares of Common Stock Stock Subscription Warrant No. 22 THIS STOCK SUBSCRIPTION WARRANT AND ANY SHARES ACQUIRED UPON THE EXERCISE OF THIS STOCK SUBSCRIPTION WARRANT HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED. NEITHER THIS STOCK SUBSCRIPTION WARRANT NOR ANY OF SUCH SHARES MAY BE SOLD OR TRANSFERRED IN THE ABSENCE OF SUCH REGISTRATION OR AN EXEMPTION THEREFROM UNDER SAID ACT. STOCK SUBSCRIPTION WARRANT To Subscribe for and Purchase Shares of Common Stock of GRUBB & ELLIS COMPANY THIS CERTIFIES THAT, for value received, JOE F. HANAUER TRUST or registered assigns, is entitled to subscribe for and purchase from GRUBB & ELLIS COMPANY (herein called the "Company"), a corporation organized and existing under the laws of the State of Delaware, at any time or from time to time during the period specified in paragraph 2 hereof, up to TEN THOUSAND SEVEN HUNDRED FOURTEEN fully paid and nonassessable shares of the Company's common stock, par value $0.01 per share (the "Common Stock"), at an exercise price per share of $2.375 (the "Exercise Price"). The number of shares purchasable hereunder and the Exercise Price are subject to adjustment as provided in paragraph 4 hereof. This Stock Subscription Warrant is being issued pursuant to the Agreement. The term "Warrant," as used herein, shall mean this Stock Subscription Warrant, including all amendments hereto. The term "Warrant Shares," as used herein, refers to the shares purchasable upon the exercise of the Warrants. Certain terms used herein and not elsewhere defined are defined in paragraph 15 hereof. This Warrant is subject to the following provisions, terms and conditions: 1. MANNER OF EXERCISE; ISSUANCE OF CERTIFICATES; PAYMENT FOR SHARES. The rights represented by this Warrant may be exercised by the holder hereof in whole or in part (but not as to a fractional Warrant Share), by the surrender of this Warrant, together with a completed Exercise Agreement in the form attached hereto, during normal business hours on any business day at the principal office of the Company (or such other office or agency of the Company in New York, New York or San Francisco, California as it may designate by notice in writing to the holder hereof at the address of such holder appearing on the books of the Company) at any time during the period set forth in paragraph 2 hereof and upon payment to the Company by certified check or bank draft of the Exercise Price for such shares, or, at the election of the holder hereof, by delivery of other Warrants equal in value to the aggregate Exercise Price with respect to such Warrants being exercised, the value of which other Warrants shall be deemed to equal the difference between the Market Price of a share of Common Stock on the date immediately preceding the date of exercise and the then current Exercise Price. The Company agrees that the shares so purchased shall be and are deemed to be issued to the holder hereof or its designee as the record owner of such shares as of the close of business on the date on which this Warrant shall have been surrendered and payment made for such shares as aforesaid. Certificates for the Warrant Shares so purchased, representing the aggregate number of shares specified in said Exercise Agreement, shall be delivered to the holder hereof within a reasonable time, not exceeding five business days, after the rights represented by this Warrant shall have been so exercised. Each stock certificate so delivered shall be in such denominations as may be requested by the holder hereof and shall be registered in the name of said holder or such other name (upon compliance with the transfer requirements hereinafter set forth) as shall be designated by said holder. If this Warrant shall have been exercised only in part, then, unless this Warrant has expired, the Company shall, at its expense, at the time of delivery of said stock certificates, deliver to said holder a new Warrant representing the number of shares with respect to which this Warrant shall not then have been exercised. The Company shall pay all taxes and other expenses and charges payable in connection with the preparation, execution and delivery of stock certificates (and any new Warrants) pursuant to this paragraph except that, in case such stock certificates shall be registered in a name or names other than the holder of this Warrant or its nominee, funds sufficient to pay all stock transfer taxes which shall be payable in connection with the execution and delivery of such stock certificates shall be paid by the holder hereof to the Company at the time of the delivery of such stock certificates by the Company as mentioned above. 2. PERIOD OF EXERCISE. This Warrant is exercisable at any time or from time to time prior to January 29, 2002. 3. SHARES TO BE FULLY PAID; RESERVATION OF SHARES. The Company covenants and agrees that all Warrant Shares will, upon issuance, be fully paid and nonassessable and free from preemptive rights and all taxes, liens and charges with respect to the issue thereof; and without limiting the generality of the foregoing, the Company covenants and agrees that it will from time to time take all such action as may be required to assure that the par value per Warrant Share is at all times equal to or less than the effective Exercise Price. The Company further covenants and agrees that during the period within which the rights represented by this Warrant may be exercised, the Company will at all times have authorized, and reserved for the purpose of issue upon exercise of the subscription rights evidenced by this Warrant, a sufficient number of shares of Common Stock to provide for the exercise of the rights represented by this Warrant. The Company shall take all 2 such action as may be necessary to assure that such shares of Common Stock may be so issued without violation of any applicable law or regulation and will be approved for listing on any domestic securities exchange upon which the Common Stock may be listed. The Company further covenants and agrees that it will, at any time, at its expense, promptly list on each national securities exchange on which any Capital Stock is at the time listed, upon official notice of issuance, Common Stock issuable upon the exercise of any Warrant as provided in paragraph 1 hereof, and maintain such listing of all shares of Common Stock from time to time issuable upon such exercise, and will, at any time, register under the Securities Exchange Act of 1934, as amended, all shares of Common Stock from time to time issuable upon such exercise if and at the time that any existing shares of Capital Stock are so registered. 4. ANTI-DILUTION PROVISIONS. The Exercise Price set forth above shall be subject to adjustment from time to time as hereinafter provided. For purposes of this paragraph 4, the term "Capital Stock" as used herein includes the Company's Common Stock and shall also include any capital stock of any class of the Company hereafter authorized which shall not be limited to a fixed sum or percentage in respect of the rights of the holders thereof to participate in dividends and in the distribution of assets upon the voluntary or involuntary liquidation, dissolution or winding up of the Company; provided that the shares purchasable pursuant to this Warrant shall include only Common Stock. Upon each adjustment of the Exercise Price, this Warrant shall thereafter represent the right to purchase, at the Exercise Price resulting from such adjustment, the largest number of shares of Common Stock obtained by multiplying the Exercise Price in effect immediately prior to such adjustment by the number of shares of Common Stock purchasable thereunder immediately prior to such adjustment and dividing the product thereof by the Exercise Price resulting from such adjustment. In case the Company, at any time, shall be a party to any Transaction, each holder hereof, upon the exercise hereof at any time on or after the Consummation Date shall be entitled to receive, and this Warrant shall thereafter represent the right to receive, in lieu of the Common Stock issuable upon exercise prior to the Consummation Date, the kind and amount of securities or property (including cash) which it would have owned or have been entitled to receive after the happening of such Transaction had this Warrant been exercised immediately prior to such Transaction. Notwithstanding anything contained herein to the contrary, the Company shall not effect any Transaction unless prior to the consummation thereof each corporation or entity (other than the Company) which may be required to deliver any securities or other property upon the exercise of Warrants, the surrender of Warrants or the satisfaction of exercise rights as provided herein, shall assume, by written instrument delivered to each holder of Warrants, the obligation to deliver to such holder such securities or other property to which, in accordance with the foregoing provisions, such holder may be entitled, and such corporation or entity shall have similarly delivered to each holder of Warrants an opinion of counsel for such corporation or entity, satisfactory to each holder of Warrants, which opinion shall state that all the outstanding Warrants, including, without limitation, the exercise provisions applicable thereto, if any, shall thereafter continue in full force and effect and shall be enforceable against such corporation or entity in 3 accordance with the terms hereof and thereof and, together with such other matters as such holders may reasonably request. In case the Company shall (i) pay a dividend in shares of Capital Stock or securities convertible into Capital Stock or make a distribution to all holders of shares of Capital Stock in shares of Capital Stock or securities convertible into Capital Stock, (ii) subdivide its outstanding shares of Capital Stock, (iii) combine its outstanding shares of Capital Stock into a smaller number of shares of Capital Stock or (iv) issue by reclassification of its shares of Capital Stock other securities of the Corporation, the Exercise Price shall be adjusted (to the nearest cent) by multiplying the Exercise Price immediately prior to such adjustment by a fraction, of which the numerator shall be the number of shares of Capital Stock outstanding immediately prior to the occurrence of such event, and of which the denominator shall be the number of shares of Capital Stock outstanding (including any convertible securities issued pursuant to clause (i) or (iv) above on an as converted basis) immediately thereafter. An adjustment made pursuant to the foregoing sentence shall become effective immediately after the effective date of such event retroactive to the record date, if any, for such event. (d) NOTICE OF ADJUSTMENT. Upon the occurrence of any event requiring an adjustment of the Exercise Price, then and in each such case the Company shall promptly deliver to each holder of Warrants a certificate signed by the President or any Vice President and the Secretary or any Assistant Secretary of the Company (an "Officers' Certificate") stating the Exercise Price resulting from such adjustment and the increase or decrease, if any, in the number of shares of Common Stock issuable upon exercise of the Warrants, setting forth in reasonable detail the method of calculation and the facts upon which such calculation is based. Within 90 days after each fiscal year in which any such adjustment shall have occurred, or within 30 days after any request therefor by any holder of Warrants stating that such holder contemplates exercise of such Warrants, the Company will obtain and deliver to each holder of Warrants the opinion of its regular independent auditors or another firm of independent public accountants of recognized national standing selected by the Company's Board of Directors who are satisfactory to the registered holder of this Warrant, which opinion shall confirm the statements in the most recent Officers' Certificate delivered under this paragraph 4(d). (e) OTHER NOTICES. In case at any time: (i) the Company shall declare or pay to the holders of Capital Stock any dividend other than a regular periodic cash dividend or any periodic cash dividend in excess of 115% of the cash dividend for the comparable fiscal period in the immediately preceding fiscal year; (ii) the Company shall declare or pay any dividend upon Capital Stock payable in stock or make any special dividend or other distribution (other than regular cash dividends) to the holders of Capital Stock; 4 (iii) the Company shall offer for subscription pro rata to the holders of Capital Stock any additional shares of stock of any class or other rights; (iv) there shall be any capital reorganization, or reclassification of the Capital Stock of the Company, or consolidation or merger of the Company with, or sale of all or substantially all of its assets to, another corporation or other entity; (v) there shall be a voluntary or involuntary dissolution, liquidation or winding-up of the Company; or (vi) there shall be any other Transaction; then, in any one or more of such cases, the Company shall give to the holder of each Warrant (a) at least 15 days prior to any event referred to in clause (i) or (ii) above, at least 30 days prior to any event referred to in clause (iii), (iv) or (v) above, and within five business days after it has knowledge of any pending Transaction, written notice of the date on which the books of the Company shall close or a record shall be taken for such dividend, distribution or subscription rights or for determining rights to vote in respect of any such reorganization, reclassification, consolidation, merger, sale, dissolution, liquidation, winding-up or Transaction and (b) in the case of any such reorganization, reclassification, consolidation, merger, sale, dissolution, liquidation, winding-up or Transaction known to the Company, at least 30 days prior written notice of the date (or, if not then known, a reasonable approximation thereof by the Company) when the same shall take place. Such notice in accordance with the foregoing clause (a) shall also specify, in the case of any such dividend, distribution or subscription rights, the date on which the holders of Capital Stock shall be entitled thereto, and such notice in accordance with the foregoing clause (b) shall also specify the date on which the holders of Capital Stock shall be entitled to exchange their Capital Stock for securities or other property deliverable upon such reorganization, reclassification, consolidation, merger, sale, dissolution, liquidation, winding-up or Transaction, as the case may be. Such notice shall also state that the action in question or the record date is subject to the effectiveness of a registration statement under the Securities Act or to a favorable vote of security holders, if either is required. 5. CERTAIN AGREEMENTS OF THE COMPANY. The Company covenants and agrees that: (a) CERTAIN ACTIONS PROHIBITED. The Company will not by amendment of its certificate of incorporation or through any reorganization, transfer of assets, consolidation, merger, dissolution, issue or sale of securities or any other voluntary action, avoid or seek to avoid the observance or performance of any of the terms to be observed or performed hereunder by the Company, but will at all times in good faith assist in the carrying out of all the provisions of this Warrant and in the taking of all such action as may reasonably be requested by the holder of any Warrant in order to protect the exercise rights of the holders of the Warrants. Without limiting the generality of the foregoing, the Company (i) will not increase the par value of any shares of Common Stock receivable upon the exercise of the Warrants above the Exercise Price then in effect, (ii) will take all such actions as may be necessary or appropriate in order that the Company 5 may validly and legally issue fully paid and nonassessable shares of Common Stock upon the exercise of all Warrants from time to time outstanding, (iii) will not take any action which results in any adjustment of the number of shares of Common Stock issuable after the action upon the exercise of all of the Warrants would exceed the total number of shares of Common Stock then authorized by the Company's certificate of incorporation and available for the purpose of issue upon such exercise, and (iv) will not issue any capital stock of any class which has the right to more than one vote per share or any capital stock of any class which is preferred as to dividends or as to the distribution of assets upon voluntary or involuntary dissolution, liquidation or winding-up, unless the rights of the holders thereof shall be limited to a fixed sum or percentage (or floating rate related to market yields) of par value or stated value in aspect of participation in dividends and a fixed sum or percentage of par value or stated value in any such distribution of assets. (b) SUCCESSORS AND ASSIGNS. This Warrant will be binding upon any entity succeeding to the Company by merger, consolidation or acquisition of all or substantially all of the Company's assets. (c) ISSUANCE OF WARRANT SECURITIES. If the issuance of any Warrant Shares required to be reserved for purposes of exercise of this Warrant or for the conversion of such Warrant Shares requires registration with or approval of any Federal governmental authority under any Federal or state law (other than any registration under the Securities Act) or listing on any national securities exchange, before such shares may be issued upon exercise of this Warrant, the Company will, at its expense, use its best efforts to cause such shares to be duly registered or approved, or listed on the relevant national securities exchange, as the case may be, at such time, so that such shares may be issued in accordance with the terms hereof and so converted. 6. ISSUE TAX. The issuance of certificates for Warrant Shares upon the exercise of Warrants shall be made without charge to the holders of such Warrants or such shares for any issuance tax in respect thereof, provided that the Company shall not be required to pay any tax which may be payable in respect of any transfer involved in the issuance and delivery of any certificate in a name other than the holder of the Warrant exercised. 7. CLOSING OF BOOKS. The Company will at no time close its transfer books against the transfer of any Warrant, of any Warrant Shares issued or issuable upon the exercise of any Warrant or in any manner which interferes with the timely exercise of this Warrant. 8. AMENDMENTS TO TERMS OF WARRANT SHARES. The Company will not amend the terms of the Warrant Shares. 9. AVAILABILITY OF INFORMATION. The Company will cooperate with each holder of any Warrants or Warrant Shares in supplying such information as may be necessary for such holder to complete and file any information reporting forms presently or hereafter required by the Securities and Exchange Commission as a condition to the availability of an exemption from the Securities Act for the sale of any Warrants or Warrant Shares. The Company will deliver to any person at the time holding any Warrants, promptly upon their becoming available, copies of all 6 financial statements, reports, notices and proxy statements sent or made available generally by the Company to its stockholders, and copies of all regular and periodic reports and all registration statements and prospectuses filed by the Company with any securities exchange or with the Securities and Exchange Commission. 10. NO RIGHTS OR LIABILITIES AS A STOCKHOLDER. This Warrant shall not entitle the holder hereof to any voting rights or other rights as a stockholder of the Company. No provision of this Warrant, in the absence of affirmative action by the holder hereof to purchase Warrant Shares, and no mere enumeration herein of the rights or privileges of the holder hereof, shall give rise to any liability of such holder for the Exercise Price or as a stockholder of the Company, whether such liability is asserted by the Company or by creditors of the Company. 11. TRANSFER AND EXCHANGE. (a) (1) The transfer of this Warrant and all rights hereunder, in whole or in part, is registrable at the office or agency of the Company referred to below by the holder hereof in person or by his duly authorized attorney, upon surrender of this Warrant properly endorsed. Each taker and holder of this Warrant, by taking or holding the same, consents and agrees that this Warrant, when endorsed in blank, shall be deemed negotiable, and that the holder hereof, when this Warrant shall have been so endorsed, may be treated by the Company and all other persons dealing with this Warrant as the absolute owner and holder hereof for any purpose and as the person entitled to exercise the rights represented by this Warrant, or to the registration of transfer hereof on the books of the Company; and until due presentment for registration of transfer on such books the Company may treat the registered holder hereof as the owner and holder for all purposes, and the Company shall not be affected by notice to the contrary. (2) The holder of this Warrant, by acceptance hereof, understands that the Warrant Securities are characterized as "restricted securities" under the federal securities laws inasmuch as they are being or will be acquired from the Company in a transaction not involving a public offering and that under such laws and applicable regulations such Warrant Securities may be resold without registration under the Securities Act only in certain limited circumstances. The holder of this Warrant, by acceptance hereof, agrees to comply with all applicable laws (including, without limitation, any filing required by the Hart-Scott-Rodino Antitrust Improvements Act of 1976) upon exercise hereof. The holder of this Warrant, by acceptance hereof, represents that such holder is acquiring this Warrant and any Warrant Shares to be issued upon exercise hereof for its own account (including any separate account) for the purpose of investment and not with a view to or for sale in connection with any distribution thereof. The holder hereof further represents that such holder has had an opportunity to ask questions and receive answers from the Company regarding the terms and conditions of the offering of the Warrant Securities as required by Section (b)(2)(v) of Rule 502 of Regulation D under the Securities Act. 7 Without in any way limiting the foregoing, the holder hereof further agrees not to make any disposition of all or any portion of the Warrant Securities unless and until: (x) There is then in effect a Registration Statement under the Securities Act covering such proposed disposition and such disposition is made in accordance with such Registration Statement; or (y) (i) The holder hereof shall have notified the Company of the proposed disposition and shall have furnished the Company with a detailed statement of the circumstances surrounding the proposed disposition, and (ii) shall have furnished the Company with an opinion of counsel, reasonably satisfactory to the Company (it being understood that if the holder of this Warrant is a party to the Agreement, counsel who is such party's employee shall be deemed reasonably satisfactory to the Company), that such disposition will not require registration of such Warrant Securities under the Securities Act. (b) REGISTER. The Company shall maintain, at the principal office of the Company (or such other office or agency of the Company in New York, New York or San Francisco, California as it may designate by notice to the holder hereof), a register for the Warrants, in which the Company shall record the name and address of the person in whose name a Warrant has been issued, as well as the name and address of each transferee and each prior owner of such Warrant. Within 10 days after any holder of Warrants shall by notice request the same, the Company will deliver to such holder a certificate, signed by one of its officers, listing the name and address of every other holder of Warrants and/or Warrant Shares, as such information appears in said register and in the stock transfer books of the Company at the close of business on the day before such certificate is signed. (c) WARRANTS EXCHANGEABLE FOR DIFFERENT DENOMINATIONS. This Warrant is exchangeable, upon the surrender hereof by the holder hereof at the office or agency of the Company referred to in paragraph 11(b), for new Warrants of like tenor representing in the aggregate the right to subscribe for and purchase the number of shares which may be subscribed for and purchased hereunder of Common Stock, each of such new Warrants to represent the right to subscribe for and purchase such number of shares as shall be designated by said holder hereof at the time of such surrender. (d) REPLACEMENT OF WARRANTS. Upon receipt of evidence reasonably satisfactory to the Company of the loss, theft, destruction or mutilation of this Warrant and, in the case of any such loss, theft or destruction, upon delivery of an indemnity bond (or, in the case of any institutional holder, an indemnity agreement) reasonably satisfactory in form and amount to the Company or, in the case of any such mutilation, upon surrender and cancellation of such Warrant, the Company at its expense will execute and deliver, in lieu thereof, a new Warrant of like tenor. (e) CANCELLATION; PAYMENT OF EXPENSES. Upon the surrender of this Warrant in connection with any exchange, transfer or replacement as provided in this paragraph 11, this Warrant shall be promptly canceled by the Company. The Company shall pay all taxes (other than 8 securities transfer taxes) and all other expenses and charges payable in connection with the preparation, execution and delivery of Warrants pursuant to this paragraph 11. 12. NOTICES. All notices, requests and other communications required or permitted to be given or delivered to the holders of Warrants shall be in writing, and shall be delivered, or shall be sent by certified or registered mail, postage prepaid and addressed, to each holder at the address shown on the register for the Warrants, or at such other address as shall have been furnished to the Company by notice from such holder. All notices, requests and other communications required or permitted to be given or delivered to the Company shall be in writing, and shall be delivered, or shall be sent by certified or registered mail, postage prepaid and addressed, to the office of the Company, at 10275 West Higgins Road, Suite 300, Rosemont, Illinois 60018, Attention: Chief Financial Officer, with a copy to General Counsel, or at such other address as shall have been furnished to the holders of Warrants by notice from the Company. Any such notice, request or other communication may be sent by telegram or telex, but shall in such case be subsequently confirmed by a writing delivered or sent by certified or registered mail as provided above. All notices shall be deemed to have been given either at the time of the delivery thereof to (or the receipt by, in the case of a telegram or telex) any officer or employee of the person entitled to receive such notice at the address of such person for purposes of this paragraph 12, or, if mailed, at the completion of the third full day following the time of such mailing thereof to such address, as the case may be. 13. GOVERNING LAW. This Warrant shall be construed in accordance with and governed by the laws of the State of New York without regard to the principles of conflicts of laws. 14. REMEDIES. The Company stipulates that the remedies at law of the holder of this Warrant in the event of any default or threatened default by the Company in the performance of or compliance with any of the terms of this Warrant are not and will not be adequate, and that such terms may be specifically enforced by a decree for the specific performance of any agreement contained herein or by an injunction against a violation of any of the terms hereof or otherwise. 15. DEFINITIONS. For the purpose of this Warrant, the following terms shall have the following meanings: "AGREEMENT" shall mean the Tri-Party Agreement dated December 11, 1996 by and among the Company, Warburg, Pincus Investors, L.P. and Joe F. Hanauer. "CAPITAL STOCK" shall have the meaning assigned to such term in paragraph 4. "CONSUMMATION DATE" shall mean the date of the consummation of a Transaction. "MARKET PRICE" shall mean, on any date specified herein, (A) if any class of Capital Stock is listed or admitted to trading on any national securities exchange, the highest price obtained by taking the arithmetic mean over a period of twenty consecutive Trading Days ending the second Trading Day prior to such date of the average, on each such Trading Day, of the high and low sale 9 price of shares of each such class of Capital Stock or if no such sale takes place on such date, the average of the highest closing bid and lowest closing asked prices thereof on such date, in each case as officially reported on all national securities exchanges on which each such class of Capital Stock is then listed or admitted to trading, or (B) if no shares of any class of Capital Stock are then listed or admitted to trading on any national securities exchange, the highest closing price of any class of Capital Stock on such date in the over-the-counter market as shown by NASDAQ or, if no such shares of any class of Capital Stock are then quoted in such system, as published by the National Quotation Bureau, Incorporated or any similar successor organization, and in either case as reported by any member firm of the New York Stock Exchange selected by the Company. If no shares of any class of Capital Stock are then listed or admitted to trading on any national securities exchange and if no closing bid and asked prices thereof are then so quoted or published in the over-the-counter market, "Market Price" shall mean the higher of (x) the book value per share of Capital Stock (assuming for the purposes of this calculation the economic equivalence of all shares of all classes of Capital Stock) as determined on a fully diluted basis in accordance with generally accepted accounting principles by a firm of independent public accountants of recognized standing (which may be its regular auditors) selected by the Board of Directors of the Company as of the last day of any month ending within 60 days preceding the date as of which the determination is to be made or (y) the fair value per share of Capital Stock (assuming for the purposes of this calculation the economic equivalence of all shares of all classes of Capital Stock), as determined on a fully diluted basis in good faith by an independent brokerage firm or Standard & Poor's Corporation (as selected by the Board of Directors of the Company), as of a date which is 15 days preceding the date as of which the determination is to be made. "SECURITIES ACT" shall mean the Securities Act of 1933, as amended. "TRADING DAY" shall mean any day on which the New York Stock Exchange is open for trading on a regular basis. "TRANSACTION" shall mean any transaction to which the Company is a party at any time (including, without limitation, a merger, consolidation, sale of all or substantially all of the Company's assets, liquidation or recapitalization of the Capital Stock) in which the previously outstanding Capital Stock shall be changed into or exchanged for different securities of the Company or common stock or other securities of another corporation or interests in a noncorporate entity or other property (including cash) or any combination of any of the foregoing or in which the Capital Stock ceases to be a publicly traded security either listed on the New York Stock Exchange or the American Stock Exchange or quoted by NASDAQ or any successor thereto or comparable system. 10 "WARBURG/HANAUER WARRANTS" shall mean (i) this Stock Subscription Warrant No. 22, (ii) the Stock Subscription Warrant No. 20 issued to Joe F. Hanauer Trust to purchase 14,286 shares of Common Stock, (iii) the Stock Subscription Warrant No. 21 issued to Warburg, Pincus Investors, L.P. to purchase 185,714 shares of Common Stock, and (iv) the Stock Subscription Warrant No. 23 issued to Warburg, Pincus Investors, L.P. to purchase 139,286 shares of Common Stock, and including any amendments to the warrants referred to in (i), (ii), (iii) and (iv) of this definition. "WARRANT SECURITIES" shall mean the Warrants and the Warrant Shares. 16. MISCELLANEOUS. (a) AMENDMENTS. This Warrant and any provision hereof may be amended or waived only by an instrument in writing signed by the holders of then outstanding Warburg/Hanauer Warrants representing the right to purchase not less than a majority of the total number of shares of Common Stock issuable upon exercise of all then outstanding Warburg/Hanauer Warrants then not transferable without registration under the Securities Act and, if it is to be bound thereby, by the Company. (b) DESCRIPTIVE HEADINGS. The descriptive headings of the several paragraphs of this Warrant are inserted for purposes of reference only, and shall not affect the meaning or construction of any of the provisions hereof. 1 IN WITNESS WHEREOF, GRUBB & ELLIS COMPANY has caused this Stock Subscription Warrant to be signed by its duly authorized officer under its corporate seal, attested by its duly authorized officer, and the Warrant to be dated as of December 11, 1996. GRUBB & ELLIS COMPANY By /s/ Robert J. Walner ------------------------- Attest: By /s/ Carol Vangirsdale -------------------------- 12 FORM OF EXERCISE AGREEMENT Date To: The undersigned, pursuant to the provisions set forth in the within Stock Subscription Warrant, hereby agrees to subscribe for and purchase ________ shares of Common Stock covered by such Stock Subscription Warrant, and makes payment herewith in full therefor at the price per share provided by such Stock Subscription Warrant [in cash] [by delivery of $_____ principal amount of ______ Notes] [by cancellation of $______ of accrued and unpaid interest on ______ Notes]. Name__________________________ Title_________________________ Company_______________________ Signature_____________________ Address_______________________ ______________________________ ASSIGNMENT FOR VALUE RECEIVED hereby sells, assigns and transfers all of the rights of the undersigned under the within Stock Subscription Warrant, with respect to the number of Warrant Shares covered thereby set forth hereinbelow to: Name of Assignee Address No. of Shares - ---------------- ------- ------------- Dated: ___________, 19__. Name__________________________ Title_________________________ Company_______________________ Signature_____________________ Witness_______________________ EX-4 5 EXHIBIT 4 EXHIBIT 4 [LETTERHEAD] December 9, 1996 Mr. Joe Hanauer Combined Investments 361 Forest Avenue Suite #200 Laguna Beach, CA 92651 Dear Joe: This letter shall confirm our understanding in connection with the Closing of the transactions contemplated by the Tri-Party Agreement dated as of December 11, 1996 by and among Grubb & Ellis Company ("GBE"), Warburg, Pincus Investors, L.P. ("WPI") and yourself that WPI will cause GBE Directors nominated by WPI to nominate you for election as a Director of GBE at the 1997 and 1998 annual meetings of shareholders of GBE to serve until the following annual meeting of shareholders. WPI further agrees to vote all of its shares of Common Stock of GBE in favor of your election as a Director. Very truly yours, Warburg, Pincus Investors, L.P. by: Warburg, Pincus & Co. /s/ Reuben S. Leibowitz --------------------------------- by: Reuben S. Leibowitz General Partner EX-5 6 EXHIBIT 5 Exhibit 5 REGISTRATION RIGHTS AGREEMENT This Registration Rights Agreement (this "Agreement"), dated as of December 11, 1996, is by and among Grubb & Ellis Company, a Delaware corporation (the "Company"), Warburg, Pincus Investors, L.P., a Delaware limited partnership ("Warburg"), Joe F. Hanauer ("Hanauer"), C. Michael Kojaian, Mike Kojaian and Kenneth J. Kojaian (collectively, the "Kojaian Investors"). WHEREAS, Warburg, Hanauer and the Kojaian Investors have entered into certain agreements with the Company pursuant to which they purchased shares of common stock of the Company (the "Common Stock") and/or securities convertible into or exercisable for shares of Common Stock. WHEREAS, the parties desire to provide for certain rights to register such shares of Common Stock and such shares of Common Stock issued or issuable upon conversion or exercise of any such securities under the Securities Act of 1933, as amended, in the manner and upon the terms and conditions set forth in this Agreement. NOW, THEREFORE, in consideration of the premises and of the terms and conditions herein contained, the parties hereto mutually agree as follows: 1. DEFINITIONS. 1.1 DEFINED TERMS. In addition to the capitalized terms defined elsewhere in this Agreement, as used in this Agreement the following terms shall have the following meanings (with the singular to include the plural, except where the context otherwise requires): (a) "Affiliate" of a Person shall mean any Person directly or indirectly controlling, controlled by, or under common control with such Person. (b) "Board of Directors" shall mean the Board of Directors of the Company. (c) "Commission" shall mean the Securities and Exchange Commission. (d) "Exchange Act" shall mean the Securities Exchange Act of 1934, as amended. (e) "Hanauer Securities" shall mean the Hanauer Shares, the Hanauer Warrants and any and all issued shares of Hanauer Registrable Securities. (f) "Hanauer Shares" shall mean all shares of Common Stock held by Hanauer or the Joe F. Hanauer Trust dated June 15, 1988 (the "Hanauer Trust") on the date hereof. (g) "Hanauer Warrants" shall mean all warrants held by Hanauer or the Hanauer Trust on the date hereof to purchase shares of Common Stock. (h) "Kojaian Shares" shall mean the aggregate of 2,500,000 shares of Common Stock issued to the Kojaian Investors pursuant to the Stock Purchase Agreement dated as of December 11, 1996 between the Kojaian Investors and the Company. (i) "Kojaian Securities" shall mean the Kojaian Shares and any and all issued shares of Kojaian Registrable Securities. (j) "Person" shall mean any individual, corporation, partnership, association, trust or other entity or organization, including a government or political subdivision or agency or instrumentality thereof. (k) "Prospectus" shall mean the prospectus included in any Registration Statement, as amended or supplemented by any prospectus supplement with respect to the terms of the offering of any portion of the Registrable Securities covered by such Registration Statement and by all other amendments and supplements to the prospectus, including post-effective amendments and all material incorporated by reference in such prospectus. (l) "Registration" shall mean a Demand Registration or a Piggyback Registration. (m) "Registration Statement" shall mean any registration statement of the Company which covers any of the Registrable Securities pursuant to the provisions of this Agreement, including the Prospectus, amendments and supplements to such Registration Statement, including post-effective amendments, all exhibits and all material incorporated by reference in such Registration Statement. (n) "Securities" shall mean the Hanauer Securities, the Kojaian Securities and the Warburg Securities. (o) "Securities Act" shall mean the Securities Act of 1933, as amended. (p) "Subsidiary" shall mean any corporation, partnership, joint venture or other entity of which the Company owns, directly or indirectly, a majority of the capital stock or a majority of the partnership or other equity interests, or is a general partner. (q) "underwritten registration" or "underwritten offering" shall mean a sale of securities of the Company to an underwriter for reoffering to the public. (r) "Warburg Securities" shall mean the Warburg Shares, the Warburg Warrants and any and all issued shares of Warburg Registrable Securities. 2 (s) "Warburg Shares" shall mean all shares of Common Stock held by Warburg on the date hereof. (t) "Warburg Warrants" shall mean all warrants held by Warburg on the date hereof to purchase shares of Common Stock. 2. REGISTRATION RIGHTS. 2.1 DEMAND REGISTRATIONS. (a) At any time after the date hereof the holder or holders of at least 30% of the aggregate amount of Warburg Registrable Securities (based on the amount of Warburg Registrable Securities beneficially owned by Warburg as of the date hereof, as adjusted pursuant to the terms hereof) may make three written requests to the Company for registration under and in accordance with the provisions of the Securities Act of all or part of the Warburg Registrable Securities; PROVIDED, HOWEVER, that Warburg may make any of such three requests for registration regardless of the percentage of Warburg Registrable Securities it holds. At any time after the date hereof, the holder or holders of at least 30% of the aggregate amount of Kojaian Registrable Securities may make three written requests to the Company for registration under and in accordance with the provisions of the Securities Act of all or part of the Kojaian Registrable Securities. For purposes of this Section 2, a Person is deemed to be a holder of Registrable Securities whenever such Person owns Registrable Securities or has the right to acquire such Registrable Securities, whether or not such acquisition has actually been effected and disregarding any legal restrictions upon the exercise of such right. "Warburg Registrable Securities" shall include the Warburg Shares and all shares of Common Stock issued or issuable upon exercise of any of the Warburg Warrants, "Hanauer Registrable Securities" shall include the Hanauer Shares and all shares of Common Stock issued or issuable upon exercise of any of the Hanauer Warrants and "Kojaian Registrable Securities" shall include the Kojaian Shares (Warburg Registrable Securities, Hanauer Registrable Securities and Kojaian Registrable Securities are sometimes collectively referred to herein as "Registrable Securities"). Registrable Securities shall include all shares of Common Stock, or Common Stock issued or issuable upon conversion or exercise of any securities of the Company, which may be issued or distributed with respect to, or in exchange for, the Warburg Warrants, the Hanauer Warrants or any Common Stock referred to in the preceding sentence pursuant to a stock dividend, stock split or other distribution, merger, consolidation, recapitalization or reclassification or otherwise, and any securities of the Company which may be issued or distributed with respect to, or in exchange for, any such Common Stock or such other securities pursuant to a stock dividend, stock split or other distribution, merger, consolidation, recapitalization or reclassification or otherwise; PROVIDED, HOWEVER, that any such Registrable Securities shall cease to be Registrable Securities when (i) a Registration Statement with respect to the sale of such Registrable Securities has been declared effective under the Securities Act and such Registrable Securities have been disposed of in accordance with the plan of distribution set 3 forth in such Registration Statement, (ii) such Registrable Securities are distributed pursuant to Rule 144 or Rule 144A (or any similar provision then in force) under the Securities Act or (iii) such Registrable Securities shall have been otherwise transferred, new certificates for them not bearing a legend restricting further transfer under the Securities Act shall have been delivered by the Company and they may be resold without subsequent registration under the Securities Act; PROVIDED, FURTHER, HOWEVER, that any securities that have ceased to be Registrable Securities cannot thereafter become Registrable Securities, and any security that is issued or distributed in respect to securities that have ceased to be Registrable Securities are not Registrable Securities. Any registration requested pursuant to Section 2.1(a) shall hereinafter be referred to as a "Demand Registration." Each request for a Demand Registration shall specify the kind and aggregate amount of Registrable Securities to be registered and the intended methods of disposition thereof, which may be stated in the alternative if a shelf Registration Statement is requested pursuant to Rule 415 under the Securities Act. The Company shall be deemed to have effected a Demand Registration if (i) the Registration Statement relating to such Demand Registration is declared effective by the Commission and remains effective for at least 30 days; PROVIDED, HOWEVER, that no Demand Registration shall be deemed to have been effected if (x) such registration, after it has become effective, is interfered with by any stop order, injunction or other order or requirement of the Commission or other governmental agency or court or (y) the conditions to closing specified in the purchase agreement or underwriting agreement entered into in connection with such registration are not satisfied or (ii) at any time after the requisite holders request a Demand Registration and prior to the effectiveness of the Registration Statement, the preparation of such Registration Statement is discontinued or such Registration Statement is withdrawn or abandoned at the request of the holders of a majority of the Registrable Securities sought to be registered in such Registration Statement pursuant to Section 2.1(a), unless either (x) the holders of such Registrable Securities have elected to pay and have paid to the Company in full the Registration Expenses (as hereinafter defined) in connection with such Registration Statement, or (y) such discontinuation, withdrawal or abandonment is requested by such holders because of the occurrence of a significant negative change in market conditions or the Company's business condition or prospects since the date of the initial request for a Demand Registration. (b) DEMAND NOTICES. Promptly upon receipt of any request for a Demand Registration pursuant to Section 2.1(a) (but in no event more than five business days thereafter), the Company will serve written notice (a "Demand Notice") of any such Registration request to all other beneficial holders of Registrable Securities who then have the right to request a Demand Registration, and the Company will include in such Registration all such Registrable Securities of any holder with respect to which the Company has received written requests for inclusion therein, in which the holder has specified that such inclusion is to be deemed a Demand Registration pursuant to Section 2.1(a) hereof, within 30 days after the Demand Notice has been given to the applicable holders of Registrable Securities. All requests made pursuant to this Section 2.1(b) shall specify the kind and aggregate amount of Registrable Securities to be registered. If such initial request for a Demand Registration has specified that the offering pursuant thereto 4 shall be underwritten, then each holder making a request pursuant to this Section 2.1(b) must participate in such underwritten offering and shall not be permitted to make any other offering in connection with such Demand Registration. If such initial request for a Demand Registration has specified that the offering pursuant thereto shall be on any other basis, then each holder making a request pursuant to this Section 2.1(b) must participate in such offering on such basis and shall not be permitted to make an underwritten offering in connection with such Demand Registration. (c) PRIORITY OF DEMAND REGISTRATIONS. If the managing underwriter or agent of a Demand Registration (or, in the case of a Demand Registration not being underwritten, holders of a majority of the Registrable Securities sought to be registered therein pursuant to Section 2.1), advises the Company in writing that in its or their opinion the number of securities requested to be included in such Demand Registration exceeds the number which can be sold in such offering without a significant adverse effect on the price, timing or distribution of the securities offered, the Company will include in such Registration only the number of securities that, in the opinion of such underwriter or agent (or holders, as the case may be), can be sold without a significant adverse effect on the price, timing or distribution of the securities offered, selected pro rata among the holders that have requested to be included in such Demand Registration pursuant to Sections 2.1(a) or 2.1(g) or pursuant to other demand registration rights, based on the number of shares of Registrable Securities or other securities requested to be registered by each such holder. The Company and other holders of securities of the Company may include other securities in such Registration if, but only if, such underwriter or agent (or holders of Registrable Securities, as the case may be) concludes that such inclusion will not have a significant adverse effect on the price, timing or distribution of all the securities requested to be included in such Registration. (d) THE COMPANY'S RIGHT TO DEFER REGISTRATION. If the Company is requested to effect a Demand Registration and the Company furnishes to the holders of Registrable Securities requesting such Registration a copy of a resolution of the Board of Directors certified by the Secretary of the Company stating that in the good faith judgment of the Board of Directors it would be adverse to the Company and its securityholders for such Registration Statement to be filed on or before the date such filing would otherwise be required hereunder because such registration would interfere with any financing, acquisition, corporate reorganization or other material transaction involving the Company or any of its Subsidiaries or would require premature disclosure thereof, or would require disclosure of material information which the Company would be justified in not disclosing in the absence of such Registration, the Company shall have the right to defer such filing for a reasonable period not to exceed 90 days after receipt of the request for such Registration from such holders of Registrable Securities. If the Company shall so postpone the filing of a Registration Statement and if any holder of Registrable Securities requesting such Demand Registration pursuant to Section 2.1 within 30 days after receipt of the notice of postponement advises the Company in writing that it has determined to withdraw its request for Registration, then such Demand Registration shall be deemed to be withdrawn by it and such request shall be deemed not to have been exercised for purposes of determining 5 whether such holder retains the right to Demand Registrations pursuant to this Section 2.1. In addition, if any holder of Registrable Securities so notifies the Company of its determination to withdraw its request for Registration and, within the 60 days immediately following the deferral period, any holders of Registrable Securities make a written request to the Company for Registration of the same class of Registrable Securities that were subject to the Registration withdrawn pursuant to the preceding sentence, the Company shall have no right to defer such Registration pursuant to this paragraph (d). (e) REGISTRATION STATEMENT FORM. Registrations under this Section 2.1 shall be on such appropriate registration form of the Commission (i) as shall be selected by the Company and as shall be reasonably acceptable to the holders of a majority of the Registrable Securities requesting a Demand Registration and (ii) as shall permit the disposition of such Registrable Securities in accordance with the intended method or methods of disposition specified in such holders' requests for such Registration. If, in connection with any Registration under this Section 2.1 which is proposed by the Company to be on Form S-3 or any successor form to such Form, the managing underwriter, if any, shall advise the Company in writing that in its opinion the use of another permitted form is of material importance to the success of the offering, then such Registration shall be on such other permitted form. (f) SELECTION OF UNDERWRITERS. If any offering pursuant to a Demand Registration involves an underwritten offering, the holders of a majority of the Registrable Securities included in such Demand Registration pursuant to Section 2.1(a) shall have the right to select the managing underwriter or underwriters to administer the offering, subject to the consent of the Company, which consent shall not be unreasonably withheld. (g) HANAUER PARTICIPATION. In the event that a holder or holders of Warburg Registrable Securities requests a Demand Registration, the parties hereto agree that Hanauer and the Hanauer Trust may elect to include a proportionate share of the Hanauer Registrable Securities held by them in such Registration, in which case Hanauer (or the Hanauer Trust) shall be permitted to sell such Hanauer Registrable Securities in the same manner and on the same basis as such holder or holders of Warburg Registrable Securities, including for purposes of receiving notice pursuant to Section 2.1(b) and for determining pursuant to Section 2.1(c) the number of Registrable Securities to be selected for inclusion in such Registration. 2.2 PIGGYBACK REGISTRATIONS. (a) PARTICIPATION. Subject to Section 2.2(b) hereof, if at any time and from time to time after the date hereof, the Company files a Registration Statement under the Securities Act with respect to any offering of any equity securities by the Company for its own account or for the account of any of its equity holders (other than (i) a registration on Form S-4 or S-8 or any successor form to such Forms or (ii) any registration of securities as it relates to an offering and sale to management of the Company pursuant to any employee stock plan or other employee benefit plan arrangement) then, as soon as practicable (but in no event less than ten days prior to the proposed date of filing such 6 Registration Statement, unless notice has been given under Section 2.1(b)), the Company shall give written notice of such proposed filing to all beneficial holders of Registrable Securities, which notice may be the same as the Demand Notice given pursuant to Section 2.1(b) if applicable, and such notice shall offer the holders of Registrable Securities the opportunity to register such number of Registrable Securities as each such holder may request (a "Piggyback Registration"). Subject to Section 2.2(b), the Company shall include in such Registration Statement all Registrable Securities requested within 30 days after the receipt of any such notice (which request shall specify the Registrable Securities intended to be disposed of by such holder) to be included in the Registration for such offering pursuant to a Piggyback Registration; PROVIDED, HOWEVER, that if, at any time after giving written notice of its intention to register any securities and prior to the effective date of the Registration Statement filed in connection with such Registration, the Company shall determine for any reason not to register or to delay registration of such securities, the Company may, at its election, give written notice of such determination to each holder of Registrable Securities and, thereupon, (i) in the case of a determination not to register, shall be relieved of its obligation to register any Registrable Securities in connection with such Registration (but not from its obligation to pay the Registration Expenses in connection therewith), without prejudice, however, to the rights of any holders of Registrable Securities entitled to do so to request that such Registration be effected as a Registration under Section 2.1, and (ii) in the case of a determination to delay registering, shall be permitted to delay registering any Registrable Securities, for the same period as the delay in registering such other securities. If the offering pursuant to such Registration Statement is to be underwritten, then each holder making a request for a Piggyback Registration pursuant to this Section 2.2(a) must participate in such underwritten offering and shall not be permitted to make any other offering in connection with such Registration. If the offering pursuant to such Registration Statement is to be on any other basis, then each holder making a request for a Piggyback Registration pursuant to this Section 2.2(a) must participate in such offering on such basis and shall not be permitted to make an underwritten offering in connection with such Registration. Each holder of Registrable Securities shall be permitted to withdraw all or part of such holder's Registrable Securities from a Piggyback Registration at any time prior to the effective date thereof. (b) UNDERWRITER'S CUTBACK. The Company shall use its best efforts to cause the managing underwriter or underwriters of a proposed underwritten offering to permit the Registrable Securities requested to be included in the Registration for such offering under Section 2.2(a) or pursuant to other piggyback registration rights granted by the Company, if any ("Piggyback Securities"), to be included on the same terms and conditions as any similar securities included therein. Notwithstanding the foregoing, if the managing underwriter or underwriters of any such proposed underwritten offerings informs the Company and the holders of such Registrable Securities in writing that the total amount or kind of securities, including Piggyback Securities, which such holders and any other persons or entities intend to include in such offering would be reasonably likely to adversely affect the price or distribution of the securities offered in such offering or the timing thereof, then the securities to be included in such Registration shall be (i) first, 100% of the securities that the Company or the holder or holders making a request for a Demand Registration pursuant to Section 2.1 or pursuant to other demand registration 7 rights, as the case may be, proposes to sell, subject to the provisions of Section 2.1(c), and (ii) second, the number of securities that, in the opinion of such underwriter or underwriters, can be sold without an adverse effect on the price, timing or distribution of the securities to be included, selected pro rata among holders of Registrable Securities and holders of Piggyback Securities to the extent any of such holders has requested pursuant to Section 2.2(a) or pursuant to other incidental registration rights to be included in such Piggyback Registration, based on the number of shares of Registrable Securities or Piggyback Securities requested to be registered by each such holder. (c) NO EFFECT ON DEMAND REGISTRATIONS. No Registration of Registrable Securities effected pursuant to a request under this Section 2.2 shall be deemed to have been effected pursuant to Section 2.1 hereof or shall relieve the Company of its obligation to effect any Registration upon request under Section 2.1 hereof. 2.3 HOLD-BACK AGREEMENTS. (a) RESTRICTIONS ON PUBLIC SALE BY HOLDER OF REGISTRABLE SECURITIES. Each holder of Registrable Securities agrees, if requested by (i) the Company, (ii) the managing underwriters in an underwritten offering or (iii) the holders of a majority of the Registrable Securities included pursuant to Section 2.1 hereof in a Demand Registration not being underwritten, not to effect any public sale or distribution of securities of the Company the same as or similar to those being registered, or any securities convertible into or exchangeable or exercisable for such securities, in any Registration Statement, including a sale pursuant to Rule 144 under the Securities Act (except as part of such underwritten registration), during the 14-day period prior to, and during the 90-day period (or, with respect to a Piggyback Registration, such longer period of up to 180 days as may be required by such underwriter) beginning on, the effective date of any Registration Statement (except as part of such registration) or the commencement of the public distribution of securities, to the extent timely notified in writing by the Company or the managing underwriters (or the holders, as the case may be). (b) RESTRICTIONS ON PUBLIC SALE BY THE COMPANY AND OTHERS. The Company agrees, if requested by the managing underwriter in an underwritten offering, not to effect any public sale or distribution of any securities the same as or similar to those being registered by the Company, or any securities convertible into or exchangeable or exercisable for such securities, during the 14-day period prior to, and during the 90-day period (or, with respect to a Piggyback Registration, such longer period of up to 180 days as may be required by the underwriter) beginning on, the effective date of a Registration Statement filed under Section 2.1 or Section 2.2 hereof or the commencement of the public distribution of securities to the extent timely notified in writing by a holder of Registrable Securities covered by such Registration Statement or the managing underwriters (except as part of such registration, if permitted, or pursuant to registrations on Forms S-4 or S-8 or any successor form to such Forms or any registration of securities for offering and sale to management of the Company pursuant to any employee stock plan or other employee benefit plan arrangement). The Company agrees to use reasonable efforts to obtain from each holder of restricted securities of the Company the same as or similar to those being 8 registered by the Company, or any restricted securities convertible into or exchangeable or exercisable for any of its securities, an agreement not to effect any public sale or distribution of such securities (other than securities purchased in a public offering) during such period, except as part of any such registration if permitted. (c) NO INCONSISTENT AGREEMENTS. The Company is not presently a party to any other agreement with respect to the registration under the Securities Act of any of its securities. The Company may enter into any other such agreement; PROVIDED, HOWEVER, that the rights and benefits of a securityholder with respect to registration of the Company's securities as contained in any such other agreement shall be no more favorable than the rights and benefits of holders of Registrable Securities as contained in this Agreement. 2.4 REGISTRATION PROCEDURES. In connection with the Company's Registration obligations pursuant to Sections 2.1 and 2.2 hereof, the Company will use its best efforts to effect such registration to permit the sale of such Registrable Securities in accordance with the intended method or methods of distribution thereof, and pursuant thereto the Company will as expeditiously as possible: (a) prepare and, not later than 45 days after receipt of any request for a Demand Registration, file with the Commission a Registration Statement or Registration Statements relating to the applicable Demand Registration or Piggyback Registration including all exhibits and financial statements required by the Commission to be filed therewith, and use its best efforts to cause such Registration Statement to become effective under the Securities Act; PROVIDED, HOWEVER, that the Company may discontinue any Registration of its securities which are not Registrable Securities (and, under the circumstances specified in Section 2.1(d), may delay and, under the circumstances specified in Section 2.2(a), may delay or discontinue Registration of its securities which are Registrable Securities) at any time prior to the effective date of the Registration Statement relating thereto; (b) prepare and file with the Commission such amendments and post-effective amendments to the Registration Statement as may be requested by the holders of a majority of the Registrable Securities or as may be necessary to keep the Registration Statement effective for a period of not less than 270 days (or such shorter period which will terminate when all Registrable Securities covered by such Registration Statement have been sold or withdrawn), or, if such Registration Statement relates to an underwritten offering, such longer period as in the opinion of counsel for the underwriters a Prospectus is required by law to be delivered in connection with sales of Registrable Securities by an underwriter or dealer; cause the Prospectus to be supplemented by any required Prospectus supplement, and as so supplemented to be filed pursuant to Rule 424 under the Securities Act; and comply with the provisions of the Securities Act, the Exchange Act, and the rules and regulations promulgated thereunder with respect to the disposition of all securities covered by such Registration Statement during the applicable period in accordance with the intended method or methods of distribution by the sellers thereof set forth in such Registration Statement or supplement to the Prospectus; 9 (c) notify the selling holders of Registrable Securities and the managing underwriters, if any, and (if requested) confirm such advice in writing, as soon as practicable after notice thereof is received by the Company (i) when the Registration Statement or any amendment thereto has been filed or becomes effective, the Prospectus or any amendment or supplement to the Prospectus has been filed, and, to furnish such selling holders and managing underwriters with copies thereof, (ii) of any request by the Commission or any other federal or state governmental authority for amendments or supplements to the Registration Statement or the Prospectus or for additional information, (iii) of the issuance by the Commission of any stop order suspending the effectiveness of the Registration Statement or any order preventing or suspending the use of any preliminary Prospectus or Prospectus or the initiation or threatening of any proceedings for such purposes, (iv) if at any time the representations and warranties of the Company contemplated by paragraph (m) below cease to be true and correct and (v) of the receipt by the Company of any notification with respect to the suspension of the qualification of the Registrable Securities for offering or sale in any jurisdiction or the initiation or threatening of any proceeding for such purpose; (d) promptly notify the selling holders of Registrable Securities and the managing underwriters, if any, when the Company becomes aware of the happening of any event as a result of which the Registration Statement or the Prospectus included in such Registration Statement (as then in effect) contains any untrue statement of a material fact or omits to state a material fact necessary to make the statements therein (in the case of the Prospectus and any preliminary prospectus, in the light of the circumstances under which they were made) not misleading or, if for any other reason it shall be necessary during such time period to amend or supplement the Registration Statement or the Prospectus in order to comply with the Securities Act and, in either case as promptly as practicable thereafter, prepare and file with the Commission, and furnish without charge to the selling holders and the managing underwriters, if any, a supplement or amendment to such Registration Statement or Prospectus which will correct such statement or omission or effect such compliance; (e) make every reasonable effort to obtain the withdrawal of any stop order or other order suspending the use of any preliminary Prospectus or Prospectus or suspending any qualification of the Registrable Securities; (f) if requested by the managing underwriter or underwriters or a holder of Registrable Securities being sold in connection with an underwritten offering, promptly incorporate in a Prospectus supplement or post-effective amendment such information as the managing underwriters and the holders of a majority of the Registrable Securities being sold agree should be included therein relating to the plan of distribution with respect to such Registrable Securities, including, without limitation, information with respect to the number of Registrable Securities being sold to such underwriters, the purchase price being paid therefor by such underwriters and with respect to any other terms of the underwritten (or best efforts underwritten) offering of the Registrable Securities to be sold in such offering; and make all required filings of such Prospectus supplement or post-effective 10 amendment as soon as practicable after being notified of the matters to be incorporated in such Prospectus supplement or post-effective amendment; (g) furnish to each selling holder of Registrable Securities and each managing underwriter, without charge, one executed copy and as many conformed copies as they may reasonably request, of the Registration Statement and any amendment or post-effective amendment thereto, including financial statements and schedules, all documents incorporated therein by reference and all exhibits (including those incorporated by reference); (h) deliver to each selling holder of Registrable Securities and the underwriters, if any, without charge, as many copies of the Prospectus (including each preliminary prospectus) and any amendment or supplement thereto as such Persons may reasonably request (it being understood that the Company consents to the use of the Prospectus or any amendment or supplement thereto by each of the selling holders of Registrable Securities and the underwriters, if any, in connection with the offering and sale of the Registrable Securities covered by the Prospectus or any amendment or supplement thereto) and such other documents as such selling holder may reasonably request in order to facilitate the disposition of the Registrable Securities by such holder; (i) on or prior to the date on which the Registration Statement is declared effective, use its best efforts to register or qualify, and cooperate with the selling holders of Registrable Securities, the managing underwriter or agent, if any, and their respective counsel in connection with the registration or qualification of such Registrable Securities for offer and sale under the securities or blue sky laws of each state and other jurisdiction of the United States as any such seller, underwriter or agent reasonably requests in writing and do any and all other acts or things reasonably necessary or advisable to keep such registration or qualification in effect for so long as such Registration Statement remains in effect and so as to permit the continuance of sales and dealings therein for as long as may be necessary to complete the distribution of the Registrable Securities covered by the Registration Statement; PROVIDED that the Company will not be required to qualify generally to do business in any jurisdiction where it is not then so qualified or to take any action which would subject it to taxation or general service of process in any such jurisdiction where it is not then so subject; (j) cooperate with the selling holders of Registrable Securities and the managing underwriter or agent, if any, to facilitate the timely preparation and delivery of certificates representing Registrable Securities to be sold and not bearing any restrictive legends; and enable such Registrable Securities to be in such denominations and registered in such names as the managing underwriters may request at least two business days prior to any sale of Registrable Securities to the underwriters; (k) use its best efforts to cause the Registrable Securities covered by the applicable Registration Statement to be registered with or approved by such other governmental agencies or authorities as may be necessary to enable the seller or sellers 11 thereof or the underwriters, if any, to consummate the disposition of such Registrable Securities; (l) not later than the effective date of the applicable Registration Statement, provide a CUSIP number for all Registrable Securities and provide the applicable transfer agent with printed certificates for the Registerable Securities which are in a form eligible for deposit with The Depository Trust Company; (m) make such representations and warranties to the holders of Registrable Securities being registered, and the underwriters or agents, if any, in form, substance and scope as are customarily made by issuers in primary underwritten public offerings; (n) enter into such customary agreements (including a purchase agreement or underwriting agreement) and take all such other actions as the holders of at least a majority of any Registrable Securities being sold or the managing underwriter or agent, if any, reasonably request in order to expedite or facilitate the registration and disposition of such Registrable Securities; (o) obtain for delivery to the holders of Registrable Securities being registered and to the underwriter or agent an opinion or opinions from counsel for the Company, upon consummation of the sale of such Registrable Securities to the underwriters (the "Closing Date") in customary form and in form, substance and scope reasonably satisfactory to such holders, underwriters or agents and their counsel; (p) obtain for delivery to the Company and the underwriter or agent, with copies to the holders of Registrable Securities, a cold comfort letter from the Company's independent public accountants in customary form and covering such matters of the type customarily covered by cold comfort letters as the managing underwriter or the holders of at least a majority of the Registrable Securities being sold reasonably request, dated the effective date of the Registration Statement and brought down to the Closing Date; (q) cooperate with each seller of Registrable Securities and each underwriter or agent participating in the disposition of such Registrable Securities and their respective counsel in connection with any filings required to be made with the National Association of Securities Dealers, Inc. (the "NASD"); (r) use its best efforts to comply with all applicable rules and regulations of the Commission and make generally available to its security holders, as soon as reasonably practicable (but not more than fifteen months) after the effective date of the Registration Statement, an earnings statement satisfying the provisions of Section 11(a) of the Securities Act and the rules and regulations promulgated thereunder; (s) as promptly as practicable after filing with the Commission of any document which is incorporated by reference into the Registration Statement or the Prospectus, provide copies of such document to counsel for the selling holders of Registrable Securities and to the managing underwriters, if any; 12 (t) provide and cause to be maintained a transfer agent and registrar for all Registrable Securities covered by such Registration Statement from and after a date not later than the effective date of such Registration Statement; and (u) use its best efforts to cause all Registrable Securities covered by the Registration Statement to be listed on each securities exchange on which any of the Company's securities are then listed or quoted on each inter-dealer quotation system on which any of the Company's securities are then quoted. The Company may require each seller of Registrable Securities as to which any registration is being effected to furnish to the Company such information regarding the distribution of such securities and such other information relating to such holder and its ownership of Registrable Securities as the Company may from time to time reasonably request in writing. Each holder of Registrable Securities agrees to furnish such information to the Company and to cooperate with the Company as necessary to enable the Company to comply with the provisions of this Agreement. Each holder of Registrable Securities agrees by acquisition of such Registrable Securities that, upon receipt of any notice from the Company of the happening of any event of the kind described in Section 2.4(d) hereof, such holder will forthwith discontinue disposition of Registrable Securities pursuant to such Registration Statement until such holder's receipt of the copies of the supplemented or amended Prospectus contemplated by Section 2.4(d) hereof, or until it is advised in writing by the Company that the use of the Prospectus may be resumed, and has received copies of any additional or supplemental filings which are incorporated by reference in the Prospectus, and, if so directed by the Company, such holder will deliver to the Company (at the Company's expense) all copies, other than permanent file copies then in such holder's possession, of the Prospectus covering such Registrable Securities current at the time of receipt of such notice. In the event the Company shall give any such notice, the time periods during which such Registration Statement shall be maintained effective (including the period referred to in Section 2.4(b) hereof) shall be extended by the number of days during the period from and including the date of the giving of such notice to and including the date when each seller of Registrable Securities covered by such Registration Statement either receives the copies of the supplemented or amended Prospectus contemplated by Section 2.4(d) hereof or is advised in writing by the Company that the use of the Prospectus may be resumed. 2.5 UNDERWRITTEN OFFERINGS. (a) REQUESTED UNDERWRITTEN OFFERINGS. If requested by the underwriters for any underwritten offering by holders of Registrable Securities pursuant to a Registration requested under Section 2.1, the Company will use reasonable efforts to enter into an underwriting agreement with such underwriters for such offering, such agreement to be reasonably satisfactory in substance and form to the Company, each such holder and the underwriters and to contain such representations and warranties by the Company and such other terms as are generally prevailing in agreements of that type, including, without limitation, indemnities to the effect and to the extent provided in Section 2.8. The holders 13 of the Registrable Securities proposed to be distributed by such underwriters will cooperate with the Company in the negotiation of the underwriting agreement and will give consideration to the reasonable suggestion of the Company regarding the form thereof. Such holders of Registrable Securities to be distributed by such underwriters shall be parties to such underwriting agreement and may, at their option, require that any or all of the representations and warranties by, and the other agreements on the part of, the Company to and for the benefit of such underwriters shall also be made to and for the benefit of such holders of Registrable Securities and that any or all of the conditions precedent to the obligations of such underwriters under such underwriting agreement be conditions precedent to the obligations of such holders of Registrable Securities. Any such holder of Registrable Securities shall not be required to make any representations or warranties to or agreements with the Company or the underwriters other than representations, warranties or agreements regarding such holder, such holder's Registrable Securities, such holder's intended method of distribution and any other representations required by law. (b) INCIDENTAL UNDERWRITTEN OFFERINGS. If the Company proposes to register any of its securities under the Securities Act as contemplated by Section 2.2 and such securities are to be distributed by or through one or more underwriters, the Company, will, if requested by any holder of Registrable Securities pursuant to Section 2.2 and subject to the provisions of Section 2.2(b), use its best efforts to arrange for such underwriters to include all the Registrable Securities to be offered and sold by such holder among the securities of the Company to be distributed by such underwriters. The holders of Registrable Securities to be distributed by such underwriters shall be parties to the underwriting agreement between the Company and such underwriters and may, at their option, require that any or all of the representations and warranties by, and the other agreements on the part of, the Company to and for the benefit of such underwriters shall also be made to and for the benefit of such holders of Registrable Securities and that any or all of the conditions precedent to the obligations of such underwriters under such underwriting agreement be conditions precedent to the obligations of such holders of Registrable Securities. Any such holder of Registrable Securities shall not be required to make any representations or warranties to or agreements with the Company or the underwriters other than representations, warranties or agreements regarding such holder, such holders' Registrable Securities and such holder's intended method of distribution or any other representations required by law. (c) PARTICIPATION IN UNDERWRITTEN REGISTRATIONS. No Person may participate in any underwritten registration hereunder unless such Person (i) agrees to sell such Person's securities on the basis provided in any underwriting arrangements approved by the Persons entitled to approve such arrangements and (ii) completes and executes all questionnaires, powers of attorney, indemnities, underwriting agreements and other documents required under the terms of such underwriting arrangements. 2.6 PREPARATION; REASONABLE INVESTIGATION. In connection with the preparation and filing of each Registration Statement, the Company will give the holders of Registrable Securities registered under such Registration Statement, their underwriters, if any, and their respective counsel and accountants the opportunity to participate in the 14 preparation of such Registration Statement, each Prospectus included therein or filed with the Commission, and, to the extent practicable, each amendment thereof or supplement thereto, and give each of them such access to its books and records (to the extent customarily given to underwriters of the Company's securities) and such opportunities to discuss the business of the Company with its officers and the independent public accountants who have certified its financial statements as shall be necessary, in the opinion of such holders' and such underwriters' respective counsel, to conduct a reasonable investigation within the meaning of the Securities Act; PROVIDED, HOWEVER, that any books, records, information or documents that are designated by the Company in writing as confidential shall be kept confidential by such Persons unless disclosure thereof is required by law. 2.7 REGISTRATION EXPENSES. All expenses incident to the Company's performance of or compliance with this Agreement, including without limitation (i) all registration and filing fees, and any other fees and expenses associated with filings required to be made with the Commission or the NASD (including, if applicable, the fees and expenses of any "qualified independent underwriter" and its counsel as may be required by the rules and regulations of the NASD), (ii) all fees and expenses of compliance with state securities or blue sky laws (including fees and disbursements of counsel for the underwriters or selling holders in connection with blue sky qualifications of the Registrable Securities and determination of their eligibility for investment under the laws of such jurisdictions as the managing underwriters or holders of a majority of the Registrable Securities being sold may designate), (iii) all printing and related messenger and delivery expenses (including expenses of printing certificates for the Registrable Securities in a form eligible for deposit with The Depository Trust Company and of printing prospectuses), (iv) all fees and disbursements of counsel for the Company and of all independent certified public accountants of the Company (including the expenses of any special audit and cold comfort letters required by or incident to such performance), (v) reasonable premiums for Securities Act liability insurance if the Company so desires or the underwriters so reasonably require in accordance with then customary underwriting practice, (vi) all fees and expenses incurred in connection with the listing of the Registrable Securities on any securities exchange or quotation of the Registrable Securities on any inter-dealer quotation system, (vii) all reasonable fees and disbursements of one counsel selected by the holders of a majority of the Registrable Securities being registered in the case of a Piggyback Registration, or one counsel selected by Warburg in the case of a Demand Registration requested by Warburg pursuant to Section 2.1 and one counsel selected by the holder or holders of at least a majority of the Kojaian Registrable Securities in the case of a Demand Registration requested by the Kojaian Investors pursuant to Section 2.1, in each case to represent such holders in connection with such registration, (viii) all fees and disbursements of underwriters customarily paid by the issuers or sellers of securities, excluding underwriting discounts and commissions and transfer taxes, if any, and excluding fees and disbursements of counsel to such underwriters (other than such fees and disbursements incurred in connection with any registration or qualification of Registrable Securities under the securities or blue sky laws of any state), (ix) all fees and expenses of accountants to the holders of Registrable Securities being sold and (x) fees and expenses of other Persons retained by the Company (all such expenses being herein called "Registration Expenses"), 15 will be borne by the Company, regardless of whether the Registration Statement becomes effective (except as provided in Section 2.1 hereof). The Company will, in any event, pay its internal expenses (including, without limitation, all salaries and expenses of its officers and employees performing legal or accounting duties), the expense of any audit and the fees and expenses of any Person, including special experts, retained by the Company. 2.8 INDEMNIFICATION. (a) INDEMNIFICATION BY THE COMPANY. The Company agrees to indemnify and hold harmless, to the full extent permitted by law, each holder of Registrable Securities, its officers, directors, employees and agents and each Person who controls such holder (within the meaning of the Securities Act or the Exchange Act) from and against all losses, claims, damages, liabilities and expenses (including reasonable costs of investigation and legal expenses) arising out of or based upon any untrue or alleged untrue statement of a material fact contained in any Registration Statement, Prospectus or preliminary Prospectus or any omission or alleged omission to state therein a material fact required to be stated therein or necessary to make the statements therein not misleading, except insofar as the same are caused by or contained in any information furnished in writing to the Company by such holder expressly for use therein; PROVIDED, HOWEVER, that the Company shall not be liable in any such case to the extent that any such loss, claim, damage, liability or expense arises out of or is based upon an untrue statement or alleged untrue statement or omission or alleged omission made in any such preliminary Prospectus if (i) it is determined that it was the responsibility of such holder to provide the Person asserting such loss, claim, damage, liability or expense with a current copy of the Prospectus and such holder failed to deliver or cause to be delivered a copy of the Prospectus to such Person after the Company had furnished such holder with a sufficient number of copies of the same and (ii) the Prospectus completely corrected in a timely manner such untrue statement or omission. This indemnity shall be in addition to any liability the Company may otherwise have, shall remain in full force and effect regardless of any investigation made by or on behalf of such holder or any such officer, director, employee, agent or controlling Person and shall survive termination of this Agreement and the transfer of Registrable Securities by such holder. The Company will also indemnify underwriters, selling brokers, dealer managers and similar securities industry professionals participating in the distribution, their officers and directors and each Person who controls such Persons (within the meaning of the Securities Act and the Exchange Act) to the same extent as provided above (with appropriate modification) with respect to the indemnification of the holders of Registrable Securities, if requested. (b) INDEMNIFICATION BY THE SELLING HOLDER OF REGISTRABLE SECURITIES. Each selling holder of Registrable Securities agrees to indemnify and hold harmless, to the full extent permitted by law, the Company, its directors and officers and each Person who controls the Company (within the meaning of the Securities Act or the Exchange Act) from and against any losses, claims, damages, liabilities and expenses resulting from any untrue statement of a material fact or any omission of a material fact required to be stated in the Registration Statement, Prospectus or preliminary Prospectus or necessary to make the statements therein not misleading, to the extent, but only to the extent, that such untrue 16 statement or omission is contained in any information furnished in writing by such selling holder to the Company specifically for inclusion in such Registration Statement or Prospectus and has not been corrected in a subsequent writing prior to or concurrently with the sale of the Registrable Securities to the Person asserting such loss, claim, damage, liability or expense. This indemnity shall be in addition to any liability such selling holder may otherwise have, shall remain in full force and effect regardless of any investigation made by or on behalf of the Company or any such officer, director or controlling Person and shall survive termination of this Agreement and the transfer of Registrable Securities by such selling holder. The Company shall be entitled to receive indemnities from underwriters, selling brokers, dealer managers and similar securities industry professionals participating in the distribution, to the same extent as provided above (with appropriate modification) with respect to information so furnished in writing by such Persons specifically for inclusion in any Prospectus or Registration Statement. (c) CONDUCT OF INDEMNIFICATION PROCEEDINGS. Any Person entitled to indemnification hereunder will (i) give prompt written notice to the indemnifying party of any claim with respect to which it seeks indemnification and (ii) permit such indemnifying party to assume the defense of such claim with counsel reasonably satisfactory to the indemnified party; PROVIDED, HOWEVER, that any delay or failure to so notify the indemnifying party shall relieve the indemnifying party of its obligations hereunder only to the extent, if at all, that it is prejudiced by reason of such delay or failure; PROVIDED FURTHER, HOWEVER, that any Person entitled to indemnification hereunder shall have the right to select and employ separate counsel and to participate in the defense of such claim, but the fees and expenses of such counsel shall be at the expense of such Person unless (i) the indemnifying party has agreed in writing to pay such fees or expenses, or (ii) the indemnifying party shall have failed to assume the defense of such claim within a reasonable time after receipt of notice of such claim from the Person entitled to indemnification hereunder and employ counsel reasonably satisfactory to such Person, or (iii) in the reasonable judgment of any such Person, based upon advice of its counsel, a conflict of interest may exist between such Person and the indemnifying party with respect to such claims (in which case, if the Person notifies the indemnifying party in writing that such Person elects to employ separate counsel at the expense of the indemnifying party, the indemnifying party shall not have the right to assume the defense of such claim on behalf of such Person). If such defense is not assumed by the indemnifying party, the indemnifying party will not be subject to any liability for any settlement made without its consent (but such consent will not be unreasonably withheld), PROVIDED that an indemnifying party shall not be required to consent to any settlement involving the imposition of equitable remedies or involving the imposition of any material obligations on such indemnifying party other than financial obligations for which such indemnified party will be indemnified hereunder. No indemnifying party shall consent to entry of any judgment or enter into any settlement which does not include as an unconditional term thereof the giving by the claimant or plaintiff to such indemnified party of a release from all liability in respect to such claim or litigation. Whenever the indemnified party or the indemnifying party receives a firm offer to settle a claim for which indemnification is sought hereunder, it shall promptly notify the other of such offer. If the indemnifying party refuses to accept such offer within 20 business days after receipt of such offer (or of notice 17 thereof), such claim shall continue to be contested and, if such claim is within the scope of the indemnifying party's indemnity contained herein, the indemnified party shall be indemnified pursuant to the terms hereof. If the indemnifying party notifies the indemnified party in writing that the indemnifying party desires to accept such offer, but the indemnified party refuses to accept such offer within 20 business days after receipt of such notice, the indemnified party may continue to contest such claim and, in such event, the total maximum liability of the indemnifying party to indemnify or otherwise reimburse the indemnified party hereunder with respect to such claim shall be limited to and shall not exceed the amount of such offer, plus reasonable out-of-pocket costs and expenses (including reasonable attorneys' fees and disbursements) to the date of notice that the indemnifying party desires to accept such offer, PROVIDED that this sentence shall not apply to any settlement of any claim involving the imposition of equitable remedies or to any settlement imposing any material obligations on such indemnified party other than financial obligations for which such indemnified party will be indemnified hereunder. An indemnifying party who is not entitled to, or elects not to, assume the defense of a claim will not be obligated to pay the fees and expenses of more than one counsel for all parties indemnified by such indemnifying party with respect to such claim, unless in the written opinion of counsel to the indemnified party reasonably satisfactory to the indemnifying party, use of one counsel by the underwriters on the one hand, and by the securityholders on the other, would be expected to give rise to a conflict of interest between such underwriters, on the one hand and such securityholders on the other with respect to such claim, in which event the indemnifying party shall be obligated to pay the fees and expenses of one such additional counsel. (d) CONTRIBUTION. If for any reason the indemnification provided for in the preceding paragraphs (a) and (b) is unavailable to an indemnified party or insufficient to hold it harmless as contemplated by the preceding paragraphs (a) and (b), then the indemnifying party shall contribute to the amount paid or payable by the indemnified party as a result of such loss, claim, damage or liability in such proportion as is appropriate to reflect not only the relative benefits received by the indemnified party and the indemnifying party, but also the relative fault of the indemnified party and the indemnifying party, as well as any other relevant equitable considerations, provided that no selling holder of Registrable Securities shall be required to contribute in an amount greater than the dollar amount of the proceeds received by such selling holder with respect to the sale of any such Registrable Securities. No person guilty of fraudulent misrepresentation (within the meaning of Section 11(f) of the Securities Act) shall be entitled to contribution from any person who was not guilty of such fraudulent misrepresentation. 2.9 RULES 144 AND 144A. The Company covenants that it will file the reports required to be filed by it under the Securities Act and the Exchange Act and the rules and regulations adopted by the Commission thereunder (or, if the Company is not required to file such reports, it will, upon the request of any holder of Registrable Securities after the date that is the second anniversary of the date hereof, make publicly available other information so long as necessary to permit sales pursuant to Rules 144 or 144A under the Securities Act), and it will take such further action as any holder of Registrable Securities may reasonably request, all to the extent required from time to time to enable 18 such holder to sell Registrable Securities without registration under the Securities Act within the limitation of the exemptions provided by (i) Rules 144 or 144A under the Securities Act, as such Rules may be amended from time to time, or (ii) any similar rule or regulation hereafter adopted by the Commission. Upon the request of any holder of Registrable Securities, the Company will deliver to such holder a written statement as to whether it has complied with such requirements. 3. TRANSFER OF SECURITIES. 3.1 NOTICE OF PROPOSED TRANSFER. At the time of any transfer or sale or proposed transfer or sale of any Securities, the Company may require written notice describing briefly the manner of such transfer or sale and a written opinion of counsel for the holder thereof (who may be inside counsel) to the effect that such transfer or sale may be effected without the registration of such Securities under the Securities Act and will be made in compliance with applicable state securities and blue sky laws. The Company shall thereupon permit or cause its transfer agent (if any) to permit such transfer or sale to be effected unless the Company, within five days after receipt of such notice and opinion, shall furnish to such holder and such holder's counsel (if any) an opinion of the Company's outside counsel which (i) states that such sale or transfer may not be effected without the registration of such Securities under the Securities Act (or will not be made in compliance with applicable securities and blue sky laws) and (ii) specifies the reasons, factual, legal or both, why such counsel's opinion differs from that of holder's counsel. However, if in such written notice to the Company the transferring holder informs the Company that the transfer or sale is to a purchaser or transferee whom the transferring holder knows or reasonably believes to be a "qualified institutional buyer," as that term is defined in Rule 144A promulgated under the Securities Act, no opinion of counsel shall be required. 3.2 TERMINATION OF RESTRICTIONS. Notwithstanding the foregoing provisions of this Section 3, the restrictions imposed by this Section 3 upon the transferability of the Securities shall terminate as to any particular Securities when (i) such Securities shall have been effectively registered under the Securities Act and sold by the holder thereof in accordance with such registration, (ii) such Securities have been sold in accordance with Rule 144 or Rule 144A promulgated under the Securities Act, or (iii) written opinions to the effect that such restrictions are no longer required or necessary under any federal or state law or regulation have been received from counsel for the holder thereof (who may be inside counsel) and, if the Company shall so require, from counsel for the Company. 3.3 EXCHANGE, TRANSFER AND REPLACEMENT OF CERTIFICATES. Subject to the foregoing provisions of this Section 3, upon surrender of any certificate representing Securities duly endorsed for exchange or transfer, the Company will, at its expense, or will cause its transfer agent, at the Company's expense, to issue in exchange therefor new certificates in such denominations as may be requested representing in the aggregate the same number of Securities represented by the certificate so surrendered and registered as such stockholder may request. Upon receipt of evidence reasonably satisfactory to the Company of the loss, theft, destruction or mutilation of any certificate representing Securities and, in the case of any such loss, theft or destruction, upon delivery of an agreement of indemnity satisfactory 19 to the Company or, in the case of any such mutilation, upon surrender and cancellation of such certificate, the Company will issue, at its expense, or will cause its transfer agent, at the Company's expense, to issue a new certificate representing the same aggregate number of Securities represented by such lost, stolen, destroyed or mutilated certificate; PROVIDED, HOWEVER, that in the event of any loss, theft or destruction of any certificate representing Securities registered in the name of Warburg, Hanauer or the Kojaian Investors or any of their respective Affiliates, or in the name of any other holder which is an institutional investor or its nominee, the Company shall not require such person or Affiliate or any other holder which is an institutional investor or its nominee to furnish any indemnity or surety bond in connection with the issuance of a new certificate therefor if the Company is furnished with an affidavit of the holder (if the holder is an individual) or, otherwise, the Chairman of the Board, President, any Vice President, Treasurer or any Assistant Treasurer of the holder (or, in the case of a nominee, the beneficial owner for which such holder is serving as nominee) setting forth the fact of such loss, theft or destruction and, together with such affidavit, such holder furnishes (or, in the case of a nominee, the beneficial owner for which such holder is serving as nominee furnishes) to the Company its written agreement to indemnify the Company with respect to such loss, theft or destruction; the Company shall, however, have the right to require any holder of Securities other than Warburg, Hanauer or the Kojaian Investors or any of their respective Affiliates or any other holder which is an institutional investor or its nominee to furnish such an indemnity or surety bond. The party delivering any certificate representing Securities pursuant to this Section 3.3 will pay the cost of such delivery (including the cost of insurance against loss or theft in an amount satisfactory to the sender). 4. MISCELLANEOUS. 4.1. INJUNCTIVE RELIEF. Remedies for breach by the Company of its obligations to register the Registrable Securities shall be as otherwise set forth herein. It is hereby agreed and acknowledged that it will be impossible to measure in money the damages that would be suffered if the parties fail to comply with any of the obligations herein imposed on them and that in the event of any such failure, an aggrieved Person will be irreparably damaged and will not have an adequate remedy at law. Any such Person shall, therefore, be entitled to injunctive relief, including specific performance, to enforce such obligations, and if any action should be brought in equity to enforce any of the provisions of this Agreement, none of the parties hereto shall raise the defense that there is an adequate remedy at law. 4.2. NOTICES. All notices, other communications or documents provided for or permitted to be given hereunder, shall be made in writing and shall be given either personally by hand-delivery, by facsimile transmission, by mailing the same in a sealed envelope, registered first-class mail, postage prepaid, return receipt requested, or by air courier guaranteeing overnight delivery: (a) If to the Company: Grubb & Ellis Company 10275 W. Higgins Road, Suite 300 Rosemont, Illinois 60018 20 Attention: General Counsel Telecopy number: (847) 390-8718 With a copy to: Latham & Watkins 505 Montgomery Street, Suite 1900 San Francisco, California 94111 Attention: Scott R. Haber, Esq. Telecopy number: (415) 395-8095 (b)If to Warburg: Warburg, Pincus Investors, L.P. c/o E. M. Warburg, Pincus & Co., Inc. 466 Lexington Avenue, 10th Floor New York, New York 10023 Attention: Reuben S. Leibowitz Telecopy number: (212) 878-9351 With a copy to: Wachtell, Lipton, Rosen & Katz 51 W. 52nd Street New York, New York 10019 Attention: Andrew Brownstein, Esq. Telecopy number: (212) 403-2000 (c) If to the Kojaian Investors: Mr. C. Michael Kojaian Mr. Mike Kojaian Mr. Kenneth J. Kojaian c/o Kojaian Management Corporation 26600 Telegraph Road, Suite 450 Southfield, Michigan 48034-5300 Telecopy number: (810) 827-7550 With a copy to: Honigman, Miller, Schwartz & Cohn 2290 First National Building 660 Woodward Avenue Detroit, Michigan 48226 Attention: Don Kunz Telecopy number: (313) 962-0176 (d) If to Hanauer: Joe F. Hanauer Combined Investments, L.P. 361 Forest Avenue, Suite 200 Laguna Beach, CA 92651 Telecopy number: (714) 494-3085 Each party hereto, by written notice given to the other parties hereto in accordance with this Section 4.2 may change the address to which notices, other communications or documents are to be sent to such party. All notices, other 21 communications or documents shall be deemed to have been duly given: (i) at the time delivered by hand, if personally delivered; (ii) when receipt is acknowledged by electronic confirmation, if by facsimile transmission; (iii) four business days after being deposited in the mail, postage prepaid, if mailed; and (iv) on the next business day, if timely delivered to an air courier guaranteeing overnight delivery; PROVIDED, HOWEVER, that notices of a change of address shall be effective only upon receipt. 4.3. SUCCESSORS AND ASSIGNS. (a) This Agreement shall inure to the benefit of and be binding upon the parties, and successors and assigns of each of the parties. (b) All of the terms, covenants and agreements contained in this Agreement are solely for the benefit of the parties hereto and their respective successors and assigns as provided in Section 4.3(a), and no other parties (including, without limitation, any other stockholder or creditor of the Company, or any director, officer or employee of the Company) are intended to be benefitted by, or entitled to enforce, this Agreement. 4.4. GOVERNING LAW. This Agreement shall be governed by and construed in accordance with the laws of the State of New York, without regard to the principles of conflicts of laws. 4.5. HEADINGS. The headings in this Agreement are inserted herein for convenience of reference only and shall not limit or otherwise affect the meaning hereof. 4.6. SEVERABILITY. In the event that any one or more of the provisions contained herein, or the application thereof in any circumstance, is held invalid, illegal or unenforceable, the validity, legality and enforceability of any such provision in every other respect and of the remaining provisions contained herein shall not be affected or impaired thereby. 4.7. ENTIRE AGREEMENT; AMENDMENT. This Agreement contains the entire agreement among the parties hereto with respect to the subject matter contained herein, supersedes all prior agreements, negotiations and understandings, whether written or oral, with respect to the subject matter hereof, and may not be amended, modified or supplemented, and waivers and consents to departures from the provisions hereof may not be given, except by an instrument in writing signed the holders of not less than a majority of the Warburg Registrable Securities, the Hanauer Registrable Securities and the Kojaian Registrable Securities, treated as one class, and by the Company. There are no restrictions, promises, warranties or undertakings, other than those set forth in this Agreement. 4.8. WAIVER. No action taken pursuant to this Agreement shall be deemed to constitute a waiver by the party taking such action of compliance with any covenants or agreements contained herein. No failure to exercise and no delay in exercising any right, power or privilege of a party hereunder shall operate as a waiver nor a consent to the 22 modification of the terms hereof unless given by that party in writing. The waiver by any party hereto of a breach of any provision of this Agreement shall not operate or be construed as a waiver of any preceding or succeeding breach. 4.9. INSPECTION. So long as this Agreement shall be in effect, this Agreement shall be made available for inspection by any stockholder of the Company at the principal offices of the Company. 4.10. COUNTERPARTS. This Agreement may be executed in any number of counterparts and by the parties hereto in separate counterparts each of which when so executed shall be deemed to be an original and all of which together shall constitute one and the same agreement. 23 IN WITNESS WHEREOF, the parties hereto have caused this instrument to be duly executed as of the date first written above. GRUBB & ELLIS COMPANY By: /s/ Robert J. Walner ----------------------------------------------- Its: Senior Vice President and General Counsel ------------------------------------------- WARBURG, PINCUS INVESTORS, L.P. By Warburg, Pincus & Co., General Partner By: /s/ John Santoleri ---------------------------------------------- Its: Partner ------------------------------------------- /s/ Joe F. Hanauer - -------------------------------------------------- JOE F. HANAUER /s/ C. Michael Kojaian - -------------------------------------------------- C. MICHAEL KOJAIAN /s/ Mike Kojaian - -------------------------------------------------- MIKE KOJAIAN /s/ Kenneth J. Kojaian - -------------------------------------------------- KENNETH J. KOJAIAN -----END PRIVACY-ENHANCED MESSAGE-----