10-K

UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549

FORM 10-K

þ	ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
	For the fiscal year ended December 31, 2008
OR
o	TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
	For the transition period from to

Commission file number 1-8122

GRUBB & ELLIS COMPANY
(Exact name of registrant as specified in its charter)

Delaware	94-1424307
(State or other jurisdiction of incorporation or organization)	(IRS Employer Identification No.)

1551 North Tustin Avenue, Suite 300, Santa Ana, California 92705
(Address of principal executive offices) (Zip Code)

(714) 667-8252
(Registrant’s telephone number, including area code)

Securities registered pursuant to Section 12(b) of the Act:

Title of each class	Name of each exchange on which registered
Common Stock	New York Stock Exchange

Securities registered pursuant to Section 12(g) of the Act: None

Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act. Yes  o No  þ

Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or Section 15(d) of the Act. Yes  o No  þ

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.  Yes  þ     No  o

Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K is not contained herein and will not be contained, to the best of registrant’s knowledge, in its definitive proxy or information statements incorporated by reference in Part III of this Form 10-K or any amendment to this Form 10-K.  o

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files).  o Yes     o No

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, or a non-accelerated filer, or a smaller reporting company. See the definitions of “large accelerated filer,” “accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act. (Check one):

Large accelerated filer	o	Accelerated filer	þ
Non-accelerated filer	o	Smaller reporting company	o
(Do not check if a smaller reporting company)

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).  Yes  o No  þ

The aggregate market value of voting common stock held by non-affiliates of the registrant as of June 30, 2008 was approximately $138,632,960 based on the last sales price on June 30, 2008 on the New York Stock Exchange of $3.85 per share for the registrant’s common stock.

The number of shares outstanding of the registrant’s common stock as of May 15, 2009 was 65,265,828 shares.

GRUBB & ELLIS COMPANY
FORM 10-K

TABLE OF CONTENTS

			Page
Part I
	Item 1.	Business	1
	Item 1A.	Risk Factors	12
	Item 1B.	Unresolved Staff Comments	31
	Item 2.	Properties	31
	Item 3.	Legal Proceedings	31
	Item 4.	Submission of Matters to a Vote of Security Holders	32
Part II
	Item 5.	Market for Registrant’s Common Equity and Related Stockholder Matters	33
	Item 6.	Selected Financial Data	36
	Item 7.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	38
	Item 7A.	Quantitative and Qualitative Disclosures About Market Risk	61
	Item 8.	Financial Statements and Supplementary Data	63
	Item 9.	Changes in and Disagreements with Accountants on Accounting and Financial Disclosure	126
	Item 9A.	Controls and Procedures	126
	Item 9B.	Other Information	128
Part III
	Item 10.	Directors, Executive Officers and Corporate Governance	130
	Item 11.	Executive Compensation	136
	Item 12.	Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters	160
	Item 13.	Certain Relationships and Related Transactions and Director Independence	163
	Item 14.	Principal Accountant Fees and Services	168
Part IV
	Item 15.	Exhibits and Financial Statement Schedules	170
Schedule II — Valuation and Qualifying Accounts			178
Schedule III — Real Estate and Accumulated Depreciation			179
Signatures			181
Exhibit Index
Exhibit 4.2
Exhibit 10.61
Exhibit 10.62
Exhibit 21.1
Exhibit 23.1
Exhibit 23.2
Exhibit 31.1
Exhibit 31.2
Exhibit 32

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GRUBB & ELLIS COMPANY

PART I

Item 1.   Business.

The filing of this Annual Report on Form 10-K (“Report”) was delayed due to the need to restate certain of the Company’s financial statements which is discussed below in this Item 1 under the sub-headings “Restatement of Certain Financial Information and Special Investigation.”

General

Grubb & Ellis Company (“the Company” or “Grubb & Ellis”), a Delaware corporation founded 50 years ago in Northern California, is one of the country’s largest and most respected commercial real estate services and investment management firms. On December 7, 2007, the Company effected a stock merger (the “Merger”) with NNN Realty Advisors, Inc. (“NNN”), a real estate asset management company and nationally recognized sponsor of public non-traded real estate investment trusts (“REITs”), as well as a sponsor of tax deferred tenant-in-common (“TIC”) 1031 property exchanges and other investment programs. Upon the closing of the Merger, a change of control occurred. The former stockholders of NNN acquired approximately 60% of the Company’s issued and outstanding common stock.

With 127 owned and affiliate offices worldwide (54 owned and approximately 73 affiliates) and more than 6,000 professionals, including a brokerage sales force of more than 1,800 brokers, the Company offers property owners, corporate occupants and program investors comprehensive integrated real estate solutions, including transactions, management, consulting and investment advisory services supported by proprietary market research and extensive local market expertise.

In certain instances throughout this Report phrases such as “legacy Grubb & Ellis” or similar descriptions are used to reference, when appropriate, Grubb & Ellis prior to the Merger. Similarly, in certain instances throughout this Report the term NNN, “legacy NNN” or similar phrases are used to reference, when appropriate, NNN Realty Advisors, Inc. prior to the Merger.

Business Segment Reporting

The Company currently reports its revenue by three operating business segments in accordance with the provisions of Statement of Financial Accounting Standards (“SFAS”) No. 131, Disclosures about Segments of an Enterprise and Related Information: Investment Management, which includes providing acquisition, financing and disposition services with respect to its programs, asset management services related to its programs, and dealer-manager services by its securities broker-dealer, which facilitates capital raising transactions for its TIC, REIT and other investment programs; Transaction Services, which comprises its real estate brokerage operations; and Management Services, which includes property management, corporate facilities management, project management, client accounting, business services and engineering services for unrelated third parties and the properties owned by the programs it sponsors. Additional information on these business segments can be found in Note 18 of Notes to Consolidated Financial Statements in Item 8 of this Report. Subsequent to the Merger, the legacy NNN reportable segments were realigned into a single operating and reportable segment called Investment Management. This realignment had no impact on the Company’s consolidated balance sheet, results of operations or cash flows.

For the year ended December 31, 2008, the Company had revenues of approximately $611.8 million and loss from continuing operations of approximately $279.5 million.

Restatement of Certain Financial Information and Special Investigation

On March 16, 2009, management and the Audit Committee of the Board of Directors of the Company concluded that the Company’s previously issued audited financial statements for each of the fiscal years ended December 31, 2006 and 2007, the unaudited interim financial statements for each of the quarters ended March 31, June 30 and September 30, 2008 and selected financial data derived from the Company’s

previously issued audited financial statements for the fiscal years ended December 31, 2005 and 2004 included in the Company’s securities filings thereafter should be restated.

The Audit Committee reached this conclusion after consulting with and upon the recommendation of management. The Audit Committee and management have discussed this conclusion with Ernst & Young LLP (“EY”), the Company’s independent registered public accounting firm, and management has discussed this conclusion with Deloitte & Touche LLP (“D&T”), the independent registered public accounting firm for NNN prior to the Merger.

As a consequence, (i) the Company’s consolidated balance sheets as of December 31, 2006 and December 31, 2007, and for each of the quarters ended March 31, June 30, and September 30, 2008; (ii) the Company’s related consolidated statements of operations, stockholders’ equity and cash flows for each of the fiscal years ended December 31, 2004, December 31, 2005, December 31, 2006 and December 31, 2007 and for each of the quarters ended March 31, June 30 and September 30, 2008 and 2007, and the footnotes thereto; (iii) the related report of EY, with respect to the fiscal year ended December 31, 2007; and (iv) the related reports of D&T, with respect to the fiscal years ended December 31, 2004, December 31, 2005 and December 31, 2006, should no longer be relied upon. The restatement of the Company’s financial statements is based upon a review of the accounting treatment of certain transactions entered into by NNN with respect to certain tenant-in-common investment programs (“TIC Programs”) sponsored by NNN prior to the Merger. During this review, the Company discovered that NNN had recognized fee revenue in 2004, 2005, 2006 and 2007 and the Company had recognized fee revenue in the three interim periods in 2008 in advance of the period in which such fee revenue should have been recognized.

After considering management’s recommendation and consulting with EY, the Audit Committee has determined that NNN incorrectly recognized fee revenue under Statement of Financial Accounting Standards Statement No. 66, Accounting for Sales of Real Estate, and Statement of Position 92-1, Accounting for Real Estate Syndication Income, in 2005, 2006 and 2007 and the three interim periods in 2008 in connection with certain TIC Programs in which NNN had various forms of continuing involvement after the close of the sale of the investments in the TIC Programs to third-parties. As a result of the recognition by NNN of the applicable fee revenue in the wrong accounting period, the Company reduced retained earnings as of January 1, 2006 by approximately $8.7 million; increased revenues in 2006 by approximately $518,000; and increased revenues in 2007 by approximately $251,000.

The Audit Committee also has determined, after considering management’s recommendation and consulting with EY, that because NNN had various forms of continuing involvement after the close of the sale of the investments in the TIC Programs to third-parties, certain entities involved in the TIC Programs were variable interest entities in which the Company was the primary beneficiary and therefore are required to be consolidated in accordance with FIN 46(R), Consolidation of Variable Interest Entities an Interpretation of ARB 51. The restatement also will reflect the consolidation of these entities.

The determination to restate the Company’s financial statements was prompted by the Audit Committee being made aware in mid-December 2008 of the existence of a letter agreement, wherein a former executive of NNN caused NNN to agree to provide certain investors with a right to exchange their investment in certain TIC Programs for an investment in a different TIC Program (the “Exchange Letter”). As a consequence, the Board of Directors formed a special committee (the “Special Committee”) to investigate the facts and circumstances surrounding the Exchange Letter and to determine whether there were any other similar agreements that might impact the Company’s previously issued financial statements. The Special Committee retained independent outside counsel, Manatt Phelps & Phillips, LLP (“Manatt”), to assist it with this investigation. In connection therewith, the Special Committee asked management to review the accounting treatment regarding the Exchange Letter and any other letter agreements that might be identified in the course of the special investigation. In the course of the special investigation, the Audit Committee and management became aware of additional letter agreements authorized by former executives of NNN (collectively, the “Additional Letters”), some providing for a right of exchange similar to that contained in the Exchange Letter and others in which NNN committed to provide certain investors in certain TIC Programs a specified rate of return. Manatt has concluded its investigation and advised the Board of Directors that it did not uncover in the

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course of its investigation any other letter agreements similar to the Exchange Letter and the Additional Letters. In connection with the restatement of certain of the Company’s financial statements as described herein and in Item 8, Note 3 to the consolidated financial statements, management of the Company re-evaluated the effectiveness of its disclosure controls and procedures both prior and subsequent to the Merger. As a result of this re-evaluation, management determined that there was a control deficiency that constituted a material weakness in the Company’s internal controls prior to the Merger that was not adequately remediated as of December 31, 2008. Accordingly, additional enhancements to the control environment have been implemented in 2009 to ensure that controls related to these material weaknesses are strengthened and will operate effectively.

Transaction Services

Grubb & Ellis has a track record of over 50 years of proven performance in the commercial real estate industry and is one of the largest real estate brokerage firms in the country, offering clients the experience of thousands of successful transactions and the expertise that comes from a nationwide platform. By focusing on the overall business objectives of its clients, Grubb & Ellis utilizes its research capabilities, extensive properties database and expert negotiation skills to create, buy, sell and lease opportunities for both users and owners of commercial real estate. With a comprehensive approach to transactions, Grubb & Ellis offers a full suite of services to clients, from site selection and sale negotiations to needs analysis, occupancy projections, prospect qualification, pricing recommendations, long-term value consultation, tenant representation and consulting services. As one of the most active and largest commercial real estate brokerages in the United States, Grubb & Ellis’ traditional real estate services provide added value to the Company’s real estate investment programs by offering a comprehensive market view and local area expertise. This powerful business combination allows the Company to identify attractive investment properties and quickly acquire them for the benefit of its program investors. In addition, select brokers have the opportunity to cross-sell product through the Company’s Investment Management platform.

The Company actively engages its brokerage force in the execution of its marketing strategy. Regional and metro-area managing directors, who are responsible for operations in each major market, facilitate the development of brokers. Through the Company’s specialty practice groups, known as “Specialty Councils,” key personnel share information regarding local, regional and national industry trends and participate in national marketing activities, including trade shows and seminars. This ongoing dialogue among brokers serves to increase their level of expertise as well as their network of relationships, and is supplemented by other more formal education, including recently expanded training programs offering sales and motivational training and cross-functional networking and business development opportunities.

In some local markets where the Company does not have owned offices, it has affiliation agreements with independent real estate service providers that conduct business under the Grubb & Ellis brand. The Company’s affiliation agreements provide for exclusive mutual referrals in their respective markets, generating referral fees. The Company’s affiliation agreements are generally multi-year contracts. Through its affiliate offices, the Company has access to more than 1,000 brokers with local market research capabilities.

The Company’s Corporate Services Group provides comprehensive coordination of all required real estate related services to help realize the needs of clients’ real estate portfolios and to maximize their business objectives. These services include consulting services, lease administration, strategic planning, project management, account management and international services. As of December 31, 2008, Grubb & Ellis had in excess of 1,800 brokers at its owned and affiliate offices, of which 814 brokers were at its owned offices, down from 927 at December 31, 2007. Approximately 67% and 33% of the Company’s Transaction Services revenue were from leasing and sale transactions, respectively, during 2008.

Management Services

Grubb & Ellis delivers integrated property, facility, asset, construction, business and engineering management services to a host of corporate and institutional clients. The Company offers customized programs that focus on cost-efficient operations and tenant retention.

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The Company manages a comprehensive range of properties including headquarters, facilities and class A office space for major corporations, including many Fortune 500 companies. Grubb & Ellis’ skills extend to management of industrial, manufacturing and warehousing facilities as well as data centers, retail outlets and multi-family properties for real estate users and investors.

Additionally, Grubb & Ellis provides consulting services, including site selection, feasibility studies, exit strategies, market forecasts, appraisals, strategic planning and research services.

The Company is committed to providing unparalleled client service. In addition to expanding the scope of products and services offered, it is also focused on ensuring that it can support client relationships with best-in-class service. During 2008, the Company continued to expand the number of client service relationship managers, which provide a single point of contact to corporate clients with multi-service needs.

Grubb & Ellis Management Services, the Company’s Management Services subsidiary, was recognized as Microsoft Corporation’s top vendor of 2007 from among more than 15,000 vendors. In addition, in 2008 Grubb & Ellis secured significant new management services contracts from Kraft Foods, Sharp Healthcare and Red Mountain West. The Company also secured significant contract renewals with Ingersoll Rand and Qwest Communications. At December 31, 2008, Grubb & Ellis managed approximately 231.0 million square feet, of which 184.1 million were from third parties and 46.9 million related to its investment management programs.

Investment Management

The Company and its subsidiaries are leading sponsors of real estate investment programs that provide individuals and institutions the opportunity to invest in a broad range of real estate investment vehicles, including tax-deferred 1031 TIC exchanges, public non-traded REITs and real estate investment funds. During the year ended, more than $984.3 million in investor equity was raised for these investment programs; the Company has more than $6.8 billion of assets under management related to the various programs that it sponsors. The Company has completed transaction acquisition and disposition volume totaling approximately $11.9 billion on behalf of more than 55,000 program investors since 1998.

Investment management products are distributed through the Company’s broker-dealer subsidiary, Grubb & Ellis Securities Inc. (“GBE Securities”) (formerly NNN Capital Corp.). GBE Securities is registered with the Securities and Exchange Commission (the “SEC”), the Financial Industry Regulatory Authority (“FINRA”) and all 50 states. GBE Securities has agreements with an extensive network of broker dealers with approximately 219 selling relationships providing access to over 38,000 licensed registered representatives as of December 31, 2008. Part of the Company’s strategy is to expand its network of broker-dealers to increase the amount of equity that it raises in its various investment programs.

Grubb & Ellis Realty Investors, LLC (“GERI”) (formerly Triple Net Properties, LLC), a subsidiary of the Company, is a recognized market leader in the securitized TIC industry as measured by total equity raised according to published reports of OMNI Research and Consulting LLC (“OMNI”). This product strategy allows investors to fractionally own large, institutional-quality real estate assets with the added advantage of qualifying for deferred tax benefits on real estate capital gains. The Company currently sponsors more than 150 TIC Programs and has taken more than 50 programs full cycle (from acquisition through disposition). The Company raised $176.9 million of TIC equity in 2008.

Public non-traded REITs are registered with the SEC but are not listed on any of the securities exchanges like a traded REIT. According to the published Stanger Report, Winter 2009, by Robert A. Stanger and Co., an independent financial advisor, approximately $10.3 billion was raised in this sector in 2008. The Company sponsors two demographically focused programs that are actively raising capital, Grubb & Ellis Healthcare REIT, Inc. and Grubb & Ellis Apartment REIT, Inc. which raised $592.7 million in combined capital in 2008.

In February 2008, the Company launched its Private Client Management program for high net worth investors. This platform provides comprehensive real estate investment and advisory services to high net worth investors, offering qualified individuals, entities and corporations, the opportunity to benefit from the potential advantages of real estate investment through a passive, sole-ownership vehicle that delivers discretion to the investor. Private Client Management is open to all qualified investors seeking to build or expand their

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commercial real estate portfolio, whether their investment objectives are tax-deferred 1031 exchange driven or not. The Company raised more than $193 million of equity through Private Client Management in 2008.

In 2008, the Company started a family of U.S. and global open end mutual funds that focus on real estate securities and manage private investment funds exclusively for qualified investors through its 51% ownership in Grubb & Ellis Alesco Global Advisors, LLC (“Alesco”). The Company, through its subsidiary, Alesco, serves as the general partner and investment advisor to six hedge fund limited partnerships, five of which are required to be consolidated: Grubb & Ellis AGA Realty Income Fund, LP, AGA Strategic Realty Fund, L.P., AGA Global Realty Fund LP and AGA Realty Income Partners LP, and one mutual fund which is required to be consolidated, Grubb & Ellis Realty Income Fund. Alesco currently has $2.3 million of investment funds under management.

Through its multi-family platform, the Company provides investment management services for TIC and REIT apartment products and currently manages in excess of 13,000 apartment units through Grubb & Ellis Residential Management, Inc., the Company’s multi-family management services subsidiary.

Our Opportunity

The Company seamlessly integrates its traditional transaction and management services with the innovative investment programs of GERI. All functions of the new Company work together to provide comprehensive service to clients and program investors. Teamed with a forward-looking investment strategy that seeks to capitalize on the nation’s changing demographics, the Company’s various service offerings support its investment programs to provide clients and program investors with a full array of solutions for multiple needs. The proprietary research and demographic investing strategy of the Company establishes a foundation upon which its investment programs are based. The real estate brokerage network of the Company offers keen insight into the available pool of assets nationwide, in order to maximize acquisition opportunities for program investors. The professional property and asset management services of the Company drive value to each of the investment programs from acquisition through ultimate disposition. The Company’s management believes that it has the vision, discipline and strategy to deliver innovative solutions across the full spectrum of commercial real estate, whether it is a need for space, strategic planning or a real estate investment product that meets specific return criteria.

The Company re-branded its investment programs as Grubb & Ellis subsequent to the Merger to capitalize on the strength of the brand name. Its TIC Programs are sponsored by GERI, its REIT investment programs are now Grubb & Ellis Healthcare REIT, Inc. and Grubb & Ellis Apartment REIT, Inc. and its FINRA registered broker-dealer is now Grubb & Ellis Securities, Inc. As part of the Company’s strategic plan, management has identified more than $20.0 million of expense synergies, on an annualized basis, a portion of which has been invested in enhancing the management team with the addition of several executives in key operational and management roles.

Secured Credit Facility

On August 5, 2008, the Company amended (the “First Letter Amendment) its $75.0 million senior secured revolving credit facility revising certain terms of that certain Second Amended and Restated Credit Agreement dated as of December 7, 2007 (the “Credit Facility” or “Line of Credit”) by and among the Company, the guarantors named therein, the financial institutions identified therein as lender parties, Deutsche Bank Securities Inc., as sole book-running manager and sole lead arranger and Deutsche Bank Trust Company Americas, as the initial swing line bank, the initial issuer of Letters of Credit (as defined therein) and administrative agent for the lender parties named therein.

The First Letter Amendment, among other things, provided the Company with an extension from September 30, 2008 to March 31, 2009 to dispose of the three real estate assets that the Company had previously acquired on behalf of Grubb & Ellis Realty Advisors, Inc. (“GERA”). Additionally, the First Letter Amendment also, among other things, modified select debt covenants in order to provide greater flexibility to facilitate the Company’s TIC Programs. The modifications made to the debt covenants permit the Company and its Restricted Subsidiaries (as defined in the Credit Facility) to incur certain contingent obligations with

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respect to any guarantee of primary obligations of certain tenant-in-common syndications effected by the Company or its Restricted Subsidiaries that comply with requirements set forth in the Credit Facility.

On November 4, 2008, the Company further amended (the “Second Letter Amendment”) its Credit Facility as of September 30, 2008. The Second Letter Amendment, among other things, a) reduced the amount available under the Credit Facility from $75,000,000 to $50,000,000 by providing that no advances or letters of credit would be made available to the Company after September 30, 2008 until such time as borrowings are reduced to less than $50,000,000; b) provided that 100% of any net cash proceeds from the sale of certain real estate assets that must be sold by the Company would permanently reduce the Revolving Credit Commitments (as defined in the Credit Facility), provided that the Revolving Credit Commitments shall not be reduced to less than $50,000,000 by reason of the operation of such asset sales; and c) modified the interest rate incurred on borrowings by increasing the applicable margins by 100 basis points and by providing for an interest rate floor for any prime rate related borrowings.

Additionally, the Second Letter Amendment, among other things, reduced the limit on guarantees of primary obligations from $125,000,000 to $50,000,000, modified select financial covenants to reflect the impact of the current economic environment on the Company’s financial performance, amended certain restrictions on payments by deleting any dividend/share repurchase limitations and modified the reporting requirements of the Company with respect to real property owned or held.

As of September 30, 2008, the Company was not in compliance with certain of its financial covenants related to earnings before taxes, interest, depreciation or amortization, or EBITDA. As a result, part of the Second Letter Amendment included a provision to modify selected covenants. The Debt/EBITDA Ratio (as defined in the Credit Facility) for the quarters ending September 30, 2008 and December 31, 2008 were amended from 3.75:1.00 to 5.50:1.00, while the Debt/EBITDA Ratio for the quarters ending March 31, 2009 and thereafter remain at 3.50:1.00. The Interest Coverage Ratio (as defined in the Credit Facility) for the quarters ending September 30, 2008, December 31, 2008 and March 31, 2009 were amended from 3.50:1.00 to 3.25:1.00, while the Interest Coverage Ratio for the quarters ended June 30, 2009 and September 30, 2009 remained unchanged at 3.50:1.00 and for the quarters ended December 31, 2009 and thereafter remained unchanged at 4.00:1.00. The Recourse Debt/Core EBITDA Ratio (as defined in the Credit Facility) for the quarters ending September 30, 2008 and December 31, 2008 were amended from 2.25:1.00 to 4.25:1.00, while the Recourse Debt/Core EBITDA Ratio for the quarters thereafter remained unchanged at 2.25:1.00. The Core EBITDA (as defined in the Credit Facility) to be maintained by the Company at all times was reduced from $60.0 million to $30.0 million and the Minimum Liquidity to be maintained by the Company at all times was reduced from $25.0 million to $15.0 million. The Company was not in compliance with certain debt covenants as of December 31, 2008, all of which were effectively cured as of such date by the entering into the Third Amendment to the Credit Facility, as described below. As a consequence of the forgoing, and certain provisions of the Third Amendment to the Credit Facility, the $63.0 million outstanding under the Line of Credit has been classified as a current liability as of December 31, 2008.

Revised Credit Facility

On May 20, 2009, the Company further amended its Credit Facility by entering into a Third Amended and Restated Credit Agreement dated as of May 18, 2009 (the “Third Amendment”). The Third Amendment, among other things, bifurcates the existing credit facility into two revolving credit facilities, (i) a $38,000,000 Revolving Credit A Facility (the “Revolving Credit A Facility” or “Revolving A Credit Advances”) which is deemed fully funded as of the date of the Third Amendment and (ii) a $29,289,245 Revolving Credit B Facility (the “Revolving Credit B Facility”), comprised of revolving credit advances in the aggregate of $25,000,000 which are deemed fully funded as of the date of the Third Amendment and letters of credit advances in the aggregate amount of $4,289,245 which are issued and outstanding as of the date of the Third Amendment. The Third Amendment requires the Company to draw down $4,289,245 under the Revolving Credit B Facility on the date of the Third Amendment and deposit such funds in a cash collateral account to cash collateralize outstanding letters of credit under the Credit Facility and eliminates the swingline features of the Credit Facility and the Company’s ability to cause the lenders to issue any additional letters of credit. In addition, the Third Amendment also changes the termination date of the Credit Facility from December 7,

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2010 to March 31, 2010, subject to extension or early termination as described below, and modifies the interest rate incurred on borrowings by initially increasing the applicable margin by 450 basis points (or to 7.00% on prime rate loans and 8.00% on LIBOR based loans). The Third Amendment also eliminated specific financial covenants, and in its place, the Company is required to comply with an approved budget, that has been agreed to by the Company and the lenders, subject to agreed upon variances (“the Approved Budget”). The Company is also required under the Third Amendment, to effect a recapitalization plan (the “Recapitalization Plan”), on or before September 30, 2009 and in connection therewith to effect a prepayment of at least seventy two (72%) percent of the Revolving Credit A Advances (the “Partial Prepayment”). In the event the Company fails to effect the Recapitalization Plan and in connection therewith to effect a Partial Prepayment, the (i) lenders will have the right commencing on October 1, 2009, to exercise warrants, for nominal consideration (the “Warrants”), to purchase common stock of the Company equal to 15% of the common stock of the Company on a fully diluted basis as of such date, subject to adjustment, (ii) the applicable margin automatically increases to 11% on prime rate loans and increases to 12% on LIBOR based loans, (iii) the Company shall be required to amortize an aggregate of $10 million of the Revolving Credit A Facility in three (3) equal installments on the first business day of each of the last three (3) months of 2009, (iv) the Company is obligated to submit a revised budget by October 1, 2009, (v) the Credit Facility will terminate on January 15, 2010, and (vi) no further advances may be drawn under the Credit Facility.

In the event that Company effects the Recapitalization Plan and in connection therewith effects a Partial Prepayment on or prior to September 30, 2009, the Warrants automatically will expire and not become exercisable, the applicable margin will automatically be reduced to 3% on prime rate loans and 4% on LIBOR based loans and the Company shall have the right, subject to the requisite approval of the lenders, to seek an extension of the Credit Facility to January 5, 2011, provided the Company also pays a fee of .25% of the then outstanding commitments under the Credit Facility.

As a result of the Third Amendment the Company is required to prepay outstanding Revolving Credit A Advances (and to the extent the Revolving Credit A Facility shall be reduced to zero, prepay outstanding Revolving Credit B Advances) in an amount equal to 100% (or, after the Revolving Credit A Advances are reduced by at least the Partial Prepayment amount, in an amount equal to 50%) of Net Cash Proceeds (as defined in the Credit Agreement) from:

•  assets sales,

•  conversions of Investments (as defined in the Credit Agreement),

•  the refund of any taxes or the sale of equity interests by the Company or its subsidiaries,

•  the issuance of debt securities, or

•  any other transaction or event occurring outside the ordinary course of business of the Company or its subsidiaries;

provided, however, that (a) the Net Cash Proceeds received from the sale of the certain real property assets shall be used to prepay outstanding Revolving Credit B Advances and to the extent Revolving Credit B Advances shall be reduced to zero, to prepay outstanding Revolving Credit A Advances, (b) the Company shall prepay outstanding Revolving Credit B Advances in an amount equal to 100% of the Net Cash Proceeds from the sale of the Danbury Corporate Center in Danbury Connecticut (the “Danbury Property”) unless the Company is then not in compliance with the Recapitalization Plan in which event Revolving Credit A Advances shall be prepaid first and (c) the Company’s 2008 tax refund was used to prepay outstanding Revolving Credit B Advances upon the closing of the Third Amendment.

The Third Amendment requires the Company to (a) sell the Danbury Property by June 1, 2009, unless such date is extended with the applicable approval of the lenders and (b) use its commercially reasonable best efforts to sell four other commercial properties, including the two other GERA Properties (as defined below), by September 30, 2009.

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Certain Real Estate Held for Sale

During the first half of 2007, the Company acquired three commercial properties — the Danbury Property in Danbury, Connecticut, Abrams Center in Dallas, Texas and 6400 Shafer Court in Rosemont, Illinois — for an aggregate contract price of $122.2 million, along with acquisition costs of approximately $1.3 million, and assumed obligations of approximately $542,000. The Company acquired the three properties pursuant to its warehousing strategy to accumulate these assets with the intention to hold them for future sale to GERA, the Company’s affiliated publicly traded special purpose acquisition company formed by the Company in September 2005. The Company funded its equity position in these acquisitions primarily with borrowings from its Credit Facility.

Simultaneously with the acquisition of the third property in June 2007, the Company closed two non-recourse mortgage loan financings with Wachovia Bank, National Association in an aggregate amount of $120.5 million. The proceeds of the mortgage loans were used to finance the purchase of this third property, to fund certain required reserves for all three properties, to pay the lender’s fees and costs and to repay certain amounts borrowed by the Company through its Credit Facility with respect to the first two properties purchased.

As a result of GERA failing to obtain the requisite consents of its stockholders in February 2008 to approve the acquisition of the three commercial office properties from the Company, GERA was unable to effect a business combination within the proscribed deadline of March 3, 2008 in accordance with its charter and was required to liquidate. Consequently, pursuant to a proxy statement filed by GERA with the SEC on March 24, 2008, at a special meeting of GERA’s stockholders held on April 14, 2008, the stockholders approved the dissolution and plan of liquidation of GERA. In the first quarter of 2008 the Company wrote-off its investment in GERA of approximately $5.8 million, including its stock and warrant purchases, operating advances and third party costs. The Company also paid third-party legal, accounting, printing and other costs (other than monies paid to stockholders of GERA on liquidation) associated with the dissolution and liquidation of GERA. In addition, the various exclusive service agreements that the Company had previously entered into with GERA for transaction services, property and facilities management, and project management, were no longer of any force or effect.

As of September 30, 2008, the Company initiated a plan to sell five properties it classified as real estate held for investment in its financial statements as of September 30, 2008. These five properties are comprised of the three commercial properties that were initially intended to be transferred to GERA as discussed above (the “GERA Properties”) and two other properties that the Company previously acquired with the intention of transferring to a strategic office fund that ultimately was never launched. As of December 31, 2008, the Company had a covenant within its Credit Facility that required the sale of the GERA Properties before March 31, 2009. The downturn in the global capital markets significantly lessened the probability that the Company would be able to achieve relief from this covenant through amendment or other financial resolutions by March 31, 2009. Pursuant to SFAS No. 144, Accounting for the Impairment or Disposal of Long-Lived Assets, the Company assessed the value of the assets. In addition, the Company reviewed the valuation of its other owned properties and real estate investments. This valuation review resulted in the Company recognizing an impairment charge of approximately $90.4 million against the carrying value of the properties and real estate investments during the year ended December 31, 2008.

On October 31, 2008, the Company entered into that certain Agreement for the Purchase and Sale of Real Property and Escrow Instructions to effect the sale of the Danbury Property located at 39 Old Ridgebury Road, Danbury, Connecticut, to an unaffiliated entity for a purchase price of $76 million. This agreement was amended and restated in its entirety by that certain Danbury Merger Agreement dated as of January 23, 2009, as amended by the First Amendment to Danbury Merger Agreement dated as of January 23, 2009 (the “First Danbury Amendment”), which reduced the purchase price to $73.5 million. In accordance with the terms of the Danbury Merger Agreement, as amended by the First Danbury Amendment, the Company received one half of the buyer’s deposits in an amount of $3.125 million from the buyer upon the execution of the Danbury Merger Agreement, which released deposit remains subject to the terms of the Danbury Merger Agreement and the remaining $3.125 million of deposits continued to be held in escrow pending the closing. On May 19,

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2009, the Company and the buyer entered into the Second Amendment to the Danbury Merger Agreement (the “Second Danbury Amendment”) pursuant to which the remaining $3.125 million of deposits held in escrow were released to the Company (and remain subject to the terms of the Danbury Merger Agreement, as amended) and the purchase price was reduced to $72.4 million. In accordance with the Second Danbury Amendment, the closing of the sale of the property, is expected to occur on or before June 1, 2009.

The Third Amendment to the Credit Facility requires the Company to (a) sell the Danbury Property by June 1, 2009, unless such date is extended with the applicable approval of the lenders and (b) use its best efforts to sell the four other commercial properties, including the two other GERA Properties, by September 30, 2009.

Industry and Competition

The U.S. commercial real estate services industry is large and highly fragmented, with thousands of companies providing asset management, investment management and brokerage services. In recent years the industry has experienced substantial consolidation, a trend that is expected to continue.

The top 25 brokerage companies collectively completed nearly $1.2 trillion in investment sales and leasing transactions globally in 2007, according to the latest available survey published by National Real Estate Investor, which is the most recent available survey. The Company ranked 13th in this survey, including transactions in its affiliate offices.

Within the management services business, according to a recent survey published in 2008 by National Real Estate Investor, the top 25 companies in the industry manage over 8.3 billion square feet of commercial property. The Company ranks as the seventh largest property management company in this survey with 265.6 million square feet under management at year end 2007, including property under management in its affiliate offices. The largest company in the survey had 1.9 billion square feet under management.

The Company competes in a variety of service businesses within the commercial real estate industry. Each of these business areas is highly competitive on a national as well as local level. The Company faces competition not only from other regional and national service providers, but also from global real estate providers, boutique real estate advisory firms and appraisal firms. Although many of the Company’s competitors are local or regional firms that are substantially smaller than the Company, some competitors are substantially larger than the Company on a local, regional, national and/or international basis. The Company’s significant competitors include CB Richard Ellis, Jones Lang LaSalle and Cushman & Wakefield, all of which have global platforms. The Company believes that it needs such a platform in order to effectively compete for the business of large multi-national corporations that are increasingly seeking a single real estate services provider.

The Company believes there are only limited barriers to entry in its investment management business. Its programs face competition generally from REITs, institutional pension plans and other public and private real estate companies and private real estate investors for the acquisition of properties and for raising capital to create programs to make these acquisitions. It also competes against other real estate companies who may be chosen by a broker-dealer as an investment platform instead of the Company and with other broker-dealers and other properties for viable tenants for its programs’ properties. Finally, GBE Securities faces competition from institutions that provide or arrange for other types of financing through private or public offerings of equity or debt and from traditional bank financings. While there can be no assurances that the Company will be able to continue to compete effectively, maintain current fee levels or margins, or maintain or increase its market share, based on its competitive strengths, the Company believes that it can operate successfully in the future in this highly competitive industry. The ability to do so, however, depends upon the Company’s ability to, among other things, successfully manage through the current, unprecedented disruption and dislocation of the credit markets and the weakening national and global economics. Specifically, as our business involves the acquisition, disposition, and financing of commercial properties, many of such activities are dependent, either directly or indirectly, and in whole or in part, with the availability and cost of credit. The disruption in the global capital market which began in 2008 has adversely affected our businesses and will continue to do so until such time as credit is once again available at reasonable costs. In addition, the health of real estate

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investment and leasing markets is dependent on the level of economic activity on a regional and local basis. The significant slowdown in overall economic activity in 2008 has adversely affected many sectors of our business and will continue to do so until economic conditions change.

Environmental Regulation

Federal, state and local laws and regulations impose environmental zoning restrictions, use controls, disclosure obligations and other restrictions that impact the management, development, use, and/or sale of real estate. Such laws and regulations tend to discourage sales and leasing activities, as well as the willingness of mortgage lenders to provide financing, with respect to some properties. If transactions in which the Company is involved are delayed or abandoned as a result of these restrictions, the brokerage business could be adversely affected. In addition, a failure by the Company to disclose known environmental concerns in connection with a real estate transaction may subject the Company to liability to a buyer or lessee of property.

The Company generally undertakes a third-party Phase I investigation of potential environmental risks when evaluating an acquisition for a sponsored program. A Phase I investigation is an investigation for the presence or likely presence of hazardous substances or petroleum products under conditions that indicate an existing release, a post release or a material threat of a release. A Phase I investigation does not typically include any sampling. The Company’s programs may acquire a property with environmental contamination, subject to a determination of the level of risk and potential cost of remediation.

Various environmental laws and regulations also can impose liability for the costs of investigating or remediation of hazardous or toxic substances at sites currently or formerly owned or operated by a party, or at off-site locations to which such party sent wastes for disposal. As a property manager, the Company could be held liable as an operator for any such contamination, even if the original activity was legal and the Company had no knowledge of, or did not cause, the release or contamination. Further, because liability under some of these laws is joint and several, the Company could be held responsible for more than its share, or even all, of the costs for such contaminated site if the other responsible parties are unable to pay. The Company could also incur liability for property damage or personal injury claims alleged to result from environmental contamination, or from asbestos-containing materials or lead-based paint present at the properties that it manages. Insurance for such matters may not always be available, or sufficient to cover the Company’s losses. Certain requirements governing the removal or encapsulation of asbestos-containing materials, as well as recently enacted local ordinances obligating property managers to inspect for and remove lead-based paint in certain buildings, could increase the Company’s costs of legal compliance and potentially subject the Company to violations or claims. Although such costs have not had a material impact on the Company’s financial results or competitive position in 2008, the enactment of additional regulations, or more stringent enforcement of existing regulations, could cause the Company to incur significant costs in the future, and/or adversely impact the brokerage and management services businesses. See Note 20 of Notes to Consolidated Financial Statements in Item 8 of this Report for additional information.

Seasonality

Notwithstanding the Company’s expanded business platform as a consequence of the Merger, a substantial portion of the Company’s revenues are derived from brokerage transaction services, which are seasonal in nature. As a consequence, the Company’s revenue stream and the related commission expense are also subject to seasonal fluctuations. However, the Company’s non-variable operating expenses, which are treated as expenses when incurred during the year, are relatively constant in total dollars on a quarterly basis. The Company has typically experienced its lowest quarterly revenue from transaction services in the quarter ending March 31 of each year with higher and more consistent revenue in the quarters ending June 30 and September 30. The quarter ending December 31 has historically provided the highest quarterly level of revenue due to increased activity caused by the desire of clients to complete transactions by calendar year-end. Transaction services revenue represented 39.3% of the $611.8 million in total revenue for 2008.

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Regulation

Transaction and Property Management Services

The Company and its brokers, salespersons and, in some instances, property managers are regulated by the states in which it does business. These regulations may include licensing procedures, prescribed professional responsibilities and anti-fraud provisions. The Company’s activities are also subject to various local, state, national and international jurisdictions’ fair advertising, trade, housing and real estate settlement laws and regulations and are affected bylaws and regulations relating to real estate and real estate finance and development. Because the size and scope of real estate sales transactions have increased significantly during the past several years, both the difficulty of ensuring compliance with the numerous state statutory requirements and licensing regimes and the possible liability resulting from non-compliance have increased.

Dealer-Manager Services

The securities industry is subject to extensive regulation under federal and state law. Broker-dealers are subject to regulations covering all aspects of the securities business. In general, broker-dealers are required to register with the SEC and to be members of FINRA or the New York Stock Exchange (“NYSE”). As a member of FINRA, GBE Securities’ broker-dealer business is subject to the requirements of the Securities Exchange Act of 1934 as amended (the “Exchange Act”) and the rules promulgated thereunder relating to broker-dealers and to the Rules of Fair Practice of FINRA. These regulations establish, among other things, the minimum net capital requirements for GBE Securities’ broker-dealer business. Such business is also subject to regulation under various state laws in all 50 states and the District of Columbia, including registration requirements.

Service Marks

The Company has registered trade names and service marks for the “Grubb & Ellis” name and logo and certain other trade names. The “Grubb & Ellis” brand name is considered an important asset of the Company, and the Company actively defends and enforces such trade names and service marks.

Real Estate Markets

The Company’s business is highly dependent on the commercial real estate markets, which in turn are impacted by numerous factors, including but not limited to the general economy, availability and terms of credit and demand for real estate in local markets. Changes in one or more of these factors could either favorably or unfavorably impact the volume of transactions, demand for real estate investments and prices or lease terms for real estate. Consequently, the Company’s revenue from transaction services, investment management operations and property management fees, operating results, cash flow and financial condition are impacted by these factors, among others.

The Merger

Upon the closing of the Merger, which occurred on December 7, 2007, the 43,779,740 shares of common stock of NNN that were issued and outstanding immediately prior to the Merger were automatically converted into 38,526,171 shares of common stock of the Company, and the 2,249,850 NNN restricted stock and stock options that were issued and outstanding immediately prior to the Merger were automatically converted into 1,979,868 shares of restricted stock and stock options of the Company. The shares of the Company’s common stock issued in connection with the Merger were registered under the Securities Act of 1933, as amended (the “Securities Act”), and the Company’s common stock, including the shares of common stock issued pursuant to the Merger, continue to trade on the NYSE under the symbol “GBE.”

Unless otherwise indicated, all pre-merger NNN share data has been adjusted to reflect the conversion as a result of the Merger (see Note 10 of Notes to Consolidated Financial Statements in Item 8 of this Report for additional information).

Subsequent to the closing of the Merger, in December 2007, the Company relocated its headquarters from Chicago, Illinois to Santa Ana, California, changed its fiscal year from June 30 to December 31, and

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appointed EY as its independent registered public accounting firm to audit financial statements of the Company going forward.

Employees

As of December 31, 2008, the Company had approximately 5,000 employees including more than 800 transaction professionals working in 54 owned offices. Nearly 2,600 employees serve as property and facilities management staff at the Company’s client-owned properties and the Company’s clients reimburse the Company fully for their salaries and benefits. The Company considers its relationship with its employees to be good and has not experienced any interruptions of its operations as a result of labor disagreements.

Availability of this Report

The Company’s internet address is www.grubb-ellis.com. On the Investor Relations page on this web site, the Company posts its Annual Reports on Form 10-K, its Quarterly Reports on Form 10-Q, its Current Reports on Form 8-K and its proxy statements as soon as reasonably practicable after it files them electronically with the SEC. All such filings on the Investor Relations web page are available to be viewed free of charge. Information contained on our website is not part of this Report on Form 10-K or our other filings with the SEC. We assume no obligation to update or revise any forward-looking statements in the Annual Report on Form 10-K, whether as a result of new information, future events or otherwise, unless we are required to do so by law.

In addition, a copy of this Report on Form 10-K is available without charge by contacting Investor Relations, Grubb & Ellis Company, 1551 North Tustin Avenue, Suite 300, Santa Ana, California 92705.

Item 1A.   Risk Factors.

Risks Related to the Company’s Business in General

We currently have restricted borrowing capacity under our senior secured credit facility, our senior secured credit facility imposes operating restrictions and covenants which the Company may be unable to maintain compliance with in future periods, and in an event of default, all of our borrowings would become immediately due and payable.

Our Credit Facility imposes, and any further amendment or refinancing thereof, may impose, operating and other restrictions on the Company and many of its subsidiaries. These restrictions will affect, and in many respects will limit or prohibit, our ability and our guarantor subsidiaries’ abilities to:

•  incur or guarantee additional indebtedness;

•  create liens;

•  make investments;

•  transfer or sell assets, including the stock of subsidiaries;

•  enter into mergers or consolidations;

•  enter into transactions with affiliates;

•  issue shares of preferred stock;

•  enter into sale/leaseback transactions; and

•  pay dividends or make distributions on capital stock or redeem or repurchase capital stock.

As a condition to entering into the Third Amendment to the Credit Facility the lenders thereunder required the Company to submit for lender pre-approval the Approved Budget and the Recapitalization Plan. The Third Amendment eliminated specific financial covenants; however, the Third Amendment imposes restrictions on the Company’s ability to operate outside of the Approved Budget, subject to a permitted negative cumulative cash flow variance equal to the greater of (a) 15% cumulative negative variance between actual and projected cash flow in the Approved Budget for the applicable period and (b) a $1,500,000 cumulative negative variance

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between actual and projected cash flow in the Approved Budget for the applicable period (the “Permitted Variance”); provided, however, that the Company’s failure to comply with the Permitted Variance, as a consequence of general economic conditions or otherwise, in any week shall not constitute an Event of Default unless such noncompliance has occurred for three consecutive calendar weeks. In addition the Third Amendment also requires the Company to implement the Recapitalization Plan and complete each step provided in the Recapitalization Plan by the dates set for such completion.

In the event the Company fails to effect the Recapitalization Plan and in connection therewith to effect a Partial Prepayment on or before September 30, 2009, the (i) lenders will have the right commencing on October 1, 2009, to exercise the Warrants, for nominal consideration, to purchase common stock of the Company equal to 15% of the common stock of the Company on a fully diluted basis as of such date, subject to adjustment, (ii) the applicable margin automatically increases to 11% on prime rate loans and increases to 12% on LIBOR based loans, (iii) the Company shall be required to amortize an aggregate of $10 million of the Revolving Credit A Facility in three (3) equal installments on the first business day of each of the last three (3) months of 2009, (iv) the Company is obligated to submit a revised budget by October 1, 2009, (v) the Credit Facility will terminate on January 15, 2010, and (vi) no further advances may be drawn under the Credit Facility. In the event that the Credit Facility terminates on January 15, 2010, the Company will be required to repay the Credit Facility in its entirety at that time, and there can be no assurances that the Company will have access to alternative funding sources, or if such sources are available to the Company, that they will be on favorable terms and conditions to the Company.

In addition, the Company is required to prepay outstanding Revolving Credit A Advances (and to the extent the Revolving Credit A Facility shall be reduced to zero, prepay outstanding Revolving Credit B Advances) in an amount equal to 100% (or, after the Revolving Credit A Advances are reduced by at least the Partial Prepayment amount, in an amount equal to 50%) of Net Cash Proceeds (as defined in the Credit Agreement) from:

•  assets sales,

•  conversions of Investments (as defined in the Credit Agreement),

•  the refund of any taxes or the sale of equity interests by the Company or its subsidiaries,

•  the issuance of debt securities, or

•  any other transaction or event occurring outside the ordinary course of business of the Company or its subsidiaries;

provided, however, (a) that the Net Cash Proceeds received from the sale of the certain real property assets shall be used to prepay outstanding Revolving Credit B Advances and to the extent Revolving Credit B Advances shall be reduced to zero, to prepay outstanding Revolving Credit A Advances, (b) the Company shall prepay outstanding Revolving Credit B Advances in an amount equal to 100% of the Net Cash Proceeds from the sale of the Danbury Property unless the Company is then not in compliance with the Recapitalization Plan in which event Revolving Credit A Advances shall be prepaid first and (c) the Company’s 2008 tax refund was used to prepay outstanding Revolving Credit B Advances upon the closing of the Third Amendment.

The Company’s ability to comply with these covenants may be affected by many events beyond its control and the Company’s future operating results may not allow the Company to comply with the covenants, or in the event of a default, to remedy that default. There can be no assurance that the Company will continue to comply in future periods.

The Company’s failure to comply with these covenants or to comply with the other restrictions contained in its Credit Facility could result in a default, which could cause such indebtedness under its existing Credit Facility to become immediately due and payable. If the Company is unable to repay outstanding borrowings when due, the lenders under the Credit Facility will have the right to proceed against the collateral granted to the lenders to secure the debt, which is substantially all of the assets of the Company. In the event that the

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Company is in default of its existing Credit Facility, the Company may seek to explore a variety of options, including but not limited to accessing alternative debt or equity capital or effective asset sales, although there can be no assurances that any such alternatives will be available to the Company, or, if available to the Company, on terms and conditions favorable to the Company.

The restrictions contained in our Credit Facility could also limit our ability to plan for or react to market conditions or meet capital needs and adversely affect our ability to finance ongoing operations, acquisitions and investments.

Based upon the Third Amendment to the Credit Facility, the Company did not have any further ability to borrow under the Credit Facility as of the date of the Third Amendment, as the Credit Facility was fully drawn. The Company may only borrow under the Revolving Credit B Facility to the extent that it repays outstanding Revolving Credit B Advances thereunder and such advances are used to pay expenses in compliance with the Approved Budget or to fund Permitted Cash Reserves (as defined in the Credit Facility).

The ongoing downturn in the general economy and the real estate market has negatively impacted and could continue to negatively impact the Company’s business and financial results.

Periods of economic slowdown or recession, significantly reduced access to credit, declining employment levels, decreasing demand for real estate, declining real estate values or the perception that any of these events may occur, can reduce transaction volumes or demand for services for each of our business lines. The current recession and the downturn in the real estate market have resulted in and may continue to result in:

•  a decline in acquisition, disposition and leasing activity;

•  a decline in the supply of capital invested in commercial real estate;

•  a decline in fees collected from investment management programs, which are dependent upon demand for investment in commercial real estate; and

•  a decline in the value of real estate and in rental rates, which would cause the Company to realize lower revenue from:

•  property management fees, which in certain cases are calculated as a percentage of the revenue of the property under management; and

•  commissions or fees derived from property valuation, sales and leasing, which are typically based on the value, sale price or lease revenue commitment, respectively.

The declining real estate market in the United States, the availability and cost of credit, increased unemployment, volatile oil prices, declining consumer confidence and the instability of United States banking and financial institutions, have contributed to increased volatility, an overall economic slowdown and diminished expectations for the economy and markets going forward. The fragile state of the credit markets, the fear of a global recession for an extended period and the current economic environment have impacted real estate services and investment management firms like ours through reduced transaction volumes, falling transaction values, lower real estate valuations, liquidity restrictions, market volatility, and the loss of confidence. As a consequence, similar to other real estate services and investment management firms, our stock price has declined significantly.

These negative economic conditions have caused a reduced demand for overall amount of sale and leasing activity in the commercial real estate industry and the demand for our transaction and management services and investment management services. Our revenues and profitability depend upon on the overall demand for our services from our clients. As a result of the economic conditions in 2008, we were not in compliance with certain of our financial covenants under our Credit Facility as of September 30, 2008. In November 2008, the applicable financial covenants were amended for certain periods in the Second Letter Amendment to the Credit Facility effective as of September 30, 2008. We were not in compliance with certain debt covenants as of December 31, 2008, all of which were effectively cured as of such date by the Third Amendment. As a

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consequence of the foregoing and certain provisions of the Third Amendment, the $63.0 million outstanding under the Credit Facility has been classified as a current liability as of December 31, 2008.

The Third Amendment restricts our ability to operate outside of the Approved Budget without the permission of the requisite majority of lenders. In addition, we are required to remit Net Cash Proceeds from the sale of assets including real estate assets to repay advances under the Credit Facility and pursue additional sources of capital in accordance with the Recapitalization Plan. All of these demands put the Company’s liquidity and financial resources at risk.

Due the economic downturn, it may take us longer to dispose of real estate assets and investments and the selling prices may be lower than originally anticipated. If this occurs, fees from transaction services will be reduced. In addition, the performance of certain properties in the investment management portfolio may be negatively impacted, which would likewise affect our fees. As a result, the carrying value of certain of our real estate investments may become impaired and we could record losses as a result of such impairment or we could experience reduced profitability related to declines in real estate values. As of September 30, 2008, the Company initiated a plan to sell the properties it classified as real estate held for investment in its financial statements as of September 30, 2008. As of December 31, 2008, the Company’s Credit Facility included a covenant which required the sale of certain of these assets before March 31, 2009. The downturn in the global credit markets significantly lessened the probability that the Company would be able to achieve relief from this covenant through amendment or other financial resolutions as of March 31, 2009. Pursuant to SFAS No. 144, Accounting for the Impairment or Disposal of Long-Lived Assets, the Company assessed the value of the assets. In addition, the Company reviewed the valuation of its other owned properties and real estate investments. This valuation review resulted in the Company recognizing an impairment charge of approximately $90.4 million against the carrying value of the properties and real estate investments during the year ended December 31, 2008. The Third Amendment to the Credit Facility requires the Company to (a) sell the Danbury Property by June 1, 2009, unless such date is extended with the applicable approval of the lenders and (b) use its commercially reasonable best efforts to sell the four other commercial properties, including the two other GERA Properties, by September 30, 2009. In order to satisfy the covenants in our Credit Agreement, we may be forced to reduce the purchase price of these properties in order to sell the properties which may result in further impairment.

We are not able to predict the severity or duration of the current adverse economic environment or the disruption in the financial markets. The real estate market tends to be cyclical and related to the condition of the overall economy and to the perceptions of investors, developers and other market participants as to the economic outlook. The ongoing downturn in the general economy and the real estate market has negatively impacted and could continue to negatively impact the Company’s business and results of operations.

The ongoing adverse developments in the credit markets and the risk of continued market deterioration have adversely affected the Company’s revenues, expenses and operating results and may continue to do so.

Our business lines are sensitive to credit cost and availability as well as market place liquidity. In addition, the revenues in all our businesses are dependent to some extent on overall volume of activity and pricing in the commercial real estate market. In 2008, the credit markets experienced an unprecedented level of disruption and uncertainty. This disruption and uncertainty has reduced the availability and significantly increased the cost of most sources of funding. In certain cases, sources of funding have been eliminated.

Disruptions in the credit markets have adversely affected, and may continue to adversely affect, our business of providing services to owners, purchasers, sellers, investors and occupants of real estate in connection with acquisitions, dispositions and leasing of real property. If our clients are unable to obtain credit on favorable terms, there will be fewer completed acquisitions, dispositions and leases of property. In addition, if purchasers of real estate are not able to obtain favorable financing resulting in a lack of disposition opportunities for funds whom we act as advisor, our fee revenues will decline and we may also experience losses on real estate held for investment.

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The recent decline in real estate values and the inability to obtain financing has either eliminated or severely reduced the availability of the Company’s historical funding sources for its investment management programs, and to the extent credit remains available for these programs, it is currently more expensive. The Company may not be able to continue to access sources of funding for its investment management programs or, if available to the Company, the Company may not be able to do so on favorable terms. Any decision by lenders to make additional funds available to the Company in the future for its investment management programs will depend upon a number of factors, such as industry and market trends in our business, the lenders’ own resources and policies concerning loans and investments, and the relative attractiveness of alternative investment or lending opportunities.

The depth and duration of the current credit market and liquidity disruptions are impossible to predict. In fact, the magnitude of the recent credit market disruption has exceeded the expectations of most if not all market participants. This uncertainty limits the Company’s ability to develop future business plans and the Company believes that it limits the ability of other participants in the credit markets and the real estate markets to do so as well. This uncertainty may lead market participants to act more conservatively than in recent history, which may continue to depress demand and pricing in our markets.

If the Company fails to meet its payment or other obligations under its senior secured credit facility, then the lenders under such credit facility could foreclose on, and acquire control of, substantially all of its assets.

Any material downturn in the Company’s revenue or increase in its costs and expenses could impair its ability to meet its debt obligations. The Company’s lenders under the senior secured Credit Facility have a lien on substantially all of the Company’s assets and the assets of the Company’s subsidiaries including their respective accounts receivable, cash, general intangibles, investment property and future acquired material property. If the Company fails to meet its payment or other obligations under the Credit Facility, the lenders under such Credit Facility will be entitled to foreclose on substantially all of the assets of the Company and the Company’s subsidiaries and liquidate these assets.

We experienced additional, unanticipated costs and may have additional risk and further costs as a result of the restatement of our financial statements.

As a result of the restatement of certain audited and unaudited financial data, and the special investigation in connection therewith, we incurred substantial, additional unanticipated costs for accounting and legal fees. The restatement and special investigation was also time-consuming and affected management’s attention and resources. Further, there are no assurances that we will not become involved in legal proceedings in the future in relation to these restatements. In connection with any such potential proceedings, any incurred expenses not covered by available insurance or any adverse resolution could have a material adverse effect on the Company. Any such future legal proceedings could also be time-consuming and distract our management from the conduct of our business.

The Company may not be able to obtain additional financing when the Company needs it or on acceptable terms, and any such financing, or the failure to obtain financing, may adversely affect the market price of the Company’s common stock.

There can be no assurance that the anticipated cash flow from operations will be sufficient to meet all of the Company’s cash requirements. The Company intends to continue to make investments to support the Company’s business growth and may require additional funds to respond to business challenges. Accordingly, the Company may need to complete additional equity or debt financings to secure additional funds. The Company cannot assure you that further equity or debt financing will be available on acceptable terms, if at all. If the market price of the Company’s common stock does not increase significantly the Company will have limited ability to address financing needs through an equity offering or such equity financing may result in significant dilution to existing stockholders. In addition, the terms of any debt financing may restrict the Company’s financial and operating flexibility. The Company’s inability to obtain any needed financing, or the terms on which it may be available, could have a material adverse effect on the Company’s business.

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We have received a notice from the New York Stock Exchange (“NYSE”) that we did not meet its continued listing requirements. If we are unable to rectify this non-compliance in accordance with NYSE rules, our common stock will be delisted from trading on the NYSE, which could have a material adverse effect on the liquidity and value of our common stock.

On February 20, 2009, we received notification from NYSE Regulation, Inc. that we were not in compliance with the NYSE’s continued listing standard requiring that the average closing price of our common stock be above $1.00 per share over a 30 consecutive trading-day period. Under the NYSE’s rules, we normally would have six months, or until August 20, 2009, for our share price and average share price to comply with the share price standard. However, on February 26, 2009, the NYSE temporarily suspended the application of its continued listing criteria relating to a minimum average trading price of $1.00 until June 30, 2009. Companies currently below the $1.00 minimum level that do not regain compliance during the suspension period recommence their compliance period upon reinstitution of the share price standard and thereupon receive the remaining balance of their compliance period. If the share price and average share price of our common stock do not regain compliance with the $1.00 requirement during the suspension period, under the NYSE’s temporary rulemaking we will have until on or about December 20, 2009, in which to comply with the share price standard.

If we are unable to regain compliance with the NYSE’s continued listing standard within the required time frame, our common stock will be delisted from the NYSE. As a result, we likely would have our common stock quoted on the Over-the-Counter Bulletin Board (“OTC BB”) in order to have our common stock continue to be traded on a public market. Securities that trade on the OTC BB generally have less liquidity and greater volatility than securities that trade on the NYSE. Delisting from the NYSE also may preclude us from using certain state securities law exemptions, which could make it more difficult and expensive for us to raise capital in the future and more difficult for us to provide compensation packages sufficient to attract and retain top talent. In addition, because issuers whose securities trade on the OTC BB are not subject to the corporate governance and other standards imposed by the NYSE, and such issuers receive less news and analyst coverage, our reputation may suffer, which could result in a decrease in the trading price of our shares. The delisting of our common stock from the NYSE, therefore, could significantly disrupt the ability of investors to trade our common stock and could have a material adverse effect on the value and liquidity of our common stock.

The Company is in a highly competitive business with numerous competitors, some of which may have greater financial and operational resources than it does.

The Company competes in a variety of service disciplines within the commercial real estate industry. Each of these business areas is highly competitive on a national as well as on a regional and local level. The Company faces competition not only from other national real estate service providers, but also from global real estate service providers, boutique real estate advisory firms, consulting and appraisal firms. Depending on the product or service, the Company also faces competition from other real estate service providers, institutional lenders, insurance companies, investment banking firms, investment managers and accounting firms, some of which may have greater financial resources than the Company does. The Company is also subject to competition from other large national firms and from multi-national firms that have similar service competencies to it. Although many of the Company’s competitors are local or regional firms that are substantially smaller than it, some of its competitors are substantially larger than it on a local, regional, national or international basis. In general, there can be no assurance that the Company will be able to continue to compete effectively with respect to any of its business lines or on an overall basis, or to maintain current fee levels or margins, or maintain or increase its market share.

The TIC business in general, from which the Company has historically generated significant revenues, materially contracted in 2008.

The Company has historically generated significant revenues from fees earned through the transaction structuring and property management of its TIC Programs. In 2008, however, with the nationwide decline in real estate values and the global credit crises, the TIC industry contracted significantly. According to the research of OMNI, approximately $3.7 billion of TIC equity was raised in 2006. In 2008, the amount of TIC

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equity raised declined by approximately 66% to $1.24 billion. Moreover, OMNI has indicated that based on the current year-to-date activity through the first part of 2009, should the current trends remain constant throughout the entire calendar year, the TIC industry would raise approximately $300.0 million in 2009, an approximately 90% decline from 2006. As the Company has historically generated a significant amount of revenue from its TIC operations, the rapid and steep decline in this industry may have a material, adverse effect on the Company’s business and results of operations if it is unable to generate revenues in its other business segments, of which there can be no assurances, to make up for the loss of TIC-related revenues.

As a service-oriented company, the Company depends on key personnel, and the loss of its current personnel or its failure to hire and retain additional personnel could harm its business.

The Company depends on its ability to attract and retain highly skilled personnel. The Company believes that its future success in developing its business and maintaining a competitive position will depend in large part on its ability to identify, recruit, hire, train, retain and motivate highly skilled executive, managerial, sales, marketing and customer service personnel. Competition for these personnel is intense, and the Company may not be able to successfully recruit, assimilate or retain sufficiently qualified personnel. Since July 2008, the Company has been conducting a search to identify and hire a Chief Executive Officer. Shortly after the resignation of the Company’s Chief Executive Officer in July 2008, the Company appointed an interim Chief Executive Officer. As of the date of filing this Form 10-K, the Company has not yet identified and hired a permanent Chief Executive Officer. The Company’s ability to attract new employees may be limited by certain restrictions in its senior secured credit facility, including limitations on cash bonus payments to new hires and may only make cash payments that exceed those limits if it receives approval from the administrative agent, which cannot be guaranteed. We use equity incentives to attract and retain our key personnel. In 2008, and the first quarter of 2009, our stock price declined significantly, resulting in the decline in value of previously provided equity awards, which may result in an increase risk of loss of key personnel. The performance of our stock may also diminish our ability to offer attractive incentive awards to new hires. The Company’s failure to recruit and retain necessary executive, managerial, sales, marketing and customer service personnel could harm its business and its ability to obtain new customers.

The Company plans to expand its business to include international operations that could subject it to social, political and economic risks of doing business in foreign countries.

Although the Company does not currently conduct significant business outside the United States, the Company intends to expand its business to include international operations. There can be no assurance that the Company will be able to successfully expand its business in international markets. Current global economic conditions may restrict, limit or delay the Company’s ability to expand its business into international markets or make such expansion less economically feasible. If the Company expands into international markets, circumstances and developments related to international operations that could negatively affect the Company’s business or results of operations include, but are not limited to, the following factors:

•  lack of substantial experience operating in international markets;

•  lack of recognition of the Grubb & Ellis brand name in international markets;

•  difficulties and costs of staffing and managing international operations;

•  currency restrictions, which may prevent the transfer of capital and profits to the United States;

•  diverse foreign currency fluctuations;

•  changes in regulatory requirements;

•  potentially adverse tax consequences;

•  the responsibility of complying with multiple and potentially conflicting laws;

•  the impact of regional or country-specific business cycles and economic instability;

•  the geographic, time zone, language and cultural differences among personnel in different areas of the world;

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•  political instability; and

•  foreign ownership restrictions with respect to operations in certain countries.

Additionally, the Company may establish joint ventures with foreign entities for the provision of brokerage services abroad, which may involve the purchase or sale of the Company’s equity securities or the equity securities of the joint venture participant(s). In these joint ventures, the Company may not have the right or power to direct the management and policies of the joint venture and other participants may take action contrary to the Company’s instructions or requests and against the Company’s policies and objectives. In addition, the other participants may become bankrupt or have economic or other business interests or goals that are inconsistent with the Company. If a joint venture participant acts contrary to the Company’s interest, then it could have a material adverse effect on the Company’s business and results of operations.

Failure to manage any future growth effectively may have a material adverse effect on the Company’s financial condition and results of operations.

Management will need to successfully manage any future growth effectively. The Company has pursued an aggressive expansion strategy in the transaction services business. The integration and additional growth may place a significant strain upon management, administrative, operational and financial infrastructure. The Company’s ability to grow also depends upon its ability to successfully hire, train, supervise and manage additional executive officers and new employees, obtain financing for its capital needs, expand its systems effectively, allocate its human resources optimally, maintain clear lines of communication between its transactional and management functions and its finance and accounting functions, and manage the pressures on its management and administrative, operational and financial infrastructure. Additionally, managing future growth may be difficult due to the new geographic locations and business lines of the Company. There can be no assurance that the Company will be able to accurately anticipate and respond to the changing demands it will face as it integrates and continues to expand its operations, and it may not be able to manage growth effectively or to achieve growth at all. Any failure to manage the future growth effectively could have a material adverse effect on the Company’s business, financial condition and results of operations.

Risks Related to the Company’s Transaction Services and Management Services Business

The Company’s quarterly operating results are likely to fluctuate due to the seasonal nature of its business and may fail to meet expectations, which may cause the price of its securities to decline.

Historically, the majority of legacy Grubb & Ellis revenue has been derived from the transaction services that it provides. Such services are typically subject to seasonal fluctuations. Legacy Grubb & Ellis typically experienced its lowest quarterly revenue in the quarter ending March 31 of each year with higher and more consistent revenue in the quarters ending June 30 and September 30. The quarter ending December 31 has historically provided the highest quarterly level of revenue due to increased activity caused by the desire of clients to complete transactions by calendar year-end. However, the Company’s non-variable operating expenses, which are treated as expenses when incurred during the year, are relatively constant in total dollars on a quarterly basis. As a result, since a high proportion of these operating expenses are fixed, declines in revenue could disproportionately affect the Company’s operating results in a quarter. In addition, the Company’s quarterly operating results have fluctuated in the past and will likely continue to fluctuate in the future. If the Company’s quarterly operating results fail to meet expectations, the price of the Company’s securities could fluctuate or decline significantly.

If the properties that the Company manages fail to perform, then its business and results of operations could be harmed.

The Company’s success partially depends upon the performance of the properties it manages. The Company could be adversely affected by the nonperformance of, or the deteriorating financial condition of, certain of its clients. The revenue the Company generates from its property management business is generally a percentage of aggregate rent collections from the properties. The performance of these properties will

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depend upon the following factors, among others, many of which are partially or completely outside of the Company’s control:

•  the Company’s ability to attract and retain creditworthy tenants;

•  the magnitude of defaults by tenants under their respective leases;

•  the Company’s ability to control operating expenses;

•  governmental regulations, local rent control or stabilization ordinances which are in, or may be put into, effect;

•  various uninsurable risks;

•  financial condition of certain clients;

•  financial conditions prevailing generally and in the areas in which these properties are located;

•  the nature and extent of competitive properties; and

•  the general real estate market.

These or other factors may negatively impact the properties that the Company manages, which could have a material adverse effect on its business and results of operations.

If the Company fails to comply with laws and regulations applicable to real estate brokerage and mortgage transactions and other business lines, then it may incur significant financial penalties.

Due to the broad geographic scope of the Company’s operations and the real estate services performed, the Company is subject to numerous federal, state and local laws and regulations specific to the services performed. For example, the brokerage of real estate sales and leasing transactions requires the Company to maintain brokerage licenses in each state in which it operates. If the Company fails to maintain its licenses or conduct brokerage activities without a license or violate any of the regulations applicable to our licenses, then it may be required to pay fines (including treble damages in certain states) or return commissions received or have our licenses suspended or revoked. In addition, because the size and scope of real estate sales transactions have increased significantly during the past several years, both the difficulty of ensuring compliance with the numerous state licensing regimes and the possible loss resulting from non-compliance have increased. Furthermore, the laws and regulations applicable to the Company’s business, both in the United States and in foreign countries, also may change in ways that increase the costs of compliance. The failure to comply with both foreign and domestic regulations could result in significant financial penalties which could have a material adverse effect on the Company’s business and results of operations.

The Company may have liabilities in connection with real estate brokerage and property and facilities management activities.

As a licensed real estate broker, the Company and its licensed employees and independent contractors that work for it are subject to statutory due diligence, disclosure and standard-of-care obligations. Failure to fulfill these obligations could subject the Company or its employees to litigation from parties who purchased, sold or leased properties that the Company or they brokered or managed. The Company could become subject to claims by participants in real estate sales, as well as building owners and companies for whom we provide management services, claiming that the Company did not fulfill its statutory obligations as a broker.

In addition, in the Company’s property and facilities management businesses, it hires and supervises third-party contractors to provide construction and engineering services for its managed properties. While the Company’s role is limited to that of a supervisor, the Company may be subject to claims for construction defects or other similar actions. Adverse outcomes of property and facilities management litigation could have a material adverse effect on the Company’s business, financial condition and results of operations.

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Environmental regulations may adversely impact the Company’s business and/or cause the Company to incur costs for cleanup of hazardous substances or wastes or other environmental liabilities.

Federal, state and local laws and regulations impose various environmental zoning restrictions, use controls, and disclosure obligations which impact the management, development, use, and/or sale of real estate. Such laws and regulations tend to discourage sales and leasing activities, as well as mortgage lending availability, with respect to some properties. A decrease or delay in such transactions may adversely affect the results of operations and financial condition of the Company’s real estate brokerage business. In addition, a failure by the Company to disclose environmental concerns in connection with a real estate transaction may subject it to liability to a buyer or lessee of property.

In addition, in its role as a property manager, the Company could incur liability under environmental laws for the investigation or remediation of hazardous or toxic substances or wastes at properties it currently or formerly managed, or at off-site locations where wastes from such properties were disposed. Such liability can be imposed without regard for the lawfulness of the original disposal activity, or the Company’s knowledge of, or fault for, the release or contamination. Further, liability under some of these laws may be joint and several, meaning that one liable party could be held responsible for all costs related to a contaminated site. The Company could also be held liable for property damage or personal injury claims alleged to result from environmental contamination, or from asbestos-containing materials or lead-based paint present at the properties it manages. Insurance for such matters may not be available or sufficient.

Certain requirements governing the removal or encapsulation of asbestos-containing materials, as well as recently enacted local ordinances obligating property managers to inspect for and remove lead-based paint in certain buildings, could increase the Company’s costs of legal compliance and potentially subject it to violations or claims. Although such costs have not had a material impact on its financial results or competitive position during fiscal year 2006, 2007 or 2008, the enactment of additional regulations, or more stringent enforcement of existing regulations, could cause it to incur significant costs in the future, and/or adversely impact its brokerage and management services businesses.

Risks Related to the Company’s Investment Management and Broker-Dealer Business

Declines in asset value and reductions in distributions in investment programs could adversely affect the Company business, as it could cause harm to the Company’s reputation, cause the loss of management contracts and third-party broker-dealer selling agreements, limit the Company’s ability to sign future third-party broker-dealer selling agreements and potentially expose the Company to legal liability.

The current market value of many of the properties owned through the Company’s investment programs have recently decreased as a result of the overall decline in the economy and commercial real estate generally. In addition, there have been reductions in distributions in numerous investment programs in 2008, in certain instances to a zero percent distribution rate. Significant declines in value and reductions in distributions in the investment programs sponsored by the Company could adversely affect the Company’s reputation and the Company’s ability to attract investors for future investment programs. In addition, significant declines in value and reductions in distributions could cause the Company to lose asset and property management contracts for its investment management programs, cause the Company to lose third-party broker-dealer selling agreements for existing investment programs, including its REITs, and limit the Company’s ability to sign future third-party broker-dealer agreements. The loss of value may be significant enough to cause certain investment programs to go into foreclosure or result in a complete loss of equity for program investors. Significant losses in asset value and investor equity and reductions in distributions increases the risk of claims or legal actions by program investors. Any such legal liability could result in further damage to the Company’s reputation, loss of third-party broker-dealer selling agreements and incurrence of legal expenses.

The Company currently provides its Investment Management services primarily to its programs. Its revenue depends on the number of its programs, on the price of the properties acquired or disposed of by these programs, and on the revenue generated by the properties under its management.

The Company derives fees for Investment Management services based on a percentage of the price of the properties acquired or disposed of by its programs and for management services based on a percentage of the

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rental amounts of the properties in its programs. The Company is responsible for the management of all of the properties owned by its programs, but as of December 31, 2008 it had subcontracted the property management of approximately 18.0% of its programs’ office, medical office and healthcare related facilities and retail properties (based on square footage) and 30.3% of its programs’ multi-family apartment units to third parties. For REITs, investment decisions are controlled by the Board of Directors of REITs that are independent of the Company. Investment decisions of these Boards affect the fees earned by the Company. As a result, if any of the Company’s programs are unsuccessful, both its Transaction Services and Investment Management services fees will be reduced, if any are paid at all. In addition, failures of the Company’s programs to provide competitive investment returns could significantly impair its ability to market future programs. The Company’s inability to spread risk among a large number of programs could cause it to be over-reliant on a limited number of programs for its revenues. There can be no assurance that the Company will maintain current levels of transaction and management services for its programs’ properties.

The Company may be unable to grow its programs, which would cause it to fail to satisfy its business strategy.

A significant element of the Company business strategy is the growth in the number of its programs. The consummation of any future program will be subject to raising adequate capital for the investment, identifying appropriate assets for acquisition and effectively and efficiently closing the transactions. There can be no assurance that the Company will be able to identify and invest in additional properties or will be able to raise adequate capital for new programs in the future. If the Company is unable to consummate new programs in the future, it will not be able to continue to grow the revenue it receives from either transaction or management services.

The inability to access investors for the Company’s programs through broker-dealers or other intermediaries could have a material adverse effect on its business.

The Company’s ability to source capital for its programs depends significantly on access to the client base of securities broker-dealers and other financial investment intermediaries that may offer competing investment products. The Company believes that its future success in developing its business and maintaining a competitive position will depend in large part on its ability to continue to maintain these relationships as well as finding additional securities broker-dealers to facilitate offerings by its programs or to find investors for the Company’s REITs, TIC Programs and other investment programs. The Company cannot be sure that it will continue to gain access to these channels. In addition, competition for capital is intense and the Company may not be able to obtain the capital required to complete a program. The inability to have this access could have a material adverse effect on its business and results of operations.

The termination of any of the Company’s broker-dealer relationships, especially given the limited number of key broker-dealers, could have a material adverse effect on its business.

The Company’s securities programs are sold through third-party broker-dealers who are members of its selling group. While the Company has established relationships with its selling group, it is required to enter into a new agreement with each member of the selling group for each new program it offers. In addition, the Company’s programs may be removed from a selling broker-dealer’s approved program list at any time for any reason. The Company cannot assure you of the continued participation of existing members of its selling group nor can the Company make an assurance that its selling group will expand. While the Company continues to diversify and add new investment channels for its programs, a significant portion of the growth in recent years in the number of TIC Programs it sponsors and in its REITs has been as a result of capital raised by a relatively limited number of broker-dealers. Loss of any of these key broker-dealer relationships, or the failure to develop new relationships to cover the Company’s expanding business through new investment channels, could have a material adverse effect on its business and results of operations.

Misconduct by third-party selling broker-dealers or the Company’s sales force, could have a material adverse effect on its business.

The Company relies on selling broker-dealers and the Company’s sales force to properly offer its securities programs to customers in compliance with its selling agreements and with applicable regulatory requirements.

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While these persons are responsible for their activities as registered broker-dealers, their actions may nonetheless result in complaints or legal or regulatory action against the Company.

A significant amount of the Company’s revenue has historically been derived from fees earned through the transaction structuring and property management of its TIC Programs, which programs rely primarily on Section 1031 of the Internal Revenue Code to provide for deferral of capital gains taxes to make these programs attractive. A change in this tax code section or a complete revocation of this section as it relates specifically to TICs could materially impact these programs.

Section 1031 of the Internal Revenue Code provides for the deferral of capital gains taxes which would ordinarily arise from the sale of real estate through a tax-deferred exchange of property, which defers the recognition of capital gains tax until such time as the replacement property is sold in a taxable transaction. These transactions are referred to as 1031 exchanges. In 2002, the Internal Revenue Service, or IRS, issued advance ruling guidelines outlining the requirements for properly structured TIC arrangements, which the Company believes validate the TIC structure generally and as it employs it. However, as recently as May 2006, the Senate Finance Committee proposed a bill in the negotiations over the budget reconciliation tax-cutting package to modify Section 1031 treatment for TICs as a way to raise additional tax revenue. The proposal was unsuccessful, but the Company cannot assure you that in the future there will not be attempts to limit or disallow the tax deferral benefits for TIC transactions. For the year ended December 31, 2008, approximately 1.4% of the Company’s total revenue was derived from TIC acquisition fees, although this amount is declining due to a significant contraction in the industry in 2008 (see Risk Factor above, “The TIC business in general, from which the Company has historically generated significant revenues, materially contracted in 2008”) If the Company were no longer able to structure TIC Programs as 1031 exchanges for its investors, it could lose a significant amount of revenue in the future, which might materially affect its results of operations. Moreover, any attempt to limit or disallow the tax deferral benefits of the 1031 exchange generally would have a material adverse effect on the real estate industry generally and on the Company’s business and results of operations.

A significant amount of the Company’s programs are structured to provide favorable tax treatment to investors or REITs. If a program fails to satisfy the requirements necessary to permit this favorable tax treatment, the Company could be subject to claims by investors and its reputation for structuring these transactions would be negatively affected, which would have an adverse effect on its financial condition and results of operations.

The Company structures TIC Programs and public non-traded REITs to provide favorable tax treatment to investors. For example, its TIC investors are able to defer the recognition of gain on sale of investment or business property if they enter into a 1031 exchange. Similarly, qualified REITs generally are not subject to federal income tax at corporate rates, which permits REITs to make larger distributions to investors (i.e. without reduction for federal income tax imposed at the corporate level). If the Company fails to properly structure a TIC transaction or if a REIT fails to satisfy the complex requirements for qualification and taxation as a REIT under the Internal Revenue Code, the Company could be subject to claims by investors as a result of additional tax they may be required to pay or because they are unable to receive the distributions they expected at the time they made their investment. In addition, any failure to satisfy applicable tax regulations in structuring its programs would negatively affect the Company’s reputation, which would in turn affect its ability to earn additional fees from new programs. Claims by investors could lead to losses and any reduction in the Company’s fees would have a material adverse effect on its revenues.

Any future co-investment activities the Company undertakes could subject it to real estate investment risks which could lead to the need for substantial capital contributions, which may impact its cash flows and financial condition and, if it is unable to make them, could damage its reputation and result in adverse consequences to its holdings.

The Company may from time to time invest its capital in certain real estate investments with other real estate firms or with institutional investors such as pension plans. Any co-investment will generally require the Company to make initial capital contributions, and some co-investment entities may request additional capital from the Company and its subsidiaries holding investments in those assets. These contributions could

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adversely impact the Company’s cash flows and financial condition. Moreover, the failure to provide these contributions could have adverse consequences to the Company’s interests in these investments. These adverse consequences could include damage to the Company’s reputation with its co-investment partners as well as dilution of ownership and the necessity of obtaining alternative funding from other sources that may be on disadvantageous terms, if available at all.

Geographic concentration of program properties may expose the Company’s programs to regional economic downturns that could adversely impact their operations and, as a result, the fees the Company is able to generate from them, including fees on disposition of the properties as the Company may be limited in its ability to dispose of properties in a challenging real estate market.

The Company’s programs generally focus on acquiring assets satisfying particular investment criteria, such as type or quality of tenants. There is generally no or little focus on the geographic location of a particular property. The Company cannot guarantee, however, that its programs will have, or will be able to maintain, a significant amount of geographic diversity. Although the Company’s property programs are located in 31 states, a majority of these properties (by square footage) are located in Texas, California, Florida and North Carolina. Geographic concentration of properties exposes the Company’s programs to economic downturns in the areas where the properties are located. A regional recession or other major, localized economic disruption in a region, such as earthquakes and hurricanes, in any of these areas could adversely affect the Company’s programs’ ability to generate or increase their operating revenues, attract new tenants or dispose of unproductive properties. Any reduction in program revenues would effectively reduce the fees the Company generates from them, which would adversely affect the Company’s results of operations and financial condition.

The failure of Triple Net Properties, LLC, recently renamed Grubb & Ellis Realty Investors, LLC (“GERI”) and Triple Net Properties Realty, Inc. (“Realty”), subsidiaries of the Company acquired in the Merger, to hold certain required real estate licenses may subject Realty and the Company to penalties, such as fines, restitution payments and termination of management agreements, and to the suspension or revocation of certain broker licenses.

Although Realty was required to have real estate licenses in states in which it acted as a broker for NNN’s investment programs and received real estate commissions prior to 2007, Realty did not hold a license in certain of those states when it earned fees for those services. In addition, almost all of GERI’s revenue was based on an arrangement with Realty to share fees from NNN’s programs. GERI did not hold a real estate license in any state, although most states in which properties of NNN’s programs were located may have required GERI to hold a license in order to share fees. As a result, Realty and the Company may be subject to penalties, such as fines (which could be a multiple of the amount received), restitution payments and termination of management agreements, and to the suspension or revocation of certain of Realty’s real estate broker licenses.

If third-party managers providing property management services for the Company’s programs’ office, medical office and healthcare related facilities, retail and multi-family properties are negligent in their performance of, or default on, their management obligations, the tenants may not renew their leases or the Company may become subject to unforeseen liabilities. If this occurs, it could have an adverse effect on the Company’s financial condition and operating results.

The Company has entered into agreements with third-party management companies to provide property management services for a significant number of the Company’s programs’ properties, and the Company expects to enter into similar third-party management agreements with respect to properties the Company’s programs acquire in the future. The Company does not supervise these third-party managers and their personnel on a day-to-day basis and the Company cannot assure you that they will manage the Company’s programs’ properties in a manner that is consistent with their obligations under the Company’s agreements, that they will not be negligent in their performance or engage in other criminal or fraudulent activity, or that these managers will not otherwise default on their management obligations to the Company. If any of the foregoing occurs, the relationships with the Company’s programs’ tenants could be damaged, which may cause the tenants not to renew their leases, and the Company could incur liabilities resulting from loss or injury to

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the properties or to persons at the properties. If the Company is unable to lease the properties or the Company become subject to significant liabilities as a result of third-party management performance issues, the Company’s operating results and financial condition could be substantially harmed.

The Company or its new programs may be required to incur future indebtedness to raise sufficient funds to purchase properties.

One of the Company’s business strategies is to develop new programs. The development of a new program requires the identification and subsequent acquisition of properties when the opportunity arises. In some instances, in order to effectively and efficiently complete a program, the Company may provide deposits for the acquisition of property or actually purchase the property and warehouse it temporarily for the program. If the Company does not have cash on hand available to pay these deposits or fund an acquisition, the Company or the Company’s programs may be required to incur additional indebtedness, which indebtedness may not be available on acceptable terms. If the Company incurs substantial debt, the Company could lose its interests in any properties that have been provided as collateral for any secured borrowing, or the Company could lose its assets if the debt is recourse to it. In addition, the Company’s cash flow from operations may not be sufficient to repay these obligations upon their maturity, making it necessary for the Company to raise additional capital or dispose of some of its assets. The Company cannot assure you that it will be able to borrow additional debt on satisfactory terms, or at all. The Third Amendment to the Credit Agreement includes a restrictive covenant which prohibits the Company from incurring such indebtedness unless consistent with the Approved Budget without the consent of the requisite majority of lenders.

The Company may be required to repay loans the Company guaranteed that were used to finance properties acquired by the Company’s programs.

From time to time the Company has provided guarantees of loans for properties under management. As of December 31, 2008, there were 151 properties under management with loan guarantees of approximately $3.5 billion in total principal outstanding with terms ranging from 1 to 10 years, secured by properties with a total aggregate purchase price of approximately $4.8 billion as of December 31, 2008. The Company’s guarantees consisted of the following as of December 31, 2008. In addition, the consolidated variable interest entities (“VIEs”) and unconsolidated VIEs are jointly and severally liable on the non-recourse mortgage debt related to the interests in the Company’s TIC investments totaling $277.8 million and $385.3 million as of December 31, 2008, respectively.

(In thousands)	December 31, 2008
Non-recourse/carve-out guarantees of debt of properties under management(1)	$	3,414,433
Non-recourse/carve-out guarantees of the Company’s debt(1)	$	107,000
Guarantees of the Company’s mezzanine debt	$	—
Recourse guarantees of debt of properties under management	$	42,426
Recourse guarantees of the Company’s debt	$	10,000

(1) A “non-recourse/carve-out” guaranty imposes personal liability on the guarantor in the event the borrower engages in certain acts prohibited by the loan documents.

As property values and performance decline, the risk of exposure under these guarantees increases. Management evaluates these guarantees to determine if the guarantee meets the criteria required to record a liability in accordance with Financial Accounting Standards Board (“FASB”) Financial Interpretation No. 45, Guarantor’s Accounting and Disclosure Requirements for Guarantees, Including Indirect Guarantees of Indebtedness of Others (“FIN No. 45”). As of December 31, 2008, the Company recorded a liability of $9.1 million related to recourse guarantees of debt of properties under management which matured in January and April 2009. Any other such liabilities were insignificant as of December 31, 2008 and 2007. The Third Amendment to the Credit Facility includes a restrictive covenant which prohibits the Company from providing any additional guarantees unless consistent with the Approved Budget without the consent of the requisite majority of lenders.

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The revenue streams from the Company’s management services may be subject to limitation or cancellation.

The agreements under which the Company provides advisory and management services to public non-traded REITs may generally be terminated by each REIT following a notice period, with or without cause. The Company cannot assure you that these agreements will not be terminated and the board of directors and management of Grubb & Ellis Healthcare REIT has informed the Company that it does not intend to renew its Advisory Agreement with the Grubb & Ellis Healthcare REIT Advisor, LLC, a subsidiary of the Company, upon the termination of the Advisory Agreement on September 20, 2009. In addition, if the Company has a significant amount of TIC Programs selling their properties or public non-traded REITs liquidating in the same period, the Company’s revenues would decrease unless it is able to find replacement programs to generate new fees. The Company is currently in the process of liquidating two of its public non-traded REITs and, as a result, the Company’s management fees from these REITs have been reduced due to the number of properties that have been sold. Any decrease in the Company’s fees, as a result of termination of a contract or customary close out or liquidation of a program, could have a material adverse effect on the Company’s business, results of operations and financial condition.

Future pressures to lower, waive or credit back the Company’s fees could reduce the Company’s revenue and profitability.

The Company has on occasion waived or credited its fees for real estate acquisitions and financings for the Company’s TIC Programs to improve projected investment returns and attract TIC investors. There has also been a trend toward lower fees in some segments of the third-party asset management business, and fees paid for the management of properties in the Company’s TIC Programs or public non-traded REITs could follow these trends. In order for the Company to maintain its fee structure in a competitive environment, the Company must be able to provide clients with investment returns and service that will encourage them to be willing to pay such fees. The Company cannot assure you that it will be able to maintain its current fee structures. Fee reductions on existing or future new business could have a material adverse impact on the Company’s revenue and profitability.

Regulatory uncertainties related to the Company’s broker-dealer services could harm the Company’s business.

The securities industry in the United States is subject to extensive regulation under both federal and state laws. Broker-dealers are subject to regulations covering all aspects of the securities business. The SEC, FINRA, and other self-regulatory organizations and state securities commissions can censure, fine, issue cease-and-desist orders to, suspend or expel a broker-dealer or any of its officers or employees. The ability to comply with applicable laws and rules is largely dependent on an internal system to ensure compliance, as well as the ability to attract and retain qualified compliance personnel. The Company could be subject to disciplinary or other actions in the future due to claimed noncompliance with these securities regulations, which could have a material adverse effect on the Company’s operations and profitability.

The Company depends upon its programs’ tenants to pay rent, and their inability to pay rent may substantially reduce certain fees the Company receives which are based on gross rental amounts.

The Company’s programs are subject to varying degrees of risk that generally arise from the ownership of real estate. For example, the income the Company is able to generate from management fees is derived from the gross rental income on the properties in its programs. The rental income depends upon the ability of the tenants of the Company’s programs’ properties to generate enough income to make their lease payments to the Company. Changes beyond the Company’s control may adversely affect the tenants’ ability to make lease payments or could require them to terminate their leases. Either an inability to make lease payments or a termination of one or more leases could reduce the management fees the Company receives. These changes include, among others, the following:

•  downturns in national or regional economic conditions where the Company’s programs’ properties are located, which generally will negatively impact the demand and rental rates;

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•  changes in local market conditions such as an oversupply of properties, including space available by sublease or new construction, or a reduction in demand for properties in the Company’s programs, making it more difficult for the Company’s programs to lease space at attractive rental rates or at all;

•  competition from other available properties, which could cause the Company’s programs to lose current or prospective tenants or cause them to reduce rental rates; and

•  changes in federal, state or local regulations and controls affecting rents, prices of goods, interest rates, fuel and energy consumption.

Due to these changes, among others, tenants and lease guarantors, if any, may be unable to make their lease payments.

Defaults by tenants or the failure of any lease guarantors to fulfill their obligations, or other early termination of a lease could, depending upon the size of the leased premises and the Company’s ability as property manager to successfully find a substitute tenant, have a material adverse effect on the Company’s revenue.

Conflicts of interest inherent in transactions between the Company’s programs and the Company, and among its programs, could create liability for the Company that could have a material adverse effect on its results of operations and financial condition.

These conflicts include but are not limited to the following:

•  the Company experiences conflicts of interests with certain of its directors, officers and affiliates from time to time with regard to any of its investments, transactions and agreements in which it holds a direct or indirect pecuniary interest;

•  since the Company receives both management fees and acquisition and disposition fees for its programs’ properties, the Company could be in conflict with its programs over whether their properties should be sold or held by the program and the Company may make decisions or take actions based on factors other than in the best interest of investors of a particular sponsored investor program;

•  a component of the compensation of certain of the Company’s executives is based on the performance of particular programs, which could cause the executives to favor those programs over others;

•  the Company may face conflicts of interests as to how it allocates property acquisition opportunities or prospective tenants among competing programs;

•  the Company may face conflicts of interests if programs sell properties to each other or invest in each other; and

•  the Company’s executive officers will devote only as much of their time to a program as they determine is reasonably required, which may be substantially less than full time; during times of intense activity in other programs, these officers may devote less time and fewer resources to a program than are necessary or appropriate to manage the program’s business.

The Company cannot assure you that one or more of these conflicts will not result in claims by investors in its programs, which could have a material adverse effect on its results of operations and financial condition.

The offerings conducted to raise capital for the Company’s TIC Programs are done in reliance on exemptions from the registration requirements of the Securities Act. A failure to satisfy the requirements for the appropriate exemption could void the offering or, if it is already completed, provide the investors with rescission rights, either of which would have a material adverse effect on the Company’s reputation and as a result its business and results of operations.

The securities of the Company’s TIC Programs are offered and sold in reliance upon a private placement offering exemption from registration under the Securities Act and applicable state securities laws. If the Company or its dealer-manager failed to comply with the requirements of the relevant exemption and an offering were in process, the Company may have to terminate the offering. If an offering was completed, the

27

investors may have the right, if they so desired, to rescind their purchase of the securities. A rescission offer could also be required under applicable state securities laws and regulations in states where any securities were offered without registration or qualification pursuant to a private offering or other exemption. If a number of holders sought rescission at one time, the applicable program would be required to make significant payments which could adversely affect its business and as a result, the fees generated by the Company from such program. If one of the Company’s programs was forced to terminate an offering before it was completed or to make a rescission offer, the Company’s reputation would also likely be significantly harmed. Any reduction in fees as a result of a rescission offer or a loss of reputation would have a material adverse effect on the Company’s business and results of operations.

The inability to identify suitable refinance options may negatively impact investment program performance and cause harm to the Company’s reputation, cause the loss of management contracts and third-party broker-dealer selling agreements, limit the Company’s ability to sign future third-party broker-dealer selling agreements and potentially expose the Company to legal liability.

The availability of real estate financing has greatly diminished over the past year as a result of the global credit crisis and overall decline in the real estate market. As a result, the Company may not be able to refinance some or all of the loans maturing in its investment management portfolio. Failure to obtain suitable refinance options may have a negative impact on investment returns and may potentially cause investments to go into foreclosure or result in a complete loss of equity for program investors. Any such negative impact on distributions, foreclosure or loss of equity in an investment program could adversely affect the Company’s reputation and the Company’s ability to attract investors for future investment programs. In addition, it could cause the Company to lose asset and property management contracts, cause the Company to lose third-party broker-dealer selling agreements for existing investment programs, including its REITs, and limit the Company’s ability to sign future third-party broker-dealer agreements. Significant losses in investor equity and reductions in distributions increases the risk of claims or legal actions by program investors. Any such legal liability could result in damage to the Company’s reputation, loss of third-party broker-dealer selling agreements and incurrence of legal expenses.

An increase in interest rates may negatively affect the equity value of the Company’s programs or cause the Company to lose potential investors to alternative investments, causing the fees the Company receives for transaction and management services to be reduced.

Although in the last two years, interest rates in the United States have generally decreased, if interest rates were to rise, the Company’s financing costs would likely rise and the Company’s net yield to investors may decline. This downward pressure on net yields to investors in the Company’s programs could compare poorly to rising yields on alternative investments. Additionally, as interest rates rise, valuations of commercial real estate properties typically decline. A decrease in both the attractiveness of the Company’s programs and the value of assets held by these programs could cause a decrease in both transaction and management services revenues, which would have an adverse effect on the Company’s results of operations.

Increasing competition for the acquisition of real estate may impede the Company’s ability to make future acquisitions which would reduce the fees the Company generates from these programs and could adversely affect the Company’s operating results and financial condition.

The commercial real estate industry is highly competitive on an international, national and regional level. The Company’s programs face competition from REITs, institutional pension plans, and other public and private real estate companies and private real estate investors for the acquisition of properties and for raising capital to create programs to make these acquisitions. Competition may prevent the Company’s programs from acquiring desirable properties or increase the price they must pay for real estate. In addition, the number of entities and the amount of funds competing for suitable investment properties may increase, resulting in increased demand and increased prices paid for these properties. If the Company’s programs pay higher prices for properties, investors may experience a lower return on investment and be less inclined to invest in the Company’s next program which may decrease the Company’s profitability. Increased competition for properties may also preclude the Company’s programs from acquiring properties that would generate the most

28

attractive returns to investors or may reduce the number of properties the Company’s programs could acquire, which could have an adverse effect on the Company’s business.

Illiquidity of real estate investments could significantly impede the Company’s ability to respond to adverse changes in the performance of the Company’s programs’ properties and harm the Company’s financial condition.

Because real estate investments are relatively illiquid, the Company’s ability to promptly facilitate a sale of one or more properties or investments in the Company’s programs in response to changing economic, financial and investment conditions may be limited. In particular, these risks could arise from weakness in the market for a property, changes in the financial condition or prospects of prospective purchasers, changes in regional, national or international economic conditions, and changes in laws, regulations or fiscal policies of jurisdictions in which the property is located. Fees from the disposition of properties would be materially affected if the Company were unable to facilitate a significant number of property dispositions for the Company’s programs.

Uninsured and underinsured losses may adversely affect operations.

Should a property sustain damage or an occupant sustain an injury, the Company may incur losses due to insurance deductibles, co-payments on insured losses or uninsured losses. In the event of a substantial property loss or personal injury, the insurance coverage may not be sufficient to pay the full damages. In the event of an uninsured loss, the Company could lose some or all of its capital investment, cash flow and anticipated profits related to one or more properties. Inflation, changes in building codes and ordinances, environmental considerations, and other factors also might make it not feasible to use insurance proceeds to replace a property after it has been damaged or destroyed. Under these circumstances, the insurance proceeds the Company receives, if any, might not be adequate to restore the Company’s economic position with respect to the property. In the event of a significant loss at one or more of the properties in the Company’s programs, the remaining insurance under the applicable policy, if any, could be insufficient to adequately insure the remaining properties. In this event, securing additional insurance, if possible, could be significantly more expensive than the current policy. A loss at any of these properties or an increase in premium as a result of a loss could decrease the income from or value of properties under management in the Company’s programs, which in turn would reduce the fees the Company receives from these programs. Any decrease or loss in fees could have a material adverse effect on the Company’s financial condition or results of operations.

The Company carries commercial general liability, fire and extended coverage insurance with respect to the Company’s programs’ properties. The Company obtains coverage that has policy specifications and insured limits that the Company believes are customarily carried for similar properties. The Company cannot assure you, however, that particular risks that are currently insurable will continue to be insurable on an economic basis or that current levels of coverage will continue to be available. In addition, the Company generally does not obtain insurance against certain risks, such as floods.

Risks Related to the Company in General

Delaware law and provisions of the Company’s amended and restated certificate of incorporation and restated bylaws contain provisions that could delay, deter or prevent a change of control.

The anti-takeover provisions of Delaware law impose various impediments on the ability or desire of a third party to acquire control of the Company, even if a change of control would be beneficial to its existing stockholders, and the Company will be subject to these Delaware anti-takeover provisions. Additionally, the Company’s amended and restated certificate of incorporation and its restated bylaws contain provisions that might enable its management to resist a proposed takeover of the Company. The provisions include:

•  a staggered or classified board of directors;

•  the authority of the Company’s board to issue, without stockholder approval, preferred stock with such terms as the Company’s board may determine;

•  the authority of the Company’s board to adopt, amend or repeal the Company’s bylaws; and

29

•  a prohibition on holders of less than a majority of the Company’s outstanding shares of capital stock calling a special meeting of the Company’s stockholders.

These provisions could discourage, delay or prevent a change of control of the Company or an acquisition of the Company at a price that its stockholders may find attractive. These provisions also may discourage proxy contests and make it more difficult for the Company’s stockholders to elect directors and take other corporate actions. The existence of these provisions could limit the price that investors might be willing to pay in the future for shares of the Company’s common stock.

As a consequence the amendments to the Company’s amended and restated certificate of incorporation adopted in connection with the Merger, the Company has a staggered board, which may entrench management and discourage unsolicited stockholder proposals that may be deemed to be in the best interests of stockholders.

The Company’s amended and restated certificate of incorporation provides that its board of directors be divided into three classes, each of which will generally serve for a term of three years with only one class of directors being elected in each year. As a result, at any annual meeting, only a minority of the board of directors will be considered for election. Since the Company’s staggered board would prevent its stockholders from replacing a majority of its board of directors at any annual meeting, it may entrench management and discourage unsolicited stockholder proposals that may be deemed to be in the best interests of stockholders.

The Company has the ability to issue blank check preferred stock, which could adversely affect the voting power and other rights of the holders of its common stock.

The Company does not currently have any issued and outstanding preferred stock. However, the board of directors has the right to issue “blank check” preferred stock, which may affect the voting rights of holders of common stock and could deter or delay an attempt to obtain control of the Company. There are ten million shares of preferred stock authorized. Subject to the requisite lender approval under the Credit Facility, the Company’s board of directors is authorized, without any further stockholder approval, to issue one or more additional series of preferred stock. The Company is authorized to fix and state the voting rights, powers, designations, preferences and relative participation or other special rights of each such series of preferred stock and any qualifications, limitations and restrictions thereon. Preferred stock typically ranks prior to the common stock with respect to dividend rights, liquidation preferences, or both, and may have full, limited, or expanded voting rights. Accordingly, issuances of preferred stock could adversely affect the voting power and other rights of the holders of common stock and could negatively affect the market price of the Company’s common stock.

The Company has registration rights outstanding, which could have a negative impact on its share price if exercised.

Pursuant to the Company’s registration rights agreement with Kojaian Ventures, L.L.C. and Kojaian Holdings, LLC, and the registration rights of the holders of Warrants issued to the lenders under the Company’s Credit Facility, the holders of such rights could, in the future, cause the Company to file additional registration statements with respect to its shares of common stock, which could have a negative impact on the market price of the Company’s common stock.

Future sales of the Company’s common stock could adversely affect its stock price

The Company issued the Warrants to its lenders in connection with the execution of the Third Amendment to its Credit Facility. The Warrants are exercisable for nominal consideration to purchase that number of shares of common stock of the Company which equal 15% of the fully diluted common stock of the Company as of October 1, 2009, subject to adjustment and are entitled to certain registration rights. The Warrants are not exercisable until such date (and remain exercisable until September 30, 2019), and in the event the Company effects the Recapitalization Plan and the Partial Prepayment on or before September 30, 2009, the warrants shall automatically terminate and become null and void. The issuance of shares of common stock of the Company upon exercise of the Warrants could materially adversely impact the market price of the Company’s common stock.

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In addition, there are an aggregate of 1,077,175 Company shares subject to issuance upon the exercise of outstanding options. Accordingly, these shares will be available for sale in the open market, subject to vesting restrictions, and, in the case of affiliates, certain volume limitations. The sale of shares either pursuant to the exercise of outstanding options or as after the satisfaction of vesting restriction of certain restricted stock could also cause the price of the Company’s common stock to decline.

Item 1B.   Unresolved Staff Comments.

Not Applicable

Item 2.   Properties.

The Company leases all of its office space through non-cancelable operating leases. The terms of the leases vary depending on the size and location of the office. As of December 31, 2008, the Company leased over 747,000 square feet of office space in 73 locations under leases which expire at various dates through June 30, 2020. For those leases that are not renewable, the Company believes that there are adequate alternatives available at acceptable rental rates to meet its needs, although there can be no assurances in this regard. Many of our offices that contain employees of the Transaction Services, Investment Management or Management Services segments also contain employees of other segments. The Company’s Corporate Headquarters are in Santa Ana, California. See Note 20 of Notes to Consolidated Financial Statements in Item 8 of this Report for additional information, which is incorporated herein by reference.

Item 3.   Legal Proceedings.

On September 16, 2004, Triple Net Properties, LLC (which was re-named Grubb & Ellis Realty Investors, LLC (“GERI”) after the Merger), learned that the SEC Staff was conducting an investigation referred to as “In the matter of Triple Net Properties, LLC.” The SEC Staff requested information from Triple Net Properties relating to disclosure in the Triple Net Securities Offerings. The SEC Staff also requested information from NNN Capital Corp. (which was re-named GBE Securities after the Merger), the dealer-manager for the Triple Net securities offerings. The SEC Staff requested financial and other information regarding the Triple Net securities offerings and the disclosures included in the related offering documents from each of Triple Net Properties and NNN Capital Corp.

On June 2, 2008, the Company was notified by the SEC Staff that the SEC closed the investigation without any enforcement action against the Company or its subsidiaries. As a result, the shares of common stock owned by Mr. Thompson, the founder of Triple Net Properties and the former Chairman of the Company that were being held in the escrow account pending the outcome of the SEC investigation were returned to Mr. Thompson and the escrow agreement was terminated.

General

Grubb & Ellis and its subsidiaries are involved in various claims and lawsuits arising out of the ordinary conduct of its business, as well as in connection with its participation in various joint ventures and partnerships, many of which may not be covered by the Company’s insurance policies. In the opinion of management, the eventual outcome of such claims and lawsuits is not expected to have a material adverse effect on the Company’s financial position or results of operations.

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Item 4.   Submission of Matters to a Vote of Security Holders.

The Company held its Annual Meeting of Stockholders on December 3, 2008 (the “Annual Meeting”). At the Annual Meeting, the Company’s stockholders voted upon each of the following matters:

1. The election of three (3) Class A directors, each to serve for a term of three (3) years expiring in 2011 and until their successors are elected and qualified, for which our Board of Directors nominated Harold H. Greene, Devin I. Murphy and D. Fleet Wallace for election at the Annual Meeting;

2. The ratification of the appointment, by the Board of Directors, of Ernst & Young LLP as the Company’s independent registered public accounting firm for the fiscal year ending December 31, 2008;

3. A proposal submitted by a stockholder to adopt a resolution to amend the Amended and Restated Bylaws of the Company to require the Company to hold the Annual Meeting on December 3, 2008 and to prevent the Company from delaying such meeting to a later date; and

4. A proposal submitted by a stockholder to adopt a resolution to amend the Amended and Restated Bylaws of the Company to require stockholder approval for adjournment of a stockholder meeting at which a quorum is present.

With respect to matter number 1, each of Harold H. Greene, Devin I. Murphy and D. Fleet Wallace were elected to serve for a term of three (3) years expiring in 2011 and until their successors are elected and qualified. The results of the election are below:

Election of Directors	For		Withheld		Abstentions		Broker Non-Votes
Harold H. Greene		28,486,574		135,814		25,698,805		0
Devin I. Murphy		32,839,367		130,723		21,351,103		0
D. Fleet Wallace		28,482,376		140,012		25,698,805		0
Anthony W. Thompson		19,884,716		1,466,386		32,970,091		0
Harold A. Ellis, Jr.		25,624,199		74,605		28,622,389		0
Stuart A. Tanz		25,624,414		74,390		28,622,389		0

In addition, each of Glenn L. Carpenter, Gary H. Hunt, C. Michael Kojaian, Robert J. McLaughlin and Rodger D. Young continue to serve on the Board in accordance with their respective terms.

With respect to matter number 2: 54,145,810 votes were cast in favor; 125,647 votes were cast against; there were 49,736 abstentions; and there were no broker non-votes.

With respect to matter number 3: 20,912,450 votes were cast in favor; 11,464,320 votes were cast against; there were 21,944,423 abstentions; and there were no broker non-votes. Accordingly, since a majority of all issued and outstanding shares as of the record date for the Annual Meeting (of which there were 64,628,798 shares) voting in favor of this proposal was required for this proposal to be approved, the proposal was defeated.

With respect to matter number 4: 30,522,726 votes were cast in favor; 23,673,747 votes were cast against; there were 124,720 abstentions; and there were no broker non-votes. Accordingly, since a majority of all issued and outstanding shares as of the record date for the Annual Meeting (of which there were 64,628,798 shares) voting in favor of this proposal was required for this proposal to be approved, the proposal was defeated.

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GRUBB & ELLIS COMPANY

PART II

Item 5.   Market for Registrant’s Common Equity and Related Stockholder Matters.

Market and Price Information

The principal market for the Company’s common stock is the NYSE. The following table sets forth the high and low sales prices of the Company’s common stock on the respective market for each quarter of the years ended December 31, 2008 and 2007.

	2008				2007
	High		Low		High		Low
First Quarter	$	7.50	$	3.80	$	11.90	$	10.23
Second Quarter	$	7.50	$	3.61	$	13.25	$	10.69
Third Quarter	$	5.00	$	2.70	$	12.15	$	7.00
Fourth Quarter	$	2.88	$	0.81	$	9.57	$	4.95

As of May 15, 2009, there were 1,071 registered holders of the Company’s common stock and 65,265,828 shares of common stock outstanding. Sales of substantial amounts of common stock, including shares issued upon the exercise of warrants or options, or the perception that such sales might occur, could adversely affect prevailing market prices for the common stock.

The Company declared first and second quarter cash dividends in 2008 for an aggregate of $0.2050 per share for the year. On July 11, 2008, the Company’s Board of Directors approved the suspension of future dividend payments. Legacy NNN declared aggregate quarterly cash dividends in 2007 of $0.33 per share and the Company declared a fourth quarter cash dividend in 2007 of $0.03 for an aggregate of $0.36 per share in cash dividends for the year.

Sales of Unregistered Securities

During 2008, the Company implemented a deferred compensation plan that allows for the granting of “phantom” shares of company stock to participants under a deferred compensation plan arrangement. These awards vest over three to five years. Vested phantom stock awards are paid according to distribution elections made by the participants at the time of vesting and are expected to be settled by the Company purchasing shares of Company common stock in the open market from time to time and delivering such shares to the participant. During 2008, the Company awarded an aggregate of 5.4 million phantom shares to certain employees with an aggregate value on the various grant dates of $22.5 million. On December 31, 2008, an aggregate of 5.2 million phantom share grants were outstanding. Generally, upon vesting, recipients of the grants are entitled to receive the number of phantom shares granted, regardless of the value of the shares upon the date of vesting; provided, however, grants with respect to 900,000 phantom shares had a guaranteed minimum share price ($3.1 million in the aggregate) that will result in the Company paying additional compensation to the participants should the value of the shares upon vesting be less than the grant date value of the shares.

The issuances by the Company of the “phantom” share awards in the transactions described above were exempt from the registration requirements of Section 5 of the Securities Act pursuant to Section 4(2) of the Securities Act, as amended, as such transactions did not involve a public offering by the Company.

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Equity Compensation Plan Information

The following table provides information on equity compensation plans of the Company as of December 31, 2008.

					Number of securities
					remaining available
			Weighted average		for
	Number of securities to		exercise price of		future issuance under
	be		outstanding		equity compensation
	issued upon exercise of		options,		plans (excluding
	outstanding options,		warrants and		securities reflected in
	warrants and rights		rights		column (a))
Plan Category	(a)		(b)		(c)
Equity compensation plans approved by security holders		1,077,175	$	7.76		2,055,375
Equity compensation plans not approved by security holders		—		—		—
Total		1,077,175	$	7.76		2,055,375

Grubb & Ellis Stock Performance

This section entitled, “Grubb & Ellis Stock Performance” is not to be deemed to be “soliciting material” or to be “filed” with the SEC or subject to Regulation 14A or 14C or to the liabilities of Section 18 of the Exchange Act, except to the extent that the Company specifically requests that such information be treated as soliciting material or specifically incorporates it by reference into any filing under the Securities Act or the Exchange Act.

The graph below matches the cumulative 66-month total return to shareholders on Grubb & Ellis Company’s common stock versus the cumulative total returns of the S&P 500 index, and a customized peer group of three companies that includes: CB Richard Ellis Group Inc, Grubb & Ellis Company and Jones Lang Lasalle Inc. The graph assumes that the value of the investment in the company’s common stock, in the peer group, and the S&P 500 index (including reinvestment of dividends) was $100 on 6/30/2003 and tracks it through 12/31/2008.

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COMPARISON OF 66 MONTH CUMULATIVE TOTAL RETURN*
Among Grubb & Ellis Company, The S&P 500 Index
And A Peer Group

*$100 invested on 6/30/03 in stock & index-including reinvestment of dividends. Fiscal year ended December 31.

Copyright ^© 2009 S&P, a division of The McGraw-Hill Companies Inc. All rights reserved.

	6/03		6/04		6/05		6/06		6/07		12/07		12/08
Grubb & Ellis Company		100.00		169.36		595.74		787.23		987.23		547.79		110.55
S&P 500		100.00		119.11		126.64		137.57		165.90		163.63		103.09
Peer Group		100.00		171.44		352.04		629.07		884.74		533.23		142.38

The stock price performance included in this graph is not necessarily indicative of future stock price performance.

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Item 6.   Selected Financial Data.

The following tables set forth the selected historical consolidated financial data for Grubb & Ellis and its subsidiaries, as of and for the years ended, December 31, 2008, 2007 (restated), 2006 (restated), 2005 (restated), and 2004 (restated). GERI (formerly Triple Net Properties) was the accounting acquirer of Realty and NNN Capital Corp. The selected historical consolidated financial data as of and for the years ended December 31, 2008, 2007 (restated) and 2006 (restated) has been derived from the audited financial statements included in Item 8. of this Report. The selected historical financial data as of and for the years ended December 31, 2005 (restated) and 2004 (restated) have been derived from the audited consolidated financial statements not included in this Report. Historical results are not necessarily indicative of the results that may be expected for any future period.

The selected historical consolidated financial data for the years ended December 31, 2007 (restated), 2006 (restated), 2005 (restated) and 2004 (restated) has been restated to correct accounting errors related to the timing of revenue recognition relating to certain tenant-in-common investment programs sponsored by GERI and the consolidation of certain entities that should have been consolidated into the Company’s financial statements as described in Item 8, Note 3 to the consolidated financial statements. The selected historical consolidated financial data set forth below should be read in conjunction with Item 7 and the consolidated financial statements.

The impact of the restatement on fiscal year 2007 resulted in an increase in net income of $230,000, or less than $.01 per basic and diluted share, an increase in total assets of $12.1 million, an increase in total liabilities of $5.5 million and an increase in minority interest liability of $11.2 million. The impact of the restatement on fiscal year 2006 resulted in an increase in net income of $3.9 million, or $0.19 per basic and diluted share, a increase in total assets of $19.7 million, an increase in total liabilities of $18.1 million and an increase in minority interest liability of $6.3 million. The impact of the restatement resulted on fiscal year 2005 resulted in a decrease in net income of $8.1 million, or $0.47 per basic and diluted share, an increase in total assets of $39.7 million, an increase in total liabilities of $47.4 million and an increase in minority interest liability of $993,000. The impact of the restatement on fiscal year 2004 resulted in an decrease in net income of $619,000, or $0.04 per basic and diluted share and an increase in total liabilities of $619,000.

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	Year Ended December 31,
				2007			2006			2005			2004
(In thousands, except per share data)	2008			Restated(1)			Restated(2)			Restated(3)			Restated(3)
Consolidated Statement of Operations Data:
Total services revenue	$	595,495		$	201,538		$	99,599		$	80,817		$	64,281
Total revenue		611,821			217,937			108,543			84,423			66,592
Total compensation costs		503,004			104,109			49,449			29,873			19,717
Total operating expense		867,275			175,588			97,633			71,035			51,082
Operating (loss) income		(255,454	)		42,349			10,910			13,388			15,510
(Loss) income from continuing operations		(279,492	)		26,826			20,934			13,438			15,628
Net (loss) income		(330,870	)		21,072			19,971			10,047			15,628
Basic (loss) earnings per share:	$	(5.21	)	$	0.55		$	1.01		$	0.58		$	0.90
Diluted (loss) earnings per share:	$	(5.21	)	$	0.55		$	1.01		$	0.58		$	0.90
Basic weighted average shares outstanding		63,515			38,652			19,681			17,200			17,407
Diluted weighted average shares outstanding		63,515			38,653			19,694			17,200			17,407
Dividends declared per share	$	0.205		$	0.36		$	0.10			—			—
Consolidated Statement of Cash Flow Data:
Net cash (used in) provided by operating activities	$	(33,629	)	$	33,543		$	17,356		$	23,536		$	17,214
Net cash used in investing activities		(76,330	)		(486,909	)		(56,203	)		(35,183	)		(13,046	)
Net cash provided by (used in) financing activities		93,616			400,468			140,525			10,251			(7,647	)

	December 31,
									2004
	2008		2007 Restated		2006 Restated		2005 Restated		Restated
Consolidated Balance Sheet Data (at end of period):
Total assets	$	520,277	$	988,542	$	347,709	$	126,057	$	42,911
Line of credit		63,000		8,000		—		8,500		3,545
Notes payable		215,959		348,931		62,978		54,931		—
Senior and participating notes		16,277		16,277		10,263		2,300		4,845
Redeemable preferred liability		—		—		—		6,077		5,717
Stockholders’ equity		70,171		404,056		217,125		20,081		16,164

(1)	Based on Generally Accepted Accounting Principles (GAAP), the operating results for the year ended December 31, 2007 (restated) includes the results of legacy NNN for the full periods presented and the results of the legacy Grubb & Ellis business for the period from December 8, 2007 through December 31, 2007.
(2)	Includes a full year of operating results of GERI, one and one-half months of Realty (acquired on November 16, 2006) and one-half month of GBE Securities (formerly NNN Capital Corp.) (acquired on December 14, 2006). GERI was treated as the acquirer in connection with these transactions.
(3)	Based on GAAP, reflects operating results of GERI.

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Item 7.   Management’s Discussion and Analysis of Financial Condition and Results of Operations.

Note Regarding Forward-Looking Statements

The accompanying Management’s Discussion and Analysis of Financial Condition and Results of Operations reflects the restatement of previously issued financial statements, as discussed in Item 8, Note 3 to the consolidated financial statements.

This Annual Report contains statements that are forward-looking and as such are not historical facts. Rather, these statements constitute projections, forecasts or forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. You should not place undue reliance on these statements. Forward-looking statements include information concerning the Company’s liquidity and possible or assumed future results of operations, including descriptions of the Company’s business strategies. These statements often include words such as “believe,” “expect,” “anticipate,” “intend,” “plan,” “estimate” “seek,” “will,” “may” or similar expressions. These statements are based on certain assumptions that the Company has made in light of its experience in the industry as well as its perceptions of the historical trends, current conditions, expected future developments and other factors the Company believes are appropriate under these circumstances.

All such forward-looking statements speak only as of the date of this Annual Report. The Company expressly disclaims any obligation or undertaking to release publicly any updates or revisions to any forward-looking statements contained herein to reflect any change in the Company’s expectations with regard thereto or any change in events, conditions or circumstances on which any such statement is based.

As you read this Annual Report, you should understand that these statements are no guarantees of performance or results. They involve risks, uncertainties and assumptions. You should understand the risks and uncertainties discussed in “Item 1A — Risk Factors” and elsewhere in this Annual Report, could affect the Company’s actual financial results and could cause actual results to differ materially from those expressed in the forward-looking statements. Some important factors include, but are not limited to:

•  our ability to satisfy financial and other covenants of our Credit Facility;

•  the continued weakening national economy in general and the commercial real estate markets in particular;

•  the continued global credit crises and capital markets disruption;

•  changes in general economic and business conditions, including interest rates, the cost and availability of financing of capital for investment in real estate, clients’ willingness to make real estate commitments and other factors impacting the value of real estate assets;

•  our ability to retain major clients and renew related contracts;

•  the failure of properties sponsored or managed by us to perform as anticipated;

•  the effects of the restatement of certain of our financial statements;

•  our ability to compete in specific geographic markets or business segments that are material to us;

•  the contraction of the TIC market;

•  declining values of real assets and distributions on our programs;

•  significant variability in our results of operations among quarters;

•  our ability to retain our senior management and attract and retain qualified and experienced employees;

•  our ability to comply with the laws and regulations applicable to real estate brokerage investment syndication and mortgage transactions;

•  our exposure to liabilities in connection with real estate brokerage, real estate and property management activities;

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•  changes in the key components of revenue growth for large commercial real estate services companies;

•  reliance of companies on outsourcing for their commercial real estate needs;

•  liquidity and availability of additional or continued sources of financing for the Company’s investment programs;

•  trends in use of large, full-service real estate providers;

•  diversification of our client base;

•  improvements in operating efficiency;

•  protection of our brand;

•  trends in pricing for commercial real estate services; and

•  the effect of implementation of new tax and accounting rules and standards.

Overview and Background

The Company is a commercial real estate services and investment management firm. The Merger was accounted for using the purchase method of accounting based on accounting principles generally accepted in the United States (“GAAP”) and as such, although structured as a reverse merger, NNN is considered the acquirer of legacy Grubb & Ellis. As a consequence, the operating results for the twelve months ended December 31, 2008 reflect the consolidated results of the Company as a result of the Merger, while the twelve months ended December 31, 2007 includes the full year operating results of legacy NNN and the operating results of legacy Grubb & Ellis for the period from December 8, 2007 through December 31, 2007. The year ended December 31, 2006 includes solely the operating results of legacy NNN.

Unless otherwise indicated, all pre-Merger legacy NNN share data have been adjusted to reflect the conversion as a result of the Merger (see Note 10 of Notes to Consolidated Financial Statements in Item 8 of this Report for additional information).

Critical Accounting Policies

The Company’s consolidated financial statements have been prepared in accordance with GAAP. Certain accounting policies are considered to be critical accounting policies, as they require management to make assumptions about matters that are highly uncertain at the time the estimate is made and changes in the accounting estimate are reasonably likely to occur from period to period. The Company believes that the following critical accounting policies reflect the more significant judgments and estimates used in the preparation of its consolidated financial statements.

Revenue Recognition

Transaction Services

Real estate sales commissions are recognized when earned which is typically the close of escrow. Receipt of payment occurs at the point at which all Company services have been performed, and title to real property has passed from seller to buyer, if applicable. Real estate leasing commissions are recognized upon execution of appropriate lease and commission agreements and receipt of full or partial payment, and, when payable upon certain events such as tenant occupancy or rent commencement, upon occurrence of such events. All other commissions and fees are recognized at the time the related services have been performed and delivered by the Company to the client, unless future contingencies exist.

Investment Management

The Company earns fees associated with its transactions by structuring, negotiating and closing acquisitions of real estate properties to third-party investors. Such fees include acquisition fees for locating and acquiring the property and selling it to various TIC investors, REITs and its various real estate funds. The Company accounts for acquisition and loan fees in accordance with AICPA Statement of Position 92-1 (“SOP 92-1”), Accounting for Real Estate Syndication Income, and Statement of Financial Accounting

39

Standards No. 66 (“SFAS No. 66”), Accounting for Sales of Real Estate. In general, the Company records the acquisition and loan fees upon the close of sale to the buyer if the buyer is independent of the seller, collection of the sales price, including the acquisition fees and loan fees, is reasonably assured, and the Company is not responsible for supporting operations of the property. Organizational marketing expense allowance (“OMEA”), fees are earned and recognized from gross proceeds of equity raised in connection with offerings and are used to pay formation costs, as well as organizational and marketing costs. When the Company does not meet the criteria for revenue recognition under SFAS No. 66 and SOP 92-1, revenue is deferred until revenue can be reasonably estimated or until the Company defers revenue up to its maximum exposure to loss. The Company earns disposition fees for disposing of the property on behalf of the REIT, investment fund or TIC. The Company recognizes the disposition fee when the sale of the property closes. The Company is entitled to loan advisory fees for arranging financing related to properties under management.

The Company earns captive asset and property management fees primarily for managing the operations of real estate properties owned by the real estate programs, REITs and limited liability companies that invest in real estate or value funds it sponsors. Such fees are based on pre-established formulas and contractual arrangements and are earned as such services are performed. The Company is entitled to receive reimbursement for expenses associated with managing the properties; these expenses include salaries for property managers and other personnel providing services to the property. Each property in the Company’s TIC Programs may also be charged an accounting fee for costs associated with preparing financial reports. The Company is also entitled to leasing commissions when a new tenant is secured and upon tenant renewals. Leasing commissions are recognized upon execution of leases.

Through its dealer-manager, the Company facilitates capital raising transactions for its programs its dealer-manager acts as a dealer-manager exclusively for the Company’s programs and does not provide securities services to any third party. The Company’s wholesale dealer-manager services are comprised of raising capital for its programs through its selling broker-dealer relationships. Most of the commissions, fees and allowances earned for its dealer-manager services are passed on to the selling broker-dealers as commissions and to cover offering expenses, and the Company retains the balance. Accordingly, the Company records these fees net of the amounts paid to its selling broker-dealer relationships.

Management Services

Management fees are recognized at the time the related services have been performed by the Company, unless future contingencies exist. In addition, in regard to management and facility service contracts, the owner of the property will typically reimburse the Company for certain expenses that are incurred on behalf of the owner, which are comprised primarily of on-site employee salaries and related benefit costs. The amounts which are to be reimbursed per the terms of the services contract, are recognized as revenue by the Company in the same period as the related expenses are incurred. In certain instances, the Company sub contracts its property management services to independent property managers, in which case the Company passes a portion of their property management fee on to the sub contractor, and the Company retains the balance. Accordingly, the Company records these fees net of the amounts paid to its sub contractors.

Basis of Presentation and Principles of Consolidation

The consolidated financial statements include the accounts of the Company and its wholly-owned and majority-owned controlled subsidiaries’ variable interest entities (“VIEs”) in which the Company is the primary beneficiary and partnerships/LLCs in which the Company is the managing member or general partner and the other partners/members lack substantive rights (hereinafter collectively referred to as the “Company”). All significant intercompany accounts and transactions have been eliminated in consolidation. For acquisitions of an interest in an entity or newly formed joint venture or limited liability company, the Company evaluates the entity to determine if the entity is deemed a VIE, and if the Company is deemed to be the primary beneficiary, in accordance with Financial Accounting Standards Board (“FASB”) Interpretation No. 46(R), Consolidation of Variable Interest Entities (“FIN No. 46(R)”).

The Company consolidates entities that are VIEs when the Company is deemed to be the primary beneficiary of the VIE. For entities in which (i) the Company is not deemed to be the primary beneficiary,

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(ii) the Company’s ownership is 50.0% or less and (iii) the Company has the ability to exercise significant influence, the Company uses the equity accounting method (i.e. at cost, increased or decreased by the Company’s share of earnings or losses, plus contributions less distributions). The Company also uses the equity method of accounting for jointly-controlled tenant-in-common interests. As events occur, the Company will reconsider its determination of whether an entity is a VIE and who the primary beneficiary is to determine if there is a change in the original determinations and will report such changes on a quarterly basis.

Purchase Price Allocation

In accordance with the Financial Accounting Standards Board’s (“FASB”) Statement of Financial Accounting Standards (“SFAS”) No. 141, Business Combinations (“SFAS 141”), the purchase price of acquired properties is allocated to tangible and identified intangible assets and liabilities based on their respective fair values. The allocation to tangible assets (building and land) is based upon determination of the value of the property as if it were vacant using discounted cash flow models similar to those used by independent appraisers. Factors considered include an estimate of carrying costs during the expected lease-up periods considering current market conditions and costs to execute similar leases. Additionally, the purchase price of the applicable property is allocated to the above or below market value of in-place leases and the value of in-place leases and related tenant relationships.

The value allocable to the above or below market component of the acquired in-place leases is determined based upon the present value (using a discount rate which reflects the risks associated with the acquired leases) of the difference between (i) the contractual amounts to be paid pursuant to the lease over its remaining term, and (ii) the Company’s estimate of the amounts that would be paid using fair market rates over the remaining term of the lease. The amounts allocated to above market leases are included in identified intangible assets and below market lease values are included in liabilities in the accompanying consolidated financial statements and are amortized to rental revenue over the weighted-average remaining term of the acquired leases with each property.

The total amount of identified intangible assets acquired is further allocated to in-place lease costs and the value of tenant relationships based on management’s evaluation of the specific characteristics of each tenant’s lease and the Company’s overall relationship with that respective tenant. Characteristics considered in allocating these values include the nature and extent of the credit quality and expectations of lease renewals, among other factors. These allocations are subject to change within one year of the date of purchase based on information related to one or more events identified at the date of purchase that confirm the value of an asset or liability of an acquired property.

Impairment of Long-Lived Assets

In accordance with SFAS No. 144, Accounting for the Impairment or Disposal of Long-Lived Assets, long-lived assets are periodically evaluated for potential impairment whenever events or changes in circumstances indicate that their carrying amount may not be recoverable. In the event that periodic assessments reflect that the carrying amount of the asset exceeds the sum of the undiscounted cash flows (excluding interest) that are expected to result from the use and eventual disposition of the asset, the Company would recognize an impairment loss to the extent the carrying amount exceeded the fair value of the property. The Company estimates the fair value using available market information or other industry valuation techniques such as present value calculations. This valuation review resulted in the recognition of an impairment charge of approximately $90.4 million against the carrying value of the properties and real estate investments during the year ended December 31, 2008. No impairment losses were recognized for the years ended December 31, 2007 and 2006.

The Company recognizes goodwill and other non-amortizing intangible assets in accordance with SFAS No. 142, Goodwill and Other Intangible Assets (“SFAS No. 142”). Under SFAS No. 142, goodwill is recorded at its carrying value and is tested for impairment at least annually or more frequently if impairment indicators exist at a level of reporting referred to as a reporting unit. The Company recognizes goodwill in accordance with SFAS No. 142 and tests the carrying value for impairment during the fourth quarter of each year. The goodwill impairment analysis is a two-step process. The first step used to identify potential

41

impairment involves comparing each reporting unit’s estimated fair value to its carrying value, including goodwill. To estimate the fair value of its reporting units, the Company used a discounted cash flow model and market comparable data. Significant judgment is required by management in developing the assumptions for the discounted cash flow model. These assumptions include cash flow projections utilizing revenue growth rates, profit margin percentages, discount rates, market/economic conditions, etc. If the estimated fair value of a reporting unit exceeds its carrying value, goodwill is considered to not be impaired. If the carrying value exceeds estimated fair value, there is an indication of potential impairment and the second step is performed to measure the amount of impairment. The second step of the process involves the calculation of an implied fair value of goodwill for each reporting unit for which step one indicated a potential impairment. The implied fair value of goodwill is determined by measuring the excess of the estimated fair value of the reporting unit as calculated in step one, over the estimated fair values of the individual assets, liabilities and identified intangibles. During the fourth quarter of 2008, the Company identified the uncertainty surrounding the global economy and the volatility of the Company’s market capitalization as goodwill impairment indicators. The Company’s goodwill impairment analysis resulted in the recognition of an impairment charge of approximately $172.7 million during the year ended December 31, 2008. The Company also analyzed it’s trade name for impairment pursuant to SFAS No. 142 and determined that the trade name was not impaired as of December 31, 2008. Accordingly, no impairment charge was recorded related to the trade name during the year ended December 31, 2008. In addition to testing goodwill and it’s trade name for impairment, the Company tested the intangible contract rights for impairment during the fourth quarter of 2008. The intangible contract rights represent the legal right to future disposition fees of a portfolio of real estate properties under contract. As a result of the current economic environment, a portion of these disposition fees may not be recoverable. Based on the Company’s analysis for the current and projected property values, condition of the properties and status of mortgage loans payable, the Company determined that there are certain properties for which receipt of disposition fees was improbable. As a result, the Company recorded an impairment charge of approximately $8.6 million related to the impaired intangible contract rights as of December 31, 2008.

Insurance and Claim Reserves

The Company has maintained partially self-insured and deductible programs for, general liability, workers’ compensation and certain employee health care costs. In addition, the Company assumed liabilities at the date of the Merger representing reserves related to a self insured errors and omissions program of the acquired company. Reserves for all such programs are included in accrued claims and settlements and compensation and employee benefits payable, as appropriate. Reserves are based on the aggregate of the liability for reported claims and an actuarially-based estimate of incurred but not reported claims. As of the date of the Merger, the Company entered into a premium based insurance policy for all error and omission coverage on claims arising after the date of the Merger. Claims arising prior to the date of the Merger continue to be applied against the previously mentioned liability reserves assumed relative to the acquired company.

The Company is also subject to various proceedings, lawsuits and other claims related to commission disputes and environmental, labor and other matters, and is required to assess the likelihood of any adverse judgments or outcomes to these matters. A determination of the amount of reserves, if any, for these contingencies is made after careful analysis of each individual issue. New developments in each matter, or changes in approach such as a change in settlement strategy in dealing with these matters, may warrant an increase or decrease in the amount of these reserves.

Recently Issued Accounting Pronouncements

In September 2006, the FASB issued Statement of Financial Accounting Standards (“SFAS”) No. 157, Fair Value Measurements (“SFAS No. 157”). SFAS No. 157 defines fair value, establishes a framework for measuring fair value in generally accepted accounting principles, and expands disclosures about fair value instruments. In February 2008, the FASB issued FASB Staff Position No. FAS 157-2, Effective Date of FASB Statement No. 157 (the “FSP”). The FSP amends SFAS No. 157 to delay the effective date of SFAS No. 157 for non-financial assets and non-financial liabilities, except for items that are recognized or disclosed at fair value in the financial statements on a recurring basis (that is, at least annually). There was no effect on the Company’s consolidated financial statements as a result of the adoption of SFAS No. 157 as of January 1,

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2008 as it relates to financial assets and financial liabilities. For items within its scope, the FSP defers the effective date of SFAS No. 157 to fiscal years beginning after November 15, 2008, and interim periods within those fiscal years. The Company will adopt SFAS No. 157 as it relates to non-financial assets and non-financial liabilities in the first quarter of 2009 and does not believe adoption will have a material effect on its consolidated financial statements.

In February 2007, the FASB issued SFAS No. 159, The Fair Value Option for Financial Assets and Financial Liabilities, (“SFAS No. 159”). SFAS No. 159 permits entities to choose to measure many financial instruments and certain other items at fair value. The objective of the guidance is to improve financial reporting by providing entities with the opportunity to mitigate volatility in reported earnings caused by measuring related assets and liabilities differently without having to apply complex hedge accounting provisions. The Company adopted SFAS No. 159 on a prospective basis on January 1, 2008. The adoption of SFAS No. 159 did not have a material impact on the consolidated financial statements since the Company did not elect to apply the fair value option for any of its eligible financial instruments or other items on the January 1, 2008 effective date.

In December 2007, the FASB issued revised SFAS No. 141, Business Combinations, (“SFAS No. 141R”). SFAS No. 141R will change the accounting for business combinations and will require an acquiring entity to recognize all the assets acquired and liabilities assumed in a transaction at the acquisition-date fair value with limited exceptions. SFAS No. 141R will change the accounting treatment and disclosure for certain specific items in a business combination. SFAS No. 141R applies prospectively to business combinations for which the acquisition date is on or after the beginning of the first annual reporting period beginning on or after December 15, 2008. SFAS No. 141R will have an impact on accounting for business combinations once adopted but the effect is dependent upon acquisitions at that time.

In December 2007, the FASB issued SFAS No. 160, Noncontrolling Interests in Consolidated Financial Statements — An Amendment of ARB No. 51, (“SFAS No. 160”). SFAS No. 160 establishes new accounting and reporting standards for the non-controlling interest in a subsidiary and for the deconsolidation of a subsidiary. SFAS No. 160 requires that noncontrolling interests be presented as a component of consolidated stockholders’ equity, eliminates minority interest accounting such that the amount of net income attributable to the noncontrolling interests will be presented as part of consolidated net income in the accompanying consolidated statements of operations and not as a separate component of income and expense, and requires that upon any changes in ownership that result in the loss of control of the subsidiary, the noncontrolling interest be re-measured at fair value with the resultant gain or loss recorded in net income. SFAS No. 160 is effective for fiscal years beginning on or after December 15, 2008. The Company will adopt SFAS No. 160 in the first quarter of 2009 and does not believe the adoption will have a material effect on its consolidated financial statements.

In March 2008, the FASB issued SFAS No. 161, Disclosures about Derivative Instruments and Hedging Activities (“SFAS No. 161”). SFAS No. 161 is intended to improve financial reporting of derivative instruments and hedging activities by requiring enhanced disclosures to enable investors to better understand their effects on an entity’s financial position, financial performance, and cash flows. SFAS No. 161 achieves these improvements by requiring disclosure of the fair values of derivative instruments and their gains and losses in a tabular format. It also provides more information about an entity’s liquidity by requiring disclosure of derivative features that are credit risk-related. Finally, it requires cross-referencing within footnotes to enable financial statement users to locate important information about derivative instruments. SFAS No. 161 is effective for financial statements issued for fiscal years and interim periods beginning after November 15, 2008, with early application encouraged. The Company will adopt SFAS No. 161 in the first quarter of 2009 and does not believe the adoption will have a material effect on its consolidated financial statements.

In April 2008, the FASB issued FSP SFAS No. 142-3, Determination of the Useful Life of Intangible Assets, (“FSP SFAS 142-3”). FSP SFAS 142-3 is intended to improve the consistency between the useful life of recognized intangible assets under SFAS No. 142, Goodwill and Other Intangible Assets, (“SFAS No. 142”), and the period of expected cash flows used to measure the fair value of the assets under SFAS No. 141R. FSP SFAS 142-3 amends the factors an entity should consider in developing renewal or

43

extension assumptions in determining the useful life of recognized intangible assets. In addition to the required disclosures under SFAS No. 142, FSP SFAS 142-3 requires disclosure of the entity’s accounting policy regarding costs incurred to renew or extend the term of recognized intangible assets, the weighted average period to the next renewal or extension, and the total amount of capitalized costs incurred to renew or extend the term of recognized intangible assets. FSP SFAS 142-3 is effective for financial statements issued for fiscal years and interim periods beginning after December 15, 2008. The Company will adopt FSP SFAS 142-3 on January 1, 2009. The adoption of FSP SFAS 142-3 is not expected to have a material impact on the consolidated financial statements.

In June 2008, the FASB issued FSP EITF 03-6-1, Determining Whether Instruments Granted in Share-Based Payment Transactions Are Participating Securities (“FSP EITF 03-6-1”), which addresses whether instruments granted in share-based payment transactions are participating securities prior to vesting and, therefore, need to be included in the computation of earnings per share under the two-class method described in SFAS No. 128, Earnings per Share. FSP EITF 03-6-1, which will apply to the Company because it grants instruments to employees in share-based payment transactions that meet the definition of participating securities, is effective retrospectively for financial statements issued for fiscal years and interim periods beginning after December 15, 2008. The Company will adopt FSP EITF 03-6-1 in the first quarter of 2009 and does not believe the adoption will have a material effect on its consolidated financial statements.

In December 2008, the Financial Accounting Standards Board (“FASB”) issued Staff Position (“FSP”) Statement of Financial Account Standards (“FAS”) No. 140-4 and FIN 46(R)-8, “Disclosures by Public Entities (Enterprises) about Transfers of Financial Assets and Interests in Variable Interest Entities” (“FSP FAS 140-4”). The purpose of this FSP is to improve disclosures by public entities and enterprises until pending amendments to SFAS No. 140, “Accounting for Transfers and Servicing of Financial Assets and Extinguishments of Liabilities” (“SFAS 140”), and FIN 46(R) are finalized and approved by the FASB. The FSP amends SFAS 140 to require public entities to provide additional disclosures about transferors’ continuing involvements with transferred financial assets. It also amends FIN 46(R) to require public enterprises to provide additional disclosures about their involvement with variable interest entities. FSP FAS 140-4 and FIN 46(R)-8 is effective for financial statements issued for fiscal years and interim periods ending after December 15, 2008. For periods after the initial adoption date, comparative disclosures are required. The Company adopted the FSP and FIN 46(R)-8 on December 31, 2008.

RESULTS OF OPERATIONS

Overview

The Company reported revenue of $611.8 million for the year ended December 31, 2008, compared with revenue of $217.9 million for the same period of 2007. Approximately $442.0 million of the increase was attributed to a full year of results from the Transaction Services and Management Services businesses. The remaining decrease of $48.1 million was attributed to a net decrease of $48.1 million in Investment Management revenue. The decrease in revenue as compared to the prior year period can be attributed to lower acquisition fees as a result of less tenant-in-common equity raise and lower disposition fees, only partially offset by an increase in acquisition fees related to our public non-traded REITs as a result of a significant increase in equity raised. Additionally, $6.8 million of property management fees related to captive management programs were recorded in management services revenue as the property management related to those programs was transferred subsequent to the Merger. The Company completed a total of 50 acquisitions and 9 dispositions on behalf of the investment programs it sponsors at values of approximately $1.2 billion and $225.8 million, respectively, during the year ended December 31, 2008. The net acquisitions from the Investment Management business allowed the Company to grow its captive assets under management by approximately 17.5% from $5.8 billion as of December 31, 2007 to $6.8 billion as of December 31, 2008.

The net loss for the year ended December 31, 2008 was $330.9 million, or $5.21 per diluted share, and included a non-cash charge of $181.3 million for goodwill and intangible assets impairment, a non-cash charge of $90.4 million for real estate related impairments (of which $32.9 million was recorded in the fourth quarter), a $28.0 million charge, $18.9 million of which is non-cash, which includes an allowance for bad debt on related party receivables and advances and an expected loss on the sale of two properties under

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management for which the Company has a recourse obligation, a second quarter non-cash charge of $8.9 million for depreciation and amortization related to the reclassification of five assets held for sale to assets held for investment, a first quarter net write-off of its investment in GERA of $5.8 million and $14.7 million of merger and integration related costs. In addition, the year-to-date results included approximately $11.7 million of stock-based compensation, $1.2 million for amortization of contract rights and other identified intangible assets and $1.8 million of recognized loss on marketable equity securities.

As of September 30, 2008, the Company initiated a plan to sell the properties it classified as real estate held for investment in its financial statements as of September 30, 2008. As of December 31, 2008, the Company had a covenant within its Credit Facility which required the sale of certain of these assets before March 31, 2009. The downturn in the global capital markets significantly lessened the probability that the Company would be able to achieve relief from this covenant through amendment or other financial resolutions by March 31 2009. Pursuant to SFAS No. 144, Accounting for the Impairment or Disposal of Long-Lived Assets, the Company assessed the value of the assets. In addition, the Company reviewed the valuation of its other owned properties and real estate investments. This valuation review resulted in the Company recognizing an impairment charge of approximately $90.4 million against the carrying value of the properties and real estate investments as of December 31, 2008.

As a result of the Merger in December 2007, the newly combined Company’s operating segments were evaluated for reportable segments. The legacy NNN reportable segments were realigned into a single operating and reportable segment called Investment Management. This realignment had no impact on the Company’s consolidated balance sheet, results of operations or cash flows.

The Company reports its revenue by three operating business segments in accordance with the provisions of SFAS No. 131, Disclosures about Segments of an Enterprise and Related Information. Transaction Services, which comprises its real estate brokerage operations; Investment Management which includes providing acquisition, financing and disposition services with respect to its programs, asset management services related to its programs, and dealer-manager services by its securities broker-dealer, which facilitates capital raising transactions for its TIC, REIT and other investment programs; and Management Services, which includes property management, corporate facilities management, project management, client accounting, business services and engineering services for unrelated third parties and the properties owned by the programs it sponsors. Additional information on these business segments can be found in Note 18 of Notes to Consolidated Financial Statements in Item 8 of this Report.

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Year Ended December 31, 2008 Compared to Year Ended December 31, 2007

The following summarizes comparative results of operations for the periods indicated.

	Year Ended
	December 31,						Change
(In thousands)	2008			2007(1)			$			%
				Restated
Revenue
Transaction services	$	240,250		$	35,522		$	204,728			576.3	%
Investment management		101,581			149,651			(48,070	)		(32.1	)
Management services		253,664			16,365			237,299			1,450.0
Rental related		16,326			16,399			(73	)		(0.4	)
Total revenue		611,821			217,937			393,884			180.7
Operating Expense
Compensation costs		503,004			104,109			398,895			383.2
General and administrative		119,660			44,251			75,409			170.4
Depreciation and amortization		10,312			2,621			7,691			293.4
Rental related		14,414			16,054			(1,640	)		(10.2	)
Interest		5,914			2,168			3,746			172.8
Merger related costs		14,732			6,385			8,347			130.7
Real estate related impairments		17,954			—			17,954			—
Goodwill and intangible asset impairment		181,285			—			181,285			—
Total operating expense		867,275			175,588			691,687			393.9
Operating (Loss) Income		(255,454	)		42,349			(297,803	)		(703.2	)
Other (Expense) Income
Equity in losses of unconsolidated entities		(13,311	)		2,029			(15,340	)		(756.0	)
Interest income		902			2,992			(2,090	)		(69.9	)
Other		(6,458	)		(465	)		(5,993	)		(1,288.8	)
Total other (expense) income		(18,867	)		4,556			(23,423	)		(514.1	)
(Loss) income from continuing operations before minority interest and income tax provision		(274,321	)		46,905			(321,226	)		(684.8	)
Minority interest in loss (income) of consolidated entities		11,719			(1,961	)		13,680			697.6
Loss (income) from continuing operations before income tax provision		(262,602	)		44,944			(307,546	)		(684.3	)
Income tax provision		(16,890	)		(18,118	)		(1,228	)		(6.8	)
Loss (income) from continuing operations		(279,492	)		26,826			(306,318	)		(1,141.9	)
Discontinued Operations
Loss from discontinued operations — net of taxes		(51,735	)		(6,006	)		(45,729	)		(761.4	)
Gain on disposal of discontinued operations — net of taxes		357			252			105			41.7
Total loss from discontinued operations		(51,378	)		(5,754	)		(45,624	)		(792.9	)
Net (Loss) Income	$	(330,870	)	$	21,072		$	(351,942	)		(1,670.2	)

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(1) Based on GAAP, the operating results for twelve months ended December 31, 2007 includes the results of NNN for the full periods presented and the results of the legacy Grubb & Ellis business for the period from December 8, 2007 through December 31, 2007.

Revenue

Transaction Services Revenue

The Company earns revenue from the delivery of transaction and management services to the commercial real estate industry. Transaction fees include commissions from leasing, acquisition and disposition, and agency leasing assignments as well as fees from appraisal and consulting services. Management fees, which include reimbursed salaries, wages and benefits, comprise the remainder of the Company’s Transaction Services revenue, and include fees related to both property and facilities management outsourcing as well as project management and business services.

The Transaction services segment was acquired from the legacy Grubb & Ellis on December 7, 2007 which includes brokerage commission, valuation and consulting revenue. As of December 31, 2008, legacy Grubb & Ellis had 814 brokers, down from 927 as of December 31, 2007.

Investment Management Revenue

Investment management revenue of $101.6 million for the year ended December 31, 2008, which includes transaction, captive management and dealer-manager businesses, was comprised primarily of transaction fees of $43.4 million, asset and property management fees of $38.0 million and dealer-manager fees of $15.1 million.

Transaction related fees decreased $39.8 million, or 47.8%, to $43.4 million for the year ended December 31, 2008, compared to approximately $83.2 million for the same period in 2007. The year-over-year decrease in transaction fees was primarily due to decreases of $14.6 million in real estate acquisition fees, $13.5 million in real estate disposition fees, $5.0 million in OMEA fees, and $6.6 million in other transaction related fees.

Acquisition fees decreased approximately $14.6 million, or 31.3%, to $32.1 million for the year ended December 31, 2008, compared to approximately $46.7 million for the same period in 2007. The year-over-year decrease in acquisition fees was primarily attributed to a decrease of approximately $19.1 million in fees earned from the Company’s TIC Programs and a decrease of approximately $2.8 million in fees earned from the Company’s other real estate funds and joint ventures, partially offset by an increase of $3.1 million from the non-traded REIT programs and $4.2 million from Private Client Management. During the year ended December 31, 2008, the Company acquired 50 properties on behalf of its sponsored programs for an approximate aggregate total of $1.2 billion, compared to 77 properties for an approximate aggregate total of $2.0 billion during the same period in 2007.

Disposition fees decreased approximately $13.5 million, or 74.5%, to approximately $4.6 million for the year ended December 31, 2008, compared to approximately $18.2 million for the same period in 2007. The decrease reflects lower sales volume and lower sales values due to current market conditions. Fees on dispositions as a percentage of aggregate sales price was 2.6% for the year ended December 31, 2008, compared to 2.4% for the same period in 2007, primarily due to a change in the mix of properties sold. Offsetting the disposition fees during the year ended December 31, 2008 and 2007 was $1.2 million and $3.2 million, respectively, of amortization of identified intangible contract rights associated with the acquisition of Realty as they represent the right to future disposition fees of a portfolio of real properties under contract.

OMEA fees decreased approximately $5.0 million, or 54.3%, to $4.2 million for the year ended December 31, 2008, compared to approximately $9.1 million for the same period in 2007. OMEA fees as a percentage of equity raised for the year ended December 31, 2008 was 2.4%, compared to 2.0% for the same period in 2007. The decrease in OMEA fees earned was primarily due to a decline in TIC equity raised, declining to $176.9 million in TIC equity raised in 2008, compared to $452.2 million in TIC equity raised in 2007.

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The Company completed a total of 50 acquisitions and 9 dispositions on behalf of the investment programs it sponsors at values in excess of $1.2 billion and $225.8 million, respectively, during 2008. The net acquisitions from the Investment Management business allowed the Company to grow its captive assets under management by more than 17.0% during 2008. As of December 31, 2008, the value of the Company’s assets under management was in excess of $6.8 billion.

Captive management fees were down approximately 7.5% year-over-year and include the movement of approximately $6.8 million of revenue to the Company’s management services segment. Exclusive of this transfer of revenue, captive management fees increased approximately 9.1% year-over-year.

Management Services Revenue

Management Services revenue includes asset and property management fees as well as reimbursed salaries, wages and benefits from the Company’s third party property management and facilities outsourcing services, along with business services fees. Management Services revenue was $253.7 million for the year ended December 31, 2008 and $16.4 million from December 8, 2007 through December 31, 2007. Following the closing of the merger, Grubb & Ellis Management Services assumed management of nearly 27.1 million square feet of NNN’s 46.9 million-square-foot captive investment management portfolio. As of December 31, 2008, the Company managed 231.0 million square feet of property.

Rental Revenue

Rental revenue includes pass-through revenue for the master lease accommodations related to the Company’s TIC Programs.

Operating Expense Overview

Operating expenses increased $691.7 million, or 393.9%, to $867.3 million for the year ended December 31, 2008, compared to $175.6 million for the same period in 2007. The increase includes approximately $455.6 million due to the legacy Grubb & Ellis business, $18.0 million in real estate related impairments, $181.3 million in goodwill and intangible asset impairments, a $28.0 million charge which includes an allowance for bad debt on related party receivables and advances and an expected loss on the sale of two properties under management for which the Company has a recourse obligation, $8.3 million due to additional merger related costs and $4.2 million in additional non-cash stock based compensation.

Compensation costs

Compensation costs increased $398.9 million, or 383.2%, to $503.0 million for the year ended December 31, 2008, compared to $104.1 million for the same period in 2007 due to approximately $406.3 million of compensation costs attributed to legacy Grubb & Ellis’ operations. Compensation costs related to the investment management business decreased approximately 9.4% to $56.6 million, for the year ended December 31, 2008, compared to $62.5 million for the same period in 2007. Included in the compensation cost was non-cash stock compensation expense which increased by $4.2 million to $11.7 million for the year ended December 31, 2008 compared to $7.5 million for the same period in 2007.

General and Administrative

General and administrative expense increased approximately $75.4 million, or 170.4%, to $119.7 million for the year ended December 31, 2008, compared to $44.3 million for the same period in 2007 due to approximately $48.4 million of general and administration expenses attributed to legacy Grubb & Ellis operations and an increase of $27.0 million related to the investment management business, primarily due to an increase in allowances for bad debt on related party receivables and advances.

General and administrative expense was 19.6% of total revenue for the year ended December 31, 2008, compared with 20.3% for the same period in 2007.

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Depreciation and Amortization

Depreciation and amortization increased approximately $7.7 million, or 293.4%, to $10.3 million for the year ended December 31, 2008, compared to $2.6 million for the same period in 2007. The increase includes approximately $6.3 million due to the legacy Grubb & Ellis business. Included in depreciation and amortization expense was approximately $3.5 million for amortization of other identified intangible assets.

Rental Expense

Rental expense includes pass-through expenses for master lease accommodations related to the Company’s TIC Programs.

Interest Expense

Interest expense increased approximately $3.7 million, or 172.8%, to $5.9 million for the year ended December 31, 2008, compared to $2.2 million for the same period in 2007. Interest expense is primarily comprised of interest expense related to the Company’s Line of Credit.

Real Estate Related Impairments

The Company recognized an impairment charge of approximately $18.0 million during the year ended December 31, 2008 related to certain unconsolidated real estate investments. The impairment charges were recognized against the carrying value of the investments during the year ended December 31, 2008. In addition, the Company recognized approximately $72.4 million in real estate related impairments related to six properties held for sale as of December 31, 2008, for which the net income (loss) of the properties are classified as discontinued operations. See Discontinued Operations discussion below.

Goodwill and Intangible Assets Impairment

The Company recognized a goodwill and intangible assets impairment charge of approximately $181.3 million during the year ended December 31, 2008. The total impairment charge of $181.3 million is comprised of $172.7 million related to goodwill impairment and $8.6 million related to the impairment of intangible contract rights. The Company recognizes goodwill in accordance with SFAS No. 142 and tests the carrying value for impairment during the fourth quarter of each year. The goodwill impairment analysis is a two-step process. The first step used to identify potential impairment involves comparing each reporting unit’s estimated fair value to its carrying value, including goodwill. To estimate the fair value of its reporting units, the Company used a discounted cash flow model and market comparable data. Significant judgment is required by management in developing the assumptions for the discounted cash flow model. These assumptions include cash flow projections utilizing revenue growth rates, profit margin percentages, discount rates, market/economic conditions, etc. If the estimated fair value of a reporting unit exceeds its carrying value, goodwill is considered to not be impaired. If the carrying value exceeds estimated fair value, there is an indication of potential impairment and the second step is performed to measure the amount of impairment. The second step of the process involves the calculation of an implied fair value of goodwill for each reporting unit for which step one indicated a potential impairment. The implied fair value of goodwill is determined by measuring the excess of the estimated fair value of the reporting unit as calculated in step one, over the estimated fair values of the individual assets, liabilities and identified intangibles. During the fourth quarter of 2008, the Company identified the uncertainty surrounding the global economy and the volatility of the Company’s market capitalization as goodwill impairment indicators. The Company’s goodwill impairment analysis resulted in the recognition of an impairment charge of approximately $172.7 million during the year ended December 31, 2008. The Company also analyzed its trade name for impairment pursuant to SFAS No. 142 and determined that the trade name was not impaired as of December 31, 2008. Accordingly, no impairment charge was recorded related to the trade name during the year ended December 31, 2008. In addition to testing goodwill and its trade name for impairment, the Company tested the intangible contract rights for impairment during the fourth quarter of 2008. The intangible contract rights represent the legal right to future disposition fees of a portfolio of real estate properties under contract. As a result of the current economic environment, a portion of these disposition fees may not be recoverable. Based on our analysis for the current and projected property values, condition of the properties and status of mortgage loans payable

49

associated with these contract rights, the Company determined that there are certain properties for which receipt of disposition fees was improbable. As a result, the Company recorded an impairment charge of approximately $8.6 million related to the impaired intangible contract rights as of December 31, 2008.

Equity in Earnings (Losses) of Unconsolidated Real Estate

In the first quarter of 2008, the Company wrote off its investment in GERA, which resulted in a net impact of approximately $5.8 million, including $4.5 million related to stock and warrant purchases and $1.3 million related to operating advances and third party costs. Equity in losses also includes $10.3 million in equity in earnings related to seven LLCs that are consolidated pursuant to FIN No. 46(R). The consolidated LLCs record equity in earnings based on the LLCs pro rata ownership interest in the underlying unconsolidated properties.

Minority Interests

Minority interest in loss increased by $13.7 million, or 697.6%, to $11.7 million during the year ended December 31, 2008, compared to minority interest in income of $2.0 million for the same period in 2007. Minority interest in loss includes $8.6 million in real estate related impairments recorded at the underlying properties during the year ended December 31, 2008.

Discontinued Operations

In accordance with SFAS No. 144, for the year ended December 31, 2008, discontinued operations included the net income (loss) of six properties and two limited liability company (“LLC”) entities classified as held for sale as of December 31, 2008. The net loss of $51.4 million during the year ended December 31, 2008 includes approximately $72.4 million of real estate related impairments. During October 2008, the Company initiated a plan to sell the properties it classified as held for investment in its financial statements as of September 30, 2008. As of December 31, 2008, the Company had a covenant within its Credit Facility which required the sale of certain of these assets before March 31, 2009. The downturn in the global capital markets significantly lessened the probability that the Company would be able to achieve relief from this covenant through amendment or other financial resolutions by March 31, 2009. Pursuant to SFAS No. 144, the Company assessed the value of the assets. The impairment charges were recognized against the carrying value of the properties during the year ended December 31, 2008. (See Note 19 of the Notes to Consolidated Financial Statements in Item 8 of this Report for additional information.)

Income Tax

The Company recognized a tax expense from continuing operations of approximately $16.9 million for the year ended December 31, 2008, compared to a tax expense of $18.1 million for the same period in 2007. In 2008 and 2007, the reported effective income tax rates were (6.42%) and 40.38%, respectively. The 2008 effective tax rate was negatively impacted by impairments of Goodwill and the recording of a valuation allowance against deferred tax assets to the extent the realization of the associated tax benefit is not more-likely-than-not. Based on management’s evaluation of the Company’s tax position, it is believed the amounts related to the valuation allowances are appropriately accrued. The Company’s deferred tax assets are primarily attributable to impairments of various real estate holdings. (See Note 24 of the Notes to Consolidated Financial Statements in Item 8 of this Report for additional information.)

Net (Loss) Income

As a result of the above items, the Company recognized a net loss of approximately $330.9 million, or $5.21 per diluted share for the year ended December 31, 2008, compared to net income of $21.1 million, or $0.55 per diluted share, for the same period in 2007.

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Year Ended December 31, 2007 Compared to Year Ended December 31, 2006

The following summarizes comparative results of operations for the periods indicated.

	Year Ended
	December 31,						Change
(In thousands)	2007(1)			2006(2)			$			%
	Restated			Restated
Revenue
Transaction services	$	35,522		$	—		$	35,522			—	%
Investment management		149,651			99,599			50,052			50.3
Management services		16,365			—			16,365			—
Rental related		16,399			8,944			7,455			83.4
Total revenue		217,937			108,543			109,394			100.8
Operating Expense
Compensation costs		104,109			49,449			54,660			110.5
General and administrative		44,251			30,188			14,063			46.6
Depreciation and amortization		2,621			1,808			813			45.0
Rental related		16,054			9,423			6,631			70.4
Interest		2,168			6,765			(4,597	)		(68.0	)
Merger related costs		6,385			—			6,385			—
Total operating expense		175,588			97,633			77,955			79.8
Operating Income		42,349			10,910			31,439			288.2
Other Income (Expense)
Equity in earnings (losses) of unconsolidated entities		2,029			1,948			81			4.2
Interest income		2,992			713			2,279			319.6
Other		(465	)		—			(465	)		—
Total other income		4,556			2,661			1,895			71.2
Income from continuing operations before minority interest and income tax (provision) benefit		46,905			13,571			33,334			245.6
Minority interest in income of consolidated entities		(1,961	)		(78	)		(1,883	)		(2,414.1	)
Income from continuing operations before income tax (provision) benefit		44,944			13,493			31,451			233.1
Income tax (provision) benefit		(18,118	)		7,441			(25,559	)		(343.5	)
Income from continuing operations		26,826			20,934			5,892			28.1
Discontinued Operations
Loss from discontinued operations — net of taxes		(6,006	)		(1,031	)		(4,975	)		(482.5	)
Gain on disposal of discontinued operations — net of taxes		252			68			184			270.6
Total loss from discontinued operations		(5,754	)		(963	)		(4,791	)		(497.5	)
Net Income	$	21,072		$	19,971		$	1,101			5.5

(1)	Based on GAAP, the operating results for twelve months ended December 31, 2007 includes the results of NNN for the full periods presented and the results of the legacy Grubb & Ellis business for the period from December 8, 2007 through December 31, 2007.
(2)	Based on GAAP, the operating results for the twelve months ended December 31, 2006 represents legacy NNN business.

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Revenue

Transaction Services Revenue

The Company earns revenue from the delivery of transaction and management services to the commercial real estate industry. Transaction fees include commissions from leasing, acquisition and disposition, and agency leasing assignments as well as fees from appraisal and consulting services. Management fees, which include reimbursed salaries, wages and benefits, comprise the remainder of the Company’s Transaction Services revenue, and include fees related to both property and facilities management outsourcing as well as project management and business services.

Transaction services segment was acquired from the legacy Grubb & Ellis on December 7, 2007 which includes brokerage commission, valuation and consulting revenue. As of December 31, 2007, legacy Grubb & Ellis had 927 brokers, up from 917 at December 31, 2006.

Investment Management Revenue

Investment management revenue of $149.7 million for the year ended December 31, 2007, which includes transaction, captive management and dealer-manager businesses, was comprised primarily of transaction fees of $83.2 million, asset and property management fees of $41.0 million and dealer-manager fees of $18.0 million.

Transaction related fees increased $27.0 million, or 48.0%, for the year ended December 31, 2007, primarily due to increases of $20.7 million in real estate acquisition fees, $2.5 million in real estate disposition fees, $1.4 million in OMEA fees and $2.4 million in other transaction related fees.

Acquisition fees increased $20.7 million, or 79.4%, to $46.7 million for the year ended December 31, 2007, compared to $26.0 million for the same period in 2006. Net fees as a percentage of aggregate acquisition price increased to 2.3% for the twelve months ended December 31, 2007, compared to 1.9% for the same period in 2006, which resulted in $8.5 million in additional fees earned during 2007. During the year ended December 31, 2007, the Company acquired 77 properties (including six which were still owned as of December 31, 2007) on behalf of its sponsored programs for an approximate aggregate total of $2.0 billion, compared to 45 properties for an approximate aggregate total of $1.4 billion during the same period in 2006. This increase in acquisition volume in 2007 resulted in an additional $11.9 million in net fees.

The $2.5 million increase in real estate disposition fees for the year ended December 31, 2007 was primarily due to an increase in fees realized from the sales of properties, with $18.2 million in net fees realized from the disposition of 28 properties, with an average sales price of $31.3 million per property for the year ended December 31, 2007, compared to $15.7 million in fees realized from the disposition of 22 properties for the same period in 2006 with an average sales price of $37.9 million per property. Included in the fees realized from the sales of properties were $5.7 million in fees earned as a result of the continuing liquidation of G REIT, Inc. (“G REIT”) for the year ended December 31, 2007, compared to $5.3 million for the same period in 2006. The disposition fees were reduced during the years ended December 31, 2007 and 2006 in the amount of $3.2 million and $410,000, respectively, as a result of amortizing the identified intangible contract rights associated with the acquisition of Realty as they represent the right to future disposition fees of a portfolio of real properties under contract. Fees on dispositions as a percentage of aggregate sales price was 2.4% for the year ended December 31, 2007, compared to 1.9% for the same period in 2006 (excluding one property sold in 2006 for which the Company waived the entire amount of the disposition fee), primarily due to a change in the mix of properties sold.

OMEA fees increased $1.4 million, or 18.2%, to $9.1 million for the twelve months ended December 31, 2007, compared to $7.7 million for the same period in 2006. OMEA fees as a percentage of equity raised for the year ended December 31, 2007 was 2.0%, compared to 1.5% for the same period in 2006. The increase in OMEA fees earned was primarily due to $2.5 million in non-recurring credits issued in 2006 partially offset by $900,000 due to lower TIC equity raised in 2007 of $451.0 million, compared to $510.0 million in TIC equity raised in 2006.

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The diversified platform created as a result of the merger has already generated new revenue opportunities. The Company’s largest TIC investment during the fourth quarter of 2007 was generated from the net proceeds of a Transaction Services client that was re-invested on a tax deferred basis through GERI’s TIC platform.

The Company completed a total of 77 acquisitions and 30 dispositions on behalf of the investment programs it sponsors at values in excess of $2.0 billion and $880.0 million, respectively, during 2007. The net acquisitions from the Investment Management business allowed the Company to grow its captive assets under management by more than 27.0% during 2007. At December 31, 2007, the value of the Company’s assets under management was in excess of $5.7 billion.

The $6.4 million, or 18.6%, increase in captive management revenue was primarily due to an increase in property and asset management fees of $6.2 million, or 18.6%, to $41.0 million for the year ended December 31, 2007, compared to $34.6 million for 2006. This increase was primarily the result of the growth in recurring revenue, as total square footage of assets under management increased to an average of approximately 29.4 million for the year ended December 31, 2007, compared to approximately 26.2 million for the same period in 2006. Property and asset management fees per average square foot were $1.39 for the year ended December 31, 2007, compared to $1.32 for the same period in 2006. The increase in property and asset management fees per average square foot was primarily due to a change in product mix. During 2007, assets managed under TIC Programs and within Grubb & Ellis Healthcare REIT, Inc. (“Healthcare REIT”) and Grubb & Ellis Apartment REIT, Inc. (“Apartment REIT”) increased to approximately 83.7% of average assets under management compared to 75.7% in 2006, while assets managed under G REIT and T REIT, Inc. (“T REIT”) decreased to approximately 5.7%, compared to 17.6% in 2006 as a result of the liquidation of those entities. Property and asset management fees in TIC Programs earn up to 6% and in Healthcare REIT and Apartment REIT earn up to approximately 4% plus 1% of each REIT’s average invested assets, while G REIT and T REIT programs earn approximately 4%.

Management Services Revenue

Management Services revenue includes asset and property management fees as well as reimbursed salaries, wages and benefits from the Company’s third party property management and facilities outsourcing services, along with business services fees. Revenue was $16.4 million from December 8, 2007 through December 31, 2007. Following the closing of the merger, Grubb & Ellis Management Services assumed management of nearly 23 million square feet of NNN’s 41.7 million-square-foot captive investment management portfolio. The Company expects to transfer 6 million square feet of outsourced property management during the first half of 2008. At December 31, 2007, the Company managed 216 million square feet of property.

Rental Revenue

Rental revenue includes pass-through revenue for the master lease accommodations related to the Company’s TIC Programs.

Operating Expense Overview

Operating expenses increased $78.0 million, or 79.8%, for the year ended December 31, 2007, compared to the same period in 2006. Of the $78.0 million, $47.0 million was due to the Grubb & Ellis legacy business from December 8, 2007 to December 31, 2007. The remaining $31.0 million of the increase was attributed to legacy NNN’s Investment Management business, including $7.5 million in rental related expense, $10.2 million resulting from operations of the Company’s broker-dealer acquired in December 2006, $5.5 million in compensation related costs, $7.5 million in non-cash stock based compensation, $6.4 million in merger related costs, offset by a decrease of $4.7 million in interest expense and a net decrease of approximately $500,000 in other operating costs.

Compensation costs

Compensation costs increased $54.7 million, or 110.5%, to $104.1 million for the year ended December 31, 2007, compared to $49.4 million for the same period in 2006. Approximately $41.7 million of the increase was attributed to compensation costs from legacy Grubb & Ellis’ operations from December 8 through December 31, 2007. The remaining $13.0 million of the increase was related to the investment

53

management business which increased to $62.5 million, or 26.3%, for the year ended December 31, 2007, compared to $49.5 million for the same period in 2006. The increase of $5.5 million, or 11.1%, in compensation related costs, which included $2.1 million in reimbursable salaries, wages and benefits, was primarily due to an increase in full-time equivalent employees of approximately 89%. Contributing to the increase in compensation costs was $7.5 million in non-cash stock based compensation.

General and Administrative

General and administrative expense increased $14.1 million, or 46.6%, to $44.3 million for the year ended December 31, 2007, compared to $30.2 million for the same period in 2006. Approximately $4.7 million of the increase was attributed to general and administration expenses from the legacy Grubb & Ellis operations from December 8, 2007 through December 31, 2007. The remaining $9.4 million of the increase was related to the investment management business which increased to $39.6 million for the year ended December 31, 2007, compared to $30.2 million for the same period in 2006. The increase was primarily due to a $10.2 million increase resulting from operations of the Company’s broker-dealer acquired in December 2006, partially offset by decrease of $1.2 million related to non-recurring credits granted to certain investors in 2006.

Depreciation and Amortization

Depreciation and amortization increased $813,000, or 45.0%, to $2.6 million for the year ended December 31, 2007, compared to $1.8 million for the same period in 2006. Approximately $885,000 of the increase was attributed to depreciation and amortization expense from the legacy Grubb & Ellis operations from December 8 through December 31, 2007.

Rental Expense

Rental expense includes pass-through expenses for master lease accommodations related to the Company’s TIC Programs.

Interest Expense

Interest expense decreased $4.6 million, or 68.0%, to $2.2 million for the year ended December 31, 2007, compared to $6.8 million for the same period in 2006. The decrease was related to the investment management business and was primarily comprised of a decrease of approximately $2.0 million related to a prepayment penalty assessed to the Company in 2006 related to the early payoff and termination of the line of credit with Wachovia Bank National Association along with a decrease of approximately $1.3 million in interest expense in 2007 as a result of the line of credit having been paid off in 2006. In addition, interest expense related to preferred membership units decreased by approximately $1.1 million in 2007 as the preferred membership units were paid off in 2006.

Discontinued Operations

In 2007, GERI acquired 13 properties to resell to its sponsored programs. In accordance with SFAS No. 144, for the year ended December 31, 2007, discontinued operations included the net income (loss) of one property and its associated limited liability company (“LLC”) entity sold to a joint venture, two properties and the associated LLCs resold to Healthcare REIT and ten properties and their associated LLCs classified as held for sale as of December 31, 2007. In addition, for the year ended December 31, 2007, discontinued operations included the net income (loss) of six properties and two LLCs owned by the Company and classified as held for sale. (See Note 19 of Notes to Consolidated Financial Statements in Item 8 of this Report for additional information).

Income Tax

The Company incurred a tax provision of $18.1 million for the year ended December 31, 2007, compared to a tax benefit of $7.4 million for the same period in 2006. Effective with the close of NNN’s 144A private equity offering on November 16, 2006, GERI became a wholly-owned subsidiary, which caused a change in GERI’s tax status from a non-taxable partnership to a taxable C corporation. The change in tax status required NNN to recognize a one time income tax benefit of $6.0 million for the future tax effects attributable to temporary differences between GAAP basis and tax accounting principles as of the effective date of

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November 15, 2006. The $25.6 million decrease in tax expense was primarily a result of the nonrecurring tax benefit noted above coupled with the inclusion of 12 months of book income in 2007 versus six weeks of book income in 2006 due to the change in tax status. In addition, the Company is subject to the highest federal income tax rate of 35% in 2007, compared to a 34% statutory tax rate in 2006. (See Note 24 of Notes to Consolidated Financial Statements in Item 8 of this Report for additional information).

Net Income

As a result of the above items, net income increased $1.1 million to $21.1 million, or $0.55 per fully diluted share, for the year ended December 31, 2007, compared to net income of $20.0 million, or $1.01 per fully diluted share, for the same period in 2006.

Liquidity and Capital Resources

As of December 31, 2008, cash and cash equivalents decreased by approximately $16.3 million, from a cash balance of $49.3 million as of December 31, 2007. The Company’s operating activities used net cash of $33.6 million, as the Company repaid net operating liabilities totaling $20.2 million primarily related to incentive compensation and deferred commissions paid during the first quarter, which attained peak levels during the quarter ended December 31, 2007. Other operating activities used net cash totaling $13.4 million. Investing activities used net cash of $76.3 million primarily for acquisition funding of Company sponsored real estate programs. Financing activities provided net cash of $93.6 million primarily through borrowings including $55.0 million under the Company’s Line of Credit and mortgage financing of Company sponsored real estate programs. Financing activities for the year ended December 31, 2008 also included dividend payments of $15.1 million related to the dividends declared by the Company in December 2007 and the first and second quarters of 2008, $30.0 million for repayment of mezzanine financing on two of the assets held for sale and $13.0 million for repayment of mortgage debt in connection with the restructuring of the financing related to two of the assets held for sale.

Current Sources of Capital and Liquidity

The Company believes that it will have sufficient capital resources to satisfy its liquidity needs over the next twelve-month period. The Company expects to meet its short-term liquidity needs, which may include principal repayments of debt obligations, investments in various real estate investor programs and institutional funds and capital expenditures, through current and retained cash flow earnings, the sale of real estate properties, additional long-term secured and unsecured borrowings and proceeds from the potential issuance of debt or equity securities and the potential sale of other assets. The Credit Facility restricts our ability to operate outside of the Approved Budget without the permission of the requisite majority of lenders. In addition, we are required to remit Net Cash Proceeds from the sale of assets including real estate assets to repay advances under the Credit Facility and pursue additional sources of capital in accordance with the Recapitalization Plan. All of these demands put the Company’s liquidity and financial resources at risk. As of the date of filing this Form 10-K, the Company had approximately $67.3 million outstanding under the Credit Facility.

On October 31, 2008, the Company entered into that certain Agreement for the Purchase and Sale of Real Property and Escrow Instructions to effect the sale of the Danbury Property to an unaffiliated entity for a purchase price of $76.0 million. This agreement was amended and restated in its entirety by that certain Danbury Merger Agreement dated as of January 23, 2009, as amended by the First Amendment to Danbury Merger Agreement dates as of January 23, 2009 which reduced the purchase price to $73.5 million. In accordance with the terms of the Danbury Merger Agreement, as amended by the First Danbury Amendment, the Company received one half of the buyer’s deposits in an amount of $3.125 million from the buyer upon the execution of the Danbury Merger Agreement, which released escrow deposit remains subject to the terms of the Danbury Merger Agreement, and the remaining $3.125 million of deposits continued to be held in escrow pending the closing. On May 19, 2009, the Company and the buyer entered into the Second Danbury Amendment pursuant to which the remaining $3.125 million of deposits held in escrow were released to the

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Company (and remain subject to the terms of the Danbury Merger Agreement, as amended), and the purchase price was reduced to $72.4 million. In accordance with the Second Danbury Amendment, the closing of the sale of the property expected to occur on or before June 1, 2009.

In February 2007, the Company entered into a $25.0 million revolving line of credit with LaSalle Bank N.A. This line of credit consisted of $10.0 million for use in property acquisitions and $15.0 million for general corporate purposes and bore interest at prime plus 0.50% or three-month LIBOR plus 1.50%, at the Company’s option, on each drawdown.

On December 7, 2007, the Company entered into the Credit Facility to replace its revolving line of credit with LaSalle Bank N.A. The Credit Facility is for general corporate purposes which at the time generally bore interest at either the prime rate or LIBOR based rates plus an applicable margin ranging from 1.50% to 2.50%. As of December 31, 2007, the Company had $8.0 million outstanding under the Credit Facility.

On August 5, 2008, the Company entered into the First Letter Amendment to its Credit Facility. The First Letter Amendment, among other things, provided the Company with an extension from September 30, 2008 to March 31, 2009 to dispose of the three real estate assets that the Company had previously acquired on behalf of GERA. Additionally, the First Letter Amendment also, among other things, modified select debt and financial covenants in order to provide greater flexibility to facilitate the Company’s TIC Programs.

On November 4, 2008, the Company amended (the “Second Letter Amendment”) its Credit Agreement. The effective date of the Second Letter Amendment is September 30, 2008. (Certain capitalized terms set forth below that are not otherwise defined herein have the meaning ascribed to them in the Credit Facility, as amended.

The Second Letter Amendment, among other things, a) reduced the amount available under the Credit Facility from $75.0 million to $50.0 million by providing that no advances or letters of credit shall be made available to the Company after September 30, 2008 until such time as borrowings have been reduced to less than $50.0 million; b) provided that 100% of any net cash proceeds from the sale of certain real estate assets that have to be sold by the Company shall permanently reduce the Revolving Credit Commitments, provided that the Revolving Credit Commitments shall not be reduced to less than $50.0 million by reason of the operation of such asset sales; and c) modified the interest rate incurred on borrowings by increasing the applicable margins by 100 basis points and by providing for an interest rate floor for any prime rate related borrowings.

Additionally, the Second Letter Amendment, among other things, modified restrictions on guarantees of primary obligations from $125.0 million to $50.0 million, modifies select financial covenants to reflect the impact of the current economic environment on the Company’s financial performance, amended certain restrictions on payments by deleting any dividend/share repurchase limitations and modified the reporting requirements of the Company with respect to real property owned or held.

As of September 30, 2008, the Company was not in compliance with certain of its financial covenants related to EBITDA. As a result, part of the Second Letter Amendment included a provision to modify selected covenants. The Debt/EBITDA ratio for the quarters ending September 30, 2008 and December 31, 2008 were amended from 3.75:1.00 to 5.50:1.00, while the Debt/EBITDA Ratio for the quarters ending March 31, 2009 and thereafter remain at 3.50:1.00. The Interest Coverage Ratio for the quarters ending September 30, 2008, December 31, 2008 and March 31, 2009 were amended from 3.50:1.00 to 3.25:1.00, while the Interest Coverage Ratio for the quarters ended June 30, 2009 and September 30, 2009 remained unchanged at 3.50:1.00 and for the quarters ended December 31, 2009 and thereafter remained unchanged at 4.00:1.00. The Recourse Debt/Core EBITDA Ratio for the quarters ending September 30, 2008 and December 31, 2008 were amended from 2.25:1.00 to 4.25:1.00, while the Recourse Debt/Core EBITDA Ratio for the quarters thereafter remained unchanged at 2.25:1.00. The Core EBITDA to be maintained by the Company at all times was reduced from $60.0 million to $30.0 million and the Minimum Liquidity to be maintained by the Company at all times was reduced from $25.0 million to $15.0 million. The Company was not in compliance with certain debt covenants as of December 31, 2008, all of which were effectively cured as of such date by the Third Amendment to the Credit Facility described below. As a consequence of the foregoing, and certain provisions

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of the Third Amendment, the $63.0 million outstanding under the Credit Facility has been classified as a current liability as of December 31, 2008. See “Risk Factors” set forth in Item 1A. of Part I above.

On May 20, 2009, the Company further amended its Credit Facility by entering into the Third Amendment. The Third Amendment, among other things, bifurcates the existing credit facility into two revolving credit facilities, (i) a $38,000,000 Revolving Credit A Facility which is deemed fully funded as of the date of the Third Amendment, and (ii) a $29,289,245 Revolving Credit B Facility, comprised of revolving credit advances in the aggregate of $25,000,000 which are deemed fully funded as of the date of the Third Amendment and letters of credit advances in the aggregate amount of $4,289,245 which are issued and outstanding as of the date of the Third Amendment. The Third Amendment requires the Company to draw down $4,289,245 under the Revolving Credit B Facility on the date of the Third Amendment and deposit such funds in a cash collateral account to cash collateralize outstanding letters of credit under the Credit Facility and eliminates the swingline features of the Credit Facility and the Company’s ability to cause the lenders to issue any additional letters of credit. In addition, the Third Amendment also changes the termination date of the Credit Facility from December 7, 2010 to March 31, 2010 and modifies the interest rate incurred on borrowings by initially increasing the applicable margin by 450 basis points (or to 7.00% on prime rate loans and 8.00% on LIBOR based loans).

The Third Amendment also eliminated specific financial covenants, and in its place, the Company is required to comply with the Approved Budget, that has been agreed to by the Company and the lenders, subject to agreed upon variances. The Company is also required under the Third Amendment to effect the Recapitalization Plan, on or before September 30, 2009 and in connection therewith to effect the Partial Prepayment of the Revolving A Credit Facility. In the event the Company fails to effect the Recapitalization Plan and in connection therewith to reduce the Revolving Credit A Credit Facility by the Partial Prepayment amount, the (i) lenders will have the right commencing on October 1, 2009, to exercise the Warrants, for nominal consideration, to purchase common stock of the Company equal to 15% of the common stock of the Company on a fully diluted basis as of such date, subject to adjustment, (ii) the applicable margin automatically increases to 11% on prime rate loans and increases to 12% on LIBOR based loans, (iii) the Company shall be required to amortize an aggregate of $10 million of the Revolving Credit A Facility in three (3) equal installments on the first business day of each of the last three (3) months of 2009, (iv) the Company is obligated to submit a revised budget by October 1, 2009, (v) the Credit Facility will terminate on January 15, 2010, and (vi) no further advances may be drawn under the Credit Facility.

In the event that Company effects the Recapitalization Plan and the Partial Prepayment amount on or prior to September 30, 2009, the Warrants automatically will expire and not become exercisable, the applicable margin will automatically be reduced to 3% on prime rate loans and 4% on LIBOR based loans and the Company shall have the right, subject to the requisite approval of the lenders, to seek an extension of the term of the Credit Facility to January 5, 2011, provided the Company also pays a fee of .25% of the then outstanding commitments under the Credit Facility.

As a result of the Third Amendment the Company is required to prepay Revolving Credit A Advances (and to the extent the Revolving Credit A Facility shall be reduced to zero, prepay outstanding Revolving Credit B Advances) in an amount equal to 100% (or, after the Revolving Credit A Advances are reduced by at least the Partial Prepayment amount, in an amount equal to 50%) of Net Cash Proceeds (as defined in the Credit Agreement) from:

•  assets sales,

•  conversions of Investments (as defined in the Credit Agreement),

•  the refund of any taxes or the sale of equity interests by the Company or its subsidiaries,

•  the issuance of debt securities, or

•  any other transaction or event occurring outside the ordinary course of business of the Company or its subsidiaries;

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provided, however, that (a) the Net Cash Proceeds received from the sale of the certain real property assets shall be used to prepay outstanding Revolving Credit B Advances and to the extent Revolving Credit B Advances shall be reduced to zero, to prepay outstanding Revolving Credit A Advances, (b) the Company shall prepay outstanding Revolving Credit B Advances in an amount equal to 100% of the Net Cash Proceeds from the sale of the Danbury Property unless the Company is then not in compliance with the Recapitalization Plan in which event Revolving Credit A Advances shall be prepaid first and (c) the Company’s 2008 tax refund was used to prepay outstanding Revolving Credit B Advances upon the closing of the Third Amendment.

The Third Amendment requires the Company to (a) sell the Danbury Property by June 1, 2009, unless such date is extended with the applicable approval of the lenders and (b) use its commercially reasonable best efforts to sell four other commercial properties, including the two other GERA Properties, by September 30, 2009.

As part of the Company’s strategic plan, management has identified more than $20.0 million of expense synergies, on an annualized basis, a portion of which has been invested in enhancing the management team with the addition of several executives in key operational and management roles. In connection with the Merger, the Company announced its intention to pay a $0.41 per share dividend per annum, which equates to approximately $26.5 million on an annual basis. The Company declared and paid such dividends for holders of records at the end of each of the fourth calendar quarter of 2007 and the first and second calendar quarters of 2008. On July 11, 2008, the Company’s Board of Directors approved the suspension of future dividend payments. In addition, the Board of Directors approved a share repurchase program under which the Company may repurchase up to $25 million of its common stock through the end of 2009. As of December 31, 2008, the Company has repurchased 532,000 shares of its common stock for $1.8 million. The Third Amendment to the Credit Agreement restricts the Company’s ability to repurchase any additional shares.

Long-Term Liquidity Needs

The Company expects to meet its long-term liquidity needs, which may include principal repayments of debt obligations, investments in various real estate investor programs and institutional funds and capital expenditures, through current and retained cash flow earnings, the sale of real estate properties, additional long-term secured and unsecured borrowings and proceeds from the potential issuance of debt or equity securities and the potential sale of other assets. The Credit Facility restricts our ability to operate outside of the Approved Budget without the permission of the requisite majority of lenders, and the failure to operate within the Approved Budget by more than the greater of $1,500,000 or 15% on a cumulative basis for more than three consecutive weeks would, absent the requisite approval, result in an event of default of the Credit Facility and make the entire balance due and payable. In addition, we are required to remit Net Cash Proceeds from the sale of assets including real estate assets to repay advances under the Credit Facility and pursue additional sources of capital in accordance with the Recapitalization Plan. The Company’s Credit Facility requires the Company to implement the Recapitalization Plan and complete each step provided in the Recapitalization Plan by the dates set for such completion. In the event the Company is unable to effect the Partial Prepayment in connection with the Recapitalization Plan by September 30, 2009, the Company is required to amortize $10 million of the Revolving Credit A Facility in three equal installments on the first business day of each of the last three months of 2009 and the entire Credit Facility would become due and payable on January 15, 2010. In addition, the Company would not have access to any further advances under the Revolving Credit B Facility which would greatly reduce the Company’s liquidity. All of these demands put the Company’s liquidity and financial resources at risk.

Factors That May Influence Future Sources of Capital and Liquidity

Although Realty was required to have real estate licenses in all of the states in which it acted as a broker for NNN’s programs and received real estate commissions prior to 2007, Realty did not hold a license in certain of those states when it earned fees for those services. In addition, almost all of Triple Net Properties’ revenue was based on an arrangement with Realty to share fees from NNN’s programs. Triple Net Properties did not hold a real estate license in any state, although most states in which properties of NNN’s programs were located may have required Triple Net Properties to hold a license in order to share fees. As a result, Realty and the Company may be subject to penalties, such as fines (which could be a multiple of the amount

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received), restitution payments and termination of management agreements, and to the suspension or revocation of certain of Realty’s real estate broker licenses. As of December 31, 2008, no liabilities have been accrued for the failure to hold real estate licenses. To the extent that Realty or the Company incurs any liability arising from the failure to comply with real estate broker licensing requirements in certain states, Anthony W. Thompson, Louis J. Rogers and Jeffrey T. Hanson have agreed to forfeit to the Company up to an aggregate of 4,124,120 shares of the Company common stock. In addition, Mr. Thompson has agreed to indemnify the Company, to the extent the liability incurred by the Company for such matters exceeds the deemed $46,865,000 value of these shares (based upon the $11.36 per share value of such shares as of such agreement), up to an additional $9,435,000 in cash. These shares are held in escrow in connection with an independent escrow agreement entered into on November 14, 2006 between NNN, Messrs. Thompson, Rogers and Hanson and the escrow agent. The above indemnifications expire on November 16, 2009. Since Mr. Hanson is entitled over time to receive up to 743,160 shares from Messrs. Thompson and Rogers (557,370 from Mr. Thompson and 185,790 from Mr. Rogers) from the shares held in the indemnification and escrow agreement, he is a party to it as well and his liability is limited to those shares. If Mr. Hanson’s right to receive the shares vests, then to the extent shares attributable to his ownership are available, and not subject to potential claims, under the indemnification and escrow agreement, he will be permitted to remove 88,000 shares on each of January 1, 2008 and 2009 to pay taxes. As Mr. Hanson’s right to receive the shares vests, then to the extent shares attributable to his ownership are available, and not subject to potential claims, under the indemnification and escrow agreement, he will be permitted to remove certain shares to pay taxes. On January 20, 2009, Mr. Hanson was permitted to remove 247,695 shares from the escrow to pay taxes.

On November 16, 2007, the Company completed the acquisition of a 51% membership interest in Grubb & Ellis Alesco Global Advisors, LLC (“Alesco”). Pursuant to the Intercompany Agreement between the Company and Alesco, dated as of November 16, 2007, the Company committed to invest $20.0 million in seed capital into the open and closed end real estate funds that Alesco expects to launch. Additionally, upon achievement of certain earn-out targets, the Company is required to purchase up to an additional 27% interest in Alesco for $15.0 million. The Company is allowed to use $15.0 million of seed capital to fund the earn-out payments. As of December 31, 2008, the Company has invested $500,000 in seed capital into the open and closed end real estate funds that Alesco launched during 2008.

Cash Flow

Year Ended December 31, 2008 Compared to Year Ended December 31, 2007

Net cash used in operating activities increased $69.5 million to $36.0 million for the year ended December 31, 2008, compared to net cash provided by operating activities of $33.5 million for the same period in 2007. Net cash used in operating activities included a decrease in net income of $351.9 million adjusted for an increase in non-cash reconciling items, the most significant of which was $181.3 million in goodwill impairment, $90.4 million in real estate related impairments, $11.7 million in stock-based compensation, $29.0 million in depreciation and amortization primarily related to five properties held for sale, $1.2 million as a result of amortizing the identified intangible contract rights associated with the acquisition of Realty, partially offset by a $3.3 million increase in deferred taxes. Also contributing to this increase was cash used in net changes in other operating assets and liabilities of $36.3 million.

Net cash used in investing activities decreased $413.0 million to $73.9 million for the year ended December 31, 2008, compared to $486.9 million for the same period in 2007. This decrease in cash used in investing activities was primarily related to a decrease of $483.0 million of cash used in the acquisition and related improvements of office properties and asset purchases for GERI’s sponsored TIC Programs, partially offset by $92.9 million in proceeds from the sales of certain real estate assets in 2007.

Net cash provided by financing activities decreased $306.9 million to $93.6 million for the year ended December 31, 2008, compared to $400.5 million for the same period in 2007. The decrease was primarily due to a decrease of $443.7 million in borrowings on notes payable related to properties purchased for GERI’s sponsored TIC Programs in 2008, a decrease of $27.0 million in contributions from minority interests in 2008 offset by a decrease of $87.5 million in repayments of notes payable and capital lease obligations and an increase in advances on the line of credit of $55.0 million in 2008.

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Year Ended December 31, 2007 Compared to Year Ended December 31, 2006

Net cash provided by operating activities increased $16.2 million to $33.5 million for the year ended December 31, 2007, compared to $17.4 million for the same period in 2006. Net cash provided by operating activities included an increase in net income of $1.1 million adjusted for an increase in non-cash reconciling items, the most significant of which was $5.2 million in stock-based compensation, $6.6 million in depreciation and amortization primarily related to two properties purchased in 2007, $2.7 million as a result of amortizing the identified intangible contract rights associated with the acquisition of Realty, partially offset by a $1.0 million increase in deferred taxes. Also contributing to this increase was cash provided by net changes in other operating assets and liabilities of $6.1 million. This increase in cash from operating activities was partially offset by a $7.3 million increase in accounts receivable from related parties which consisted primarily of accrued management, leasing and transaction fees from the Company’s various sponsored programs.

Net cash used in investing activities increased $430.7 million to $486.9 million for the year ended December 31, 2007, compared to $56.2 million for the same period in 2006. This increase in cash used in investing activities was primarily related to $142.3 million of cash used in the acquisition and related improvements to two office properties held for investment and $462.8 million for asset purchases of GERI’s sponsored programs, to facilitate the reselling of such assets to its TIC Programs and REITs, partially offset by $92.9 million in proceeds from the sales of these assets and $117.5 million in proceeds from repayment of advances to related parties.

Net cash provided by financing activities increased $259.9 million to $400.5 million for the year ended December 31, 2007, compared to $140.5 million for the same period in 2006. The increase was primarily due to an increase of $426.3 million in borrowings on notes payable related to properties acquired in 2007 and an increase of $34.5 million in contributions from minority interests in 2007 and a decrease of $11.6 million in dividends paid in 2007. Partially offsetting the year-over-year increase in cash provided by financing activities was $146.0 million in net proceeds in November 2006 as a result of the issuance of NNN’s common stock through the 144A private equity offering, an increase of $47.9 million in principal repayments on notes payable in 2007 and $7.5 million in additional repayments under the Company’s line of credit in 2007.

Commitments, Contingencies and Other Contractual Obligations

Contractual Obligations

The Company leases office space throughout the country through non-cancelable operating leases, which expire at various dates through June 30, 2020.

The following table summarizes contractual obligations as of December 31, 2008 and the effect that such obligations are expected to have on the Company’s liquidity and cash flow in future periods. This table does not reflect any available extension options.

	Payments Due by Period
	Less Than						More Than
	1 Year		1-3 Years		3-5 Years		5 Years
(In thousands)	2009		(2010-2011)		(2012-2013)		(After 2013)		Total
Principal — secured debt	$	63,000	$	—	$	—	$	—	$	63,000
Interest — secured debt		3,570		6,951		—		—		10,521
Principal — properties held for sale		108,779		180		—		107,000		215,959
Interest — properties held for sale		8,656		13,021		13,012		14,187		48,876
Principal — senior notes		—		16,277		—		—		16,277
Interest — senior notes		1,424		2,849		843		—		5,116
Operating lease obligations — others		9,793		21,754		21,884		19,880		73,311
Operating lease obligations — general		22,085		30,829		22,082		16,903		91,899
Capital lease obligations		333		203		—		—		536
Total	$	217,640	$	92,064	$	57,821	$	157,970	$	525,495

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TIC Program Exchange Provisions.  Prior to the Merger, NNN entered into agreements in which NNN agreed to provide certain investors with a right to exchange their investment in certain TIC Programs for an investment in a different TIC program. NNN also entered into an agreement with another investor that provided the investor with certain repurchase rights under certain circumstances with respect to their investment. The agreements containing such rights of exchange and repurchase rights pertain to initial investments in TIC programs totaling $31.6 million. The Company deferred revenues relating to these agreements of $584,000, $393,000 and $986,000 for the years ended December 31, 2006, 2007 and 2008, respectively. Additional losses of $14.3 million related to these agreements were recorded in 2008 to reflect the impairment in value of properties underlying the agreements with investors. As of December 31, 2008 the Company had recorded liabilities totaling $18.6 million related to such agreements, consisting of $4.3 million of cumulative deferred revenues and $14.3 million of additional losses related to these agreements.

Off-Balance Sheet Arrangements.  From time to time the Company provides guarantees of loans for properties under management. As of December 31, 2008, there were 151 properties under management with loan guarantees of approximately $3.5 billion in total principal outstanding with terms ranging from one to 10 years, secured by properties with a total aggregate purchase price of approximately $4.8 billion. As of December 31, 2007, there were 143 properties under management with loan guarantees of approximately $3.4 billion in total principal outstanding with terms ranging from one to 10 years, secured by properties with a total aggregate purchase price of approximately $4.6 billion. In addition, the consolidated VIEs and unconsolidated VIEs are jointly and severally liable on the non-recourse mortgage debt related to the interests in the Company’s TIC investments totaling $277.8 million and $385.3 million as of December 31, 2008, respectively.

The Company’s guarantees consisted of the following as of December 31, 2008 and 2007:

	December 31,
(In thousands)	2008		2007
Non-recourse/carve-out guarantees of debt of properties under management(1)	$	3,414,433	$	3,167,447
Non-recourse/carve-out guarantees of the Company’s debt(1)	$	107,000	$	221,430
Guarantees of the Company’s mezzanine debt	$	—	$	48,790
Recourse guarantees of debt of properties under management	$	42,426	$	47,399
Recourse guarantees of the Company’s debt	$	10,000	$	10,000

(1) A “non-recourse/carve-out” guaranty imposes personal liability on the guarantor in the event the borrower engages in certain acts prohibited by the loan documents.

Management evaluates these guarantees to determine if the guarantee meets the criteria required to record a liability in accordance with FASB Financial Interpretation No. 45, Guarantor’s Accounting and Disclosure Requirements for Guarantees, Including Indirect Guarantees of Indebtedness of Others (“FIN No. 45”) Subsequent to the initial measurement under FIN No. 45, the Company evaluates the ongoing liability relating to these guarantees in accordance with SFAS No. 5. As of December 31, 2008, the Company recorded a liability of $9.1 million related to recourse guarantees of debt of properties under management which matured in January and April 2009. Any other such liabilities were insignificant as of December 31, 2008 and 2007.

Item 7A.   Quantitative and Qualitative Disclosures About Market Risk.

Interest Rate Risk

Derivatives — The Company’s Credit Facility debt obligations and mortgage loan obligations are floating rate obligations whose interest rate and related monthly interest payments vary with the movement in LIBOR and/or prime lending rates. As of December 31, 2008 and 2007, the outstanding principal balances on the Credit Facility debt obligations totaled $63.0 million and $8.0 million, respectively, and on the mortgage loan debt obligations totaled $216.0 million and $348.9 million, respectively. Since interest payments on any future obligation will increase if interest rate markets rise, or decrease if interest rate markets decline, the Company will be subject to cash flow risk related to these debt instruments. In order to mitigate this risk, the terms of

61

the Company’s Credit Facility required the Company to maintain interest rate hedge agreements that were in effect as of the date of the Third Amendment against variable interest debt obligations. To fulfill this requirement, the Company holds two interest rate cap agreements with Deutsche Bank Trust Company Americas, which provide for quarterly payments to the Company equal to the variable interest amount paid by the Company in excess of 6.00% of the underlying notional amounts. In addition, the terms of certain mortgage loan agreements required the Company to purchase two-year interest rate caps on 30-day LIBOR with a LIBOR strike price of 6.00%, thereby locking the maximum interest rate on borrowings under the mortgage loans at 7.70% for the initial two year term of the mortgage loans.

The Company’s earnings are affected by changes in short-term interest rates as a result of the variable interest rates incurred on its Credit Facility. The Company’s Credit Facility is secured by its assets, bears interest at the bank’s prime rate or LIBOR plus applicable margins based on compliance with covenants with respect to consummation of a recapitalization transaction in accordance with the Recapitalization Plan and currently matures on March 31 2010, subject to extension or early termination under certain circumstances.. Since interest payments on this obligation will increase if interest rate markets rise, or decrease if interest rate markets decline, the Company is subject to cash flow risk related to this debt instrument as amounts are drawn under the Line of Credit.

Additionally, the Company’s earnings are affected by changes in short-term interest rates as a result of the variable interest rate incurred on the portion of the outstanding mortgages on its real estate held for sale. As of December 31, 2008 and 2007, the outstanding principal balance on these variable rate debt obligations was $108.7 million and $169.3 million, respectively, with a weighted average interest rate of 3.78% and 8.23% per annum, respectively. Since interest payments on these obligations will increase if interest rates rise, or decrease if interest rates decline, the Company is subject to cash flow risk related to these debt instruments. As of December 31, 2008, for example, a 0.5% increase in interest rates would have increased the Company’s overall annual interest expense by approximately $390,000, or 3.67%. As of December 31, 2007, for example, a 0.8% increase in interest rates would have increased the Company’s overall annual interest expense by approximately $1.4 million, or 9.72%.This sensitivity analysis contains certain simplifying assumptions, for example, it does not consider the impact of changes in prepayment risk.

During the fourth quarter of 2006, GERI entered into several interest rate lock agreements with commercial banks aggregating to approximately $400.0 million, with interest rates ranging from 6.15% to 6.19% per annum. All rate locks were cancelled and all deposits in connection with these agreements were refunded to the Company in April 2008.

Except for the acquisition of Grubb & Ellis Alesco Global Advisors, LLC, as previously described, the Company does not utilize financial instruments for trading or other speculative purposes, nor does it utilize leveraged financial instruments.

62

Item 8.   Financial Statements and Supplementary Data.

INDEX TO CONSOLIDATED FINANCIAL STATEMENTS

Grubb & Ellis Company
Reports of Independent Registered Public Accounting Firms	64
Consolidated Balance Sheets as of December 31, 2008 and 2007 (as restated)	66
Consolidated Statements of Operations for the years ended December 31, 2008, 2007 (as restated) and 2006 (as restated)	67
Consolidated Statements of Stockholders’ Equity (Deficit) for the years ended December 31, 2008, 2007 (as restated) and 2006 (as restated)	68
Consolidated Statements of Cash Flows for the years ended December 31, 2008, 2007 (as restated) and 2006 (as restated)	69
Notes to Consolidated Financial Statements for the years ended December 31, 2008, 2007 and 2006	71

63

REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

The Board of Directors and Shareholders of Grubb & Ellis Company

We have audited the consolidated balance sheets of Grubb & Ellis Company and subsidiaries as of December 31, 2008 and 2007, and the related consolidated statements of operations, stockholders’ equity, and cash flows for the years then ended. Our audits also included the financial statement schedules listed in the index at Item 15. These financial statements and schedules are the responsibility of the Company’s management. Our responsibility is to express an opinion on these financial statements and schedules based on our audits. We did not audit the financial statements of Grubb & Ellis Securities, Inc. (f.k.a. NNN Capital Corp.), a wholly-owned subsidiary, which statements reflect total assets of $6,264,000 and $20,584,000 as of December 31, 2008 and 2007, respectively, and total revenues of $15,224,000 and $18,315,000 for the years then ended. Those statements were audited by other auditors whose report has been furnished to us, and our opinion, insofar as it relates to the amounts included for Grubb & Ellis Securities, Inc. (f.k.a. NNN Capital Corp.), is based solely on the report of the other auditors.

We conducted our audits in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits and the report of other auditors provide a reasonable basis for our opinion.

In our opinion, based on our audit and the report of other auditors, the financial statements referred to above present fairly, in all material respects, the consolidated financial position of Grubb & Ellis Company and subsidiaries at December 31, 2008 and 2007, and the consolidated results of their operations and their cash flows for the years then ended, in conformity with U.S. generally accepted accounting principles. Also, in our opinion, the related financial statement schedules, when considered in relation to the basic financial statements taken as a whole, present fairly, in all material respects, the information set forth therein.

As discussed in Note 3, the accompanying 2007 consolidated financial statements have been restated.

We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States), Grubb & Ellis Company’s internal control over financial reporting as of December 31, 2008, based on criteria established in Internal Control-Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission and our report dated May 27, 2009 expressed an adverse opinion thereon.

/s/ Ernst & Young LLP

Irvine, California

May 27, 2009

64

REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

To the Board of Directors and Stockholders Grubb & Ellis Company:

We have audited the accompanying consolidated statements of operations, stockholders’ equity, and cash flows of Grubb & Ellis Company (formerly NNN Realty Advisors, Inc.) and subsidiaries (the “Company”) for the year ended December 31, 2006. Our audit also included the financial statement schedule listed in the Index at Item 15. These financial statements and financial statement schedule are the responsibility of the Company’s management. Our responsibility is to express an opinion on these financial statements based on our audits.

We conducted our audit in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. The Company is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting. Our audits included consideration of internal control over financial reporting as a basis for designing audit procedures that are appropriate in the circumstances but not for the purpose of expressing an opinion on the effectiveness of the Company’s internal control over financial reporting. Accordingly, we express no such opinion. An audit also includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements, assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audit provides a reasonable basis for our opinion.

In our opinion, such consolidated financial statements present fairly, in all material respects, the results of operations and cash flows of Grubb & Ellis Company and subsidiaries for the year ended December 31, 2006, in conformity with accounting principles generally accepted in the United States of America. Also, in our opinion, such consolidated financial statement schedule, when considered in relation to the basic consolidated financial statements taken as a whole, presents fairly in all material respects, the information set forth therein.

As discussed in Note 3, the accompanying 2006 consolidated financial statements have been restated.

Los Angeles, California

May 7, 2007 (May 27, 2009 as to the restatement discussed in Note 3 and of discontinued operations discussed in Note 19 )

65

GRUBB & ELLIS COMPANY

CONSOLIDATED BALANCE SHEETS

(In thousands, except share and per share amounts)

	December 31,
	2008			2007
				Restated
ASSETS
Current assets:
Cash and cash equivalents	$	32,985		$	49,328
Restricted cash		36,047			70,023
Investment in marketable equity securities		1,510			9,052
Current portion of accounts receivable from related parties — net		22,630			32,795
Current portion of advances to related parties — net		2,982			6,667
Notes receivable from related party — net		9,100			7,600
Service fees receivable — net		26,987			19,521
Current portion of professional service contracts — net		4,326			7,235
Real estate deposits and pre-acquisition costs		5,961			11,818
Properties held for sale		167,408			332,176
Identified intangible assets and other assets held for sale — net		37,145			76,985
Prepaid expenses and other assets		22,770			12,855
Deferred tax assets		—			7,991
Total current assets		369,851			644,046
Accounts receivable from related parties — net		11,072			10,360
Advances to related parties — net		11,499			3,751
Professional service contracts — net		10,320			13,088
Investments in unconsolidated entities		8,733			22,191
Property, equipment and leasehold improvements — net		14,009			16,728
Goodwill		—			169,317
Identified intangible assets — net		91,527			105,473
Other assets — net		3,266			3,588
Total assets	$	520,277		$	988,542
LIABILITIES, MINORITY INTEREST AND STOCKHOLDERS’ EQUITY
Current liabilities:
Accounts payable and accrued expenses	$	70,222		$	102,004
Due to related parties		2,447			3,329
Line of credit		63,000			—
Current portion of capital lease obligations		333			351
Notes payable of properties held for sale		215,959			348,931
Liabilities of properties held for sale — net		16,843			25,550
Other liabilities		35,762			12,360
Deferred tax liabilities		2,080			—
Total current liabilities		406,646			492,525
Long-term liabilities:
Line of credit		—			8,000
Senior notes		16,277			16,277
Capital lease obligations		203			439
Other long-term liabilities		6,077			7,434
Deferred tax liabilities		17,298			29,915
Total liabilities		446,501			554,590
Commitment and contingencies (Note 20)
Minority interest		3,605			29,896
Stockholders’ equity:
Preferred stock: $0.01 par value; 10,000,000, shares authorized as of December 31, 2008 and 2007; no shares issued and outstanding as of December 31, 2008 and 2007		—			—
Common stock: $0.01 par value; 100,000,000 shares authorized; 65,382,601 and 64,824,777 shares issued and outstanding as of December 31, 2008 and 2007, respectively		654			648
Additional paid-in capital		402,780			393,665
(Accumulated deficit) retained earnings		(333,263	)		10,792
Other comprehensive loss		—			(1,049	)
Total stockholders’ equity		70,171			404,056
Total liabilities, minority interest and stockholders’ equity	$	520,277		$	988,542

See accompanying notes to consolidated financial statements.

66

GRUBB & ELLIS COMPANY

CONSOLIDATED STATEMENTS OF OPERATIONS

(In thousands, except per share data)

	Year Ended December 31,
	2008			2007			2006
				Restated			Restated
REVENUE
Transaction services	$	240,250		$	35,522		$	—
Investment management		101,581			149,651			99,599
Management services		253,664			16,365			—
Rental related		16,326			16,399			8,944
Total revenue		611,821			217,937			108,543
OPERATING EXPENSE
Compensation costs		503,004			104,109			49,449
General and administrative		119,660			44,251			30,188
Depreciation and amortization		10,312			2,621			1,808
Rental related		14,414			16,054			9,423
Interest		5,914			2,168			6,765
Merger related costs		14,732			6,385			—
Real estate related impairments		17,954			—			—
Goodwill and intangible asset impairment		181,285			—			—
Total operating expense		867,275			175,588			97,633
OPERATING (LOSS) INCOME		(255,454	)		42,349			10,910
OTHER (EXPENSE) INCOME
Equity in (losses) earnings of unconsolidated entities		(13,311	)		2,029			1,948
Interest income		902			2,992			713
Other		(6,458	)		(465	)		—
Total other (expense) income		(18,867	)		4,556			2,661
(Loss) income from continuing operations before minority interest and income tax (provision) benefit		(274,321	)		46,905			13,571
Minority interest in loss (income) of consolidated entities		11,719			(1,961	)		(78	)
(Loss) income from continuing operations before income tax (provision) benefit		(262,602	)		44,944			13,493
Income tax (provision) benefit		(16,890	)		(18,118	)		7,441
(Loss) income from continuing operations		(279,492	)		26,826			20,934
DISCONTINUED OPERATIONS
Loss from discontinued operations — net of taxes		(51,735	)		(6,006	)		(1,031	)
Gain on disposal of discontinued operations — net of taxes		357			252			68
Total loss from discontinued operations		(51,378	)		(5,754	)		(963	)
NET (LOSS) INCOME	$	(330,870	)	$	21,072		$	19,971
Basic (loss) earnings per share
(Loss) income from continuing operations	$	(4.40	)	$	0.69		$	1.06
Loss from discontinued operations		(0.81	)		(0.14	)		(0.05	)
Net (loss) earnings per share	$	(5.21	)	$	0.55		$	1.01
Diluted (loss) earnings per share
(Loss) income from continuing operations	$	(4.40	)	$	0.69		$	1.06
Loss from discontinued operations		(0.81	)		(0.14	)		(0.05	)
Net (loss) earnings per share	$	(5.21	)	$	0.55		$	1.01
Basic weighted average shares outstanding		63,515			38,652			19,681
Diluted weighted average shares outstanding		63,515			38,653			19,694

See accompanying notes to consolidated financial statements.

67

GRUBB & ELLIS COMPANY

CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY

(In thousands)

										Accumulated			(Accumulated
							Additional			Other			Deficit)			Total
	Common Stock						Paid-In			Comprehensive			Retained			Stockholders’
	Shares			Amount			Capital			Loss			Earnings			Equity
Balance as of January 1, 2006 (as previously reported)		17,372		$	174		$	3,902		$	—		$	24,701		$	28,777
Prior year adjustment														(8,696	)		(8,696	)
Balance as of January 1, 2006 (as restated)		17,372			174			3,902			—			16,005			20,081
Dividends declared		—			—			—			—			(31,883	)		(31,883	)
Issuance of common stock to acquire Realty and NNN Capital Corp.		5,289			53			60,361			—			—			60,414
Issuance of common stock		14,080			141			159,859			—			—			160,000
Offering costs		—			—			(13,885	)		—			—			(13,885	)
Issuance of restricted shares to directors and officers		541			5			—			—			—			5
Vesting of share-based compensation		—			—			2,448			—			—			2,448
Change in unrealized (loss) on marketable securities, net of taxes		—			—			—			(26	)		—			(26	)
Net income		—			—			—			—			19,971			19,971
Comprehensive income		—			—			—			—			—			19,945
Balance as of December 31, 2006(as restated)		37,282			373			212,685			(26	)		4,093			217,125
Dividends declared		—			—			—			—			(14,373	)		(14,373	)
Vesting of share-based compensation		—			—			9,027			—			—			9,027
Common stock for merger transaction		26,196			262			171,953			—			—			172,215
Issuance of restricted shares to directors, officers and employees		1,450			14			—			—			—			14
Cancellation of non-vested restricted shares		(103	)		(1	)		—			—			—			(1	)
Change in unrealized loss on marketable securities, net of taxes		—			—			—			(1,023	)		—			(1,023	)
Net income		—			—			—			—			21,072			21,072
Comprehensive income		—			—			—			—			—			20,049
Balance as of December 31, 2007(as restated)		64,825			648			393,665			(1,049	)		10,792			404,056
Dividends declared		—			—			—			—			(13,395	)		(13,395	)
Vesting of share-based compensation		—			—			11,248			—			210			11,458
Repurchase of common stock		(532	)		(5	)		(1,835	)		—			—			(1,840	)
Issuance of restricted shares to directors, officers and employees		1,552			15			(15	)		—			—			—
Issuance of stock to directors, officers and employees related to equity compensation awards		77			1			378			—			—			379
Cancellation of non-vested restricted shares		(539	)		(5	)		(75	)		—			—			(80	)
Change in unrealized loss on marketable securities, net of taxes		—			—			(586	)		1,049			—			463
Net loss		—			—			—			—			(330,870	)		(330,870	)
Comprehensive loss		—			—			—			—			—			(330,407	)
Balance as of December 31, 2008		65,383		$	654		$	402,780		$	—		$	(333,263	)	$	70,171

See accompanying notes to consolidated financial statements.

68

GRUBB & ELLIS COMPANY

CONSOLIDATED STATEMENTS OF CASH FLOWS

(In thousands)

	Year Ended December 31,
	2008			2007			2006
				Restated			Restated
CASH FLOWS FROM OPERATING ACTIVITIES
Net (loss) income	$	(330,870	)	$	21,072		$	19,971
Adjustments to reconcile net (loss) income to net cash (used in) provided by operating activities:
Equity in (earnings) losses of unconsolidated entities		13,311			(2,029	)		(1,948	)
Depreciation and amortization (including amortization of signing bonuses)		28,961			8,652			2,086
Loss on disposal of property, equipment and leasehold improvements		494			861			—
Goodwill and intangible asset impairment		181,286			—			—
Impairment of real estate		90,351			—			—
Stock-based compensation		11,705			9,041			3,865
Compensation expense on profit sharing arrangements		1,878			1,999			—
Amortization/write-off of intangible contractual rights		1,179			3,133			410
Amortization of deferred financing costs		1,006			1,713			31
Loss (gain) on sale of marketable equity securities		7,215			(184	)		—
Deferred income taxes		(3,784	)		(7,109	)		(8,147	)
Allowance for uncollectible accounts		13,319			806			1,408
Minority interest in (losses) income of consolidated entities		(11,719	)		1,961			78
Loss on write-off of real estate deposits and pre-acquisition costs		2,415			—			—
Other operating noncash gains (losses)		2,267			8			(105	)
Changes in operating assets and liabilities:
Accounts receivable from related parties		6,480			6,018			(1,254	)
Prepaid expenses and other assets		(28,945	)		(36,295	)		(919	)
Accounts payable and accrued expenses		(19,915	)		15,884			2,367
Other liabilities		(263	)		8,012			(487	)
Net cash (used in) provided by operating activities		(33,629	)		33,543			17,356
CASH FLOWS FROM INVESTING ACTIVITIES
Purchases of property and equipment		(4,407	)		(3,331	)		(2,339	)
Tenant improvements and capital expenditures
Purchases of marketable equity securities		(997	)		(30,732	)		(2,360	)
Proceeds from sale of marketable equity securities		2,653			22,870			—
Advances to related parties		(13,173	)		(39,112	)		(19,268	)
Proceeds from repayment of advances to related parties		20,043			117,496			16,713
Payments to related parties		(882	)		(2,704	)		(1,064	)
Origination of notes receivable from related parties		(15,100	)		(39,300	)		(10,000	)
Proceeds from repayment of notes receivable from related parties		13,600			41,700			777
Investments in unconsolidated entities		(29,163	)		(9,076	)		(111,772	)
Sale of tenant-in-common interests in unconsolidated entities		—			20,466			101,128
Distributions of capital from unconsolidated entities		914			1,256			20,049
Acquisition of businesses — net of cash acquired		—			339			(7,398	)
Acquisition of properties		(122,163	)		(605,126	)		(80,905	)
Proceeds from sale of properties		—			92,945			31,684
Real estate deposits and pre-acquisition costs		(59,780	)		(50,202	)		(14,106	)
Proceeds from collection of real estate deposits and pre-acquisition costs		118,835			49,427			26,722
Restricted cash		13,290			(53,825	)		(4,064	)
Net cash used in investing activities		(76,330	)		(486,909	)		(56,203	)

See accompanying notes to consolidated financial statements.

69

GRUBB & ELLIS COMPANY

CONSOLIDATED STATEMENTS OF CASH FLOWS — (Continued)

(In thousands)

	Year Ended December 31,
	2008			2007			2006
				Restated			Restated
CASH FLOWS FROM FINANCING ACTIVITIES
Advances on line of credit		55,000			—			14,000
Repayment of advances on line of credit		—			(30,000	)		(22,500	)
Borrowings on notes payable and capital lease obligations		103,339			547,015			120,711
Repayments of notes payable and capital lease obligations		(56,386	)		(143,848	)		(95,930	)
Other financing costs		—			850			(1,867	)
Proceeds from issuance of senior notes		—			6,015			10,263
Repayments of participating notes		—			—			(2,300	)
Redemption of redeemable preferred membership units		—			—			(5,506	)
Deferred financing costs		(2,412	)		(2,310	)		(1,515	)
Net proceeds from issuance of common stock		52			—			146,000
Repurchase of common stock		(1,840	)		—			—
Dividends paid to common stockholders		(15,128	)		(16,449	)		(28,070	)
Contributions from minority interests		15,084			42,061			7,554
Distributions to minority interests		(4,093	)		(2,866	)		(315	)
Net cash provided by financing activities		93,616			400,468			140,525
NET (DECREASE) INCREASE IN CASH		(16,343	)		(52,898	)		101,678
Cash and cash equivalents — Beginning of year		49,328			102,226			548
Cash and cash equivalents — End of year	$	32,985		$	49,328		$	102,226
SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION
Cash paid during the period for:
Interest	$	21,089		$	10,148		$	5,784
Income taxes	$	2,151		$	22,622		$	179
SUPPLEMENTAL DISCLOSURE OF NONCASH ACTIVITIES
Accrual for tenant improvements, lease commissions and capital expenditures	$	739		$	814		$	—
Equipment acquired with capital lease obligations	$	52		$	541		$	355
Dividends accrued	$	—		$	1,733		$	3,813
Deconsolidation of assets held by variable interest entities	$	301,656		$	372,674		$	28,016
Deconsolidation of liabilities held by variable interest entities	$	222,448		$	269,732		$	17,449
Assets acquired in acquisition	$	—		$	462,730		$	26,657
Liabilities assumed in acquisition	$	—		$	259,659		$	19,342

See accompanying notes to consolidated financial statements.

70

GRUBB & ELLIS COMPANY

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

FOR THE YEARS ENDED DECEMBER 31, 2008, 2007 AND 2006

1.   ORGANIZATION

Grubb & Ellis Company (“the Company” or “Grubb & Ellis”), a Delaware corporation founded 50 years ago in Northern California, is a commercial real estate services and investment management firms. On December 7, 2007, the Company effected a stock merger (the “Merger”) with NNN Realty Advisors, Inc. (“NNN”), a real estate asset management company and sponsor of public non-traded real estate investment trusts (“REITs”), as well as a sponsor of tax deferred tenant-in-common (“TIC”) 1031 property exchanges and other investment programs. Upon the closing of the Merger, a change of control occurred. The former stockholders of NNN acquired approximately 60% of the Company’s issued and outstanding common stock.

The Company offers property owners, corporate occupants and program investors comprehensive integrated real estate solutions, including transactions, management, consulting and investment advisory services supported by market research and local market expertise.

In certain instances throughout these Financial Statements phrases such as “legacy Grubb & Ellis” or similar descriptions are used to reference, when appropriate, Grubb & Ellis prior to the Merger. Similarly, in certain instances throughout these Financial Statements the term NNN, “legacy NNN” or similar phrases are used to reference, when appropriate, NNN Realty Advisors, Inc. prior to the Merger.

2.   SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Basis of Presentation and Principles of Consolidation — The consolidated financial statements include the accounts of the Company and its wholly-owned and majority-owned controlled subsidiaries’, variable interest entities (“VIEs”) in which the Company is the primary beneficiary, and partnerships/limited liability companies (“LLCs”) in which the Company is the managing member or general partner and the other partners/members lack substantive rights (hereinafter collectively referred to as the “Company”). All significant intercompany accounts and transactions have been eliminated in consolidation. For acquisitions of an interest in an entity or newly formed joint venture or limited liability company, the Company evaluates the entity to determine if the entity is deemed a VIE, and if the Company is deemed to be the primary beneficiary, in accordance with Financial Accounting Standards Board (“FASB”) Interpretation No. 46(R), Consolidation of Variable Interest Entities (“FIN No. 46(R)”).

The Company consolidates entities that are VIEs when the Company is deemed to be the primary beneficiary of the VIE. For entities in which (i) the Company is not deemed to be the primary beneficiary, (ii) the Company’s ownership is 50.0% or less and (iii) the Company has the ability to exercise significant influence, the Company uses the equity accounting method (i.e. at cost, increased or decreased by the Company’s share of earnings or losses, plus contributions less distributions). The Company also uses the equity method of accounting for jointly-controlled tenant-in-common interests. As reconsideration events occur, the Company will reconsider its determination of whether an entity is a VIE and who the primary beneficiary is to determine if there is a change in the original determinations and will report such changes on a quarterly basis.

As more fully discussed in Note 16, the Company has entered into a Third Amendment to its Credit Facility that requires the Company to comply with the Approved Budget that has been agreed to by the Company and the lenders, subject to agreed upon variances. The Company is also required under the Third Amendment to effect the Recapitalization plan on or before September 30, 2009 and in connection therewith to effect a Partial Prepayment on or before September 30, 2009. Among other things, in the event the Company does not complete the recapitalization plan and/or make the Partial Prepayment, the Credit Facility will terminate on January 15, 2010. In light of the current state of the financial markets and economic environment, there is risk that the Company will be unable to meet the terms of the Credit Facility which would result in the entire balance of the debt becoming due and payable. If the Credit Facility were to become

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due and payable on the alternative due date of January 15, 2010, there can be no assurances that the Company will have access to alternative funding sources, or if such sources are available to the Company, that they will be on favorable terms and conditions to the Company, which at that time could create substantial doubt about the Company’s ability to continue as a going concern after January 15, 2010.

Use of Estimates — The financial statements have been prepared in conformity with accounting principles generally accepted in the United States (“GAAP”), which requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities (including disclosure of contingent assets and liabilities) as of the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates.

Credit Facility — Weak economic conditions could impact the Company’s ability to remain in compliance with the debt covenants contained within its Credit Facility described in Note 16 below. If revenues are less than the Company has projected, the Company will be required to take further actions within its control to reduce costs so as to allow the Company to remain in compliance with the financial covenants in the Credit Facility. In the event the Company is required to amend the Credit Facility in order to remain in compliance with the financial covenants set forth therein, there can be no assurances that it will be able to do so.

Reclassifications — Certain reclassifications have been made to prior year and prior interim period amounts in order to conform to the current period presentation. These reclassifications have no effect on reported net income. Adjustments related to the restatement of previously issued financial statements are detailed in Note 3.

Cash and cash equivalents — Cash and cash equivalents consist of all highly liquid investments with a maturity of three months or less when purchased. Short-term investments with remaining maturities of three months or less when acquired are considered cash equivalents.

Restricted Cash — Restricted cash is comprised primarily of cash and loan impound reserve accounts for property taxes, insurance, capital improvements, and tenant improvements related to consolidated properties. As of December 31, 2008 and 2007, the restricted cash was $36.0 million and $70.0 million, respectively.

Accounts Receivable from Related Parties — Accounts receivable from related parties consist of fees earned from syndicated entities and properties under management, including property and asset management fees. Property and asset management fees are collected from the operations of the underlying real estate properties.

Allowance for Uncollectible Receivables — Receivables are carried net of management’s estimate of uncollectible receivables. Management’s determination of the adequacy of these allowances is based upon evaluations of historical loss experience, operating performance of the underlying properties, current economic conditions, and other relevant factors.

Real Estate Deposits and Pre-acquisition Costs — Real estate deposits and pre-acquisition costs are incurred when the Company evaluates properties for purchase and syndication. Pre-acquisition costs are capitalized as incurred. Real estate deposits may become nonrefundable under certain circumstances. The majority of the real estate deposits outstanding as of December 31, 2008 and 2007, were either refunded to the Company during the subsequent year or used to purchase property and subsequently reimbursed from the syndicated equity. Costs of abandoned projects represent pre-acquisition costs associated with properties no longer sought for acquisition by the Company and are included in general and administrative expense in the Company’s consolidated statement of operations.

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Payments to obtain an option to acquire real property are capitalized as incurred. All other costs related to a property that are incurred before the property is acquired, or before an option to acquire it is obtained, are capitalized if all of the following conditions are met and otherwise are charged to expense as incurred:

•  the costs are directly identifiable with the specific property;

•  the costs would be capitalized if the property were already acquired; and

•  acquisition of the property or an option to acquire the property is probable. This condition requires that the Company is actively seeking to acquire the property and have the ability to finance or obtain financing for the acquisition and that there is no indication that the property is not available for sale.

Purchase Price Allocation — In accordance with Statement of Financial Accounting Standards (“SFAS”) No. 141, Business Combinations (“SFAS No. 141”), the purchase price of acquired businesses or properties is allocated to tangible and identified intangible assets and liabilities based on their respective fair values. In the case of real estate acquisitions, the allocation to tangible assets (building and land) is based upon determination of the value of the property as if it were vacant using discounted cash flow models similar to those used by independent appraisers. Factors considered include an estimate of carrying costs during the expected lease-up periods considering current market conditions and costs to execute similar leases. Additionally, the purchase price of the applicable property is allocated to the above or below market value of in-place leases and the value of in-place leases and related tenant relationships.

The value allocable to the above or below market component of the acquired in-place leases is determined based upon the present value (using a discount rate which reflects the risks associated with the acquired leases) of the difference between (i) the contractual amounts to be paid pursuant to the lease over its remaining term, and (ii) our estimate of the amounts that would be paid using fair market rates over the remaining term of the lease. The amounts allocated to above market leases are included in identified intangible assets — net and below market lease values are included in liabilities of real estate properties in the accompanying consolidated financial statements and are amortized to rental revenue over the weighted-average remaining term of the acquired leases with each property.

The total amount of identified intangible assets acquired is further allocated to in-place lease costs and the value of tenant relationships based on management’s evaluation of the specific characteristics of each tenant’s lease and our overall relationship with that respective tenant. Characteristics considered in allocating these values include the nature and extent of the credit quality and expectations of lease renewals, among other factors. These allocations are subject to change within one year of the date of purchase based on information related to one or more events identified at the date of purchase that confirm the value of an asset or liability of an acquired property.

Identified Intangible Assets — The Company’s acquisitions require the application of purchase accounting in accordance with SFAS No. 141. This results in tangible and identified intangible assets and liabilities of the acquired entity being recorded at fair value. Identified intangible assets includes a trade name, which is not being amortized and has an indefinite estimated useful life. The remaining other intangible assets primarily include contract rights, affiliate agreements, customer relationships and internally developed software, which are all being amortized over estimated useful lives ranging up to 20 years.

Properties Held for Investment — Properties held for investment are carried at historical cost less accumulated depreciation, net of any impairments. The cost of these properties include the cost of land, completed buildings, and related improvements. Expenditures that increase the service life of properties are capitalized; the cost of maintenance and repairs is charged to expense as incurred. The cost of buildings and improvements is depreciated on a straight-line basis over the estimated useful lives of the buildings and improvements, ranging primarily from 15 to 39 years, and the shorter of the lease term or useful life, ranging from one to ten years for tenant improvements.

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Properties Held for Sale — In accordance with SFAS No. 144, Accounting for the Impairment or Disposal of Long-Lived Assets (“SFAS No. 144”), at the time a property is held for sale, such property is carried at the lower of (i) its carrying amount or (ii) fair value less costs to sell. In addition, no depreciation or amortization of tenant origination cost is recorded for a property classified as held for sale. The Company classifies operating properties as properties held for sale in the period in which all of the required criteria are met.

SFAS No. 144 requires, in many instances, that the balance sheet and income statements for both current and prior periods report the assets, liabilities and results of operations of any component of an entity which has either been disposed of, or is classified as held for sale, as discontinued operations. In instances when a company expects to have significant continuing involvement in the component beyond the date of sale, the operations of the component instead continue to be fully recorded within the continuing operations of the Company through the date of sale. In accordance with this requirement, the Company records any results of operations related to its real estate held for sale as discontinued operations only when the Company expects not to have significant continuing involvement in the real estate after the date of sale.

Property, Equipment and Leasehold Improvements — Property and equipment are stated at cost, less accumulated depreciation and amortization. Depreciation and amortization expense is recorded on a straight-line basis over the estimated useful lives of the related assets, which range from three to seven years. Leasehold improvements are amortized on a straight-line basis over the life of the related lease or the estimated service life of the improvements, whichever is shorter. Maintenance and repairs are expensed as incurred, while betterments are capitalized. Upon the sale or retirement of depreciable assets, the related accounts are relieved, with any resulting gain or loss included in operations.

Impairment of Long-Lived Assets — In accordance with SFAS No. 144, long-lived assets are periodically evaluated for potential impairment whenever events or changes in circumstances indicate that their carrying amount may not be recoverable. In the event that periodic assessments reflect that the carrying amount of the asset exceeds the sum of the undiscounted cash flows (excluding interest) that are expected to result from the use and eventual disposition of the asset, the Company would recognize an impairment loss to the extent the carrying amount exceeded the fair value of the property. The Company estimates the fair value using available market information or other industry valuation techniques such as present value calculations. The Company recognized impairment charges of approximately $90.4 million against the carrying value of the properties and real estate investments for the year ended December 31, 2008, $18.0 million is recorded separately on the statement of operations and $72.4 million is included in discontinued operations. No impairment losses were recognized for the years ended December 31, 2007 and 2006.

The Company recognizes goodwill and other non-amortizing intangible assets in accordance with SFAS No. 142, Goodwill and Other Intangible Assets (“SFAS No. 142”). Under SFAS No. 142, goodwill is recorded at its carrying value and is tested for impairment at least annually or more frequently if impairment indicators exist, at a level of reporting referred to as a reporting unit. The Company recognizes goodwill in accordance with SFAS No. 142 and tests the carrying value for impairment during the fourth quarter of each year. The goodwill impairment analysis is a two-step process. The first step used to identify potential impairment involves comparing each reporting unit’s estimated fair value to its carrying value, including goodwill. To estimate the fair value of its reporting units, the Company used a discounted cash flow model and market comparable data. Significant judgment is required by management in developing the assumptions for the discounted cash flow model. These assumptions include cash flow projections utilizing revenue growth rates, profit margin percentages, discount rates, market/economic conditions, etc. If the estimated fair value of a reporting unit exceeds its carrying value, goodwill is considered to not be impaired. If the carrying value exceeds estimated fair value, there is an indication of potential impairment and the second step is performed to measure the amount of impairment. The second step of the process involves the calculation of an implied fair value of goodwill for each reporting unit for which step one indicated a potential impairment. The implied fair value of goodwill is determined by measuring the excess of the estimated fair value of the reporting unit as

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calculated in step one, over the estimated fair values of the individual assets, liabilities and identified intangibles. During the fourth quarter of 2008, the Company identified the uncertainty surrounding the global economy and the volatility of the Company’s market capitalization as goodwill impairment indicators. The Company’s goodwill impairment analysis resulted in the recognition of an impairment charge of approximately $172.7 million during the year ended December 31, 2008.

The Company also analyzed its trade name for impairment pursuant to SFAS No. 142 and determined that the trade name was not impaired as of December 31, 2008. Accordingly, no impairment charge was recorded related to the trade name during the year ended December 31, 2008. In addition to testing goodwill and its trade name for impairment, the Company tested the intangible contract rights for impairment during the fourth quarter of 2008. The intangible contract rights represent the legal right to future disposition fees of a portfolio of real estate properties under contract. As a result of the current economic environment, a portion of these disposition fees may not be recoverable. Based on the Company’s analysis for the current and projected property values, condition of the properties and status of mortgage loans payable, the Company determined that there are certain properties for which receipt of disposition fees was no longer probable. As a result, the Company recorded an impairment charge of approximately $8.6 million related to the impaired intangible contract rights as of December 31, 2008.

Revenue Recognition

Transaction Services

Real estate commissions are recognized when earned which is typically the close of escrow. Receipt of payment occurs at the point at which all Company services have been performed, and title to real property has passed from seller to buyer, if applicable. Real estate leasing commissions are recognized upon execution of appropriate lease and commission agreements and receipt of full or partial payment, and, when payable upon certain events such as tenant occupancy or rent commencement, upon occurrence of such events. All other commissions and fees are recognized at the time the related services have been performed and delivered by the Company to the client, unless future contingencies exist.

Investment Management

The Company earns fees associated with its transactions by structuring, negotiating and closing acquisitions of real estate properties to third-party investors. Such fees include acquisition fees for locating and acquiring the property and selling it to various TIC investors, REITs and its various real estate funds. The Company accounts for acquisition and loan fees in accordance with AICPA Statement of Position 92-1 (“SOP 92-1”), Accounting for Real Estate Syndication Income, and Statement of Financial Accounting Standards No. 66 (“SFAS No. 66”), Accounting for Sales of Real Estate. In general, the Company records the acquisition and loan fees upon the close of sale to the buyer if the buyer is independent of the seller, collection of the sales price, including the acquisition fees and loan fees, is reasonably assured, and the Company is not responsible for supporting operations of the property. Organizational marketing expense allowance (“OMEA”), fees are earned and recognized from gross proceeds of equity raised in connection with offerings and are used to pay formation costs, as well as organizational and marketing costs. When the Company does not meet the criteria for revenue recognition under SFAS No. 66 and SOP 92-1, revenue is deferred until revenue can be reasonably estimated or until the Company defers revenue up to its maximum exposure to loss. The Company earns disposition fees for disposing of the property on behalf of the REIT, investment fund or TIC. The Company recognizes the disposition fee when the sale of the property closes. The Company is entitled to loan advisory fees for arranging financing related to properties under management.

The Company earns captive asset and property management fees primarily for managing the operations of real estate properties owned by the real estate programs, REITs and LLCs that invest in real estate or value funds it sponsors. Such fees are based on pre-established formulas and contractual arrangements and are

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earned as such services are performed. The Company is entitled to receive reimbursement for expenses associated with managing the properties; these expenses include salaries for property managers and other personnel providing services to the property. Each property in the Company’s TIC Programs is charged an accounting fee for costs associated with preparing financial reports. The Company is also entitled to leasing commissions when a new tenant is secured and upon tenant renewals. Leasing commissions are recognized upon execution of leases.

Through its dealer-manager, the Company facilitates capital raising transactions for its programs its dealer-manager acts as a dealer-manager exclusively for the Company’s programs and does not provide securities services to any third party. The Company’s wholesale dealer-manager services are comprised of raising capital for its programs through its selling broker-dealer relationships. Most of the commissions, fees and allowances earned for its dealer-manager services are passed on to the selling broker-dealers as commissions and to cover offering expenses, and the Company retains the balance. Accordingly, the Company records these fees net of the amounts paid to its selling broker-dealer relationships.

Management Services

Management fees are recognized at the time the related services have been performed by the Company, unless future contingencies exist. In addition, in regard to management and facility service contracts, the owner of the property will typically reimburse the Company for certain expenses that are incurred on behalf of the owner, which are comprised primarily of on-site employee salaries and related benefit costs. The amounts which are to be reimbursed per the terms of the services contract, are recognized as revenue by the Company in the same period as the related expenses are incurred. In certain instances, the Company sub contracts its property management services to independent property managers, in which case the Company passes a portion of their property management fee on to the sub contractor, and the Company retains the balance. Accordingly, the Company records these fees net of the amounts paid to its sub contractors.

Professional Service Contracts — The Company holds multi-year service contracts with certain key transaction professionals for which cash payments were made to the professionals upon signing, the costs of which are being amortized over the lives of the respective contracts, which are generally two to five years. Amortization expense relating to these contracts of approximately $9.2 million and $443,000 was recorded for the years ended December 31, 2008 and 2007, respectively, and is included in compensation costs in the Company’s consolidated statement of operations.

Fair Value of Financial Instruments — SFAS No. 107, Disclosures About Fair Value of Financial Instruments (“SFAS No. 107”), requires disclosure of fair value of financial instruments, whether or not recognized on the face of the balance sheet, for which it is practical to estimate that value. SFAS No. 107 defines fair value as the quoted market prices for those instruments that are actively traded in financial markets. In cases where quoted market prices are not available, fair values are estimated using present value or other valuation techniques. The fair value estimates are made at the end of each year based on available market information and judgments about the financial instrument, such as estimates of timing and amount of expected future cash flows. Such estimates do not reflect any premium or discount that could result from offering for sale at one time the Company’s entire holdings of a particular financial instrument, nor do they consider that tax impact of the realization of unrealized gains or losses. In many cases, the fair value estimates cannot be substantiated by comparison to independent markets, nor can the disclosed value be realized in immediate settlement of the instrument.

As of December 31, 2008, the fair values of the Company’s notes payable, senior notes and lines of credit were approximately $195.4 million, $15.5 million and $60.0 million, respectively, compared to the carrying values of $216.0 million, $16.3 million and $63.0 million, respectively. The amounts recorded for accounts receivable, notes receivable, advances and accounts payable and accrued liabilities approximate fair value due to their short-term nature.

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Fair Value Measurements — Effective January 1, 2008, the Company adopted SFAS No. 157, Fair Value Measurements, or SFAS No. 157. SFAS No. 157 defines fair value, establishes a framework for measuring fair value, and expands disclosures about fair value measurements. SFAS No. 157 applies to reported balances that are required or permitted to be measured at fair value under existing accounting pronouncements; accordingly, the standard does not require any new fair value measurements of reported balances.

SFAS No. 157 emphasizes that fair value is a market-based measurement, not an entity-specific measurement. Therefore, a fair value measurement should be determined based on the assumptions that market participants would use in pricing the asset or liability. As a basis for considering market participant assumptions in fair value measurements, SFAS No. 157 establishes a fair value hierarchy that distinguishes between market participant assumptions based on market data obtained from sources independent of the reporting entity (observable inputs that are classified within Levels 1 and 2 of the hierarchy) and the reporting entity’s own assumptions about market participant assumptions (unobservable inputs classified within Level 3 of the hierarchy).

Level 1 inputs utilize quoted prices (unadjusted) in active markets for identical assets or liabilities that we have the ability to access. Level 2 inputs are inputs other than quoted prices included in Level 1 that are observable for the asset or liability, either directly or indirectly. Level 2 inputs may include quoted prices for similar assets and liabilities in active markets, as well as inputs that are observable for the asset or liability (other than quoted prices), such as interest rates, foreign exchange rates, and yield curves that are observable at commonly quoted intervals. Level 3 inputs are unobservable inputs for the asset or liability, which are typically based on an entity’s own assumptions, as there is little, if any, related market activity. In instances where the determination of the fair value measurement is based on inputs from different levels of the fair value hierarchy, the level in the fair value hierarchy within which the entire fair value measurement falls is based on the lowest level input that is significant to the fair value measurement in its entirety. The Company’s assessment of the significance of a particular input to the fair value measurement in its entirety requires judgment, and considers factors specific to the asset or liability. In accordance with the provisions of FSP SFAS No. 157-2, the Company has partially applied the provisions of SFAS No. 157 only to its financial assets and liabilities recorded at fair value, which consist of available-for-sale marketable securities and interest rate caps.

Stock-Based Compensation — Effective January 1, 2006, the Company adopted SFAS No. 123R, Share Based Payment, under the modified prospective transition method. SFAS No. 123R requires the measurement of compensation cost at the grant date, based upon the estimated fair value of the award, and requires amortization of the related expense over the employee’s requisite service period.

(Loss) earnings per share — Basic (loss) earnings per share is computed by dividing net (loss) income by the weighted average number of common shares outstanding during each period. The computation of diluted (loss) earnings per share further assumes the dilutive effect of stock options, stock warrants and contingently issuable shares. Contingently issuable shares represent non-vested stock awards and unvested stock fund units in the deferred compensation plan. In accordance with SFAS No. 128, Earnings Per Share, these shares are included in the dilutive earnings per share calculation under the treasury stock method. Unless otherwise indicated, all pre-merger NNN share data have been adjusted to reflect the conversion as a result of the Merger (see Note 10 for additional information).

Concentration of Credit Risk — Financial instruments that potentially subject the Company to a concentration of credit risk are primarily cash investments and accounts receivable. The Company currently maintains substantially all of its cash with several major financial institutions. The Company has cash in financial institutions which is insured by the Federal Deposit Insurance Corporation, or FDIC, up to $250,000 per depositor per insured bank. As of December 31, 2008, the Company had cash accounts in excess of FDIC insured limits. The Company believes this risk is not significant.

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Accrued Claims and Settlements — The Company has maintained partially self-insured and deductible programs for general liability, workers’ compensation and certain employee health care costs. In addition, the Company assumed liabilities at the date of the Merger representing reserves related to self insured errors and omissions program of the acquired company. Reserves for all such programs are included in accrued claims and settlements and compensation and employee benefits payable, as appropriate. Reserves are based on the aggregate of the liability for reported claims and an actuarially-based estimate of incurred but not reported claims. As of the date of the Merger, the Company entered into a premium based insurance policy for all error and omission coverage on claims arising after the date of the Merger. Claims arising prior to the date of the Merger continue to be applied against the previously mentioned liability reserves assumed relative to the acquired company.

Income Taxes — Income taxes are accounted for under the asset and liability method in accordance with SFAS No. 109, Accounting for Income Taxes (“SFAS No. 109”). Deferred tax assets and liabilities are determined based on temporary differences between the financial reporting and the tax basis of assets and liabilities and operating loss and tax credit carry forwards. Deferred tax assets and liabilities are measured by applying enacted tax rates and laws and are released in the years in which the temporary differences are expected to be recovered or settled. The effect on deferred tax assets and liabilities of a change in tax rates is recognized in income in the period that includes the enactment date. Valuation allowances are provided against deferred tax assets when it is more likely than not that some portion or all of the deferred tax asset will not be realized. During the year ended December 31, 2008, the Company recorded a valuation allowance of $48.9 million.

Effective January 1, 2007, the Company adopted FASB Interpretation No. 48 “Accounting for Uncertainty in Income Taxes-An Interpretation of Statement of Financial Accounting Standard No. 109” (“FIN 48”). FIN 48 prescribes a recognition threshold and measurement attribute for the financial statement recognition and measurement of a tax position taken or expected to be taken in a tax return.

As a result of the implementation of FIN No. 48, the Company had no additional liability that was required to be recorded; accordingly, no charge was taken to opening retained earnings on January 1, 2007 upon adoption of FIN No. 48.

Marketable Securities — The Company accounts for investments in marketable debt and equity securities in accordance with SFAS No. 115, Accounting for Certain Investments in Debt and Equity Securities (“SFAS No. 115”). The Company determines the appropriate classification of debt and equity securities at the time of purchase and reevaluates such designation as of each balance sheet date. Marketable securities acquired are classified with the intent to generate a profit from short-term movements in market prices as trading securities. Debt securities are classified as held to maturity when there is a positive intent and ability to hold the securities to maturity. Marketable equity and debt securities not classified as trading or held to maturity are classified as available for sale.

In accordance with SFAS No. 115, trading securities are carried at their fair value with realized and unrealized gains and losses included in the statement of operations. The available for sale securities are carried at their fair market value and any difference between cost and market value is recorded as unrealized gain or loss, net of income taxes, and is reported as accumulated other comprehensive income in the consolidated statement of stockholders’ equity. Premiums and discounts are recognized in interest income using the effective interest method. Realized gains and losses and declines in value expected to be other-than-temporary on available for sale securities are included in other income. The cost of securities sold is based on the specific identification method. Interest and dividends on securities classified as available for sale are included in interest income.

Comprehensive Income (Loss) — Pursuant to SFAS No. 130, Reporting Comprehensive Income, the Company has included a calculation of comprehensive (loss) income in its accompanying consolidated

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statements of stockholders’ equity for the years ended December 31, 2008, 2007 and 2006. Comprehensive (loss) income includes net (loss) income adjusted for certain revenues, expenses, gains and losses that are excluded from net (loss) income.

Guarantees — The Company accounts for its guarantees in accordance with FASB Interpretation No. 45, Guarantor’s Accounting and Disclosure Requirements for Guarantees, Including Indirect Guarantees of Indebtedness of Others (“FIN No. 45”). FIN No. 45 elaborates on the disclosures to be made by the guarantor in its interim and annual financial statements about its obligations under certain guarantees that it has issued. It also requires that a guarantor recognize, at the inception of a guarantee, a liability for the fair value of the obligation undertaken in issuing the guarantee. Management evaluates these guarantees to determine if the guarantee meets the criteria required to record a liability.

Segment Disclosure — As a result of the Merger in December 2007, the newly combined Company’s operating segments were evaluated for reportable segments. As a result, the legacy NNN reportable segments were realigned into a single operating and reportable segment called Investment Management. This realignment had no impact on the Company’s consolidated balance sheet, results of operations or cash flows. In accordance with the provisions of Statement of Financial Accounting Standards No. 131, Disclosures about Segments of an Enterprise and Related Information (“SFAS No. 131”), the Company divides its services into three primary business segments, transaction services, investment management and management services.

Derivative Instruments and Hedging Activities — The Company applies the provisions of SFAS No. 133, Accounting for Derivative Instruments and Hedging Activities, as amended (“SFAS No. 133”). SFAS No. 133 requires companies to record derivatives on the balance sheet as assets or liabilities, measured at fair value, while changes in that fair value may increase or decrease reported net (loss) income or stockholders’ equity, depending on interest rate levels and computed “effectiveness” of the derivatives, as that term is defined by SFAS No. 133, but will have no effect on cash flows. The Company’s derivatives consist solely of four interest rate cap agreements with third parties, which were executed in relation to its credit agreement or notes payable obligations. These cap agreements were not accounted for as effective cash flow hedges as of December 31, 2008.

Recently Issued Accounting Pronouncements

In September 2006, the FASB issued SFAS No. 157, Fair Value Measurements (“SFAS No. 157”). SFAS No. 157 defines fair value, establishes a framework for measuring fair value in generally accepted accounting principles, and expands disclosures about fair value instruments. In February 2008, the FASB issued FASB Staff Position No. FAS 157-2, Effective Date of FASB Statement No. 157 (the “FSP”). The FSP amends SFAS No. 157 to delay the effective date of SFAS No. 157 for non-financial assets and non-financial liabilities, except for items that are recognized or disclosed at fair value in the financial statements on a recurring basis (that is, at least annually). There was no effect on the Company’s consolidated financial statements as a result of the adoption of SFAS No. 157 as of January 1, 2008 as it relates to financial assets and financial liabilities. For items within its scope, the FSP defers the effective date of SFAS No. 157 to fiscal years beginning after November 15, 2008, and interim periods within those fiscal years. The Company will adopt SFAS No. 157 as it relates to non-financial assets and non-financial liabilities in the first quarter of 2009 and does not believe adoption will have a material effect on its consolidated financial statements.

In February 2007, the FASB issued SFAS No. 159, The Fair Value Option for Financial Assets and Financial Liabilities, (“SFAS No. 159”). SFAS No. 159 permits entities to choose to measure many financial instruments and certain other items at fair value. The objective of the guidance is to improve financial reporting by providing entities with the opportunity to mitigate volatility in reported earnings caused by measuring related assets and liabilities differently without having to apply complex hedge accounting provisions. The Company adopted SFAS No. 159 on a prospective basis on January 1, 2008. The adoption of SFAS No. 159 did not have a material impact on the consolidated financial statements since the Company did

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not elect to apply the fair value option for any of its eligible financial instruments or other items on the January 1, 2008 effective date.

In December 2007, the FASB issued revised SFAS No. 141, Business Combinations, (“SFAS No. 141R”). SFAS No. 141R will change the accounting for business combinations and will require an acquiring entity to recognize all the assets acquired and liabilities assumed in a transaction at the acquisition-date fair value with limited exceptions. SFAS No. 141R will change the accounting treatment and disclosure for certain specific items in a business combination. SFAS No. 141R applies prospectively to business combinations for which the acquisition date is on or after the beginning of the first annual reporting period beginning on or after December 15, 2008. SFAS No. 141R will have an impact on accounting for business combinations once adopted but the effect is dependent upon acquisitions at that time.

In December 2007, the FASB issued SFAS No. 160, Noncontrolling Interests in Consolidated Financial Statements — An Amendment of ARB No. 51, (“SFAS No. 160”). SFAS No. 160 establishes new accounting and reporting standards for the non-controlling interest in a subsidiary and for the deconsolidation of a subsidiary. SFAS No. 160 requires that noncontrolling interests be presented as a component of consolidated stockholders’ equity, eliminates minority interest accounting such that the amount of net income attributable to the noncontrolling interests will be presented as part of consolidated net income in the accompanying consolidated statements of operations and not as a separate component of income and expense, and requires that upon any changes in ownership that result in the loss of control of the subsidiary, the noncontrolling interest be re-measured at fair value with the resultant gain or loss recorded in net income. SFAS No. 160 is effective for fiscal years beginning on or after December 15, 2008. The Company will adopt SFAS No. 160 in the first quarter of 2009 and does not believe the adoption will have a material effect on its consolidated financial statements.

In March 2008, the FASB issued SFAS No. 161, Disclosures about Derivative Instruments and Hedging Activities (“SFAS No. 161”). SFAS No. 161 is intended to improve financial reporting of derivative instruments and hedging activities by requiring enhanced disclosures to enable investors to better understand their effects on an entity’s financial position, financial performance, and cash flows. SFAS No. 161 achieves these improvements by requiring disclosure of the fair values of derivative instruments and their gains and losses in a tabular format. It also provides more information about an entity’s liquidity by requiring disclosure of derivative features that are credit risk-related. Finally, it requires cross-referencing within footnotes to enable financial statement users to locate important information about derivative instruments. SFAS No. 161 is effective for financial statements issued for fiscal years and interim periods beginning after November 15, 2008, with early application encouraged. The Company will adopt SFAS No. 161 in the first quarter of 2009 and does not believe the adoption will have a material effect on its consolidated financial statements.

In April 2008, the FASB issued FSP SFAS No. 142-3, Determination of the Useful Life of Intangible Assets, (“FSP SFAS 142-3”). FSP SFAS 142-3 is intended to improve the consistency between the useful life of recognized intangible assets under SFAS No. 142, Goodwill and Other Intangible Assets, (“SFAS No. 142”), and the period of expected cash flows used to measure the fair value of the assets under SFAS No. 141R. FSP SFAS 142-3 amends the factors an entity should consider in developing renewal or extension assumptions in determining the useful life of recognized intangible assets. In addition to the required disclosures under SFAS No. 142, FSP SFAS 142-3 requires disclosure of the entity’s accounting policy regarding costs incurred to renew or extend the term of recognized intangible assets, the weighted average period to the next renewal or extension, and the total amount of capitalized costs incurred to renew or extend the term of recognized intangible assets. FSP SFAS 142-3 is effective for financial statements issued for fiscal years and interim periods beginning after December 15, 2008. The Company will adopt FSP SFAS 142-3 on January 1, 2009. The adoption of FSP SFAS 142-3 is not expected to have a material impact on the consolidated financial statements.

80

GRUBB & ELLIS COMPANY

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

In June 2008, the FASB issued FSP EITF 03-6-1, Determining Whether Instruments Granted in Share-Based Payment Transactions Are Participating Securities (“FSP EITF 03-6-1”), which addresses whether instruments granted in share-based payment transactions are participating securities prior to vesting and, therefore, need to be included in the computation of earnings per share under the two-class method described in SFAS No. 128, Earnings per Share. FSP EITF 03-6-1, which will apply to the Company because it grants instruments to employees in share-based payment transactions that meet the definition of participating securities, is effective retrospectively for financial statements issued for fiscal years and interim periods beginning after December 15, 2008. The Company will adopt FSP EITF 03-6-1 in the first quarter of 2009 and does not believe the adoption will have a material effect on its consolidated financial statements.

In December 2008, the Financial Accounting Standards Board (“FASB”) issued Staff Position (“FSP”) Statement of Financial Account Standards No. 140-4 and FIN 46(R)-8, Disclosures by Public Entities (Enterprises) about Transfers of Financial Assets and Interests in Variable Interest Entities (“FSP FAS 140-4”). The purpose of this FSP is to improve disclosures by public entities and enterprises until pending amendments to SFAS No. 140, Accounting for Transfers and Servicing of Financial Assets and Extinguishments of Liabilities (“SFAS 140”), and FIN 46(R) are finalized and approved by the FASB. The FSP amends SFAS 140 to require public entities to provide additional disclosures about transferors’ continuing involvements with transferred financial assets. It also amends FIN 46(R) to require public enterprises to provide additional disclosures about their involvement with variable interest entities. FSP FAS 140-4 and FIN 46(R)-8 is effective for financial statements issued for fiscal years and interim periods ending after December 15, 2008. For periods after the initial adoption date, comparative disclosures are required. The Company adopted the FSP and FIN 46(R)-8 on December 31, 2008.

3.   RESTATEMENT OF PREVIOUSLY ISSUED FINANCIAL STATEMENTS

On March 16, 2009, management and the Audit Committee of the Board of Directors concluded that the Company’s previously issued audited financial statements should be restated, for the reasons discussed below.

The restatement of the Company’s financial statements was based upon a review of the accounting treatment of certain transactions entered into by NNN with respect to certain tenant-in-common investment programs (“TIC Programs”) sponsored by NNN prior to the Merger. The review of NNN’s accounting treatment was prompted by the Company being made aware of the existence of a letter agreement, wherein NNN agreed to provide certain investors with a right to exchange their investment in certain TIC Programs for an investment in a different TIC Program (the “Exchange Letter”). In the course of its review, the Company became aware of additional letter agreements, some providing for a right of exchange similar to that contained in the Exchange Letter, another that provided the investor with certain repurchase rights under certain circumstances with respect to their investment and others in which NNN committed to provide certain investors in certain TIC Programs a specified rate of return. The agreements containing such rights of exchange and repurchase rights pertain to initial investments in TIC programs totaling $31.6 million.

Upon review of the accounting treatment for these letter agreements as well as other TIC Programs and master lease arrangements, management concluded that some of the letter agreements had not been accounted for and that revenue had been incorrectly recognized as it related to these letter agreements as well as other TIC Programs and master lease arrangements under SFAS No. 66 and SOP 92-1 because the Company had various forms of continuing involvement after the close of the sale of the investments in the TIC Programs to third-parties. As a result of the recognition by the Company of the applicable fee revenue in the incorrect accounting periods, the Company reduced retained earnings as of January 1, 2006 by approximately $8.7 million; increased revenues in 2006 by approximately $518,000; and increased revenues in 2007 by approximately $251,000 to correct these errors.

Management also concluded that because NNN had various forms of continuing involvement after the close of the sale of the investments in the TIC Programs to third-parties, certain entities involved in the TIC

81

GRUBB & ELLIS COMPANY

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

Programs were variable interest entities in which the Company was the primary beneficiary and therefore were required to be consolidated in accordance with FIN No. 46(R). As a result, the Company increased total assets by $12.3 million, total liabilities by $1.1 million and minority interest by $11.2 million at December 31, 2007 to correct this error.

Management further concluded the method used for December 31, 2007 to present, in its statement of cash flows, its deconsolidation of certain entities the Company no longer controlled was erroneous to the extent certain non cash investing and financing transactions were presented as sources and uses of cash. As a result of this error, cash flows used in investing activities increased by $251.6 million and cash flows provided by financing activities increased by $251.9 million.

Restatement adjustments pertaining to income taxes relate to the revenue recognition restatement adjustments described above.

All applicable notes have been restated to reflect the above described adjustments.

	December 31, 2007
	As
	previously
(In thousands)	reported(1)		Adjustments			As Restated
ASSETS
Current assets:
Restricted cash	$	69,098	$	925		$	70,023
Current portion of accounts receivable from related parties — net		32,575		220			32,795
Current portion of advances to related parties — net		7,010		(343	)		6,667
Deferred tax assets		7,854		137			7,991
Total current assets		643,107		939			644,046
Investments in unconsolidated entities		11,028		11,163			22,191
Total assets		976,440		12,102			988,542
LIABILITIES, MINORITY INTEREST AND STOCKHOLDERS’ EQUITY
Current liabilities:
Accounts payable and accrued expenses		100,867		1,137			102,004
Other liabilities		5,055		7,305			12,360
Total current liabilities		484,083		8,442			492,525
Long-term liabilities:
Deferred tax liabilities		32,837		(2,922	)		29,915
Total liabilities		549,070		5,520			554,590
Minority interest		18,725		11,171			29,896
Stockholders’ equity:
Retained earnings		15,381		(4,589	)		10,792
Total stockholders’ equity		408,645		(4,589	)		404,056
Total liabilities, minority interest and stockholders’ equity		976,440		12,102			988,542

82

GRUBB & ELLIS COMPANY

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

(In thousands)	For The Year Ended December 31, 2007									For The Year Ended December 31, 2006
	As Previously									As Previously
	Reported(1)			Adjustments			As Restated			Reported(1)			Adjustments			As Restated
REVENUE
Investment management	$	149,400		$	251		$	149,651		$	99,081		$	518		$	99,599
Total revenue		217,686			251			217,937			108,025			518			108,543
OPERATING EXPENSE
General and administrative		44,251			—			44,251			29,845			343			30,188
Interest		2,164			4			2,168			5,569			1,196			6,765
Total operating expense		175,584			4			175,588			96,094			1,539			97,633
OPERATING INCOME (LOSS)		42,102			247			42,349			11,931			(1,021	)		10,910
OTHER INCOME (EXPENSE)
Equity in earnings (losses) of unconsolidated entities		(339	)		2,368			2,029			491			1,457			1,948
Interest income		2,990			2			2,992			713			—			713
Other		(650	)		185			(465	)		—			—			—
Total other income		2,001			2,555			4,556			1,204			1,457			2,661
Income from continuing operations before minority interest and income tax (provision) benefit		44,103			2,802			46,905			13,135			436			13,571
Minority interest in loss (income) of consolidated entities		459			(2,420	)		(1,961	)		(308	)		230			(78	)
Income from continuing operations before income tax benefit (provision)		44,562			382			44,944			12,827			666			13,493
Income tax (provision) benefit		(17,966	)		(152	)		(18,118	)		4,230			3,211			7,441
Income from continuing operations		26,596			230			26,826			17,057			3,877			20,934
NET INCOME	$	20,842		$	230		$	21,072		$	16,094		$	3,877		$	19,971
Basic earnings (loss) per share
Income from continuing operations	$	0.68		$	0.01		$	0.69		$	0.87		$	0.19		$	1.06
Loss from discontinued operations	$	(0.14	)	$	—		$	(0.14	)	$	(0.05	)	$	—		$	(0.05	)
Net earnings per share	$	0.54		$	0.01		$	0.55		$	0.82		$	0.19		$	1.01
Diluted earnings (loss) per share
Income from continuing operations	$	0.68		$	0.01		$	0.69		$	0.87		$	0.19		$	1.06
Loss from discontinued operations	$	(0.14	)	$	—		$	(0.14	)	$	(0.05	)	$	—		$	(0.05	)
Net earnings per share	$	0.54		$	0.01		$	0.55		$	0.82		$	0.19		$	1.01
Basic weighted average shares outstanding		38,652						38,652			19,681						19,681
Diluted weighted average shares outstanding		38,653						38,653			19,694						19,694

83

GRUBB & ELLIS COMPANY

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

	For The Year Ended December 31, 2007									For The Year Ended December 31, 2006
	As									As
	Previously						As			Previously						As
(In thousands)	Reported			Adjustments			Restated			Reported(1)			Adjustments			Restated
CASH FLOWS FROM OPERATING ACTIVITIES
Net income	$	20,842		$	230		$	21,072		$	16,094		$	3,877		$	19,971
Adjustments to reconcile net income to net cash provided by operating activities:
Equity in losses (earnings) of unconsolidated entities		339			(2,368	)		(2,029	)		(491	)		(1,457	)		(1,948	)
Depreciation and amortization		9,668			(1,016	)		8,652			2,086			—			2,086
Loss on disposal of property, equipment and leasehold improvements		—			861			861			—			—			—
Stock-based compensation		9,041			—			9,041			3,865			—			3,865
Compensation expense on profit sharing arrangements		—			1,999			1,999			—			—			—
Amortization/write-off of intangible contract rights		3,249			(116	)		3,133			410			—			410
Amortization of deferred financing costs		1,713			—			1,713			31			—			31
Gain on sale of marketable equity securities		—			(184	)		(184	)		—			—			—
Deferred income taxes		(5,918	)		(1,191	)		(7,109	)		(4,936	)		(3,211	)		(8,147	)
Allowance for uncollectible accounts		859			(53	)		806			1,408			—			1,408
Minority interest		(459	)		2,420			1,961			308			(230	)		78
Other operating non cash (gains) losses		(119	)		127			8			(448	)		343			(105	)
Changes in operating assets and liabilities:
Accounts receivable from related parties		(8,907	)		14,925			6,018			(2,636	)		1,382			(1,254	)
Prepaid expenses and other assets		366			(36,661	)		(36,295	)		(1,062	)		143			(919	)
Accounts payable and accrued expenses		1,110			14,774			15,884			51			2,316			2,367
Other liabilities		1,857			6,155			8,012			521			(1,008	)		(487	)
Net cash provided by (used in) operating activities		33,641			(98	)		33,543			15,201			2,155			17,356
CASH FLOWS FROM INVESTING ACTIVITIES:
Purchases of property and equipment		(2,693	)		(638	)		(3,331	)		(1,984	)		(355	)		(2,339	)
Purchases of marketable equity securities		(2,087	)		(28,645	)		(30,732	)		(2,360	)		—			(2,360	)
Proceeds from sale of marketable equity securities		—			22,870			22,870			—			—			—
Advances to related parties		(5,340	)		(33,772	)		(39,112	)		(19,268	)		—			(19,268	)
Proceeds from repayment of advances to related parties		3,072			114,424			117,496			16,713			—			16,713
Payments to related parties		(3,080	)		376			(2,704	)		—			(1,064	)		(1,064	)
Origination of notes receivable from related parties		(7,600	)		(31,700	)		(39,300	)		(10,000	)		—			(10,000	)
Proceeds from repayment of notes receivable from related parties		10,000			31,700			41,700			777			—			777
Investments in unconsolidated entities		(2,250	)		(6,826	)		(9,076	)		596			(112,368	)		(111,772	)
Sale of tenant-in-common interests in unconsolidated entities		—			20,466			20,466			—			101,128			101,128
Distributions of capital received from investments in unconsolidated entities		—			1,256			1,256			—			20,049			20,049
Acquisition of properties		(677,392	)		72,266			(605,126	)		(80,905	)		—			(80,905	)
Proceeds from sale of properties		472,553			(379,608	)		92,945			31,684			—			31,684
Real estate deposits and pre-acquisition costs		(11,686	)		(38,516	)		(50,202	)		(15,948	)		1,842			(14,106	)
Proceeds from collection of real estate deposits and
pre-acquisition costs		12,749			36,678			49,427			33,768			(7,046	)		26,722
Restricted cash		(21,909	)		(31,916	)		(53,825	)		(2,787	)		(1,277	)		(4,064	)
Net cash (used in) provided by investing activities		(235,324	)		(251,585	)		(486,909	)		(57,112	)		909			(56,203	)
CASH FLOWS FROM FINANCING ACTIVITIES:
Advances on line of credit		(30,000	)		—			(30,000	)		—			14,000			14,000
Repayment of advances on line of credit		—			—			—			(8,500	)		(14,000	)		(22,500	)
Borrowings on notes payable and capital lease obligations		239,888			307,127			547,015			71,106			49,605			120,711
Repayments of notes payable and capital leases obligations		(62,874	)		(80,974	)		(143,848	)		(36,820	)		(59,110	)		(95,930	)
Other financing costs		850			—			850			(1,973	)		106			(1,867	)
Contributions from minority interests		13,409			28,652			42,061			904			6,650			7,554
Distributions to minority interests		—			(2,866	)		(2,866	)		—			(315	)		(315	)
Net cash provided by (used in) financing activities		148,529			251,939			400,468			143,589			(3,064	)		140,525
NET (DECREASE) INCREASE IN CASH		(53,154	)		256			(52,898	)		101,678			—			101,678
Cash and cash equivalents – End of year	$	49,072		$	256		$	49,328		$	102,226		$	—		$	102,226
SUPPLEMENTAL DISCLOSURE OF NONCASH ACTIVITIES
Deconsolidation of assets held by variable interest entities	$	—		$	372,674		$	372,674		$	—		$	28,016		$	28,016
Deconsolidation of liabilities held by variable interest entities	$	—		$	269,732		$	269,732		$	—		$	17,449		$	17,449

(1) Amounts presented “as previously reported” have been reclassified to conform to current year presentation. See discussion of reclassifications in note 2.

84

GRUBB & ELLIS COMPANY

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

4.   MARKETABLE SECURITIES

The Company has partially applied the provisions of SFAS No. 157 to its financial assets recorded at fair value, which consist of available-for-sale marketable securities. SFAS No. 157 establishes a three-tiered fair value hierarchy that prioritizes inputs to valuation techniques used in fair value calculations. Level 1 inputs, the highest priority, are quoted prices in active markets for identical assets, while other levels use observable market data or internally-developed valuation models. The valuation of the Company’s available-for-sale marketable securities is based on quoted prices in active markets for identical securities.

The historical cost and estimated fair value of the available-for-sale marketable securities held by the Company are as follows:

	As of December 31, 2007
			Gross Unrealized
(In thousands)	Historical Cost		Gains		Losses			Market Value
Marketable equity securities	$	4,440	$	—	$	(1,355	)	$	3,085

Sales of marketable equity securities resulted in realized losses of approximately $1.8 million during 2008, of which the Company recognized $1.6 million of these losses during the second quarter, prior to the sale of all the securities, as the Company believed that the decline in the value of these securities was other than temporary. Sales of equity securities resulted in realized gains of $1.2 million and realized losses of $1.0 million for the year ended December 31, 2007. There were no sales of equity securities for the year ended December 31, 2006.

Investments in Limited Partnerships

Since the acquisition of its subsidiary, Grubb & Ellis Alesco Global Advisors, LLC (“Alesco”) in 2007, the Company serves as general partner and investment advisor to six hedge fund limited partnerships, five of which are required to be consolidated: Grubb & Ellis AGA Realty Income Fund, LP, AGA Strategic Realty Fund, L.P., AGA Global Realty Fund LP and AGA Realty Income Partners LP and one mutual fund which is required to be consolidated, Grubb & Ellis Realty Income Fund.

In accordance with EITF 04-05 “Determining Whether a General Partner, or the General Partners as a Group Controls a Limited Partnership of Similar Entity When the Limited Partners Have Certain Rights,” Alesco consolidates five hedge fund limited partnerships as the rights of the limited partners do not overcome the rights of the general partner.

For the years ended December 31, 2008 and 2007, Alesco had investment losses of approximately $4.6 million and $680,000, respectively, which are reflected in other expense and offset in minority interest in loss of consolidated entities on the statements of operations. Alesco earned approximately $103,000 and $15,000 of management fees based on ownership interest under the agreements for the years ended December 31, 2008 and 2007, respectively. As of December 31, 2008 and 2007 these limited partnerships had assets of approximately $1.5 million and $6.0 million, respectively, primarily consisting of exchange traded marketable securities, including equity securities and foreign currencies.

The following table reflects trading securities. The original cost, estimated market value and gross unrealized appreciation and depreciation of equity securities are presented in the tables below:

	As of December 31, 2008									As of December 31, 2007
			Gross					Fair									Fair
	Historical		Unrealized					Market		Historical		Gross Unrealized					Market
(In thousands)	Cost		Gains		Losses			Value		Cost		Gains		Losses			Value
Equity securities	$	1,933	$	12	$	(435	)	$	1,510	$	7,250	$	134	$	(1,417	)	$	5,967

85

GRUBB & ELLIS COMPANY

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

	For The Year Ended											For The Year Ended
	December 31, 2008											December 31, 2007
				Realized			Unrealized								Realized			Unrealized
	Investment			Gains			Gains					Investment			Gains			Gains
(In thousands)	Income			(Losses)			(Losses)		Total			Income			(Losses)			(Losses)			Total
Equity securities	$	307		$	(5,454	)	$	841	$	(4,306	)	$	163		$	(185	)	$	(618	)	$	(640	)
Less investment expenses		(283	)		—			—		(283	)		(40	)								(40	)
	$	24		$	(5,454	)	$	841	$	(4,589	)	$	123		$	(185	)	$	(618	)	$	(680	)

5.   RELATED PARTIES

Related party transactions as of December 31, 2008 and 2007 are summarized below:

Accounts Receivable

Accounts receivable from related parties consisted of the following:

	December 31,
	2008			2007
(In thousands)
Accrued property management fees	$	23,298		$	19,574
Accrued lease commissions		7,720			9,945
Other accrued fees		3,372			4,432
Other receivables		647			4,147
Accrued asset management fees		1,725			1,206
Accounts receivable from sponsored REITs		4,768			4,796
Accrued real estate acquisition fees		1,834			87
Total		43,364			44,187
Allowance for uncollectible receivables		(9,662	)		(1,032	)
Accounts receivable from related parties — net		33,702			43,155
Less portion classified as current		(22,630	)		(32,795	)
Non-current portion	$	11,072		$	10,360

86

GRUBB & ELLIS COMPANY

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

Advances to Related Parties

The Company makes advances to affiliated real estate entities under management in the normal course of business. Such advances are uncollateralized, generally have payment terms of one year or less and bear interest at 6.0% to 12.0% per annum. The advances consisted of the following:

	December 31,
	2008			2007
(In thousands)				Restated
Advances to properties of related parties	$	14,714		$	9,823
Advances to related parties		2,937			2,434
Total		17,651			12,257
Allowance for uncollectible advances		(3,170	)		(1,839	)
Advances to related parties — net		14,481			10,418
Less portion classified as current		(2,982	)		(6,667	)
Non-current portion	$	11,499		$	3,751

As of December 31, 2007, advances to a program that is 30.0% owned and managed by Anthony W. Thompson, the Company’s former Chairman and a significant shareholder, who subsequently resigned in February 2008 but remains a substantial stockholder of the Company, totaled $1.0 million including accrued interest. These amounts were repaid in full during the year ended December 31, 2008 and as of December 31, 2008 there were no outstanding advances related to this program. However, as of December 31, 2008, accounts receivable totaling $310,000 is due from this program. On November 4, 2008, the Company made a formal written demand to Mr. Thompson for these monies.

As of December 31, 2008, advances to a program that is 40.0% owned and, as of April 1, 2008, managed by Mr. Thompson totaled $983,000, which includes $61,000 in accrued interest. As of December 31, 2008, the total outstanding balance of $983,000 was past due. The total past due amount of $983,000 has been reserved for and is included in the allowance for uncollectible advances. On November 4, 2008 and April 3, 2009, the Company made a formal written demand to Mr. Thompson for these monies.

Notes Receivable From Related Party

In December 2007, the Company advanced $10.0 million to Grubb & Ellis Apartment REIT, Inc. (“Apartment REIT”) on an unsecured basis. The unsecured note required monthly interest-only payments which began on January 1, 2008. The balance owed to the Company as of December 31, 2007 which consisted of $7.6 million in principal was repaid in full in the first quarter of 2008.

In June 2008, the Company advanced $6.0 million to Grubb & Ellis Healthcare REIT, Inc. (“Healthcare REIT”) on an unsecured basis. The unsecured note had a maturity date of December 30, 2008 and bore interest at a fixed rate of 4.96% per annum, however, Healthcare REIT repaid in full the $6.0 million note in the third quarter of 2008. The note required monthly interest-only payments beginning on August 1, 2008 and provided for a default interest rate in an event of default equal to 2.00% per annum in excess of the stated interest rate.

In June 2008, the Company advanced $3.7 million to Apartment REIT on an unsecured basis. The unsecured note originally had a maturity date of December 27, 2008 and bore interest at a fixed rate of 4.95% per annum. Effective November 10, 2008, the Company extended the maturity date to May 10, 2009 and adjusted the interest rate to a fixed rate of 5.26% per annum, and effective May 10, 2009, the Company extended the maturity date to November 10, 2009 and adjusted the interest rate to a fixed rate of 8.43% per annum. The note requires monthly interest-only payments beginning on August 1, 2008 and provides for a

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default interest rate in an event of default equal to 2.00% per annum in excess of the stated interest rate. In September 2008, the Company advanced an additional $5.4 million to Apartment REIT on an unsecured basis. The unsecured note originally had a maturity date of March 15, 2009 and bore interest at a fixed rate of 4.99% per annum. Effective March 9, 2009, the Company extended the maturity date to September 15, 2009 and adjusted the interest rate to a fixed rate of 5.00% per annum. The note requires monthly interest-only payments beginning on October 1, 2008 and provides for a default interest rate in an event of default equal to 2.00% per annum in excess of the stated interest rate. As of December 31, 2008, the balance owed by Apartment REIT to the Company on the two unsecured notes totals $9.1 million in principal with no interest outstanding.

6.  SERVICE FEES RECEIVABLE, NET

Service fees receivable consisted of the following:

	December 31,
	2008			2007
(In thousands)
Transaction services fees receivable	$	16,185		$	11,289
Management services fees receivable		11,848			8,903
Allowance for uncollectible accounts		(871	)		(343	)
Total		27,162			19,849
Less portion classified as current		(26,987	)		(19,521	)
Non-current portion (included in other assets)	$	175		$	328

7.   VARIABLE INTEREST ENTITIES

The determination of the appropriate accounting method with respect to the Company’s variable interest entities (“VIEs”), including joint ventures, is based on FIN No. 46(R). The Company consolidates any VIE for which it is the primary beneficiary.

The Company determines if an entity is a VIE under FIN No. 46(R) based on several factors, including whether the entity’s total equity investment at risk upon inception is sufficient to finance the entity’s activities without additional subordinated financial support. The Company makes judgments regarding the sufficiency of the equity at risk based first on a qualitative analysis, then a quantitative analysis, if necessary. In a quantitative analysis, the Company incorporates various estimates, including estimated future cash flows, asset hold periods and discount rates, as well as estimates of the probabilities of various scenarios occurring. If the entity is a VIE, the Company then determines whether to consolidate the entity as the primary beneficiary. The Company is deemed to be the primary beneficiary of the VIE and consolidates the entity if the Company will absorb a majority of the entity’s expected losses, receive a majority of the entity’s expected residual returns or both.

A change in the judgments, assumptions and estimates outlined above could result in consolidating an entity that is not currently consolidated or accounting for an investment on the equity method that is currently consolidated, the effects of which could be material to the Company’s consolidated financial statements.

As of December 31, 2008 the Company had investments in seven LLCs that are VIEs in which the Company is the primary beneficiary. These seven LLCs hold interests in the Company’s TIC investments. The carrying value of the assets and liabilities for these consolidated VIEs as of December 31, 2008 was $3.7 million and $309,000, respectively. As of December 31, 2007, the Company had investments in 13 LLCs that are VIEs in which the Company is the primary beneficiary. These 13 LLCs hold interests in the Company’s TIC investments. The carrying value of the assets and liabilities for these consolidated VIEs as of

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December 31, 2007 was $23.9 million and $24.4 million, respectively. The $24.4 million in liabilities includes $18.8 million of full recourse mezzanine debt. In addition, these consolidated VIEs are joint and severally liable on the non-recourse mortgage debt related to the interests in the Company’s TIC investments totalling $277.8 million and $392.2 million as of December 31, 2008 and 2007, respectively. This mortgage debt is not consolidated as the LLCs account for the interests in the Company’s TIC investments under the equity method and the non recourse mortgage debt does not meet the criteria under SFAS No. 140 for recognizing the share of the debt assumed by the other TIC interest holders for consolidation. The Company does consider the third party TIC holders ability and intent to repay their share of the joint and several liability in evaluating the recovery. Six LLCs deconsolidated during the year ended December 31, 2008 as a result of the Company selling interests in certain real estate properties that it held through these consolidated LLCs which resulted in the Company no longer being the primary beneficiary of these LLCs.

If the interest in the entity is determined to not be a VIE under FIN No. 46(R), then the entity is evaluated for consolidation under the American Institute of Certified Public Accountants’ Statement of Position No. 78-9, Accounting for Investments in Real Estate Ventures, (“SOP 78-9”), as amended by Emerging Issues Task Force No. 04-5, Determining Whether a General Partner, or the General Partners as a Group, Controls a Limited Partnership or Similar Entity When the Limited Partners Have Certain Rights (“EITF 04-5”).

As of December 31, 2008 and 2007 the Company had a number of entities that were determined to be VIEs, that did not meet the consolidation requirements of FIN No. 46(R). The unconsolidated VIEs are accounted for under the equity method. The aggregate investment carrying value of the unconsolidated VIEs was $5.0 million and $5.2 million as of December 31, 2008 and 2007, respectively, and was classified under Investments in Unconsolidated Entities in the consolidated balance sheet. The Company’s maximum exposure to loss as a result of its investments in unconsolidated VIEs is typically limited to the aggregate of the carrying value of the investment and future funding commitments. Future funding commitments as of December 31, 2008 for the unconsolidated VIEs totalled $823,000. In addition, as of December 31, 2008 and 2007, these unconsolidated VIEs are joint and severally liable on non-recourse mortgage debt totalling $385.3 million and $336.9 million, respectively. This mortgage debt is not consolidated as the LLCs account for the interests in the Company’s TIC investments under the equity method and the non recourse mortgage debt does not meet the criteria under SFAS No. 140 for recognizing the share of the debt assumed by the other TIC interest holders for consolidation. The Company does consider the third party TIC holders ability and intent to repay their share of the joint and several liability in evaluating the recovery. Although the mortgage debt is non-recourse to the VIE that holds the TIC interest, the Company has full recourse guarantees on a portion of such mortgage debt totalling $3.5 million and $0 as of December 31, 2008 and 2007, respectively. In evaluating the recovery of the TIC investment the Company evaluated the likelihood that the lender would foreclose on the VIEs interest in the TIC to satisfy the obligation. See Note 8 — Investments in Unconsolidated Entities for additional information.

8.   INVESTMENTS IN UNCONSOLIDATED ENTITIES

As of December 31, 2008 and 2007, the Company held investments in five joint ventures totaling $3.8 million and $5.9 million, respectively, which represent a range of 5.0% to 10.0% ownership interest in each property. In addition, pursuant to FIN No. 46(R), the Company has consolidated seven LLCs with investments in unconsolidated entities totaling $3.7 million as of December 31, 2008 and 13 LLCs with investments in unconsolidated entities totaling $17.0 million as of December 31, 2007, respectively (of which $5.9 million is included in properties held for sale including investments in unconsolidated entities on the consolidated balance sheet as of December 31, 2007). In addition, the Company had an investment in Grubb & Ellis Realty Advisors, Inc. (“GERA”) of $4.1 million as of December 31, 2007. The remaining amounts within investments in unconsolidated entities are related to various LLCs, which represent ownership interests of less than 1.0%.

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As of December 31, 2007, the Company owned approximately 5.9 million shares of common stock of GERA, which was a publicly traded special purpose acquisition company, which represented approximately 19% of the outstanding common stock. The Company also owned approximately 4.6 million GERA warrants which were exercisable into additional GERA common stock, subject to certain conditions. As part of the Merger, the Company recorded each of these investments at fair value on December 7, 2007, the date they were acquired, at a total investment of approximately $4.5 million.

All of the officers of GERA were also officers or directors of legacy Grubb & Ellis, although such persons did not receive any compensation from GERA in their capacity as officers of GERA. Due to the Company’s ownership position and influence over the operating and financial decisions of GERA, the Company’s investment in GERA was accounted for within the Company’s consolidated financial statements under the equity method of accounting. The Company’s combined carrying value of these GERA investments as of December 31, 2007, totaled approximately $4.1 million, net of an unrealized loss, and was included in investments in unconsolidated entities in the Company’s consolidated balance sheet as of that date.

On February 28, 2008, a special meeting of the stockholders of GERA was held to vote on, among other things, a proposed transaction with the Company. GERA failed to obtain the requisite consents of its stockholders to approve the proposed business transaction and at a subsequent special meeting of the stockholders of GERA held on April 14, 2008, the stockholders of GERA approved the dissolution and plan of liquidation of GERA. The Company did not receive any funds or other assets as a result of GERA’s dissolution and liquidation.

As a consequence, the Company wrote off its investment in GERA and other advances to that entity in the first quarter of 2008 and recognized a loss of approximately $5.8 million which is recorded in equity in losses on the consolidated statement of operations and is comprised of $4.5 million related to stock and warrant purchases and $1.3 million related to operating advances and third party costs, which included an unrealized loss previously reflected in accumulated other comprehensive loss.

As of December 31, 2008 and 2007 the Company had interests in certain variable interest entities, of which the Company was not considered the primary beneficiary. Accordingly, such VIEs were not consolidated in the financial statements.

9.  PROPERTY, EQUIPMENT AND LEASEHOLD IMPROVEMENTS

Property and equipment consisted of the following:

		December 31,
	Useful Life	2008			2007
(In thousands)
Computer equipment	3-5 years	$	31,096		$	32,002
Automobiles	5 years		11			11
Capital leases	1-5 years		1,566			1,519
Furniture and fixtures	7 years		25,083			25,283
Leasehold improvements	1-5 years		7,834			7,810
Total			65,590			66,625
Accumulated depreciation and amortization			(51,581	)		(49,897	)
Property and equipment — net		$	14,009		$	16,728

The Company recognized $6.8 million, $1.8 million and $1.8 million of depreciation expense for the years ended December 31, 2008, 2007 and 2006, respectively.

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10.   BUSINESS COMBINATIONS AND GOODWILL

Merger of Grubb & Ellis Company with NNN

On December 7, 2007, the Company effected the Merger with NNN, a real estate asset management company and sponsor of TIC Programs as well as a sponsor of two non-traded REITs and other investment programs.

On December 7, 2007, pursuant to the Merger Agreement (i) each issued and outstanding share of common stock of NNN was automatically converted into 0.88 of a share of common stock of the Company, and (ii) each issued and outstanding stock options of NNN, exercisable for common stock of NNN, was automatically converted into the right to receive stock options exercisable for common stock of the Company based on the same 0.88 share conversion ratio. Therefore, 43,779,740 shares of common stock of NNN that were issued and outstanding immediately prior to the Merger were automatically converted into 38,526,171 shares of common stock of the Company, and the 739,850 NNN stock options that were issued and outstanding immediately prior to the Merger were automatically converted into 651,068 stock options of the Company. The prior year share and option amounts have been retroactively adjusted to reflect the 0.88 conversion.

Under the purchase method of accounting, the Merger consideration of $172.2 million was determined based on the closing price of the Company’s common stock of $6.43 per share on the date the merger closed, applied to the 26,195,655 shares of the Company’s common stock outstanding plus the fair value of vested options outstanding of approximately $3.8 million. The fair value of these vested options was calculated using the Black-Scholes option-pricing model which incorporated the following assumptions: weighted average exercise price of $7.02 per option, volatility of 105.11%, a 5 year expected life of the awards, risk-free interest rate of 3.51% and no expected dividend yield.

The results of operations of legacy Grubb & Ellis have been included in the consolidated results of operations since December 8, 2007 and the results of operations of NNN have been included in the consolidated results of operations for the full year ended December 31, 2007.

The purchase price was allocated to the assets acquired and liabilities assumed based on the estimated fair value of net assets as of the acquisition date as follows (in thousands):

Current assets	$	189,214
Other assets		29,797
Identified intangible assets acquired		86,600
Goodwill		107,507
Total assets		413,118
Current liabilities		233,894
Other liabilities		7,022
Total liabilities		240,916
Total purchase price	$	172,202

As a result of the merger, the Company incurred $14.7 million and $6.4 million in merger related expenses during 2008 and 2007, respectively, as reflected on the Company’s consolidated statement of operations. Additionally, as a result of the Merger, the Company recorded $1.6 million and $3.6 million as a purchase accounting liability for severance for certain executives in 2008 and 2007, respectively, as part of a change in control provision in the related employment agreements.

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As part of its Merger transition, the Company recently completed its personnel reorganization plan, and recorded additional severance liabilities totaling approximately $2.3 million during the year ended December 31, 2008, which increased the goodwill recorded from the acquisition. These liabilities relate primarily to severance and other benefits to be paid to involuntarily terminated employees of the acquired company. Such liabilities, totaling approximately $7.4 million, have been recorded related to the personnel reorganization plan, of which approximately $6.7 million has been paid to terminated employees as of December 31, 2008. As a result of the Merger, approximately $110.9 million has been recorded to goodwill as of December 31, 2008, which was subsequently written off as an impairment charge during the year ended December 31, 2008.

Acquisition of NNN/ROC Apartment Holdings, LLC

On July 1, 2007, the Company completed the acquisition of the remaining 50.0% membership interest in NNN/ROC Apartment Holdings, LLC (“ROC”). ROC holds contract rights associated with a fee sharing agreement between ROC Realty Advisors and NNN with respect to certain fee streams (including an interest in net cash flows associated with subtenant leases (as Landlord) in excess of expenses from the Master Lease Agreement (as tenant) and related multi-family property acquisitions where ROC Realty Advisors, LLC sourced the deals for placement into the TIC investment programs. The aggregate purchase price for the acquisition of 50.0% membership interest of ROC was approximately $1.7 million in cash.

Acquisition of Alesco Global Advisors, LLC

On November 16, 2007, the Company completed the acquisition of the 51.0% membership interest in Alesco. Alesco is a registered investment advisor focused on real estate securities and manages private investment funds exclusively for qualified investors. Alesco holds several investment advisory contracts right and it the general partner of several domestic mutual fund investments limited partnerships. Alesco is also an investment advisor to one offshore hedge fund. The Company’s purpose of acquiring Alesco was to create a global leader in real estate securities management within open and closed end mutual funds, and hedge funds. The aggregate purchase price was approximately $3.0 million in cash. Additionally, upon achievement of certain earn-out targets, the Company is required to purchase up to an additional 27% interest in Alesco for $15.0 million.

Acquisition of Triple Net Properties, Realty, and NNN Capital Corp.

NNN was organized as a corporation in the State of Delaware in September 2006 and was formed to acquire each of GERI (formerly Triple Net Properties, LLC), Triple Net Properties Realty, Inc. (“Realty”) and Grubb & Ellis Securities, Inc. (“GBE Securities” formerly NNN Capital Corp.) and its other subsidiaries (collectively, NNN), to bring the businesses conducted by those companies under one corporate umbrella and to facilitate an offering pursuant to Rule 144A of the Securities Act (“the 144A offering”), which transactions are collectively referred to as “the formation transactions.” On November 16, 2006, NNN closed a $160.0 million private placement of common stock to institutional investors and certain accredited investors with 14.1 million shares of the Company’s common stock sold in the offering at $11.36 per share. Triple Net Properties was the accounting acquirer of Realty and NNN Capital Corp.

Concurrently with the close of the 144A offering, the following transactions occurred:

•  TNP Merger Sub, LLC, a Delaware limited liability company and wholly-owned subsidiary of NNN, entered into an agreement and plan of merger with Triple Net Properties, a Virginia limited liability company owned by Anthony W. Thompson (former Chairman of the Board), Scott D. Peters (former executive officer and director), Louis J. Rogers (former director and former executive officer of Triple Net Properties) and a number of other employees and third-party investors. In connection with the merger agreement, NNN entered into contribution agreements with the holders of a majority of the

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GRUBB & ELLIS COMPANY

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

common membership interests of Triple Net Properties. Under the merger agreement and the contribution agreements, NNN issued 17,372,438 shares of the Company’s common stock (to the accredited investor members) and $986,000 in cash (to the unaccredited investor members in lieu of 0.5% of the shares of the Company’s common stock they would otherwise be entitled to receive, which was valued at the $11.36 offering price to investors in the 144A offering) in exchange for all the common member interests. Concurrently with the closing of the 144A offering on November 16, 2006, Triple Net Properties became a wholly-owned subsidiary of NNN. For accounting purposes, Triple Net Properties was considered the acquirer of Realty and NNN Capital Corp.

•  NNN entered into a contribution agreement with Mr. Thompson and Mr. Rogers pursuant to which they contributed all of the outstanding shares of Realty, to the Company in exchange for 4,124,120 shares of the Company’s common stock and, with respect to Mr. Thompson, $9.4 million in cash in lieu of the shares of NNN he would otherwise be entitled to receive, which was valued at the $11.36 offering price to investors in the 144A offering. Concurrently with the closing of the 144A offering on November 16, 2006, Realty became a wholly-owned subsidiary of NNN.

•  NNN entered into a contribution agreement with Mr. Thompson, Mr. Rogers and Kevin K. Hull pursuant to which they contributed all of the outstanding shares of NNN Capital Corp. to the Company in exchange for 1,164,680 shares of the Company’s common stock and, with respect to Mr. Thompson, $2.7 million in cash in lieu of the shares of NNN he would otherwise be entitled to receive, which was valued at the $11.36 offering price to investors in the 144A offering. NNN Capital Corp. became a wholly-owned subsidiary of NNN on December 14, 2006.

In connection with these transactions, the owners of Realty and Capital Corp have agreed to indemnify NNN for a breach of any representations and for certain other losses, subject to a maximum aggregate limit on the amount of their liability of $12.0 million. Mr. Thompson and Mr. Rogers also agreed to escrow shares of NNN’s common stock and indemnify NNN for certain other matters. Except for these escrow arrangements, NNN has no assurance that any contributing party providing these limited representations or indemnities will have adequate capital to fulfill its indemnity obligations.

The acquisitions were accounted for under the purchase method of accounting, and accordingly all assets and liabilities were adjusted to and recorded at their estimated fair values as of the acquisition date. Goodwill and other intangible assets represent the excess of purchase price over the fair value of net assets acquired. In accordance with SFAS No. 141, the Company recorded goodwill for a purchase business combination to the extent that the purchase price of the acquisition exceeded the net identifiable assets and intangible assets of the acquired companies.

The purchase accounting adjustments for the acquisition of Realty and NNN Capital Corp. were recorded in the accompanying consolidated financial statements as of, and for periods subsequent to the acquisition dates. The excess purchase price over the estimated fair value of net assets acquired has been recorded to goodwill, which is not deductible for tax purposes. The final valuation of the net assets acquired is complete.

The aggregate purchase price for the acquisition of Realty and NNN Capital Corp. was approximately $72.2 million, which included: (1) issuance of 5,288,800 shares of the Company’s common stock, valued at $11.36 per share (the offering price upon the close of the 144A); and (2) $12.1 million in cash paid to Mr. Thompson in lieu of the shares of the Company’s common stock he would otherwise be entitled to receive, valued at $11.36 per share. As of December 31, 2006, the total purchase price has been paid.

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The following represents the calculation of the purchase price of Realty and the excess purchase price over the estimated fair value of the net assets acquired:

(In thousands except share and per share data)
Purchase of shares of Realty for cash				$	9,435
Purchase of shares of Realty for stock					46,865
Total purchase price					56,300
Adjusted beginning equity	$	1,733
Adjustment for fair value of intangible contract rights		(20,538	)
Adjustment to goodwill to reflect deferred tax liability arising from allocation of purchase price to intangible contract rights		8,214
Less: fair value of net assets acquired					(10,591	)
Goodwill: Excess purchase price over fair value of net assets				$	45,709

Realty was comprised of the following:

Assets:
Current assets	$	5,326
Intangible contract rights		20,538
Total assets		25,864
Liabilities:
Current liabilities		7,059
Long-term deferred tax liability		8,214
Total liabilities		15,273
Fair value of net assets acquired	$	10,591

The issuance of the Company’s common stock to the owners of Realty was based upon the following:

Realty fair value	$	56,300
Cash payment toward purchase		(9,435	)
Value of shares issued	$	46,865
Price per share issued	$	10.00
Shares issued to Realty owners		4,686,500

The following represents the calculation of the purchase price of GBE Securities and the excess purchase price over the estimated fair value of the net assets acquired:

(In thousands, except share and per share data)
Purchase of shares of GBE Securities for cash	$	2,665
Purchase of shares of GBE Securities for stock		13,235
Total purchase price		15,900
Less: fair value of net assets acquired		(1,426	)
Goodwill: Excess purchase price over fair value of net assets	$	14,474

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GBE Securities was comprised of the following:

Assets:
Current assets	$	5,391
Property and equipment		104
Total assets		5,495
Liabilities:
Current liabilities		4,069
Total liabilities		4,069
Fair value of net assets acquired	$	1,426

The issuance of the Company’s common stock to the owners of GBE Securities was based upon the following:

GBE Securities fair value	$	15,900
Cash payment toward purchase		(2,665	)
Value of shares issued	$	13,235
Price per share issued	$	10.00
Shares issued to GBE Securities owners		1,323,500

Supplemental information (unaudited)

Unaudited pro forma results, assuming the above mentioned 2007 acquisitions had occurred as of January 1, 2007 for purposes of the 2007 pro forma disclosures, are presented below. The unaudited pro forma results have been prepared for comparative purposes only and do not purport to be indicative of what operating results would have been had all acquisitions occurred on January 1, 2007, and may not be indicative of future operating results.

	Unaudited
	Pro Forma
	Results
	For The Year
	Ended
	December 31, 2007
(In thousands, except per share data)	Restated
Revenue	$	733,095
Loss from continuing operations	$	(790	)
Net income	$	18,930
Basic earnings per share	$	0.30
Weighted average shares outstanding for basic earnings per share		63,393
Diluted earnings per share	$	0.29
Weighted average shares outstanding for diluted earnings per share		64,785

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Goodwill

	Transaction			Management			Investment			Goodwill
	Services			Services			Management			Unassigned			Total
(In thousands)
Balance as of December 31, 2006	$	—		$	—		$	60,183		$	—		$	60,183
Goodwill acquired								1,627			—			1,627
Goodwill acquired — unassigned(1)		—			—			—			107,507			107,507
Balance as of December 31, 2007		—			—			61,810			107,507			169,317
Goodwill assigned		41,098			6,902			59,507			(107,507	)		—
Goodwill acquired		1,533			98			1,724			—			3,355
Impairment charge off		(42,631	)		(7,000	)		(123,041	)		—			(172,672	)
Balance as of December 31, 2008	$	—		$	—		$	—		$	—		$	—

(1) The fair values of the assets and liabilities recorded on the date of acquisition related to the Merger were preliminary and subject to refinement as additional valuation information was received. The goodwill recorded in connection with the acquisition was assigned to the individual reporting units pursuant to FASB Statement No. 142 during the year ended December 31, 2008. Approximately $8.8 million of goodwill is expected to be deductible for tax purposes.

Under SFAS No. 142, goodwill is recorded at its carrying value and is tested for impairment at least annually or more frequently if impairment indicators exist at a level of reporting referred to as a reporting unit. The Company recognizes goodwill in accordance with SFAS No. 142 and tests the carrying value for impairment during the fourth quarter of each year. The goodwill impairment analysis is a two-step process. The first step is used to identify potential impairment by comparing each reporting unit’s estimated fair value to its carrying value, including goodwill. To estimate the fair value of its reporting units, the Company used a discounted cash flow model and market comparable data. Significant judgment is required by management in developing the assumptions for the discounted cash flow model. These assumptions include cash flow projections utilizing revenue growth rates, profit margin percentages, discount rates, market/economic conditions, etc. If the estimated fair value of a reporting unit exceeds its carrying value, goodwill is considered to not be impaired. If the carrying value exceeds estimated fair value, there is an indication of potential impairment and the second step is performed to measure the amount of impairment. The second step of the process involves the calculation of an implied fair value of goodwill for each reporting unit for which step one indicated a potential impairment. The implied fair value of goodwill is determined by measuring the excess of the estimated fair value of the reporting unit as calculated in step one, over the estimated fair values of the individual assets, liabilities and identified intangibles. During the fourth quarter of 2008, the Company identified the uncertainty surrounding the global economy and the volatility of the Company’s market capitalization as goodwill impairment indicators. The Company’s goodwill impairment analysis resulted in the recognition of an impairment charge of approximately $172.7 million during the year ended December 31, 2008. The Company also analyzed its trade name for impairment pursuant to SFAS No. 142 and determined that the trade name was not impaired as of December 31, 2008. Accordingly, no impairment charge was recorded related to the trade name during the year ended December 31, 2008.

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11.   PROPERTY ACQUISITIONS

2008 Acquisitions

Acquisition of Properties for TIC Sponsored Programs

During the year ended December 31, 2008, the Company completed the acquisition of two office properties and two multifamily residential properties on behalf of TIC sponsored programs, all of which were sold to the respective programs during the same period. The aggregate purchase price including the closing costs of these four properties was $111.7 million, of which $69.0 million was financed with mortgage debt.

2007 Acquisitions

Acquisition of Properties for TIC Sponsored Programs

During the year ended December 31, 2007, the Company completed the acquisition of sixteen office properties and three residential properties. The Company classified these properties as property held for sale upon acquisition. The aggregate purchase price including the closing costs of these properties was $294.0 million, of which $254.8 million was financed with mortgage debt. The Company’s discontinued operations include the combined results of these acquisitions. As of December 31, 2007, twelve of these properties have been sold and four properties remain held for sale as follows: Park Central, acquired November 29, 2007, Emberwood Apartments, acquired December 4, 2007, Woodside, acquired December 13, 2007 and Exchange South, acquired December 13, 2007.

Acquisition of Properties for Investment

During the year ended December 31, 2007, the Company also completed the acquisition of two office properties. The aggregate purchase price including closing costs of these properties was $141.5 million, of which $123.0 million was financed with mortgage debt. During 2008, the Company initiated a plan to sell these two office properties and has classified the properties as real estate held for sale in its financial statements as of December 31, 2008.

The following table summarizes the estimated fair values of the assets acquired and liabilities assumed at the date of acquisition for the properties that are included in properties held for sale as of December 31, 2007:

	2007
(In thousands)
Land	$	16,395
Building and improvements		79,946
In place leases		5,560
Above market leases		450
Tenant relationships		6,931
Net assets acquired	$	109,282
Below market leases	$	(233	)
Net liabilities assumed	$	(233	)

Pro forma statement of operations data is not required as all results of operations for properties held for sale are included in discontinued operations in the Company’s consolidated statement of operations.

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

12.   IDENTIFIED INTANGIBLE ASSETS

Identified intangible assets consisted of the following:

		December 31,
(In thousands)	Useful Life	2008			2007
Contract rights
Contract rights, established for the legal right to future disposition fees of a portfolio of real estate properties under contract	Amortize per disposition transactions	$	11,924		$	20,538
Accumulated amortization — contract rights			(4,700	)		(3,521	)
Contract rights, net			7,224			17,017
Other identified intangible assets
Trade name	Indefinite		64,100			64,100
Affiliate agreement	20 years		10,600			10,600
Customer relationships	5 to 7 years		5,436			5,579
Internally developed software	4 years		6,200			6,200
Customer backlog	1 year		300			300
Other contract rights	5 to 7 years		1,418			1,418
Non-compete and employment agreements	3 to 4 years		97			597
			88,151			88,794
Accumulated amortization			(3,848	)		(338	)
Other identified intangible assets, net			84,303			88,456
Total identified intangible assets, net		$	91,527		$	105,473

Amortization expense recorded for the contract rights was $1.2 million, $3.1 million and $410,000 for the years ended December 31, 2008, 2007 and 2006, respectively. Amortization expense was charged as a reduction to investment management revenue in each respective period. The amortization of the contract rights for intangible assets will be applied based on the net relative value of disposition fees realized when the properties are sold. The Company tested the intangible contract rights for impairment during the fourth quarter of 2008. The intangible contract rights represent the legal right to future disposition fees of a portfolio of real estate properties under contract. As a result of the current economic environment, a portion of these disposition fees may not be recoverable. Based on our analysis for the current and projected property values, condition of the properties and status of mortgage loans payable associated with these contract rights, the Company determined that there are certain properties for which receipt of disposition fees was improbable. As a result, the Company recorded an impairment charge of approximately $8.6 million related to the impaired intangible contract rights as of December 31, 2008.

The Company’s trade name was evaluated for potential impairment pursuant to SFAS No. 142. See Note 2 for further discussion.

Amortization expense recorded for the other identified intangible assets was $3.5 million, $338,000 and $0 for the years ended December 31, 2008, 2007 and 2006, respectively. Amortization expense was included as part of operating expense in the accompanying consolidated statement of operations.

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

Amortization expense for the other identified intangible assets for each of the next five years ended December 31 is as follows:

	(In
	thousands)
2009	$	3,224
2010		3,224
2011		3,122
2012		1,516
2013		1,157
Thereafter		7,960
	$	20,203

13.   ACCOUNTS PAYABLE AND ACCRUED EXPENSES

Accounts payable and accrued expenses consisted of the following:

	December 31,
	2008		2007
(In thousands)			Restated
Accrued liabilities	$	11,502	$	14,990
Salaries and related costs		13,643		16,028
Accounts payable		14,323		10,961
Broker commissions		14,002		26,597
Dividends		—		1,733
Severance		2,957		4,965
Bonuses		9,741		14,934
Property management fees and commissions due to third parties		2,940		4,909
Interest		651		1,431
Other		463		5,456
Total	$	70,222	$	102,004

14.   CAPITAL LEASE OBLIGATIONS

Capital lease obligations consisted of the following:

	December 31,
	2008			2007
(In thousands)
Capital leases obligations	$	536		$	790
Total		536			790
Less portion classified as current		(333	)		(351	)
Non-current portion	$	203		$	439

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GRUBB & ELLIS COMPANY

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

As of December 31, 2008, the future minimum payments due under the capital lease obligations are as follows for the years ending December 31:

(In thousands)
2009	$	371
2010		189
2011		23
Less imputed interest		(47	)
	$	536

15.   NOTES PAYABLE OF PROPERTIES HELD FOR SALE INCLUDING INVESTMENTS IN UNCONSOLIDATED ENTITIES

Notes payable of properties held for sale including investments in unconsolidated entities consisted of the following:

	December 31,
	2008		2007
(In thousands)
Mortgage debt payable to various financial institutions, with variable interest rates based on London Interbank Offered Rate (“LIBOR”) and include an interest rate cap for LIBOR at 6.00% (interest rates ranging from 2.91% to 6.00% per annum as of December 31, 2008). The notes require monthly interest-only payments and mature in July 2009 and have automatic one-year extension options	$	108,677	$	120,500
Mortgage debt payable to various financial institutions. Fixed interest rates range from 5.95% to 6.32% per annum. The notes mature at various dates through February 2017. As of December 31, 2008, all notes require monthly interest-only payments		107,000		107,000
Mezzanine debt payable to various financial institutions, with variable interest rates based on LIBOR (ranging from 11.31% to 12.00% per annum as of December 31, 2007), required monthly interest-only payments. These debts were paid in full during the first and second quarters of 2008		—		30,000
Mortgage debt payable to various financial institutions. Fixed interest rates range from 6.14% to 6.79% per annum. The notes were scheduled to mature at various dates through January 2018. As of December 31, 2007, all notes required monthly interest-only payments (paid in full in 2008)		—		72,230
Mezzanine debt payable to various financial institutions, fixed and variable interest rates range from 6.86% to 10.23% per annum. The notes were scheduled to mature at various dates through December 2008. As of December 31, 2007, all notes required monthly interest-only payments (paid in full in 2008)		—		18,790
Unsecured notes payable to third-party investors with fixed interest at 6.00% per annum and matures in December 2011. Principal and interest payments are due quarterly		282		411
Total	$	215,959	$	348,931

GERI historically had entered into several interest rate lock agreements with commercial banks. All rate locks were cancelled and all deposits in connection with these agreements were refunded to the Company in April 2008.

The Company restructured the financing of two properties through amendments to the mortgage note in July 2008. The amendments allowed the Company to use pre-funded reserves of approximately $13.0 million to reduce the outstanding balance of the mortgage note payable on the properties. In connection with the

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GRUBB & ELLIS COMPANY

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

amendments, the LIBOR margin was changed to 3.50% from 2.50%, the cross collateralization provisions of the mortgages were removed and several minor covenants were revised.

As of December 31, 2008, the principal payments due on notes payable of properties held for sale including investments in unconsolidated entities for each of the next five years ending December 31 and thereafter are summarized as follows:

	(In
	thousands)
2009	$	108,779
2010		143
2011		37
2012		—
2013		—
Thereafter		107,000
	$	215,959

16.   LINES OF CREDIT

In February 2007, the Company entered into a $25.0 million revolving line of credit with LaSalle Bank N.A. to replace the previous revolving line of credit. This line of credit consisted of $10.0 million for acquisitions and $15.0 million for general corporate purposes and bore interest at prime rate plus 0.50% or three-month LIBOR plus 1.50%, at the Company’s option and matured February 20, 2010. During 2007, the Company paid $100,000 in loan fees relating to the revolving line of credit.

On December 7, 2007, the Company terminated the $25.0 million line of credit with LaSalle Bank N.A. and entered into a $75.0 million Second Amended and Restated Credit Agreement by and among the Company, the guarantors named therein, the financial institutions defined therein as lender parties, Deutsche Bank Trust Company Americas, as lender and administrative agent (the “Credit Facility”). The Company is restricted to solely use the line of credit for investments, acquisitions, working capital, equity interest repurchase or exchange, and other general corporate purposes. The line bore interest at either the prime rate or LIBOR based rates, as the Company may choose on each of its borrowings, plus an applicable margin based on the Company’s Debt/Earnings Before Interest, Taxes, Depreciation and Amortization (“EBITDA”) ratio as defined in the credit agreement.

On August 5, 2008, the Company entered into an amendment (the ‘First Letter Amendment”) to its Credit Facility. The First Letter Amendment, among other things, provided the Company with an extension from September 30, 2008 to March 31, 2009 to dispose of the three real estate assets that the Company had previously acquired on behalf of GERA. Additionally, the First Letter Amendment also, among other things, modified select debt and financial covenants in order to provide greater flexibility to facilitate the Company’s TIC Programs.

On November 4, 2008, the Company amended (the “Second Letter Amendment”) its Credit Facility revising certain terms of that certain Second Amended and Restated Credit Agreement dated as of December 7, 2007, as amended. The effective date of the Second Letter Amendment was September 30, 2008.

The Second Letter Amendment, among other things: (a) modified the amount available under the Credit Facility from $75.0 million to $50.0 million by providing that no advances or letters of credit shall be made available to the Company after September 30, 2008 until such time as borrowings have been reduced to less than $50.0 million; (b) provided that 100% of any net cash proceeds from the sale of certain real estate assets that have to be sold by the Company shall permanently reduce the Revolving Credit Commitments, provided that the Revolving Credit Commitments shall not be reduced to less than $50.0 million by reason of the

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

operation of such asset sales; and (c) modified the interest rate incurred on borrowings by increasing the applicable margins by 100 basis points and by providing for an interest rate floor for any prime rate related borrowings.

Additionally, the Second Letter Amendment, among other things, modified restrictions on guarantees of primary obligations from $125.0 million to $50.0 million, modified select financial covenants to reflect the impact of the current economic environment on the Company’s financial performance, amended certain restrictions on payments by deleting any dividend/share repurchase limitations and modifies the reporting requirements of the Company with respect to real property owned or held.

As of September 30, 2008, the Company was not in compliance with certain of its financial covenants related to EBITDA. As a result, part of the Second Letter Amendment included a provision which modified selected covenants. The Debt /EBITDA ratio for the quarters ending September 30, 2008 and December 31, 2008 were amended from 3.75:1.00 to 5.50:1.00, while the Debt /EBITDA Ratio for the quarters ending March 31, 2009 and thereafter remain at 3.50:1.00. The Interest Coverage Ratio for the quarters ending September 30, 2008, December 31, 2008 and March 31, 2009 were amended from 3.50:1.00 to 3.25:1.00, while the Interest Coverage Ratio for the quarters ended June 30, 2009 and September 30, 2009 remained unchanged at 3.50:1.00 and for the quarters ended December 31, 2009 and thereafter remained unchanged at 4.00:1.00. The Recourse Debt/Core EBITDA Ratio for the quarters ending September 30, 2008 and December 31, 2008 were amended from 2.25:1.00 to 4.25:1.00, while the Recourse Debt/Core EBITDA Ratio for the quarters thereafter remained unchanged at 2.25:1.00. The Core EBITDA to be maintained by the Company at all times was reduced from $60.0 million to $30.0 million and the Minimum Liquidity to be maintained by the Company at all times was reduced from $25.0 million to $15.0 million. The Company was not in compliance with certain debt covenants as of December 31, 2008, all of which were effectively cured as of such date by the Third Amendment to the Credit Facility described below. As a consequence of the foregoing, and certain provisions of the Third Amendment, the Credit Facility has been classified as a current liability as of December 31, 2008.

On May 20, 2009, the Company further amended its Credit Facility by entering into the Third Amendment. The Third Amendment, among other things, bifurcates the existing credit facility into two revolving credit facilities, (i) a $38,000,000 Revolving Credit A Facility which is deemed fully funded as of the date of the Third Amendment, and (ii) a $29,289,245 Revolving Credit B Facility, comprised of revolving credit advances in the aggregate of $25,000,000 which are deemed fully funded as of the date of the Third Amendment and letters of credit advances in the aggregate amount of $4,289,245 which are issued and outstanding as of the date of the Third Amendment. The Third Amendment requires the Company to draw down $4,289,245 under the Revolving Credit B Facility on the date of the Third Amendment and deposit such funds in a cash collateral account to cash collateralize outstanding letters of credit under the Credit Facility and eliminates the swingline features of the Credit Facility and the Company’s ability to cause the lenders to issue any additional letters of credit. In addition, the Third Amendment also changes the termination date of the Credit Facility from December 7, 2010 to March 31, 2010 and modifies the interest rate incurred on borrowings by initially increasing the applicable margin by 450 basis points (or to 7.00% on prime rate loans and 8.00% on LIBOR based loans).

The Third Amendment also eliminated specific financial covenants, and in its place, the Company is required to comply with the Approved Budget, that has been agreed to by the Company and the lenders, subject to agreed upon variances. The Company is also required under the Third Amendment to effect the Recapitalization Plan, on or before September 30, 2009 and in connection therewith to effect a prepayment of at least seventy two (72%) of the Revolving Credit A Advances (the “Partial Prepayment”). In the event the Company fails to effect the Recapitalization Plan and in connection therewith to effect a Partial Prepayment on or before September 30, 2009, the (i) lenders will have the right commencing on October 1, 2009, to exercise the Warrants, for nominal consideration, to purchase common stock of the Company equal to 15% of

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

the common stock of the Company on a fully diluted basis as of such date, subject to adjustment, (ii) the applicable margin automatically increases to 11% on prime rate loans and increases to 12% on LIBOR based loans, (iii) the Company shall be required to amortize an aggregate of $10 million of the Revolving Credit A Facility in three (3) equal installments on the first business day of each of the last three (3) months of 2009, (iv) the Company is obligated to submit a revised budget by October 1, 2009, (v) the Credit Facility will terminate on January 15, 2010, and (vi) no further advances may be drawn under the Credit Facility.

In the event that Company effects the Recapitalization Plan and in connection therewith effects a partial repayment of the Revolving A Credit Facility on a prior to September 30, 2009, the Warrants automatically will expire and not become exercisable, the applicable margin will automatically be reduced to 3% on prime rate loans and 4% on LIBOR based loans and the Company shall have the right, subject to the requisite approval of the lenders, to seek an extension of the term of the Credit Facility to January 5, 2011, provided the Company also pays a fee of .25% of the then outstanding commitments under the Credit Facility.

As a result of the Third Amendment the Company is required to prepay outstanding Revolving Credit A Advances (and to the extent the Revolving Credit A Facility shall be reduced to zero, prepay outstanding Revolving Credit B Advances) in an amount equal to 100% (or, after the Revolving Credit A Advances are reduced by at least the Partial Prepayment amount, in an amount equal to 50%) of Net Cash Proceeds (as defined in the Credit Agreement) from:

•  assets sales,

•  conversions of Investments (as defined in the Credit Agreement),

•  the refund of any taxes or the sale of equity interests by the Company or its subsidiaries,

•  the issuance of debt securities, or

•  any other transaction or event occurring outside the ordinary course of business of the Company or its subsidiaries;

provided, however, that (a) the Net Cash Proceeds received from the sale of the certain real property assets shall be used to prepay outstanding Revolving Credit B Advances and to the extent Revolving Credit B Advances shall be reduced to zero, to prepay outstanding Revolving Credit A Advances, (b) the Company shall prepay outstanding Revolving Credit B Advances in an amount equal to 100% of the Net Cash Proceeds from the sale of the Danbury Corporate Center in Danbury Connecticut (the “Danbury Property”) unless the Company is then not in compliance with the Recapitalization Plan in which event Revolving Credit A Advances shall be prepaid first and (c) the Company’s 2008 tax refund was used to prepay outstanding Revolving Credit B Advances upon the closing of the Third Amendment.

The Third Amendment requires the Company to (a) sell the Danbury Property by June 1, 2009, unless such date is extended with the applicable approval of the lenders and (b) use its commercially reasonable best efforts to sell four other commercial properties, including the two other GERA Properties, by September 30, 2009.

The Company’s Credit Facility is secured by substantially all of the Company’s assets. The outstanding balance on the Credit Facility was $63.0 million and $8.0 million as of December 31, 2008 and December 31, 2007, respectively, and carried a weighted average interest rate of 5.80% and 7.75%, respectively.

In light of the current state of the financial markets and economic environment, there is risk that the Company will be unable to meet the terms of the Credit Facility which would result in the entire balance of the debt becoming due and payable. If the Credit Facility were to become due and payable immediately or on the alternative due date of January 15, 2010, there can be no assurances that the Company will have access to alternative funding sources, or if such sources are available to the Company, that they will be on favorable terms and conditions to the Company. If the Credit Facility were to become immediately due and payable, the

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GRUBB & ELLIS COMPANY

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

recoverability of the Company’s assets may be further impaired which could affect the ability to repay the debt.

17.   SENIOR NOTES

On August 1, 2006, NNN Collateralized Senior Notes, LLC (the “Senior Notes Program”), the Senior Notes Program began offering $50,000,000 in aggregate principal amount which mature in 2011 and bear interest at a rate of 8.75% per annum. Interest on the notes is payable monthly in arrears on the first day of each month, commencing on the first day of the month occurring after issuance. The notes will mature five years from the date of first issuance of any of such notes, with two one-year options to extend the maturity date of the notes at the Senior Notes Program’s option. The interest rate will increase to 9.25% per annum during any extension. The Senior Notes Program has the right to redeem the notes, in whole or in part, at: (1) 102.0% of their principal amount plus accrued interest any time after January 1, 2008; (2) 101.0% of their principal amount plus accrued interest any time after July 1, 2008; and (3) par value after January 1, 2009. The notes are the Senior Notes Program’s senior obligations, ranking pari passu in right of payment with all other senior debt incurred and ranking senior to any subordinated debt it may incur. The notes are effectively subordinated to all present or future debt secured by real or personal property to the extent of the value of the collateral securing such debt. The notes will be secured by a pledge of the Senior Notes Program’s membership interest in NNN Series A Holdings, LLC, which is the Senior Notes Program’s wholly-owned subsidiary for the sole purpose of making the investments. Each note is guaranteed by GERI. The guarantee is secured by a pledge of GERI membership interest in the Senior Notes Program. The Program was closed in January 2007. The total amount raised from this program was $16.3 million.

As of December 31, 2008 and 2007, the Senior Notes Program’s balance is reflected in the table below:

Date

Maturity

December 31,

Current

Call

Ownership

Subsidiary

Issued

Date

2008

2007

Rate

Date

(In thousands)

100%

Senior Notes Program

08/01/2006

08/01/2011

$

16,277

$

16,277

8.75

%

N/A

18.   SEGMENT DISCLOSURE

In conjunction with the Merger, management re-evaluated its reportable segments and determined that the Company’s reportable segments consist of Transaction Services, Investment Management, and Management Services. The Company’s Investment Management segment includes all of NNN’s historical business units and, therefore, all historical data have been conformed to reflect the reportable segments as a combined company.

Transaction Services — Transaction services advises buyers, sellers, landlords and tenants on the sale, leasing and valuation of commercial property and includes the Company’s national accounts group and national affiliate program operations.

Investment Management — Investment Management includes services for acquisition, financing and disposition with respect to the Company’s investment programs, asset management services related to the Company’s programs, and dealer-manager services by its securities broker-dealer, which facilitates capital raising transactions for its investment programs.

Management Services — Management services provide property management and related services for owners of investment properties and facilities management services for corporate owners and occupiers.

The Company also has certain corporate level activities including interest income from notes and advances, property rental related operations, legal administration, accounting, finance, and management information systems which are not considered separate operating segments.

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GRUBB & ELLIS COMPANY

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

The Company evaluates the performance of its segments based upon operating (loss) income. Operating (loss) income is defined as operating revenue less compensation and general and administrative costs and excludes other rental related, rental expense, interest expense, depreciation and amortization and certain other operating and non-operating expenses. The accounting policies of the reportable segments are the same as those described in the Company’s summary of significant accounting policies (See Note 2). Beginning in 2009, allocations of corporate compensation and corporate general and administrative costs will be excluded from the evaluation of segment performance.

	Transaction			Investment			Management
Year Ended December 31, 2008	Services			Management			Services		Total
(In thousands)
Revenue	$	240,250		$	101,581		$	253,664	$	595,495
Compensation costs		220,648			56,591			225,765		503,004
General and administrative		45,805			64,978			8,877		119,660
Segment operating (loss) income	$	(26,203	)	$	(19,988	)	$	19,022	$	(27,169	)
Segment assets	$	100,606		$	90,047		$	50,232	$	240,885

	Transaction		Investment		Management
Year Ended December 31, 2007	Services		Management		Services		Total
(In thousands)	Restated		Restated		Restated		Restated
Revenue	$	35,522	$	149,651	$	16,365	$	201,538
Compensation costs		27,081		62,454		14,574		104,109
General and administrative		3,894		39,535		822		44,251
Segment operating income	$	4,547	$	47,662	$	969	$	53,178
Segment assets	$	141,348	$	480,155	$	14,469	$	635,972

	Transaction		Investment		Management
Year Ended December 31, 2006	Services		Management		Services		Total
(In thousands)	Restated		Restated		Restated		Restated
Revenue	$	—	$	99,599	$	—	$	99,599
Compensation costs		—		49,449		—		49,449
General and administrative		—		30,188		—		30,188
Segment operating income	$	—	$	19,962	$	—	$	19,962
Segment assets	$	—	$	273,705	$	—	$	273,705

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GRUBB & ELLIS COMPANY

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

The following is reconciliation between segment operating (loss) income to consolidated net (loss) income:

	Year Ended December 31,
	2008			2007			2006
(In thousands)				Restated			Restated
Reconciliation to consolidated net (loss) income:
Total segment operating (loss) income	$	(27,169	)	$	53,178		$	19,962
Non-segment:
Rental related revenue		16,326			16,399			8,944
Operating expenses		(244,611	)		(27,228	)		(17,996	)
Other (expense) income		(18,867	)		4,556			2,661
Minority interest in loss (income) of consolidated entities		11,719			(1,961	)		(78	)
Income tax (provision) benefit		(16,890	)		(18,118	)		7,441
Loss from discontinued operations		(51,378	)		(5,754	)		(963	)
Net (loss) income	$	(330,870	)	$	21,072		$	19,971

Reconciliation of segment assets to consolidated balance sheets:

(In thousands)
Segment assets	$	240,885	$	635,972	$	273,705
Corporate assets		279,392		352,570		74,004
Total assets	$	520,277	$	988,542	$	347,709
Corporate expenditures	$	4,407	$	3,331	$	2,339
Total capital expenditures	$	4,407	$	3,331	$	2,339

19.   PROPERTIES HELD FOR SALE INCLUDING INVESTMENTS IN UNCONSOLIDATED ENTITIES AND DISCONTINUED OPERATIONS

A summary of the properties and related LLCs held for sale balance sheet information is as follows:

	December 31,		December 31,
	2008		2007
(In thousands)
Cash and cash equivalents	$	922	$	59
Restricted cash		33,142		67,047
Properties held for sale including investments in unconsolidated entities		167,408		332,176
Identified intangible assets and other assets		37,145		76,985
Other assets		—		617
Total assets	$	238,617	$	476,884
Notes payable of properties held for sale including investments in unconsolidated entities	$	215,959	$	348,931
Liabilities of properties held for sale		16,843		25,550
Other liabilities		2,407		12,379
Total liabilities	$	235,209	$	386,860

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GRUBB & ELLIS COMPANY

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

During 2008, the Company initiated a plan to sell the properties it classified as real estate held for investment in its financial statements. As of December 31, 2008, the Company has a covenant within its Credit Facility which requires the sale of certain of these assets before March 31, 2009. The downturn in the global capital markets significantly lessened the probability that the Company would be able to achieve relief from this covenant through amendment or other financial resolutions. Pursuant to SFAS No. 144, the Company assessed the value of the assets. In addition, the Company reviewed the valuation of its other owned properties and real estate investments. This valuation review resulted in the Company recognizing an impairment charge of approximately $90.4 million against the carrying value of the properties and real estate investments as of December 31, 2008, $18.0 of which is recorded separately on the statements of operations and $72.4 million of which is included in discontinued operations. There were no impairment charges recognized during the years ended December 31, 2007 and 2006.

On October 31, 2008, the Company entered into that certain Agreement for the Purchase and Sale of Real Property and Escrow Instructions to effect the sale of the Danbury Corporate Center located at 39 Old Ridgebury Road, Danbury, Connecticut, to an unaffiliated entity for a purchase price of $76.0 million. This agreement was amended and restated in its entirety by that certain Danbury Merger Agreement dated as of January 23, 2009, as amended by the First Amendment to Danbury Merger Agreement dated as of January 23, 2009 (the “First Danbury Amendment”) which reduced the purchase price to $73.5 million. In accordance with the terms of the Danbury Merger Agreement, as amended by the First Danbury Amendment, the Company received one half of the buyer’s deposits in an amount of $3.125 million from the buyer upon the execution of the Danbury Merger Agreement, which released escrow deposit remains subject to the terms of the Danbury Merger Agreement, and the remaining $3.125 million of deposits continued to be held in escrow pending the closing. On May 19, 2009, the Company and the buyer entered into the Second Amendment to the Danbury Merger Agreement (the “Second Danbury Amendment”) pursuant to which the remaining $3.125 million of deposits held in escrow were released to the Company (and remain subject to the terms of the Danbury Merger Agreement, as amended), and the purchase price was reduced to $72,400,000. In accordance with the Second Danbury Amendment, the closing of the sale of the property is expected to occur on or before June 1, 2009.

The investments in unconsolidated entities held for sale represent the Company’s interest in certain real estate properties that it holds through various consolidated LLCs. In accordance with SFAS No. 66, Accounting for Sales of Real Estate, and Emerging Issues Task Force 98-8, the Company treats the disposition of these interests similar to the disposition of real estate it holds directly. In addition, pursuant to FIN No. 46(R), when the Company is no longer the primary beneficiary of the LLC, the Company deconsolidates the LLC.

During the year ended December 31, 2008, the Company sold interests in certain real estate properties that it holds through various consolidated LLCs resulting in the deconsolidation of the LLCs and a decrease of approximately $198.0 million in properties held for sale including investments in unconsolidated entities. These non-cash transactions concurrently resulted in a decrease in restricted cash of approximately $20.7 million, a decrease in other assets, identified intangible assets and other assets held for sale of approximately $48.4 million, a decrease in investments in unconsolidated entities of approximately $34.6 million, a decrease in accounts payable and accrued expenses of approximately $13.5 million, a decrease in notes payable of properties held for sale including investments in unconsolidated entities of approximately $180.2 million, a decrease in minority interest liability of approximately $27.6 million, a decrease in other liabilities of approximately $1.3 million and an increase in proceeds from related parties of approximately $79.1 million.

During the year ended December 31, 2007, the Company sold interests in certain real estate properties that it holds through various consolidated LLCs resulting in the deconsolidation of the LLCs and a decrease of approximately $290.3 million in properties held for sale including investments in unconsolidated entities.

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These non-cash transactions concurrently resulted in a decrease in restricted cash of approximately $33.5 million, a decrease in other assets, identified intangible assets and other assets held for sale of approximately $48.9 million, a decrease in accounts payable and accrued expenses of approximately $8.6 million, a decrease in notes payable of properties held for sale including investments in unconsolidated entities of approximately $238.1 million, a decrease in minority interest liability of approximately $19.4 million, a decrease in other liabilities of approximately $3.7 million and an increase in proceeds from related parties of approximately $102.9 million.

In instances when the Company expects to have significant ongoing cash flows or significant continuing involvement in the component beyond the date of sale, the income (loss) from certain properties held for sale continue to be fully recorded within the continuing operations of the Company through the date of sale.

The net results of discontinued operations and the net gain on dispositions of properties sold or classified as held for sale as of December 31, 2008, in which the Company has no significant ongoing cash flows or significant continuing involvement, are reflected in the consolidated statements of operations as discontinued operations. The Company will receive certain fee income from these properties on an ongoing basis that is not considered significant when compared to the operating results of such properties.

The following table summarizes the income (loss) and expense components- net of taxes that comprised discontinued operations for the years ended December 31, 2008, 2007 and 2006:

	Year Ended December 31,
	2008			2007			2006
(In thousands)
Rental income	$	40,287		$	22,236		$	1,541
Rental expense		(36,892	)		(10,037	)		(862	)
Depreciation and amortization		—			(7,117	)		(199	)
Interest expense (including amortization of deferred financing costs)		(15,816	)		(15,092	)		(1,572	)
Real estate related impairments		(72,397	)		—			—
Tax benefit		33,083			4,004			61
Loss from discontinued operations-net of taxes		(51,735	)		(6,006	)		(1,031	)
Gain on disposal of discontinued operations-net of taxes		357			252			68
Total loss from discontinued operations	$	(51,378	)	$	(5,754	)	$	(963	)

20.   COMMITMENTS AND CONTINGENCIES

Operating Leases — The Company has non-cancelable operating lease obligations for office space and certain equipment ranging from one to ten years, and sublease agreements under which the Company acts as a sublessor. The office space leases often times provide for annual rent increases, and typically require payment of property taxes, insurance and maintenance costs.

Rent expense under these operating leases was approximately $23.2 million, $4.3 million and $2.2 million for the years ended December 31, 2008, 2007 and 2006, respectively. Rent expense is included in general and administrative expense in the accompanying consolidated statements of operations.

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As of December 31, 2008, future minimum amounts payable under non-cancelable operating leases are as follows for the years ending December 31:

	(In
	thousands)
2009	$	22,085
2010		16,760
2011		14,069
2012		12,458
2013		9,624
Thereafter		16,903
	$	91,899

Operating Leases — Other — The Company is a master lessee of seven multi-family residential properties in various locations under non-cancelable leases. The leases, which commenced in various months and expire from June 2015 through March 2016, require minimum monthly payments averaging $795,000 over the 10-year period. Rent expense under these operating leases was approximately $9.4 million, $8.6 million and $4.6 million, for the years ended December 31, 2008, 2007 and 2006, respectively. As of December 31, 2008, rental related expense, based on contractual amounts due, are as follows for the years ending December 31:

	Rental
	Related
	Expense
(In thousands)
2009	$	9,793
2010		10,812
2011		10,942
2012		10,942
2013		10,942
Thereafter		19,880
	$	73,311

The Company subleases these multifamily spaces to third parties for no more than one year. Rental income from these subleases was approximately $16.4 million, $16.4 million and $8.9 million for the years ended December 31, 2008, 2007 and 2006, respectively.

The Company is also a 50% joint venture partner of four multi-family residential properties in various locations under non-cancelable leases. The leases, which commenced in various months and expire from November 2014 through January 2015, require minimum monthly payments averaging $372,000 over the 10-year period. Rent expense under these operating leases was approximately $4.5 million, $4.3 million and

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$3.2 million, for the years ended December 31, 2008, 2007 and 2006, respectively. As of December 31, 2008, rental related expense, based on contractual amounts due, are as follows for the years ending December 31:

(In thousands)
2009	$	4,474
2010		4,474
2011		4,474
2012		4,474
2013		4,474
Thereafter		4,518
	$	26,888

The Company subleases these multifamily spaces to third parties for no more than one year. Rental income from these subleases was approximately $9.0 million, $8.4 million and $8.0 million for the years ended December 31, 2008, 2007 and 2006, respectively.

As of December 31, 2008, the Company had recorded liabilities totaling $7.3 million related to such master lease arrangements, consisting of $4.6 million of cumulative deferred revenues relating to acquisition fees and loan fees received from 2004 through 2006 and $2.7 million of additional loss reserves which were recorded in 2008.

TIC Program Exchange Provision - Prior to the Merger, NNN entered into agreements in which NNN agreed to provide certain investors with a right to exchange their investment in certain TIC Programs for an investment in a different TIC program. NNN also entered into an agreement with another investor that provided the investor with certain repurchase rights under certain circumstances with respect to their investment. The agreements containing such rights of exchange and repurchase rights pertain to initial investments in TIC programs totalling $31.6 million. The Company deferred revenues relating to these agreements of $986,000, $393,000 and $584,000 for the years ended December 31, 2008, 2007 and 2006, respectively. Additional losses of $14.3 million related to these agreements were recorded in 2008 to reflect the impairment in value of properties underlying the agreements with investors. As of December 31, 2008 the Company had recorded liabilities totalling $18.6 million related to such agreements, consisting of $4.3 million of cumulative deferred revenues and $14.3 million of additional losses related to these agreements. In addition, the Company is joint and severally liable on the non-recourse mortgage debt related to these TIC Programs totalling $277.8 million and $392.2 million as of December 31, 2008 and 2007, respectively. This mortgage debt is not consolidated as the LLCs account for the interests in the Company’s TIC investments under the equity method and the non recourse mortgage debt does not meet the criteria under SFAS No. 140 for recognizing the share of the debt assumed by the other TIC interest holders for consolidation. The Company does consider the third party TIC holders ability and intent to repay their share of the joint and several liability in evaluating the recoverability of the Company’s investment in the TIC Program.

Capital Lease Obligations — The Company leases computers, copiers, and postage equipment that are accounted for as capital leases (See Note 14 of for additional information).

SEC Investigation — On June 2, 2008, the Company announced that the staff of the SEC Los Angeles Enforcement Division informed the Company that the SEC was closing the previously disclosed September 16, 2004 investigation referred to as “In the matter of Triple Net Properties, LLC,” without any enforcement action against Triple Net Properties or its subsidiaries.

General — The Company is involved in various claims and lawsuits arising out of the ordinary conduct of its business, as well as in connection with its participation in various joint ventures and partnerships, many of which may not be covered by the Company’s insurance policies. In the opinion of management, the eventual

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

outcome of such claims and lawsuits is not expected to have a material adverse effect on the Company’s financial position or results of operations.

Guarantees — From time to time the Company provides guarantees of loans for properties under management. As of December 31, 2008, there were 151 properties under management with loan guarantees of approximately $3.5 billion in total principal outstanding with terms ranging from one to 10 years, secured by properties with a total aggregate purchase price of approximately $4.8 billion. As of December 31, 2007, there were 143 properties under management with loans that were guaranteed of approximately $3.4 billion in total principal outstanding secured by properties with a total aggregate purchase price of approximately $4.6 billion. In addition, the consolidated VIEs and unconsolidated VIEs are jointly and severally liable on the non-recourse mortgage debt related to the interests in the Company’s TIC investments totaling $277.8 million and $385.3 million as of December 31, 2008, respectively.

The Company’s guarantees consisted of the following as of December 31, 2008 and 2007:

	December 31,
	2008		2007
(In thousands)
Non-recourse/carve-out guarantees of debt of properties under management(1)	$	3,414,433	$	3,167,447
Non-recourse/carve-out guarantees of the Company’s debt(1)	$	107,000	$	221,430
Guarantees of the Company’s mezzanine debt	$	—	$	48,790
Recourse guarantees of debt of properties under management	$	42,426	$	47,399
Recourse guarantees of the Company’s debt	$	10,000	$	10,000

(1) A “non-recourse/carve-out” guarantee imposes personal liability on the guarantor in the event the borrower engages in certain acts prohibited by the loan documents.

Management evaluates these guarantees to determine if the guarantee meets the criteria required to record a liability in accordance with FIN No. 45. As of December 31, 2008, the Company recorded a liability of $9.1 million related to recourse guarantees of debt of properties under management which matured in January and April 2009. Any other such liabilities were insignificant as of December 31, 2008 and 2007.

Environmental Obligations — In the Company’s role as property manager, it could incur liabilities for the investigation or remediation of hazardous or toxic substances or wastes at properties the Company currently or formerly managed or at off-site locations where wastes were disposed. Similarly, under debt financing arrangements on properties owned by sponsored programs, the Company has agreed to indemnify the lenders for environmental liabilities and to remediate any environmental problems that may arise. The Company is not aware of any environmental liability or unasserted claim or assessment relating to an environmental liability that the Company believes would require disclosure or the recording of a loss contingency as of December 31, 2008 and 2007.

Real Estate Licensing Issues — Although Realty was required to have real estate licenses in all of the states in which it acted as a broker for NNN’s programs and received real estate commissions prior to 2007, Realty did not hold a license in certain of those states when it earned fees for those services. In addition, almost all of GERI’s revenue was based on an arrangement with Realty to share fees from NNN’s programs. GERI did not hold a real estate license in any state, although most states in which properties of the NNN’s programs were located may have required GERI to hold a license. As a result, Realty and the Company may be subject to penalties, such as fines (which could be a multiple of the amount received), restitution payments and termination of management agreements, and to the suspension or revocation of certain of Realty’s real estate broker licenses. As of December 31, 2008, there have been no claims, and the Company cannot assess or estimate whether it will incur any losses as a result of the foregoing.

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To the extent that the Company incurs any liability arising from the failure to comply with real estate broker licensing requirements in certain states, Mr. Thompson, Mr. Rogers and Mr. Hanson have agreed to forfeit to the Company up to an aggregate of 4,124,120 shares of the Company’s common stock, and each share will be deemed to have a value of $11.36 per share in satisfying this obligation. Mr. Thompson has agreed to indemnify the Company, to the extent the liability incurred by the Company for such matters exceeds the deemed $46,865,000 value of these shares (as of the date of the agreement), up to an additional $9,435,000 in cash. In connection with this arrangement, NNN has entered into an indemnification and escrow agreement with Mr. Thompson, Mr. Rogers, Mr. Hanson, an independent escrow agent and NNN, pursuant to which the escrow agent will hold 4,124,120 shares of the Company’s common stock that are otherwise issuable to Mr. Thompson and Mr. Rogers in connection with the NNN’s formation transactions (2,885,520 shares for Mr. Thompson and 1,238,600 shares for Mr. Rogers) to secure Mr. Thompson’s and Mr. Rogers’ obligations to the Company with respect to these matters. Mr. Thompson’s and Mr. Rogers’ liability under this arrangement will not exceed the sum of the value of their shares in the escrow except to the extent Mr. Thompson may be obligated to indemnify the Company for excess liabilities up to an additional $9,435,000 in cash. Since Mr. Hanson is entitled over time to receive up to 743,160 shares from Messrs. Thompson and Rogers (557,370 from Mr. Thompson and 185,790 from Mr. Rogers) from the shares held in the indemnification and escrow agreement, he is a party to it as well and his liability is limited to those shares. If Mr. Hanson’s right to receive the shares vests, then to the extent shares attributable to his ownership are available, and not subject to potential claims, under the indemnification and escrow agreement, he is permitted to remove 88,000 shares on each of January 1, 2008 and 2009 to pay taxes. As Mr. Hanson’s right to receive the shares vests, then to the extent shares attributable to his ownership are available, and not subject to potential claims, under the indemnification and escrow agreement, he will be permitted to remove certain shares to pay taxes. On January 20, 2009, Mr. Hanson was permitted to remove 247,695 shares from the escrow to pay taxes.

Alesco Seed Capital - On November 16, 2007, the Company completed the acquisition of a 51% membership interest in Grubb & Ellis Alesco Global Advisors, LLC (“Alesco”). Pursuant to the Intercompany Agreement between the Company and Alesco, dated as of November 16, 2007, the Company committed to invest $20.0 million in seed capital into the open and closed end real estate funds that Alesco expects to launch. Additionally, upon achievement of certain earn-out targets, the Company is required to purchase up to an additional 27% interest in Alesco for $15.0 million. The Company is allowed to use $15.0 million of seed capital to fund the earn-out payments. As of December 31, 2008, the Company has invested $500,000 in seed capital into the open and closed end real estate funds that Alesco launched during 2008.

21.   EARNINGS (LOSS) PER SHARE

The Company computes earnings per share in accordance with SFAS No. 128, Earnings Per Share (“SFAS No. 128”). Under the provisions of SFAS No. 128, basic earnings (loss) per share is computed using the weighted-average number of common shares outstanding during the period. Diluted earnings (loss) per share is computed using the weighted-average number of common and common equivalent shares of stock outstanding during the periods utilizing the treasury stock method for stock options and unvested restricted stock.

On December 7, 2007, pursuant to the Merger Agreement (i) each issued and outstanding share of common stock of NNN was automatically converted into 0.88 of a share of common stock of the Company, and (ii) each issued and outstanding stock option of NNN, exercisable for common stock of NNN, was automatically converted into the right to receive stock option exercisable for common stock of the Company based on the same 0.88 share conversion ratio.

Unless otherwise indicated, all pre-merger NNN share data have been adjusted to reflect the 0.88 conversion as a result of the Merger.

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

The following is a reconciliation between weighted-average shares used in the basic and diluted earnings (loss) per share calculations:

	Year Ended December 31,
	2008			2007			2006
(In thousands, except per share amounts)				Restated			Restated
Numerator:
(Loss) income from continuing operations, net of tax	$	(279,492	)	$	26,826		$	20,934
Loss from discontinued operations, net of tax		(51,378	)		(5,754	)		(963	)
Net (loss) income	$	(330,870	)	$	21,072		$	19,971
Denominator:
Denominator for basic earnings (loss) per share:
Weighted-average number of common shares outstanding		63,515			38,652			19,681	(1)
Effect of dilutive securities:
Unvested restricted stock		—	(2)		1	(2)		13	(2)
Denominator for diluted earnings (loss) per share:
Weighted-average number of common and common equivalent
shares outstanding		63,515			38,653			19,694
Basic (loss) earnings per share
(Loss) income from continuing operations, net of tax	$	(4.40	)	$	0.69		$	1.06
Loss from discontinued operations, net of tax		(0.81	)		(0.14	)		(0.05	)
Basic (loss) earnings per share	$	(5.21	)	$	0.55		$	1.01
Diluted (loss) earnings per share
(Loss) income from continuing operations, net of tax	$	(4.40	)	$	0.69		$	1.06
Loss from discontinued operations, net of tax		(0.81	)		(0.14	)		(0.05	)
Diluted (loss) earnings per share	$	(5.21	)	$	0.55		$	1.01

(1)

Shares of NNN’s common stock as December 31, 2007, were converted to the Company’s common shares outstanding by applying December 7, 2007 merger exchange ratio for earnings (loss) per share disclosure purposes.

(2)

Excluded from the calculation of diluted weighted-average common shares were approximately 3.1 million, 2.0 million and 181,000 shares of options and restricted stock that have an anti-dilutive effect when applying the treasury stock method as of December 31, 2008, 2007 and 2006, respectively. In addition, excluded from the calculation of diluted weighted-average common shares as of December 31, 2008 were approximately 5.2 million shares that may be awarded to employees related to the deferred compensation plan. See Note 23 – Employee Benefit Plans for additional information on the deferred compensation plan.

22.   OTHER RELATED PARTY TRANSACTIONS

Offering Costs and Other Expenses Related to Public Non-traded REITs — The Company, through its consolidated subsidiaries Grubb & Ellis Apartment REIT Advisor, LLC, and Grubb & Ellis Healthcare REIT Advisor, LLC, bears certain general and administrative expenses in its capacity as advisor of Apartment REIT and Healthcare REIT, respectively, and is reimbursed for these expenses. However, Apartment REIT and

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

Healthcare REIT will not reimburse the Company for any operating expenses that, in any four consecutive fiscal quarters, exceed the greater of 2.0% of average invested assets (as defined in their respective advisory agreements) or 25.0% of the respective REIT’s net income for such year, unless the board of directors of the respective REITs approve such excess as justified based on unusual or nonrecurring factors. All unreimbursable amounts are expensed by the Company.

The Company also pays for the organizational, offering and related expenses on behalf of Apartment REIT and Healthcare REIT. These organizational, offering and related expenses include all expenses (other than selling commissions and the marketing support fee which generally represent 7.0% and 2.5% of the gross offering proceeds, respectively) to be paid by Apartment REIT and Healthcare REIT in connection with their offerings. These expenses only become the liability of Apartment REIT and Healthcare REIT to the extent selling commissions, the marketing support fee and due diligence expense reimbursements and other organizational and offering expenses do not exceed 11.5% of the gross proceeds of the offering. As of December 31, 2008, the Company has incurred expenses of $3.8 million and $0 in excess of 11.5% of the gross proceeds of the Apartment REIT and Healthcare REIT offerings, respectively. As of December 31, 2008, the Company has recorded an allowance for bad debt of approximately $3.6 million related to the Apartment REIT offering costs incurred as the Company believes that such amounts will not be reimbursed.

Management Fees — The Company provides both transaction and management services to parties, which are related to a principal stockholder and director of the Company (collectively, “Kojaian Companies”). In addition, the Company also pays asset management fees to the Kojaian Companies related to properties the Company manages on their behalf. Revenue, including reimbursable expenses related to salaries, wages and benefits, earned by the Company for services rendered to these affiliates, including joint ventures, officers and directors and their affiliates, was $7.3 million, $530,000, and $0, respectively for the years ended December 31, 2008, 2007 and 2006.

Other Related Party — GERI, which is wholly owned by the Company, owns a 50.0% managing member interest in Grubb & Ellis Apartment REIT Advisor, LLC and, therefore, consolidates Grubb & Ellis Apartment REIT Advisor, LLC. Each of Grubb & Ellis Apartment Management, LLC and ROC REIT Advisors, LLC own a 25.0% equity interest in Grubb & Ellis Apartment REIT Advisor, LLC. As of December 31, 2008, Andrea R. Biller, the Company’s General Counsel, Executive Vice President and Secretary, owned an equity interest of 18.0% of Grubb & Ellis Apartment Management, LLC. As of December 31, 2007, each of Scott D. Peters, the Company’s former Chief Executive Officer and President, and Andrea R. Biller owned an equity interest of 18.0% of Grubb & Ellis Apartment Management, LLC. On August 8, 2008, in accordance with the terms of the operating agreement of Grubb & Ellis Apartment Management, LLC, Grubb & Ellis Apartment Management LLC tendered settlement for the purchase of the 18.0% equity interest in Grubb & Ellis Apartment Management LLC that was previously owned by Mr. Peters. As a consequence, through a wholly-owned subsidiary, the Company’s equity interest in Grubb & Ellis Apartment Management, LLC increased from 64.0% to 82.0% after giving effect to this purchase from Mr. Peters. As of December 31, 2008 and December 31, 2007, Stanley J. Olander, Jr., the Company’s Executive Vice President — Multifamily, owned an equity interest of 33.3% of ROC REIT Advisors, LLC.

GERI owns a 75.0% managing member interest in Grubb & Ellis Healthcare REIT Advisor, LLC and, therefore, consolidates Grubb & Ellis Healthcare REIT Advisor, LLC. Grubb & Ellis Healthcare Management, LLC owns a 25.0% equity interest in Grubb & Ellis Healthcare REIT Advisor, LLC. As of December 31, 2008, each of Ms. Biller and Mr. Hanson, the Company’s Chief Investment Officer and GERI’s President, owned an equity interest of 18.0% of Grubb & Ellis Healthcare Management, LLC. As of December 31, 2007, each of Mr. Peters, Ms. Biller and Mr. Hanson owned an equity interest of 18.0% in Grubb & Ellis Healthcare Management, LLC. On August 8, 2008, in accordance with the terms of the operating agreement of Grubb & Ellis Healthcare Management, LLC, Grubb & Ellis Healthcare Management, LLC tendered settlement for the purchase of 18.0% equity interest in Grubb & Ellis Healthcare Management, LLC that was previously owned

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by Mr. Peters. As a consequence, through a wholly-owned subsidiary, the Company’s equity interest in Grubb & Ellis Healthcare Management, LLC increased from 46.0% to 64.0% after giving effect to this purchase from Mr. Peters.

In connection with his resignation on July 10, 2008, Mr. Peters is no longer a member of Grubb & Ellis Apartment Management, LLC and Grubb & Ellis Healthcare Management, LLC.

Mr. Thompson, as a special member, was entitled to receive up to $175,000 annually in compensation from each of Grubb & Ellis Apartment Management, LLC and Grubb & Ellis Healthcare Management, LLC. Effective February 8, 2008, upon his resignation as Chairman, he was no longer a special member. As part of his resignation, the Company has agreed to continue to pay him up to an aggregate of $569,000 through the initial offering periods related to Apartment REIT, Inc. and Healthcare REIT, Inc., of which $263,000 remains outstanding as of December 31, 2008.

The grants of membership interests in Grubb & Ellis Apartment Management, LLC and Grubb & Ellis Healthcare Management, LLC to certain executives are being accounted for by the Company as a profit sharing arrangement. Compensation expense is recorded by the Company when the likelihood of payment is probable and the amount of such payment is estimable, which generally coincides with Grubb & Ellis Apartment REIT Advisor, LLC and Grubb & Ellis Healthcare REIT Advisor, LLC recording its revenue. Compensation expense related to this profit sharing arrangement associated with Grubb & Ellis Apartment Management, LLC includes distributions of $88,000, $175,000 and $22,000 respectively, earned by Mr. Thompson, $85,000, $159,000 and $50,000, respectively, earned by Mr. Peters and $122,000, $159,000 and $50,000, respectively, earned by Ms. Biller for the years ended December 31, 2008, 2007 and 2006, respectively. Compensation expense related to this profit sharing arrangement associated with Grubb & Ellis Healthcare Management, LLC includes distributions of $175,000 and $175,000, respectively, earned by Mr. Thompson, $387,000 and $414,000, respectively, earned by Mr. Peters and $548,000 and $414,000, respectively, earned by each of Ms. Biller and Mr. Hanson for the years ended December 31, 2008 and 2007, respectively. No distributions were paid in 2006.

As of December 31, 2008 and December 31, 2007, the remaining 82.0% and 64.0%, respectively, equity interest in Grubb & Ellis Apartment Management, LLC and the remaining 64.0% and 46.0%, respectively, equity interest in Grubb & Ellis Healthcare Management, LLC were owned by GERI. Any allocable earnings attributable to GERI’s ownership interests are paid to GERI on a quarterly basis. Grubb & Ellis Apartment Management, LLC incurred expenses of $338,000, $492,000 and $182,000 for the years ended December 31, 2008, 2007 and 2006, respectively, and Grubb & Ellis Healthcare Management, LLC incurred expenses of $1,385,000, $882,000 and $0 for the years ended December 31, 2008, 2007 and 2006, respectively, to Company employees, which was included in compensation expense in the consolidated statement of operations.

Mr. Thompson and Mr. Rogers have agreed to transfer up to 15.0% of the common stock of Realty they own to Mr. Hanson, assuming he remains employed by the Company in equal increments on July 29, 2007, 2008 and 2009. The transfers will be settled with 743,160 shares of the Company’s common stock (557,370 from Mr. Thompson and 185,790 from Mr. Rogers). Because Mr. Thompson and Mr. Rogers were affiliates of NNN at the time of such transfers, NNN and the Company recognized a compensation charge (See Note 23). Mr. Hanson is not entitled to any reimbursement for his tax liability or any gross-up payment.

On September 20, 2006, the Company awarded Mr. Peters a bonus of $2.1 million, which was payable in 178,957 shares of the Company’s common stock, representing a value of $1.3 million and a cash tax gross-up payment of $854,000.

Mr. Peters and Ms. Biller each earned in fiscal 2006 a performance-based bonus of $100,000 from GERI upon the receipt by GERI of net commissions aggregating $5,000,000 or more from the sale of G REIT properties in 2006. The performance based-bonus was paid in March 2007.

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The Company’s directors and officers, as well as officers, managers and employees have purchased, and may continue to purchase, interests in offerings made by the Company’s programs at a discount. The purchase price for these interests reflects the fact that selling commissions and marketing allowances will not be paid in connection with these sales. The net proceeds to the Company from these sales made net of commissions will be substantially the same as the net proceeds received from other sales.

Mr. Thompson has routinely provided personal guarantees to various lending institutions that provided financing for the acquisition of many properties by our programs. These guarantees cover certain covenant payments, environmental and hazardous substance indemnification and any indemnification for any liability arising from the SEC investigation of Triple Net Properties. In connection with the formation transactions, the Company indemnified Mr. Thompson for amounts he may be required to pay under all of these guarantees to which Triple Net Properties, Realty or NNN Capital Corp. is an obligor to the extent such indemnification would not require the Company to book additional liabilities on the Company’s balance sheet.

In September 2007, NNN acquired Cunningham Lending Group LLC (“Cunningham”), a company that was wholly-owned by Mr. Thompson, for $255,000 in cash. Prior to the acquisition, Cunningham made unsecured loans to some of the properties under management by GERI. The loans, which bear interest at rates ranging from 8.0% to 12.0% per annum are reflected in advances to related parties on the Company’s balance sheet and are serviced by the cash flows from the programs. In accordance with FIN No. 46(R), the Company consolidated Cunningham in its financial statements beginning in 2005.

23.   EMPLOYEE BENEFIT PLANS

Stock Incentive Plans

Unless otherwise indicated, all pre-merger NNN share data have been adjusted to reflect the conversion as a result of the Merger (see Note 10).

2006 Omnibus Equity Plan — In September 2006, NNN’s board of directors and then sole stockholder approved and adopted the 2006 Long-Term Incentive Plan (the “2006 Plan”). As a result of the merger of Grubb & Ellis and NNN, all issued and outstanding stock option awards under the 2006 Plan were merged into and are subject to the general provisions of the 2006 Omnibus Equity Plan (the “Omnibus Plan”). Awards previously issued pursuant to the 2006 Plan maintain all of the specific rights and characteristics as they held when originally issued, except for the number of shares represented within each award. The numbers of shares contained in awards issued under the 2006 Plan have been multiplied by a conversion factor of 0.88 to calculate a post-merger equivalent share amount for each award. In addition, the exercise price of any option award originally granted under the 2006 Plan has been divided by the same conversion factor of 0.88 to achieve a post-merger equivalent exercise price. All tables contained within this Note 23 of Notes to Consolidated Financial Statements have been retroactively restated to reflect the above conversion factors, effective as if the conversion had been calculated as of January 1, 2006, the earliest date presented.

A total of 2,055,375 shares of common stock (plus restricted shares issuable to outside directors pursuant to a formula contained in the plan) remained eligible for future grant under the Omnibus Plan as of December 31, 2008.

Non-Qualified Stock Options.  Non-qualified stock options, or NQSOs, provide for the right to purchase shares of common stock at a specified price not less than its fair market value on the date of grant, and usually will become exercisable (in the discretion of the administrator) in one or more installments after the grant date, subject to the completion of the applicable vesting service period or the attainment of pre-established performance goals.

In terms of vesting periods, 1,105,219 stock options were granted and vested at the date of merger. Other stock options granted during the year ended December 31, 2007 vest in equal annual increments over the three

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years following the date of grant. Of the stock options granted during the year ended December 31, 2006, 60,133 options were exercisable on the date of grant. The remaining options vest in equal annual increments over the two years following the date of grant.

These NQSOs are subject to a maximum term of ten years from the date of grant and are subject to earlier termination under certain conditions. Because these stock option awards were granted to the Company’s senior executive officers, no forfeiture rate has been assumed.

The following table provides a summary of the Company’s stock option activity:

						Weighted-Average
						Remaining		Weighted-Average
				Weighted-Average		Contractual		Grant Date
	Number of			Exercise Price		Term		Fair Value
	Shares			per Share		(In Years)		per Share
Options outstanding as of January 1, 2006		—
Options granted		180,400		$	11.36			$	4.16
Options exercised		—
Options forfeited or expired		—
Options outstanding as of December 31, 2006		180,400		$	11.36		9.87	$	4.16
Options granted		610,940		$	11.36			$	3.61
Options exercised		—
Options forfeited or expired		(140,800	)	$	11.36			$	3.78
Options converted and vested related to acquired company		1,105,219		$	7.06			$	3.60
Options outstanding as of December 31, 2007		1,755,759		$	8.65		6.14	$	3.65
Options granted		—
Options exercised		(76,666	)	$	6.53			$	4.23
Options forfeited or expired		(601,918	)	$	10.74			$	2.12
Options outstanding as of December 31, 2008		1,077,175		$	7.76		6.79	$	4.51
Options vested and exercisable as of December 31, 2008		820,797		$	6.63		6.39	$	4.79
Options expected to vest as of December 31, 2008		256,378		$	11.36		8.06	$	3.61
Options vested and expected to vest as of December 31, 2008		1,077,175		$	7.76		6.79	$	4.51

SFAS No. 123R requires companies to estimate the fair value of its stock option equity awards on the date of grant using an option-pricing model. The Company uses the Black-Scholes option-pricing model. The determination of the fair value of option-based awards using the Black-Scholes model incorporates various assumptions including exercise price, fair value at date of grant, volatility, and expected life of awards, risk-free interest rates and expected dividend yield. The expected volatility is based on the historical volatility of comparable publicly traded companies in the real estate sector over the most recent period commensurate with the estimated expected life of the Company’s stock options. The expected life of the Company’s stock options represents the average between the vesting and contractual term, pursuant to Staff Accounting Bulletin (“SAB”) No. 107. The fair value of each option grant is estimated on the date of grant using the Black-Scholes option-pricing model with the following weighted-average assumptions used for grants during the

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years ended December 31, 2007 and 2006. (The Company did not grant any options during the year ended December 31, 2008):

	Year Ended December 31,
	2007			2006
Exercise price	$	8.59		$	11.36
Expected term (in years)		5.0			6.0
Risk-free interest rate		3.97	%		4.67	%
Expected volatility		81.79	%		43.94	%
Expected dividend yield		4.1	%		4.1	%
Fair value at date of grant	$	3.45		$	3.66

Option valuation models require the input of subjective assumptions including the expected stock price volatility and expected life. For the years ended December 31, 2008, 2007 and 2006, the Company recognized stock-based compensation related to stock option awards of $554,000, $619,000 and $281,000, respectively. The related income tax benefit for the years ended December 31, 2008, 2007 and 2006 was $209,000, $248,000 and $110,000, respectively. The total fair value of stock options that vested for the years ended December 31, 2008, 2007 and 2006 was $774,000, $189,000 and $250,000, respectively. As of December 31, 2008, there was $491,000 in unrecognized compensation expense related to stock option awards that the Company expects to recognize over a weighted average period of 13 months.

Restricted Stock.  Restricted stock may be issued at such price, if any, and may be made subject to such restrictions (including time vesting or satisfaction of performance goals), as may be determined by the administrator. Restricted stock typically may be repurchased by the Company at the original purchase price, if any, or forfeited, if the vesting conditions and other restrictions are not met.

For the years ended December 31, 2008 and 2007, the Company granted restricted stock awards of 1,552,227 shares and 1,449,372 shares, respectively. Total compensation expense recognized for restricted stock awards was $7.8 million, $5.5 million, and $1.7 million for the years ended December 31, 2008, 2007 and 2006, respectively. The related income tax benefit for the years ended December 31, 2008, 2007 and 2006 was $2.9 million, $2.2 million, and $681,000, respectively. As of December 31, 2008, there was $6.9 million of unrecognized compensation expense related to unvested restricted stock awards that the Company expects to recognize over a weighted average period of 18 months.

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The following table provides a summary of the Company’s restricted stock activity:

				Weighted-Average
				Grant Date
	Number of			Fair Value
	Shares			per Share
Non vested shares outstanding as of January 1, 2006		—
Shares issued		541,200		$	10.83
Shares vested		—
Shares forfeited		—
Non vested shares outstanding as of December 31, 2006		541,200		$	10.83
Shares issued upon merger		40,000		$	12.49
Shares issued		1,409,372		$	10.31
Shares vested		(456,133	)	$	10.78
Shares forfeited		(102,667	)	$	10.89
Non vested shares outstanding as of December 31, 2007		1,431,772		$	10.37
Shares issued		1,552,227		$	3.06
Shares vested		(455,195	)	$	10.65
Shares forfeited		(514,792	)	$	9.79
Non vested shares outstanding as of December 31, 2008		2,014,012		$	4.95

Employment Agreements.  In October 2006, the Company entered into employment agreements with each of Mr. Peters, Mr. Rogers, Ms. Biller, Francene LaPoint, the Company’s Former Executive Vice President, Accounting and Finance, Mr. Hanson and Mr. Hull. These agreements provide that each of these executives agree to devote substantially all of his or her full working time to NNN’s business. The agreements have a term of three years, and provide for an annual base salary and bonus targets under the performance bonus program. Additional benefits include health benefits and other fringe benefits as the board or compensation committee determines. Mr. Hanson’s employment agreement further provides for a special bonus based on his ability to procure new sources of equity, and Mr. Peters’ new employment arrangement with the combined company provides for a $1.0 million payment for a second residence in California following the close of the Merger and the purchase of a second residence. In January, 2008, Mr. Peters irrevocably waived his right to receive the $1.0 million payment for a second residence in California. Effective July 10, 2008, Mr. Peters resigned as Chief Executive Officer and President of the Company. Effective October 3, 2008, Ms. LaPoint resigned as Executive Vice President, Accounting and Finance of the Company.

Other stock award.  On September 20, 2006, the Company awarded Mr. Peters a bonus of $2.1 million, which was payable in 178,083 shares of the Company’s common stock for a value of $1.3 million, and cash of $854,000.

Other Equity Awards — In accordance with SFAS No. 123R, share-based payments awarded to an employee of the reporting entity by a related party, or other holder of an economic interest in the entity, as compensation for services provided to the entity are share-based payment transactions to be accounted for under this Statement unless the transfer is clearly for a purpose other than compensation for services to the reporting entity. The economic interest holder is one who either owns 10.0% or more of an entity’s common stock or has the ability, directly or indirectly, to control or significantly influence the entity. The substance of such a transaction is that the economic interest holder makes a capital contribution to the reporting entity, and that entity makes a share-based payment to its employee in exchange for services rendered. SFAS No. 123R also requires that the fair value of unvested stock options or awards granted by an acquirer in exchange for stock options or awards held by employees of the acquiree shall be determined at the consummation date of

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the acquisition. The incremental compensation cost shall be (1) the portion of the grant-date fair value of the original award for which the requisite service is expected to be rendered (or has already been rendered) at that date plus (2) the incremental cost resulting from the acquisition (the fair market value at the consummation date of the acquisition over the fair value of the original grant).

On July 29, 2006, Mr. Thompson and Mr. Rogers agreed to transfer up to 15.0% of the outstanding common stock of Realty to Mr. Hanson, assuming he remained employed by the Company, in equal increments on July 29, 2007, 2008 and 2009. Due to the acquisition of Realty, the transfers were settled with 743,160 shares of the Company’s common stock (557,370 shares from Mr. Thompson and 185,790 shares from Mr. Rogers). Since Mr. Thompson and Mr. Rogers were affiliates who owned more than 10.0% of Realty’s common stock and had the ability, directly or indirectly, to control or significantly influence the entity, and the award was granted to Mr. Hanson in exchange for services provided to Realty which are vested upon completion of the respective service period, the fair value of the award was accounted for as stock-based compensation in accordance with SFAS No. 123R. These shares included rights to dividends or other distributions declared on or prior to July 29, 2009. As a result, the Company recognized $2.8 million, $2.7 million, and $333,000 in stock-based compensation and a related income tax benefit (deferred tax asset) of $1.1 million, $1.1 million and $130,000 for the years ended December 31, 2008, 2007 and 2006, respectively. As of December 31, 2008, there was $1.6 million of unrecognized stock-based compensation related to the unvested portion of the award that the Company expects to recognize in 2009.

On December 7, 2007, Mr. Thompson transferred 528,000 shares of his own Company common stock to Mr. Peters, which were to vest in equal annual increments over the five years following the date of grant. Since Mr. Thompson was an affiliate who owned more than 10.0% of the Company’s common stock and had the ability, directly or indirectly, to control or significantly influence the entity, and the award was granted to Mr. Peters in exchange for services provided to the Company which are vested upon completion of the respective service period, the fair value of the award was accounted for as stock-based compensation in accordance with SFAS No. 123R. These shares included rights to dividends or other distributions declared. As a result, the Company recognized $48,000 in stock-based compensation and a related income tax benefit (deferred tax asset) of $19,000 for the year ended December 31, 2007.

On July 10, 2008, Scott D. Peters resigned as the Company’s Chief Executive Officer and President, and as a consequence, the employment agreement between the Company and Mr. Peters was terminated in accordance with its terms. As such, previously recognized stock-based compensation expense related to the transfer of shares, including accrued dividends or distributions declared, were reversed, along with forfeiture of all rights and interests. Additionally, there will be no further recognition of stock-based compensation related to the unvested portion of the award.

401k Plan — The Company adopted a 401(k) plan (the “Plan”) for the benefit of its employees. The Plan covers employees of the Company and eligibility begins the first of the month following the hire date. For the years ended December 31, 2008, 2007 and 2006, the Company contributed $3.3 million, $817,000, and $525,000 to the Plan, respectively.

Deferred Compensation Plan

During 2008, the Company implemented a deferred compensation plan that permits employees and independent contractors to defer portions of their compensation, subject to annual deferral limits, and have it credited to one or more investment options in the plan. Deferrals made by employees and independent contractors and earnings thereon are fully accrued and held in a rabbi trust. In addition, the Company may make discretionary contributions to the plan which vest over one to five years. Contributions made by the Company and earnings thereon are accrued over the vesting period and have not been funded to date. Benefits are paid according to elections made by the participants. Included in Other Long Term Liabilities as of December 31, 2008 is $1.7 million reflecting the non-stock liability under this plan. The Company has

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purchased whole-life insurance contracts on certain employee participants to recover distributions made or to be made under this plan and have recorded the cash surrender value of the policies of $1.1 million in Other Noncurrent Assets.

In addition, the Company may award “phantom” shares of Company stock to participants under the deferred compensation plan. These awards vest over three to five years. Vested phantom stock awards are also unfunded and paid according to distribution elections made by the participants at the time of vesting and will be settled by the Company purchasing shares of Company common stock in the open market from time to time and delivering such shares to the participant. During 2008, the Company granted an aggregate of 5.4 million phantom shares to various employees under this plan, of which 5.2 million phantom shares were outstanding as of December 31, 2008. The Company recorded stock compensation expense of $3.1 million for the year ended December 31, 2008 related to certain of these grants which provided for a minimum guaranteed value upon vesting.

24.   INCOME TAXES

The components of income tax (benefit) provision from continuing operations for the years ended December 31, 2008, 2007 and 2006 consisted of the following:

	Year Ended December 31,
(In thousands)	2008			2007			2006
Current:					Restated			Restated
Federal	$	(10,981	)	$	16,991		$	375
State		(1,890	)		3,195			331
		(12,871	)		20,186			706
Deferred:
Federal		33,175			(1,943	)		(6,766	)
State		(3,414	)		(125	)		(1,381	)
		29,761			(2,068	)		(8,147	)
	$	16,890		$	18,118		$	(7,441	)

The Company recorded prepaid taxes totaling approximately of $1.2 million and $2.4 million as of December 31, 2008 and 2007, respectively, comprised primarily of state tax refund receivables and state prepaid tax estimates. The Company also received net federal and state tax refunds of approximately $6.2 million and $300,000 during 2008 and 2007, respectively, comprised primarily of refunds of estimated overpayments and net operating loss carryback claims resulting in refunds of taxes paid in previous years.

The Company generated a federal net operating loss (“NOL”) of approximately $9.5 million for the taxable period of the acquired entity ending on the Merger date December 7, 2007. The Company carried back $6.6 million of this NOL to 2006 and claimed a refund of taxes paid of $1.7 million. As of December 31, 2008, federal net operating loss carryforwards were available to the Company in the amount of approximately $2.2 million, translating to a deferred tax asset before valuation allowance of $800,000, which will begin to expire in 2027. The remaining NOL carryforward is subject to an annual limitation under IRC section 382 because the Merger caused a change of ownership of the Company of greater than 50.0%. The annual limitation is approximately $7.3 million. Prior to the issuance of the Company’s December 31, 2008 Annual Report, the Company filed its 2008 federal income tax return claiming an ordinary loss of $29.2 million. The Company carried back this NOL to 2006 and 2007 and claimed and received a refund of taxes paid of $10.3 million.

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The Company also had state net operating loss carryforwards from previous periods totaling $74.5 million, translating to a deferred tax asset of $6.1 million before valuation allowances, which will begin to expire in 2017. The current increase in deferred assets related to state net operating losses has been offset by an increase in the valuation allowances of $2.4 million as the future utilization of these state NOLs is uncertain. The additional increase in deferred tax assets of $2.2 million related to current year estimated state net operating losses has been offset by the same increase in the valuation allowance.

The Company regularly reviews its deferred tax assets for recoverability and establishes a valuation allowance based upon historical taxable income, projected future taxable income and the expected timing of the reversals of existing temporary differences to reduce its deferred assets to the amount that it believes is more likely than not to be realized. Due to the cumulative pre-tax book loss in the past three years and the inherent volatility of the business in recent years, the Company believes that this negative evidence supports the position that a valuation allowance is required pursuant to paragraphs 20-25 of SFAS 109. As of December 31, 2008, there is approximately $6.2 million of taxable income available in carryback years that could be used to offset deductible temporary differences. Management determined that as of December 31, 2008, $55.2 million of deferred tax assets do not satisfy the recognition criteria set forth in SFAS No. 109. Accordingly, a valuation allowance has been recorded for this amount. If released, the entire amount would result in a benefit to continuing operations. During the year ended December 31, 2008, our valuation allowances increased by approximately $52.1 million. Of the $52.1 million increase, $2.4 million was charged against Goodwill due to state return to provision true-ups of the pre-merger returns.

The differences between the total income tax (benefit) provision of the Company for financial statement purposes and the income taxes computed using the applicable federal income tax rate of 35.0% for 2008 and 2007, and 34% for 2006 were as follows:

	Year Ended December 31,
	2008			2007			2006
(In thousands)				Restated			Restated
Federal income taxes at the statutory rate	$	(91,913	)	$	15,736		$	3,769
Income of properties not subject to corporate income tax(1)		—			—			(4,905	)
Tax benefit of change in tax status		—			—			(6,086	)
State income taxes, net of federal benefit		(3,525	)		2,344			(51	)
Credits		(236	)		(250	)		—
Other		(235	)		(251	)		—
Non-taxable income		—						(238	)
Non-deductible expenses		63,122			460			70
Change in valuation allowance		49,677			79			—
Provision (benefit) for income taxes	$	16,890		$	18,118		$	(7,441	)

(1) Represents Grubb & Ellis Realty Investors, LLC income for the period January 1, 2006 through November 15, 2006.

Deferred income taxes reflect the net tax effects of temporary differences between the carrying amounts of assets and liabilities for financial reporting and income tax purposes. The significant components of deferred

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GRUBB & ELLIS COMPANY

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

tax assets and liabilities as of December 31, 2008 and 2007 from continuing and discontinued operations consisted of the following:

(In thousands)	December 31, 2008			December 31, 2007
				Restated
Stock compensation	$	953		$	968
Accrued expenses		3,446			3,096
Severance accrual		1,160			1,986
Allowance for bad debts		3,764			1,745
Deferred revenue		122			1,750
Workers compensation reserves		689			703
Net operating losses		—			2,559
Other		870			535
Less valuation allowance		(8,363	)		(1,561	)
Current deferred tax assets:		2,641			11,781
Intangible assets		(2,569	)		(2,532	)
Prepaid service contracts		(1,055	)		(1,076	)
Other		(1,097	)		(182	)
Current deferred tax liabilities:		(4,721	)		(3,790	)
Net current deferred tax assets (liabilities)	$	(2,080	)	$	7,991
Stock compensation	$	4,720		$	2,616
Capitalized cost of member redemption		461			935
Property and equipment		3,523			2,568
Legal reserve		1,449			2,067
Real estate impairments		40,139			—
Other		5,099			3,653
Capital losses		2,528			—
Net operating losses		9,200			4,125
Less valuation allowance		(46,841	)		(1,542	)
Noncurrent deferred tax assets		20,278			14,422
Intangible assets		(38,470	)		(43,693	)
Other		894			(644	)
Noncurrent deferred tax liabilities		(37,576	)		(44,337	)
Net noncurrent deferred tax liabilities	$	(17,298	)	$	(29,915	)
Net deferred tax liabilities:	$	(19,378	)	$	(21,924	)

The Company classified estimated interest and penalties related to unrecognized tax benefits in our provision for income taxes. As of December 31, 2008, the Company remains subject to examination by certain tax jurisdictions for the tax years ended December 31, 2004 through 2008. There were no significant changes in the accrued liability related to uncertain tax positions during the year ended December 31, 2008, nor does the Company anticipate significant changes during the next 12-month period.

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25.   SELECTED QUARTERLY FINANCIAL DATA (unaudited)

	Fiscal Year 2008
	Quarter Ended
	As Reported(1)			As Restated			As Reported(1)			As Restated
	March 31, 2008			March 31, 2008			June 30, 2008			June 30, 2008
(In thousands, except per share amounts)
Total revenue	$	151,086		$	150,368		$	156,678		$	156,233
Operating loss	$	(2,724	)	$	(3,442	)	$	(376	)	$	(821	)
Net loss to common stockholders	$	(5,868	)	$	(6,298	)	$	(5,114	)	$	(5,380	)
Loss per common share:
Basic —	$	(0.09	)	$	(0.10	)	$	(0.08	)	$	(0.08	)
Weighted average common shares outstanding		63,521			63,521			63,600			63,600
Diluted —	$	(0.09	)	$	(0.10	)	$	(0.08	)	$	(0.08	)
Weighted average common shares outstanding		63,521			63,521			63,600			63,600

	Fiscal Year 2008
	Quarter Ended
	As Reported(1)			As Restated
	September 30, 2008			September 30, 2008			December 31, 2008
(In thousands, except per share amounts)
Total revenue	$	150,110		$	149,192		$	156,028
Operating loss	$	(20,489	)	$	(33,121	)	$	(218,070	)
Net loss to common stockholders	$	(44,016	)	$	(56,282	)	$	(262,910	)
Loss per common share:
Basic —	$	(0.69	)	$	(0.88	)	$	(4.15	)
Weighted average common shares outstanding		63,601			63,601			63,388
Diluted —	$	(0.69	)	$	(0.88	)	$	(4.15	)
Weighted average common shares outstanding		63,601			63,601			63,388

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

	Fiscal Year 2007
	Quarter Ended
			As Restated		As Reported(1)		As Restated
	As Reported(1) March 31, 2007		March 31, 2007		June 30, 2007		June 30, 2007
(In thousands, except per share amounts)
Total revenue	$	31,616	$	32,641	$	43,258	$	42,197
Operating income	$	5,308	$	6,333	$	17,771	$	16,710
Net income to common stockholders	$	3,637	$	4,252	$	10,234	$	9,597
Income per common share:
Basic —	$	0.10	$	0.12	$	0.24	$	0.23
Weighted average common shares outstanding		36,910		36,910		41,943		41,943
Diluted —	$	0.10	$	0.12	$	0.24	$	0.23
Weighted average common shares outstanding		36,949		36,949		42,056		42,056

	Fiscal Year 2007
	Quarter Ended
	As Reported(1)		As Restated		As Reported(1)		As Restated
	September 30, 2007		September 30, 2007		December 31, 2007		December 31, 2007
(In thousands, except per share amounts)
Total revenue	$	46,158	$	46,763	$	96,522	$	96,336
Operating income	$	9,610	$	10,215	$	9,277	$	9,091
Net income to common stockholders	$	4,053	$	4,416	$	2,918	$	2,807
Income per common share:
Basic —	$	0.10	$	0.11	$	0.07	$	0.06
Weighted average common shares outstanding		41,943		41,943		43,821		43,821
Diluted —	$	0.10	$	0.10	$	0.07	$	0.06
Weighted average common shares outstanding		42,127		42,127		43,826		43,826

(1) Amounts presented “as reported” have been reclassified to conform to current year presentation. See discussion of reclassifications in note 2.

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Item 9.   Changes in and Disagreements with Accountants on Accounting and Financial Disclosure.

None.

Item 9A.   Controls and Procedures.

Restatement

As discussed in the Form 8-K filed March 17, 2009 and elsewhere in this Annual Report on Form 10-K (“2008 Form 10-K”), management has restated (1) its audited financial statements for each of the fiscal years ended December 31, 2006 and December 31, 2007; (2) the unaudited interim financial statements for each of the quarterly periods ended March 31, 2008 and 2007, June 30, 2008 and 2007 and September 30, 2008 and 2007 and December 31, 2007; and (3) selected financial data for the fiscal years ended December 31, 2004, 2005, 2006 and 2007 in the 2008 Form 10-K. The determination to restate this previously issued financial information was made as a result of management’s identification of certain letter agreements entered into by NNN Realty Advisors (“NNN”) with respect to certain tenant-in-common investment programs sponsored by NNN prior to the merger of NNN with Grubb & Ellis in December 2007 (“the Merger”). While evaluating these letter agreements as well as other TIC Programs and master lease arrangements, management determined that revenue with respect to certain tenant-in-common investment programs and master lease arrangements was recognized in 2004, 2005 and 2006 prior to completing the revenue recognition criteria required by generally accepted accounting principles. Additionally, the results of operations of certain entities to which these letter agreements referred should have been consolidated into the Company’s financial statements.

Evaluation of disclosure controls and procedures

The Company maintains disclosure controls and procedures that are designed to ensure that information required to be disclosed in our reports pursuant to the Securities Exchange Act of 1934, as amended, or the Exchange Act, is recorded, processed, summarized and reported within the time periods specified in the SEC rules and regulations, and that such information is accumulated and communicated to management, including our Interim Chief Executive Officer and Chief Financial Officer, as appropriate, to allow timely decisions regarding required disclosure. In designing and evaluating the disclosure controls and procedures, management recognizes that any controls and procedures, no matter how well designed and operated, can provide only reasonable assurance of achieving the desired control objectives, as the Company’s are designed to do, and management necessarily was required to apply its judgment in evaluating whether the benefits of the controls and procedures that the Company adopts outweigh their costs.

In connection with the restatement discussed above, management of the Company, including our Interim Chief Executive Officer and our Chief Financial Officer reevaluated the effectiveness of our disclosure controls and procedures both prior and subsequent to the Merger and pursuant to SEC Rule 13a-15(e) and 15d-15(e) under the Exchange Act. As a result of this reevaluation, management has determined that the control deficiencies discussed below constituted a material weakness in the system of internal control prior to the Merger that was not adequately remediated as of December 31, 2008. Therefore, management, including our Interim Chief Executive Officer and our Chief Financial Officer have now concluded that our disclosure controls and procedures were not effective as of December 31, 2008.

The Company’s management nevertheless has concluded, after completion of a special investigation approved by the Board of Directors and conducted by outside counsel to determine the population of letter agreements and the tenant-in-common investment programs, that the consolidated financial statements included in this 2008 Form 10-K are fairly stated, in accordance with accounting principles generally accepted in the United States of America. Based in part on these additional efforts, our Interim Chief Executive Officer and Chief Financial Officer have included their certifications as exhibits to this 2008 Form 10-K.

Material Weaknesses in Internal Control Over Financial Reporting

A material weakness is a deficiency, or a combination of deficiencies in internal control over financial reporting, that creates a more than remote likelihood that a material misstatement of interim or annual

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financial statements will not be prevented or detected on a timely basis. Management has concluded that the following material weakness existed at December 31, 2008.

•  Several internal controls were not operating effectively and therefore failed to identify, adequately disclose and appropriately account for the letter agreements and master lease arrangements and revenue recognition relating to tenant-in-common investment programs and master lease arrangements entered into by NNN prior to the Merger.

•  The Company did not maintain internal controls relating to properly evaluating the revenue recognition relating to a number of tenant-in-common investment programs.

As noted below, certain remediation activities were implemented during the second half of 2008, including a change in senior management and restructuring of the accounting and finance function. Additional enhancements to the control environment are planned for 2009 to ensure that controls related to these material weaknesses are strengthened and will operate effectively.

Management’s Report on Internal Control over Financial Reporting

Management recognizes its responsibility for establishing and maintaining adequate internal control over financial reporting and has designed internal controls and procedures to provide reasonable assurance regarding the reliability of financial reporting and the preparation of consolidated financial statements and related notes in accordance with generally accepted accounting principles in the United States of America. Management assessed the effectiveness of the Company’s internal control over financial reporting as of December 31, 2008. In making this assessment, management used the criteria set forth by the Committee of Sponsoring Organizations of the Treadway Commission (“COSO”) in Internal Control-Integrated Framework. Based on that assessment, our management concluded that solely as a result of the material weaknesses in internal control as described above, the Company did not maintain effective internal control over financial reporting as of December 31, 2008.

Ernst & Young LLP has issued an opinion on the effectiveness of the Company’s internal control over financial reporting as of December 31, 2008, based on COSO criteria. This report appears under “Report of Independent Registered Public Accounting Firm” on the following page.

Management’s Remediation Initiatives

The Company’s management is committed to continuing efforts aimed at improving the design adequacy and operational effectiveness of its system of internal control and is taking all necessary steps to address the material weaknesses identified above. The Company has taken the following measures to strengthen the control environment:

•  Restructured the Finance and Accounting functions and engaged additional resources with the appropriate depth of experience for our Finance and Accounting departments

•  Updated accounting policies and procedures to ensure that accounting personnel have sufficient guidance to remediate previously communicated weaknesses and to appropriately account for transactions

Additional remediation activities that will continue through 2009 include:

•  Implementing a required legal and accounting review prior to execution of investor agreements

•  Enhancing executive and senior management certifications to specifically address knowledge of side agreements, related party transactions, incidents of fraud, and to acknowledge compliance with the Company’s Code of Business Conduct and Ethics

•  Implementing a management training program that addresses acceptable transactions and authorization requirements

We anticipate the actions described above and resulting improvement in controls will generally strengthen our disclosure controls and procedures, as well as our internal control over financial reporting, and will, over

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time, address the material weakness that we identified in our internal control over financial reporting as of December 31, 2008. However, because many of the remedial actions we have undertaken are very recent and because they relate, in part, to the hiring of additional personnel and many of the controls in our system of internal controls rely extensively on manual review and approval, the successful operation of these controls for, at least, several fiscal quarters may be required prior to management being able to conclude that the material weakness has been eliminated. These actions are reasonably likely to materially affect our internal control over financial reporting.

Changes in Internal Control over Financial Reporting

Management has evaluated, with the participation of our Interim Chief Executive Officer and Chief Financial Officer, whether any changes in our internal control over financial reporting that occurred during our last fiscal quarter have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

During fiscal year 2008, we continued our remediation with respect to our previously disclosed material weakness related to stock based compensation as well as remediation efforts related to the material weakness discussed above. There were no specific actions during the fourth fiscal quarter of 2008 which materially affected, or are reasonably likely to materially affect, the Company’s internal control over financial reporting other than those outlined above as remediation initiatives.

Item 9B.   Other Information

None.

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REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

The Board of Directors and Shareholders of Grubb & Ellis Company

We have audited Grubb & Ellis Company’s internal control over financial reporting as of December 31, 2008, based on criteria established in Internal Control — Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission (the COSO criteria). Grubb & Ellis Company’s management is responsible for maintaining effective internal control over financial reporting, and for its assessment of the effectiveness of internal control over financial reporting included in the accompanying Management’s Report on Internal Control over Financial Reporting. Our responsibility is to express an opinion on the company’s internal control over financial reporting based on our audit.

We conducted our audit in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether effective internal control over financial reporting was maintained in all material respects. Our audit included obtaining an understanding of internal control over financial reporting, assessing the risk that a material weakness exists, testing and evaluating the design and operating effectiveness of internal control based on the assessed risk, and performing such other procedures as we considered necessary in the circumstances. We believe that our audit provides a reasonable basis for our opinion.

A company’s internal control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles. A company’s internal control over financial reporting includes those policies and procedures that (1) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the company; (2) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and that receipts and expenditures of the company are being made only in accordance with authorizations of management and directors of the company; and (3) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use, or disposition of the company’s assets that could have a material effect on the financial statements.

Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.

A material weakness is a deficiency, or combination of deficiencies, in internal control over financial reporting, such that there is a reasonable possibility that a material misstatement of the company’s annual or interim financial statements will not be prevented or detected on a timely basis. The following material weaknesses have been identified and included in management’s assessment. Management has identified a material weakness in controls that were not operating effectively and therefore failed to identify, adequately disclose and appropriately account for letter agreements relating to tenant-in-common investment programs entered into by NNN Realty Advisors, Inc. prior to the merger. Management also identified a material weakness in controls that were not operating effectively and failed to properly evaluate the revenue recognition relating to a number of other tenancy-in-common investment programs. These material weaknesses were considered in determining the nature, timing, and extent of audit tests applied in our audit of the 2008 financial statements, and this report does not affect our report dated May 27, 2009 on those financial statements.

In our opinion, because of the effect of the material weaknesses described above on the achievement of the objectives of the control criteria, Grubb & Ellis Company has not maintained effective internal control over financial reporting as of December 31, 2008, based on the COSO criteria.

/s/  Ernst & Young LLP

Irvine, California

May 27, 2009

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GRUBB & ELLIS COMPANY

PART III

Item 10.   Directors, Executive Officers and Corporate Governance.

Information about the Directors

The Company’s Board is comprised of three Classes of directors. The term of office of each Class A director extends until the annual meeting of Company stockholders in 2011 and until his successor is elected and qualified. The term of office of each Class B director extends until the annual meeting of Company stockholders in 2009 and until his successor is elected and qualified. The term of office of each Class C director extends until the annual meeting of Company stockholders in 2010 and until his successor is elected and qualified. Thereafter, the term of each Class shall be three years from the applicable annual meeting.

Class A directors
Harold H. Greene	70, has served as a director of the Company since December 2007. Mr. Greene also served as a director of NNN from November 2006 to December 2007. Mr. Greene is a 40-year veteran of the commercial and residential real estate lending industry. He most recently served as the Managing Director for Bank of America’s California Commercial Real Estate Division from 1998 to his retirement in 2001, where he was responsible for lending to commercial real estate developers in California and managed an investment portfolio of approximately $2.6 billion. From 1990 to 1998, Mr. Greene was the Executive Vice President of SeaFirst Bank in Seattle, Washington and prior to that he served as the Vice Chairman of MetroBank from 1989 to 1990 and in various positions, including Senior Vice President in charge of the Asset Based Finance Group, with Union Bank, where he worked for 27 years. Mr. Greene currently serves as a director of Gary’s and Company (men’s clothing retailer), as a director and member of the audit committee of Paladin Realty Income Properties, Inc., and as a director and member of the audit, compensation and nominating and corporate governance committees of William Lyon Homes.
Devin I. Murphy	49, has served as a director of the Company since July 2008. He is a Managing Partner of Coventry Real Estate Advisors, LLC, a real estate private equity firm which sponsors opportunistic institutional investment funds that acquire and develop retail and mixed-used properties. Prior to joining Coventry Real Estate Advisors, LLC in 2008, Mr. Murphy was the Global Head of Real Estate Investment Banking at Deutsche Bank Securities, Inc. from 2004 to 2007. From 1993 through 2007, he was with Morgan Stanley & Company in a variety of real estate and investment banking roles, including Co-Head North American Real Estate Investment Banking and Global Head of the firm’s Real Estate Private Capital Markets Group. Mr. Murphy also served on the investment committee of the Morgan Stanley Real Estate funds for 10 years during which time these funds invested over $35 billion.
D. Fleet Wallace	41, has served as a director of the Company since December 2007. Mr. Wallace also served as a director of NNN from November 2006 to December 2007. Mr. Wallace is a principal and co-founder of McCann Realty Partners, LLC, an apartment investment

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	company focusing on garden apartment properties in the Southeast formed in 2004. From April 1998 to August 2001, Mr. Wallace served as corporate counsel and assistant secretary of United Dominion Realty Trust, Inc., a publicly-traded real estate investment trust. From September 1994 to April 1998, Mr. Wallace was in the private practice of law with McGuire Woods in Richmond, Virginia. Mr. Wallace has also served as a Trustee of G REIT Liquidating Trust since January 2008.
Class B directors
Robert J. McLaughlin	76, has served as a director of the Company since July 2004. Mr. McLaughlin previously served as a director of the Company from September 1994 to March 2001. He founded The Sutter Group in 1982, a management consulting company that focuses on enhancing shareholder value, and currently serves as its President. Previously, Mr. McLaughlin served as President and Chief Executive Officer of Tru-Circle Corporation, an aerospace subcontractor, from November 2003 to April 2004, and as Chairman of the Board of Directors from August 2001 to February 2003, and as Chairman and Chief Executive Officer from October 2001 to April 2002 of Imperial Sugar Company.
Gary H. Hunt	60, has served as a director of the Company since December 2007 and as the Company’s Interim Chief Executive Officer since July 2008. Mr. Hunt also served as a director of NNN from November 2006 to December 2007. Mr. Hunt has served as the managing partner of California Strategies, LLC, a privately held consulting firm in Irvine, California that works with large homebuilders, real estate companies and government entities since 2001. Prior to serving with California Strategies, Mr. Hunt was the executive vice president and served on the board of directors and on the Executive Committee of the Board of The Irvine Company, a 110-year-old privately held company that plans, develops and invests in real estate primarily in Orange County, California for 25 years. He also serves on the board of directors of Glenair Inc. and William Lyon Homes. Mr. Hunt has also served as a Trustee of G REIT Liquidating Trust since January 2008.
Glenn L. Carpenter	66, has served as a director of the Company since December 2007 and served as Chairman of the Board of the Company from February 2008 until he voluntarily stepped down as Chairman in January 2009. Mr. Carpenter also served as a director of NNN from November 2006 to December 2007. Since August 2001, Mr. Carpenter has served as the Chief Executive Officer, President and Chairman of FountainGlen Properties, LP, a privately held company in Newport Beach, California, that develops, owns and operates apartment communities for active seniors. Prior to serving with FountainGlen, from 1994 to 2001, Mr. Carpenter was the Chief Executive Officer and founder of Pacific Gulf Properties Inc., a publicly traded REIT that developed and operated industrial business parks and various types of apartment communities. From 1970 to 1994, Mr. Carpenter served as Chief Executive Officer and President, and other officer positions of Santa Anita Realty Enterprises Inc., a publicly traded REIT that owned and managed

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	industrial office buildings, apartments and shopping centers. He has received numerous honors in the real estate field including the 2000 Real Estate Man of the Year Award and was voted the 1999 Orange County Entrepreneur of the Year for real estate. Mr. Carpenter sits on the board of councilors of the School of Gerontology at the University of Southern California and is a council and executive board member of the American Seniors Housing Association.
Class C directors
C. Michael Kojaian	47, has served as a director of the Company since December 1996. He served as the Chairman of the Board of Directors of the Company from June 2002 until December 7, 2007 and has served as the Chairman of the Board of Directors of the Company since January 6, 2009. He has been the President of Kojaian Ventures, L.L.C. and also Executive Vice President, a director and a shareholder of Kojaian Management Corporation, both of which are investment firms headquartered in Bloomfield Hills, Michigan, since 2000 and 1985, respectively. He is also a director of Arbor Realty Trust, Inc. Mr. Kojaian has also served as the Chairman of the Board of Directors of Grubb & Ellis Realty Advisors, Inc., an affiliate of the Company, from its inception in September 2005 until April 2008, and as its Chief Executive Officer from December 13, 2007 until April 2008.
Rodger D. Young	62, has served as a director of the Company since April 2003. Mr. Young has been a name partner of the law firm of Young & Susser, P.C. since its founding in 1991, a boutique firm specializing in commercial litigation with offices in Southfield, Michigan and New York City. In 2001, Mr. Young was named Chairman of the Bush Administration’s Federal Judge and U.S. Attorney Qualification Committee by Governor John Engler and Michigan’s Republican Congressional Delegation. Mr. Young is a member of the American College of Trial Lawyers and was listed in the 2007 edition of Best Lawyers of America. Mr. Young was named by Chambers International and by Best Lawyers in America as one of the top commercial litigators in the United States.

Communications with the Directors

Stockholders, employees and others interested in communicating with the Chairman of the Board may do so by writing to C. Michael Kojaian, c/o Corporate Secretary, Grubb & Ellis Company, 1551 North Tustin Avenue, Suite 300, Santa Ana, California 92705. Stockholders, employees and others interested in communicating with any of the other directors of the Company may do so by writing to such director, c/o Corporate Secretary, Grubb & Ellis Company, 1551 North Tustin Avenue, Suite 300, Santa Ana, California 92705.

Information About Executive Officers

Gary Hunt has served as the Company’s Interim Chief Executive Officer and President since July 11, 2008. For information on Mr. Hunt see “Information about the Directors” above. In addition to Mr. Hunt, the following are the current executive officers of the Company:

Andrea R. Biller 59, has served as Executive Vice President, General Counsel and Secretary of the Company since December 2007. She joined GERI

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	in March 2003 as General Counsel and served as NNN’s General Counsel, Executive Vice President and Secretary since November 2006 and director since December 2007. Ms. Biller also has served as Executive Vice President and Secretary of Grubb & Ellis Healthcare REIT, Inc. since April 2006 and Secretary of Grubb & Ellis Apartment REIT, Inc. since April 2009 and from December 2005 to February 2009. Ms. Biller also has served as a director of Grubb & Ellis Apartment REIT, Inc. since June 2008. Ms. Biller served as Executive Vice President of G REIT, Inc. from December 2005 to January 2008 and Secretary of G REIT, Inc. from June 2004 to January 2008. Ms. Biller also served as the Secretary of T REIT, Inc. from May 2004 to July 2007. Ms. Biller served as an Attorney at the Securities and Exchange Commission, Division of Corporate Finance, in Washington D.C. from 1995-2000, including two years as Special Counsel, and as a private attorney specializing in corporate and securities law from 1990-1995 and 2000-2002. Ms. Biller is licensed to practice law in California, Virginia, and Washington, D.C.
Jeffrey T. Hanson	38, has served as Chief Investment Officer of the Company since January 2008. He has served as Chief Investment Officer of NNN since November and joined NNN in July 2006 as the President and Chief Executive Officer of Realty. From December 1997 to July 2006, Mr. Hanson was a Senior Vice President with the Grubb and Ellis Institutional Investment Group in Grubb & Ellis’ Newport Beach office. Mr. Hanson served as a real estate broker with CB Richard Ellis from 1996 to December 1997. Mr. Hanson formerly served as a member of the Grubb & Ellis President’s Counsel and Institutional Investment Group Board of Advisors.
Stanley J. Olander, Jr.	54, has served as an Executive Vice President — Multifamily of the Company since December 2007. He has also served as Chief Executive Officer and a director of Grubb & Ellis Apartment REIT, Inc. and Chief Executive Officer of Grubb & Ellis Apartment REIT Advisors, LLC since December 2005. Mr. Olander has also served as Grubb & Ellis Apartment REIT, Inc.’s Chairman of the Board since December 2006 and has also served as President of Grubb & Ellis Apartment REIT, Inc. and President of Grubb & Ellis Apartment REIT Advisors, LLC since April 2007. Mr. Olander has also been a Managing Member of ROC REIT Advisors, LLC since 2006 and a Managing Member of ROC Realty Advisors since 2005. Additionally, since July 2007, Mr. Olander has also served as Chief Executive Officer, President and Chairman of the Board of Grubb & Ellis Residential Management, Inc. He served as President and Chief Financial Officer and a member of the board of directors of Cornerstone Realty Income Trust, Inc. from 1996 until April 2005. Prior to the sale of Cornerstone Realty Income Trust, Inc. in April 2005, the company’s shares were listed on the New York Stock Exchange, it owned approximately 23,000 apartment units in five states and had a total market capitalization of approximately 40,000 apartment units.
Richard W. Pehlke	55, has served as the Executive Vice President and Chief Financial Officer of the Company since February 2007. Prior to joining the

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Company, Mr. Pehlke served as Executive Vice President and Chief Financial Officer and a member of the board of directors of Hudson Highland Group, a publicly held global professional staffing and recruiting business, from 2003 to December 2005 and served as a consultant during 2006. From 2001 to 2003, Mr. Pehlke operated his own consulting business specializing in financial strategy and leadership development. In 2000, he was the Executive Vice President and Chief Financial Officer of ONE, Inc. a privately held software implementation business. Prior to 2000, Mr. Pehlke held senior financial positions in the telecommunications, financial services and food and consumer products industries.

Jacob Van Berkel

49, has served as Executive Vice President and Chief Operating Officer of the Company since February 2008 and President, Real Estate Services since May 2008. Mr. Van Berkel oversees operations and business integration for Grubb & Ellis, having joined NNN Realty Advisors in August 2007 to assist with the merger of the two companies. He is responsible for the strategic direction of all Grubb & Ellis’ human resources, marketing and communications, research and other day-to-day operational activities. He has 25 years of experience, including more than four years at CB Richard Ellis as senior vice president, human resources as well as in senior global human resources, operations and sales positions with First Data Corporation, Gateway Inc. and Western Digital.

Section 16(a) Beneficial Ownership Reporting Compliance

Section 16(a) of the Exchange Act requires our directors, executive officers and stockholders holding ten percent (10%) or more of our voting securities (“Insiders”) to file with the SEC reports showing their ownership and changes in ownership of Company securities, and to send copies of these filings to us. To our knowledge, based upon review of copies of such reports furnished to us and upon written representations that the Company has received to the effect that no other reports were required during the year ended December 31, 2008, the Insiders complied with all Section 16(a) filing requirements applicable to them, except as noted below.

On November 17, 2008, Rodger D. Young, a director of the Company, purchased 14,000 shares of the Company’s common stock on the open market. As a result of this transaction, a Form 4 was due to be filed on November 19, 2008 for Mr. Young, but was not filed until November 21, 2008. In addition, on December 10, 2008, the Company awarded each of its outside directors 20,000 restricted shares of the Company’s common stock, pursuant to the Company’s 2006 Omnibus Equity Plan which vest in equal 331/3 portions on each of the first, second, and third anniversaries of the grant date (December 10, 2008). As a result of this award, a Form 4 was due to be filed on December 12, 2008 for each of the following directors: Glenn L. Carpenter, Harold H. Greene, C. Michael Kojaian, Robert J. McLaughlin, Devin I. Murphy, D. Fleet Wallace and Rodger D. Young. However, the required Form 4s for each of the aforementioned outside directors of the Company were not filed until December 16, 2008.

Code of Ethics

The Company has adopted, and revised effective January 25, 2008, a code of business conduct and ethics (“Code of Business Conduct and Ethics”) that applies to all of the Company’s directors, officers, employees and independent contractors, including the Company’s principal executive officer, principal financial officer and controller and complies with the requirements of the Sarbanes-Oxley Act of 2002 and the NYSE listing requirements. The January 25, 2008 revision was effected to make the Code of Business Conduct and Ethics

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consistent with the amendment of even date to the Company’s by-laws so as to provide that members of the board of directors who are not an employee or executive officer of the Company (“Non-Management Directors”) have the right to directly or indirectly engage in the same or similar business activities or lines of business as the Company, or any of its subsidiaries, including those business activities or lines of business deemed to be competing with the Company or any of its subsidiaries. In the event that the Non-Management Director acquires knowledge, other than as a result of his or her position as a director of the Company, of a potential transaction or matter that may be a corporate opportunity for the Company, or any of its subsidiaries, such Non-Management Director shall be entitled to offer such corporate opportunity to the Company as such Non-Management Director deems appropriate under the circumstances in their sole discretion.

The Company’s Code of Business Conduct and Ethics is designed to deter wrongdoing, and to promote, among other things, honest and ethical conduct, full, timely, accurate and clear public disclosures, compliance with all applicable laws, rules and regulations, the prompt internal reporting of violations of the code, and accountability. In addition, the Company maintains an Ethics Hotline with an outside service provider in order to assure compliance with the so-called “whistle blower” provisions of the Sarbanes Oxley Act of 2002. This toll-free hotline and confidential web-site provide officers, employees and independent contractors with a means by which issues can be communicated to management on a confidential basis. A copy of the Company’s Code of Business Conduct and Ethics is available on the company’s website at www.grubb-ellis.com and upon request and without charge by contacting Investor Relations, Grubb & Ellis Company, 1551 North Tustin Avenue, Suite 300, Santa Ana, California 92705.

Change to Procedures for Recommending Nominees for Director

As discussed in the Company’s Form 8-K filed on February 9, 2009, on February 5, 2009 the Board unanimously amended the Company’s Amended and Restated Bylaws (the “Bylaws”), by, among other things, adding a new Section 2.10 to the Bylaws and amending Section 3.03.

Section 2.10 requires a stockholder to give notice in writing to the Company no later than 90 days prior to the one year anniversary of the preceding year’s annual meeting for nominations for election to the Board and for any other proposals such stockholder wishes to bring before a stockholders’ meeting other than director nominations. Section 2.10 requires that the written notice set forth (1) information as to the nominees for election to the Board, (2) information as to the stockholder who delivered the notice and the beneficial owner, if any, on whose behalf the nomination or proposal is made, and (3) information as to any other business that a stockholder proposes to bring before a meeting, and requires that any proposed business constitute a proper matter for stockholder action.

Section 3.03 of the Bylaws was amended to provide that any nominations for election to the Board shall be made pursuant to Section 2.10 of the Bylaws. Section 3.03 of the Bylaws previously provided for written notice to be provided to the Company for nominations for election to the Board no later than 14 days prior to a stockholders’ meeting (unless the stockholders have been given less than 21 days’ notice of the meeting in which case written notice is to be delivered or mailed to the Company no later than the close of the seventh day after notice of the meeting was mailed to stockholders). Section 3.03 also previously set forth the information that was required to be included in the written notice.

Corporate Governance Guidelines

Effective July 6, 2006, the Board adopted corporate governance guidelines to assist the Board in the performance of its duties and the exercise of its responsibilities. The Company’s Corporate Governance Guidelines are available on the Company’s website at www.grubb-ellis.com and printed copies may be obtained upon request by contacting Investor Relations, Grubb & Ellis Company, 1551 North Tustin Avenue, Suite 300, Santa Ana, California 92705.

Audit Committee

The Audit Committee of the Board is a separately-designated standing audit committee established in accordance with Section 3(a)(58)(A) of the Securities Exchange Act of 1934 as amended (the “Exchange

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Act”) and the rules thereunder. The Audit Committee operates under a written charter adopted by the Board of Directors. The charter of the Audit Committee was last revised effective January 28, 2008 and is available on the Company’s website at www.grubb-ellis.com and printed copies of which may be obtained upon request by contacting Investor Relations, Grubb & Ellis Company, 1551 North Tustin Avenue, Suite 300, Santa Ana, California 92705. The current members of the Audit Committee are Robert McLaughlin, Chair, Harold H. Greene and D. Fleet Wallace. The Board has determined that the members of the Audit Committee are independent under the NYSE listing requirements and the Exchange Act and the rules thereunder, and that Mr. McLaughlin is an audit committee financial expert in accordance with rules established by the SEC.

Corporate Governance and Nominating Committee

The functions of the Company’s Corporate Governance and Nominating Committee are to assist the Board with respect to: (i) director qualification, identification, nomination, independence and evaluation; (ii) committee structure, composition, leadership and evaluation; (iii) succession planning for the CEO and other senior executives; and (iv) corporate governance matters. The Corporate Governance and Nominating Committee operates under a written charter adopted by the Board, which is available on the Company’s website at www.grubb-ellis.com and printed copies of which may be obtained upon request by contacting Investor Relations, Grubb & Ellis Company, 1551 North Tustin Avenue, Suite 300, Santa Ana, California 92705. The members of the Corporate Governance and Nominating Committee for the year ended December 31, 2008, were Rodger D. Young, Chair, Harold H. Greene and C. Michael Kojaian. On February 9, 2009, Devin I. Murphy was appointed to serve as a member of the Corporate Governance and Nominating Committee and Mr. Kojaian resigned as a member of the Corporate Governance and Nominating Committee. The Board has determined that Messrs. Young, Greene, Murphy and Kojaian are independent under the NYSE listing requirements and the Exchange Act and the rules thereunder.

Certifications

On December 12, 2008, the Company’s General Counsel certified to the NYSE that she was not aware of any violation by the Company of the corporate governance listing standards of the NYSE. The Company has filed with the SEC, as an exhibit to this Annual Report, the certifications required by Section 302 of the Sarbanes-Oxley Act of 2002.

Item 11.   Executive Compensation.

Compensation Discussion and Analysis

This compensation discussion and analysis describes the governance and oversight of the Company’s executive compensation programs and the material elements of compensation paid or awarded to those who served as the Company’s principal executive officer, the Company’s principal financial officer, and the three other most highly compensated executive officers of the Company during the period from January 1, 2008 through December 31, 2008 (collectively, the “named executive officers” or “NEOs” and individually, a “named executive officer” or “NEO”). The specific amounts and material terms of such compensation paid, payable or awarded are disclosed in the tables and narrative included in this section of this Annual Report.

The compensation disclosure provided with respect to the Company’s NEOs and directors with respect to calendar year 2008 represent their full year’s compensation for such year, incurred by the Company with respect to calendar year 2008. The compensation disclosure provided with respect to the Company’s NEOs and directors with respect to calendar years 2007 and 2006 represent their full year’s compensation for each of those years, incurred by either NNN or the Company, as applicable, with respect to calendar year 2006, and incurred by either NNN or the Company, as applicable with respect to the entire 2007 calendar year, except for the period December 8, 2007 through December 31, 2007, during this three (3) week stub period the Company incurred the entire compensation to all NEOs and directors.

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Compensation Committee Overview

The Board of Directors has delegated to the Compensation Committee oversight responsibilities for the Company’s executive compensation programs.

The Compensation Committee determines the policy and strategies of the Company with respect to executive compensation taking into account certain factors that the Compensation Committee deems appropriate such as (a) compensation elements that will enable the Company to attract and retain executive officers who are in a position to achieve the strategic goals of the Company which are in turn designed to enhance stockholder value, and (b) the Company’s ability to compensate its executives in relation to its profitability and liquidity.

The Compensation Committee approves, subject to further, final approval by the full Board of Directors, (a) all compensation arrangements and terms of employment, and any material changes to the compensation arrangements or terms of employment, for the NEOs and certain other key employees (including employment agreements and severance arrangements), and (b) the establishment of, and changes to, equity-based awards programs. In addition, each calendar year, the Compensation Committee approves the annual incentive goals and objectives of each NEO and certain other key employees, evaluates the performance of each NEO and certain other key employees against the approved performance goals and objectives applicable to him or her, determines whether and to what extent any incentive awards have been earned by each NEO, and makes recommendations to the Company’s Board of Directors regarding the approval of incentive awards.

Consistent with the Compensation Committee’s objectives, the Company’s overall compensation program is structured to attract, motivate and retain highly qualified executives by paying them competitively and tying their compensation to the Company’s success as a whole and their contribution to the Company’s success.

The Compensation Committee also provides general oversight of the Company’s employee benefit and retirement plans.

The Compensation Committee operates under a written charter adopted by the full Board and revised effective December 10, 2007, which is available on the Company’s website at www.grubb-ellis.com. Printed copies may be obtained upon request by contacting Investor Relations, Grubb & Ellis Company, 1551 North Tustin Avenue, Suite 300, Santa Ana, California 92705.

Use of Consultants

Under its charter, the Compensation Committee has the power to select, retain, compensate and terminate any compensation consultant it determines is useful in the fulfillment of the Committee’s responsibilities. The Committee also has the authority to seek advice from internal or external legal, accounting or other advisors.

In the fourth quarter of 2007, and in anticipation of the closing of the Merger, the Company engaged the services of FPL Associates Compensation, an outside consulting firm, to provide a comprehensive compensation study of the merged companies for the Compensation Committee and the Board of Directors with respect to an analysis of, and proposed designs and recommendations for, compensation arrangements primarily for the NEO’s, other service executives, directors, brokers and the board.

The Company has previously engaged the services of Ferguson Partners, an affiliate of FPL Associates Compensation. In February 2007, Ferguson Partners managed the search for the Company’s Chief Financial Officer which resulted in the hiring of the Company’s Chief Financial Officer, Richard W. Pehlke, in February 2007. In conjunction with the search, Ferguson Partners advised the Committee with respect to Mr. Pehlke’s compensation arrangements and terms of employment. Similarly, the Compensation Committee has used the services of Ferguson Partners in the past in connection with the search and establishment of the compensation arrangements and terms of employment for the other executive officers. In each instance, and in connection with the study conducted by its affiliate, FPL Associates Compensation in the fourth quarter of 2007, Ferguson Partners and FPL Associates Compensation provided to the Compensation Committee and the board with information regarding comparative market compensation arrangements.

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In March 2008, the Company engaged Christenson Advisors, LLC to provide an array of compensation and human resource related services across the Company.

The Company engaged the services of Equinox Partners in July 2008 to manage the search for the Company’s Chief Executive Officer following Scott D. Peters’ resignation in July 2008. The search process was impeded, however, in the fourth quarter of 2008 by the proxy contest in connection the Company’s Annual Stockholders’ Meeting held in December in which the Company ultimately prevailed. The Company remains actively engaged in its search for a permanent Chief Executive Officer.

Role of Executives in Establishing Compensation

In advance of each Compensation Committee meeting, the Chief Executive Officer and the Chief Operating Officer work with the Compensation Committee Chairman to set the meeting agenda. The Compensation Committee periodically consults with the Chief Executive Officer of the Company with respect to the hiring and the compensation of the other NEOs and certain other key employees. Members of management, typically the Chief Executive Officer, the Chief Financial Officer and General Counsel, regularly participate in non-executive portions of Compensation Committee meetings.

Certain Compensation Committee Activity

The Compensation Committee met ten times during the year ended December 31, 2008 and in fulfillment of its obligations, among other things, determined on December 3, 2008, based upon a recommendation of Christenson Advisors, LLC, that the cash retainer for independent, outside directors of $50,000 per annum would remain the same as would the Board Meeting and Committee Meeting fees of $1,500 per meeting. Similarly, the Compensation Committee determined that the Audit Chair retainer, the Compensation Chair retainer and the Governance Chair retainer would remain constant at $15,000, $10,000 and $7,500 per annum, respectively. The Compensation Committee also decided, based upon a recommendation of Christenson Advisors, LLC, that the $60,000 annual equity award for independent, outside directors, with respect to 2009 only, be capped at 20,000 shares due to decline in the stock market in 2008, which adversely affected the price of the Company’s shares.

Compensation Philosophy, Goals and Objectives

As a commercial real estate services company, the Company is a people oriented business which strives to create an environment that supports its employees in order to achieve its growth strategy and other goals established by the board so as to increase stockholder value over the long term.

The primary goals and objectives of the Company’s compensation programs are to:

•  Compensate management, key employees, independent contractors and consultants on a competitive basis in order to attract, motivate and retain high quality, high performance individuals who will achieve the Company’s short-term and long term goals;

•  Motivate and reward executive officers whose knowledge, skill and performance are critical to the Company’s success;

•  Align the interests of the Company’s executive officers and stockholders through equity-based long-term incentive awards that motivate executive officers to increase stockholder value and reward executive officers when stockholder value increases; and

•  Ensure fairness among the executive management team by recognizing contributions each executive officer makes to the Company’s success.

The Compensation Committee established these goals in order to enhance stockholder value.

The Company believes that it is important for variable compensation, i.e. where an NEO has a significant portion of his or her total “bonus compensation” at risk, to constitute a significant portion of total compensation and that such variable compensation be designed so as to reward effective team work (through

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the achievement of Company-wide financial goals) as well as the achievement of individual goals (through the achievement of business unit/functional goals and individual performance goals and objectives). The Company believes that this dual approach best aligns the individual NEO’s interest with the interests of the stockholders.

Compensation During Term of Employment

The Company’s compensation program for NEOs is currently comprised of four key elements — base salary, annual bonus incentive compensation, stock-based compensation and a retirement plan — that are intended to balance the goals of achieving both short-term and long-term results which the Company believes will effectively align management with stockholders.

Base Salary

Amounts paid to NEOs as base salaries are included in the column captioned “Salary” in the Summary Compensation Table below. The base salary of each NEO is determined based upon their position, responsibility, qualifications and experience, and reflects consideration of both external comparison to available market data and internal comparison to other executive officers.

The base salary for an NEO is typically established at the time of the negotiation of his or her respective employment agreement. In the case of each of the Company’s General Counsel Executive Vice President and Corporate Secretary, Andrea R. Biller, her compensation has not been adjusted since the inception of her current employment agreement. In the case of the Company’s Chief Financial Officer and Executive Vice President, Richard W. Pehlke, his base salary was increased on January 1, 2008 from $350,000 to $375,000. Chief Investment Officer, Jeffrey T. Hanson’s base salary was increased on August 1, 2008 from $350,000 to $450,000. As a result of Jacob Van Berkel being promoted to Chief Operating Officer and Executive Vice President on March 1, 2008, Mr. Van Berkel’s base salary was increased from $280,000 to $400,000.

The base salary component is designed to constitute between 20% and 50% of total annual compensation a target for the NEOs based upon each individual’s position in the organization and the Compensation Committee’s determination of each position’s ability to directly impact the Company’s financial results.

Annual Bonus Incentive Compensation

Amounts paid to NEOs under the annual bonus plan are included in the column captioned “Bonus” in the Summary Compensation Table below. In addition to earning base salaries, each of the Company’s NEOs is eligible to receive an annual cash bonus, the target amount of which is set by the individual employment agreement with each NEO. The annual bonus incentive of each NEO is determined based upon his or her position, responsibility, qualifications and experience, and reflects consideration of both external comparison to available market data and internal comparison to other executive officers.

Jeffrey T. Hanson, Chief Investment Officer, had his annual bonus incentive target increase from 100% to 150% effective August 1, 2008. Richard W. Pehlke, Chief Financial Officer and Executive Vice President, had his annual bonus incentive target increase from 50% to 150% effective January 1, 2008.

In 2007, the bonus plan with respect to those NEOs who were executive officers of the legacy Grubb & Ellis Company had a formulaic component based on achievement of specified Company earnings before interest and taxes (“EBIT”) and business unit/function EBIT goals and also a component based on the achievement of personal goals and objectives designed to enhance the overall performance of the Company. The bonus plan of those NEOs, who were executive officers of legacy NNN, while taking into account NNN’s earnings before interest, taxes, depreciation and amortization (“EBITDA”), as well as personal goals and objectives, was not formulaic, but rather, more discretionary in nature. Beginning in 2008, the bonus plan for all NEOs has been standardized and will be tied to the specified targets based on the Company’s EBITDA as discussed below.

The annual cash bonus plan target for NEOs is between 50% and 200% of base salary and is designed to constitute from 20% to 50% of an NEO’s total annual target compensation. The bonus plan component is

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based on each individual’s role and responsibilities in the company and the Committee’s determination of each NEO’s ability to directly impact the Company’s financial results.

The Compensation Committee reviews each NEO’s bonus plan annually. Annual Company EBITDA targets are determined in connection with the annual calendar-year based budget process. A minimum threshold of 80% of Company EBITDA must be achieved before any payment is awarded with respect to this component of bonus compensation. Fiscal year 2008 bonus targets were set at 100% of budgeted EBITDA. At the end of each calendar year, the Chief Executive Officer reviews the performance of each of the other NEOs and certain other key employees against the financial objectives and against their personal goals and objectives and makes recommendations to the Compensation Committee for payments on the annual cash bonus plan. The Compensation Committee reviews the recommendations and forwards these to the Board for final approval of payments under the plan.

For fiscal year 2008, no annual incentive bonus plan payments were made to the NEOs.

During 2007, the Compensation Committee revised the calendar 2007 bonus plans for the Grubb & Ellis legacy NEOs to increase the percentage of bonus tied to the Company’s EBIT performance in order to more closely link the annual bonus to the Company’s overall financial performance. The chart directly below captioned “Annual Bonus Incentive Compensation” provides the details of the calendar 2006, calendar 2007 and calendar 2008 plans.

In addition to the annual bonus program, from time to time the Board may establish one-time cash bonuses related to the satisfactory performance of identified special projects. Upon the closing of the Merger, Scott D. Peters, the Company’s then Chief Executive Officer and President received (i) a special one-time transaction success fee of $1,000,000, (ii) 528,000 shares of common stock of the Company from Anthony W. Thompson, the former Chairman of the Board of the Company, and (iii) the right to receive up to $1,000,000 for a second residence in California, which right Mr. Peters irrevocably waived in January, 2008. The 528,000 shares of common stock received from Anthony W. Thompson were forfeited by Mr. Peters upon his departure from the Company in July 2008 and returned to Mr. Thompson.

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Annual Bonus Incentive Compensation

			Bonus Target
			as a						Business
	Calendar		% of Base			Company			Unit/Function			Personal Goals
	Year		Salary			Performance(5)			Performance(5)			and Objectives
Gary H. Hunt(1) Current Interim Chief Executive Officer		2008		—			—			—			—
Scott D. Peters(2)		2008		200	%		70	%		—			30	%
Former Chief Executive Officer		2007		200	%		—			—			—
		2006		—			—			—			—
Richard W. Pehlke		2008		150	%		70	%		—			30	%
Chief Financial Officer		2007		50	%(3)		90	%					10	%
Andrea R. Biller		2008		150	%		70	%		—			30	%
Executive Vice President,		2007		150	%		—			—			—
General Counsel and Corporate Secretary		2006		—			—			—			—
Jeffrey T. Hanson		2008		150	%		40	%		40	%		20	%
Chief Investment Officer		2007		100	%		—			—			—
		2006		—			—			—			—
Jacob Van Berkel(4)		2008		100	%		70	%		—			30	%
Chief Operating Officer and Executive Vice President		2007		100	%		—			—			—

(1)	Mr. Hunt has served as the Interim Chief Executive Officer since July 2008.
(2)	Mr. Peters served as the Chief Executive Officer until July 2008.
(3)	Mr. Pehlke had a minimum guaranteed bonus of $125,000 for calendar 2007, prorated based on his hire date in February 2007 (equal to $110,577).
(4)	Mr. Van Berkel joined the Company in August 2007.
(5)	2008 bonuses calculated based on Company EBITDA and 2007 bonuses calculated based on Company EBIT.

Stock-Based Compensation and Incentives

The compensation associated with stock awards granted to NEOs is included in the Summary Compensation Table and other tables below (including the charts that show outstanding equity awards). Except for the January 24, 2008 grant of 75,000 and 80,000 restricted shares of common stock to Richard W. Pehlke and Jacob Van Berkel respectively, and the December 3, 2008 grant of 250,000 restricted shares of common stock to each of Richard W. Pehlke and Jacob Van Berkel, no other grants were made to NEOs during the year ended December 31, 2008.

In February of 2009, each of Messrs. Pehlke and Van Berkel, on their own initiative, voluntarily returned an aggregate of 131,000 and 130,000 restricted shares, respectively, to the Company for re-allocation of such restricted shares, on the same terms and conditions, to various employees in their respective business units.

The equity grants are intended to align management with the long-term interests of the Company’s stockholders and to have a retentive effect upon the Company’s NEOs. The Compensation Committee and the Board of Directors approve all equity grants to NEOs.

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Profit Sharing Plan

NNN has established a profit sharing plan for its employees, pursuant to which NNN provides matching contributions. Generally, all employees are eligible to participate following one year of service with NNN. Matching contributions are made in NNN’s sole discretion. Participants’ interests in their respective contribution account vests over 4 years, with 0.0% vested in the first year of service, 25.0% in the second year, 50.0% in the third year and 100.0% in the fourth year.

Retirement Plans

The amounts paid to the Company’s NEOs under the retirement plan are included in the column captioned “All Other Compensation” in the Summary Compensation Table directly below. The Company has established and maintains a retirement savings plan under Section 401(k) of the Internal Revenue Code of 1986 (the “Code”) to cover the Company’s eligible employees including the Company’s NEOs. The Code allows eligible employees to defer a portion of their compensation, within prescribed limits, on a tax deferred basis through contributions to the Company’s 401(k) plan. The Company’s 401(k) plan is intended to constitute a qualified plan under Section 401(k) of the Code and its associated trust is intended to be exempt from federal income taxation under Section 501(a) of the Code. The Company makes Company matching contributions to the 401(k) plan for the benefit of the Company’s employees including the Company’s NEOs. In April 2009, the Company’s matching contributions to the 401(k) plan were suspended.

Personal Benefits and Perquisites

The amounts paid to the Company’s NEOs for personal benefits and perquisites are included in the column captioned “All Other Compensation” in the Summary Compensation Table below. Perquisites to which all of the Company’s NEOs are entitled include health, dental, life insurance, long-term disability, profit-sharing and a 401(k) savings plan, and 100% of the premium cost of health insurance for certain NEOs is paid for by the Company. Upon the closing of the Merger, Scott D. Peters, the Company’s then Chief Executive Officer and President had the right to receive up to $1,000,000 for a second residence in California, which right Mr. Peters irrevocably waived in January, 2008.

Long Term Incentive Plan

On May 1, 2008, the Compensation Committee adopted the Long Term Incentive Plan (“LTIP”) of Grubb & Ellis Company, effective January 1, 2008, designed to reward the efforts of the executive officers of the Company to successfully attain the Company’s long-term goals by directly tying the executive officers’ compensation to the Company and individual results. During fiscal year 2008, no named executive officer received an award under the LTIP.

The LTIP is divided into two components: (i) annual long-term incentive target which comprises 50% of the overall target, and (ii) multi-year annual incentive target which comprises the other 50% .

Awards under the LTIP are earned by performance during a fiscal year and by remaining employed by the Company through the date awards are granted, usually in March for annual long-term incentive awards or though the conclusion of the three-year performance period for multi-year long term incentive awards (“Grant Date”).

All awards are paid in shares of the Company’s common stock, subject to the rights of the Company to distribute cash or other non-equity forms of compensation in lieu of the Company’s common stock.

The annual long-term incentive target is broken down into three components: (i) absolute shareholder return (30%); corporate EBITDA (35%); and individual performance priorities (35%). Vesting of awards upon achievement of the annual long-term incentive targets is as follows: (i) 33.33% of the restricted shares of the Company’s common stock will vest on the Grant Date; (ii) 33.33% will vest in the first anniversary of the Grant Date; and (iii) the remaining 33.33% will vest on the second anniversary of the Grant Date.

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The multi-year long-term incentive target is broken down into two components: (i) absolute shareholder return (50%); and relative total shareholder return (50%). Vesting of wards upon achievement of the multi-year long-term incentive awards is as follows: (i) 50% of the restricted shares of the Company’s common stock will be paid on the Grant Date; and (ii) 50% on the first year anniversary of the Grant Date.

Summary Compensation Table

The following table sets forth certain information with respect to compensation for the calendar years ended December 31, 2008, 2007 and 2006 earned by or paid to the Company’s named executive officers for such full calendar years (by either NNN or legacy Grubb & Ellis, as applicable, prior to the Merger, and by the Company subsequent to the Merger).

															Change
															in
															Pension
													Non-		Value
													Equity		And
													Incentive		Nonqualified
Name and	Year								Stock		Option		Plan		Deferred		All other
Principal	Ended		Salary			Bonus			Awards		Awards		Compensation		Compensation		Compensation
Position	December		($)			($)			($)(11)		($)(12)		($)		Earnings		($)(8)(13)(14)		Total
Gary H. Hunt(1)		2008	$	300,000	(5)	$	—		$	59,088	$	—	$	—	$	—	$	—	$	359,088
Interim Chief Executive Officer
Scott D. Peters(2)		2008		401,889			—			704,841		68,500		—		—		528,310		1,703,540
Former Chief		2007		587,808			1,825,800			2,610,555		91,250		—		—		655,621		5,771,034
Executive Officer		2006		611,250			1,125,900	(7)		1,834,669		81,345						977,260		4,630,424
Richard W. Pehlke(3)		2008		375,000			—			112,951		—		—		—		—		487,951
Executive Vice President, and Chief Financial Officer		2007		299,500			200,000			49,770		198,808		—		—		—		748,078
Andrea R. Biller		2008		400,000			—			100,106		42,803		—		—		688,565		1,231,474
Executive Vice		2007		400,000			451,000			1,286,413		73,000		—		—		592,134		2,802,547
President, General Counsel and Corporate Secretary		2006		391,674			501,200	(7)		411,667		65,076		—		—		72,834		1,442,451
Jeffrey T. Hanson		2008		391,667			250,000	(10)		2,900,777		38,168		—		—		556,727		4,137,339
Chief		2007		350,000			500,350	(10)		3,410,352		45,625		—		—		425,106		4,731,433
Investment Officer		2006		117,628	(6)		1,212,180	(9)		726,079		40,673		—		—		1,083		2,097,643
Jacob Van Berkel(4)		2008		380,000			—			149,203		—		—		—		4,816		534,019
Chief Operating Officer and Executive Vice President		2007		115,096			225,000			2,238		—		—		—		30		342,364

(1)	Mr. Hunt has served as the Interim Chief Executive Officer since July 2008.
(2)	Mr. Peters served as the Chief Executive Officer from December 2007 until July 2008.
(3)	Mr. Pehlke has served as the Chief Financial Officer since February 2007.
(4)	Mr. Van Berkel joined the Company in August 2007.
(5)	Amounts paid to Mr. Hunt represent a consulting fee as Mr. Hunt consults as the Interim Chief Executive Officer and is not an employee of the Company.
(6)	Mr. Hanson’s annual salary for fiscal 2006 was $250,000. The $117,628 represents amounts paid or to be paid to Mr. Hanson from July 29, 2006 (the date Mr. Hanson joined GERI) through December 31, 2006.
(7)	Bonus amounts include bonuses of $100,000 earned in fiscal 2006 to each of Mr. Peters and Ms. Biller upon the receipt by NNN from G REIT, a public non-traded REIT that NNN sponsored, of net

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	commissions aggregating $5 million or more from the sale of G REIT properties pursuant to a plan of liquidation approved by G REIT stockholders.
(8)	All other compensation also includes: (i) cash distributions based on membership interests of $85,303, $159,418 and $50,000 earned by Mr. Peters and $121,804, $159,418 and $50,000 earned by Ms. Biller from Grubb & Ellis Apartment Management, LLC for each of the calendar years ended December 31, 2008, 2007 and 2006, respectively; and (ii) cash distributions based on membership interests of $386,700, $413,546 and $0 earned by Mr. Peters and $547,519, $413,546 and $0 earned by each of Mr. Hanson and Ms. Biller from Grubb & Ellis Healthcare Management, LLC for each of the calendar years ended December 31, 2008, 2007 and 2006, respectively.
(9)	Mr. Hanson was appointed GERI’s Managing Director, Real Estate on July 29, 2006. His bonus amount included a $750,000 sign-on bonus that was paid in September 2006. Amount also included a special bonus paid to Mr. Hanson pursuant to his employment agreement for being the procuring cause of at least $25 million in equity from new sources, which equity was received by GERI during the fiscal year, for real estate investments sourced by GERI.
(10)	Amount includes a special bonus of $250,000. The 2008 special bonus has not yet been paid.
(11)	The amounts shown are the amounts of compensation cost related to the grants of restricted stock, as well as the compensation expense associated with the accelerated vesting of the restricted stock at the Merger date, as described in Statement of Financial Accounting Standards No. 123R Share-Based Payment (“SFAS No. 123R”), utilizing the assumptions discussed in Note 23 to the consolidated financial statements included in Item 8 of this Annual Report.
(12)	The amounts shown are the amounts of compensation cost related to the grants of stock options, as well as compensation expense associated with the accelerated vesting of the stock options at the Merger date, as described in SFAS No. 123R, utilizing the assumptions discussed in Note 23 to the consolidated financial statements included in Item 8 of this Annual Report.
(13)	The amounts shown include the Company’s incremental cost for the provision to the named executive officers of certain specified perquisites in fiscal 2008, 2007 and 2006, as follows:

							Tax Gross		Medical &
			Living		Travel		Up		Dental
			Expenses		Expenses		Payment		Premiums		Total
Named Executive Officer	Year		($)		($)		($)		($)		($)
Gary H. Hunt		2008	$	—	$	—	$	—	$	—	$	—
Scott D. Peters		2008		15,871		15,209		—		7,161		38,241
		2007		27,314		29,573		—		8,340		65,227
		2006		24,557		31,376		853,668		1,043		910,644
Richard W. Pehlke		2008		—		—		—		7,287		7,287
		2007		—		—		—		—		—
Andrea R. Biller		2008		—		—		—		4,621		4,621
		2007		—		—		—		1,740		1,740
		2006		—		—		—		218		218
Jeffrey T. Hanson		2008		—		—		—		13,179		13,179
		2007		—		—		—		8,340		8,340
		2006		—		—		—		1,043		1,043
Jacob Van Berkel		2008		—		—		—		—		—
		2007		—		—		—		—		—

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(14) The amounts shown also include the following 401(k) matching contributions made by the Company, income attributable to life insurance coverage and contributions to the profit-sharing plan in fiscal 2008, 2007 and 2006, as follows:

							Profit-Sharing
			401(k) Plan		Life		Plan
			Company		Insurance		Company
			Contributions		Coverage		Contributions		Total
Named Executive Officer	Year		($)		($)		($)		($)
Gary H. Hunt		2008	$	—	$	—	$	—	$	—
Scott D. Peters		2008		4,600		374		—		4,974
		2007		3,100		120		14,210		17,430
		2006		—		116		16,500		16,616
Richard W. Pehlke		2008		—		1,290		—		1,290
		2007		—		—		—		—
Andrea R. Biller		2008		—		1,290		—		1,290
		2007		3,100		120		14,210		17,430
		2006		6,000		116		16,500		22,616
Jeffrey T. Hanson		2008		—		270		—		270
		2007		3,100		120		—		3,220
		2006		—		40		—		40
Jacob Van Berkel		2008		4,600		450		—		5,050
		2007		—		30		—		30

Grants of Plan-Based Awards

The following table sets forth information regarding the grants of plan-based awards made to its NEOs for the fiscal year ended December 31, 2008.

			All Other			All Other
			Stock			Option
			Awards:			Awards:		Exercise or		Grant Date
			Number of			Number of		Base Price		Fair
			Shares of			Securities		of Option		Value of Stock
	Grant		Stock or			Underlying		Awards		and Option
Name	Date		Units			Options(1)		($/Share)		Awards($)(1)
Gary H. Hunt		—		—			—	$	—	$	—
Scott D. Peters		—		—			—		—		—
Richard W. Pehlke		01/24/08		75,000	(2)		—		4.41		330,750
		12/03/08		250,000	(2)				1.26		315,000
Andrea R. Biller		—		—			—		—		—
Jeffrey T. Hanson		—		—			—		—		—
Jacob Van Berkel		01/24/08		80,000	(2)		—		4.41		352,800
		12/03/08		250,000	(2)				1.26		315,000

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(1)

The grant date fair value of the shares of restricted stock and stock options granted were computed in accordance with SFAS No. 123R.

(2)

Amounts shown with respect to Messrs. Pehlke and Van Berkel represent restricted stock awarded pursuant to the Company’s 2006 Omnibus Equity Plan which will vest in equal thirty-three and one third (331/3%) installments on each of the first, second and third anniversaries of their respective grant dates. In February 2009, each of Messrs. Pehlke and Van Berkel, on their own initiative, voluntarily returned an aggregate of 131,000 and 130,000 restricted shares, respectively, to the Company for re-allocation of such restricted shares, on the same terms and conditions, to various employees in their respective business units.

Outstanding Equity Awards at Fiscal Year-End

The following table sets forth summary information regarding the outstanding equity awards held by the Company’s named executive officers at December 31, 2008:

	Option Awards									Stock Awards
													Market
													Value
	Number of			Number of						Number of			of Shares
	Securities			Securities						Shares or			or Units
	Underlying			Underlying						Units of			of Stock
	Unexercised			Unexercised		Option		Option		Stock that			That
	Options			Options		Exercise		Expiration		Have Not			Have Not
Name	Exercisable			Unexercisable		Price		Date		Vested			Vested(1)
Gary H. Hunt		—			—		—		—		7,333	(2)	$	83,303
		—			—		—		—		5,997	(3)	$	40,000
Scott D. Peters		—			—		—		—
Richard W. Pehlke		25,000	(4)		—	$	11.75		02/14/2017
											75,000	(5)	$	330,750
											250,000	(6)	$	315,000
Andrea R. Biller		35,200	(7)		—	$	11.36		11/16/2016
											17,600	(8)	$	199,936
Jeffrey T. Hanson		22,000	(9)		—	$	11.36		11/16/2016
											247,720	(10)	$	2,814,099
											11,733	(11)	$	133,287
Jacob Van Berkel		—			—		—		—		11,733	(12)	$	59,252
		—			—		—		—		80,000	(5)	$	352,800
		—			—		—		—		250,000	(6)	$	315,000

(1)	The grant date fair value of the shares of restricted stock granted on January 24, 2008 or December 3, 2008, as applicable, as computed in accordance with SFAS No. 123R, is reflected in the Grants of Plan-Based Awards table.
(2)	Amounts shown represent 11,000 restricted shares of the Company’s common stock that were received in connection with the Merger in exchange for 12,500 shares of NNN restricted stock. The 12,500 shares were awarded to Mr. Hunt as a Director pursuant to the NNN’s 2006 Long Term Incentive Plan and vest in equal 1/3 installments in each of the first, second and third anniversaries of the grant date (June 27, 2007), subject to continued service with the Company.
(3)	Amounts shown represent 8,996 shares of the Company’s common stock that were awarded to Mr. Hunt as a Director under the 2006 Omnibus Equity Plan and vest in equal 1/3 installments in each of the first,

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	second and third anniversaries of the grant date (December 10, 2007), subject to continued service with the Company.
(4)	Amounts shown represent options granted on February 15, 2007. These options vest in equal installments of thirty-three and one-third percent (331/3%) on the last business day before each of the first, second and third anniversaries of February 14, 2007, subject to the terms of the Stock Option Agreement by and between Mr. Pehlke and the Company, dated as of February 15, 2007, and the Company’s 2006 Omnibus Equity Plan. The full 25,000 options vested on the date of the Merger.
(5)	Amounts shown represent shares of the Company’s common stock that were awarded on January 23, 2008 under the 2006 Omnibus Equity Plan which will vest in equal 1/3 installments in each of the first, second and third anniversaries of the grant date, subject to continued service with the Company.
(6)	Amounts shown represent shares of the Company’s common stock that were awarded on December 3, 2008 under the 2006 Omnibus Equity Plan which will vest in equal 1/3 installments in each of the first, second and third anniversaries of the grant date, subject to continued service with the Company.
(7)	Amounts shown represent options received in the Merger in exchange for stock options to acquire 40,000 shares of the common stock of NNN Realty Advisors, Inc. for $10.00 per share. These options vested and became exercisable with respect to one-third of the underlying shares of the Company’s common stock on each of November 16, 2006, November 16, 2007 and November 16, 2008 and have a maximum term of ten-years.
(8)	Amounts shown represent 26,400 restricted shares of the Company’s common stock that were received in connection with the Merger in exchange for 30,000 shares of NNN restricted stock. The 30,000 shares were awarded to Ms. Biller pursuant to the NNN’s 2006 Long Term Incentive Plan and vest in equal 1/3 installments in each of the first, second and third anniversaries of the grant date (June 27, 2007), subject to continued service with the Company.
(9)	Amounts shown represent options received in the Merger in exchange for stock options to acquire 25,000 shares of the common stock NNN Realty Advisors, Inc. for $10.00 per share. These options vested and became exercisable with respect to one-third of the underlying shares of the Company’s common stock on each of November 16, 2006, November 16, 2007 and November 16, 2008 and have a maximum term of ten-years.
(10)	Amounts shown represent 743,160 restricted shares of the Company’s common stock that were received in connection with the Merger in exchange for 844,500 of NNN restricted stock and which are transferable from Mr. Thompson and Mr. Rogers, assuming Mr. Hanson remains employed by the Company, in equal 1/3 installments on each of the first, second and third anniversaries of the grant date (July 29, 2006).
(11)	Amounts shown represent 17,600 restricted shares of the Company’s common stock that were received in connection with the Merger in exchange for 20,000 shares of NNN restricted stock. The 20,000 shares were awarded to Mr. Hanson pursuant to the NNN’s 2006 Long Term Incentive Plan and vest in equal  1/3 installments in each of the first, second and third anniversaries of the grant date (June 27, 2007), subject to continued service with the Company.
(12)	Amounts shown represent 17,600 restricted shares of the Company’s common stock that were received in connection with the Merger in exchange for 20,000 shares of NNN restricted stock. The 20,000 shares were awarded to Mr. Van Berkel pursuant to the NNN’s 2006 Long Term Incentive Plan and vest in equal 1/3 installments in each of the first, second and third anniversaries of the grant date (December 4, 2007), subject to continued service with the Company.

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Options Exercises and Stock Vested

The following table sets forth summary information regarding exercise of stock options and vesting of restricted stock held by the Company’s named executive officers at December 31, 2008:

	Option Awards				Stock Awards
	Number of Shares				Number of Shares
	Acquired on		Value Realized on		Acquired on			Value realized on
Name	Exercise		Exercise ($)		Vesting			Vesting ($)
Gary H. Hunt		—		—		3,667	(1)	$	14,118	(2)
						2,999	(3)		3,749	(4)
Scott D. Peters		—		—		—			—
Richard W. Pehlke		—		—		—			—
Andrea R. Biller		—		—		8,800	(5)		33,880	(2)
Jeffrey T. Hanson		—		—		247,720	(6)		857,111	(7)
						5,867	(8)		22,588	(2)
Jacob Van Berkel		—		—		5,867	(9)		7,392	(10)

(1)	Amounts shown represent 11,000 restricted shares of the Company’s common stock that were received in connection with the Merger in exchange for 12,500 shares of NNN restricted stock. The 12,500 shares were awarded to Mr. Hunt pursuant to the NNN’s 2006 Long Term Incentive Plan and vest in equal 1/3 installments in each of the first, second and third anniversaries of the grant date (June 27, 2007), subject to continued service with the Company.
(2)	On June 26, 2008, the closing price of a share of common stock on the NYSE was $3.85.
(3)	Amounts shown represent 8,996 shares of the Company’s common stock that were awarded to Mr. Hunt on December 10, 2007 under the 2006 Omnibus Equity Plan and vest in equal 1/3 installments in each of the first, second and third anniversaries of the grant date, subject to continued service with the Company.
(4)	On December 9, 2008, the closing price of a share of common stock on the NYSE was $1.25.
(5)	Amounts shown represent 26,400 restricted shares of the Company’s common stock that were received in connection with the Merger in exchange for 30,000 shares of NNN restricted stock. The 30,000 shares were awarded to Ms. Biller pursuant to the NNN’s 2006 Long Term Incentive Plan and vest in equal 1/3 installments in each of the first, second and third anniversaries of the grant date (June 27, 2007), subject to continued service with the Company.
(6)	Amounts shown represent 743,160 restricted shares of the Company’s common stock that were received in connection with the Merger in exchange for 844,500 of NNN restricted stock and which are transferable from Mr. Thompson and Mr. Rogers, assuming Mr. Hanson remains employed by the Company, in equal 1/3 installments on each of the first, second and third anniversaries of the grant date (July 29, 2006).
(7)	On July 28, 2008, the closing price of a share of common stock on the NYSE was $3.46.
(8)	Amounts shown represent 17,600 restricted shares of the Company’s common stock that were received in connection with the Merger in exchange for 20,000 shares of NNN restricted stock. The 20,000 shares were awarded to Mr. Hanson pursuant to the NNN’s 2006 Long Term Incentive Plan and vest in equal  1/3 installments in each of the first, second and third anniversaries of the grant date (June 27, 2007), subject to continued service with the Company.
(9)	Amounts shown represent 17,600 restricted shares of the Company’s common stock that were received in connection with the Merger in exchange for 20,000 shares of NNN restricted stock. The 20,000 shares were awarded to Mr. Van Berkel pursuant to the NNN’s 2006 Long Term Incentive Plan and vest in

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	equal 1/3 installments in each of the first, second and third anniversaries of the grant date (December 4, 2007), subject to continued service with the Company.
(10)	On December 3, 2008, the closing price of a share of common stock on the NYSE was $1.26.

Non-Qualified Deferred Compensation

During fiscal year 2008, no named executive officer was a participant in the DCP in 2008.

Contributions.

Under the DCP, the participants designated by the committee administering the Plan (the “Committee”) may elect to defer up to 80% of their base salary and commissions, and up to 100% of their bonus compensation. In addition, the Company may make discretionary Company contributions to the DCP at any time on behalf of the participants. Unless otherwise specified by the Company, Company contributions shall be deemed to be invested in the Company’s common stock.

Investment Elections.

Participants designate the investment funds selected by the Committee in which the participants’ deferral accounts shall be deemed to be invested for purposes of determining the amount of earnings and losses to be credited to such accounts.

Vesting.

The participants are fully vested at all times in amounts credited to the participants’ deferral accounts. A participant shall vest in his or her Company contribution account as provided by the Committee, but not earlier than 12 months from the date the Company contribution is credited to a participant’s Company contribution account. Except as otherwise provided by the Company in writing, all vesting of Company contributions shall cease upon a participant’ termination of service with the Company and any portion of a participant’s Company contribution account which is unvested as of such date shall be forfeited; provided, however, that if a participant’s termination of service is the result of his or her death, the participant shall be 100% vested in his or her Company contribution account(s).

Distributions.

Scheduled distributions elected by the participants shall be no earlier than two years from the last day of the fiscal year in which the deferrals are credited to the participant’s account, or, if later, the last day of the fiscal year in which the Company contributions vest. The participant may elect to receive the scheduled distribution in a lump sum or in equal installments over a period of up to five years. Company contributions are only distributable in a lump sum.

In the event of a participant’s retirement (termination of service after attaining age 60, or age 55 with at least 10 years of service) or disability (as defined in the DCP), the participant’s vested deferral accounts shall be paid to the participant in a single lump sum on a date that is not prior to the end of the six month period following the participant’s retirement or disability, unless the participant has made an alternative election to receive the retirement or disability benefits in equal installments over a period of up to 15 years, in which event payments shall be made as elected.

In the event of a participant’s death, the Company shall pay to the participant’s beneficiary a death benefit equal to the participant’s vested accounts in a single lump sum within 30 days after the end of the month during which the participant’s death occurred.

The Company may accelerate payment in the event of a participant’s “financial hardship.”

Employment Contracts and Compensation Arrangements

Scott D. Peters

In July 2008, Mr. Peters resigned from the Company. The following is a description of the employment agreement under which Mr. Peters was employed during calendar year 2008.

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In November, 2006, Mr. Peters entered into an executive employment agreement with the Company pursuant to which Mr. Peters served as the Chief Executive Officer and President of the Company. The executive employment agreement provided for an annual base salary of $550,000 per annum. His base salary was increased to $600,000 per annum upon the closing of the Merger. Mr. Peters was eligible to receive an annual discretionary bonus of up to 200% of his base salary. The executive employment agreement had an initial term of three years, and on the final day of the original term, and on each anniversary thereafter, the term of the agreement could have been extended automatically for an additional year unless the Company or Mr. Peters provided at least one year’s written notice that the term would not be extended. In connection with the entering into of his executive employment agreement in November, 2006, Mr. Peters received 154,000 shares of restricted stock and 44,000 stock options at an exercise price of $11.36 per share, one-third of which options vest on the grant date, and the remaining options vest in equal installments on the first and second anniversary date of the option grant.

Mr. Peters was also entitled to participate in the Company’s health and other benefit plans generally afforded to executive employees and was reimbursed for reasonable travel, entertainment and other reasonable expenses incurred in connection with his duties. The employment agreement contained confidentiality, non-competition, no raid, non-solicitation, non-disparagement and indemnification provisions.

In the event the Company had terminated Mr. Peters’ employment for Cause (as defined in the executive employment agreement) or if he had voluntarily resigned without Good Reason (as defined in the executive employment agreement), Mr. Peters would have been entitled to accrued salary and any unreimbursed business expenses. In the event that Mr. Peters’ employment terminated because of the expiration of his term, death or disability, the Company would have paid any accrued salary, any unreimbursed business expenses, and a prorated performance bonus equal to the performance bonus (and in the case of termination for reason of death or disability, equal to the maximum target) that otherwise would have been payable to Mr. Peters in the fiscal year in which the termination occurred had he continued employment through the last day of such fiscal year, prorated for the number of calendar months he was employed by the Company in such fiscal year. The prorated performance bonus would have been paid within 60 days after Mr. Peters’ date of termination, provided that he executes and delivers to the Company a general release and was not in material breach of any of the provisions of the executive employment agreement.

In the event of termination of employment without Cause, or voluntary resignation with Good Reason, the Company would have paid any accrued salary, any unreimbursed business expenses and a severance benefit, in a lump sum cash payment, equal to Mr. Peters’ annual salary plus the target bonus in the year of the termination, the sum of which will be multiplied by a “severance benefit factor.” The “severance benefit factor” would have been determined as follows: (a) if the date of termination occurred during the original three year employment term, the “severance benefit factor” will be the greater of one, and the number of months from the date of termination to the last day of the original three year employment term, divided by 12, or (b) if the date of termination was after the original three year employment term, the “severance benefit factor” will equal one. Also, all options would have become fully vested.

In the event of a termination by the Company without Cause at any time within 90 days before, or 12 months after, a Change in Control (as defined in the executive employment agreement), or in the event of resignation for Good Reason within 12 months after a Change in Control, or if without Good Reason during the period commencing six months after a Change in Control and ending 12 months after a Change in Control, then the Company would have paid any accrued salary, any unreimbursed business expenses, and a severance benefit. The severance benefit would have been in a lump sum cash payment, equal to the annual salary plus the target bonus in the year of the termination, the sum of which will be multiplied by three. Mr. Peters would have also received 100% of the Company’s paid health insurance coverage as provided immediately prior to the termination. The health insurance coverage would have continued for two years following termination of employment, or until Mr. Peters became covered under another employer’s group health insurance plan, whichever came first. Also, Mr. Peters would have become fully vested in his options. These severance benefits upon a Change in Control would have been paid 60 days after the date of termination, provided the execution and delivery to the Company of a general release and Mr. Peters was not in material breach of any of the provisions of his executive employment agreement. Any payment and benefits

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discussed in this paragraph regarding a termination associated with a Change in Control would have been in lieu of any payments and benefits that would otherwise be awarded in an executive’s termination.

If payments or other amounts had become due to Mr. Peters under his executive employment agreement or otherwise, and the excise tax imposed by Section 4999 of the Code had been applicable to such payments, the Company would have been required to pay a gross up payment in the amount of such excise tax plus the amount of income, excise and other taxes due as a result of the gross up payment. All determinations required to be made and the assumptions to be utilized in arriving at such determinations, with certain exceptions, would have been made by the Company’s independent certified public accountants serving immediately prior to the Change in Control.

In July 2008, Mr. Peters resigned from the Company and no payments are due to him under his executive employment agreement.

Richard W. Pehlke

Effective February 15, 2007, Mr. Pehlke and the Company entered into a three-year employment agreement pursuant to which Mr. Pehlke serves as the Company’s Executive Vice President and Chief Financial Officer at an annual base salary of $350,000. In addition, Mr. Pehlke is entitled to receive target bonus cash compensation of up to 50% of his base salary based upon annual performance goals to be established by the Compensation Committee of the Company. Mr. Pehlke is also eligible to receive a target annual performance based equity bonus of 65% of his base salary based upon annual performance goals to be established by the Compensation Committee. The equity bonus is payable in restricted shares that vest on the third anniversary of the date of the grant. Mr. Pehlke was also granted stock options to purchase 25,000 shares of the Company’s common stock which have a term of 10 years, are exercisable at $11.75 per share (equal to the market price of the Company’s common stock on the date immediately preceding the grant date) and vest ratably over three years.

Mr. Pehlke’s annual base salary was increased from $350,000 to $375,000 on January 1, 2008. Similarly, Mr. Pehlke’s target bonus compensation was increased from 50% to 150% of his base salary on January 1, 2008.

Mr. Pehlke is also entitled to participate in the Company’s health and other benefit plans generally afforded to executive employees and is reimbursed for reasonable travel, entertainment and other reasonable expenses incurred in connection with his duties. The employment agreement contains confidentiality, non-competition, no raid, non-solicitation, non-disparagement and indemnification provisions.

The employment agreement is terminable by the Company upon Mr. Pehlke’s death or incapacity or for Cause (as defined in the employment agreement), without any additional compensation other than what has accrued to Mr. Pehlke as of the date of any such termination, except that in the case of death or incapacity, any unvested restricted shares automatically vest.

In the event that Mr. Pehlke is terminated without Cause, or if Mr. Pehlke terminates the agreement for Good Reason (as defined in the employment agreement), Mr. Pehlke is entitled to receive his annual base salary, payable in accordance with the Company’s customary payroll practices, for the balance of the term of the agreement or 24 months, whichever is less (subject to the provisions of Section 409A of the Internal Revenue Code of 1986, as amended) and all then unvested options shall automatically vest. The Company’s payment of any amounts to Mr. Pehlke upon his termination without Cause or for Good Reason is contingent upon him executing the Company’s then standard form of release.

Effective December 23, 2008, Mr. Pehlke and the Company entered into a change of control agreement pursuant to which in the event that Mr. Pehlke is terminated without Cause or resigns for Good Reason upon a Change of Control (as defined in the employment agreement) or within six months thereafter or is terminated without Cause or resigns for Good Reason within three months prior to a Change of Control, in contemplation thereof, Mr. Pehlke is entitled to receive two times his base salary payable in accordance with the Company’s customary payroll practices, over a twelve month period (subject to the provisions of Section 409A of the Code) plus an amount equal to one time his target annual cash bonus payable in cash on the next immediately

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following date when similar annual cash bonus compensation is paid to other executive officers of the Company (but in no event later than March 15th of the calendar year following the calendar year to which such bonus payment relates). In addition, upon a Change of Control, all then unvested options and restricted shares automatically vest. The Company’s payment of any amounts to Mr. Pehlke upon his termination upon a Change of Control is contingent upon his executing the Company’s then standard form of release.

Potential Payments upon Termination or Change of Control
Richard W. Pehlke

							Involuntary
							Not for		Involuntary		Resignation
Executive Payments	Voluntary		Early		Normal		Cause		for Cause		for Good		Change in
Upon Termination	Termination		Retirement		Retirement		Termination		Termination		Reason		Control		Death		Disability
Severance Payments	$	—	$	—	$	—	$	421,875	$	—	$	421,875	$	1,312,500	$	—	$	—
Bonus Incentive Compensation		—		—		—		—		—		—		—		—		—
Long Term Incentive Plan		—		—		—		—		—		—		—		—		—
Stock Options (unvested and accelerated)(1)		—		—		—				—						—		—
Restricted Stock (unvested and accelerated)		—		—		—	$	403,000		—	$	403,000	$	403,000		—		—
Performance Shares (unvested and accelerated)		—		—		—		—		—		—		—		—		—
Benefit Continuation		—		—		—		—		—		—		—		—		—
Tax Gross-Up		—		—		—		—		—		—		—		—		—
Total Value	$	—	$	—	$	—	$	824,875	$	—	$	824,875	$	1,715,500	$	—	$	—

(1) Mr. Pehlke’s agreement provides for immediate vesting of all stock options in the event of involuntary termination not for Cause, resignation for Good Reason, or in the event of Change of Control; the option exercise price is $11.75 and the closing price on the NYSE on December 31, 2008 was $1.24, therefore, as of December 31, 2008, Mr. Pehlke’s options were out of the money.

Andrea R. Biller

In November 2006, Ms. Biller entered into an executive employment agreement with the Company pursuant to which Ms. Biller serves as the Company’s General Counsel, Executive Vice President and Corporate Secretary. The agreement provides for an annual base salary of $400,000 per annum. Ms. Biller is eligible to receive an annual discretionary bonus of up to 150% of her base salary. The executive employment agreement has an initial term of three (3) years, and on the final day of the original term, and on each anniversary thereafter, the term of the agreement is extended automatically for an additional year unless the Company or Ms. Biller provides at least one year’s written notice that the term will not be extended. On October 23, 2008, the Company provided a notice not to extend the term of the executive employment agreement beyond its current extension date. In connection with the entering into of her executive employment agreement in November 2006, Ms. Biller received 114,400 shares of restricted stock and 35,200 stock options at an exercise price of $11.36 per share, one-third of which options vested on the grant date, and the remaining options vest in equal installments on the first and second anniversary date of the option grant.

Ms. Biller is also entitled to participate in the Company’s health and other benefit plans generally afforded to executive employees and is reimbursed for reasonable travel, entertainment and other reasonable expenses incurred in connection with her duties. The executive employment agreement contains confidentiality, non-competition, no raid, non-solicitation, non-disparagement and indemnification provisions.

In the event the Company terminates Ms. Biller’s employment for Cause (as defined in the executive employment agreement) or if she voluntarily resigns without Good Reason (as defined in the executive employment agreement), Ms. Biller is entitled to accrued salary and any unreimbursed business expenses. In the event that Ms. Biller’s employment terminates because of the expiration of her term, death or disability, the Company will pay an accrued salary, any unreimbursed business expenses, and a prorated performance

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bonus equal to the performance bonus (and in the case of termination for reason of death or disability, equal to the maximum target) that otherwise would have been payable to Ms. Biller in the fiscal year in which the termination occurs had she continued employment through the last day of such fiscal year, prorated for the number of calendar months she was employed by the Company in such fiscal year. The prorated performance bonus will be paid within 60 days after Ms. Biller’s date of termination, provided that she executes and delivers to the Company a general release and is not in material breach of any of the provisions of the executive employment agreement.

In the event of termination of employment without Cause, or voluntary resignation with Good Reason, the Company will pay any accrued salary, any unreimbursed business expenses and a severance benefit, in a lump sum cash payment, equal to Ms. Biller’s annual salary plus the target bonus in the year of the termination, the sum of which will be multiplied by a “severance benefit factor.” The “severance benefit factor” will be determined as follows: (a) if the date of termination occurs during the original three year employment term, the “severance benefit factor” will be the greater of one, and the number of months from the date of termination to the last day of the original three year employment term, divided by 12, or (b) if the date of termination is after the original three year employment term, the “severance benefit factor” will equal one. Also, all options become fully vested.

In the event of a termination by the Company without Cause at any time within 90 days before, or 12 months after, a Change in Control (as defined in the executive employment agreement), or in the event of resignation for Good Reason within 12 months after a Change in Control, or if without Good Reason during the period commencing six months after a Change in Control and ending 12 months after a Change in Control, then the Company will pay any accrued salary, any unreimbursed business expenses, and a severance benefit. The severance benefit will be in a lump sum cash payment, equal to the annual salary plus the target bonus in the year of the termination, the sum of which will be multiplied by three. Ms. Biller will also receive 100% of the Company’s paid health insurance coverage as provided immediately prior to the termination. The health insurance coverage will continue for two years following termination of employment, or until Ms. Biller becomes covered under another employer’s group health insurance plan, whichever comes first. Also, Ms. Biller will become fully vested in her options and restricted shares. These severance benefits upon a Change in Control will be paid 60 days after the date of termination, provided the execution and delivery to the Company of a general release and Ms. Biller is not in material breach of any of the provisions of her executive employment agreement. Any payment and benefits discussed in this paragraph regarding a termination associated with a Change in Control will be in lieu of any payments and benefits that would otherwise be awarded in an executive’s termination.

If payments or other amounts become due to Ms. Biller under her executive employment agreement or otherwise, and the excise tax imposed by Section 4999 of the Code applies to such payments, the Company is required to pay a gross up payment in the amount of this excise tax plus the amount of income, excise and other taxes due as a result of the gross up payment. All determinations required to be made and the assumptions to be utilized in arriving at such determinations, with certain exceptions, will be made by the Company’s independent certified public accountants serving immediately prior to the Change in Control.

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Potential Payments upon Termination or Change in Control
Andrea R. Biller

							Involuntary
							Not for		Involuntary		Resignation
Executive Payments	Voluntary		Early		Normal		Cause		for Cause		for Good		Change in
Upon Termination	Termination		Retirement		Retirement		Termination		Termination		Reason		Control		Death		Disability
Severance Payments	$	—	$	—	$	—	$	1,000,000	$	—	$	1,000,000	$	3,000,000	$	—	$	—
Bonus Incentive Compensation		—		—		—		—		—		—		—		—		—
Long Term Incentive Plan		—		—		—		—		—		—		—		—		—
Stock Options (unvested and accelerated)		—		—		—		—		—		—		—		—		—
Restricted Stock (unvested and accelerated)		—		—		—	$	21,824		—	$	21,824	$	21,824		—		—
Performance Shares (unvested and accelerated)		—		—		—		—		—		—		—		—		—
Benefit Continuation		—		—		—	$	9,242		—	$	9,242	$	9,242		—		—
Tax Gross-Up		—		—		—		—		—		—	$	428,575		—		—
Total Value	$	—	$	—	$	—	$	1,031,066	$	—	$	1,031,066	$	3,459,641		—		—

Jeffrey T. Hanson

In November, 2006, Mr. Hanson entered into an executive employment agreement with the Company pursuant to which Mr. Hanson serves as the Company’s Chief Investment Officer. The agreement provides for an annual base salary of $350,000 per annum. Mr. Hanson is eligible to receive an annual discretionary bonus of up to 100% of his base salary. The executive employment agreement has an initial term of three (3) years, and on the final day of the original term, and on each anniversary thereafter, the term of the Agreement is extended automatically for an additional year unless the Company or Mr. Hanson provides at least one year’s written notice that the term will not be extended. On October 23, 2008, the Company provided a notice not to extend the term of the executive employment agreement beyond its current extension date. In connection with the entering into of his executive employment agreement in November, 2006, Mr. Hanson received 44,000 shares of restricted stock and 22,000 stock options at an exercise price of $11.36 per share, one-third of which options vest on the grant date, and the remaining options vest in equal installments on the first and second anniversary date of the option grant. Mr. Hanson is entitled to receive a special bonus of $250,000 if, during the applicable fiscal year, (x) Mr. Hanson is the procuring cause of at least $25 million of equity from new sources, which equity is actually received by the Company during such fiscal year, for real estate investments sourced by the Company, and (y) Mr. Hanson is employed by the Company on the last day of such fiscal year.

Mr. Hanson’s annual base salary was increased from $350,000 to $450,000 on August 1, 2008. Similarly, Mr. Hanson’s target bonus compensation was increased from 100% to 150% of his base salary on August 1, 2008.

Mr. Hanson is also entitled to participate in the Company’s health and other benefit plans generally afforded to executive employees and is reimbursed for reasonable travel, entertainment and other reasonable expenses incurred in connection with his duties. The executive employment agreement contains confidentiality, non-competition, no raid, non-solicitation, non-disparagement and indemnification provisions.

In the event the Company terminates Mr. Hanson’s employment for Cause (as defined in his executive employment agreement) or if he voluntarily resigns without Good Reason (as defined in his executive employment agreement), Mr. Hanson is entitled to accrued salary and any unreimbursed business expenses. In the event that Mr. Hanson’s employment terminates because of the expiration of his term, death or disability, the Company will pay any accrued salary, any unreimbursed business expenses, and a prorated performance bonus equal to the performance bonus (and in the case of termination for reason of death or disability, equal to the maximum target) that otherwise would have been payable to Mr. Hanson in the fiscal year in which the termination occurs had he continued employment through the last day of such fiscal year, prorated for the number of calendar months he was employed by the Company in such fiscal year. The prorated performance bonus will be paid within 60 days after Mr. Hanson’s date of termination, provided that he executes and

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delivers to the Company a general release and is not in material breach of any of the provisions of the executive employment agreement.

In the event of termination of employment without Cause, or voluntary resignation with Good Reason, the Company will pay any accrued salary, any unreimbursed business expenses and a severance benefit, in a lump sum cash payment, equal to Mr. Hanson’s annual salary plus the target bonus in the year of the termination, the sum of which will be multiplied by a “severance benefit factor.” The “severance benefit factor” will be determined as follows: (a) if the date of termination occurs during the original three year employment term, the “severance benefit factor” will be the greater of one, and the number of months from the date of termination to the last day of the original three year employment term, divided by 12, or (b) if the date of termination is after the original three year employment term, the “severance benefit factor” will equal one. Also, all options become fully vested.

In the event of a termination by the Company without Cause at any time within 90 days before, or 12 months after, a Change in Control (as defined in the executive employment agreement), or in the event of resignation for Good Reason within 12 months after a Change in Control, or if without Good Reason during the period commencing six months after a Change in Control and ending 12 months after a Change in Control, then the Company will pay any accrued salary, any unreimbursed business expenses, and a severance benefit. The severance benefit will be in a lump sum cash payment, equal to the annual salary plus the target bonus in the year of the termination, the sum of which will be multiplied by three. Mr. Hanson will also receive 100% of the Company’s paid health insurance coverage as provided immediately prior to the termination. The health insurance coverage will continue for two years following termination of employment, or until Mr. Hanson becomes covered under another employer’s group health insurance plan, whichever comes first. Also, Mr. Hanson will become fully vested in his options and restricted shares. Mr. Hanson’s executive employment agreement further provides for an additional severance benefit equal to the lesser of (a) one percent of the amount of equity from new sources not previously related to the Company or any of its subsidiaries, for which Mr. Hanson is the procuring cause in the Company’s fiscal year in which the date of termination occurs, which equity is actually received by the Company or any of its subsidiaries during such fiscal year, for real estate investments sourced by the Company or any of its subsidiaries, or (b) $250,000, if he is discharged by the Company without Cause, or he voluntarily resigns for Good Reason. The additional severance benefit to Mr. Hanson will be in lieu of the $250,000 special bonus to Mr. Hanson in respect of the fiscal year in which his termination of employment occurs.

These severance benefits upon a Change in Control will be paid 60 days after the date of termination, provided the execution and delivery to the Company of a general release and Mr. Hanson is not in material breach of any of the provisions of his executive employment agreement. Any payment and benefits discussed in this paragraph regarding a termination associated with a Change in Control will be in lieu of any payments and benefits that would otherwise be awarded in an executive’s termination.

If payments or other amounts become due to Mr. Hanson under his employment agreement or otherwise, and the excise tax imposed by Section 4999 of the Code applies to such payments, the Company is required to pay a gross up payment in the amount of this excise tax plus the amount of income, excise and other taxes due as a result of the gross up payment. All determinations required to be made and the assumptions to be utilized in arriving at such determinations, with certain exceptions, will be made by the Company’s independent certified public accountants serving immediately prior to the Change in Control.

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Potential Payments upon Termination or Change in Control
Jeffrey T. Hanson

							Involuntary
							Not for		Involuntary		Resignation
Executive Payments	Voluntary		Early		Normal		Cause		for Cause		for Good		Change in
Upon Termination	Termination		Retirement		Retirement		Termination		Termination		Reason		Control		Death		Disability
Severance Payments	$	—	$	—	$	—	$	1,375,000	$	—	$	1,375,000	$	3,625,000	$	—	$	—
Bonus Incentive Compensation		—		—		—		—		—		—		—		—		—
Long Term Incentive Plan		—		—		—		—		—		—		—		—		—
Stock Options (unvested and accelerated)		—		—		—		—		—		—		—		—		—
Restricted Stock (unvested and accelerated)		—		—		—	$	321,722		—	$	321,722	$	321,722		—		—
Performance Shares (unvested and accelerated)		—		—		—		—		—		—		—		—		—
Benefit Continuation		—		—		—	$	26,358		—	$	26,358	$	26,358		—		—
Tax Gross-Up		—		—		—		—		—		—		—		—		—
Total Value	$	—	$	—	$	—	$	1,723,080	$	—	$	1,723,080	$	3,973,080	$	—	$	—

Jacob Van Berkel

Mr. Van Berkel was promoted to Chief Operating Officer and Executive Vice President on March 1, 2008 which provides for an annual base salary of $400,000 per annum. Mr. Van Berkel is eligible to receive an annual discretionary bonus of up to 100% of his base salary. Effective December 23, 2008, Mr. Van Berkel and the Company entered into a change of control agreement pursuant to which in the event that Mr. Van Berkel is terminated without Cause or resigns for Good Reason upon a Change of Control (as defined in the change of control agreement) or within six months thereafter or is terminated without Cause or resigns for Good Reason within three months prior to a Change of Control, in contemplation thereof, Mr. Van Berkel is entitled to receive two times his base salary payable in accordance with the Company’s customary payroll practices, over a twelve month period (subject to the provisions of Section 409A of the Code) plus an amount equal to one time his target annual cash bonus payable in cash on the next immediately following date when similar annual cash bonus compensation is paid to other executive officers of the Company (but in no event later than March 15th of the calendar year following the calendar year to which such bonus payment relates). In addition, upon a Change of Control, all then unvested restricted shares automatically vest. The Company’s payment of any amounts to Mr. Van Berkel upon his termination upon a Change of Control is contingent upon his executing the Company’s then standard form of release.

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Potential Payments upon Termination or Change of Control
Jacob Van Berkel

							Involuntary
							Not for		Involuntary		Resignation
Executive Payments	Voluntary		Early		Normal		Cause		for Cause		for Good		Change in
Upon Termination	Termination		Retirement		Retirement		Termination		Termination		Reason		Control		Death		Disability
Severance Payments	$	—	$	—	$	—	$	—	$	—	$	—	$	1,200,000	$	—	$	—
Bonus Incentive Compensation		—		—		—		—		—		—		—		—		—
Long Term Incentive Plan		—		—		—		—		—		—		—		—		—
Stock Options (unvested and accelerated)(1)		—		—		—		—		—		—		—		—		—
Restricted Stock (unvested and accelerated)		—		—		—		—		—		—	$	423,749		—		—
Performance Shares (unvested and accelerated)		—		—		—		—		—		—		—		—		—
Benefit Continuation		—		—		—		—		—		—		—		—		—
Tax Gross-Up		—		—		—		—		—		—		—		—		—
Total Value	$	—	$	—	$	—	$	—	$	—	$	—	$	1,623,749	$	—	$	—

Compensation of Directors

Pursuant to the FPL Associates Compensation report obtained by the Board of Directors in contemplation of the Merger, directors’ compensation was further reviewed and revised in December 2007.

Only individuals who serve as directors and are otherwise unaffiliated with the Company (“Outside Directors”) receive compensation for serving on the Board and on its committees. Outside Directors are compensated for serving on the Board with a combination of cash and equity based compensation which includes annual grants of restricted stock, an annual retainer fee, meeting fees and chairperson fees. Directors are also reimbursed for out-of-pocket travel and lodging expenses incurred in attending Board and committee meetings.

Pursuant to the FPL Associates Compensation report, Board compensation was adjusted in December 2007 as follows: (i) an annual retainer fee of $50,000 per annum; (ii) a fee of $1,500 for each regular meeting of the Board of Directors attended in person or telephonically; (iii) a fee of $1,500 for each meeting of a standing committee of the Board of Directors attended in person or telephonically; and (iv) $60,000 worth of restricted shares of common stock issued at the then current market price of the common stock, to vest ratably in equal annual installments over three years, except in the event of a change in control, in which event vesting is accelerated. On March 12, 2008, the Compensation Committee, in consultation with Christenson Advisors, LLC, revised the compensation arrangements for the non-executive Chairman of the Board to provide for an annual retainer fee of $80,000 in cash, $140,000 worth of restricted shares of the Company’s common stock per annum to vest pro-rata over three years, and an annual allowance of $25,000. Outside Directors are also required to commit to an equity position in the Company over five years in the amount equal to $250,000 worth of common stock which may include annual restricted stock grants to the directors.

Effective March 12, 2008, Mr. Carpenter received an initial grant of 11,958 shares of restricted stock which is based upon the closing price of the Company’s common stock on March 12, 2008, which was $6.69.

Effective July 10, 2008, Mr. Murphy received an initial grant of 19,480 shares of restricted stock which is based upon the closing price of the Company’s common stock on July 10, 2008, which was $3.08.

Effective December 10, 2008, each of the Company’s Outside Directors, Glenn L. Carpenter, Harold H Greene, C. Michael Kojaian, Robert J. McLaughlin, Devin I. Murphy, D. Fleet Wallace, and Rodger D. Young received 20,000 shares of common stock which is based upon the closing price of the Company’s common stock on December 10, 2008, which was $1.30. Those shares represent the Company’s annual grant to its Outside Directors which, pursuant to the Company’s 2006 Omnibus Equity Plan, is set at $60,000 worth of restricted shares of the Company’s common stock based upon the closing price of such common stock on the date of the grant. However, in light of recent market conditions, the Company decided to limit such amount of

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grant in 2008 to 20,000 restricted shares of the Company’s common stock. Gary H. Hunt did not receive an annual restricted stock grant as he is currently serving as the Company’s Interim Chief Executive Officer and is not considered an Outside Director.

Director Compensation Table

	Fees Earned
	or Paid in		Stock
Director	Cash(1)		Awards(2)(3)		Total
Glenn L. Carpenter	$	117,000	$	82,915	$	199,915
Harold H. Greene	$	117,500	$	61,751	$	179,251
Gary H. Hunt	$	73,250	$	61,751	$	135,001
C. Michael Kojaian	$	108,500	$	20,040	$	128,540
Robert J. McLaughlin	$	134,000	$	20,040	$	154,040
Devin I. Murphy	$	60,110	$	9,666	$	69,776
Scott D. Peters(4)	$	0	$	0	$	0
Anthony W. Thompson(5)	$	0	$	0	$	0
D. Fleet Wallace	$	128,500	$	61,751	$	190,251
Rodger D. Young	$	132,000	$	20,040	$	152,040

(1)	Represents annual retainers plus all meeting and committee attendance fees earned by non-employee directors in 2008.
(2)	The amounts shown are the compensation costs recognized by the Company in 2008 in accordance with SFAS No. 123R. Mr. Carpenter received a grant of 11,958 shares of restricted stock on March 12, 2008, which also vest in three equal installments on each of the next three annual anniversary dates of the grant. The grant date fair value of the 11,958 shares of restricted stock was $80,000 based on a value of $6.69 per share on the date of the grant. Mr. Murphy received a grant of 19,480 shares of restricted stock on July 10, 2008, which also vest in three equal installments on each of the next three annual anniversary dates of the grant. The grant date fair value of the 19,480 shares of restricted stock was $60,000 based on a value of $3.08 per share on the date of the grant. Each of the Outside Directors received a grant of 20,000 shares on December 10, 2008 which vest in three equal increments on each of the next three annual anniversary dates of the grant. The grant date fair value of the 20,000 shares of restricted stock was $26,000 based on a value of $1.30 per share on the date of grant. Those shares represent the Company’s annual grant to its Outside Directors which, pursuant to the Company’s 2006 Omnibus Equity Plan, is set at $60,000 worth of restricted shares of the Company’s common stock based upon the closing price of such common stock on the date of the grant. However, in light of recent market conditions, the Company decided to limit such amount of grant in 2008 to 20,000 restricted shares of the Company’s common stock.
(3)	The following table shows the aggregate number of unvested stock awards and option awards granted to non-employee directors and outstanding as of December 31, 2008:

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				Stock Awards
	Options Outstanding			Outstanding at
Director	at Fiscal Year End			Fiscal Year End
Glenn L. Carpenter		0			45,288
Harold H. Greene		0			33,330
Gary H. Hunt		0			13,330
C. Michael Kojaian		0			25,997
Robert J. McLaughlin		0	(i)		25,997
Devin I. Murphy		0			39,480
Scott D. Peters(4)		0			0
Anthony W. Thompson(5)		0			0
D. Fleet Wallace		0			33,330
Rodger D. Young		10,000			25,997

(i)     Mr. McLaughlin exercised his option to purchase 10,000 shares of common stock of the Company on March 18, 2008, at $2.99 per share.

(4)	Mr. Peters resigned as Chief Executive Officer and President of the Company effective July 10, 2008.
(5)	Mr. Thompson resigned from the Board of Directors of the Company effective February 8, 2008

Stock Ownership Policy for Outside Directors

Under the current stock ownership policy, Outside Directors are required to accumulate an equity position in the Company over five years in an amount equal to $250,000 worth of common stock (the previous policy required an accumulation of $200,000 worth of common stock over a five year period). Shares of common stock acquired by Outside Directors pursuant to the restricted stock grants can be applied toward this equity accumulation requirement.

Compensation Committee Interlocks and Insider Participation

The members of the Compensation Committee during the year ended December 31, 2008 were D. Fleet Wallace, Chair, Glenn L. Carpenter, Gary H. Hunt, C. Michael Kojaian, Robert J. McLaughlin, and Rodger D. Young. In February, 2008 when Mr. Carpenter became Chairman of the Board, replacing Anthony W. Thompson, he resigned from the Compensation Committee. In July 2008, when Scott Peters resigned as Chief Executive Officer and President of the Company, Mr. Hunt assumed the position as Interim Chief Executive Officer, subsequently resigned from the Compensation Committee as Chairman and was replaced by D. Fleet Wallace as the new Chairman. In addition, Mr. Kojaian also became a member of the Company’s Compensation Committee. On February 9, 2009, Glenn L. Carpenter was appointed to serve as a member of the Company’s Compensation Committee and Mr. C. Michael Kojaian resigned as a member of the Compensation Committee.

Except for Gary H. Hunt, the current Interim Chief Executive Officer and a former member of the Compensation Committee, none of the current or former members of the Compensation Committee is or was a current or former officer or employee of the Company or any of its subsidiaries or had any relationship requiring disclosure by the Company under any paragraph of Item 404 of Regulation S-K of the SEC’s Rules and Regulations. During the year ended December 31, 2008, none of the executive officers of the Company served as a member of the board of directors or compensation committee of any other company that had one or more of its executive officers serving as a member of the Company’s Board of Directors or Compensation Committee.

Compensation Committee Report

The forgoing Compensation Committee Report is not to be deemed to be “soliciting material” or to be “filed” with the SEC or subject to Regulation 14A or 14C or to the liabilities of Section 18 of the Exchange Act, except to the extent that the Company specifically requests that such information be treated as soliciting

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material or specifically incorporates it by reference into any filing under the Securities Act of 1933, as amended (the “Securities Act”) or the Exchange Act.

The Compensation Committee has reviewed and discussed with the Company’s management the Compensation Discussion and Analysis presented in this Annual Report. Based on such review and discussion, the Compensation Committee has recommended to the Board of Directors that the Compensation Discussion and Analysis be included in this Annual Report.

The Compensation Committee

D. Fleet Wallace, Chair
Glenn L. Carpenter
Robert J. McLaughlin
Rodger D. Young

Item 12.   Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters.

Equity Compensation Plan Information

This information is included in Part II, Item 5, of this Annual Report.

Stock Ownership Table

The following table shows the share ownership as of May 15, 2009 by persons known by the Company to be beneficial holders of more than 5% of the Company’s outstanding capital stock, directors, named executive officers, and all current directors and executive officers as a group. Unless otherwise noted, the stock listed is

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common stock, and the persons listed have sole voting and disposition powers over the shares held in their names, subject to community property laws if applicable.

Name and Address	Amount and Nature of			Percent of
of Beneficial Owner(1)	Beneficial Ownership			Class(2)
Persons affiliated with Kojaian Holdings LLC(3)		3,616,326			5.5	%
Persons affiliated with Kojaian Ventures, L.L.C.(4)		11,700,000			17.9	%
Anthony W. Thompson(5)		7,723,043			11.8	%
Sharon Thompson(6)		5,209,103			8.0	%
Wellington Management Company, LLP(7)		8,863,296			13.6	%
Executive Officers and Directors
Glenn L. Carpenter		78,354	(8)(9)(10)(11)			*
Harold H. Greene		48,796	(9)(10)(11)			*
Gary H. Hunt		28,796	(9)(10)			*
C. Michael Kojaian		15,345,322	(10)(11)(12)		23.5	%
Robert J. McLaughlin		157,801	(10)(11)(13)			*
Devin I. Murphy		59,481	(11)(14)			*
D. Fleet Wallace		48,796	(9)(10)(11)			*
Rodger D. Young		71,241	(10)(11)(15)			*
Andrea R. Biller		337,810	(16)			*
Jeffrey T. Hanson		578,990	(17)			*
Richard W. Pehlke		218,166	(18)			*
Scott D. Peters		536,083	(19)			*
Jacob Van Berkel		217,600	(20)			*
All Current Directors and Executive Officers as a Group (12 persons)		17,191,153	(21)		26.3	%

* Less than one percent.

(1)	Unless otherwise indicated, the address for each of the individuals listed below is c/o Grubb & Ellis Company, 1551 Tustin Avenue, Suite 300, Santa Ana, California 92705.
(2)	The percentage of shares of capital stock shown for each person in this column and in this footnote assumes that such person, and no one else, has exercised any outstanding warrants, options or convertible securities held by him or her exercisable on May 15, 2009 or within sixty days thereafter.
(3)	Kojaian Holdings LLC is affiliated with both C. Michael Kojaian, a director of the Company, and Kojaian Ventures, L.L.C. (See footnote 12 below). The address for Kojaian Holdings LLC is 39400 Woodward Avenue, Suite 250, Bloomfield Hills, Michigan 48304.
(4)	Kojaian Ventures, L.L.C. is affiliated with both C. Michael Kojaian, a director of the Company and Kojaian Holdings LLC (see footnote 12 below). The address of Kojaian Ventures, L.L.C. is 39400 Woodward Ave., Suite 250, Bloomfield Hills, Michigan 48304.
(5)	Pursuant to a Form 4 filed with the SEC by Anthony Thompson on May 18, 2009, Mr. Thompson is deemed to be the beneficial owner of 7,723,043 shares of common stock. According to such Form 4, of these shares, 5,209,103 shares are held in a brokerage account by Mr. and Mrs. Thompson as joint tenants with right of survivorship and, accordingly, Mr. and Mrs. Thompson share voting and dispositive power with respect to such shares. Mr. Thompson’s address is c/o Thompson Family Office, 1901 Main St., Suite 108, Irvine, California 92614.
(6)	Pursuant to a Form 4 filed by Anthony Thompson on May 18, 2009, Sharon Thompson may be deemed to be the beneficial owner of 5,209,103 shares of common stock. According to such Form 4, these

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	shares are held in a brokerage account by Mr. and Mrs. Thompson as joint tenants with a right of survivorship and, accordingly, Mr. and Mrs. Thompson share voting and dispositive power with respect to such shares. Mrs. Thompson’s address is c/o Thompson Family Office, 1901 Main St., Suite 108, Irvine, California 92614.
(7)	Wellington Management Company, LLP (“Wellington”), in its capacity as investment advisor, may be deemed to beneficially own 8,863,296 shares of the Company which are held of record by clients of Wellington. Wellington’s address is 75 State Street, Boston, Massachusetts 02109.
(8)	Beneficially owned shares include 3,986 restricted shares of common stock that vested on March 12, 2009. Beneficially owned shares include 3,986 restricted shares of common stock which vest on March 12, 2010 and 3,986 restricted shares of common stock which vest on March 12, 2011, such 7,972 shares granted pursuant to the Company’s 2006 Omnibus Equity Plan.
(9)	Beneficially owned shares include 3,667 restricted shares of common stock which vest on June 27, 2009 and 3,666 restricted shares of common stock which vest on June 27, 2010.

(10)	Beneficially owned shares include 2,999 restricted shares of common stock that vest on the first business day following December 10, 2009 and 2,998 restricted shares of common stock that vest on the first business day following December 10, 2010, such 5,998 shares granted pursuant to the Company’s 2006 Omnibus Equity Plan.
(11)	Beneficially owned shares include 20,000 restricted shares of common stock which vest in equal 331/3 portions on each of the first, second, and third anniversaries of December 10, 2008, such 20,000 shares granted pursuant to the Company’s 2006 Omnibus Equity Plan.
(12)	Beneficially owned shares include shares directly held by Kojaian Holdings LLC and Kojaian Ventures, L.L.C. C. Michael Kojaian, a director of the Company, is affiliated with Kojaian Ventures, L.L.C. and Kojaian Holdings LLC. Pursuant to rules established by the SEC, the foregoing parties may be deemed to be a “group,” as defined in Section 13(d) of the Exchange Act, and C. Michael Kojaian is deemed to have beneficial ownership of the shares directly held by Kojaian Ventures, L.L.C. and the shares directly held by Kojaian Holdings LLC.
(13)	Beneficially owned shares include 92,241 shares of common stock held directly by Robert J. McLaughlin and 65,560 shares of common stock held directly by: (i) Katherine McLaughlin’s IRA (Mr. McLaughlin wife’s IRA of which Mr. McLaughlin disclaims beneficial ownership; (ii) Robert J. and Katherine McLaughlin Trust; and (iii) Louise H. McLaughlin Trust.
(14)	Beneficially owned shares include 19,480 restricted shares of common stock which vest in equal 331/3 portions on each first business day following July 10, 2009, 2010 and 2011 granted pursuant to the Company’s 2006 Omnibus Equity Plan.
(15)	Beneficially owned shares include 10,000 shares of common stock issuable upon exercise of fully vested outstanding options.
(16)	Beneficially owned shares include 35,200 restricted shares of common stock issuable upon exercise of fully vested outstanding options. Beneficially owned shares include 8,800 restricted shares of common stock that vest on June 27, 2009 and 8,800 shares of restricted stock that vest on June 27, 2010.
(17)	Beneficially owned shares include 22,000 shares of common stock issuable upon exercise of fully vested options. Beneficially owned shares include 5,866 restricted shares of common stock that vest on June 27, 2009 and 5,867 restricted shares of common stock that vest on June 27, 2010.
(18)	Beneficially owned shares include 16,666 shares of common stock issuable upon exercise of fully vested outstanding options. Beneficially owned shares include 8,334 shares of Company common stock issuable upon exercise of outstanding options which do not vest until February 15, 2010. Beneficially owned shares include 25,000 restricted shares of common stock that vest on the first business day after January 24, 2010 and 25,000 restricted shares of common stock that vest on the first business day after January 24, 2011, all of these 50,000 shares are subject to certain terms and conditions contained in that certain Restricted Stock Agreement between the Company and Mr. Pehlke dated January 24, 2008. In addition, beneficially owned shares include 119,000 restricted shares of common stock awarded to Mr. Pehlke pursuant to the Company’s 2006 Omnibus Equity Plan which will vest in equal thirty-three

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	and one-third percent (331/3%) installments on each first business day after the first, second and third anniversaries of the grant date (December 3, 2008) and are subject to acceleration under certain conditions.
(19)	Scott D. Peters resigned his position with the Company in July 2008. Mr. Peters, upon resignation, forfeited 308,000 shares of unvested restricted stock. Beneficially owned shares include 29,333 shares of common stock issuable upon exercise of fully vested outstanding options.
(20)	Beneficially owned shares include 120,000 restricted shares of common stock awarded to Mr. Van Berkel pursuant to the Company’s 2006 Omnibus Equity Plan which will vest in equal thirty-three and one-third (33 1/3%) installments on each first business day after the first, second and third anniversaries of the grant date (December 3, 2008) and are subject to acceleration under certain conditions. Beneficially owned shares also include 26,667 restricted shares of common stock which vest on the first business day following January 24, 2010 and 26,666 restricted shares of common stock which vest on the first business day following January 24, 2011. Furthermore beneficially owned shares include 5,867 shares of restricted common stock which vest on the first business day after December 4, 2009 and 5,866 shares of restricted common stock which vest on the first business day after December 4, 2010.
(21)	Beneficially owned shares include the following shares of common stock issuable upon exercise of outstanding options which are exercisable on May 15, 2009 or within sixty days thereafter under the Company’s various stock option plans: Mr. Young — 10,000 shares, Ms. Biller — 35,200 shares, Mr. Hanson — 22,000 shares, Mr. Pehlke — 16,666 shares, and all current directors and executive officers as a group 83,866 shares.

Item 13.   Certain Relationships and Related Transactions, and Director Independence.

Related Party Transaction Review Policy

The Company recognizes that transactions between the Company and any of its directors, officers or principal stockholders or an immediate family member of any director, executive officer or principal stockholder can present potential or actual conflicts of interest and create the appearance that Company decisions are based on considerations other than the best interests of the Company and its stockholders. The Company also recognizes, however, that there may be situations in which such transactions may be in, or may not be inconsistent with, the best interests of the Company.

The review and approval of related party transactions are governed by the Code of Business Conduct and Ethics. The Code of Business Conduct and Ethics is a part of the Company’s Employee Handbook, a copy of which is distributed to each of the Company’s employees at the time that they begin working for the Company, and the Company’s Salespersons Manual, a copy of which is distributed to each of the Company’s brokerage professionals at the time that they begin working for the Company. The Code of Business Conduct and Ethics is also available on the Company’s website at www.grubb-ellis.com. In addition, within 60 days after he or she begins working for the Company and once per year thereafter, the Company requires that each employee and brokerage professional to complete an on-line “Business Ethics” training class and certify to the Company that he or she has read and understands the Code of Business Conduct and Ethics and is not aware of any violation of the Code of Business Conduct and Ethics that he or she has not reported to management.

In order to ensure that related party transactions are fair to the Company and no worse than could have been obtained through “arms-length” negotiations with unrelated parties, such transactions are monitored by the Company’s management and regularly reviewed by the Audit Committee, which independently evaluates the benefit of such transactions to the Company’s stockholders. Pursuant to the Audit Committee’s charter, on a quarterly basis, management provides the Audit Committee with information regarding related party transactions for review and discussion by the Audit Committee and, if appropriate, the Board of Directors. The Audit Committee, in its discretion, may approve, ratify, rescind or take other action with respect to a related party transaction or, if necessary or appropriate, recommend that the Board of Directors approve, ratify, rescind or take other action with respect to a related party transaction.

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In addition, each director and executive officer annually delivers to the Company a questionnaire that includes, among other things, a request for information relating to any transactions in which both the director, executive officer, or their respective family members, and the Company participates, and in which the director, executive officer, or such family member, has a material interest.

Related Party Transactions

The following are descriptions of certain transactions since the beginning of 2008 in which the Company is a participant and in which any of the Company’s directors, executive officers, principal stockholders or any immediate family member of any director, executive officer or principal stockholder has or may have a direct or indirect material interest.

Grubb & Ellis Realty Advisors, Inc.

Until its dissolution in 2008, the Company owned approximately 19% of the issued and outstanding common stock of Grubb & Ellis Realty Advisors, Inc. (“GERA”), a special purpose acquisition company organized by the Company to acquire one or more United States commercial real estate properties and/or assets. C. Michael Kojaian, a director of the Company, and Kojaian Ventures, LLC, an entity with which Mr. Kojaian is affiliated and in which Mr. Kojaian has a substantial economic interest, collectively owned approximately 6.4% of the outstanding common stock of GERA. Mr. Kojaian was also the Chairman of the Board and Chief Executive Officer of GERA until its dissolution in April 2008. Mark Rose, the former Chief Executive Officer of the Company, was also a director and Chief Executive Officer of GERA and Richard W. Pehlke, the Chief Financial Officer of the Company, was also the Chief Financial Officer of GERA until its dissolution in April 2008.

As a result of GERA failing to obtain the requisite consents of its stockholders, GERA was unable to effect a business combination within the proscribed deadline of March 3, 2008 in accordance with its charter. Consequently, in April 2008 the stockholders of GERA approved the dissolution and liquidation of GERA.

In the first quarter of 2008 the Company wrote-off its investment in GERA of approximately $5.8 million, including its stock and warrant purchases, operating advances and third party costs. The Company also paid third-party legal, accounting, printing and other costs (other than monies paid to stockholders of GERA on liquidation) associated with the dissolution and liquidation of GERA. In addition, the various exclusive service agreements that the Company had previously entered into with GERA for transaction services, property and facilities management, and project management, are no longer of any force or effect.

Other Related Party Transactions

A director of the Company, C. Michael Kojaian, is affiliated with and has a substantial economic interest in Kojaian Management Corporation and its various affiliated portfolio companies (collectively, “KMC”). KMC is engaged in the business of investing in and managing real property both for its own account and for third parties. During the 2008 calendar year, KMC paid the Company and its subsidiaries the following approximate amounts in connection with real estate services rendered: $9,345,000 for management services, which include reimbursed salaries, wages and benefits of $4,028,000; $832,000 in real estate sale and leasing commissions; and $90,000 for other real estate and business services. The Company also paid KMC approximately $2,970,000, which reflected fees paid by KMC’s asset management clients for asset management services performed by KMC, but for which the Company billed the clients.

The Company believes that the fees and commissions paid to and by the Company as described above were comparable to those that would have been paid to or received from unaffiliated third parties in connection with similar transactions.

In August 2002, the Company entered into an office lease with a landlord related to KMC, providing for an annual average base rent of $365,400 over the ten-year term of the lease.

As of August 28, 2006, the Company entered into a written agreement with 1up Design Studios, Inc. (“1up”), of which Ryan Osbrink, the son of Robert H. Osbrink, the Company’s former Executive Vice

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President and President, Transaction Services (Mr. Osbrink left the Company in June 2008), is a principal shareholder, to procure graphic design and consulting services on assignments provided by brokerage professionals and/or employees of the Company. The term of the agreement was for a period beginning September 1, 2006 ending on August 31, 2007 and was terminable by either party upon 60 days prior notice. The Agreement provided that the Company would pay 1up a monthly retainer of $25,000, from which 1up would deduct the cost of its design services. The pricing for 1up’s design services was fixed pursuant to a price schedule attached as an exhibit to the agreement. In addition, at the inception of the agreement, the Company sold certain computer hardware and software to 1up for a price of $6,500 which was the approximate net book value of such items. The written agreement with 1up was terminated effective as of March 1, 2007 at the request of the Audit Committee which believed that, although the agreement did not violate the Company’s related party transaction policy, termination of the agreement was appropriate in order to avoid any appearance of impropriety that might result from the agreement to pay 1up a fixed monthly retainer. While the Company is no longer obligated to pay the monthly retainer to 1up, the Company has continued to use 1up to provide design and consulting services on an ad hoc basis. During the 2008 fiscal year, 1up was paid approximately $168,000 in fees for its services. The Company believes that amounts paid to 1up for services are comparable to the amounts that the Company would have paid to unaffiliated, third parties.

GERI owns a 50.0% managing member interest in Grubb & Ellis Apartment REIT Advisor, LLC. Each of Grubb & Ellis Apartment Management, LLC and ROC REIT Advisors, LLC own a 25.0% equity interest in Grubb & Ellis Apartment REIT Advisor, LLC. As of December 31, 2008, Andrea R. Biller, the Company’s General Counsel, Executive Vice President and Secretary, owned an equity interest of 18.0% of Grubb & Ellis Apartment Management, LLC. As of December 31, 2007, each of Scott D. Peters, the Company’s former Chief Executive Officer and President, and Andrea R. Biller owned an equity interest of 18.0% of Grubb & Ellis Apartment Management, LLC. On August 8, 2008, in accordance with the terms of the operating agreement of Grubb & Ellis Apartment Management, LLC, Grubb & Ellis Apartment Management LLC tendered settlement for the purchase of the 18.0% equity interest in Grubb & Ellis Apartment Management LLC that was previously owned by Mr. Peters. As a consequence, through a wholly-owned subsidiary, the Company’s equity interest in Grubb & Ellis Apartment Management, LLC increased from 64.0% to 82.0% after giving effect to this purchase from Mr. Peters. As of December 31, 2008 and December 31, 2007, Stanley J. Olander, Jr., the Company’s Executive Vice President — Multifamily, owned an equity interest of 33.3% of ROC REIT Advisors, LLC.

GERI owns a 75.0% managing member interest in Grubb & Ellis Healthcare REIT Advisor, LLC. Grubb & Ellis Healthcare Management, LLC owns a 25.0% equity interest in Grubb & Ellis Healthcare REIT Advisor, LLC. As of December 31, 2008, each of Ms. Biller and Mr. Hanson, the Company’s Chief Investment Officer and GERI’s President, owned an equity interest of 18.0% of Grubb & Ellis Healthcare Management, LLC. As of December 31, 2007, each of Mr. Peters, Ms. Biller and Mr. Hanson owned an equity interest of 18.0% in Grubb & Ellis Healthcare Management, LLC. On August 8, 2008, in accordance with the terms of the operating agreement of Grubb & Ellis Healthcare Management, LLC, Grubb & Ellis Healthcare Management, LLC tendered settlement for the purchase of 18.0% equity interest in Grubb & Ellis Healthcare Management, LLC that was previously owned by Mr. Peters. As a consequence, through a wholly-owned subsidiary, the Company’s equity interest in Grubb & Ellis Healthcare Management, LLC increased from 46.0% to 64.0% after giving effect to this purchase from Mr. Peters.

Anthony W. Thompson, former Chairman of the Company and NNN, as a special member, was entitled to receive up to $175,000 annually in compensation from each of Grubb & Ellis Apartment Management, LLC and Grubb & Ellis Healthcare Management, LLC. Effective February 8, 2008, upon his resignation as Chairman, he was no longer a special member. As part of his resignation, the Company has agreed to continue to pay him up to an aggregate of $569,000 through the initial offering periods related to Apartment REIT, Inc. and Healthcare REIT, Inc., of which $263,000 remains outstanding as of as of December 31, 2008.

In connection with his resignation on July 10, 2008, Mr. Peters is no longer a member of Grubb & Ellis Apartment Management, LLC and Grubb & Ellis Healthcare Management, LLC.

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The grants of membership interests in Grubb & Ellis Apartment Management, LLC and Grubb & Ellis Healthcare Management, LLC to certain executives are being accounted for by the Company as a profit sharing arrangement. Compensation expense is recorded by the Company when the likelihood of payment is probable and the amount of such payment is estimable, which generally coincides with Grubb & Ellis Apartment REIT Advisor, LLC and Grubb & Ellis Healthcare REIT Advisor, LLC recording its revenue. Compensation expense related to this profit sharing arrangement associated with Grubb & Ellis Apartment Management, LLC includes distributions of $88,000, $175,000 and $22,000, respectively, earned by Mr. Thompson, $85,000, $159,000 and $50,000, respectively, earned by Mr. Peters and $122,000, $159,000 and $50,000, respectively, earned by Ms. Biller for the years ended December 31, 2008, 2007 and 2006, respectively. Compensation expense related to this profit sharing arrangement associated with Grubb & Ellis Healthcare Management, LLC includes distributions of $175,000 and $175,000, respectively, earned by Mr. Thompson, $387,000 and $414,000, respectively, earned by Mr. Peters and $548,000 and $414,000, respectively, earned by each of Ms. Biller and Mr. Hanson for the years ended December 31, 2008 and 2007, respectively. No distributions were paid in 2006.

As of December 31, 2008 and December 31, 2007, the remaining 82.0% and 64.0%, respectively, equity interest in Grubb & Ellis Apartment Management, LLC and the remaining 64.0% and 46.0%, respectively, equity interest in Grubb & Ellis Healthcare Management, LLC were owned by GERI. Any allocable earnings attributable to GERI’s ownership interests are paid to GERI on a quarterly basis. Grubb & Ellis Apartment Management, LLC incurred expenses of $338,000, $492,000 and $182,000 for the years ended December 31, 2008, 2007 and 2006, respectively, and Grubb & Ellis Healthcare Management, LLC incurred expenses of $1,385,000, $882,000 and $0 for the years ended December 31, 2008, 2007 and 2006, respectively, to Company employees, which was included in compensation expense in the consolidated statement of operations.

Mr. Thompson and Mr. Rogers have agreed to transfer up to 15.0% of the common stock of Realty they own to Mr. Hanson, assuming he remains employed by the Company in equal increments on July 29, 2007, 2008 and 2009. The transfers will be settled with 743,160 shares of the Company’s common stock (557,370 from Mr. Thompson and 185,790 from Mr. Rogers). Because Mr. Thompson and Mr. Rogers were affiliates of NNN at the time of such transfers, NNN and the Company recognized a compensation charge. Mr. Hanson is not entitled to any reimbursement for his tax liability or any gross-up payment.

On September 20, 2006, the Company awarded Mr. Peters a bonus of $2.1 million, which was payable in 178,957 shares of the Company’s common stock, representing a value of $1.3 million and a cash tax gross-up payment of $854,000.

The Company’s directors and officers, as well as officers, managers and employees of the Company’s subsidiaries, have purchased, and may continue to purchase, interests in offerings made by the Company’s programs at a discount. The purchase price for these interests reflects the fact that selling commissions and marketing allowances will not be paid in connection with these sales. The net proceeds to the Company from these sales made net of commissions will be substantially the same as the net proceeds received from other sales.

Mr. Thompson has routinely provided personal guarantees to various lending institutions that provided financing for the acquisition of many properties by the Company’s programs. These guarantees cover certain covenant payments, environmental and hazardous substance indemnification and indemnification for any liability arising from the SEC investigation of Triple Net Properties. In connection with the formation transactions, the Company indemnified Mr. Thompson for amounts he may be required to pay under all of these guarantees to which Triple Net Properties, Realty or NNN Capital Corp. is an obligor to the extent such indemnification would not require the Company to book additional liabilities on the Company’s balance sheet.

In September 2007, NNN acquired Cunningham Lending Group LLC (“Cunningham”), a company that was wholly-owned by Mr. Thompson, for $255,000 in cash. Prior to the acquisition, Cunningham made unsecured loans to some of the properties under management by GERI. The loans, which bear interest at rates ranging from 8.0% to 12.0% per annum are reflected in advances to related parties on the Company’s balance

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sheet and are serviced by the cash flows from the programs. In accordance with FIN No. 46(R), the Company consolidated Cunningham in its financial statements beginning in 2005.

As of December 31, 2007, advances to a program 30.0% owned and managed by Anthony W. Thompson, the Company’s former Chairman, who subsequently resigned in February 2008 but remains a substantial stockholder of the Company, totaled $1.0 million including accrued interest. These amounts were repaid in full during the year ended December 31, 2008 and as of December 31, 2008 there were no outstanding advances related to this program. However, as of December 31, 2008, accounts receivable totaling $310,000 is due from this program. On November 4, 2008, the Company made a formal written demand to Mr. Thompson for these monies.

As of December 31, 2008, advances to a program 40.0% owned and, as of April 1, 2008, managed by Mr. Thompson totaled $983,000, which includes $61,000 in accrued interest. As of December 31, 2008, the total outstanding balance of $983,000 was past due. The total past due amount of $983,000 has been reserved for and is included in the allowance for uncollectible advances. On November 4, 2008 and April 3, 2009, the Company made a formal written demand to Mr. Thompson for these monies.

NNN was organized in September 2006 to acquire each of Triple Net Properties, Realty, and NNN Capital Corp, to bring the businesses conducted by those companies under one corporate umbrella. On November 30, 2006, NNN completed a $160.0 million private placement of common stock to institutional investors and certain accredited investors with 16 million shares of its common stock sold in the offering at $10.00 per share. Net proceeds from the offering were $146.0 million. Triple Net Properties was the accounting acquirer of Realty and NNN Capital Corp.

Independence of Directors

The Board has determined that seven of its eight current directors, Messrs. Carpenter, Greene, Kojaian, McLaughlin, Murphy, Wallace and Young are independent.

For purposes of determining the independence of its directors, the Board applies the following criteria:

No Material Relationship

The director must not have any material relationship with the Company. In making this determination, the Board considers all relevant facts and circumstances, including commercial, charitable and familial relationships that exist, either directly or indirectly, between the director and the Company.

Employment

The director must not have been an employee of the Company at any time during the past three years. In addition, a member of the director’s immediate family (including the director’s spouse; parents; children; siblings; mothers-, fathers-, brothers-, sisters-, sons- and daughters-in-law; and anyone who shares the director’s home, other than household employees) must not have been an executive officer of the Company in the prior three years.

Other Compensation

The director or an immediate family member must not have received more than $100,000 per year in direct compensation from the Company, other than in the form of director fees, pension or other forms of deferred compensation during the past three years.

Auditor Affiliation

The director must not be a current partner or employee of the Company’s internal or external auditor. An immediate family member of the director must not be a current partner of the Company’s internal or external auditor, or an employee of such auditor who participates in the auditor’s audit, assurance or tax compliance (but not tax planning) practice. In addition, the director or an immediate family member must not have been within the last three years a partner or employee of the Company’s internal or external auditor who personally worked on the Company’s audit.

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Interlocking Directorships

During the past three years, the director or an immediate family member must not have been employed as an executive officer by another entity where one of the Company’s current executive officers served at the same time on the compensation committee.

Business Transactions

The director must not be an employee of another entity that, during any one of the past three years, received payments from the Company, or made payments to the Company, for property or services that exceed the greater of $1 million or 2% of the other entity’s annual consolidated gross revenues. In addition, a member of the director’s immediate family must not have been an executive officer of another entity that, during any one of the past three years, received payments from the Company, or made payments to the Company, for property or services that exceed the greater of $1.0 million or 2% of the other entity’s annual consolidated gross revenues.

Item 14.   Principal Accountant Fees and Services.

Ernst & Young LLP, independent public accountants, began serving as the Company’s auditors on December 10, 2007. Ernst & Young also served as the legacy Grubb & Ellis’ auditors from January 1, 2007 to December 7, 2007. Ernst & Young billed the Company and the legacy Grubb & Ellis the fees and costs set forth below for services rendered during the years ended December 31, 2008 and 2007, respectively.

	2008		2007
Audit Fees(1)
Audit and quarterly review fees of consolidated financial statements	$	2,519,287	$	1,024,450
SEC filings, including consents and comment letters		8,300		236,000
Total Audit Fees		2,527,587		1,260,450
Audit Related Fees(2)
Employee benefit plan audits		28,325		25,500
Accounting consultations		113,937		318,804
Due diligence services on pending merger		—		161,306
Property audits		108,407		—
SAS No. 70 attestation reports		115,000		85,000
Total Audit-Related Fees		365,669		590,610
Tax Fees(2)
Tax return preparation		250,000		69,500
Tax planning		290,487		—
Total Tax Fees		540,487		69,500
Total Fees	$	3,433,743	$	1,920,560

(1)	Includes fees and expenses related to the year-end audit and interim reviews, notwithstanding when the fees and expenses were billed or when the services were rendered.
(2)	Includes fees and expenses for services rendered from January through December of the year, notwithstanding when the fees and expenses were billed.

All audit and non-audit services have been pre-approved by the Audit Committee.

Deloitte & Touche LLP, independent public accountants, served as NNN’s auditors for the period from January 1, 2007 to December 7, 2007. Deloitte & Touche billed NNN the fees and costs set forth below for services rendered during the year ended December 31, 2007. Deloitte & Touche billed the Company $165,000 in connection with services performed related to the 2008 Form 10-K.

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	2007
Audit Fees(1)
Audit of consolidated financial statements	$	881,297
Timely quarterly reviews		756,970
SEC filings, including comfort letters, consents and comment letters		—
Total Audit Fees		1,638,267
Audit Related Fees(2)
Audits in connection with acquisitions and other accounting consultations		373,996
Due diligence services on pending merger		19,798
Total Audit-Related Fees		393,794
Tax Fees(2)
Tax return preparation		61,850
Total Tax Fees		61,850
Total Fees	$	2,093,911

(1)	Includes fees and expenses related to the year-end audit and interim reviews, notwithstanding when the fees and expenses were billed or when the services were rendered.
(2)	Includes fees and expenses for services rendered from January through December of the year, notwithstanding when the fees and expenses were billed.

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PART IV.

Item 15.   Exhibits and Financial Statement Schedules

The following documents are filed as part of this report:

(a)     The following Reports of Independent Registered Public Accounting Firm and Consolidated Financial Statements are submitted herewith:

Reports of Independent Registered Public Accounting Firms

Consolidated Balance Sheets at December 31, 2008 and 2007 (as restated)

Consolidated Statements of Operations for the years ended December 31, 2008, 2007 (as restated) and 2006 (as restated)

Consolidated Statements of Stockholders’ Equity for the years ended December 31, 2008, 2007 (as restated) and 2006 (as restated)

Consolidated Statements of Cash Flows for the years ended December 31, 2008, 2007 (as restated) and 2006 (as restated)

Notes to Consolidated Financial Statements

(b)     Consolidated Financial Statements Schedules

Schedule II — Valuation and Qualifying Accounts

Schedule III — Real Estate and Accumulated Depreciation

(c)     Exhibits required to be filed by Item 601 of Regulation S-K:

(2) Plan of Acquisition, Reorganization, Arrangement, Liquidation or Succession

2.1	Agreement and Plan of Merger, dated as of May 22, 2007, among NNN Realty Advisors, Inc., B/C Corporate Holdings, Inc. and the Registrant, incorporated herein by reference to Exhibit 2.1 to the Registrant’s Current Report on Form 8-K filed on May 23, 2007.
2.2	Merger Agreement, dated as of January 22, 2009, by and among the Registrant, GERA Danbury LLC, GERA Property Acquisition, LLC, Matrix Connecticut, LLC and Matrix Danbury, LLC, incorporated herein by reference to Exhibit 2.1 to the Registrant’s Current Report on Form 8-K filed on January 29, 2009.
2.3	First Amendment to Merger Agreement, dated as of January 22, 2009, by and among the Registrant, GERA Danbury LLC, GERA Property Acquisition, LLC, Matrix Connecticut, LLC and Matrix Danbury, LLC, incorporated herein by reference to Exhibit 2.2 to the Registrant’s Current Report on Form 8-K filed on January 29, 2009.
2.4	Second Amendment to Merger Agreement, dated as of May 19, 2009, by and among the Registrant, GERA Danbury LLC, GERA Property Acquisition, LLC, Matrix Connecticut, LLC and Matrix Danbury, LLC, incorporated herein by reference to Exhibit 2.1 to the Registrant’s Current Report on Form 8-K filed on May 26, 2009.

(3) Articles of Incorporation and Bylaws

3.1	Restated Certificate of Incorporation of the Registrant, incorporated herein by reference to Exhibit 3.2 to the Registrant’s Annual Report on Form 10-K filed on March 31, 1995.
3.2	Certificate of Retirement with Respect to 130,233 Shares of Junior Convertible Preferred Stock of Grubb & Ellis Company, filed with the Delaware Secretary of State on January 22, 1997, incorporated herein by reference to Exhibit 3.3 to the Registrant’s Quarterly Report on Form 10-Q filed on February 13, 1997.

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3.3	Certificate of Retirement with Respect to 8,894 Shares of Series A Senior Convertible Preferred Stock, 128,266 Shares of Series B Senior Convertible Preferred Stock, and 19,767 Shares of Junior Convertible Preferred Stock of Grubb & Ellis Company, filed with the Delaware Secretary State on January 22, 1997, incorporated herein by reference to Exhibit 3.4 to the Registrant’s Quarterly Report on Form 10-Q filed on February 13, 1997.
3.4	Amendment to the Restated Certificate of Incorporation of the Registrant as filed with the Delaware Secretary of State on December 9, 1997, incorporated herein by reference to Exhibit 4.4 to the Registrant’s Statement on Form S-8 filed on December 19, 1997 (File No. 333-42741).
3.5	Amended and Restated Certificate of Designations, Number, Voting Powers, Preferences and Rights of Series A Preferred Stock of Grubb & Ellis Company, as filed with the Secretary of State of Delaware on September 13, 2002, incorporated herein by reference to Exhibit 3.8 to the Registrant’s Annual Report on Form 10-K filed on October 15, 2002.
3.6	Certificate of Designations, Number, Voting Powers, Preferences and Rights of Series A-1 Preferred Stock of Grubb & Ellis Company, as filed with the Secretary of State of Delaware on January 4, 2005, incorporated herein by reference to Exhibit 2 to the Registrant’s Current Report on Form 8-K filed on January 6, 2005.
3.7	Preferred Stock Exchange Agreement, dated as of December 30, 2004, between the Registrant and Kojaian Ventures, LLC, incorporated herein by reference to Exhibit 1 to the Registrant’s Current Report on Form 8-K filed on January 6, 2005.
3.8	Certificate of Designations, Number, Voting Powers, Preferences and Rights of Series A-1 Preferred Stock of Grubb & Ellis Company, as filed with the Secretary of State of Delaware on January 4, 2005, incorporated herein by reference to Exhibit 2 to the Registrant’s Current Report on Form 8-K filed on January 6, 2005.
3.9	Certificate of Amendment to the Amended and Restated Certificate of Incorporation of Grubb & Ellis Company as filed with the Delaware Secretary of State on December 7, 2007, incorporated herein by reference to Exhibit 3.1 to the Registrant’s Current Report on Form 8-K filed on December 13, 2007.
3.10	Bylaws of the Registrant, as amended and restated effective May 31, 2000, incorporated herein by reference to Exhibit 3.5 to the Registrant’s Annual Report on Form 10-K filed on September 28, 2000.
3.11	Amendment to the Amended and Restated By-laws of the Registrant, effective as of December 7, 2007, incorporated herein by reference to Exhibit 3.2 to Registrant’s Current Report on Form 8-K filed on December 13, 2007.
3.12	Amendment to the Amended and Restated By-laws of the Registrant, effective as of January 25, 2008, incorporated herein by reference to Exhibit 3.1 to Registrant’s Current Report on Form 8-K filed on January 31, 2008.
3.13	Amendment to the Amended and Restated By-laws of the Registrant, effective as of October 26, 2008, incorporated herein by reference to Exhibit 3.1 to Registrant’s Current Report on Form 8-K filed on October 29, 2008.
3.14	Amendment to the Amended and Restated By-laws of the Registrant, effective as of February 5, 2009, incorporated herein by reference to Exhibit 3.1 to Registrant’s Current Report on Form 8-K filed on February 9, 2009.

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(4) Instruments Defining the Rights of Security Holders, including Indentures.

4.1	Registration Rights Agreement, dated as of April 28, 2006, between the Registrant, Kojaian Ventures, LLC and Kojaian Holdings, LLC, incorporated herein by reference to Exhibit 99.2 to the Registrant’s Current Report on Form 8-K filed on April 28, 2006.
4.2†	Warrant Agreement, dated as of May 18, 2009, by and between the Registrant, Deutsche Bank Trust Company Americas, Fifth Third Bank, JPMorgan Chase, N.A. and KeyBank, National Association.

On an individual basis, instruments other than Exhibits listed above under Exhibit 4 defining the rights of holders of long-term debt of the Registrant and its consolidated subsidiaries and partnerships do not exceed ten percent of total consolidated assets and are, therefore, omitted; however, the Company will furnish supplementally to the Commission any such omitted instrument upon request.

(10) Material Contracts

10.1*	Employment Agreement entered into on November 9, 2004, between Robert H. Osbrink and the Registrant, effective January 1, 2004, incorporated herein by reference to Exhibit 10.1 to the Registrant’s Quarterly Report on Form 10-Q filed on November 15, 2004.
10.2*	Employment Agreement entered into on March 8, 2005, between Mark E. Rose and the Registrant, incorporated herein by reference to Exhibit 10.1 to the Registrant’s Current Report on Form 8-K filed on March 11, 2005.
10.3*	Employment Agreement, dated as of January 1, 2005, between Maureen A. Ehrenberg and the Registrant, incorporated herein by reference to Exhibit 1 to the Registrant’s Current Report on Form 8-K filed on June 10, 2005.
10.4*	First Amendment to Employment Agreement entered into between Robert Osbrink and the Registrant, dated as of September 7, 2005, incorporated herein by reference to Exhibit 10.6 to the Registrant’s Report on Form 10-K filed on September 28, 2005.
10.5*	Form of Restricted Stock Agreement between the Registrant and each of the Registrant’s Outside Directors, dated as of September 22, 2005, incorporated herein by reference to Exhibit 10.15 to Amendment No. 1 to the Registrant’s Registration Statement on Form S-1 filed on June 19, 2006 (File No. 333-133659).
10.6*	Employment Agreement entered into on April 1, 2006, between Frances P. Lewis and the Registrant, incorporated herein by reference to Exhibit 10.17 to the Registrant’s Current Report on Form 10-K filed on September 28, 2006.
10.7*	Grubb & Ellis Company 2006 Omnibus Equity Plan effective as of November 9, 2006, incorporated herein by reference to Appendix A to the Registrant’s Proxy Statement for the 2006 Annual Meeting of Stockholders filed on October 10, 2006.

10.8   Purchase and Sale Agreement between Abrams Office Center Ltd and GERA Property Acquisition LLC, a wholly-owned subsidiary of the Registrant, dated as of October 24, 2006, incorporated herein by reference to Exhibit 99.1 to the Registrant’s Current Report on Form 8-K filed on October 30, 2006.

10.9*	Second Amendment to Employment Agreement entered into between Robert H. Osbrink and the Registrant, dated as of November 15, 2006, incorporated herein by reference to Exhibit 1 to the Registrant’s Current Report on Form 8-K filed on November 21, 2006.
10.10	Letter Agreement between Abrams Office Centre and GERA Property Acquisition LLC, a wholly owned subsidiary of the Registrant, dated December 8, 2006, incorporated herein

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by reference to Exhibit 99.1 to the Registrant’s Current Report on Form 8-K filed on December 14, 2006.

10.11	Second Amendment to the Purchase and Sale Agreement between Abrams Office Centre, Ltd. and GERA Property Acquisition LLC, a wholly owned subsidiary of the Registrant, dated December 15, 2006, incorporated herein by reference to Exhibit 99.1 to the Registrant’s Current Report on Form 8-K filed on December 21, 2006.
10.12	Letter Agreement between Abrams Office Centre, Ltd. and GERA Property Acquisition LLC, a wholly owned subsidiary of the Registrant, dated December 29, 2006, incorporated herein by reference to Exhibit 99.1 to the Registrant’s Current Report on Form 8-K filed on January 5, 2007.
10.13	Letter Agreement between Abrams Office Centre, Ltd. and GERA Property Acquisition LLC, a wholly owned subsidiary of the Registrant, dated December 29, 2006, incorporated herein by reference to Exhibit 99.2 to the Registrant’s Current Report on Form 8-K filed on January 5, 2007.
10.14	Letter Agreement between Abrams Office Centre, Ltd. and GERA Property Acquisition LLC, a wholly owned subsidiary of the Registrant, dated January 4, 2007, incorporated herein by reference to Exhibit 99.3 to the Registrant’s Current Report on Form 8-K filed on January 5, 2007.
10.15	Letter Agreement between Abrams Office Centre, Ltd. and GERA Property Acquisition LLC, a wholly owned subsidiary of the Registrant, dated January 19, 2007, incorporated herein by reference to Exhibit 99.1 to the Registrant’s Current Report on Form 8-K filed on January 25, 2007.
10.16	Purchase and Sale Agreement between F/B 6400 Shafer Ct. (Rosemont), LLC and GERA Property Acquisition LLC, a wholly owned subsidiary of the Registrant, dated as of February 9, 2007, incorporated herein by reference to Exhibit 99.1 to the Registrant’s Current Report on Form 8-K filed on February 9, 2007.
10.17*	Employment Agreement between Richard W. Pehlke and the Registrant, dated as of February 9, 2007, incorporated herein by reference to Exhibit 99.1 to the Registrant’s Current Report on Form 8-K filed on February 15, 2007.
10.18*	Amendment No. 1 Employment Agreement between Richard W. Pehlke and the Registrant, dated as of December 23, 2008, incorporated herein by reference to Exhibit 10.1 to the Registrant’s Current Report on Form 8-K filed on December 23, 2008.
10.19	Purchase and Sale Agreement between Danbury Buildings Co., L.P., Danbury Buildings, Inc. and GERA Property Acquisition LLC, a wholly owned subsidiary of the Registrant, dated February 20, 2007, incorporated herein by reference to Exhibit 99.2 to the Registrant’s Current Report on Form 8-K filed on February 22, 2007.
10.20	Letter Agreement between Danbury Buildings Co., L.P., Danbury Buildings, Inc. and GERA Property Acquisition LLC, a wholly owned subsidiary of the Registrant, dated March 16, 2007, incorporated herein by reference to Exhibit 99.1 to the Registrant’s Current Report on Form 8-K filed on March 21, 2007.
10.21	Amendment to Purchase and Sale Agreement between Danbury Buildings, Inc. and Danbury Buildings Co., L.P. and GERA Property Acquisition LLC, a wholly owned subsidiary of the Registrant, dated February 20, 2007, incorporated herein by reference to Exhibit 99.1 to the Registrant’s Current Report on Form 8-K filed on May 3, 2007.
10.22	Letter Amendment to Purchase and Sale Agreement between Danbury Buildings, Inc. and Danbury Buildings Co., L.P. and GERA Property Acquisition LLC, a wholly owned

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subsidiary of the Registrant, dated as of April 30, 2007, incorporated herein by reference to Exhibit 99.2 to the Registrant’s Current Report on Form 8-K filed on May 3, 2007.

10.23	Form of Voting Agreement between Registrant and certain stockholders or NNN Realty Advisors, Inc., incorporated herein by reference to Exhibit 10.1 to the Registrant’s Current Report on Form 8-K filed on May 23, 2007.
10.24	Form of Voting Agreement between NNN Realty Advisors, Inc. and certain stockholders of the Registrant, incorporated herein by reference to Exhibit 10.2 to the Registrant’s Current Report on Form 8-K filed on May 23, 2007.
10.25	Form of Escrow Agreement between NNN Realty Advisors, Inc., Wilmington Trust Company and the Registrant, incorporated herein by reference to Exhibit 10.3 to the Registrant’s Current Report on Form 8-K filed on May 23, 2007.
10.26	Deed of Trust, Security Agreement, Assignment of Rents and Fixture Filing by and among GERA Abrams Centre LLC, Rebecca S. Conrad, as Trustee for the benefit of Wachovia Bank, National Association, dated as of June 15, 2007 incorporated herein by reference to Exhibit 10.1 to the Registrant’s Current Report on Form 8-K filed on June 19, 2007.
10.27	Commercial Offer to purchase by and between Aurora Health Care, Inc. and Triple Net Properties, LLC, dated November 21, 2007, incorporated herein by reference to Exhibit 10.1 to the Registrant’s Current Report on Form 8-K filed on December 28, 2007.
10.28	First Amendment to Offer to Purchase by and between Aurora Medical Group, Inc. and Triple Net Properties, LLC, dated November 29, 2007, incorporated herein by reference to Exhibit 10.2 to the Registrant’s Current Report on Form 8-K filed on December 28, 2007.
10.29	Form of Lease among NNN Eastern Wisconsin Medical Portfolio, LLC and Aurora Medical Group, Inc., dated as of December 21, 2007, incorporated herein by reference to Exhibit 10.3 to the Registrant’s Current Report on Form 8-K filed on December 28, 2007.
10.30	Form of Subordination, Non-Disturbance and Attornment Agreement, between Aurora Medical Group, Inc. and PNC Bank, National Association dated as of December 21, 2007, incorporated herein by reference to Exhibit 10.4 to the Registrant’s Current Report on Form 8-K filed on December 28, 2007.
10.31	Form of Estoppel Certificate from Aurora Medical Group, Inc. to PNC Bank, National Association, dated as of December 21, 2007 incorporated herein by reference to Exhibit 10.5 to the Registrant’s Current Report on Form 8-K filed on December 28, 2007.
10.32	Form of Guaranty executed by Aurora Health Care, Inc. in favor of NNN Eastern Wisconsin Medical Portfolio, LLC dated December 21, 2007, incorporated herein by reference to Exhibit 10.6 to the Registrant’s Current Report on Form 8-K filed on December 28, 2007.
10.33	Promissory Note for $32,300,000 senior loan of NNN Eastern Wisconsin Medical Portfolio, LLC to the order of PNC Bank, National Association, dated December 21, 2007, incorporated herein by reference to Exhibit 10.7 to the Registrant’s Current Report on Form 8-K filed on December 28, 2007.
10.34	Promissory Note for $3,400,000 mezzanine loan by NNN Eastern Wisconsin Medical Portfolio, LLC to the order of PNC Bank, National Association, dated December 21, 2007, incorporated herein by reference to Exhibit 10.8 to the Registrant’s Current Report on Form 8-K filed on December 28, 2007.
10.35	Mortgage, Security Agreement, Assignment of Leases and Rents and Fixture Filing by NNN Eastern Wisconsin Medical Portfolio, LLC in favor of PNC Bank, National

174

Association, dated December 21, 2007, incorporated herein by reference to Exhibit 10.9 to the Registrant’s Current Report on Form 8-K filed on December 28, 2007.

10.36	Agreement for Purchase and Sale of Real Property and Escrow Instructions, dated as of October 31, 2008, by and between GERA Danbury LLC and Matrix Connecticut, LLC, incorporated herein by reference to Exhibit 99.1 to the Registrant’s Current Report on Form 8-K filed on November 5, 2008.
10.37*	Employment Agreement between NNN Realty Advisors, Inc. and Scott D. Peters incorporated herein by reference to Exhibit 10.26 to the Registrant’s Annual Report on Form 10-K filed on March 17, 2008.
10.38*	Employment Agreement between NNN Realty Advisors, Inc. and Andrea R. Biller incorporated herein by reference to Exhibit 10.27 to the Registrant’s Annual Report on Form 10-K filed on March 17, 2008.
10.39*	Employment Agreement between NNN Realty Advisors, Inc. and Francene LaPoint incorporated herein by reference to Exhibit 10.28 to the Registrant’s Annual Report on Form 10-K filed on March 17, 2008.
10.40	Employment Agreement between NNN Realty Advisors, Inc. and Jeffrey T. Hanson incorporated herein by reference to Exhibit 10.29 to the Registrant’s Annual Report on Form 10-K filed on March 17, 2008.
10.41	Indemnification Agreement dated as of October 23, 2006 between Anthony W. Thompson and NNN Realty Advisors, Inc., incorporated herein by reference to Exhibit 10.30 to the Registrant’s Annual Report on Form 10-K filed on March 17, 2008.
10.42	Indemnification and Escrow Agreement by and among Escrow Agent, NNN Realty Advisors, Inc., Anthony W. Thompson, Louis J. Rogers and Jeffrey T. Hanson, together with Certificate as to Authorized Signatures incorporated herein by reference to Exhibit 10.31 to the Registrant’s Annual Report on Form 10-K filed on March 17, 2008.
10.43*	Form of Indemnification Agreement executed by Andrea R. Biller, Glenn L. Carpenter, Howard H. Greene, Jeffrey T. Hanson, Gary H. Hunt, C. Michael Kojaian, Francene LaPoint, Robert J. McLaughlin, Devin I. Murphy, Robert H. Osbrink, Richard W. Pehlke, Scott D. Peters, Dylan Taylor, Jacob Van Berkel, D. Fleet Wallace and Rodger D. Young. incorporated herein by reference to Exhibit 10.41 to the Registrant’s Annual Report on Form 10-K filed on March 17, 2008.
10.44*	Change of Control Agreement dated December 23, 2008 by and between Dylan Taylor and the Registrant, incorporated herein by reference to Exhibit 10.2 to the Registrant’s Current Report on Form 8-K filed on December 24, 2008.
10.45*	Change of Control Agreement dated December 23, 2008 by and between Jacob Van Berkel and the Company, incorporated herein by reference to Exhibit 10.3 to the Registrant’s Current Report on Form 8-K filed on December 24, 2008.
10.46	First Amendment to Agreement for Purchase and Sale of Real Property and Escrow Instructions, dated as of January 8, 2009, by and between GERA Danbury LLC and Matrix Connecticut, LLC, incorporated herein by reference to Exhibit 99.1 to the Registrant’s Current Report on Form 8-K filed on January 14, 2009.
10.47	Second Amendment to Agreement for Purchase and Sale of Real Property and Escrow Instructions, dated as of January 12, 2009, by and between GERA Danbury LLC and Matrix Connecticut, LLC, incorporated herein by reference to Exhibit 99.2 to the Registrant’s Current Report on Form 8-K filed on January 14, 2009.

175

10.48	Third Amendment to Agreement for Purchase and Sale of Real Property and Escrow Instructions, dated as of January 14, 2009, by and between GERA Danbury LLC and Matrix Connecticut, LLC, incorporated herein by reference to Exhibit 99.1 to the Registrant’s Current Report on Form 8-K filed on January 21, 2009.
10.49	Fourth Amendment to Agreement for Purchase and Sale of Real Property and Escrow Instructions, dated as of January 16, 2009, by and between GERA Danbury LLC and Matrix Connecticut, LLC, incorporated herein by reference to Exhibit 99.2 to the Registrant’s Current Report on Form 8-K filed on January 21, 2009.
10.50	Fifth Amendment to Agreement for Purchase and Sale of Real Property and Escrow Instructions, dated as of January 20, 2009, by and between GERA Danbury LLC and Matrix Connecticut, LLC, incorporated herein by reference to Exhibit 99.3 to the Registrant’s Current Report on Form 8-K filed on January 21, 2009.
10.51	Sixth Amendment to Agreement for Purchase and Sale of Real Property and Escrow Instructions, dated as of January 21, 2009, by and between GERA Danbury LLC and Matrix Connecticut, LLC, incorporated herein by reference to Exhibit 99.2 to the Registrant’s Current Report on Form 8-K filed on January 27, 2009.
10.52	Escrow Agreement, dated as of January 22, 2009, by and among Grubb & Ellis Company, Matrix Connecticut, LLC and First American Title Insurance Company, incorporated herein by reference to Exhibit 99.1 to the Registrant’s Current Report on Form 8-K/A filed on January 29, 2009.
10.53	Mortgage, Security Agreement, Assignment of Rents and Fixture Filing between GERA 6400 Shafer LLC to Wachovia Bank, National Association dated as of June 15, 2007, incorporated herein by reference to Exhibit 10.2 to the Registrant’s Current Report on Form 8-K filed on June 19, 2007.
10.54	Open-end Mortgage, Security Agreement, Assignment of Rents and Fixture Filing between GERA Danbury LLC to Wachovia Bank, National Association dated as of June 15, 2007, incorporated herein by reference to Exhibit 10.3 to the Registrant’s Current Report on Form 8-K filed on June 19, 2007.
10.55	Letter Agreement by and among Wachovia Bank, National Association, GERA Abrams Centre LLC and GERA 6400 Shafer LLC, dated September 28, 2007, incorporated herein by reference to Exhibit 10.1 to the Registrant’s Current Report on Form 8-K filed on October 4, 2007.
10.56	Letter Agreement by and between Wachovia Bank, National Association and GERA Danbury, LLC, dated September 28, 2007, incorporated herein by reference to Exhibit 10.2 to the Registrant’s Current Report on Form 8-K filed on October 4, 2007.
10.57	Second Amended and Restated Credit Agreement, dated as of December 7, 2007, among the Registrant, certain of its subsidiaries (the “Guarantors”), the “Lender” (as defined therein), Deutsche Bank Securities, Inc., as syndication agent, sole book-running manager and sole lead arranger, and Deutsche Bank Trust Company Americas, as initial issuing bank, swing line bank and administrative agent, incorporated herein by reference to Exhibit 10.1 to Registrant’s Current Report on Form 8-K filed on December 13, 2007.
10.58	Second Amended and Restated Security Agreement, dated as of December 7, 2007, among the Registrant, certain of its subsidiaries and Deutsche Bank Trust Company Americas, as administrative agent, for the “Secured Parties” (as defined therein), incorporated herein by reference to Exhibit 10.2 to Registrant’s Current Report on Form 8-K filed on December 13, 2007.

176

10.59	First Letter Amendment, dated as of August 4, 2008, by and among the Registrant, the guarantors named therein, Deutsche Bank Trust Company Americas, as administrative agent, the financial institutions identified therein as lender parties, Deutsche Bank Trust Company Americas, as syndication agent, and Deutsche Bank Securities Inc., as sole book running manager and sole lead arranger, incorporated herein by reference to Exhibit 99.1 to Registrant’s Current Report on Form 8-K filed on August 6, 2008.
10.60	Second Letter Amendment to the Registrant’s senior secured revolving credit facility executed on November 4, 2008, and dated as of September 30, 2008, incorporated herein by reference to Exhibit 10.2 to the Registrant’s Quarterly Report on Form 10-Q filed on November 10, 2008.
10.61†	Third Amended and Restated Credit Agreement, dated as of May 18, 2009, among the Registrant, certain of its subsidiaries (the “Guarantors”), the “Lender” (as defined therein), Deutsche Bank Securities, Inc., as syndication agent, sole book-running manager and sole lead arranger, and Deutsche Bank Trust Company Americas, as initial issuing bank, swing line bank and administrative agent.
10.62†	Third Amended and Restated Security Agreement, dated as of May 18, 2009, among the Registrant, certain of its subsidiaries and Deutsche Bank Trust Company Americas, as administrative agent, for the “Secured Parties” (as defined therein).

(14) Code of Ethics

14.1    Amendment to Code of Business Conduct and Ethics of the Registrant, incorporated herein by reference to Exhibit 14.1 to the Registrant’s Current Report on Form 8-K filed on January 31, 2008.

(16) Change in Certifying Accountants

16.1    Letter from Deloitte & Touche LLP to the Securities and Exchange Commission, dated December 14, 2007, incorporated herein by reference to Exhibit 16.1 to the Registrant’s Current Report on Form 8-K filed on December 14, 2007.

(21)† Subsidiaries of the Registrant

(23)  Consent of Independent Registered Public Accounting Firm

23.1†	Consent of Ernst & Young LLP
23.2†	Consent of Deloitte & Touche LLP

(31.1)† Section 302 Certifications

(32)† Section 906 Certification

(99)   Additional Exhibits

99.1       Letter of termination from Grubb &Ellis Realty Advisors, Inc. to the Registrant dated as of February 28, 2008, incorporated herein by reference to Exhibit 99.1 to the Registrant’s Current Report on Form 8-K filed on February 29, 2008.

†	Filed herewith.
*	Management contract or compensatory plan arrangement.

177

SCHEDULE II — VALUATION AND QUALIFYING ACCOUNTS

GRUBB & ELLIS COMPANY

December 31, 2008

	Balance at		Charged
	Beginning		to					Balance at
	of		Costs and					End
(In thousands)	Period		Expenses		Deductions(1)			of Period
Allowance for accounts receivable
Year Ended December 31, 2008	$	1,376	$	12,446	$	(3,289	)	$	10,533
Year Ended December 31, 2007	$	723	$	709	$	(56	)	$	1,376
Year Ended December 31, 2006	$	153	$	886	$	(316	)	$	723
Allowance for advances and notes receivable
Year Ended December 31, 2008	$	1,839	$	1,331	$	—		$	3,170
Year Ended December 31, 2007	$	1,400	$	451	$	(12	)	$	1,839
Year Ended December 31, 2006	$	562	$	811	$	27		$	1,400

(1) Uncollectible accounts written off, net of recoveries

178

Schedule III — REAL ESTATE AND ACCUMULATED DEPRECIATION

GRUBB & ELLIS COMPANY

													Maximum
													Life on
													Which
													Depreciation
							Costs						in Latest
	Initial Costs to Company						Capitalized						Income		Gross Amount at Which Carried at December 31, 2008
					Buildings and		Subsequent to		Date		Date		Statement				Buildings and				Accumulated
(In thousands)	Encumbrance		Land		Improvements		Acquisition		Constructed		Acquired		is Computed		Land		Improvements		Total		Depreciation
Properties Held for Sale
Rocky Mountain Exchange (Office)	$	411	$	1,202	$	2,559	$	505		1984		6/8/2005		N/A	$	396	$	1,089	$	1,485		366
Denver, CO 200 Galleria		84,000		7,440		64,591		571		1984		1/31/2007		N/A		5,527		50,276		55,803		4,550
Atlanta, GA The Avallon Complex		53,000		7,748		54,771		628		1986-2001		7/10/2007		N/A		4,765		34,650		39,415		1,968
Austin, TX Danbury Corporate Center		78,000		3,689		58,666		9,427		1981		12/7/2007		N/A		1,008		57,370		58,378		2,634
Danbury, CT Abrams Centre		20,540		3,012		14,650		1,268		1983		12/7/2007		N/A		2,025		11,968		13,993		1,234
Dallas, TX 6400 Shafer		21,961		3,222		16,313		777		1979		12/7/2007		N/A		1,105		8,621		9,726		640
Rosemont, IL
	$	257,912	$	26,313	$	211,550	$	13,176							$	14,826	$	163,974	$	178,800	$	11,392

(a)  The changes in real estate for the year ended December 31, 2008 are as follows:

(In thousands)
Balance at December 31, 2007	$	335,957
Acquisitions		144,162
Additions		12,813
Real estate related impairments		(71,488	)
Disposals and deconsolidations		(242,644	)
Balance at December 31, 2008	$	178,800

(b)  The changes in accumulated depreciation for the year ended December 31, 2007 are as follows:

(In thousands)
Balance at December 31, 2007	$	3,781
Additions		7,760
Disposals and deconsolidations		(149	)
Balance at December 31, 2008	$	11,392

(b)  The changes in real estate for the year ended December 31, 2007 are as follows:

(In thousands)
Balance at December 31, 2006	$	44,325
Acquisitions		671,985
Additions		266
Disposals and deconsolidations		(380,619	)
Balance at December 31, 2007	$	335,957

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(b)  The changes in accumulated depreciation for the year ended December 31, 2007 are as follows:

(In thousands)
Balance at December 31, 2006	$	230
Additions		3,845
Disposals and deconsolidations		(294	)
Balance at December 31, 2007	$	3,781

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SIGNATURES

Pursuant to the requirements of Section 13 or 15 (d) of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.

Grubb & Ellis Company (Registrant)
/s/  Gary H. Hunt	May 27, 2009
Gary H. Hunt Interim Chief Executive Officer and Director (Principal Executive Officer)

Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the following persons on behalf of the Registrant and in the capacities and on the dates indicated.

Signature	Title	Date
/s/  Gary H. Hunt Gary H. Hunt	Interim Chief Executive Officer and Director (Principal Executive Officer)	May 27, 2009
/s/  Richard W. Pehlke Richard W. Pehlke	Chief Financial Officer (Principal Financial and Accounting Officer)	May 27, 2009
/s/  Glenn L. Carpenter Glenn L. Carpenter	Director	May 27, 2009
/s/  Harold H. Greene Harold H. Greene	Director	May 27, 2009
/s/  C. Michael Kojaian C. Michael Kojaian	Director	May 27, 2009
/s/  Robert J. McLaughlin Robert J. McLaughlin	Director	May 27, 2009
/s/  Devin I. Murphy Devin I. Murphy	Director	May 27, 2009
/s/  D. Fleet Wallace D. Fleet Wallace	Director	May 27, 2009
/s/  Rodger D. Young Rodger D. Young	Director	May 27, 2009

181

EX-4.2

Exhibit 4.2

WARRANT AGREEMENT

Dated as of May 18, 2009

by and between

Grubb & Ellis Company

and

Deutsche Bank Trust Company Americas

Fifth Third Bank

JPMorgan Chase, N.A.

KeyBank National Association

WARRANT AGREEMENT

TABLE OF CONTENTS

		Page
SECTION 1.	Defined Terms	1
SECTION 2.	Warrant Certificates	5
SECTION 3.	Issuance of Warrants	5
SECTION 4.	Execution of Warrant Certificates	6
SECTION 5.	Registration and Countersignature	6
SECTION 6.	Transfers and Exchanges	6
SECTION 7.	Exercise of Warrants	7
SECTION 8.	Adjustment of Number of Warrant Shares Purchasable and Exercise Price	9
SECTION 9.	Consolidation, Merger, Equity Exchange, Distributions	13
SECTION 10.	Notice of Adjustments	14
SECTION 11.	Payment of Taxes	14
SECTION 12.	Mutilated or Missing Warrant Certificates	15
SECTION 13.	Reservation of Shares	15
SECTION 14.	Notices of Certain Corporate Actions	15
SECTION 15.	Holders’ Special Rights	16
SECTION 16.	Expenses	17
SECTION 17.	Representations, Warranties and Covenants of the Company	17
SECTION 18.	Registration Rights	19
SECTION 19.	Indemnification and Contribution	27
SECTION 20.	Notices to the Company and the Holders	29
SECTION 21.	Supplements and Amendments	30
SECTION 22.	Successors	30
SECTION 23.	Termination	30

i

		Page
SECTION 24.	Governing Law; Jurisdiction	30
SECTION 25.	Benefits of this Warrant Agreement	30
SECTION 26.	Counterparts	30
SECTION 27.	Enforcement	30
SECTION 28.	Further Assurances	31
SECTION 29.	Entire Agreement	31

EXHIBIT A — Form of Warrant Certificate

EXHIBIT B — Allocation of Warrants

ii

WARRANT AGREEMENT

          WARRANT AGREEMENT (this “Warrant Agreement”) dated as of May 18, 2009 by and between Grubb & Ellis Company, a Delaware corporation (the “Company”), and the Holders listed in Exhibit B.

          WHEREAS, the Company is issuing the Warrants in accordance with that certain Third Amended and Restated Credit Agreement, dated as of the date hereof (the “Credit Facility”), by and among Company, the guarantors named therein, the lenders named therein, Deutsche Bank Trust Company Americas, as syndication agent, Deutsche Bank Securities Inc., as sole book-running manager and sole lead arranger, and Deutsche Bank Trust Company Americas, as initial issuing bank, swing line bank and administrative agent; and

          WHEREAS, the Warrants entitle the holders of such Warrants, upon proper exercise, during the Exercise Period (as defined in Section 1), to receive from the Company such number of shares (the “Warrant Shares”) of Company’s common stock, par value $0.01 per share (each, a “Share”) at a price of $0.01 per Share (the “Exercise Price”), that, in the aggregate, after giving effect to the Shares issuable upon the exercise of the Warrants, on October 1, 2009, constitute fifteen percent (15%) of the issued and outstanding Shares of the Company on a fully diluted basis. The number of Warrant Shares and the Exercise Price shall be subject to adjustment as provided herein. The Warrants shall be allocated among the Holders as provided on Exhibit B hereto.

          NOW, THEREFORE, in consideration of the premises and the mutual agreements herein set forth, the parties hereto agree as follows:

     SECTION 1. Defined Terms.

          “Affiliate” shall mean, with respect to any specified Person, any other Person that directly, or indirectly through one or more intermediaries, controls, is controlled by, or is under common control with, such specified Person. The term “control” (including the terms “controlled by”, “controlling” and “under common control with”) shall mean the possession, directly or indirectly, of the power to direct or cause the direction of the management and policies of a Person, whether through the ownership of voting securities, as trustee or executor, by contract or otherwise, including, without limitation, the ownership, directly or indirectly, of securities having the power to elect a majority of the board of directors or similar body governing the affairs of such Person.

          “Additional Shares” shall mean all Shares issued or sold by the Company on or after the date hereof.

          “Administrative Agent” shall have the meaning set forth in the Credit Facility.

          “Bank Holding Company Affiliate” shall mean, with respect to any Holder that is a BHCA Holder, (a) if such Holder is a bank holding company, any company controlled by such bank holding company or (b) the bank holding company that controls such Holder and any other Person controlled by such bank holding company.

          “BHCA Holder” shall mean a bank holding company or a subsidiary of a bank holding company.

          “Blackout Period” shall have the meaning set forth in Section 18.3 of this Warrant Agreement.

          “Business Day” shall mean any day other than a Saturday, Sunday or a day on which commercial banks in the City of New York are authorized or required by law to close.

          “Capital Stock” shall mean (a) with respect to any Person that is a corporation, any and all shares, interests, participations, rights or other equivalents (however designated) of corporate stock; and (b) with respect to any other Person, any and all partnership, membership or other equity interests of such Person.

          “Code” shall mean the Internal Revenue Code of 1986, as amended.

          “Commitments” shall have the meaning set forth in the Credit Facility.

          “Company” shall have the meaning set forth in the preamble hereto.

          “Credit Facility” shall have the meaning set forth in the preamble hereto.

          “Convertible Securities” shall mean evidences of indebtedness or Equity Interests which are convertible into or exchangeable or exercisable for Additional Shares, either immediately or upon the arrival of a specified date or the happening of a specified event.

          “Convertible Security Value” shall mean the fair market value of a Convertible Security on the date of issuance, determined in good faith by the Company on a reasonable basis, less the proceeds received by the Company for such conversion or exchange.

          “Current Market Price” per Share on any date specified herein, shall mean the average daily Market Price during the period of the most recent twenty (20) days, ending on such date, on which the national securities exchanges were open for trading, except that if no Shares are then listed or admitted to trading on any national securities exchange or quoted in the over-the-counter market, the Current Market Price shall be the Market Price on such date.

          “Demand for Registration” shall have the meaning set forth in Section 18.2 of this Warrant Agreement.

          “Demand Registration” shall have the meaning set forth in Section 18.2 of this Warrant Agreement.

          “Demand Registration Statement” shall have the meaning set forth in Section 18.2 of this Warrant Agreement.

          “Equity Interests” shall mean Capital Stock or warrants, options or other rights to acquire Capital Stock.

          “Exchange Act” shall mean the Securities Exchange Act of 1934, as amended, and any similar or successor federal statute, and the rules and regulations of the SEC thereunder, all as the same shall be in effect at any applicable time.

          “Exempt Issuances” shall mean:

          (a) the grant or issuance of the Warrants or the issuance of any Warrant Shares upon exercise of any Warrant; or

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          (b) issuances or grants which are approved by each Holder as not being subject to the anti-dilution provisions set forth in this Warrant Agreement.

          “Exercise Date” shall have the meaning set forth in Section 7.8 of this Warrant Agreement.

          “Exercise Period” shall mean the period commencing on October 1, 2009 and continuing until 5:00 p.m. New York City time on September 30, 2019.

          “Exercise Price” shall mean, on the date hereof, the purchase price per Share as set forth in the recitals hereto, and thereafter shall mean such dollar amount as shall result from the adjustment specified in Section 8.

          “Expiration Date” shall mean the earlier of (a) 5:00 p.m. New York City time on September 30, 2019, or (b) if the Company completes the Recapitalization Plan, the date such Recapitalization Plan was completed.

          “FINRA” shall mean the Financial Industry Regulatory Authority, Inc.

          “Holder” shall mean any Person that is or Persons that are the registered holder(s) of the Warrants or Warrant Shares as registered on the Warrant register maintained by the Company in accordance with this Warrant Agreement.

          “KV Agreement” shall mean that certain registration rights agreement dated as of April 28, 2006 by and among the Company, Kojaian Ventures L.L.C. and Kojaian Holdings, LLC.

          “KV Registration Rights” shall mean those certain registration rights with respect to the Company’s securities as set forth in the KV Agreement.

          “Lender” shall have the meaning set forth in the Credit Facility.

          “Loans” shall mean the aggregate principal amount of loans made under the Credit Facility.

          “Majority Holders” shall mean Holders of Warrants evidencing a majority in number of the total number of Shares at the time purchasable upon the exercise of all then outstanding Warrants.

          “Market Price” shall mean, on any date specified herein, the amount per Share equal to (a) if Shares are then listed or admitted to trading on any national securities exchange, the last sale price of such Share on such date or, if no such sale takes place on such date, the average of the closing bid and asked prices thereof on such date, in each case as officially reported on the principal national securities exchange on which the Shares are then listed or admitted to trading, (b) if Shares are not then listed or admitted to trading on any national securities exchange but are designated as a national market system security by FINRA, the last trading price of the Shares on such date, (c) if there shall have been no trading on such date or if the Shares are not so designated, the average of the closing bid and asked prices of the Shares on such date as shown by FINRA automated quotation system, or (d) if Shares are not then listed or admitted to trading on any national exchange or quoted in the over-the-counter market, the fair value thereof determined by a nationally recognized investment bank selected by the Company and reasonably acceptable to the Holders.

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          “Maximum Number of Demand Securities” shall have the meaning set forth in Section 18.2 of this Warrant Agreement.

          “Maximum Number of Securities” shall have the meaning set forth in Section 18.1 of this Warrant Agreement.

          “Officers” shall mean, with respect to any Person, the Chairman of the Board, the Chief Executive Officer, the Chief Financial Officer, the President, the Treasurer, any Assistant Treasurer, the Controller, the Secretary, any Assistant Secretary, or any Vice-President.

          “Option” shall mean any warrant, option or other right to subscribe for or purchase Additional Shares or Convertible Securities.

          “Other Securities” shall mean any Shares (other than Warrant Shares) and other Equity Securities of the Company or any other Person (corporate or otherwise) which a Holder at any time shall be entitled to receive, or shall have received, upon exercise of the Warrants held by such Holder or pursuant to Section 10 hereof, in lieu of or in addition to Warrant Shares, or which at any time shall be issuable or shall have been issued in exchange for or in replacement of Warrant Shares or Other Securities received in an earlier exchange, exercise or replacement of Warrant Shares.

          “Participating Demand Holders” shall have the meaning set forth in Section 18.2 of this Warrant Agreement.

          “Participating Piggy-Back Holders” shall have the meaning set forth in Section 18.1 of this Warrant Agreement.

          “Person” shall include an individual, a corporation, an association, a partnership, a limited liability company, a trust or estate, a government, foreign or domestic, and any agency or political subdivision thereof, or any other entity.

          “Piggy-Back Registration” shall have the meaning set forth in Section 18.1 of this Warrant Agreement.

          “Piggy-Back Registration Statement” shall have the meaning set forth in Section 18.1 of this Warrant Agreement.

          “Qualified Purchaser” shall mean any institutional “Accredited Investor” as defined in Rule 501(a)(1), (2), (3) or (7) under the Securities Act.

          “Recapitalization Plan” shall have the meaning set forth in the Credit Facility.

          “Registrable Securities” shall mean any Warrant Shares and any securities or class of securities issued or issuable with respect to any Warrant Shares by way of a split, dividend, or other division of securities, or in connection with a combination of securities, conversion, exchange, replacement, recapitalization, merger, consolidation, or other reorganization or otherwise.

          “Registration Statement” shall mean a Demand Registration Statement, a Piggy-Back Registration Statement and/or a Shelf Registration Statement, as the case may be.

          “Required Lenders” shall have the meaning set forth in the Credit Facility, except that “majority in interest” shall be substituted with “66 2/3% in interest.”

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          “SEC” shall mean the Securities and Exchange Commission.

          “Securities Act” shall mean the Securities Act of 1933, as amended, and any similar or successor federal statute, and the rules and regulations of the SEC thereunder, all as the same shall be in effect at any applicable time.

          “Shares” shall have the meaning set forth in the preamble hereto.

          “Shelf Registration Statement” shall have the meaning set forth in Section 18.2 of this Warrant Agreement.

          “Total Holders’ Interest” shall mean a special economic interest in the Company entitling the Holders to receive fifteen percent (15%) of the aggregate Shares in the Company, on the fully diluted basis, as such number of Shares representing such right is adjusted in accordance with Section 9 of this Warrant Agreement.

          “Transfer” shall have the meaning set forth in Section 6.1 of this Warrant Agreement.

          “Transfer Agent” shall have the meaning set forth in Section 13.2 of this Warrant Agreement.

          “Voting Stock” shall mean any equity security entitling the holder of such security to vote at meetings of shareholders except an equity security which entitles the holder of such security to vote only upon the occurrence of some contingency, unless that contingency shall have occurred and be continuing.

          “Warrants” shall mean the warrants issued pursuant to this Warrant Agreement and represented by Warrant Certificates, and all warrants issued upon transfer, division or combination of, or in substitution thereof.

          “Warrant Agreement” shall have the meaning set forth in the preamble hereto.

          “Warrant Certificates” shall have the meaning set forth in Section 2 of this Warrant Agreement.

          “Warrant Shares” shall have the meaning set forth in the preamble hereto.

     SECTION 2. Warrant Certificates. The certificates evidencing the Warrants to be delivered pursuant to this Warrant Agreement shall be in registered form only and shall be substantially in the form set forth in Exhibit A attached hereto (“Warrant Certificates”) and may have such letters, numbers, or other marks of identification or designation and such legends or endorsements printed, lithographed or engraved thereon as the Officers of the Company executing the same may approve (with execution thereof to be conclusive evidence of such approval) and as are not inconsistent with the provisions of this Warrant Agreement, or as may be required to comply with any applicable law or with any rule or regulation made pursuant thereto or with any rule or regulation of any exchange, inter-dealer quotation system or regulated quotation service on which the Warrants or the Shares may be listed or quoted, as the case may be.

     SECTION 3. Issuance of Warrants. Upon issuance in accordance with Section 6, each Warrant Certificate shall evidence one or more Warrants. Each Warrant evidenced thereby entitles the Holder,

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upon proper exercise to receive from the Company the stated number of Warrant Shares at the Exercise Price, as adjusted as provided herein.

     SECTION 4. Execution of Warrant Certificates.

          4.1 Execution by an Officer of the Company. Warrant Certificates shall be signed on behalf of the Company by any Officer thereof under its corporate seal. The seal of the Company may be in the form of a facsimile thereof and may be impressed, affixed, imprinted or otherwise reproduced on the Warrant Certificates. The Warrant Certificates may be executed in any number of original, facsimile or electronic counterparts and each of such counterparts shall for all purposes be deemed to be an original, and all such counterparts shall together constitute but one and the same instruments; provided, however if the Warrant Certificate is executed in counterparts, the corporate seal may be imprinted on only one such counterpart. Each such signature upon any Warrant Certificate may be of the present or any future Officer of the Company, notwithstanding the fact that at the time any Warrant Certificate shall be delivered or disposed of by the Company such Officer shall have ceased to hold such office, so long as, and the Company hereby represents that, under the Company’s Certificate of Incorporation and By-Laws, any Warrants or Warrant Shares so issued would be validly issued. Any Warrant Certificate may be signed on behalf of the Company by any Person who, at the actual date of the execution of such Warrant Certificate, shall be a proper Officer of the Company to sign such Warrant Certificate, although at the date of the execution of this Warrant Agreement any such Person was not such Officer, so long as, and the Company hereby represents that, under the Company’s Certificate of Incorporation and By-Laws, any Warrants or Warrant Shares so issued would be validly issued.

          4.2 Date of Warrant Certificate. Warrant Certificates shall be dated the date of execution by the Company and shall represent one or more whole Warrants.

     SECTION 5. Registration and Countersignature.

          5.1 Warrant Register. The Company shall number and register the Warrant Certificates in a Warrant register as they are issued by the Company. The Warrant register will show the names and addresses of the Holders, the numbers of Warrants and Warrant Shares evidenced on the face of each Warrant Certificate and the date of each Warrant Certificate.

          5.2 Absolute Ownership. The Company may deem and treat the Holders as the absolute owner(s) of the Warrant Certificates (notwithstanding any notation of ownership or other writing thereon made by anyone), for all purposes, and the Company shall not be affected by any notice to the contrary.

     SECTION 6. Transfers and Exchanges.

          6.1 Limitation on Transfers.

          (a) A Holder may not transfer, assign or encumber all or any part of this Warrant (including through the grant of participation interests) (a “Transfer”).

          (b) Notwithstanding the foregoing, a Holder may Transfer all or any portion of this Warrant to (i) any of its Affiliates or (ii) any Qualified Purchaser who is also a Lender under the Credit Facility; provided however that any such transfer pursuant to clause (b)(ii) would not, after giving effect to such transfer, result in such transferee owning a greater or a lesser percentage of outstanding Warrants than such transferee’s pro rata share of Commitments under the Credit Facility, and provided further that in each case (i) and (ii) above the transferee shall agree in writing to be bound by the terms of this

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Warrant Agreement, and such transfer shall be in compliance with Section 23A of the Federal Reserve Act and the Securities Act or any state (or other jurisdiction) securities or “blue sky” laws applicable to the Company or the Warrants. Notwithstanding the foregoing, (x) upon receipt of the consent of the Administrative Agent and Required Lenders or (y) so long as all obligations under the Credit Facility have been repaid or terminated, a Holder may transfer all or any portion of this Warrant to any Qualified Purchaser without any limitations on the number of Warrants so transferred imposed by clause (b)(ii) above.

          (c) Any purported Transfer other than in accordance with the terms of this Warrant Agreement shall be null and void, and the Company shall refuse to recognize any such Transfer for any purpose and shall not reflect in its records any change in record ownership pursuant to any such Transfer.

          6.2 Registration of Transfers. The Company shall from time to time register the transfer of any outstanding Warrant Certificates upon the records to be maintained by it for that purpose, upon surrender thereof accompanied by a written instrument or instruments of transfer in form satisfactory to the Company, duly executed by the Holders thereof or by the duly appointed legal representative thereof or by a duly authorized attorney. Upon any such registration of transfer, a new Warrant Certificate shall be issued to the transferee(s) and the surrendered Warrant Certificate shall be cancelled by the Company. Cancelled Warrant Certificates shall thereafter be disposed of by or at the direction of the Company in accordance with applicable law.

          6.3 Exchange of Warrant Certificates. Warrant Certificates may be exchanged at the option of the Holder(s), when surrendered to the Company during normal business hours for another Warrant Certificate or other Warrant Certificates of like tenor and representing in the aggregate a like number of Warrants. Warrant Certificates surrendered for exchange shall be cancelled by the Company. Such cancelled Warrant Certificates shall then be disposed of by the Company in accordance with applicable law.

     SECTION 7. Exercise of Warrants.

          7.1 Exercise of Warrants. A Warrant may be exercised upon surrender to the Company of the Warrant Certificate or Warrant Certificates evidencing the Warrants to be exercised with the form of election to purchase on the reverse thereof duly completed and signed, and upon payment to the Company of the Exercise Price, as adjusted from time to time as provided herein, for each Warrant Share then purchased. Payment of the aggregate Exercise Price for all Warrant Shares being purchased in respect of a Warrant shall be made (a) by wire transfer of immediately available funds in United States Dollars or (b) by certified or official bank check for United States Dollars made payable to the order of the Company. Each Warrant not exercised prior to the Expiration Date shall become void and all rights thereunder and all rights in respect thereof under this Warrant Agreement shall cease as of such time.

          7.2 Issuance of Certificates Representing Shares. Upon such surrender of Warrants and payment of the aggregate Exercise Price, the Company shall issue and cause to be delivered promptly to or upon the written order of the Holder and in such name or names, as the Holder may designate, a certificate or certificates for the number of full Warrant Shares issuable upon the exercise of such Warrants. Such certificate or certificates shall be deemed to have been issued and any person so designated to be named therein shall be deemed to have become a Holder of such Warrant Shares as of the date of the surrender of such Warrants and payment of the aggregate Exercise Price.

          7.3 Issuance of New Warrant Certificates. The Warrants shall be exercisable at the election of the Holders either in full or from time to time in part (in whole Warrant Shares) and, in the event that a Warrant Certificate evidencing Warrants is exercised in respect of fewer than all of the

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Warrant Shares issuable on such exercise at any time prior to the Expiration Date, a new Warrant Certificate evidencing the remaining Warrant or Warrants will be promptly issued, and the Company, whenever required under this Warrant Agreement, will provide Warrant Certificates duly executed on behalf of the Company for such purpose.

          7.4 Cancellation of Warrant Certificates. All Warrant Certificates surrendered upon exercise of Warrants shall be cancelled and disposed of by the Company in accordance with applicable law.

          7.5 Warrant Agreement. The Company shall keep copies of this Warrant Agreement and any notices given or received hereunder available for inspection by the Holders of the Warrants during normal business hours at its office. The Company shall supply the Holder from time to time with such numbers of copies of this Warrant Agreement as the Holders may request.

          7.6 Alternative Cashless Exercise. Notwithstanding any provision herein to the contrary, in lieu of exercising a Warrant as set forth above, a Holder may exercise a Warrant by electing to receive that number of Shares as determined below by surrendering to the Company such Warrant, with the applicable election to purchase Shares duly completed and signed by the Holder, in which event the Company shall issue to the Holder the number of Shares computed using the following formula:

CS   = WCS   x ( MP – PP )         MP

where:

     “CS” equals the number of Shares to be issued to the Holder;

     “WCS” equals the number of Warrant Shares purchasable under the Warrant or, if only a portion of the Warrant is being exercised, the portion of the Warrant being exercised;

     “MP” equals the Current Market Price per Share; and

     “PP” equals the Exercise Price.

Following the surrender of any Warrant pursuant to this Section 7.6, the Company shall promptly record the name of the Holder in the Warrant register for that number of Shares, as calculated above in such name or names as may be designated by such Holder.

          7.7 Fractional Shares. The Company shall not be required to issue fractional Warrant Shares on the exercise of any Warrant. If more than one Warrant shall be presented for exercise in full at the same time by the same Holder, the number of full Warrant Shares which shall be issuable upon the exercise thereof shall be computed on the basis of the aggregate number of Warrant Shares purchasable on exercise of the Warrants so presented. If any fraction of a Warrant Share would, except for the provisions of this Section 7.7 be issuable on the exercise of any Warrants (or specified portion thereof), the Company shall pay an amount in cash equal to the Market Price multiplied by such fraction.

          7.8 When Exercise Effective. The exercise of any Warrant shall be deemed to have been effective immediately prior to the close of business on the Business Day on which such Warrant is surrendered to and the Exercise Price is received by the Company as provided in this Section 7 (the

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“Exercise Date”) and the Person in whose name the Shares shall be issuable upon such exercise shall be deemed to be the Holder of such Shares for all purposes on the Exercise Date.

          7.9 Continued Validity. A Holder of Shares issued upon the exercise of any Warrant, in whole or in part, shall continue to be entitled to all of the rights and subject to all of the obligations set forth in the Company’s Certificate of Incorporation and By-Laws.

          7.10 BHCA Holders. If a Holder is a BHCA Holder, unless such Holder is a financial holding company and exercises such Warrant in reliance on, and in compliance with, the merchant banking exemption set forth in Regulation Y, such Holder shall not, and shall not permit any of its Bank Holding Company Affiliates to, exercise any Warrant if, after giving effect to such exercise, (a) such Holder and its Bank Holding Company Affiliates would own more than five percent (5%) of the total issued and outstanding Shares on a fully-diluted basis or (b) such Holder would be deemed under Regulation Y to have the power to exercise, directly or indirectly, a controlling influence over the management or policies of, or would otherwise control, the Company. For purposes of clause (b) of this Section 7.10, a reasoned opinion of counsel to such Holder delivered to such Holder (which is based on facts and circumstances deemed appropriate by such counsel) to the effect that such Holder does not have the power to exercise such a controlling influence or otherwise control the Company shall be conclusive.

     SECTION 8. Adjustment of Number of Warrant Shares Purchasable and Exercise Price. The number of Warrant Shares purchasable upon exercise of the Warrants and the Exercise Price shall be subject to adjustment from time to time as set forth in this Section 8. All of the adjustments referred to in this Section 8 shall only apply to Warrants which have not yet been exercised and shall not apply to Exempt Issuances. The Company shall not create any class of Shares which carries any rights to dividends or assets differing in any respect from the rights of the Shares, except as such classes of Shares, if any, may be in existence on the date hereof.

          8.1 Share Dividends, Subdivisions and Combinations. If at any time the Company shall:

          (a) declare or pay a dividend payable in Additional Shares;

          (b) subdivide or reclassify its outstanding Shares into a greater number of Shares; or

          (c) combine or reclassify its outstanding Shares into a smaller number of Shares;

then the number of Warrant Shares purchasable upon exercise of the Warrants immediately after the occurrence of any such event shall be adjusted to equal the number of Warrant Shares which a record holder of the number of Warrant Shares purchasable upon exercise of the Warrants immediately prior to the happening of such event would own or be entitled to receive after the happening of such event.

          8.2 Issuance of Additional Shares. If at any time the Company shall (except as hereinafter provided) issue or sell any Additional Shares in exchange for consideration in an amount per Additional Share less than the Current Market Price at the time the Additional Shares are issued, then the number of Warrant Shares thereafter purchasable upon exercise of the Warrants shall be adjusted to that number determined by multiplying the number of Warrant Shares purchasable upon exercise of the Warrants immediately prior to such adjustment by a fraction (a) the numerator of which shall be the number of Shares outstanding immediately prior to the issuance of such Additional Shares plus the number of such Additional Shares so issued, and (b) the denominator of which shall be the number of Shares outstanding immediately prior to the issuance of such Additional Shares plus the number of Shares

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which the aggregate consideration for the total number of such Additional Shares so issued would purchase at the Current Market Price. For purposes of this Section 8.2, for all issuances of Shares except for those Shares issued in connection with an acquisition of assets or securities, a tender or exchange offer, a merger or other business combination, the date as of which the Current Market Price shall be computed shall be the earlier of (i) the date on which the Company shall enter into a firm contract for the issuance of such Additional Shares and (ii) the date of actual issuance of such Additional Shares. Subject to Section 8.5 hereof, no further adjustment of the number of Warrant Shares purchasable upon exercise of the Warrants shall be made under this Section 8.2 upon the issuance of any Additional Shares:

          (a) for which an adjustment is provided under Section 8.1 hereof;

          (b) which are issued pursuant to the exercise of any Options or the conversion, exchange or exercise of any Convertible Securities, if any such adjustment shall previously have been made upon the issuance of such Options or Convertible Securities (or upon the issuance of any Option therefor) pursuant to Section 8.3 or 8.4 hereof; or

          (c) as a distribution or a dividend which is distributed or declared and paid in accordance with Section 9.2 hereof.

          8.3 Issuance of Options. If at any time the Company shall issue or sell, or shall fix a record date for the determination of holders of any class of securities entitled to receive, any Options, whether or not the rights to purchase thereunder are immediately exercisable, and the consideration received by the Company in payment for such Options (determined in accordance with Section 8.6(a) hereof) shall be less than the Current Market Price in effect on the date of and immediately prior to such issuance, sale or fixing of a record date, then the number of Warrant Shares thereafter purchasable upon exercise of the Warrants shall be adjusted as provided in Section 8.2 hereof on the basis that (a) the maximum number of Additional Shares issuable pursuant to all such Options shall be deemed to have been issued as of (and, accordingly, the date as of which the Current Market Price shall be computed shall be) the computation date specified in the next succeeding sentence of this Section 8.3, and (b) the aggregate consideration for such maximum number of Additional Shares shall be (subject to Section 8.5 hereof) the consideration received by the Company for the issuance or sale of such Additional Shares pursuant to the terms of such Options or pursuant to the terms of such Convertible Securities. For purposes of this Section 8.3, the computation date for clause (a) above shall be the earlier of (i) the date on which the Company shall take a record of the holders of its Shares for the purpose of entitling them to receive any such Options, (ii) the date on which the Company shall enter into a firm contract for the issuance or sale of such Options and (iii) the date on which the Company shall issue or sell such Options. No further adjustment of the number of Warrant Shares purchasable upon exercise of the Warrants shall be made under this Section 8.3 upon the issuance or sale of any Options to subscribe for or purchase any Additional Shares or any Convertible Securities or upon the subsequent issue or sale of Additional Shares upon the exercise of such Options, if any such adjustment shall previously have been made upon the issuance or sale of such Option or upon the setting of a record date therefor, or upon any deemed issuance or sale of such Additional Shares, as a distribution or a dividend which is distributed or declared and paid in accordance with Section 9.2 hereof. Notwithstanding the foregoing, any issuance of an Option which is issued together with a debt security of the Company, as a unit, shall be treated for the purpose of this Section 8 as the issuance of a Convertible Security.

          8.4 Issuance of Convertible Securities. If at any time the Company shall issue or sell any Convertible Securities, whether or not the rights to exchange or convert thereunder are immediately exercisable, and the consideration received by the Company in payment for such Convertible Securities shall be less than the Convertible Security Value thereof, then the number of Warrant Shares thereafter purchasable upon exercise of the Warrants shall be increased to a number of Shares having a value

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immediately following the computation date (as established below) equal to the value of the number of Warrant Shares purchasable upon exercise of the Warrants immediately before such increase. For this purpose, the value before the increase will be the Current Market Price of the Shares (determined as at the date immediately preceding such increase) divided by the number of Shares outstanding on a fully diluted basis, and the value immediately following the computation date shall be the foregoing value, except that the numerator shall be the Current Market Price plus the cash amount paid to the Company for such Convertible Securities less the Convertible Security Value of such Convertible Securities on issuance and the denominator shall be increased by the number of Additional Shares issuable on exercise of such Convertible Securities. For purposes of this Section 8.4, the computation date shall be the earliest of (i) the date on which the Company shall take a record of the holders of its Shares for the purpose of entitling them to receive any such Convertible Securities, (ii) the date on which the Company shall enter into a firm contract for the issuance or sale of such Convertible Securities and (iii) the date of actual issuance or sale of such Convertible Securities. No further adjustment of the number of Warrant Shares purchasable upon exercise of the Warrants shall be made under this Section 8.4 upon the issuance or sale of any Convertible Securities or the conversion or exchange of such Convertible Securities into Additional Shares:

          (a) which are issued or sold pursuant to the exercise of any Option therefor, if any such adjustment shall previously have been made upon the issuance or sale of an Option relating to such Convertible Securities pursuant to Section 8.3 hereof; or

          (b) if any such adjustment in respect thereof shall previously have been made upon the setting of a record date therefor, or upon any deemed issuance or sale of such Convertible Securities; or

          (c) as a distribution or a dividend which is distributed or declared and paid in accordance with Section 9.2 hereof.

          8.5 Superseding Adjustment of Warrant Share. If, at any time after any adjustment of the number of Warrant Shares purchasable upon exercise of the Warrants shall have been made pursuant to Section 8.3 or 8.4 hereof as a result of the issuance of Options or Convertible Securities, or after any new adjustment of the number of Warrant Shares purchasable upon exercise of the Warrants shall have been made pursuant to this Section 8.5, (a) such Options or the right of conversion, exchange or exercise of such Convertible Securities shall expire, and all or a portion of such Options or the right of conversion, exchange or exercise with respect to all or a portion of such Convertible Securities, as the case may be, shall not have been exercised or treated as having been exercised or otherwise canceled or acquired by the Company in connection with any settlement (including, without limitation, any cash settlement) of such Options or the rights of conversion, or exchange or exercise of such convertible Securities, or (b) there has been any change (whether by the passage of time or otherwise) in the number of Shares issuable upon exercise, conversion or exchange of such Options or Convertible Securities (including as a result of the operation of anti-dilution provisions applicable thereto), or (c) the consideration per Share, for which Additional Shares are issuable pursuant to such Options or the terms of any Convertible Securities, or the maturity of any such Convertible Security, shall be changed (whether by the passage of time or otherwise) then such previous adjustment shall be rescinded and annulled and the Additional Shares which were deemed to have been issued by virtue of the computation made in connection with the adjustment so rescinded and annulled shall no longer be deemed to have been issued by virtue of such computation. Thereupon, a recomputation shall be made of the effect of such Options or Convertible Securities on the basis of:

          (a) treating the number of Additional Shares, if any, theretofore actually issued or sold pursuant to the previous exercise of such Options or such right of conversion or exchange, as having

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been issued or sold on the date or dates of such issuance as determined for purposes of such previous adjustment and for the consideration actually received therefor;

          (b) treating the maximum number of Additional Shares (A) issuable pursuant to all Options which then remain outstanding and (B) necessary to effect the conversion or exchange of all Convertible Securities which then remain outstanding, as having been issued (subject, however, to further adjustment under this Section 8.5); and

          (c) making the computations called for in Section 8.4 hereof on the basis of the revised terms of such Convertible Securities as if the securities being subject to recomputation were newly issued as of the relevant recomputation date and, if and to the extent called for by the foregoing provisions of this Section 8 on the basis aforesaid, a new adjustment of the number of Warrant Shares purchasable upon exercise of the Warrants shall be made, and such new adjustment shall supersede the previous adjustment so rescinded and annulled.

          8.6 Other Provisions Applicable to Adjustments Under this Section 8. The following provisions shall be applicable to the making of adjustments of the number of Warrant Shares purchasable upon exercise of the Warrants hereinbefore provided for in this Section 8, irrespective of the accounting treatment of any consideration described below:

          (a) Computation of Consideration. To the extent that any Additional Shares, any Options or any Convertible Securities shall be issued for cash consideration, the consideration received by the Company therefor shall be deemed to be the amount of cash received by the Company therefor, or, if such Additional Shares, Options or Convertible Securities are offered by the Company for subscription, the subscription price, or, if such Additional Shares, Options or Convertible Securities are sold to underwriters or dealers for public offering without a subscription offering, the initial public offering price. To the extent that such issuance or sale shall be for consideration other than cash, then the amount of such consideration shall be deemed to be the fair market value of such consideration at the time of such issuance, as determined in good faith by the board of directors of the Company, whose determination shall be described in a duly adopted resolution certified by the Company’s Secretary or Assistant Secretary. The consideration for any Additional Shares issuable pursuant to any Option to subscribe for or purchase the same shall be the consideration received or receivable by the Company for the sale or issuance of such Option plus the additional consideration payable to the Company upon the exercise thereof in full. The consideration for any Additional Shares issuable pursuant to the terms of any Convertible Securities shall be the consideration paid or payable to the Company in respect of the subscription for, sale or issuance of such Convertible Securities plus the additional consideration payable to the Company upon the conversion or exchange thereof in full. In case of the issuance at any time of any Additional Shares in payment or satisfaction of any dividend upon any class of securities other than Shares, the Company shall be deemed to have received for such Additional Shares consideration equal to the amount of such dividend so paid or satisfied.

          (b) When Adjustments to be Made. The adjustments required by this Section 8 shall be made whenever and as often as any specified event requiring an adjustment shall occur. For the purpose of any adjustment, any specified event shall be deemed to have occurred at the close of business on the date of its occurrence.

          (c) Fractional Interests. In computing adjustments under this Section 8, fractional interests in Shares shall be taken into account to the nearest one-hundredth of a Share.

          (d) When Adjustment Not Required. If the Company shall take a record of the holders of its Shares for the purpose of entitling them to receive a dividend or distribution or subscription

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or purchase rights and shall, thereafter and before the distribution thereof to the holders of the Shares of the Company, legally abandon its plan to pay or deliver such dividend, distribution, subscription or purchase rights, then no adjustment shall be required by reason of the taking of such record and any such adjustment previously made in respect thereof shall be rescinded and annulled, and no adjustment in the number of Warrant Shares thereafter purchasable upon exercise of the Warrants under Section 8.2, 8.3 or 8.4 hereof shall be made in respect of the Warrants held by such Holder.

          8.7 Adjustments of Exercise Price. Whenever the number of Warrant Shares purchasable upon the exercise of the Warrant is adjusted, as herein provided, the Exercise Price per Warrant Share payable upon exercise of the Warrant shall be adjusted (calculated to the nearest $.0001) so that it shall equal the price determined by multiplying the Exercise Price immediately prior to such adjustment by a fraction, the numerator of which shall be the aggregate number of Warrant Shares purchasable upon the exercise of the Warrant immediately prior to such adjustment, and the denominator of which shall be the aggregate number of Warrant Shares so purchasable immediately thereafter.

     SECTION 9. Consolidation, Merger, Equity Exchange, Distributions. The provisions set forth in this Section 9 shall only apply to Warrants which have not yet been exercised.

          9.1 Consolidation, Merger, Equity Exchange, etc. In case a consolidation, merger or equity exchange of the Company shall be effected with another Person after the date hereof and the Company shall not be the surviving entity, or the Company shall be the surviving entity but its Shares shall be changed into securities or other property of another Person, or the sale, lease or transfer of all or substantially all of its assets to another Person shall be effected after the date hereof, then, as a condition of such consolidation, merger, equity exchange, sale, lease or transfer, lawful and adequate provision shall be made whereby each Holder shall thereafter have the right to purchase and receive, upon the exercise of its Warrants, on the basis and the terms and conditions specified herein (and in lieu of each Warrant Share immediately theretofore purchasable and receivable upon the exercise of the Warrants), such securities, cash or other property receivable upon such consolidation, merger, equity exchange, sale, lease or transfer as such Holder would have been entitled to receive if its Warrants had been exercised immediately prior to such event. In any such case, appropriate and equitable provision also shall be made with respect to the rights and interests of each Holder to the end that the provisions hereof (including Section 8 hereof) shall thereafter be applicable, as nearly as may be, in relation to any securities, cash or other property thereafter deliverable upon the exercise of any Warrants. The Company shall not effect any such consolidation, merger, equity exchange, sale, lease or transfer unless prior to or simultaneously with the consummation thereof the successor Person (if other than the Company) resulting from such consolidation, merger or equity exchange or the Person purchasing, leasing or otherwise acquiring such assets shall assume, by written instrument, the obligation to deliver to such Holder such securities, cash or other property as, in accordance with the foregoing provisions, such Holder may be entitled to upon the exercise of its Warrants. The above provisions of this Section 9.1 shall similarly apply to successive consolidations, mergers, equity exchanges, sales, leases or transfers.

          9.2 Distributions upon Declaration of Dividend or Other Distribution. In case the Company shall pay, upon the declaration and payment of any dividend or distribution (whether such dividend or distribution is in the form of cash, debt securities, equity securities or other property) on any class of Shares, then, in each case, the number of Warrant Shares purchasable after the record date for such distribution upon the exercise of each Warrant shall be determined by multiplying the number of Warrant Shares purchasable upon the exercise of such Warrant immediately prior to such record date by a fraction, the numerator of which shall be the Current Market Price per Share immediately prior to the record date for such distribution and the denominator of which shall be the Current Market Price per Share immediately prior to the record date for such distribution less the amount of cash distributed or the then fair market value (as determined in good faith by the board of directors of the Company on a

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reasonable basis) such debt securities, equity securities or other property so distributed attributable to one Share; provided, however, that in lieu of making the foregoing adjustment the Company may make the same or a like distribution to the Holders of the Warrants as if their Warrants had been exercised on the day immediately preceding the record date of such distribution on the terms (subject to any adjustment pursuant to Section 8 for a prior event) on which such Warrants could have been exercised on such date.

          Such adjustment shall be made whenever any such distribution is made, and shall become effective on the date of distribution retroactive to the record date for the determination of shareholders entitled to receive such distribution.

          9.3 Dilution in Case of Other Securities. In case any Other Securities shall be issued or sold or shall become subject to issue or sale upon the conversion or exchange of any Shares (or Other Securities) of the Company (or any issuer of Other Securities or any other Person referred to in Section 9.1 hereof) or to subscription, purchase or other acquisition pursuant to any rights, options, warrants to subscribe for, purchase or otherwise acquire either Additional Shares or securities directly or indirectly convertible into or exchangeable for Additional Shares, issued or granted by the Company (or any such other issuer or Person) for a consideration such as to dilute, on a basis consistent with the standards established in the other provisions of Section 9 hereof, the purchase rights granted by the Warrants, then, and in each such case, the computations, adjustments and readjustments provided for in said Section 8 with respect to the Warrant Shares shall be made as nearly as possible in the manner so provided and applied to determine the amount of Other Securities from time to time receivable upon the exercise of the Warrants, so as to protect the Holders against the effect of such dilution; or, in the event such Other Securities are issued or sold prior to the exercise of any Warrants and are not subsequently obtainable upon exercise of such Warrants, such adjustments shall instead be made to determine the adjusted amount of Shares represented by a Warrant Share, so as to protect the Holders against the effect of such dilution in accordance with Section 8 hereof.

     SECTION 10. Notice of Adjustments. Whenever the number of Warrant Shares purchasable upon exercise of the Warrants or the Exercise Price shall be adjusted pursuant to Section 9, the Company shall forthwith provide a certificate signed by its Chief Financial Officer, setting forth, in reasonable detail, the event requiring the adjustment and the method by which such adjustment was calculated (including a statement of the fair value, as determined in good faith by the board of directors of the Company, whose determination shall be described in a duly adopted resolution certified by the Company’s Secretary or Assistant Secretary, or by appraisal (if applicable), of any evidences of indebtedness, securities, property, warrants or other subscription or purchase rights referred to in Section 8) and specifying the number of Warrant Shares purchasable upon exercise of the Warrants and describing the number and kind of any other securities issuable upon exercise of the Warrants, and any change in the Exercise Price or prices thereof, after giving effect to such adjustment or change. The Company shall promptly, and in any case within three (3) Business Days after the making of such adjustment, cause a signed copy of such certificate to be delivered to each Holder in accordance with Section 20. The Company shall keep at its principal executive offices referred to in Section 20 copies of all such certificates and cause the same to be available for inspection at said office during normal business hours by any Holder or any prospective purchaser of a Warrant designated by a Holder.

     SECTION 11. Payment of Taxes. No service charge shall be made to any Holder for any exercise, exchange or registration of transfer of Warrant Certificates, and the Company will pay all documentary stamp taxes attributable to the initial issuance of Warrant Shares upon the exercise of Warrants; provided, however, that the Company shall not be required to pay any tax or taxes which may be payable in respect of any transfer involved in the issue of any Warrant Certificates or any certificates for Warrant Shares in a name other than that of the registered holder of a Warrant

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Certificate surrendered upon the exercise of a Warrant, and the Company shall not be required to issue or deliver such Warrant Certificates or the certificates representing the Shares unless or until the Person or Persons requesting the issuance thereof shall have paid to the Company the amount of such tax or shall have established to the satisfaction of the Company that such tax has been paid.

     SECTION 12. Mutilated or Missing Warrant Certificates. If any of the Warrant Certificates shall be mutilated, lost, stolen or destroyed, the Company shall issue, in exchange and substitution for and upon cancellation of the mutilated Warrant Certificate, or in lieu of and substitution for the Warrant Certificate lost, stolen or destroyed, a new Warrant Certificate of like date and tenor and representing an equivalent number of Warrants, but only upon receipt of evidence satisfactory to the Company of such loss, theft or destruction of such Warrant Certificate and such indemnity and security therefor as is customary and reasonably satisfactory to the Company, if requested. Applicants for such substitute Warrant Certificate shall also comply with such other reasonable regulations and pay such other reasonable charges as the Company may prescribe.

     SECTION 13. Reservation of Shares.

          13.1 Reservation of Shares. The Company will, commencing on the first day of the Exercise Period and at all times subsequent thereto until the sooner of the expiration of the Exercise Period or the exercise of all of the Warrants by the Holders thereof, reserve and keep available, free from preemptive rights, out of the aggregate of its authorized but unissued Shares, for the purpose of enabling it to satisfy any obligation to issue Warrant Shares upon exercise of Warrants, the maximum number of Shares which may then be deliverable upon the exercise of all outstanding Warrants.

          13.2 Transfer Agent. The Company or the transfer agent for the Shares and every subsequent transfer agent for any Shares issuable upon the exercise of any of the rights of purchase represented by the Warrants as aforesaid (the “Transfer Agent”) will be irrevocably authorized and directed at all times commencing on the first day of the Exercise Period, and continuing until the sooner of the expiration of the Exercise Period or the exercise of all of the Warrants by the Holders thereof, to reserve such number of authorized Shares as shall be required for such purpose. The Company will keep a copy of this Warrant Agreement on file with the Transfer Agent for any Shares issuable upon the exercise of the rights of purchase represented by the Warrants. The Company will supply such Transfer Agent with duly executed certificates for such purposes and will provide or otherwise make available any cash which may be payable as provided in Section 7.7. The Company will furnish such Transfer Agent a copy of all notices of adjustments and certificates related thereto, transmitted to each Holder pursuant to Section 14.

          13.3 Valid Issuance of Warrant Shares. Before taking any action which would cause an adjustment pursuant to Section 8 hereof to reduce the Exercise Price below the then par value of the Warrant Shares, the Company shall take all corporate action necessary, in the opinion of its counsel (which may be counsel employed by the Company), in order that the Company may validly and legally issue fully paid and nonassessable Warrant Shares at the Exercise Price as so adjusted.

          13.4 Shares Fully Paid and Nonassessable. The Company covenants that all Warrant Shares which may be issued upon exercise of Warrants will be, upon payment of the aggregate Exercise Price and issuance thereof, fully paid, nonassessable, free of preemptive rights and free from all taxes, liens, charges and security interests with respect to the issue thereof.

     SECTION 14. Notices of Certain Corporate Actions

         14.1. In case:

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          (i) the Company shall authorize the issuance to all holders of Shares of options, warrants or other rights (howsoever classified) to subscribe for or purchase Shares or of any other subscription rights or warrants;

          (ii) the Company shall authorize the distribution to all holders of Shares of evidences of its indebtedness or assets (including cash dividends);

          (iii) the Company shall authorize any other action that is covered by Sections 8.1, 8.2, 8.3, 8.4, 8.5 or Section 9 hereof;

          (iv) of any consolidation or merger to which the Company is a party and for which approval of any stockholders of the Company is required, or of the sale, lease, exchange, conveyance or transfer of the properties and assets of the Company substantially as an entirety, or of any reclassification or change of Shares issuable upon exercise of the Warrants (other than a change in par value, or from par value to no par value, or from no par value to par value, or as a result of a subdivision or combination), or a tender offer or exchange offer for Shares; or

          (v) of the voluntary or involuntary dissolution, liquidation or winding up of the Company;

then, in each case, the Company shall cause to be delivered to each Holder at his address appearing on the Warrant register, at least fifteen (15) Business Days prior to the applicable record date hereinafter specified, or promptly in the case of events for which there is no record date, by first-class mail, postage prepaid, a written notice stating (i) the date as of which the Holders to be entitled to receive any such rights, options, warrants or distribution are to be determined or (ii) the initial expiration date set forth in any tender offer or exchange offer for Shares or (iii) the date on which any such consolidation, merger, conveyance, transfer, dissolution, liquidation or winding up is expected to become effective or consummated, and the date as of which it is expected that Holders shall be entitled to exchange such Shares for securities or other property, if any, deliverable upon such reclassification, consolidation, merger, conveyance, transfer, dissolution, liquidation or winding up. The failure to give the notice required by this Section 14 or any defect therein shall not affect the legality or validity of any distribution, right, option, warrant, consolidation, merger, conveyance, transfer, lease, dissolution, liquidation or winding up, or the vote upon any action.

     SECTION 15. Holders’ Special Rights.

          15.1 Inspection Rights. If the Credit Facility is terminated or is no longer in effect or the Company or any party acting on its behalf disaffirms the Company’s obligations under the Credit Facility, then, as and when reasonably requested by the Holders, the Company shall provide to each Holder or the agents or representatives of such Holder all information and/or access to all information in respect of the Company and its subsidiaries.

          15.2 Financial Reports.

(A) The Company will file with the SEC, to the extent permitted, such quarterly and annual reports and such information, documents and other reports specified in Sections 13 and 15(d) of the Exchange Act within the time periods specified in those sections. The Company will promptly deliver to Holders, but in any event no later than 15 days after the filing of the same with the SEC, copies of the quarterly and annual reports and of the information, documents and other reports, if any, which the Company is required to file with the SEC pursuant to Section 13 or 15(d) of the Exchange Act. For purposes of this

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covenant, the Company will be deemed to have furnished all required reports and information referred to in this paragraph to the Holders as required by this covenant if it has timely filed the reports referred to in this paragraph with the SEC via the EDGAR filing system and such reports are publicly available.

(B) For so long as any Warrants remain outstanding and the Company is not subject to the reporting requirements of Section 13 or 15(d) of the Exchange Act, the Company will furnish to each Holder the following reports:

          (a) as soon as available and in any event within forty-five (45) days after the end of each of the first three quarters of each fiscal year of the Company, consolidated balance sheets of the Company and its subsidiaries as of the end of such period, and consolidated statements of income and cash flows of the Company and its subsidiaries for the period then ended prepared in conformity with generally accepted accounting principles in the United States applied on a consistent basis, except as otherwise noted therein, and which financial statements have been reviewed by the Company’s independent registered public accounting firm of an established national reputation in accordance with procedures as described in SAS No. 100, Interim Financial Information;

          (b) as soon as available and in any event within ninety (90) days after the end of each fiscal year of the Company, a consolidated balance sheet of the Company and its subsidiaries as of the end of such year, and consolidated statements of income and cash flows of the Company and its subsidiaries for the year then ended prepared in conformity with generally accepted accounting principles in the United States applied on a consistent basis, except as otherwise noted therein, together with an auditor’s report from the Company’s independent registered public accounting firm of an established national reputation;

          (c) to the extent the Company is required by law or pursuant to the terms of any outstanding indebtedness of the Company to prepare such reports, any annual reports, quarterly reports and other periodic reports pursuant to Section 13 or 15(d) of the Exchange Act actually prepared by the Company as soon as available; and

          (d) to the extent the Company makes a general distribution of other information and documents to the holders of any of its securities, such information and documents shall also be provided to the Holders.

     SECTION 16. Expenses. All expenses incident to the Company’s performance of or compliance with this Warrant Agreement will be borne by the Company, including without limitation: (a) all expenses of printing Warrant Certificates; (b) messenger and delivery services and telephone calls; (c) all fees and disbursements of counsel for the Company; (d) all fees and disbursements of independent certified public accountants or knowledgeable experts selected by the Company; and (e) the Company’s internal expenses (including, without limitation, all salaries and expenses of their officers and employees performing legal or accounting duties).

     SECTION 17. Representations, Warranties and Covenants of the Company. The Company represents, warrants and covenants the following to each Holder:

          17.1 The Company has all requisite power and authority to execute, deliver and perform its obligations under the Warrant Agreement and the Warrants.

          17.2 This Warrant Agreement has been duly authorized, executed and delivered by the Company and, assuming due authorization, execution and delivery by the Holders listed in Exhibit B hereto, constitutes a valid and binding agreement of the Company.

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          17.3 The Warrants have been duly authorized by the Company and when duly executed by the Company in accordance with the terms of this Warrant Agreement will have been validly issued and delivered, and will constitute valid and binding obligations of the Company, exercisable against the Company in accordance with their terms, subject to the effects of bankruptcy, insolvency, reorganization, moratorium, fraudulent conveyance and other similar laws relating to or affecting creditors’ rights generally, and to general equitable principles (whether considered in a proceeding in equity or at law).

          17.4 The execution and delivery by the Company of this Warrant Agreement and the Warrant Certificates do not, and the consummation and performance of the transactions contemplated herein and therein, and the issuance of the Warrants, will not (i) contravene the Company’s charter or bylaws, (ii) violate any law, rule, regulation, order, writ, judgment, injunction, decree, determination or award, (iii) conflict with or result in the breach of, or constitute a default or require any payment to be made under, any contract, loan agreement, indenture, mortgage, deed of trust, lease or other instrument binding on or affecting the Company or any of its subsidiaries or any of their respective properties or (iv) result in or require the creation or imposition of any liens upon or with respect to any of the properties of the Company or any of its subsidiaries.

          17.5 The Warrant Shares have been duly and validly authorized and reserved for issuance and, when issued and delivered in accordance with the provisions of this Warrant Agreement and the Warrants, will be duly and validly issued and will conform to the existing Shares.

          17.6 Other than as disclosed in the Form 10-K (including the exhibits thereto) for the year ended December 31, 2008 (i) the Company has no outstanding restricted stocks, restricted stock units, options, warrants, convertible securities or other Equity Interests and (ii) there are no stockholder agreements, registration rights agreements, stock transfer restriction agreements (other than restrictions arising in connection with the Securities Act), voting trusts or similar agreements to which the Company or, to the knowledge of the Company, any other person is a party with respect to the Company’s securities.

          17.7 The representations and warranties of the Company in the Credit Facility are true and correct and may be relied upon by each Holder as of the date the Warrants are issued, in each case substituting entry into this Warrant Agreement and the transactions contemplated hereby for entry into the Credit Facility and the transactions contemplated thereby.

          17.8 No consent, approval, authorization, finding of suitability, registration, exemption or permit or (other than informational filings or notices) any filing with or notice to any governmental authority or regulatory body, or any third party that is a party to any of the documents, to which the Company or any of its subsidiaries is a party, is required in connection with, or as a condition to, the execution, delivery or performance by the parties of this Warrant Agreement and the consummation of the transactions contemplated hereby.

          17.9 The offer, sale, and issuance of the Warrants hereunder is exempt from registration and prospectus delivery requirements of the Securities Act, and the rules and regulations thereunder.

          17.10 The Company will from time to time take all action which may be necessary so that the Warrant Shares, immediately upon their issuance upon the exercise of the Warrant, will be listed on the principal securities exchanges and markets within the United States of America on which other Shares are then listed.

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     SECTION 18. Registration Rights.

          18.1 Piggy-Back Registration Rights.

          (a) If the Company proposes to file on its own behalf and/or on behalf of any holder of its securities a registration statement under the Securities Act on any form (other than a registration statement on Form S-4 or S-8 or any successor form for securities to be offered in a transaction of the type referred to in Rule 145 under the Securities Act or to employees of the Company pursuant to any employee benefit plan, respectively), including Form S-1, for the registration of any securities (a “Piggy-Back Registration”), it will give written notice to all Holders at least twenty (20) Business Days before the initial filing with the SEC of such registration statement (a “Piggy-Back Registration Statement”), which notice shall set forth the intended method of disposition of the securities proposed to be registered by the Company. The notice shall offer to include in such filing the aggregate number of Registrable Securities into which the Warrants are convertible as such Holders may request.

          (b) Each Holder desiring to have Registrable Securities registered under this Section 18.1 (“Participating Piggy-Back Holders”) shall advise the Company in writing within ten (10) Business Days after the date of receipt of such notice from the Company, setting forth the amount of such Registrable Securities for which registration is requested. The Company shall thereupon include in such filing the number or amount of Registrable Securities for which registration is so requested, subject to Section 18.1(c) below, and shall use its best efforts to effect registration of such Registrable Securities under the Securities Act.

          (c) If the Piggy-Back Registration relates to an underwritten public offering and the managing underwriter of such proposed public offering advises in writing that, in its opinion, the amount of Registrable Securities requested to be included in the Piggy-Back Registration Statement in addition to the securities being registered by the Company would be greater than the total number of securities which can be sold therein without having a material adverse effect on the distribution of such securities or otherwise having a material adverse effect on the marketability thereof (the “Maximum Number of Securities”), then:

            (i) in the event the Company initiated the Piggy-Back Registration, the Company shall include in such Piggy-Back Registration, in the priority listed below, up to the Maximum Number of Securities:

(1)	first, the securities the Company proposes to register for the account of the Company,
(2)	second, the securities of the Company of any holder of KV Registration Rights requested to be included in such registration in accordance with Section 2.2 of the KV Agreement,
(3)	third, all Registrable Securities requested to be included in such registration by Participating Piggy-Back Holders (allocated, if necessary for the offering not to exceed the Maximum Number of Securities, pro rata among such Holders based on the number of Registrable Securities of the Company held by each selling Holder which are sought to be included in the Piggy-Back Registration, all measured at the time of filing of the Piggy-Back Registration Statement), and

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(4) fourth, the securities of the Company of any other selling security holders (other than holders of KV Registration Rights and Participating Piggy-Back Holders) requested to be included in such registration by such holders (allocated, if necessary for the offering not to exceed the Maximum Number of Securities, pro rata among such holders based on the number of securities of the Company held by each such selling holder which are sought to be included in the Piggy-Back Registration, all measured at the time of filing of the Piggy-Back Registration Statement).

          (ii) in the event any holder of KV Registration Rights initiated the Piggy-Back Registration, the Company shall include in such Piggy-Back Registration, in the priority listed below, up to the Maximum Number of Securities:

(1)	first, the securities the Company that such initiating security holder proposes to register plus securities of the Company of any “Requesting Holders” pursuant to Section 2.1.4 of the KV Agreement,
(2)	second, all Registrable Securities requested to be included in such registration by Participating Piggy-Back Holders, (allocated, if necessary for the offering not to exceed the Maximum Number of Securities, pro rata among the Holders based on the number of Registrable Securities of the Company held by each selling Holder which are sought to be included in the Piggy-Back Registration, all measured at the time of filing of the Piggy-Back Registration Statement),
(3)	third, the securities of the Company of any other selling security holders (other than holders of KV Registration Rights and Participating Piggy-Back Holders) requested to be included in such registration by such holders (allocated, if necessary for the offering not to exceed the Maximum Number of Securities, pro rata among such holders based on the number of securities of the Company held by each such selling holder which are sought to be included in the Piggy-Back Registration, all measured at the time of filing of the Piggy-Back Registration Statement), and
(4)	fourth, any securities the Company proposes to register for the account of the Company.

          provided, however, that the Company shall be required to include in such Piggy-Back Registration the securities of holders identified in paragraphs (2) through (4) above only in such amount and in the priority listed above that would not have an “Adverse Effect” as defined in Section 2.1.5 of the KV Agreement.

           (iii) in the event that any holder of securities of the Company (other than holders of KV Registration Rights) initiated the Piggy-Back Registration, including the Holders, the Company shall include in such Piggy-Back Registration, in the priority listed below, up to the Maximum Number of Securities:

(1) first, all Registrable Securities requested to be included in such registration by the holders that initiated the Piggy-Back Registration and

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	the securities requested to be included in such registration by holders of KV Registration Rights (allocated, if necessary for the offering not to exceed the Maximum Number of Securities, pro rata among all such holders based on the number of securities of the Company held by each such holder, all measured at the time of filing of the Piggy-Back Registration Statement),
(2)	second, all Registrable Securities requested to be included in such registration by Participating Piggy-Back Holders, (allocated, if necessary for the offering not to exceed the Maximum Number of Securities, pro rata among such Holders based on the number of Registrable Securities of the Company held by each selling Holder which are sought to be included in the Piggy-Back Registration, all measured at the time of filing of the Piggy-Back Registration Statement), and
(3)	third, any other securities the Company requested to be included in such registration (including the securities to be sold for the account of the Company).

          (d) The Company will not hereafter enter into any agreement, which is inconsistent with the rights of priority provided in clause (c) above.

          18.2 Demand Registration Rights.

          (a) Any Holder may request that the Company effect a registration (a “Demand Registration”) under the Securities Act covering all or part of the Registrable Securities, which request shall specify the intended method or methods of disposition of such Registrable Securities. The Company shall promptly notify any other Holders in writing of the receipt of such request and each such Holder may elect (by written notice sent to the Company within ten (10) Business Days from the date of such Holder’s receipt of the aforementioned notice from the Company) to have all or part of such Holder’s Registrable Securities included in such registration thereof pursuant to this Section 18.2, and such Holder shall specify in such notice the number of Registrable Securities that such Holder elects to include in such registration. Thereupon the Company shall, as expeditiously as is possible, but in any event no later than forty-five (45) days (excluding any days which occur during a permitted Blackout Period under Section 18.3) after receipt of a written request for a Demand Registration, file with the SEC and use its best efforts to cause to be declared effective, a registration statement (a “Demand Registration Statement”) relating to the Registrable Securities which the Company has been so requested to register by such Holders (“Participating Demand Holders”) for sale, to the extent required to permit the disposition (in accordance with the intended method or methods thereof, as aforesaid) of the Registrable Securities so registered. With respect to any Demand Registration, the Participating Demand Holders may request the Company to effect a registration of the Registrable Securities under a registration statement pursuant to Rule 415 under the Securities Act (or any successor rule) (a “Shelf Registration Statement”).

          (b) If the majority-in-interest of the Participating Demand Holders in a Demand Registration relating to a public offering so request that the offering be underwritten with a managing underwriter and such managing underwriter of such Demand Registration advises the Company in writing that, in its opinion, the number of Registrable Securities to be included in such offering by Participating Demand Holders (plus, in the event that at the time a request for Demand Registration is made by a Holder pursuant to this Agreement there are outstanding KV Registration Rights and one or more holders

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of KV Registration Rights notify the Company of its or their election to participate in the Demand Registration in accordance with terms of the KV Agreement, the number of securities requested to be included by such holder(s) of KV Registration Rights) is greater than the total number of securities which can be sold therein without having a material adverse effect on the distribution of such securities or otherwise having a material adverse effect on the marketability thereof (the “Maximum Number of Demand Securities”), then (i) if no holder of KV Registration Rights has notified the Company of its election to participate in such Demand Registration, the Company shall include in such Demand Registration such number of Registrable Securities that the Participating Demand Holders have requested to be registered thereunder allocated among all such Participating Demand Holders on a pro rata basis (based on the number of Registrable Securities held by each Participating Demand Holder) so that the aggregate number of such Registrable Securities included in such Demand Registration does not exceed the Maximum Number of Demand Securities, and (ii) in the event that at the time a request for Demand Registration is made by a Holder pursuant to this Agreement there are outstanding KV Registration Rights and one or more holders of KV Registration Rights notify the Company of its or their election to participate in the Demand Registration in accordance with terms of the KV Agreement, such Demand Registration shall be deemed to be a Piggy-Back Registration and the provisions of Section 18.1(c)(iii) shall be applicable in determining registration priority rights as between the Holders and the holders of KV Registration Rights so that the aggregate number of such Registrable Securities and securities of such holders of KV Registration Rights included in such Demand Registration does not exceed the Maximum Number of Demand Securities. If the amount of such Registrable Securities does not exceed the Maximum Number of Demand Securities, the Company may include in such Demand Registration any other securities of the Company, as the Company may in its discretion determine or be obligated to allow, in an amount which together with the Registrable Securities included in such Demand Registration shall not exceed the Maximum Number of Demand Securities.

          (c) Registrations under this Section 18.2 shall be on such appropriate registration form of the SEC (i) as shall be selected by the Company and as shall be reasonably acceptable to the majority-in-interest of the Participating Demand Holders and (ii) as shall permit the disposition of the Registrable Securities in accordance with the intended method or methods of disposition specified in the applicable Holders’ requests for such registration. Notwithstanding the foregoing, if, pursuant to a Demand Registration, (x) the Company proposes to effect registration by filing a Registration Statement on Form S-3 (or any successor or similar short-form registration statement), (y) such registration is in connection with an underwritten offering and (z) the managing underwriter or underwriters shall advise the Company in writing that, in its or their opinion, the use of another form of registration statement (or the inclusion, rather than the incorporation by reference, of information in the prospectus related to a Registration Statement on Form S-3 (or other short-form registration statement)) is of material importance to the success of such proposed offering, then such registration shall be effected on such other form (or such information shall be so included in such prospectus).

          (d) Holders shall be entitled to an aggregate of six (6) requests pursuant to Section 18.2(a) (each, a “Demand for Registration”); provided however that (i) each Holder shall be entitled to at least one (1) and no more than two (2) of such requests and (ii) the Holders shall make no more than two (2) Demands for Registration within any 12 month period; provided further that a registration requested pursuant to Section 18.2(a) shall not be deemed to have been made for purposes of this Section 18.2(d) unless (i) it has been declared effective by the SEC, (ii) it has remained effective, and (iii) the offering of Registrable Securities pursuant to such registration is not subject to any stop order, injunction or other order or requirement of the SEC or other governmental agency or court (other than any such stop order, injunction, or other requirement of the SEC or other governmental agency or court prompted by act or omission of Holders of Registrable Securities).

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          (e) If any Holder of Registrable Securities disapproves of the terms of any underwritten offering, such Holder may elect to withdraw all its Registrable Securities by written notice to the Company, the managing underwriter and the other Holders participating in such registration. The Registrable Securities so withdrawn shall also be withdrawn from registration.

          18.3 Blackout Periods. The Company shall have the right to delay the filing or effectiveness of a Demand Registration Statement required pursuant to Section 18.2 during no more than two periods aggregating to not more than ninety (90) days (a “Blackout Period”) in the event that (a) the Company would, in accordance with the reasonable written advice of its counsel, be required to disclose in the prospectus information not otherwise then required by law to be publicly disclosed and (b) in the judgment of the board of directors of the Company, there is a reasonable likelihood that such disclosure, or any other action to be taken in connection with the prospectus, would materially and adversely affect or interfere with any financing, acquisition, merger, disposition of assets (not in the ordinary course of business), corporate reorganization or other similar transaction involving the Company; provided, however, that the Company shall delay during such Blackout Period the filing or effectiveness of any Demand Registration Statement required pursuant to the registration rights of the holders of any securities of the Company. The Company shall promptly give the Holders written notice of such determination containing a general statement of the reasons for such postponement and an approximation of the duration of the anticipated delay.

          18.4 Registration Procedures. If the Company is required by the provisions of Section 18 to effect the registration of the Registrable Securities under the Securities Act, the Company will, as expeditiously as possible:

          (a) prepare and file with the SEC the applicable Registration Statement with respect to the Registrable Securities and use its best efforts to cause such Registration Statement promptly to become and remain effective for a period of time required for the disposition of the Registrable Securities by the Holders thereof (except with respect to a Shelf Registration Statement which shall remain effective for a period not to exceed three (3) years); provided, however, that before filing such Registration Statement or any amendments thereto, the Company shall furnish to the Holders copies of all documents and amendments proposed to be filed, which documents will be subject to the review of counsel to the Holders or any underwriter, and the Company will make corrections reasonably requested by such Holder with respect to such information prior to filing any such Registration Statement or amendment The Company shall not be deemed to have used its best efforts to keep such Registration Statement effective during the applicable period if it voluntarily takes any action that would result in the Holders of the Registrable Securities not being able to sell such Registrable Securities during that period;

          (b) prepare and file with the SEC such amendments and supplements to such Registration Statement and the prospectus or preliminary prospectus used in connection therewith as may be necessary to keep such Registration Statement effective and to comply with the provisions of the Securities Act with respect to the sale or other disposition of all securities covered by such Registration Statement until the earlier of such time as all of such securities have been disposed of in a public offering or, with respect to the Shelf Registration Statement, the expiration of the three year period referred to in subsection (a) above;

          (c) furnish to such selling Holders and the underwriters such number of conformed copies of the applicable Registration Statement and each such amendment and supplement thereto (including in each case all exhibits and documents incorporated by reference), and of a prospectus, including a preliminary prospectus, in conformity with the requirements of the Securities Act, and such other documents, as such selling Holders or the underwriters may reasonably request;

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          (d) use its commercially reasonable efforts to register or qualify the Registrable Securities covered by such Registration Statement under such other securities or blue sky laws of such jurisdictions as each Holder of such securities or the managing underwriter shall reasonably request, to keep such registration or qualification in effect for so long as such Registration Statement remains in effect, and to take any other action which may be reasonably necessary to enable such selling Holder to consummate the disposition in such jurisdictions of the securities owned by such Holder (provided, however, that the Company shall not be required in connection therewith or as a condition thereto to qualify to do business, subject itself to taxation in or to file a general consent to service of process in any jurisdiction wherein it would not but for the requirements of this clause (d) be obligated to do so; and provided, further, that the Company shall not be required to qualify such Registrable Securities in any jurisdiction in which the securities regulatory authority requires that any Holder submit any of its Registrable Securities to the terms, provisions and restrictions of any escrow, lockup or similar agreement(s) for consent to sell Registrable Securities in such jurisdiction unless such Holder agrees to do so), and do such other reasonable acts and things as may be required of it to enable such Holder to consummate the disposition in such jurisdiction of the securities covered by such Registration Statement;

          (e) furnish, at the request of any Holder requesting registration of Registrable Securities pursuant to Section 18.1 or Section 18.2 , if the method of distribution is by means of an underwriting, on the date that the Registrable Securities are delivered to the underwriters for sale pursuant to such registration, or if such Registrable Securities are not being sold through underwriters, on the date that the Registration Statement with respect to such Registrable Securities becomes effective, (1) a signed opinion, dated such date, of the independent legal counsel representing the Company for the purpose of such registration, addressed to the underwriters, if any, and if such Registrable Securities are not being sold through underwriters, then to the Holders making such request, as to such matters as such underwriters or the Holders holding a majority of the Registrable Securities included in such registration, as the case may be, may reasonably request; and (2) letters dated such date and the date the offering is priced from the independent registered public accountants of the Company, addressed to the underwriters, if any, and if such Registrable Securities are not being sold through underwriters, then to the Holders making such request (i) stating that they are independent registered public accountants within the meaning of the Securities Act and that, in the opinion of such accountants, the financial statements and other financial data of the Company included in the Registration Statement or the prospectus, or any preliminary prospectus, or any amendment or supplement thereto, comply as to form in all material respects with the applicable accounting requirements of the Securities Act and (ii) covering such other financial matters (including information as to the period ending not more than three (3) Business Days prior to the date of such letters) with respect to the registration in respect of which such letter is being given as such underwriters or the Holders holding a majority of the Registrable Securities included in such registration, as the case may be, may reasonably request and as would be customary in such a transaction;

          (f) enter into customary agreements (including if the method of distribution is by means of an underwriting, an underwriting agreement in customary form) and take such other actions as are reasonably required in order to expedite or facilitate the disposition of such Registrable Securities;

          (g) otherwise use its commercially reasonable efforts to comply with all applicable rules and regulations of the SEC, and make earnings statements satisfying the provisions of Section 11(a) of the Securities Act generally available to the Holders no later than forty-five (45) days after the end of any twelve (12)month period (or, if such period is a fiscal year, ninety (90) days (or such shorter time as may be specified in General Instruction A(2) to Form 10-K under the Exchange Act, or its successor form, as the period within which the Company is required to file its annual reports on such form)) (i) commencing at the end of any fiscal quarter in which Registrable Securities are sold to underwriters in an underwritten public offering, or (ii) if not sold to underwriters in such an offering, beginning with the first

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month of the Company’s first fiscal quarter commencing after the effective date of the Registration Statement, which statements shall cover said twelve (12) month periods;

          (h) use its commercially reasonable efforts to cause all such Registrable Securities to be listed on each securities exchange or quotation system on which similar securities issued by the Company are listed or traded;

          (i) give written notice to the Holders:

     (i) when such Registration Statement or any amendment thereto has been filed with the SEC and when such Registration Statement or any post-effective amendment thereto has become effective;

     (ii) of any request by the SEC for amendments or supplements to such Registration Statement or the prospectus or the preliminary prospectus included therein or for additional information;

     (iii) of the issuance by the SEC of any stop order suspending the effectiveness of such Registration Statement or the initiation of any proceedings for that purpose;

     (iv) of the receipt by the Company or its legal counsel of any notification with respect to the suspension of the qualification of the Shares for sale in any jurisdiction or the initiation or threatening of any proceeding for such purpose; and

     (v) of the happening of any event that requires the Company to make changes in such Registration Statement or the prospectus or the preliminary prospectus in order to make the statements therein not misleading (which notice shall be accompanied by an instruction to suspend the use of the prospectus until the requisite changes have been made);

          (j) use its commercially reasonable efforts to prevent the issuance or obtain the withdrawal of any order suspending the effectiveness of any Registration Statement at the earliest possible time;

          (k) furnish to each Holder, without charge, at least one copy of such Registration Statement and any post-effective amendment thereto, including financial statements and schedules, and, if the Holder so requests in writing, all exhibits (including those, if any, incorporated by reference);

          (l) upon the occurrence of any event contemplated by Section 18.4 (i)(v) above, promptly prepare a post-effective amendment to such Registration Statement or a supplement to the related prospectus or preliminary prospectus or file any other required document so that, as thereafter delivered to the Holders, the prospectus or the preliminary prospectus will not contain an untrue statement of a material fact or omit to state any material fact necessary to make the statements therein, in light of the circumstances under which they were made, not misleading. If the Company notifies the Holders in accordance with Section 18.4 (i)(v) above to suspend the use of the prospectus until the requisite changes to the prospectus have been made, then the Holders shall suspend use of such prospectus and the period of effectiveness of such Registration Statement provided for above shall be extended by the number of days from and including the date of the giving of such notice to the date Holders shall have received such amended or supplemented prospectus pursuant to this Section 18.4(l);

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          (m) make reasonably available for inspection by the representatives of the Holders, any underwriter participating in any disposition pursuant to such Registration Statement and any counsel, accountant or other agent retained by such representative or any such underwriter all relevant financial and other records, pertinent corporate documents and properties of the Company and cause the Company’s employees to supply all relevant information reasonably requested by such representative or any such underwriter, counsel, accountant or agent in connection with the registration;

          (n) in connection with any underwritten offering, make the senior executives of the Company available to the selling Holders and the underwriters for meetings with prospective purchasers of the Registrable Securities and prepare and present to potential investors customary “road show” material in each case in accordance with the recommendations of the underwriters and in all respects in a manner consistent with other new issuances of securities in an offering of a similar size to such offering of the Registrable Securities;

          (o) permit any selling Holder to participate in the preparation of any Registration Statement, the prospectus or any preliminary prospectus, or any amendments thereto, and, if requested by any Holder or the managing underwriter, promptly incorporate in the Registration Statement, the prospectus, prospectus supplement or any amendment thereto such information as such Holders or the managing underwriter reasonably requests to be included therein; and

          (p) use commercially reasonable efforts to procure the cooperation of the Transfer Agent in settling any offering or sale of Registrable Securities into book-entry form in accordance with any procedures reasonably requested by the Holders or the underwriters.

          18.5 Expenses of Registration. All expenses incurred in connection with each registration pursuant to this Section 18, excluding underwriters’ discounts and commissions, but including without limitation all registration, filing and qualification fees, word processing, duplicating, printers’ and accounting fees (including the expenses of any special audits or “comfort” letters required by or incident to such performance and compliance), fees of FINRA or listing fees, messenger and delivery expenses, all fees and expenses of complying with state securities or blue sky laws, fees and disbursements of counsel for the Company, fees and expenses of the Company and the underwriters relating to “road show” investor presentations, including the cost of any aircraft chartered for such purpose, and the fees and disbursements of one counsel for the selling Holders (which counsel shall be selected by the Holders holding a majority-in-interest of the Registrable Securities being registered), shall be paid by the Company, except that the Holders shall bear and pay the underwriting commissions.

          18.6 Rule 144 and Rule 144A Information.

          (a) With a view to making available the benefits of certain rules and regulations of the SEC which may at any time permit the sale of the Registrable Securities to the public without registration, the Company agrees to:

          (b) make and keep public information available, as those terms are understood and defined in Rule 144 under the Securities Act;

          (c) use its best efforts to file with the SEC in a timely manner all reports and other documents required of the Company under the Securities Act and the Exchange Act; and

          (d) furnish to each Holder of Registrable Securities forthwith upon request a written statement by the Company as to its compliance with the reporting requirements of Rule 144 and of the

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Securities Act and the Exchange Act, a copy of the most recent annual or quarterly report of the Company, and such other reports and documents so filed by the Company as such Holder may reasonably request in availing itself of any rule or regulation of the SEC allowing such Holder to sell any Registrable Securities without registration.

          (e) At all times during which the Company is neither subject to the reporting requirements of Section 13 or 15(d) of the Exchange Act, nor exempt from reporting pursuant to Rule 12g3-2(b) under the Exchange Act, it will provide, upon the written request of any holder of Registrable Securities in written form (as promptly as practicable and in any event within fifteen (15) Business Days), to any prospective buyer of such Common Stock designated by such holder, all information required by Rule 144A(d)(4)(i) of the General Regulations promulgated by the SEC under the Securities Act.

     SECTION 19. Indemnification and Contribution.

          (a) The Company shall indemnify and hold harmless each Holder, its directors, officers, employees, advisors, agents, partners, members, managers and Affiliates and each Person who participates in the offering of such Registrable Securities, including underwriters (as defined in the Securities Act), and each Person, if any, who controls such Holder or participating Person within the meaning of the Securities Act, against any losses, claims, damages or liabilities, joint or several, insofar as such losses, claims, damages or liabilities (or proceedings in respect thereof) arise out of or are based on any untrue or alleged untrue statement of any material fact contained in any Registration Statement, preliminary prospectus, or prospectus or any amendment thereof or supplement thereto, or any documents incorporated by reference therein or arise out of or are based upon the omission or alleged omission to state therein a material fact required to be stated therein or necessary to make the statements therein not misleading, or any violation or alleged violation by the Company of the Securities Act, the Exchange Act or any other federal securities laws or applicable “blue sky” or state securities laws, and shall reimburse each Holder, its directors, officers, employees, advisors, agents, partners, members, managers and Affiliates, and such participating Person or controlling Person for any legal or other expenses reasonably incurred by them in connection with investigating or defending any such loss, claim, damage, liability or action; provided, however, that the Company shall not be liable to any Holder, its directors, officers, employees, advisors, agents, partners, members, managers and Affiliates, participating Person or controlling Person in any such case for any such loss, claim, damage, liability or action to the extent that it arises out of or is based upon an untrue statement or alleged untrue statement or omission or alleged omission made in connection with such Registration Statement, preliminary prospectus, prospectus or amendments or supplements thereto, in reliance upon and in conformity with written information furnished expressly for use in connection with such Registration Statement by any such Holder, its directors, officers, employees, advisors, agents, partners, members, managers and Affiliates, participating Person or controlling Person. Such indemnity shall remain in full force and effect regardless of any investigation made by or on behalf of any such Holder, its directors, officers, employees, advisors, agents, partners, members, managers and Affiliates, participating Person or controlling Person, and shall survive the transfer of the Registrable Securities by such Holder. The reimbursements required by this Section 19(a) shall be made by periodic payments during the course of the investigation or defense, as and when bills are received or expenses incurred.

          (b) In connection with any Registration Statement in which a Holder of Registrable Securities is participating, each such Holder shall indemnify and hold harmless the Company, its directors and officers, and each Person, if any, who controls the Company within the meaning of the Securities Act, against any losses, claims, damages or liabilities, joint or several, to which the Company or any such director, officer or controlling person may become subject, under the Securities Act, insofar as such losses, claims, damages or liabilities (or proceedings in respect thereof) arise out of or are based upon any untrue statement or alleged untrue statement of any material fact contained in any Registration Statement,

27

preliminary prospectus, or prospectus or any amendment thereof or supplement thereto or arise out of or are based upon the omission or alleged omission to state therein a material fact required to be stated therein or necessary to make the statements therein not misleading, in each case to the extent, but only to the extent, that such untrue statement or alleged untrue statement or omission or alleged omission was made in such Registration Statement, preliminary prospectus, the prospectus or amendments or supplements thereto, in reliance upon and in conformity with written information furnished by or on behalf of such Holder expressly for use in connection with such Registration Statement; and each such Holder shall reimburse any legal or other expenses reasonably incurred by the Company or any such director, officer, controlling Person, in connection with investigating or defending any such loss, claim, damage, liability or action; provided, however, that the indemnity agreement contained in this Section 19(b) shall not apply to amounts paid in settlement of any such loss, claim, damage, liability or action if such settlement is effected without the prior written consent of such Holder, and provided, further, that the obligation to indemnify will be several, not joint and several, among such Holders of Registrable Securities and the liability of each Holder hereunder shall be limited to the proportion of any such loss, claim, damage, liability or expense which is equal to the proportion that the net proceeds from the sale of the Registrable Securities sold by such Holder under such Registration Statement bears to the total net proceeds from the sale of all securities sold thereunder, but not in any event to exceed the net proceeds received by such Holder from the sale of Registrable Securities covered by such Registration Statement.

          (c) If the indemnification provided for in this Section 19 from the indemnifying party is unavailable to an indemnified party hereunder in respect of any losses, claims, damages, liabilities or expenses referred to therein, then the indemnifying party, in lieu of indemnifying such indemnified party, shall contribute to the amount paid or payable by such indemnified party as a result of such losses, claims, damages, liabilities or expenses in such proportion as is appropriate to reflect the relative fault of the indemnifying party and indemnified parties in connection with the actions which resulted in such losses, claims, damages, liabilities or expenses, as well as any other relevant equitable considerations. The relative fault of such indemnifying party and indemnified parties shall be determined by reference to, among other things, whether any action in question, including any untrue or alleged untrue statement of a material fact or omission or alleged omission to state a material fact, has been made by, or relates to information supplied by, such indemnifying party or indemnified parties, and the parties’ relative intent, knowledge, access to information and opportunity to correct or prevent such action. The amount paid or payable by a party as a result of the losses, claims, damages, liabilities and expenses referred to above shall be deemed to include any legal or other fees or expenses reasonably incurred by such party in connection with any investigation or proceeding. Notwithstanding the provisions of this Section 19(c), no Holder shall be required to contribute an amount greater than the dollar amount by which the net proceeds received by such Holder with respect to the sale of any Registrable Securities exceeds the amount of damages which such Holder has otherwise been required to pay by reason of any and all untrue or alleged untrue statements of material fact or omissions or alleged omissions of material fact made in any Registration Statement, prospectus or preliminary prospectus or any amendment thereof or supplement thereto related to such sale of Registrable Securities.

          The parties hereto agree that it would not be just and equitable if contribution pursuant to this Section 19(c) were determined by pro rata allocation or by any other method of allocation which does not take account of the equitable considerations referred to in the immediately preceding clause. 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.

          (d) Any Person entitled to indemnification under this Section 19 agrees to give prompt written notice to the indemnifying party after the receipt by the indemnified party of any written notice of the commencement of any action, suit, proceeding or investigation or threat thereof made in

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writing for which the indemnified party intends to claim indemnification or contribution pursuant to this Warrant Agreement; provided, that the failure so to notify the indemnified party shall not relieve the indemnifying party of any liability that it may have to the indemnifying party hereunder. If notice of commencement of any such action is given to the indemnifying party as above provided, the indemnifying party shall be entitled to participate in and, to the extent it may wish, to assume the defense of such action at its own expense, with counsel chosen by it and reasonably satisfactory to such indemnified party. The indemnified party shall have the right to employ separate counsel in any such action and participate in the defense thereof, but the fees and expenses of such counsel shall be paid by the indemnified party unless (i) the indemnifying party agrees to pay the same, (ii) the indemnifying party fails to assume the defense of such action, or (iii) the named parties to any such action (including any impleaded parties) have been advised by such counsel that either (A) representation of such indemnified party and the indemnifying party by the same counsel would be inappropriate under applicable standards of professional conduct or (B) there are one or more legal defenses available to it which are substantially different from or additional to those available to the indemnifying party. No indemnifying party shall be liable for any settlement entered into without its written consent, which consent shall not be unreasonably withheld.

          (e) The agreements contained in this Section 19 shall survive the transfer of the Registrable Securities by any Holder and sale of all the Registrable Securities pursuant to any Registration Statement and shall remain in full force and effect, regardless of any investigation made by or on behalf of any Holder, its directors and officers and Affiliates or participating or controlling Person.

     SECTION 20. Notices to the Company and the Holders. Any notice or demand authorized or permitted by this Warrant Agreement to be given or made by any Holder to or on the Company shall be sufficiently given or made if given in writing, by certified or registered mail, return receipt requested, postage prepaid, or by U.S. express mail service, or by private overnight mail service (e.g. Federal Express), or by facsimile transmission. Any such notice, request, demand, other communication or delivery shall be deemed to have been received (a) on the business day actually received if given by facsimile transmission, (b) on the business day immediately subsequent to mailing, if sent by U.S. express mail service or private overnight mail service, or (c) three (3) business days following the mailing thereof, if mailed by certified or registered mail, postage prepaid, return receipt requested, and all such notices shall be sent to the following addresses (or to such other address or addresses as a party may have advised the other in the manner provided herein) and shall be given as follows:

If to Company:

Grubb & Ellis Company
1551 North Tustin Avenue, Suite 300
Santa Ana, California 92705
Facsimile No.: (714) 667-0315
Attention: Chief Financial Officer

with a copy simultaneously by like means to:

Zukerman Gore Brandeis & Crossman, LLP
875 Third Avenue
New York, NY 10022
Facsimile No.: (212) 223-6433
Attention: Clifford A. Brandeis, Esq.

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          If to a Holder, to the address set forth on Exhibit B annexed hereto, (unless otherwise previously instructed by such Holder) with a copy simultaneously by like means to:

Shearman & Sterling LLP

599 Lexington Ave
New York, NY 10022
Telephone No: 212-848-4000
Facsimile No.: 212-848-7179
Attention: Malcolm K. Montgomery, Esq.

     SECTION 21. Supplements and Amendments. The Company may from time to time supplement or amend this Warrant Agreement without the approval of any Holders in order to cure any ambiguity or to correct or supplement any provision contained herein which may be defective or inconsistent with any other provision herein, or to make any other provisions in regard to matters or questions arising hereunder which the Company may deem necessary or desirable and which shall not in any way adversely affect the interests of the Holders. Any other amendment or supplement to this Warrant Agreement shall require the written consent of the Majority Holders. The consent of each Holder affected shall be required for any amendment of this Warrant Agreement pursuant to which the Exercise Price would be increased or the number of Warrant Shares purchasable upon exercise of Warrants would be decreased.

     SECTION 22. Successors. All the covenants and provisions of this Warrant Agreement by or for the benefit of the Company shall bind and inure to the benefit of their respective successors and assigns hereunder.

     SECTION 23. Termination. This Warrant Agreement shall terminate on the Expiration Date, after which time this Warrant Agreement and all Warrants shall no longer be of any force or effect. Notwithstanding the foregoing, this Warrant Agreement will terminate on such earlier date on which all outstanding Warrants have been exercised. The provisions of Sections 16, 17, 18 and 19 shall survive such termination.

     SECTION 24. Governing Law; Jurisdiction. This Warrant Agreement and each Warrant Certificate issued hereunder shall be deemed to be a contract made under the laws of the State of New York and for all purposes shall be governed by and construed in accordance with the internal laws of said State. The parties hereto irrevocably consent to the jurisdiction of the state and federal courts sitting in the City of New York in connection with any action, suit or proceeding arising out of or relating to this Warrant Agreement.

     SECTION 25. Benefits of this Warrant Agreement. Nothing in this Warrant Agreement shall be construed to give to any Person other than the Company and the Holders any legal or equitable right, remedy or claim under this Warrant Agreement; but this Warrant Agreement shall be for the sole and exclusive benefit of the Company and the Holders.

     SECTION 26. Counterparts. This Warrant Agreement may be executed in any number of original, facsimile or electronic counterparts and each of such counterparts shall for all purposes be deemed to be an original, and all such counterparts shall together constitute but one and the same instrument.

     SECTION 27. Enforcement. The parties agree that irreparable damage would occur in the event that any of the provisions of this Agreement were not performed in accordance with their specific terms or were otherwise breached. It is accordingly agreed that the parties shall be entitled to an injunction or

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injunctions to prevent breaches of this Agreement and to enforce specifically the terms and provisions of this Agreement in any New York state court or any federal court located in the State of New York, this being in addition to any other remedy to which they are entitled at law or in equity.

     SECTION 28. Further Assurances. From time to time on and after the date hereof, the Company shall deliver or cause to be delivered to the Holders such further documents and instruments and shall do and cause to be done such further acts as the Holders shall reasonably request (it being understood that the Holders shall have no obligation to make such request) to carry out more effectively the provisions and purposes of this Warrant Agreement, to evidence compliance herewith or to assure itself that it is protected hereunder.

     SECTION 29. Entire Agreement. This Warrant Agreement and the Warrant Certificates constitute the entire agreement of the Company and the Holders with respect to the subject matter hereof and supersedes all prior agreements and undertakings, both written and oral, among the Company and the Holders with respect to the subject matter hereof.

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          IN WITNESS WHEREOF, the parties hereto have caused this Warrant Agreement to be duly executed, as of the day and year first above written.

Grubb & Ellis Company, as the Company
By:	/s/ Richard W. Pehlke
Name:	Richard W. Pehlke
Title:	EVP & CFO

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Deutsche Bank Trust Company Americas, as a Holder
By:	/s/ James Rolison
Name:	James Rolison
Title:	Managing Director
By:	/s/ George R. Reynolds
Name:	George R. Reynolds
Title:	Director

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Fifth Third Bank, as a Holder
By:	/s/ Matthew D. Rodgers
Name:	Matthew D. Rodgers
Title:	Vice President

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JPMorgan Chase, N.A., as a Holder
By:	/s/ Jacqueline P. Yardley
Name:	Jacqueline P. Yardley
Title:	Senior Vice President

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KeyBank National Association, as a Holder
By:	/s/ James T. Freel
	Name:	James T. Freel
	Title:	Senior Vice President

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EX-10.61

Exhibit 10.61

$67,289,245

THIRD AMENDED AND RESTATED CREDIT AGREEMENT

dated as of

May 18, 2009,

Among

GRUBB & ELLIS COMPANY,

as the Borrower,

THE GUARANTORS NAMED HEREIN,

as Guarantors,

THE LENDERS NAMED HEREIN,

DEUTSCHE BANK TRUST COMPANY AMERICAS,

as Syndication Agent,

DEUTSCHE BANK SECURITIES INC.,

as Sole Book-Running Manager and Sole Lead Arranger,

and

DEUTSCHE BANK TRUST COMPANY AMERICAS,

as Initial Issuing Bank and Administrative Agent

T A B L E O F C O N T E N T S

Section	Page
ARTICLE I DEFINITIONS AND ACCOUNTING TERMS
SECTION 1.01              Certain Defined Terms		1
SECTION 1.02              Computation of Time Periods; Other Definitional Provisions		24
SECTION 1.03              Accounting Terms		24
ARTICLE II AMOUNTS AND TERMS OF THE ADVANCES AND THE LETTERS OF CREDIT
SECTION 2.01              The Advances and the Letters of Credit		25
SECTION 2.02              Making the Advances		26
SECTION 2.03              Issuance of and Drawings and Reimbursement Under Letters of Credit		27
SECTION 2.04              Repayment of Advances		29
SECTION 2.05              Termination or Reduction of the Commitments		30
SECTION 2.06              Prepayments		30
SECTION 2.07              Interest		33
SECTION 2.08              Fees		34
SECTION 2.09              Conversion of Advances		34
SECTION 2.10              Increased Costs, Etc		35
SECTION 2.11              Payments and Computations		36
SECTION 2.12              Taxes		37
SECTION 2.13              Sharing of Payments, Etc		39
SECTION 2.14              Use of Proceeds		39
SECTION 2.15              Defaulting Lenders		40
SECTION 2.16              Evidence of Obligations		42
SECTION 2.17              Extension of Termination Date		43
SECTION 2.18              Lender Pro Rata Shares		43
ARTICLE III CONDITIONS OF LENDING
SECTION 3.01              Conditions Precedent		43
SECTION 3.02              Conditions Precedent to Each Borrowing and any Extension		47
SECTION 3.03              Determinations Under Section 3.01		47
ARTICLE IV REPRESENTATIONS AND WARRANTIES
SECTION 4.01              Representations and Warranties of the Borrower		48
ARTICLE V COVENANTS OF THE BORROWER
SECTION 5.01              Affirmative Covenants		54
SECTION 5.02              Negative Covenants		60
SECTION 5.03              Reporting Requirements		68
SECTION 5.04              [Intentionally Omitted]		72
ARTICLE VI EVENTS OF DEFAULT
SECTION 6.01              Events of Default		72

Section	Page
SECTION 6.02              Actions in Respect of the Letters of Credit upon Default		75
ARTICLE VII THE Administrative Agent
SECTION 7.01              Authorization and Action		75
SECTION 7.02              Administrative Agent’s Reliance, Etc		76
SECTION 7.03              DBTCA and Affiliates		77
SECTION 7.04              Lender Party Credit Decision		77
SECTION 7.05              Indemnification		77
SECTION 7.06              Successor Administrative Agents		78
ARTICLE VIII GUARANTY
SECTION 8.01              Guaranty; Limitation of Liability		79
SECTION 8.02              Guaranty Absolute		81
SECTION 8.03              Waivers and Acknowledgments		82
SECTION 8.04              Subrogation		82
SECTION 8.05              Guaranty Supplements		83
SECTION 8.06              Subordination		83
SECTION 8.07              Continuing Guaranty; Assignments		84
ARTICLE IX MISCELLANEOUS
SECTION 9.01              Amendments, Etc		84
SECTION 9.02              Notices, Etc		85
SECTION 9.03              No Waiver; Remedies		85
SECTION 9.04              Costs and Expenses		86
SECTION 9.05              Right of Set-off		87
SECTION 9.06              Binding Effect		87
SECTION 9.07              Assignments and Participations		87
SECTION 9.08              Execution in Counterparts		90
SECTION 9.09              No Liability of the Issuing Bank		91
SECTION 9.10              Confidentiality; Patriot Act		91
SECTION 9.11              Release of Collateral		91
SECTION 9.12              Jurisdiction, Etc.		91
SECTION 9.13              Governing Law		92
SECTION 9.14              Waiver of Jury Trial		92

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SCHEDULES
Schedule I		-	Commitments, Pro Rata Shares and Applicable Lending Offices
Schedule II		-	Guarantors
Schedule III		-	Existing Letters of Credit
Schedule IV		-	Real Property Assets
Schedule V		-	Recapitalization Plan
Schedule VI		-	Cash Flow Projections
Schedule VII		-	Initial Approved Budget
Schedule 2.06(e)(iii)		-	Mandatory Amortization Payment
Schedule 3.01(a)(ii)(F)		-	UCC-1 Financing Statements to be Terminated
Schedule 4.01(b)		-	Subsidiaries
Schedule 4.01(d)		-	Authorizations, Approvals, Actions, Notices and Filings
Schedule 4.01(f)		-	Disclosed Litigation
Schedule 4.01(p)		-	Labor Matters
Schedule 4.01(q)		-	Environmental Disclosure
Schedule 4.01(t)		-	Existing Debt
Schedule 4.01(v)		-	Existing Liens
Schedule 4.01(w)		-	Owned Real Property
Schedule 4.01(x)(i)		-	Leased Real Property (Lessee)
Schedule 4.01(x)(ii)		-	Leased Real Property (Lessor)
Schedule 4.01(y)		-	Investments
Schedule 4.01(z)		-	Material Contracts
Schedule 4.01(aa)		-	Intellectual Property
Schedule 4.01(bb)		-	Non-Guarantor Subsidiaries
Schedule 4.01(cc)		-	Contingent Obligations
Schedule 4.01(dd)		-	TIC Investments
Schedule 4.01(ee)		-	Inactive Subsidiaries
Schedule 5.01(r)(i)		-	Post Closing Account Control Agreement Accounts
EXHIBITS
Exhibit A	-	Form of Revolving Credit Note
Exhibit B	-	Form of Notice of Borrowing
Exhibit C	-	Form of Assignment and Acceptance
Exhibit D	-	Form of Security Agreement
Exhibit E	-	Form of Guaranty Supplement
Exhibit F	-	Form of Opinion of Special Counsel to the Loan Parties
Exhibit G	-	Form of Compliance Certificate
Exhibit H	-	Form of Budget Reconciliation and Cash Flow Variance Report
Exhibit I	-	Form of Lender Warrants
Exhibit J	-	Form of Opinion with Respect to Lender Warrants
Exhibit K	-	Form of Post Closing Opinion of Special Counsel to the Loan Parties

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THIRD AMENDED AND RESTATED CREDIT AGREEMENT

          THIRD AMENDED AND RESTATED CREDIT AGREEMENT dated as of May 18, 2009 among GRUBB & ELLIS COMPANY, a Delaware corporation (the “Borrower”), the Guarantors (as hereinafter defined), the Lenders (as hereinafter defined), DEUTSCHE BANK SECURITIES INC., as sole book-running manager and sole lead arranger (the “Lead Arranger”), and DEUTSCHE BANK TRUST COMPANY AMERICAS (“DBTCA”), as the initial issuer of Letters of Credit (as hereinafter defined) (in such capacity, the “Initial Issuing Bank”) and administrative agent (together with any successors appointed pursuant to Article VII, the “Administrative Agent”) for the Lender Parties (as hereinafter defined).

PRELIMINARY STATEMENTS

          (1) Pursuant to that certain Second Amended and Restated Credit Agreement dated as of December 7, 2007, as amended by (i) that certain First Letter Amendment dated as of August 4, 2008, and (ii) that certain Second Letter Amendment dated as of September 30, 2008 (as so amended, the “Existing Agreement”) among the Borrower, the guarantors party thereto, the lenders described therein, Deutsche Bank Securities Inc., as sole book-running manager and sole lead arranger, and Deutsche Bank Trust Company Americas, as initial issuing bank and administrative agent, such lenders extended certain commitments to make certain credit facilities available to the Borrower.

          (2) The Borrower, the Administrative Agent, the Lead Arranger, and the lenders party to the Existing Agreement desire to amend and restate the Existing Agreement to modify the terms and covenants of the credit facility provided thereunder.

          NOW, THEREFORE, in consideration of the premises set forth herein and other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the parties hereto agree to amend and restate the Existing Agreement to read in its entirety as follows:

ARTICLE I

DEFINITIONS AND ACCOUNTING TERMS

     SECTION 1.01 Certain Defined Terms. As used in this Agreement, the following terms shall have the following meanings (such meanings to be equally applicable to both the singular and plural forms of the terms defined):

          “Account Control Agreement” has the meaning specified in the Security Agreement.

          “Accounting Change” has the meaning specified in Section 1.03.

          “Adjusted Excess Cash Flow” means, for any period, an amount equal to (a) Consolidated EBITDA attributable to such period less (b) Fixed Charges attributable to such period.

          “Administrative Agent” has the meaning specified in the preamble to this Agreement.

          “Administrative Agent’s Account” means the account of the Administrative Agent maintained at Deutsche Bank Trust Company Americas, ABA No. 021 001 033, for further credit to the Commercial Loan Division, 90 Hudson Street, Jersey City, NJ, Account No. 99401268, or such other account maintained by the Administrative Agent and designated by the Administrative Agent in a written notice to the Lender Parties and the Borrower.

          “Advance” means a Revolving Credit Advance or a Letter of Credit Advance.

          “Affiliate” means, as to any Person, any other Person that, directly or indirectly, controls, is controlled by or is under common control with such Person or is a director or officer of such Person. For purposes of this definition, the term “control” (including the terms “controlling”, “controlled by” and “under common control with”) of a Person means the possession, direct or indirect, of the power to direct or cause the direction of the management and policies of such Person, whether through the ownership of Voting Interests, by contract or otherwise.

          “Agreement” means this Third Amended and Restated Credit Agreement, as amended.

          “Agreement Value” means, for each Hedge Agreement, on any date of determination, an amount determined by the Administrative Agent equal to: (a) in the case of a Hedge Agreement documented pursuant to the Master Agreement (Multicurrency-Cross Border) published by the International Swap and Derivatives Association, Inc. (the “Master Agreement”), the amount, if any, that would be payable by any Loan Party or any of its Subsidiaries to its counterparty to such Hedge Agreement, as if (i) such Hedge Agreement was being terminated early on such date of determination, (ii) such Loan Party or Subsidiary was the sole “Affected Party”, and (iii) the Administrative Agent was the sole party determining such payment amount (with the Administrative Agent making such determination pursuant to the provisions of the form of Master Agreement); (b) in the case of a Hedge Agreement traded on an exchange, the mark-to-market value of such Hedge Agreement, which will be the unrealized loss on such Hedge Agreement to the Loan Party or Subsidiary of a Loan Party party to such Hedge Agreement determined by the Administrative Agent based on the settlement price of such Hedge Agreement on such date of determination; or (c) in all other cases, the mark-to-market value of such Hedge Agreement, which will be the unrealized loss on such Hedge Agreement to the Loan Party or Subsidiary of a Loan Party party to such Hedge Agreement determined by the Administrative Agent as the amount, if any, by which (i) the present value of the future cash flows to be paid by such Loan Party or Subsidiary exceeds (ii) the present value of the future cash flows to be received by such Loan Party or Subsidiary pursuant to such Hedge Agreement; capitalized terms used and not otherwise defined in this definition shall have the respective meanings set forth in the above described Master Agreement.

          “Applicable Lending Office” means, with respect to each Lender Party, such Lender Party’s Domestic Lending Office in the case of a Base Rate Advance and such Lender Party’s Eurodollar Lending Office in the case of a Eurodollar Rate Advance.

          “Applicable Margin” means, at any date of determination, a percentage per annum equal to (i) for Base Rate Advances, (a) from the Effective Date until the date on which a recapitalization transaction is consummated in accordance with the Recapitalization Plan, 7.00% per annum, and (b) after the date on which a recapitalization transaction is completed in accordance with the Recapitalization Plan, 3.00% per annum; provided, however, that if the Borrower shall fail to consummate a recapitalization transaction by the Mandatory Amortization Date in accordance with the Recapitalization Plan, then the Applicable Margin shall be 11.00% per annum effective as of the Mandatory Amortization Date, and (ii) for Eurodollar Rate Advances, (a) from the Effective Date until the date on which a recapitalization transaction is consummated in accordance with the Recapitalization Plan, 8.00% per annum, and (b) after the date on which a recapitalization transaction is completed in accordance with the Recapitalization Plan, 4.00% per annum; provided, however, that if the Borrower shall fail to consummate a recapitalization transaction by the Mandatory Amortization Date in accordance with the Recapitalization Plan, then the Applicable Margin shall be 12.00% per annum effective as of the Mandatory Amortization Date.

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          “Applicable Paydown Percentage” means (i) prior to the date on which the aggregate principal amount of outstanding Revolving Credit A Advances does not exceed $10,710,755, 100%, and (ii) from and after such date, 50%.

          “Appropriate Lender” means, at any time, with respect to (a) the Revolving Credit Facility, a Lender that has a Commitment with respect to such Facility at such time, or (b) the Letter of Credit Facility, (i) the Issuing Bank and (ii) if the other Revolving Credit B Lenders have participated in Letter of Credit Advances pursuant to Section 2.03(c) that are outstanding at such time, each such other Revolving Credit B Lender.

          “Approved Budget” has the meaning specified in Section 5.03(f).

          “Approved Fund” means, with respect to any Lender Party that is a fund that invests in bank loans, any other fund that invests in bank loans and is advised or managed by the same investment advisor as such Lender Party or by an Affiliate of such investment advisor.

          “Assignment and Acceptance” means an assignment and acceptance entered into by a Lender Party and an Eligible Assignee and accepted by the Administrative Agent, in accordance with Section 9.07 and in substantially the form of Exhibit C hereto or any other form approved by the Administrative Agent.

          “Available Amount” of any Letter of Credit means, at any time, the maximum amount available to be drawn under such Letter of Credit at such time (assuming compliance at such time with all conditions to drawing).

          “Bankruptcy Law” means any proceeding of the type referred to in Section 6.01(f) or Title II, U.S. Code, or any similar foreign, federal or state law for the relief of debtors.

          “Base Rate” means a fluctuating interest rate per annum in effect from time to time, which rate per annum shall at all times be equal to the highest of:

     (a) the rate of interest announced publicly by DBTCA in New York, New York, from time to time, as its prime lending rate (the “Prime Lending Rate”) (the Prime Lending Rate is a reference rate and does not necessarily represent the lowest or best rate actually charged to any customer; DBTCA may make commercial loans or other loans at rates of interest at, above or below the Prime Lending Rate);

     (b) ¹/2 of 1% per annum above the Federal Funds Rate; and

     (c) 1% per annum above the Eurodollar Rate.

          “Base Rate Advance” means an Advance that bears interest as provided in Section 2.07(a)(i).

          “Beneficial Owner” shall have the meaning set forth in Rules 13(d)-3 and 13(d)-5 under the Securities Exchange Act of 1934, as amended.

          “Borrower” has the meaning specified in the Preamble to this Agreement.

          “Borrower’s Account” means the account of the Borrower specified by the Borrower in writing to the Administrative Agent from time to time.

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          “Borrower Properties” shall mean those real estate assets owned or leased by any Loan Party or any of its Subsidiaries, listed on Schedules 4.01(w) and 4.01(x)(i), respectively.

          “Borrowing” means a Revolving Credit Borrowing.

          “Breakage Indemnity Letter” means a letter from Borrower to the Administrative Agent delivered contemporaneously with the Notice of Borrowing given hereunder with respect to the initial Borrowing and addressing the obligation of the Borrower to pay breakage costs under certain circumstances described therein.

          “Budget Non-Compliance Event” has the meaning specified in Section 5.03(e).

          “Budget Reconciliation and Cash Flow Variance Report” has the meaning specified in Section 5.03(e).

          “Business Day” means a day of the year on which banks are not required or authorized by law to close in New York City and, if the applicable Business Day relates to any Eurodollar Rate Advances, on which dealings are carried on in the London interbank market.

          “Capital Expenditures” means, for any Person for any period, the sum of, without duplication, (a) all expenditures made, directly or indirectly, by such Person or any of its Subsidiaries during such period for equipment, fixed assets, real property or improvements, or for replacements or substitutions therefor or additions thereto, that have been or should be, in accordance with GAAP, reflected as additions to property, plant or equipment or other tangible asset on a Consolidated balance sheet of such Person or have a useful life of more than one year plus (b) the aggregate principal amount of all Debt (including Obligations under Capitalized Leases) assumed or incurred in connection with any such expenditures. For purposes of this definition, the purchase price of equipment that is purchased simultaneously with the trade-in of existing equipment or with insurance proceeds shall be included in Capital Expenditures only to the extent of the gross amount of such purchase price less the credit granted by the seller of such equipment for the equipment being traded in at such time or the amount of such proceeds, as the case may be. Further, tenant improvement costs and expenses that would otherwise qualify as Capital Expenditures shall be excluded from the definition thereof to the extent such costs and expenses are reimbursable by the landlord.

          “Capitalized Leases” means all leases that have been or should be, in accordance with GAAP, recorded as capitalized leases.

          “Cash Equivalents” means any of the following, to the extent owned by the Borrower or any of its Subsidiaries free and clear of all Liens other than Liens created under the Collateral Documents and having a maturity of not greater than 180 days from the date of acquisition thereof: (a) readily marketable direct obligations of the Government of the United States or any agency or instrumentality thereof or obligations unconditionally guaranteed by the full faith and credit of the Government of the United States, (b) insured certificates of deposit of or time deposits with any commercial bank that is a Lender Party or a member of the Federal Reserve System, issues (or the parent of which issues) commercial paper rated as described in clause (c) below, is organized under the laws of the United States or any State thereof and has combined capital and surplus of at least $1 billion, (c) commercial paper issued by any corporation organized under the laws of any State of the United States and rated at least “Prime-1” (or the then equivalent grade) by Moody’s Investors Service, Inc. or “A-1” (or the then equivalent grade) by Standard & Poor’s, a division of The McGraw-Hill Companies, Inc. (d) Investments, classified in accordance with GAAP as Current Assets of the Borrower or any of its Subsidiaries, in money market investment programs registered under the Investment Company Act of 1940, as amended,

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which are administered by financial institutions that have the highest rating obtainable from either Moody’s or S&P, and the portfolios of which are limited solely to Investments of the character, quality and maturity described in clauses (a), (b) and (c) of this definition or (e) Investments in marketable securities traded on the New York Stock Exchange or any other United States national securities exchange.

          “Cash Flow Projections” means the cash flow projections for the Borrower specified on Schedule VI hereto.

          “CERCLA” means the Comprehensive Environmental Response, Compensation and Liability Act of 1980, as amended from time to time.

          “CERCLIS” means the Comprehensive Environmental Response, Compensation and Liability Information System maintained by the U.S. Environmental Protection Agency.

          “CFC” means an entity that is a controlled foreign corporation under Section 957 of the Internal Revenue Code.

          “Change of Control” means the occurrence of any of the following: (a) any “person” or “group” (as such terms are used in Sections 13(d) and 14(d) of the Securities Exchange Act of 1934, as amended) (excluding members of the Kojaian Group) shall become, or obtain rights (whether by means of warrants, options or otherwise) to become, the Beneficial Owner, directly or indirectly, of the voting power to (i) direct the voting of securities having more than 35% (or more than 50% in connection with implementation of the Recapitalization Plan) of the voting power for the election of directors of the Borrower or (ii) direct, directly or indirectly, the management or policies of the Borrower, or (b) during any period of up to 24 consecutive months, commencing before or after the date of this Agreement, Continuing Directors shall cease for any reason to constitute a majority of the board of directors of the Borrower.

          “Collateral” means all “Collateral” and “Mortgaged Property” referred to in the Collateral Documents and all other property that is or is intended to be subject to any Lien in favor of the Administrative Agent for the benefit of the Secured Parties.

          “Collateral Account” has the meaning specified in the Security Agreement.

          “Collateral Documents” means the Security Agreement, the Account Control Agreements, the Account Control Ratifications, the Commodity Account Control Agreements, the Securities Account Control Agreements, the Mortgages, the Intellectual Property Security Agreement, each of the collateral documents, instruments and agreements delivered pursuant to Section 5.01(j), and each other agreement that creates or purports to create a Lien in favor of the Administrative Agent for the benefit of the Secured Parties.

          “Commission Advance Program” means any program pursuant to which a Loan Party may make advances to its employees and/or agents against future real estate commissions to be earned by such employees or agents, provided that any such advances shall be made only in accordance with the Approved Budget.

          “Commitment” means a Revolving Credit Commitment or a Letter of Credit Commitment.

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          “Commodity Account Control Agreement” has the meaning specified in the Security Agreement.

          “Compliance Certificate” means a certificate duly executed by any of the chairman of the board of directors, chief executive officer, president or chief financial officer of the Borrower, but in any event, with respect to financial matters, the president or the chief financial officer of the Borrower, substantially in the form of Exhibit G hereto.

          “Confidential Information” means information that any Loan Party furnishes to the Administrative Agent or any Lender Party, but does not include any such information that is or becomes generally available to the public or that is or becomes available to the Administrative Agent or such Lender Party from a source other than the Loan Parties.

          “Consolidated” refers to the consolidation of accounts in accordance with GAAP.

          “Consolidated EBITDA” means, for any date of determination, for the Measurement Period most recently ended, the Consolidated EBITDA of the Borrower and its Subsidiaries for such Measurement Period, as determined on a consolidated basis in accordance with GAAP, less the consolidated net income of any Divested Entity on a pro forma basis for such Measurement Period.

          “Consolidated Net Income” means, for any date of determination, for the Measurement Period most recently ended, the Consolidated net income of the Borrower and its Subsidiaries for such Measurement Period determined on a consolidated basis in accordance with GAAP, provided that there shall be excluded from such calculation (a) the income (or deficit) of any Person (other than a Subsidiary of the Borrower) in which the Borrower or any of its Subsidiaries has an ownership interest and (b) the undistributed earnings of any Subsidiary of the Borrower to the extent that the declaration or payment of dividends or similar distributions by such Subsidiary is not at the time permitted by the terms of any contractual obligation (other than under any Loan Document) or Applicable Law applicable to such Subsidiary.

          “Contingent Obligation” means, with respect to any Person, any Obligation or arrangement of such Person to guarantee or intended to guarantee any Debt, leases, dividends or other payment Obligations (“primary obligations”) of any other Person (the “primary obligor”) in any manner, whether directly or indirectly, including, without limitation, (a) the direct or indirect guarantee, endorsement (other than for collection or deposit in the ordinary course of business), co-making, discounting with recourse or sale with recourse by such Person of the Obligation of a primary obligor, (b) the Obligation to make take-or-pay or similar payments, if required, regardless of nonperformance by any other party or parties to an agreement or (c) any Obligation of such Person, whether or not contingent, (i) to purchase any such primary obligation or any property constituting direct or indirect security therefor, (ii) to advance or supply funds (A) for the purchase or payment of any such primary obligation or (B) to maintain working capital or equity capital of the primary obligor or otherwise to maintain the net worth or solvency of the primary obligor, (iii) to purchase property, assets, securities or services primarily for the purpose of assuring the owner of any such primary obligation of the ability of the primary obligor to make payment of such primary obligation or (iv) otherwise to assure or hold harmless the holder of such primary obligation against loss in respect thereof. The amount of any Contingent Obligation shall be deemed to be an amount equal to the stated or determinable amount of the primary obligation in respect of which such Contingent Obligation is made (or, if less, the maximum amount of such primary obligation for which such Person may be liable pursuant to the terms of the instrument evidencing such Contingent Obligation) or, if not stated or determinable, the maximum reasonably anticipated liability in respect thereof (assuming such Person is required to perform thereunder), as determined by such Person in good faith.

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          “Continuing Directors” means the directors of the Borrower on the Effective Date and thereafter, all such directors and any additional or replacement directors if, in each case, such other director’s nomination for election to the board of directors of the Borrower is recommended by at least a majority of the then Continuing Directors.

          “Conversion”, “Convert” and “Converted” each refer to a conversion of Advances of one Type into Advances of the other Type pursuant to Section 2.09 or 2.10.

          “Current Assets” of any Person means all assets of such Person that would, in accordance with GAAP, be classified as current assets of a company conducting a business the same as or similar to that of such Person, after deducting adequate reserves in each case in which a reserve is proper in accordance with GAAP.

          “Customary Carve-Out Agreement” has the meaning specified in the definition of “Non-Recourse Debt.”

          “DBSI” has the meaning specified in the preamble to this Agreement.

          “DBTCA” has the meaning specified in the preamble to this Agreement.

          “Debt” of any Person means, without duplication, (a) all indebtedness of such Person for borrowed money, (b) all Obligations of such Person for the deferred purchase price of property or services (other than current trade payables incurred in the ordinary course of such Person’s business) to the extent required to be shown on a balance sheet prepared in accordance with GAAP, the amount of which shall equal the amount required to be shown on such a balance sheet, (c) all Obligations of such Person evidenced by notes, bonds, debentures or other similar instruments, (d) all Obligations of such Person created or arising from or in connection with the deposit, transfer or assignment of Equity Interests into trust, (e) all Obligations of such Person created or arising under any conditional sale or other title retention agreement with respect to property acquired by such Person (even though the rights and remedies of the seller or lender under such agreement in the event of default are limited to repossession or sale of such property), (f) all Obligations of such Person as lessee under Capitalized Leases, (g) all Obligations of such Person under acceptance, letter of credit or similar facilities, (h) all Obligations of such Person to purchase, redeem, retire, defease or otherwise make any payment in respect of any Equity Interests in such Person or any other Person or any warrants, rights or options to acquire such Equity Interests, valued, in the case of Redeemable Preferred Interests, at the greater of its voluntary or involuntary liquidation preference plus accrued and unpaid dividends, (i) all Obligations of such Person in respect of Hedge Agreements, valued at the Agreement Value thereof, (j) all Contingent Obligations and Off-Balance Sheet Obligations of such Person and (k) all indebtedness and other payment Obligations referred to in clauses (a) through (j) above of another Person secured by (or for which the holder of such Debt has an existing right, contingent or otherwise, to be secured by) any Lien on property (including, without limitation, accounts and contract rights) owned by such Person, even though such Person has not assumed or become liable for the payment of such indebtedness or other payment Obligations, provided that the amount of Debt of the type referred to in clauses (j), to the extent such Debt consists of guarantees, and (k) above will be included within the definition of “Debt” only to the extent of the amount of the obligations so guaranteed and to the extent of any such Lien, respectively.

          “Debt for Borrowed Money” of any Person means, at any date of determination, all items that, in accordance with GAAP, would be classified as indebtedness on a Consolidated balance sheet of such Person at such date, including, without limitation, any Contingent Obligations of the Borrower and its Subsidiaries.

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          “Default” means any Event of Default or any event that would constitute an Event of Default but for the passage of time or the requirement that notice be given or both.

          “Default Interest” has the meaning set forth in Section 2.07(b).

          “Defaulted Advance” means, with respect to any Lender Party at any time, the portion of any Advance required to be made by such Lender Party to the Borrower pursuant to Section 2.01 or 2.02 at or prior to such time that has not been made by such Lender Party or by the Administrative Agent for the account of such Lender Party pursuant to Section 2.02(e) as of such time. In the event that a portion of a Defaulted Advance shall be deemed made pursuant to Section 2.15(a), the remaining portion of such Defaulted Advance shall be considered a Defaulted Advance originally required to be made pursuant to Section 2.01 on the same date as the Defaulted Advance so deemed made in part.

          “Defaulted Amount” means, with respect to any Lender Party at any time, any amount required to be paid by such Lender Party to the Administrative Agent or any other Lender Party hereunder or under any other Loan Document at or prior to such time that has not been so paid as of such time, including, without limitation, any amount required to be paid by such Lender Party to (a) the Issuing Bank pursuant to Section 2.03(c) to purchase a portion of a Letter of Credit Advance made by the Issuing Bank, (b) the Administrative Agent pursuant to Section 2.02(e) to reimburse the Administrative Agent for the amount of any Advance made by the Administrative Agent for the account of such Lender Party, (c) any other Lender Party pursuant to Section 2.13 to purchase any participation in Advances owing to such other Lender Party and (d) the Administrative Agent or the Issuing Bank pursuant to Section 7.05 to reimburse the Administrative Agent or the Issuing Bank for such Lender Party’s ratable share of any amount required to be paid by the Lender Parties to the Administrative Agent or the Issuing Bank as provided therein. In the event that a portion of a Defaulted Amount shall be deemed paid pursuant to Section 2.15(b), the remaining portion of such Defaulted Amount shall be considered a Defaulted Amount originally required to be paid hereunder or under any other Loan Document on the same date as the Defaulted Amount so deemed paid in part.

          “Defaulting Lender” means, at any time, any Lender Party that, at such time, (a) owes a Defaulted Advance or a Defaulted Amount or (b) shall take any action or be the subject of any action or proceeding of a type described in Section 6.01(f).

          “Deposit Account” has the meaning specified in the Security Agreement.

          “Disclosed Litigation” has the meaning specified in Section 3.01(e).

          “Disposition” means, with respect to any Property, any sale, lease, sale and leaseback, assignment, conveyance, transfer or other disposition thereof; and the terms “Dispose” and “Dispose of” shall have correlative meanings.

          “Divested Entity” means, for any date of determination, for the Measurement Period most recently ended, any Person (or division or similar business unit) disposed of by the Borrower or any Subsidiary during such Measurement Period if, as of the last day of the fiscal quarter immediately preceding such disposition, the contribution to EBITDA of such Person (or division or similar business unit) accounted for 5% or more of Consolidated EBITDA for the 12 months preceding such last day.

          “Domestic Lending Office” means, with respect to any Lender Party, the office of such Lender Party specified as its “Domestic Lending Office” opposite its name on Schedule I hereto or in the Assignment and Acceptance pursuant to which it became a Lender Party, as the case may be, or such

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other office of such Lender Party as such Lender Party may from time to time specify to the Borrower and the Administrative Agent.

          “Domestic Subsidiary” means any Subsidiary of the Borrower organized under the laws of any jurisdiction within the United States of America.

          “Early Termination Date” has the meaning specified in the definition of “Termination Date” herein.

          “EBITDA” means, for any date of determination, for the Measurement Period most recently ended, Consolidated Net Income for such Measurement Period plus, without duplication and to the extent reflected as a charge in the statement of Consolidated Net Income for such Measurement Period, the sum of (a) total income tax expense, (b) interest expense, amortization or write-off of debt discount and debt issuance costs and commissions, discounts and other fees and charges associated with Debt (including the Advances), (c) depreciation expense, (d) amortization of intangibles (including goodwill) and organization costs, (e) any extraordinary, unusual or non-recurring cash expenses or losses (including, whether or not otherwise includable as a separate item in the statement of Consolidated Net Income for such Measurement Period, losses on sales of assets outside of the ordinary course of business) and (f) any other non-cash charges; and minus, to the extent included in the statement of such Consolidated Net Income for such Measurement Period, the sum of (a) interest income, (b) any extraordinary income or gains (including, whether or not otherwise includable as a separate item in the statement of Consolidated Net Income for such Measurement Period, gains on the sales of assets outside of the ordinary course of business) and (c) any other non-cash income, all as determined in accordance with GAAP.

          “Effective Date” has the meaning specified in Section 3.01.

          “Eligible Assignee” means (a) with respect to any Facility (other than the Letter of Credit Facility), (i) a commercial bank organized under the laws of the United States, or any state thereof, and having a combined capital and surplus of at least $100,000,000; (ii) a commercial bank organized under the laws of any other country which is a member of the Organization for Economic Cooperation and Development (the “OECD”), or a political subdivision of any such country, and having a combined capital and surplus of at least $100,000,000 (provided that such bank is acting through a branch or agency located in the country in which it is organized or another country which is also a member of the OECD); (iii) a Person that is engaged in the business of commercial banking and that is (A) an Affiliate of a Lender, (B) an Affiliate of a Person of which a Lender is an Affiliate or (C) a Person of which a Lender is an Affiliate; (iv) an insurance company, mutual fund or other financial institution organized under the laws of the United States, any state thereof, any other country which is a member of the OECD or a political subdivision of any such country which invests in bank loans and has a net worth of $500,000,000; (v) any fund (other than a mutual fund) which invests in bank loans and whose assets exceed $100,000,000; and (vi) with the prior approval of the Administrative Agent and the Required Lenders, any other Person; and (b) with respect to the Letter of Credit Facility, a Person that is an Eligible Assignee under subclause (i), (ii) or (vi) of clause (a) of this definition (or any Affiliate of any such Person) and is approved by the Administrative Agent; provided, however, that (x) neither any Loan Party nor any Affiliate of a Loan Party shall qualify as an Eligible Assignee under this definition without the approval of the Administrative Agent and the Required Lenders and (y) no Person shall be an “Eligible Assignee” unless at the time of the proposed assignment to such Person (i) such Person is able to make its portion of the Revolving Credit A Advances in U.S. dollars, and (ii) such Person is exempt from withholding of tax on interest and is able to deliver the documents related thereto pursuant to Section 2.12(e) of the Credit Agreement.

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          “Environmental Action” means any action, suit, demand, demand letter, claim, notice of non-compliance or violation, notice of liability or potential liability, investigation, proceeding, consent order or consent agreement relating in any way to any Environmental Law, any Environmental Permit or Hazardous Material or arising from alleged injury or threat to health, safety or the environment, including, without limitation, (a) by any governmental or regulatory authority for enforcement, cleanup, removal, response, remedial or other actions or damages and (b) by any governmental or regulatory authority or third party for damages, contribution, indemnification, cost recovery, compensation or injunctive relief.

          “Environmental Law” means any Federal, state, local or foreign statute, law, ordinance, rule, regulation, code, order, writ, judgment, injunction, decree or judicial or agency interpretation, policy or guidance relating to pollution or protection of the environment, health, safety or natural resources, including, without limitation, those relating to the use, handling, transportation, treatment, storage, disposal, release or discharge of Hazardous Materials.

          “Environmental Permit” means any permit, approval, identification number, license or other authorization required under any Environmental Law.

          “Equity Interests” means, with respect to any Person, shares of capital stock (common or preferred) of (or other ownership or profit interests in) such Person, warrants, options or other rights for the purchase or other acquisition from such Person of shares of capital stock (common or preferred) of (or other ownership or profit interests in) such Person, securities convertible into or exchangeable for shares of capital stock (common or preferred) of (or other ownership or profit interests in) such Person or warrants, rights or options for the purchase or other acquisition from such Person of such shares (or such other interests), and other ownership or profit interests in such Person (including, without limitation, partnership, member or trust interests therein), whether voting or nonvoting, and whether or not such shares, warrants, options, rights or other interests are authorized or otherwise existing on any date of determination.

          “ERISA” means the Employee Retirement Income Security Act of 1974, as amended from time to time, and the regulations promulgated and rulings issued thereunder.

          “ERISA Affiliate” means any Person that for purposes of Title IV of ERISA is a member of the controlled group of any Loan Party, or under common control with any Loan Party, within the meaning of Section 414 of the Internal Revenue Code.

          “ERISA Event” means (a)(i) the occurrence of a reportable event, within the meaning of Section 4043 of ERISA, with respect to any Plan unless the 30-day notice requirement with respect to such event has been waived by the PBGC or (ii) the requirements of Section 4043(b) of ERISA apply with respect to a contributing sponsor, as defined in Section 4001(a)(13) of ERISA, of a Plan, and an event described in paragraph (9), (10), (11), (12) or (13) of Section 4043(c) of ERISA is reasonably expected to occur with respect to such Plan within the following 30 days; (b) the application for a minimum funding waiver with respect to a Plan; (c) the provision by the administrator of any Plan of a notice of intent to terminate such Plan, pursuant to Section 4041(a)(2) of ERISA (including any such notice with respect to a plan amendment referred to in Section 4041(e) of ERISA); (d) the cessation of operations at a facility of any Loan Party or any ERISA Affiliate in the circumstances described in Section 4062(e) of ERISA; (e) the withdrawal by any Loan Party or any ERISA Affiliate from a Multiple Employer Plan during a plan year for which it was a substantial employer, as defined in Section 4001(a)(2) of ERISA; (f) the conditions for imposition of a lien under Section 302(f) of ERISA shall have been met with respect to any Plan; (g) the adoption of an amendment to a Plan requiring the provision of security to such Plan pursuant to Section 307 of ERISA; or (h) the institution by the PBGC of proceedings to terminate a Plan pursuant to Section 4042 of ERISA, or the occurrence of any event or

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condition described in Section 4042 of ERISA that constitutes grounds for the termination of, or the appointment of a trustee to administer, such Plan.

          “Escrow Bank” has the meaning specified in Section 2.15(c).

          “Eurocurrency Liabilities” has the meaning specified in Regulation D of the Board of Governors of the Federal Reserve System, as in effect from time to time.

          “Eurodollar Lending Office” means, with respect to any Lender Party, the office of such Lender Party specified as its “Eurodollar Lending Office” opposite its name on Schedule I hereto or in the Assignment and Acceptance pursuant to which it became a Lender Party (or, if no such office is specified, its Domestic Lending Office), or such other office of such Lender Party as such Lender Party may from time to time specify to the Borrower and the Administrative Agent.

          “Eurodollar Rate” means, for any Interest Period for all Eurodollar Rate Advances comprising part of the same Borrowing, an interest rate per annum equal to the rate per annum obtained by dividing (a) the average of the respective rates per annum (rounded upward to the next whole multiple of 1/16th of 1%) posted by each of the principal London offices of banks posting rates as displayed on the Reuters Screen LIBOR01 Page or such other page as may replace such page on such service for the purpose of displaying the London interbank offered rate of major banks for deposits in U.S. dollars, at approximately 11:00 A.M. (London time) two Business Days before the first day of such Interest Period for deposits in an amount substantially equal to DBTCA’s Eurodollar Rate Advance comprising part of such Borrowing to be outstanding during such Interest Period and for a period equal to such Interest Period by (b) a percentage equal to 100% minus the Eurodollar Rate Reserve Percentage for such Interest Period.

          “Eurodollar Rate Advance” means an Advance that bears interest as provided in Section 2.07(a)(ii).

          “Eurodollar Rate Reserve Percentage” for any Interest Period for all Eurodollar Rate Advances comprising part of the same Borrowing means the reserve percentage applicable two Business Days before the first day of such Interest Period under regulations issued from time to time by the Board of Governors of the Federal Reserve System (or any successor) for determining the maximum reserve requirement (including, without limitation, any emergency, supplemental or other marginal reserve requirement) for a member bank of the Federal Reserve System in New York City with respect to liabilities or assets consisting of or including Eurocurrency Liabilities (or with respect to any other category of liabilities that includes deposits by reference to which the interest rate on Eurodollar Rate Advances is determined) having a term equal to such Interest Period.

          “Events of Default” has the meaning specified in Section 6.01.

          “Existing Agreement” has the meaning specified in the first Preliminary Statement.

          “Existing Agreement Date” means as of December 7, 2007.

          “Existing Debt” means Debt of each Loan Party and its Subsidiaries outstanding immediately before and after the occurrence of the Effective Date, other than the Facility.

          “Existing Letters of Credit” means the Letters of Credit specified on Schedule III hereto.

          “Extension Date” has the meaning specified in Section 2.17.

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          “Facility” means the Revolving Credit Facility or the Letter of Credit Facility.

          “Federal Funds Rate” means, for any period, a fluctuating interest rate per annum equal for each day during such period to the weighted average of the rates on overnight Federal funds transactions with members of the Federal Reserve System arranged by Federal funds brokers, as published for such day (or, if such day is not a Business Day, for the next preceding Business Day) by the Federal Reserve Bank of New York, or, if such rate is not so published for any day that is a Business Day, the average of the quotations for such day for such transactions received by the Administrative Agent from three Federal funds brokers of recognized standing selected by the Administrative Agent.

          “Fee Letter” means the fee letter dated as of even date herewith between the Borrower and the Administrative Agent, as amended.

          “Fiscal Year” means a fiscal year of the Borrower and its Consolidated Subsidiaries ending on December 31 in any calendar year.

          “Fixed Charges” means, for any date of determination, for the Measurement Period most recently ended, the sum (without duplication) of (a) Interest Expense for such Measurement Period, (b) cash income taxes paid by the Borrower or any of its Subsidiaries on a Consolidated basis in respect of such Measurement Period, (c) scheduled principal payments made during such Measurement Period on account of principal of Debt of the Borrower or any of its Subsidiaries (including Capitalized Lease payments but excluding payments of principal of Debt due at the maturity thereof), and (d) cash dividends paid or distributed by the Borrower during such Measurement Period.

          “Foreign Subsidiary” means any Subsidiary of the Borrower that is not a Domestic Subsidiary.

          “GAAP” has the meaning specified in Section 1.03.

          “GERA Existing Financing” means the following first mortgage loans from Wachovia Bank, N.A., each as more particularly described in the Registration Statement of Borrower on Form S-4 dated October 17, 2007: (i) that certain loan in the initial principal amount of $42,500,000 to GERA Abrams Centre LLC and GERA 6400 Shafer LLC, and (ii) that certain loan in the initial principal amount of $78,000,000 to GERA Danbury LLC.

          “GERA Property Acquisition Subsidiaries” means the following wholly-owned Subsidiaries of GERA Property Acquisition LLC, a Subsidiary of the Borrower: (i) GERA Abrams Centre LLC, (ii) GERA 6400 Shafer LLC, and (iii) GERA Danbury LLC.

          “Governmental Authority” means any nation or government, any state, province, city, municipal entity or other political subdivision thereof, and any governmental, executive, legislative, judicial, administrative or regulatory agency, department, authority, instrumentality, commission, board, bureau or similar body, whether federal, state, provincial, territorial, local or foreign.

          “Governmental Authorization” means any authorization, approval, consent, franchise, license, covenant, order, ruling, permit, certification, exemption, notice, declaration or similar right, undertaking or other action of, to or by, or any filing, qualification or registration with, any Governmental Authority.

          “Guaranteed Obligations” has the meaning specified in Section 8.01.

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          “Guarantors” means the Subsidiaries of the Borrower listed on Schedule II hereto and each other Subsidiary of the Borrower that shall be required to execute and deliver a guaranty pursuant to Section 5.01(j).

          “Guaranty” means the guaranty of the Guarantors set forth in Article VIII together with each other guaranty and guaranty supplement delivered pursuant to Section 5.01(j), in each case as amended.

          “Guaranty Supplement” has the meaning specified in Section 8.05.

          “Hazardous Materials” means (a) petroleum or petroleum products, by-products or breakdown products, radioactive materials, asbestos-containing materials, polychlorinated biphenyls and radon gas and (b) any other chemicals, materials or substances designated, classified or regulated as hazardous or toxic or as a pollutant or contaminant under any Environmental Law.

          “Hedge Agreements” means interest rate swap, cap or collar agreements, interest rate future or option contracts, currency swap agreements, currency future or option contracts and other hedging agreements.

          “Hedge Bank” means any Lender Party or an Affiliate of a Lender Party in its capacity as a party to a Secured Hedge Agreement.

          “Inactive Subsidiaries” has the meaning set forth in Section 4.01(ee).

          “Indemnified Party” has the meaning specified in Section 9.04(b).

          “Initial Issuing Bank” has the meaning specified in the preamble to this Agreement.

          “Initial Lender Parties” means the Initial Issuing Bank and the Initial Lenders.

          “Initial Lenders” means the financial institutions listed on the signature pages hereof as the Initial Lenders.

          “Initial Pledged Debt” has the meaning specified in the Security Agreement.

          “Insufficiency” means, with respect to any Plan, the amount, if any, of its unfunded benefit liabilities, as defined in Section 4001(a)(18) of ERISA.

          “Intellectual Property Security Agreement” means the intellectual property security agreement in substantially the form set forth in Exhibit F to the Security Agreement or otherwise in form and substance satisfactory to the Administrative Agent.

          “Interest Expense” means, for any date of determination, for the Measurement Period most recently ended, the sum of total cash interest expense of the Borrower and its Subsidiaries for such Measurement Period with respect to all outstanding Debt of the Borrower and its Subsidiaries (including all commissions, discounts and other fees and charges owed with respect to letters of credit, bankers’ acceptance financing and other Debt).

          “Interest Period” means, for each Eurodollar Rate Advance comprising part of the same Borrowing, the period commencing on the date of such Eurodollar Rate Advance or the date of the Conversion of any Base Rate Advance into such Eurodollar Rate Advance, and ending on the numerically

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corresponding day in the next succeeding calendar month and, thereafter, each subsequent period commencing on the last day of the immediately preceding Interest Period and ending on the numerically corresponding day in the next succeeding calendar month. The duration of each such Interest Period shall be one month; provided, however, that:

       (a) no Interest Period shall extend beyond the Termination Date;

       (b) whenever the last day of any Interest Period would otherwise occur on a day other than a Business Day, the last day of such Interest Period shall be extended to occur on the next succeeding Business Day; provided, however, that if such extension would cause the last day of such Interest Period to occur in the next following calendar month, the last day of such Interest Period shall occur on the next preceding Business Day; and

       (c) whenever the first day of any Interest Period occurs on a day of an initial calendar month for which there is no numerically corresponding day in the calendar month that succeeds such initial calendar month by the number of months equal to the number of months in such Interest Period, such Interest Period shall end on the last Business Day of such succeeding calendar month.

          “Interim Mandatory Amortization Payments” has the meaning specified in Section 2.06(e)(iv)(B).

          “Internal Revenue Code” means the Internal Revenue Code of 1986, as amended from time to time, and the regulations promulgated and rulings issued thereunder.

          “Investment” in any Person means any loan or advance to such Person, any purchase or other acquisition of any Equity Interests or Debt or the assets comprising a division or business unit or a substantial part or all of the business of such Person, any capital contribution to such Person or any other direct or indirect investment in such Person, including, without limitation, any acquisition by way of a merger or consolidation (or similar transaction) and any arrangement pursuant to which the investor incurs Debt of the types referred to in clause (j) or (k) of the definition of “Debt” in respect of such Person. For avoidance of doubt, the term Investment shall also include the acquisition of any real estate assets (a) other than the acquisition of real estate assets in the ordinary course of business in connection with the operation of investment programs by the Borrower or its Subsidiaries and consistent with the Approved Budget, provided that (i) the cost of such real estate assets acquired shall not exceed $10,000,000 in the aggregate, (ii) no individual real estate asset so acquired shall remain owned by the Borrower or any Subsidiary of the Borrower for longer than 90 consecutive days, and (iii) no Debt shall be incurred by the Borrower or any Subsidiary of the Borrower in connection with such real estate assets, and (b) exclusive of the leasing of office space as a lessee in the ordinary course of business.

          “Issuing Bank” means the Initial Issuing Bank and any other Revolving Credit B Lender approved as an Issuing Bank by the Administrative Agent and any Eligible Assignee to which a Letter of Credit Commitment hereunder has been assigned pursuant to Section 9.07 so long as such Revolving Credit B Lender or such Eligible Assignee expressly agrees to perform in accordance with their terms all of the obligations that by the terms of this Agreement are required to be performed by it as an Issuing Bank and notifies the Administrative Agent of its Applicable Lending Office and the amount of its Letter of Credit Commitment (which information shall be recorded by the Administrative Agent in the Register), for so long as such Initial Issuing Bank, Revolving Credit B Lender or Eligible Assignee, as the case may be, shall have a Letter of Credit Commitment.

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          “Kojaian Group” means Mr. C. Michael Kojaian and any person or entity who, after the Effective Date, is deemed to be an Affiliate of Mr. C. Michael Kojaian.

          “L/C Collateral Account” has the meaning specified in the Security Agreement.

          “L/C Related Documents” has the meaning specified in Section 2.04(d)(ii)(A).

          “Lead Arranger” has the meaning specified in the preamble to this Agreement.

          “Legacy TIC Syndication” means any tenant-in-common syndication effected prior to the Effective Date by the Borrower or its Subsidiaries that complies with each of the following requirements: (a) such syndication was entered into in the ordinary course of the Borrower’s business, (b) such syndication is not inconsistent with the Approved Budget, and (c) no Default has occurred and is continuing or could reasonably be expected to result from such syndication.

          “Lender Party” means any Lender or the Issuing Bank.

          “Lender Warrants” means warrants of the Borrower in substantially the form of Exhibit I granted in accordance with the Warrant Agreement.

          “Lenders” means the Initial Lenders and each Person that shall become a Lender hereunder pursuant to Section 9.07 for so long as such Initial Lender or Person, as the case may be, shall be a party to this Agreement.

          “Letter of Credit Advance” means an advance made by the Issuing Bank or any Revolving Credit B Lender pursuant to Section 2.03(c).

          “Letter of Credit Agreement” has the meaning specified in Section 2.03(a).

          “Letter of Credit Commitment” means, with respect to the Issuing Bank at any time, the amount set forth opposite such Issuing Bank’s name on Schedule I hereto under the caption “Letter of Credit Commitment” or, if such Issuing Bank has entered into one or more Assignment and Acceptances, set forth for such Issuing Bank in the Register maintained by the Administrative Agent pursuant to Section 9.07(d) as such Issuing Bank’s “Letter of Credit Commitment”, as such amount may be reduced at or prior to such time pursuant to Section 2.05.

          “Letter of Credit Facility” means, at any time, an amount equal to the lesser of (a) the aggregate amount of the Issuing Bank’s Letter of Credit Commitment at such time and (b) $4,289,245, as such amount may be reduced at or prior to such time pursuant to Section 2.05. The Letter of Credit Facility shall comprise a subfacility of the Revolving Credit B Facility, and, for avoidance of doubt, the Available Amount of each Letter of Credit shall reduce the Unused Revolving Credit B Commitments of the Lenders, as more particularly described in the definition of “Unused Revolving Credit B Commitment”.

          “Letters of Credit” has the meaning specified in Section 2.01(d).

          “Lien” means any lien, security interest or other charge or encumbrance of any kind, or any other type of preferential arrangement, including, without limitation, the lien or retained security title of a conditional vendor and any easement, right of way or other encumbrance on title to real property.

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          “Limited Joint Venture” means any joint venture (a) in which the Borrower or any of its Subsidiaries holds any Equity Interest, (b) that is not a Subsidiary of the Borrower or any of its Subsidiaries and (c) the accounts of which would not appear on the Consolidated financial statements of the Borrower.

          “Limited Purpose Subsidiary” means (i) GERA Abrams Centre LLC, (ii) GERA 6400 Shafer LLC, (iii) GERA Danbury LLC, (iv) NNN 200 Galleria, LLC and (v) NNN Avallon, LLC.

          “Loan Documents” means (a) this Agreement, (b) the Notes, (c) the Guaranties, (d) the Collateral Documents, (e) the Fee Letter, (f) each Letter of Credit Agreement and (g) each Secured Hedge Agreement, in each case as amended.

          “Loan Parties” means the Borrower and the Guarantors.

          “Mandatory Amortization Date” has the meaning specified in Section 2.06(e)(iii).

          “Mandatory Amortization Payment” has the meaning specified in Section 2.06(e)(iii).

          “Mandatory Prepayment Event” has the meaning specified in Section 2.06(e).

          “Margin Stock” has the meaning specified in Regulation U.

          “Material Adverse Change” means any material adverse change in the business, assets, properties, condition (financial or otherwise) or prospects of the Borrower or of the Borrower and its Subsidiaries, taken as a whole, including, without limitation, any material adverse change in the projected cash flow of the Borrower as compared to the Cash Flow Projections.

          “Material Adverse Effect” means a material adverse effect on (a) the business, assets, properties, condition (financial or otherwise) or prospects of the Borrower or of the Borrower and its Subsidiaries, taken as a whole, (b) the rights and remedies of the Administrative Agent or any Lender Party under any Loan Document, (c) the ability of any Loan Party to perform its Obligations under any Loan Document to which it is or is to be a party, or (d) the projected cash flow of the Borrower as compared to the Cash Flow Projections.

          “Material Contract” means, with respect to any Loan Party or any of their Subsidiaries, each contract (other than a contract pursuant to which such Loan Party or Subsidiary is engaged to provide brokerage services with regard to a single client under which a commission or other fee is payable) to which such Loan Party or Subsidiary is a party involving aggregate consideration (excluding (x) reimbursable expenses of such Loan Party or Subsidiary and (y) project management fees payable to such Loan Party or Subsidiary the amount of which cannot yet be determined because the amount of such fees are contingent) payable to or by such Loan Party or Subsidiary of $500,000 or more in any year.

          “Measurement Period” means, at any date of determination, the most recently completed four consecutive fiscal quarters of the Borrower ending on or prior to such date.

          “Mortgages” means deeds of trust, trust deeds, mortgages, leasehold mortgages and leasehold deeds of trust, if any, in form and substance satisfactory to the Administrative Agent and covering Borrower Properties (other than office space leases for which Borrower is the lessee) having a fair market value exceeding $500,000, duly executed by the appropriate Loan Party.

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          “Multiemployer Plan” means a multiemployer plan, as defined in Section 4001(a)(3) of ERISA, to which any Loan Party or any ERISA Affiliate is making or accruing an obligation to make contributions, or has within any of the preceding five plan years made or accrued an obligation to make contributions.

          “Multiple Employer Plan” means a single employer plan, as defined in Section 4001(a)(15) of ERISA, that (a) is maintained for employees of any Loan Party or any ERISA Affiliate and at least one Person other than the Loan Parties and the ERISA Affiliates or (b) was so maintained and in respect of which any Loan Party or any ERISA Affiliate could have liability under Section 4064 or 4069 of ERISA in the event such plan has been or were to be terminated.

          “Net Cash Proceeds” means, (a) with respect to any direct or indirect sale, lease, transfer or other disposition of any real property of the Borrower or any of its Subsidiaries, the excess, if any, of (i) the sum of cash and Cash Equivalents received in connection with such sale, lease, transfer or other disposition (including any cash or Cash Equivalents received by way of a permitted deferred payment pursuant to, or by monetization of, a note receivable or otherwise, but only as and when so received) over (ii) the sum of (A) the principal amount of any Non-Recourse Debt that is secured by such asset and that is required to be repaid in connection with such sale, lease, transfer or other disposition thereof, (B) the reasonable and customary out-of-pocket costs, fees, commissions, premiums and expenses incurred by the Borrower or relevant Subsidiary, and (C) federal, state, provincial, foreign and local taxes reasonably estimated (on a Consolidated basis) to be actually payable within the current or the immediately succeeding tax year as a result of any gain recognized in connection therewith, (b) with respect to any conversion of any Investment into cash or Cash Equivalents, the excess, if any, of (i) the sum of the cash or Cash Equivalents received in connection with such conversion over (ii) the sum of (A) the out-of-pocket costs, fees, commissions, premiums and expenses incurred by the applicable Borrower, Guarantor or Subsidiary in connection with such conversion to the extent such amounts were not deducted in determining the amount referred to in clause (i) and (B) federal, state, provincial, foreign and local taxes reasonably estimated (on a Consolidated basis) to be actually payable within the current or the immediately succeeding tax year as a result of any gain recognized in connection therewith, (c) with respect to any refund for Taxes paid received by the Borrower or any of its Subsidiaries, the excess, if any, of (i) the sum of the cash or Cash Equivalents received in connection with such refund over (ii) the sum of (A) the out-of-pocket costs, fees, commissions, premiums and expenses incurred by the applicable Borrower or Subsidiary in connection with such refund to the extent such amounts were not deducted in determining the amount referred to in clause (i) and (B) federal, state, provincial, foreign and local taxes reasonably estimated (on a Consolidated basis) to be actually payable within the current or the immediately succeeding tax year as a result of any gain recognized in connection therewith, (d) with respect to any direct or indirect public offering of or private placement of any Equity Interests (including Preferred Interests), the excess, if any, of (i) the sum of the cash or Cash Equivalents received in connection with such offering or placement over (ii) the sum of (A) the out-of-pocket costs, fees, commissions, premiums and expenses incurred by the applicable Borrower, Guarantor or Subsidiary in connection with such offering or placement to the extent such amounts were not deducted in determining the amount referred to in clause (i) and (B) federal, state, provincial, foreign and local taxes reasonably estimated (on a Consolidated basis) to be actually payable within the current or the immediately succeeding tax year as a result of any gain recognized in connection therewith, (e) with respect to the issuance of any Debt securities (including mortgages, mortgage bonds and any Debt expected to be included in or contributed to a commercial mortgage-backed securities issuance, a collateralized debt obligation or a collateralized loan obligation), whether placed publicly or privately, the excess, if any, of (i) the sum of the cash or Cash Equivalents received in connection with such issuance over (ii) the sum of (A) the out-of-pocket costs, fees, commissions, premiums and expenses incurred by the applicable Borrower, Guarantor or Subsidiary in connection with issuance to the extent such amounts were not deducted in determining the amount referred to in clause (i) and (B) federal, state, provincial, foreign and

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local taxes reasonably estimated (on a Consolidated basis) to be actually payable within the current or the immediately succeeding tax year as a result of any gain recognized in connection therewith, and (f) with respect to any other transaction or event occurring outside of the ordinary course of business of the Borrower and its Subsidiaries, the excess, if any, of (i) the sum of the cash or Cash Equivalents received in connection with such transaction or event over (ii) the sum of (A) the out-of-pocket costs, fees, commissions, premiums and expenses incurred by the applicable Borrower or Subsidiary in connection with the transaction or event to the extent such amounts were not deducted in determining the amount referred to in clause (i) and (B) federal, state, provincial, foreign and local taxes reasonably estimated (on a Consolidated basis) to be actually payable within the current or the immediately succeeding tax year as a result of any gain recognized in connection therewith.

          “Non-Recourse Debt” means Debt for Borrowed Money with respect to which recourse for payment is limited to (a) any building(s) or parcel(s) of real property or any related assets encumbered by a Lien securing such Debt for Borrowed Money and/or (b) the general credit of the Property-Level Subsidiary that has incurred such Debt for Borrowed Money, and/or the direct Equity Interests therein (any such Non-Recourse Debt secured by Equity Interests in any Property-Level Subsidiary, being a “Non-Recourse Mezzanine Financing”), it being understood that the instruments governing such Debt may include customary carve-outs to such limited recourse (any such customary carve-outs or agreements limited to such customary carve-outs, being a “Customary Carve-Out Agreement”) such as, for example, personal recourse to the Borrower or any Subsidiary of the Borrower for fraud, misrepresentation, misapplication or misappropriation of cash, waste, environmental claims, damage to properties, non-payment of taxes or other liens despite the existence of sufficient cash flow, interference with the enforcement of loan documents upon maturity or acceleration, voluntary or involuntary bankruptcy filings, violation of loan document prohibitions against transfer of properties or ownership interests therein and liabilities and other circumstances customarily excluded by lenders from exculpation provisions and/or included in separate indemnification and/or guaranty agreements in non-recourse financings of real estate.

          “Non-Recourse Mezzanine Financing” has the meaning specified in the definition of “Non-Recourse Debt”.

          “Note” means a Revolving Credit Note.

          “Notice of Borrowing” has the meaning specified in Section 2.02(a).

          “NPL” means the National Priorities List under CERCLA.

          “Obligation” means, with respect to any Person, any payment, performance or other obligation of such Person of any kind, including, without limitation, any liability of such Person on any claim, whether or not the right of any creditor to payment in respect of such claim is reduced to judgment, liquidated, unliquidated, fixed, contingent, matured, disputed, undisputed, legal, equitable, secured or unsecured, and whether or not such claim is discharged, stayed or otherwise affected by any proceeding referred to in Section 6.01(f). Without limiting the generality of the foregoing, the Obligations of any Loan Party under the Loan Documents include (a) the obligation to pay principal, interest, charges, expenses, fees, attorneys’ fees, commissions, including, without limitation, Letter of Credit commissions, and disbursements, indemnities and other amounts payable by such Loan Party under any Loan Document and (b) the obligation of such Loan Party to reimburse any amount in respect of any of the foregoing that any Lender Party, in its sole discretion, may elect to pay or advance on behalf of such Loan Party.

          “OECD” means the Organization for Economic Cooperation and Development.

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          “Off Balance Sheet Obligation” means, with respect to any Person, without duplication of any clause within this definition or within the definition of “Debt”, all (a) Obligations of such Person under any lease which is treated as an operating lease for financial accounting purposes and a financing lease for tax purposes (i.e., a “synthetic lease”), (b) Obligations of such Person in respect of transactions entered into by such Person, the proceeds from which would be reflected on the financial statements of such Person in accordance with GAAP as cash flows from financings at the time such transaction was entered into (other than as a result of the issuance of Equity Interests) and (c) Obligations of such Person in respect of other transactions entered into by such Person that are not otherwise addressed in the definition of “Debt” or in clause (a) or (b) above that are intended to function primarily as a borrowing of funds (including, without limitation, any minority interest transactions that function primarily as a borrowing).

          “Other Taxes” has the meaning specified in Section 2.12(b).

          “Participant” has the meaning specified in Section 2.03(c).

          “Patriot Act” means the Uniting and Strengthening America by Providing Appropriate Tools Required to Intercept and Obstruct Terrorism Act of 2001, Pub. L. 107-56, as amended from time to time.

          “PBGC” means the Pension Benefit Guaranty Corporation (or any successor).

          “Permitted Cash Reserves” means cash or Cash Equivalents in an aggregate amount not to exceed at any time the sum of (a) the minimum amount necessary to satisfy any cash on hand or liquidity requirements imposed on the Borrower or its Subsidiaries under the rules or regulations of the Financial Industry Regulatory Authority, Inc. plus (b)(i) during the period from the Effective Date until the date of consummation of a recapitalization transaction in accordance with the Recapitalization Plan, $6,000,000, and (ii) after the date on which a recapitalization transaction is consummated in accordance with the Recapitalization Plan, $12,000,000.

          “Permitted Liens” means such of the following as to which no enforcement, collection, execution, levy or foreclosure proceeding shall have been commenced: (a) Liens for taxes, assessments and governmental charges or levies to the extent not required to be paid under Section 5.01(b); (b) Liens imposed by law, such as materialmen’s, mechanics’, carriers’, workmen’s and repairmen’s Liens and other similar Liens arising in the ordinary course of business securing obligations that (i) are not overdue for a period of more than 30 days and (ii) individually or together with all other Permitted Liens outstanding on any date of determination do not materially adversely affect the use of the property to which they relate; (c) pledges or deposits in the ordinary course of business to secure obligations under workers’ compensation laws or similar legislation or to secure public or statutory obligations; (d) deposits to secure the performance of bids, trade contracts and leases (other than Debt), statutory obligations, surety bonds (other than bonds related to judgments or litigation), performance bonds and other obligations of a like nature incurred in the ordinary course of business; (e) Liens securing judgments (or the payment of money) not constituting a Default under Section 6.01(g) or securing appeal or other surety bonds related to such judgments; (f) easements, rights of way and other encumbrances on title to real property that do not render title to the property encumbered thereby unmarketable or materially adversely affect the use of such property for its present purposes, excluding any such easements, rights of way or encumbrances securing Debt for Borrowed Money; and (g) Liens securing insurance premium financing arrangements entered into in the ordinary course of business and permitted under Section 5.02(b)(iii)(G).

          “Permitted Variance” has the meaning specified in Section 5.03(e).

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          “Person” means an individual, partnership, corporation (including a business trust), limited liability company, joint stock company, trust, unincorporated association, joint venture or other entity, or a government or any political subdivision or agency thereof.

          “Plan” means a Single Employer Plan or a Multiple Employer Plan.

          “Pledged Debt” has the meaning specified in the Security Agreement.

          “Pledged Equity” has the meaning specified in the Security Agreement.

          “Post-Petition Interest” has the meaning specified in Section 8.06.

          “Preferred Interests” means, with respect to any Person, Equity Interests issued by such Person that are entitled to a preference or priority over any other Equity Interests issued by such Person upon any distribution of such Person’s property and assets, whether by dividend or upon liquidation.

          “Pre-Negotiation Agreement” means that certain Pre-Negotiation Agreement dated as of February 27, 2009 by and among the Borrower, the Administrative Agent and the Guarantors (as defined in the Existing Agreement).

          “Prepayment Failure Event” has the meaning specified in Section 2.06(e)(iii).

          “Property” means any right or interest in or to property of any kind whatsoever, whether real, personal or mixed and whether tangible or intangible, including Equity Interests.

          “Property-Level Subsidiary” means any direct or indirect Limited Purpose Subsidiary of the Borrower that holds a direct fee interest in any real property and related assets.

          “Pro Rata Share” or “Revolver B Pro Rata Share” of any amount means, with respect to any Revolving Credit B Lender at any time, the product of such amount times a fraction the numerator of which is the amount of such Lender’s Revolving Credit B Commitment at such time (or, if the Commitments shall have been terminated pursuant to Section 2.05 or 6.01, such Lender’s Revolving Credit B Commitment as in effect immediately prior to such termination) and the denominator of which is the Revolving Credit B Facility at such time (or, if the Commitments shall have been terminated pursuant to Section 2.05 or 6.01, the Revolving Credit B Facility as in effect immediately prior to such termination). The initial Revolver B Pro Rata Share of each Lender is set forth opposite the name of that Lender in Schedule I annexed hereto under the heading “Revolver B Pro Rata Share”; provided that Schedule I shall be amended and each Revolver B Pro Rata Share shall be adjusted from time to time to give effect to the execution of any supplements, amendments or modifications to this Agreement and the addition or removal of any Lender as provided herein or by assignment pursuant to Section 9.07.

          “Real Property Assets” means all real property held for sale by any Limited Purpose Subsidiary as permitted by Section 5.01(s), Section 5.01(t) and 5.02(e)(v). The Borrower acknowledges that as of the Effective Date the Real Property Assets consist of those properties listed on Schedule IV.

          “Recapitalization Plan” means a recapitalization plan, specifying the specific steps to be taken to implement a recapitalization of the Borrower and the specific dates by which such steps must be completed, in the form of Schedule V.

          “Redeemable” means, with respect to any Equity Interests, any such Equity Interests that (a) the issuer has undertaken to redeem at a fixed or determinable date or dates, whether by operation of a

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sinking fund or otherwise, or upon the occurrence of a condition not solely within the control of the issuer or (b) is redeemable at the option of the holder.

          “Register” has the meaning specified in Section 9.07(d).

          “Regulation U” means Regulation U of the Board of Governors of the Federal Reserve System, as in effect from time to time.

          “Required Lenders” means, at any time, Lenders owed or holding at least a majority in interest of the sum of (a) the aggregate principal amount of the Advances outstanding at such time, (b) the aggregate Available Amount of all Letters of Credit outstanding at such time, and (c) the aggregate Unused Revolving Credit B Commitments at such time; provided, however, that if any Lender shall be a Defaulting Lender at such time, there shall be excluded from the determination of Required Lenders at such time (A) the aggregate principal amount of the Advances owing to such Lender (in its capacity as a Lender) and outstanding at such time, (B) such Lender’s Pro Rata Share of the aggregate Available Amount of all Letters of Credit outstanding at such time and (C) the Unused Revolving Credit B Commitment of such Lender at such time. For purposes of this definition, the aggregate principal amount of Letter of Credit Advances owing to the Issuing Bank and the Available Amount of each Letter of Credit shall be considered to be owed to the Revolving Credit B Lenders ratably in accordance with their respective Revolving Credit B Commitments.

          “Restricted Investment” shall have the meaning specified in Section 5.02(m).

          “Restricted Payments” shall have the meaning specified in Section 5.02(g).

          “Revised Approved Budget” has the meaning specified in Section 2.06(e)(iv)(C).

          “Revolver A Pro Rata Share” of any amount means, with respect to any Revolving Credit A Lender at any time, the product of such amount times a fraction the numerator of which is the amount of such Lender’s Revolving Credit A Commitment at such time (or, if the Commitments shall have been terminated pursuant to Section 2.05 or 6.01, such Lender’s Revolving Credit A Commitment as in effect immediately prior to such termination) and the denominator of which is the Revolving Credit A Facility at such time (or, if the Commitments shall have been terminated pursuant to Section 2.05 or 6.01, the Revolving Credit A Facility as in effect immediately prior to such termination). The initial Revolver A Pro Rata Share of each Lender is set forth opposite the name of that Lender in Schedule I annexed hereto under the heading “Revolver A Pro Rata Share”; provided that Schedule I shall be amended and each Revolver A Pro Rata Share shall be adjusted from time to time to give effect to the execution of any supplements, amendments or modifications to this Agreement and the addition or removal of any Lender as provided herein or by assignment pursuant to Section 9.07.

          “Revolving Credit A Advance” has the meaning specified in Section 2.01(a).

          “Revolving Credit Advance” means a Revolving Credit A Advance or a Revolving Credit B Advance.

          “Revolving Credit B Advance” has the meaning specified in Section 2.01(b).

          “Revolving Credit A Borrowing” means a borrowing consisting of simultaneous Revolving Credit A Advances of the same Type made by the Revolving Credit Lenders.

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          “Revolving Credit Borrowing” means a Revolving Credit A Borrowing or a Revolving Credit B Borrowing.

          “Revolving Credit B Borrowing” a borrowing consisting of simultaneous Revolving Credit B Advances of the same Type made by the Revolving Credit Lenders.

          “Revolving Credit A Commitment” means, with respect to any Revolving Credit Lender at any time, the amount set forth opposite such Lender’s name on Schedule I hereto under the caption “Revolving Credit A Commitment” or, if such Lender has entered into one or more Assignment and Acceptances, set forth for such Lender in the Register maintained by the Administrative Agent pursuant to Section 9.07(d) as such Lender’s “Revolving Credit A Commitment”, as such amount may be reduced at or prior to such time pursuant to Section 2.05.

          “Revolving Credit B Commitment” means, with respect to any Revolving Credit Lender at any time, the amount set forth opposite such Lender’s name on Schedule I hereto under the caption “Revolving Credit B Commitment” or, if such Lender has entered into one or more Assignment and Acceptances, set forth for such Lender in the Register maintained by the Administrative Agent pursuant to Section 9.07(d) as such Lender’s “Revolving Credit B Commitment”, as such amount may be reduced at or prior to such time pursuant to Section 2.05.

          “Revolving Credit Commitment” means a Revolving Credit A Commitment or a Revolving Credit B Commitment.

          “Revolving Credit A Facility” means, at any time, the aggregate amount of the Revolving Credit Lenders’ Revolving Credit A Commitments at such time.

          “Revolving Credit B Facility” means, at any time, the aggregate amount of the Revolving Credit Lenders’ Revolving Credit B Commitments at such time.

          “Revolving Credit Facility” means, at any time, the aggregate amount of the Revolving Credit Lenders’ Revolving Credit Commitments at such time.

          “Revolving Credit A Lender” means any Lender that has a Revolving Credit A Commitment.

          “Revolving Credit B Lender” means any Lender that has a Revolving Credit B Commitment.

          “Revolving Credit Lender” means a Revolving Credit A Lender or a Revolving Credit B Lender.

          “Revolving Credit Note” means a promissory note of the Borrower payable to the order of any Revolving Credit Lender, in substantially the form of Exhibit A hereto, evidencing the aggregate indebtedness of the Borrower to such Lender resulting from the Revolving Credit Advances and Letter of Credit Advances made by such Lender, as amended.

          “Secured Hedge Agreement” means any Hedge Agreement required or permitted under Article V that is entered into by and between the Borrower and any Hedge Bank.

          “Secured Obligations” has the meaning specified in Section 2 of the Security Agreement.

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          “Secured Parties” means the Administrative Agent, the Lead Arranger, the Lender Parties and the Hedge Banks.

          “Securities Account” has the meaning specified in the Security Agreement.

          “Securities Account Control Agreement” has the meaning specified in the Security Agreement.

          “Security Agreement” has the meaning specified in Section 3.01(a)(ii).

          “Single Employer Plan” means a single employer plan, as defined in Section 4001(a)(15) of ERISA, that (a) is maintained for employees of any Loan Party or any ERISA Affiliate and no Person other than the Loan Parties and the ERISA Affiliates or (b) was so maintained and in respect of which any Loan Party or any ERISA Affiliate could have liability under Section 4069 of ERISA in the event such plan has been or were to be terminated.

          “Solvent” and “Solvency” mean, with respect to any Person on a particular date, that on such date (a) the fair value of the property of such Person is greater than the total amount of liabilities, including, without limitation, contingent liabilities, of such Person, (b) the present fair salable value of the assets of such Person is not less than the amount that will be required to pay the probable liability of such Person on its debts as they become absolute and matured, (c) such Person does not intend to, and does not believe that it will, incur debts or liabilities beyond such Person’s ability to pay such debts and liabilities as they mature and (d) such Person is not engaged in business or a transaction, and is not about to engage in business or a transaction, for which such Person’s property would constitute an unreasonably small capital. The amount of contingent liabilities at any time shall be computed as the amount that, in the light of all the facts and circumstances existing at such time, represents the amount that can reasonably be expected to become an actual or matured liability.

          “Subordinated Obligations” has the meaning specified in Section 8.06.

          “Subsidiaries Guaranty” means the guaranty of the Guarantors set forth in Article VIII together with each other guaranty and guaranty supplement delivered pursuant to Section 5.01(j), in each case as amended.

          “Subsidiary” of any Person means any corporation, partnership, joint venture, limited liability company, trust or estate of which (or in which) more than 50% of (a) the issued and outstanding capital stock having ordinary voting power to elect a majority of the Board of Directors of such corporation (irrespective of whether at the time capital stock of any other class or classes of such corporation shall or might have voting power upon the occurrence of any contingency), (b) the interest in the capital or profits of such partnership, joint venture or limited liability company or (c) the beneficial interest in such trust or estate is at the time directly or indirectly owned or controlled by such Person, by such Person and one or more of its other Subsidiaries or by one or more of such Person’s other Subsidiaries.

          “Supplemental Collateral Agent” has the meaning specified in Section 7.01(c).

          “Swing Line Bank” has the meaning specified in the Existing Agreement.

          “Taxes” has the meaning specified in Section 2.12(a).

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          “Termination Date” means the earliest of (a) if a Prepayment Failure Event has occurred, January 15, 2010 (the “Early Termination Date”), (b) provided that no Prepayment Failure Event has occurred, March 31, 2010, subject to the extension thereof pursuant to Section 2.17, and (c) the date of termination in whole of the Revolving Credit Commitments and the Letter of Credit Commitment pursuant to Section 2.05 or 6.01.

          “Type” refers to the distinction between Advances bearing interest at the Base Rate and Advances bearing interest at the Eurodollar Rate.

          “Unused Revolving Credit B Commitment” means, with respect to any Revolving Credit B Lender at any time, without duplication, (a) such Lender’s Revolving Credit B Commitment at such time minus (b) the sum of (i) the aggregate principal amount of all Revolving Credit B Advances and Letter of Credit Advances made by such Lender (in its capacity as a Lender) and outstanding at such time plus (ii) such Lender’s Pro Rata Share of (A) the aggregate Available Amount of all Letters of Credit outstanding at such time, and (B) the aggregate principal amount of all Letter of Credit Advances made by the Issuing Bank pursuant to Section 2.03(c) and outstanding at such time.

          “Voting Interests” means shares of capital stock issued by a corporation, or equivalent Equity Interests in any other Person, the holders of which are ordinarily, in the absence of contingencies, entitled to vote for the election of directors (or persons performing similar functions) of such Person, even if the right so to vote has been suspended by the happening of such a contingency.

          “Warrant Agreement” means that certain Warrant Agreement among the Borrower and the Warrant Agent described therein dated as of even date herewith.

          “Welfare Plan” means a welfare plan, as defined in Section 3(1) of ERISA, that is maintained for employees of any Loan Party or in respect of which any Loan Party could have liability.

          “Withdrawal Liability” has the meaning specified in Part I of Subtitle E of Title IV of ERISA.

     SECTION 1.02 Computation of Time Periods; Other Definitional Provisions. In this Agreement and the other Loan Documents in the computation of periods of time from a specified date to a later specified date, the word “from” means “from and including” and the words “to” and "until” each mean “to but excluding”. References in the Loan Documents to any agreement or contract “as amended” shall mean and be a reference to such agreement or contract as amended, amended and restated, supplemented or otherwise modified from time to time in accordance with its terms. The term “including” is not limiting and means “including without limitation.”

     SECTION 1.03 Accounting Terms. All accounting terms not specifically defined herein shall be construed in accordance with generally accepted accounting principals in the United States of America as in effect from time to time set forth in the opinions and pronouncements of the Accounting Principles Board and the American Institute of Certified Public Accountants and the statements and pronouncements of the Financial Accounting Standards Board or in such other statements by such other entity as may be in general use by significant segments of the United States accounting profession, which are applicable to the circumstances of the Borrower as of the date of determination (“GAAP”), except that for purposes of any financial or accounting terms used in this Agreement, GAAP shall be determined on the basis of such principles in effect on the date hereof and consistent with those used in the preparation of the audited financial statements of the Borrower in respect of the fiscal year ended December 31, 2008 delivered pursuant to Section 3.01(a)(viii). If any Accounting Change shall occur and such change results in a change in the method of calculation of financial covenants, standards or terms in this Agreement, then the

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Borrower and the Administrative Agent agree to enter into negotiations in good faith and in a timely fashion in order to amend such provisions of this Agreement so as to equitably reflect such Accounting Change with the desired result that the criteria for evaluating the Borrower’s financial condition shall be the same after such Accounting Change as if such Accounting Change had not been made. Until such time as such an amendment shall have been executed and delivered by the Borrower, the Administrative Agent and the Required Lenders, all financial covenants, standards and terms in this Agreement shall continue to be calculated or construed as if such Accounting Change had not occurred. “Accounting Change” refers to any change in accounting principles required by the promulgation of any rule, regulation, pronouncement or opinion by the Financial Accounting Standards Board of the American Institute of Certified Public Accountants (or successors thereto or agencies with similar functions), the Securities and Exchange Commission or any other qualified, authoritative agency or organization.

ARTICLE II

AMOUNTS AND TERMS OF THE ADVANCES
AND THE LETTERS OF CREDIT

     SECTION 2.01 The Advances and the Letters of Credit.

          (a) The Revolving Credit A Advances. The Revolving Credit A Facility results from the bifurcation of the Revolving Credit Facility under the Existing Agreement and consists of a tranche of the Advances outstanding thereunder in the aggregate principal amount of $38,000,000, the terms of which have been modified by this Agreement to comprise the Revolving Credit A Facility. The Revolving Credit A Commitments shall be deemed to have been fully funded as of the Effective Date (the “Revolving Credit A Advance”). No additional Advances in respect of the Revolving Credit A Facility shall be permitted hereunder. Amounts borrowed or deemed borrowed under this Section 2.01(a) and repaid or prepaid may not be reborrowed.

          (b) The Revolving Credit B Advances. The Revolving Credit B Facility results from the bifurcation of the Revolving Credit Facility under the Existing Agreement and consists of a tranche of the Advances outstanding thereunder in the aggregate principal amount of $29,289,245, the terms of which have been modified by this Agreement to comprise the Revolving Credit B Facility. Specifically, the Revolving Credit B Facility consists of (i) Revolving Credit B Advances in the aggregate principal amount of $25,000,000, and (ii) Letters of Credit in the aggregate Available Amount of $4,289,245. The Revolving Credit B Commitments hereunder shall be deemed to have been fully funded as of the Effective Date. Each Revolving Credit B Lender severally agrees, on the terms and conditions hereinafter set forth, to make advances (each a “Revolving Credit B Advance”) to the Borrower from time to time on any Business Day during the period from the Effective Date until the Termination Date, in respect of the Revolving Credit B Facility in an amount for each such Advance not to exceed such Lender’s Unused Revolving Credit B Commitment at such time. Each Revolving Credit B Borrowing shall be in an aggregate amount of not less than $500,000 or an integral multiple of $100,000 in excess thereof (other than the initial Borrowing to fund the L/C Collateral Account pursuant to Section 3.01(k), a Borrowing the proceeds of which shall be used solely to repay or prepay in full outstanding Letter of Credit Advances or a Borrowing comprised solely of Base Rate Advances) and shall consist of Revolving Credit B Advances made simultaneously by the Revolving Credit B Lenders ratably according to their Revolving Credit B Commitments. Within the limits of each Revolving Credit B Lender’s Unused Revolving Credit B Commitment in effect from time to time, and subject to the limitations set forth in Sections 2.14 and 3.02, the Borrower may borrow under this Section 2.01(b), prepay pursuant to Section 2.06(a) and reborrow under this Section 2.01(b). No more than one Revolving Credit B Advance shall be available per week. On the Effective Date, the Lenders shall make Revolving Credit B Advances

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in an aggregate amount sufficient to fund the L/C Collateral Account pursuant to Section 3.01(k), and such Revolving Credit B Advances shall be deposited directly into the L/C Collateral Account.

          (c) [Intentionally Omitted].

          (d) The Letters of Credit. No additional letters of credit (the “Letters of Credit”) shall be available under this Agreement from and after the Effective Date. All Existing Letters of Credit, as listed on Schedule III attached hereto, shall be deemed to have been issued as Letters of Credit hereunder, and from and after the Effective Date shall be subject to and governed by the terms and conditions of this Agreement. No Existing Letter of Credit shall have an expiration date later than the 30th day before the Termination Date (without reference to any extension options). In the event that the expiration date of any Existing Letter of Credit may be automatically extended beyond the 30th day before the Termination Date (without reference to any extension options) pursuant to the terms of such Existing Letter of Credit, the Administrative Agent is hereby permitted to send a notice to the Borrower and the beneficiary of the applicable Letter of Credit notifying the Borrower and such beneficiary that the Administrative Agent has elected not to extend the expiration date of such Existing Letter of Credit. On the Effective Date, the Lenders shall make Revolving Credit B Advances in an amount approved by the Issuing Bank as sufficient to cash collateralize 100% of the Available Amount of all Letters of Credit outstanding as of the Effective Date, and such Revolving Credit B Advances shall be deposited into the L/C Collateral Account in compliance with Section 3.01(k).

     SECTION 2.02 Making the Advances. (a) Except as otherwise provided in Section 2.03, each Borrowing shall be made on notice by the Borrower to the Administrative Agent, which shall give to each Appropriate Lender prompt notice thereof by telex or telecopier. Each such notice of a Borrowing (a “Notice of Borrowing”) in respect of a Eurodollar Rate Advance shall be given not later than 1:00 P.M. (New York City time) on the third Business Day prior to the date of the proposed Borrowing, and each Notice of Borrowing in respect of a Base Rate Advance shall be given not later than 1:00 P.M. (New York City time) on the Business Day immediately prior to the date of the proposed Borrowing. Each Notice of Borrowing shall be by telephone, confirmed immediately in writing, or electronic mail (containing the Notice of Borrowing as an electronic attachment containing a hand-written signature, confirmed immediately by telephone or telecopier) or telecopier, in substantially the form of Exhibit B hereto, specifying therein the requested (i) date of such Borrowing, (ii) Type of Advance comprising such Borrowing, and (iii) aggregate amount of such Borrowing. Each Appropriate Lender shall, before 1:00 P.M. (New York City time) on the date of such Borrowing, make available for the account of its Applicable Lending Office to the Administrative Agent at the Administrative Agent’s Account, in same day funds, such Lender’s ratable portion of such Borrowing in accordance with the respective Commitments under the Revolving Credit Facility of such Lender and the other Appropriate Lenders. After the Administrative Agent’s receipt of such funds and upon fulfillment of the applicable conditions set forth in Article III, the Administrative Agent will make such funds available to the Borrower by crediting the Borrower’s Account.

          (b) [Intentionally Omitted].

          (c) Anything in subsection (a) above to the contrary notwithstanding, (i) the Borrower may not select Eurodollar Rate Advances for any Borrowing if the aggregate amount of such Borrowing is less than $500,000 or if the obligation of the Appropriate Lenders to make Eurodollar Rate Advances shall then be suspended pursuant to Section 2.09 or 2.10 and (ii) no more than eight separate Interest Periods shall be permitted at any one time.

          (d) Each Notice of Borrowing shall be irrevocable and binding on the Borrower. In the case of any Borrowing that the related Notice of Borrowing specifies is to be comprised of Eurodollar

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Rate Advances, the Borrower shall indemnify each Appropriate Lender against any loss, cost or expense incurred by such Lender as a result of any failure to fulfill on or before the date specified in such Notice of Borrowing for such Borrowing the applicable conditions set forth in Article III, including, without limitation, any loss (including loss of anticipated profits), cost or expense incurred by reason of the liquidation or reemployment of deposits or other funds acquired by such Lender to fund the Advance to be made by such Lender as part of such Borrowing when such Advance, as a result of such failure, is not made on such date.

          (e) Unless the Administrative Agent shall have received notice from an Appropriate Lender prior to the date of any Borrowing under a Facility under which such Lender has a Commitment that such Lender will not make available to the Administrative Agent such Lender’s ratable portion of such Borrowing, the Administrative Agent may assume that such Lender has made such portion available to the Administrative Agent on the date of such Borrowing in accordance with subsection (a) of this Section 2.02 and the Administrative Agent may, in reliance upon such assumption, make available to the Borrower on such date a corresponding amount. If and to the extent that such Lender shall not have so made such ratable portion available to the Administrative Agent, such Lender and the Borrower severally agree to repay or pay to the Administrative Agent forthwith on demand such corresponding amount and to pay interest thereon, for each day from the date such amount is made available to the Borrower until the date such amount is repaid or paid to the Administrative Agent, at (i) in the case of the Borrower, the interest rate applicable at such time under Section 2.07 to Advances comprising such Borrowing and (ii) in the case of such Lender, the Federal Funds Rate. If such Lender shall pay to the Administrative Agent such corresponding amount, such amount so paid shall constitute such Lender’s Advance as part of such Borrowing for all purposes.

          (f) The failure of any Lender to make the Advance to be made by it as part of any Borrowing shall not relieve any other Lender of its obligation, if any, hereunder to make its Advance on the date of such Borrowing, but no Lender shall be responsible for the failure of any other Lender to make the Advance to be made by such other Lender on the date of any Borrowing.

     SECTION 2.03 Drawings and Reimbursement Under Letters of Credit. (a) [Intentionally Omitted.]

          (b) Letter of Credit Reports. Promptly after amendment of any Letter of Credit the Issuing Bank shall notify the Borrower and the Administrative Agent, in writing, of such amendment and such notice shall be accompanied by a copy of such amendment. Upon receipt of such notice, the Administrative Agent shall promptly notify each Lender, in writing, of such amendment and if so requested by a Lender, the Administrative Agent shall provide such Lender with copies of such amendment. The Issuing Bank shall furnish to the Administrative Agent (unless the Issuing Bank shall be the Administrative Agent), by facsimile on the first Business Day of each month, a written report summarizing the aggregate daily Available Amounts for Letters of Credit during the preceding month.

          (c) Letter of Credit Participations; Drawing and Reimbursement. (i) The Issuing Bank is hereby deemed to have sold and transferred to each Revolving Credit B Lender, and each Revolving Credit B Lender (in its capacity under this Section 2.03(c), a “Participant”) is hereby deemed irrevocably and unconditionally to have purchased and received from the Issuing Bank, without recourse or warranty, an undivided interest and participation in each Letter of Credit, to the extent of such Participant’s Pro Rata Share of the Available Amount of such Letter of Credit, each drawing or payment made thereunder and the obligations of the Borrower under this Agreement with respect thereto, and any security therefor or guaranty pertaining thereto. Upon any change in the Revolving Credit B Commitments or the Revolving Credit B Lenders’ respective Pro Rata Shares pursuant to Section 9.07, it is hereby agreed that, with respect to all outstanding Letters of Credit and unpaid drawings relating thereto, there shall be an

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automatic adjustment to the participations pursuant to this Section 2.03(c) to reflect the new Pro Rata Shares of the assignor and assignee Revolving Credit B Lenders, as the case may be.

          (ii) In determining whether to pay under any Letter of Credit, the Issuing Bank shall not have any obligation with respect to the other Revolving Credit B Lenders other than to confirm that any documents required to be delivered under such Letter of Credit appear to have been delivered and that they appear to substantially comply on their face with the requirements of such Letter of Credit. Any action taken or omitted to be taken by the Issuing Bank under or in connection with any Letter of Credit issued by it shall not create for the Issuing Bank any resulting liability to the Borrower, any other Loan Party, any Revolving Credit B Lender or any other Person unless such action is taken or omitted to be taken with gross negligence or willful misconduct on the part of the Issuing Bank (as determined by a court of competent jurisdiction in a final non-appealable judgment).

          (iii) The payment by the Issuing Bank of a draft drawn under any Letter of Credit shall constitute for all purposes of this Agreement the making by the Issuing Bank of a Letter of Credit Advance, which shall be a Base Rate Advance, in the amount of such draft. In the event that the Issuing Bank shall make any payment under any Letter of Credit issued by it, all funds on deposit in the L/C Collateral Account shall be exhausted or otherwise unavailable, and the Borrower shall not have reimbursed any unpaid portion of such payment in full to the Issuing Bank pursuant to Section 2.04(d), the Issuing Bank shall promptly notify the Administrative Agent, which shall promptly notify each Participant of such failure, and each Participant shall promptly and unconditionally pay to the Administrative Agent for the account of the Issuing Bank the amount of such Participant’s Pro Rata Share of such unreimbursed payment in U.S. dollars and in same day funds. Upon such notification by the Administrative Agent to any Participant required to fund a payment under a Letter of Credit, such Participant shall make available to the Administrative Agent for the account of the Issuing Bank such Participant’s Pro Rata Share of the amount of such payment in same day funds (x) if notified prior to 12:00 Noon (New York time) on any Business Day, on such Business Day, and (y) if notified at or after 12:00 Noon (New York time) on any Business Day, on the following Business Day. If such Participant shall pay to the Administrative Agent such amount for the account of the Issuing Bank on any Business Day, such amount so paid in respect of principal shall constitute a Letter of Credit Advance made by such Participant on such Business Day for purposes of this Agreement, and the outstanding principal amount of the Letter of Credit Advance made by the Issuing Bank shall be reduced by such amount on such Business Day. If and to the extent such Participant shall not have so made its Pro Rata Share of the amount of such payment available to the Administrative Agent, such Participant agrees to pay to the Administrative Agent for the account of the Issuing Bank, forthwith on demand such amount, together with interest thereon, for each day from such date until the date such amount is paid to the Administrative Agent at the Federal Funds Rate. The failure of any Participant to make available to the Administrative Agent for the account of the Issuing Bank its Pro Rata Share of any payment under any Letter of Credit shall not relieve any other Participant of its obligation hereunder to make available to the Administrative Agent for the account of the Issuing Bank its Pro Rata Share of any payment under any Letter of Credit on the date required, as specified above, but no Participant shall be responsible for the failure of any other Participant to make available to the Administrative Agent such other Participant’s Pro Rata Share of any such payment.

          (iv) Whenever the Issuing Bank receives a payment of a reimbursement obligation as to which it has received any payments from the Participants pursuant to clause (iii) above, the Issuing Bank shall pay to the Administrative Agent for the account of each such Participant that has paid its Pro Rata Share thereof, in same day funds, an amount equal to such Participant’s share (based upon the proportionate aggregate amount originally funded by such Participant to the aggregate amount funded by all Participants) of the principal amount of such reimbursement obligation and interest thereon accruing after the purchase of the respective participations.

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          (v) Upon the request of any Participant, the Issuing Bank shall furnish to such Participant copies of any standby Letter of Credit issued by it and such other documentation as may reasonably be requested by such Participant.

     SECTION 2.04 Repayment of Advances. (a) Revolving Credit A Advances. The Borrower shall repay, on the Termination Date, to the Administrative Agent for the ratable account of the Revolving Credit A Lenders the aggregate principal amount of the Revolving Credit A Advances then outstanding.

          (b) Revolving Credit B Advances. The Borrower shall repay to the Administrative Agent for the ratable account of the Revolving Credit B Lenders on the Termination Date in respect of the Revolving Credit B Facility the aggregate principal amount of the Revolving Credit B Advances then outstanding.

          (c) [Intentionally Omitted].

          (d) Letter of Credit Advances. (i) The Borrower shall repay to the Administrative Agent for the account of the Issuing Bank and each other Revolving Credit B Lender that has made a Letter of Credit Advance on the earlier of demand and the Termination Date in respect of the Revolving Credit B Facility the outstanding principal amount of each Letter of Credit Advance made by each of them.

          (ii) The Obligations of the Borrower under this Agreement, any Letter of Credit Agreement and any other agreement or instrument relating to any Letter of Credit, and the obligations of the Participants to make payments to the Administrative Agent for the account of the Issuing Bank in respect of Letters of Credit, shall be unconditional and irrevocable, and shall be paid strictly in accordance with the terms of this Agreement, such Letter of Credit Agreement and such other agreement or instrument under all circumstances, including, without limitation, the following circumstances:

     (A) any lack of validity or enforceability of any Loan Document, any Letter of Credit Agreement, any Letter of Credit or any other agreement or instrument relating thereto (all of the foregoing being, collectively, the “L/C Related Documents”);

     (B) any change in the time, manner or place of payment of, or in any other term of, all or any of the Obligations of the Borrower in respect of any L/C Related Document or any other amendment or waiver of or any consent to departure from all or any of the L/C Related Documents;

     (C) the existence of any claim, set-off, defense or other right that the Borrower may have at any time against any beneficiary or any transferee of a Letter of Credit (or any Persons for which any such beneficiary or any such transferee may be acting), any Issuing Bank or any other Person, whether in connection with the transactions contemplated by the L/C Related Documents or any unrelated transaction;

     (D) any statement or any other document presented under a Letter of Credit proving to be forged, fraudulent, invalid or insufficient in any respect or any statement therein being untrue or inaccurate in any respect;

     (E) payment by any Issuing Bank under a Letter of Credit against presentation of a draft, certificate or other document that does not strictly comply with the terms of such Letter of Credit;

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     (F) any exchange, release or non-perfection of any Collateral or other collateral, or any release or amendment or waiver of or consent to departure from the Guaranties or any other guarantee, for all or any of the Obligations of the Borrower in respect of the L/C Related Documents; or

     (G) any other circumstance or happening whatsoever, whether or not similar to any of the foregoing, including, without limitation, any other circumstance that might otherwise constitute a defense available to, or a discharge of, the Borrower or a guarantor;

provided, however, that nothing herein waives the Issuing Bank’s liability with respect to errors, omissions, interruptions, delays in transmission, dispatch or delivery of any message, payment or advice relating to any Letter of Credit that has been determined in a final and non-appealable decision of a court of competent jurisdiction to have resulted from the gross negligence or willful misconduct of the Issuing Bank.

          (iii) To the extent of funds available in the L/C Collateral Account, the Administrative Agent for the account of the Issuing Bank and each other Revolving Credit B Lender shall use such funds to repay each Letter of Credit Advance promptly following the making of such Advance. If at any time the funds remaining in the L/C Collateral Account exceed the sum of the aggregate amount of all Letter of Credit Advances then outstanding and the aggregate Available Amount of all Letters of Credit then outstanding, such excess shall be first applied to prepay outstanding Revolving Credit A Advances until the aggregate amount of Revolving Credit A Advances then outstanding shall be reduced to zero, second applied to prepay outstanding Revolving Credit B Advances until the aggregate amount of Revolving Credit B Advances then outstanding shall be reduced to zero, and third, at such time as no Advances remain outstanding, returned to the Borrower promptly following demand.

     SECTION 2.05 Termination or Reduction of the Commitments. (a) Optional. The Borrower may, upon at least five Business Days’ notice to the Administrative Agent, terminate in whole or reduce in part the unused portions of the Revolving Credit A Commitments, the Letter of Credit Facility and the Unused Revolving Credit B Commitments; provided, however, that each partial reduction of a Facility (i) shall be in an aggregate amount of $500,000 or an integral multiple of $100,000 in excess thereof and (ii) shall be made ratably among the Appropriate Lenders in accordance with their Commitments with respect to such Facility.

          (b) Mandatory. (i) From time to time upon each repayment or prepayment of the Revolving Credit A Advances, the aggregate Revolving Credit A Commitments of the Revolving Credit A Lenders shall be automatically and permanently reduced, on a pro rata basis, by an amount equal to the amount by which the aggregate Revolving Credit A Commitments immediately prior to such reduction exceed the aggregate unpaid principal amount of the Revolving Credit A Advances then outstanding (after giving effect to any such repayment or prepayment thereof).

          (ii) The Letter of Credit Facility shall be permanently reduced from time to time on the date of each reduction in the Revolving Credit B Facility by the amount, if any, by which the amount of the Letter of Credit Facility exceeds the Revolving Credit B Facility after giving effect to such reduction of the Revolving Credit B Facility.

     SECTION 2.06 Prepayments. (a) Optional. The Borrower may, upon at least three Business Days’ notice to the Administrative Agent, stating the proposed date and aggregate principal amount of the prepayment, and if such notice is given the Borrower shall, prepay the outstanding aggregate principal amount of the Advances comprising part of the same Borrowing in whole or ratably in part, together with

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accrued interest to the date of such prepayment on the aggregate principal amount prepaid; provided, however, that each partial prepayment shall be in an aggregate principal amount of $500,000 or an integral multiple of $100,000 in excess thereof. Each such prepayment of Advances shall be allocated among the Applicable Lenders on a pro rata basis.

          (b) Mandatory Prepayment of the Revolving Credit B Advances. (i) The Borrower shall, on each Business Day, prepay an aggregate principal amount of the Revolving Credit B Advances comprising part of the same Borrowings and the Letter of Credit Advances in an amount equal to the amount by which (A) the sum of the aggregate principal amount of (x) the Revolving Credit B Advances, and (y) the Letter of Credit Advances then outstanding plus the aggregate Available Amount of all Letters of Credit then outstanding exceeds (B) the Revolving Credit B Facility on such Business Day.

          (ii) [Intentionally Omitted].

          (iii) Prepayments of the Revolving Credit B Facility made pursuant to clause (i) above shall be applied to prepay Revolving Credit B Advances then outstanding comprising part of the same Borrowings until such Advances are paid in full. Upon the drawing of any Letter of Credit for which funds are on deposit in the L/C Collateral Account, such funds shall be promptly applied to pay the corresponding Letter of Credit Advance made by the Issuing Bank or Revolving Credit B Lenders, as applicable.

          (c) Change of Control Prepayment. The Borrower shall, on the date of any Change of Control, prepay in full the aggregate principal amount of the Facilities then outstanding.

          (d) Payments with Interest. All prepayments under subsections (b), (c) and (e) of this Section 2.06 shall be made together with (i) accrued interest to the date of such prepayment on the principal amount prepaid, and (ii) if any payment of a Eurodollar Rate Advance shall be made other than on the last day of an Interest Period therefor, any amounts owing pursuant to Section 9.04(c).

          (e) Other Mandatory Prepayment Events. (i) The Borrower shall on or before the 30^th day following the end of each calendar month, prepay an aggregate principal amount of the Revolving Credit B Advances (and, to the extent the Revolving Credit B Advances shall be reduced to zero, prepay outstanding Revolving Credit A Advances) comprising part of the same Borrowings in an amount equal to all Adjusted Excess Cash Flow for such calendar month; provided, however, that from and after a Prepayment Failure Event, the Borrower shall be entitled to utilize Adjusted Excess Cash Flow to make Interim Mandatory Amortization Prepayments, as and to the extent necessary to make such prepayments when due, and such utilization shall not be deemed a breach of this Section 2.06(e).

          (ii) The Borrower shall be required to prepay outstanding Revolving Credit A Advances (and, to the extent the Revolving Credit A Facility shall be reduced to zero, prepay outstanding Revolving Credit B Advances) by the Applicable Paydown Percentage of Net Cash Proceeds resulting from any of the following (each, a “Mandatory Prepayment Event”):

     (A) the sale, lease, transfer or other disposition of any assets owned by the Borrower or its Subsidiaries;

     (B) the conversion of Investments held by the Borrower or any of its Subsidiaries into cash or Cash Equivalents;

     (C) any refund for Taxes paid received by the Borrower or any of its Subsidiaries;

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     (D) any direct or indirect public offering of or private placement of any Equity Interests (including Preferred Interests) by or in the Borrower or any of its Subsidiaries;

     (E) the issuance by the Borrower or any of its Subsidiaries of any Debt securities (including mortgages, mortgage bonds and any Debt expected to be included in or contributed to a commercial mortgage-backed securities issuance, a collateralized debt obligation or a collateralized loan obligation), whether placed publicly or privately; and

     (F) any other transaction or event occurring outside of the ordinary course of business of the Borrower and its Subsidiaries;

provided, however, that notwithstanding the foregoing, (x) with respect to any Net Cash Proceeds received by the Borrower or any of its Subsidiaries in connection with (i) the consummation of the sale or other disposition (whether direct or indirect) of any of the Real Property Assets or (ii) the Borrower’s United States federal tax refund for 2008 of $10,205,424, such Net Cash proceeds shall be applied first to prepay outstanding Revolving Credit B Advances until the aggregate principal amount of all outstanding Revolving Credit B Advances has been reduced to zero, and second to prepay outstanding Revolving Credit A Advances; and (y) the Borrower shall prepay outstanding Revolving Credit B Advances in a principal amount equal to 100% of the Net Cash Proceeds received from the sale or other disposition by GERA Danbury LLC of all real property owned or held by it by June 1, 2009, unless such date is extended with the approval of the Administrative Agent and the Required Lenders; provided further that in the event the Borrower is not in compliance with the Recapitalization Plan at the time of the sale or other disposition of real property by GERA Danbury LLC, then 100% of the Net Cash Proceeds of such sale shall be applied first to prepay outstanding Revolving Credit A Advances until the aggregate principal of all outstanding Revolving Credit A Advances has been reduced to zero, and second to prepay outstanding Revolving Credit B Advances.

          (iii) The Borrower shall be required to prepay (the “Mandatory Amortization Payment”) a portion of the Revolving Credit A Facility in an amount and by the date specified in Schedule 2.06(e)(iii) (the “Mandatory Amortization Date”); provided, however, that if the Borrower shall fail to make such Mandatory Amortization Payment in the amount and by the date specified in Schedule 2.06(e)(iii) by reason of not having sufficient cash or Cash Equivalents on hand (a "Prepayment Failure Event”), provided, however, notwithstanding any provision herein to the contrary, such Prepayment Failure Event shall not constitute an Event of Default hereunder.

          (iv) In the event there occurs a Prepayment Failure Event, the following shall apply:

     (A) the Termination Date shall not extend beyond January 15, 2010 (as provided in the definition thereof in Section 1.01) and the Termination Date extension option provided pursuant to Section 2.17 shall be of no further force and effect;

     (B) on the first Business Day of each of the calendar months October 2009, November 2009 and December 2009, the Borrower shall be required to prepay a portion of the Revolving Credit A Facility in the amount of $3,333,333.33 on each such date (the “Interim Mandatory Amortization Payments”), and the failure to make any such prepayment on the applicable due date therefor shall comprise an immediate Event of Default;

     (C) not later than the date of a Prepayment Failure Event, the Borrower shall furnish to the Administrative Agent and the Lender Parties a revised consolidated,

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detailed monthly budget prepared on a line-item basis for the calendar months October 2009 through January 2010, together with a cash balance report (showing day-end balances) showing the net cash flow projected for the period covered thereby (the “Revised Approved Budget”), in detail, form and substance satisfactory to the Administrative Agent and the Required Lenders, which Revised Approved Budget shall (i) provide for the making of Interim Mandatory Amortization Payments out of Adjusted Excess Cash Flow, and (ii) show operating cash flow from the business operations of the Borrower and its Subsidiaries for each of the periods covered thereby in amounts not less than the respective amounts of operating cash flow shown for such periods in the Approved Budget in effect on the Effective Date. The Administrative Agent and the Required Lenders shall review the Revised Approved Budget after receipt thereof and Borrower shall promptly make any and all changes as Administrative Agent or the Required Lenders may request. As soon as available, Borrower shall provide to the Lenders significant revisions, if any, to the Revised Approved Budget. Any amendments to or replacements of the Revised Approved Budget shall be required to be approved by the Administrative Agent and the Required Lenders; and

     (D) no additional Advances shall be permitted to be drawn by the Borrower under the Facility from and after the occurrence of a Prepayment Failure Event.

     SECTION 2.07 Interest. (a) Scheduled Interest. The Borrower shall pay interest on the unpaid principal amount of each Advance owing to each Lender from the date of such Advance until such principal amount shall be paid in full, at the following rates per annum:

     (i) Base Rate Advances. During such periods as such Advance is a Base Rate Advance, a rate per annum equal at all times to the sum of the Base Rate in effect from time to time plus the Applicable Margin, payable in arrears monthly on the first day of each month during such periods and on the date such Base Rate Advance shall be Converted or paid in full.

     (ii) Eurodollar Rate Advances. During such periods as such Advance is a Eurodollar Rate Advance, a rate per annum equal at all times during each Interest Period for such Advance to the sum of the Eurodollar Rate for such Interest Period for such Advance plus the Applicable Margin, payable in arrears on the last day of such Interest Period and on the date such Eurodollar Rate Advance shall be Converted or paid in full.

          (b) Default Interest. Upon the occurrence and during the continuance of any Event of Default, the Administrative Agent may, and upon the request of the Required Lenders shall, require that the Borrower pay interest (“Default Interest”) on (i) the unpaid principal amount of each Advance owing to each Lender Party, payable in arrears on the dates referred to in clause (i) or (ii) of Section 2.07(a), as applicable, and on demand, at a rate per annum equal at all times to 5% per annum above the rate per annum required to be paid on such Advance pursuant to clause (i) or (ii) of Section 2.07(a), as applicable, and (ii) to the fullest extent permitted by applicable law, the amount of any interest, fee or other expense reimbursement payable under this Agreement or any other Loan Document to the Administrative Agent or any Lender Party that is not paid when due, from the date such amount shall be due until such amount shall be paid in full, payable in arrears on the date such amount shall be paid in full and on demand, at a rate per annum equal at all times to 5% per annum above the rate per annum required to be paid, in the case of interest, on the Type of Advance on which such interest has accrued pursuant to clause (i) or (ii) of Section 2.07(a), as applicable, and, in all other cases, on Base Rate Advances pursuant to clause (i) of Section 2.07(a); provided, however, that following the acceleration of the Advances, or the giving of notice by the Administrative Agent to accelerate the Advances, pursuant to Section 6.01, Default Interest shall accrue and be payable hereunder whether or not previously required by the Administrative Agent.

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          (c) Notice of Interest Period and Interest Rate. Promptly after receipt of a Notice of Borrowing pursuant to Section 2.02(a), a notice of Conversion pursuant to Section 2.09 or a notice of selection of an Interest Period pursuant to the terms of the definition of “Interest Period”, the Administrative Agent shall give notice to the Borrower and each Appropriate Lender of the applicable Interest Period and the applicable interest rate determined by the Administrative Agent for purposes of clause (a)(i) or (a)(ii) above.

     SECTION 2.08 Fees. (a) Unused Commitment Fees. The Borrower shall pay to the Administrative Agent for the account of the Lenders the following unused commitment fees, from the date hereof in the case of each Initial Lender and from the effective date specified in the Assignment and Acceptance pursuant to which it became a Lender in the case of each other Lender, in each case until the Termination Date, payable in arrears monthly on the last day of each calendar month, commencing May 31, 2009, and on the Termination Date in respect of the applicable Facility an unused revolving commitment fee at the rate of 0.75% per annum of the average daily Unused Revolving Credit B Commitment of each Appropriate Lender during such month; provided, however, that any unused commitment fee accrued with respect to any of the Commitments of a Defaulting Lender during the period prior to the time such Lender became a Defaulting Lender and unpaid at such time shall not be payable by the Borrower so long as such Lender shall be a Defaulting Lender except to the extent that such unused commitment fee shall otherwise have been due and payable by the Borrower prior to such time; and provided further that no unused commitment fee shall accrue on any of the Commitments of a Defaulting Lender so long as such Lender shall be a Defaulting Lender.

          (b) [Intentionally Omitted].

          (c) Fees to the Administrative Agent. The Borrower shall pay to the Administrative Agent for its own account such fees as may from time to time be agreed between the Borrower and the Administrative Agent.

          (d) Restatement Fee. The Borrower shall pay to the Administrative Agent, for the account and ratable benefit of the Lenders, an amendment fee equal to 1% of the sum of the Revolving Credit Commitments on the Effective Date.

     SECTION 2.09 Conversion of Advances. (a) Optional. The Borrower may on any Business Day, upon notice given to the Administrative Agent not later than 1:00 P.M. (New York City time) on the third Business Day prior to the date of the proposed Conversion and subject to the provisions of Sections 2.07 and 2.10, Convert all or any portion of the Advances of one Type comprising the same Borrowing into Advances of the other Type; provided, however, that any Conversion of Eurodollar Rate Advances into Base Rate Advances shall be made only on the last day of an Interest Period for such Eurodollar Rate Advances, any Conversion of Base Rate Advances into Eurodollar Rate Advances shall be in an amount not less than the minimum amount specified in Section 2.02(c), no Conversion of any Advances shall result in more separate Borrowings than permitted under Section 2.02(c) and each Conversion of Advances comprising part of the same Borrowing under any Facility shall be made ratably among the Appropriate Lenders in accordance with their Commitments under such Facility. Each such notice of Conversion shall, within the restrictions specified above, specify (i) the date of such Conversion, (ii) the Advances to be Converted and (iii) if such Conversion is into Eurodollar Rate Advances, the duration of the initial Interest Period for such Advances. Each notice of Conversion shall be irrevocable and binding on the Borrower.

          (b) Mandatory. (i) On the date on which the aggregate unpaid principal amount of Eurodollar Rate Advances comprising any Borrowing shall be reduced, by payment or prepayment or otherwise, to less than $1,000,000, such Advances shall automatically Convert into Base Rate Advances.

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          (ii) If the Borrower shall fail to select the duration of any Interest Period for any Eurodollar Rate Advances in accordance with the provisions contained in the definition of “Interest Period” in Section 1.01, the Administrative Agent will forthwith so notify the Borrower and the Appropriate Lenders, whereupon each such Eurodollar Rate Advance will automatically, on the last day of the then existing Interest Period therefor, Convert into a Base Rate Advance.

          (iii) Upon the occurrence and during the continuance of any Default, (x) each Eurodollar Rate Advance will automatically, on the last day of the then existing Interest Period therefor, Convert into a Base Rate Advance and (y) the obligation of the Lenders to make, or to Convert Advances into, Eurodollar Rate Advances shall be suspended.

     SECTION 2.10 Increased Costs, Etc. (a) If, due to either (i) the introduction of or any change in or in the interpretation of any law or regulation or (ii) the compliance with any guideline or request from any central bank or other governmental authority (whether or not having the force of law), there shall be any increase in the cost to any Lender Party of agreeing to make or of making, funding or maintaining Eurodollar Rate Advances or of maintaining or participating in Letters of Credit or of agreeing to make or of making or maintaining Letter of Credit Advances (excluding, for purposes of this Section 2.10, any such increased costs resulting from (x) Taxes or Other Taxes (as to which Section 2.12 shall govern) and (y) changes in the basis of taxation of overall net income or overall gross income by the United States or by the foreign jurisdiction or state under the laws of which such Lender Party is organized or has its Applicable Lending Office or any political subdivision thereof), then the Borrower shall from time to time, upon demand by such Lender Party (with a copy of such demand to the Administrative Agent), pay to the Administrative Agent for the account of such Lender Party additional amounts sufficient to compensate such Lender Party for such increased cost. A certificate as to the amount of such increased cost, submitted to the Borrower by such Lender Party, shall be conclusive and binding for all purposes, absent manifest error.

          (b) If any Lender Party determines that compliance with any law or regulation or any guideline or request from any central bank or other governmental authority (whether or not having the force of law) affects or would affect the amount of capital required or expected to be maintained by such Lender Party or any corporation controlling such Lender Party and that the amount of such capital is increased by or based upon the existence of such Lender Party’s commitment to lend or participate in Letters of Credit hereunder and other commitments of such type or the maintenance of or participation in the Letters of Credit (or similar contingent obligations), then, upon demand by such Lender Party or such corporation (with a copy of such demand to the Administrative Agent), the Borrower shall pay to the Administrative Agent for the account of such Lender Party, from time to time as specified by such Lender Party, additional amounts sufficient to compensate such Lender Party in the light of such circumstances, to the extent that such Lender Party reasonably determines such increase in capital to be allocable to the existence of such Lender Party’s commitment to lend or to participate in Letters of Credit hereunder or to the maintenance of or participation in any Letters of Credit. A certificate as to such amounts submitted to the Borrower by such Lender Party shall be conclusive and binding for all purposes, absent manifest error.

          (c) If, with respect to any Eurodollar Rate Advances under any Facility, Lenders owed at least 50% of the then aggregate unpaid principal amount thereof notify the Administrative Agent that the Eurodollar Rate for any Interest Period for such Advances will not adequately reflect the cost to such Lenders of making, funding or maintaining their Eurodollar Rate Advances for such Interest Period, the Administrative Agent shall forthwith so notify the Borrower and the Appropriate Lenders, whereupon (i) each such Eurodollar Rate Advance under such Facility will automatically, on the last day of the then existing Interest Period therefor, Convert into a Base Rate Advance and (ii) the obligation of the Appropriate Lenders to make, or to Convert Advances into, Eurodollar Rate Advances shall be suspended

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until the Administrative Agent shall notify the Borrower that such Lenders have determined that the circumstances causing such suspension no longer exist.

          (d) Notwithstanding any other provision of this Agreement, if the introduction of or any change in or in the interpretation of any law or regulation shall make it unlawful, or any central bank or other governmental authority shall assert that it is unlawful, for any Lender or its Eurodollar Lending Office to perform its obligations hereunder to make Eurodollar Rate Advances or to continue to fund or maintain Eurodollar Rate Advances hereunder, then, on notice thereof and demand therefor by such Lender to the Borrower through the Administrative Agent, (i) each Eurodollar Rate Advance under each Facility under which such Lender has a Commitment will automatically, upon such demand, Convert into a Base Rate Advance and (ii) the obligation of the Appropriate Lenders to make, or to Convert Advances into, Eurodollar Rate Advances shall be suspended until the Administrative Agent shall notify the Borrower that such Lender has determined that the circumstances causing such suspension no longer exist; provided, however, that before making any such demand, such Lender agrees to use reasonable efforts (consistent with its internal policy and legal and regulatory restrictions) to designate a different Eurodollar Lending Office if the making of such a designation would allow such Lender or its Eurodollar Lending Office to continue to perform its obligations to make Eurodollar Rate Advances or to continue to fund or maintain Eurodollar Rate Advances and would not, in the judgment of such Lender, be otherwise disadvantageous to such Lender.

     SECTION 2.11 Payments and Computations. (a) The Borrower shall make each payment hereunder and under the Notes, irrespective of any right of counterclaim or set-off (except as otherwise provided in Section 2.15), not later than 1:00 P.M. (New York City time) on the day when due in U.S. dollars to the Administrative Agent at the Administrative Agent’s Account in same day funds, with payments being received by the Administrative Agent after such time being deemed to have been received on the next succeeding Business Day. The Administrative Agent will promptly thereafter cause like funds to be distributed (i) if such payment by the Borrower is in respect of principal, interest, unused commitment fees or any other Obligation then payable hereunder and under the Notes to more than one Lender Party, to such Lender Parties for the account of their respective Applicable Lending Offices ratably in accordance with the amounts of such respective Obligations then payable to such Lender Parties and (ii) if such payment by the Borrower is in respect of any Obligation then payable hereunder to one Lender Party, to such Lender Party for the account of its Applicable Lending Office, in each case to be applied in accordance with the terms of this Agreement. Upon its acceptance of an Assignment and Acceptance and recording of the information contained therein in the Register pursuant to Section 9.07(d), from and after the effective date of such Assignment and Acceptance, the Administrative Agent shall make all payments hereunder and under the Notes in respect of the interest assigned thereby to the Lender Party assignee thereunder, and the parties to such Assignment and Acceptance shall make all appropriate adjustments in such payments for periods prior to such effective date directly between themselves.

          (b) The Borrower hereby authorizes each Lender Party and each of its Affiliates, if and to the extent payment owed to such Lender Party is not made when due hereunder or, in the case of a Lender, under the Note held by such Lender, to charge from time to time, to the fullest extent permitted by law, against any or all of the Borrower’s accounts with such Lender Party or such Affiliate any amount so due.

          (c) If the Administrative Agent receives funds for application to the Obligations under the Loan Documents under circumstances for which the Loan Documents do not specify the Advances or the manner in which such funds are to be applied, the Administrative Agent may, but shall not be obligated to, elect to distribute such funds to each Lender Party ratably in accordance with the amount of the Obligations then payable to such Lender Party, in repayment or prepayment of such of the outstanding

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Advances or other Obligations owed to such Lender Party, and for application to such principal installments, as the Administrative Agent shall direct.

          (d) All computations of interest and of fees and Letter of Credit commissions shall be made by the Administrative Agent on the basis of a year of 360 days (except that with respect to Base Rate Advances such computations shall be made by the Administrative Agent on the basis of a year of 365 or 366 days, as the case may be), in all cases for the actual number of days (including the first day but excluding the last day) occurring in the period for which such interest, fees or commissions are payable. Each determination by the Administrative Agent of an interest rate, fee or commission hereunder shall be conclusive and binding for all purposes, absent manifest error.

          (e) Whenever any payment hereunder or under the Notes shall be stated to be due on a day other than a Business Day, such payment shall be made on the next succeeding Business Day, and such extension of time shall in such case be included in the computation of payment of interest or commitment or letter of credit fees or commissions, as the case may be; provided, however, that if such extension would cause any payment to be made in the next following calendar month, such payment shall be made on the next preceding Business Day.

          (f) Unless the Administrative Agent shall have received notice from the Borrower prior to the date on which any payment is due to any Lender Party hereunder that the Borrower will not make such payment in full, the Administrative Agent may assume that the Borrower has made such payment in full to the Administrative Agent on such date and the Administrative Agent may, in reliance upon such assumption, cause to be distributed to each such Lender Party on such due date an amount equal to the amount then due such Lender Party. If and to the extent the Borrower shall not have so made such payment in full to the Administrative Agent, each such Lender Party shall repay to the Administrative Agent forthwith on demand such amount distributed to such Lender Party together with interest thereon, for each day from the date such amount is distributed to such Lender Party until the date such Lender Party repays such amount to the Administrative Agent, at the Federal Funds Rate.

     SECTION 2.12 Taxes. (a) Any and all payments by any Loan Party to or for the account of any Lender Party or the Administrative Agent hereunder or under the Notes or any other Loan Document shall be made, in accordance with Section 2.11 or the applicable provisions of such other Loan Document, if any, free and clear of and without deduction for any and all present or future taxes, levies, imposts, deductions, charges or withholdings, and all liabilities with respect thereto, excluding, in the case of each Lender Party and the Administrative Agent, taxes that are imposed on its overall net income by the United States and taxes that are imposed on its overall net income (and franchise taxes imposed in lieu thereof) by the state or foreign jurisdiction under the laws of which such Lender Party or the Administrative Agent, as the case may be, is organized or any political subdivision thereof and, in the case of each Lender Party, taxes that are imposed on its overall net income (and franchise taxes imposed in lieu thereof) by the state or foreign jurisdiction of such Lender Party’s Applicable Lending Office or any political subdivision thereof (all such non-excluded taxes, levies, imposts, deductions, charges, withholdings and liabilities in respect of payments hereunder or under the Notes being hereinafter referred to as “Taxes”). If any Loan Party shall be required by law to deduct any Taxes from or in respect of any sum payable hereunder or under any Note or any other Loan Document to any Lender Party or the Administrative Agent, (i) the sum payable by the Borrower shall be increased as may be necessary so that after such Loan Party and the Administrative Agent have made all required deductions (including deductions applicable to additional sums payable under this Section 2.12) such Lender Party or the Administrative Agent, as the case may be, receives an amount equal to the sum it would have received had no such deductions been made, (ii) such Loan Party shall make all such deductions and (iii) such Loan Party shall pay the full amount deducted to the relevant taxation authority or other authority in accordance with applicable law.

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          (b) In addition, a Loan Party shall pay any present or future stamp, documentary, excise, property, intangible, mortgage recording or similar taxes, charges or levies that arise from any payment made by such Loan Party hereunder or under any Notes or any other Loan Documents or from the execution, delivery or registration of, performance under, or otherwise with respect to, this Agreement, the Notes or the other Loan Documents (hereinafter referred to as “Other Taxes”).

          (c) The Loan Parties shall indemnify each Lender Party and the Administrative Agent for and hold them harmless against the full amount of Taxes and Other Taxes, and for the full amount of taxes of any kind imposed or asserted by any jurisdiction on amounts payable under this Section 2.12, imposed on or paid by such Lender Party or the Administrative Agent (as the case may be) and any liability (including penalties, additions to tax, interest and expenses) arising therefrom or with respect thereto. This indemnification shall be made within 30 days from the date such Lender Party or the Administrative Agent (as the case may be) makes written demand therefor.

          (d) Within 30 days after the date of any payment of Taxes, the appropriate Loan Party shall furnish to the Administrative Agent, at its address referred to in Section 9.02, the original or a certified copy of a receipt evidencing such payment, to the extent such a receipt is issued therefor, or other written proof of payment thereof that is reasonably satisfactory to the Administrative Agent. In the case of any payment hereunder or under the Notes or the other Loan Documents by or on behalf of a Loan Party through an account or branch outside the United States or by or on behalf of a Loan Party by a payor that is not a United States person, if such Loan Party determines that no Taxes are payable in respect thereof, such Loan Party shall furnish, or shall cause such payor to furnish, to the Administrative Agent, at such address, an opinion of counsel acceptable to the Administrative Agent stating that such payment is exempt from Taxes. For purposes of subsections (d) and (e) of this Section 2.12, the terms “United States” and “United States person” shall have the meanings specified in Section 7701 of the Internal Revenue Code.

          (e) Each Lender Party organized under the laws of a jurisdiction outside the United States shall, on or prior to the date of its execution and delivery of this Agreement in the case of each Initial Lender Party and on the date of the Assignment and Acceptance pursuant to which it becomes a Lender Party in the case of each other Lender Party, and from time to time thereafter as reasonably requested in writing by the Borrower (but only so long thereafter as such Lender Party remains lawfully able to do so), provide each of the Administrative Agent and the Borrower with two original Internal Revenue Service Forms W-8BEN or W-8EC1, as appropriate, or any successor or other form prescribed by the Internal Revenue Service, certifying that such Lender Party is exempt from or entitled to a reduced rate of United States withholding tax on payments pursuant to this Agreement or the Notes or any other Loan Document. If the forms provided by a Lender Party at the time such Lender Party first becomes a party to this Agreement indicate a United States interest withholding tax rate in excess of zero, withholding tax at such rate shall be considered excluded from Taxes unless and until such Lender Party provides the appropriate forms certifying that a lesser rate applies, whereupon withholding tax at such lesser rate only shall be considered excluded from Taxes for periods governed by such forms; provided, however, that if, at the effective date of the Assignment and Acceptance pursuant to which a Lender Party becomes a party to this Agreement, the Lender Party assignor was entitled to payments under subsection (a) of this Section 2.12 in respect of United States withholding tax with respect to interest paid at such date, then, to such extent, the term Taxes shall include (in addition to withholding taxes that may be imposed in the future or other amounts otherwise includable in Taxes) United States withholding tax, if any, applicable with respect to the Lender Party assignee on such date. If any form or document referred to in this subsection (e) requires the disclosure of information, other than information necessary to compute the tax payable and information required on the date hereof by Internal Revenue Service Form W-8BEN or W-8EC1, that the applicable Lender Party reasonably considers to be confidential, such

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Lender Party shall give notice thereof to the Borrower and shall not be obligated to include in such form or document such confidential information.

          (f) For any period with respect to which a Lender Party has failed to provide the Borrower with the appropriate form, certificate or other document described in subsection (e) above (other than if such failure is due to a change in law, or in the interpretation or application thereof, occurring after the date on which a form, certificate or other document originally was required to be provided or if such form, certificate or other document otherwise is not required under subsection (e) above), such Lender Party shall not be entitled to indemnification under subsection (a) or (c) of this Section 2.12 with respect to Taxes imposed by the United States by reason of such failure; provided, however, that should a Lender Party become subject to Taxes because of its failure to deliver a form, certificate or other document required hereunder, the Loan Parties shall take such steps as such Lender Party shall reasonably request to assist such Lender Party to recover such Taxes.

     SECTION 2.13 Sharing of Payments, Etc. If any Lender Party shall obtain at any time any payment (whether voluntary, involuntary, through the exercise of any right of set-off, or otherwise, other than as a result of an assignment pursuant to Section 9.07) (a) on account of Obligations due and payable to such Lender Party hereunder and under the Notes and the other Loan Documents at such time in excess of its ratable share (according to the proportion of (i) the amount of such Obligations due and payable to such Lender Party at such time to (ii) the aggregate amount of the Obligations due and payable to all Lender Parties hereunder and under the Notes and the other Loan Documents at such time) of payments on account of the Obligations due and payable to all Lender Parties hereunder and under the Notes at such time obtained by all the Lender Parties at such time or (b) on account of Obligations owing (but not due and payable) to such Lender Party hereunder and under the Notes and the other Loan Documents at such time in excess of its ratable share (according to the proportion of (i) the amount of such Obligations owing to such Lender Party at such time to (ii) the aggregate amount of the Obligations owing (but not due and payable) to all Lender Parties hereunder and under the Notes and the other Loan Documents at such time) of payments on account of the Obligations owing (but not due and payable) to all Lender Parties hereunder and under the Notes at such time obtained by all of the Lender Parties at such time, such Lender Party shall forthwith purchase from the other Lender Parties such interests or participating interests in the Obligations due and payable or owing to them, as the case may be, as shall be necessary to cause such purchasing Lender Party to share the excess payment ratably with each of them; provided, however, that if all or any portion of such excess payment is thereafter recovered from such purchasing Lender Party, such purchase from each other Lender Party shall be rescinded and such other Lender Party shall repay to the purchasing Lender Party the purchase price to the extent of such Lender Party’s ratable share (according to the proportion of (i) the purchase price paid to such Lender Party to (ii) the aggregate purchase price paid to all Lender Parties) of such recovery together with an amount equal to such Lender Party’s ratable share (according to the proportion of (i) the amount of such other Lender Party’s required repayment to (ii) the total amount so recovered from the purchasing Lender Party) of any interest or other amount paid or payable by the purchasing Lender Party in respect of the total amount so recovered, provided further that so long as the Obligations under the Loan Documents shall not have been accelerated, any excess payment received by any Appropriate Lender shall be shared on a pro rata basis only with other Appropriate Lenders. The Borrower agrees that any Lender Party so purchasing an interest or participating interest from another Lender Party pursuant to this Section 2.13 may, to the fullest extent permitted by law, exercise all its rights of payment (including the right of set-off) with respect to such interest or participating interest, as the case may be, as fully as if such Lender Party were the direct creditor of the Borrower in the amount of such interest or participating interest, as the case may be.

     SECTION 2.14 Use of Proceeds. (a) The Revolving Credit A Facility results from the bifurcation of the Revolving Credit Facility under the Existing Agreement and consists of a tranche of the Advances outstanding thereunder in the aggregate principal amount of $38,000,000, the terms of which

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have been modified by this Agreement to comprise the Revolving Credit A Facility. No proceeds of the Revolving Credit A Facility shall be available for any other purpose.

          (b) The proceeds of the Revolving Credit B Advances shall be available (and the Borrower agrees that it shall use such proceeds) solely to pay (i) the costs and expenses of the transaction contemplated under this Agreement, (ii) costs and expenses incurred by the Borrower and its Subsidiaries in accordance with the Approved Budget, and (iii) to fund Permitted Cash Reserves.

          (c) For the avoidance of doubt, in no event shall the proceeds from any Facility be used (i) to make Restricted Payments, (ii) to pay management or employee bonuses other than in accordance with the Approved Budget, (iii) to pay Capital Expenditures other than in accordance with the Approved Budget, (iv) to purchase or redeem any Equity Interests of the Borrower, (v) to make any payments on guarantees or Contingent Obligations related to any Legacy TIC Syndication other than in accordance with the Approved Budget, or (vi) to make payments to any creditors or holders of any Liens in connection with Debt subordinated (or required hereunder to be subordinated) to the Obligations under the Loan Documents.

     SECTION 2.15 Defaulting Lenders. (a) In the event that, at any one time, (i) any Lender Party shall be a Defaulting Lender, (ii) such Defaulting Lender shall owe a Defaulted Advance to the Borrower and (iii) the Borrower shall be required to make any payment hereunder or under any other Loan Document to or for the account of such Defaulting Lender, then the Borrower may, so long as no Default shall occur or be continuing at such time and to the fullest extent permitted by applicable law, set off and otherwise apply the Obligation of the Borrower to make such payment to or for the account of such Defaulting Lender against the obligation of such Defaulting Lender to make such Defaulted Advance. In the event that, on any date, the Borrower shall so set off and otherwise apply its obligation to make any such payment against the obligation of such Defaulting Lender to make any such Defaulted Advance on or prior to such date, the amount so set off and otherwise applied by the Borrower shall constitute for all purposes of this Agreement and the other Loan Documents an Advance by such Defaulting Lender made on the date of such setoff under the Facility pursuant to which such Defaulted Advance was originally required to have been made pursuant to Section 2.01. Such Advance shall be considered, for all purposes of this Agreement, to comprise part of the Borrowing in connection with which such Defaulted Advance was originally required to have been made pursuant to Section 2.01, even if the other Advances comprising such Borrowing shall be Eurodollar Rate Advances on the date such Advance is deemed to be made pursuant to this subsection (a). The Borrower shall notify the Administrative Agent at any time the Borrower exercises its right of set-off pursuant to this subsection (a) and shall set forth in such notice (A) the name of the Defaulting Lender and the Defaulted Advance required to be made by such Defaulting Lender and (B) the amount set off and otherwise applied in respect of such Defaulted Advance pursuant to this subsection (a). Any portion of such payment otherwise required to be made by the Borrower to or for the account of such Defaulting Lender which is paid by the Borrower, after giving effect to the amount set off and otherwise applied by the Borrower pursuant to this subsection (a), shall be applied by the Administrative Agent as specified in subsection (b) or (c) of this Section 2.15.

          (b) In the event that, at any one time, (i) any Lender Party shall be a Defaulting Lender, (ii) such Defaulting Lender shall owe a Defaulted Amount to the Administrative Agent or any of the other Lender Parties and (iii) the Borrower shall make any payment hereunder or under any other Loan Document to the Administrative Agent for the account of such Defaulting Lender, then the Administrative Agent may, on its behalf or on behalf of such other Lender Parties and to the fullest extent permitted by applicable law, apply at such time the amount so paid by the Borrower to or for the account of such Defaulting Lender to the payment of each such Defaulted Amount to the extent required to pay such Defaulted Amount. In the event that the Administrative Agent shall so apply any such amount to the payment of any such Defaulted Amount on any date, the amount so applied by the Administrative Agent

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shall constitute for all purposes of this Agreement and the other Loan Documents payment, to such extent, of such Defaulted Amount on such date. Any such amount so applied by the Administrative Agent shall be retained by the Administrative Agent or distributed by the Administrative Agent to such other Lender Parties, ratably in accordance with the respective portions of such Defaulted Amounts payable at such time to the Administrative Agent and such other Lender Parties and, if the amount of such payment made by the Borrower shall at such time be insufficient to pay all Defaulted Amounts owing at such time to the Administrative Agent and such other Lender Parties, in the following order of priority:

     (i)       first, to the Administrative Agent for any Defaulted Amounts then owing to them, in their capacities as such, ratably in accordance with such respective Defaulted Amounts then owing to the Administrative Agent;

     (ii)      second, to the Issuing Bank for any Defaulted Amounts then owing to them, in their capacities as such, ratably in accordance with such respective Defaulted Amounts then owing to the Issuing Bank; and

     (iii)     third, to any other Lender Parties for any Defaulted Amounts then owing to such other Lender Parties, ratably in accordance with such respective Defaulted Amounts then owing to such other Lender Parties.

Any portion of such amount paid by the Borrower for the account of such Defaulting Lender remaining, after giving effect to the amount applied by the Administrative Agent pursuant to this subsection (b), shall be applied by the Administrative Agent as specified in subsection (c) of this Section 2.15.

          (c) In the event that, at any one time, (i) any Lender Party shall be a Defaulting Lender, (ii) such Defaulting Lender shall not owe a Defaulted Advance or a Defaulted Amount and (iii) the Borrower, the Administrative Agent or any other Lender Party shall be required to pay or distribute any amount hereunder or under any other Loan Document to or for the account of such Defaulting Lender, then the Borrower or the Administrative Agent or such other Lender Party shall pay such amount to the Administrative Agent to be held by the Administrative Agent, to the fullest extent permitted by applicable law, in escrow or the Administrative Agent shall, to the fullest extent permitted by applicable law, hold in escrow such amount otherwise held by it. Any funds held by the Administrative Agent in escrow under this subsection (c) shall be deposited by the Administrative Agent in an account with a bank (the “Escrow Bank”) selected by the Administrative Agent, in the name and under the control of the Administrative Agent, but subject to the provisions of this subsection (c). The terms applicable to such account, including the rate of interest payable with respect to the credit balance of such account from time to time, shall be the Escrow Bank’s standard terms applicable to escrow accounts maintained with it. Any interest credited to such account from time to time shall be held by the Administrative Agent in escrow under, and applied by the Administrative Agent from time to time in accordance with the provisions of, this subsection (c). The Administrative Agent shall, to the fullest extent permitted by applicable law, apply all funds so held in escrow from time to time to the extent necessary to make any Advances required to be made by such Defaulting Lender and to pay any amount payable by such Defaulting Lender hereunder and under the other Loan Documents to the Administrative Agent or any other Lender Party, as and when such Advances or amounts are required to be made or paid and, if the amount so held in escrow shall at any time be insufficient to make and pay all such Advances and amounts required to be made or paid at such time, in the following order of priority:

     (i)     first, to the Administrative Agent for any amounts then due and payable by such Defaulting Lender to them hereunder, in their capacities as such, ratably in accordance with such respective amounts then due and payable to the Administrative Agent;

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     (ii)      second, to the Issuing Bank for any amounts then due and payable to them hereunder, in their capacities as such, by such Defaulting Lender, ratably in accordance with such respective amounts then due and payable to the Issuing Bank;

     (iii)     third, to any other Lender Parties for any amount then due and payable by such Defaulting Lender to such other Lender Parties hereunder, ratably in accordance with such respective amounts then due and payable to such other Lender Parties; and

     (iv)     fourth, to the Borrower for any Advance then required to be made by such Defaulting Lender pursuant to a Commitment of such Defaulting Lender.

In the event that any Lender Party that is a Defaulting Lender shall, at any time, cease to be a Defaulting Lender, any funds held by the Administrative Agent in escrow at such time with respect to such Lender Party shall be distributed by the Administrative Agent to such Lender Party and applied by such Lender Party to the Obligations owing to such Lender Party at such time under this Agreement and the other Loan Documents ratably in accordance with the respective amounts of such Obligations outstanding at such time.

          (d) The rights and remedies against a Defaulting Lender under this Section 2.15 are in addition to other rights and remedies that the Borrower may have against such Defaulting Lender with respect to any Defaulted Advance and that the Administrative Agent or any Lender Party may have against such Defaulting Lender with respect to any Defaulted Amount.

     SECTION 2.16 Evidence of Obligations. (a) Each Lender Party shall maintain in accordance with its usual practice an account or accounts evidencing the indebtedness of the Borrower to such Lender resulting from each Advance owing to such Lender Party from time to time, including the amounts of principal and interest payable and paid to such Lender from time to time hereunder. The Borrower agrees that upon notice by any Lender Party to the Borrower (with a copy of such notice to the Administrative Agent) to the effect that a promissory note or other evidence of indebtedness is required or appropriate in order for such Lender Party to evidence (whether for purposes of pledge, enforcement or otherwise) the Advances owing to, or to be made by, such Lender Party, the Borrower shall promptly execute and deliver to such Lender Party, with a copy to the Administrative Agent, a Revolving Credit Note, in substantially the form of Exhibit A, payable to the order of such Lender Party in a principal amount equal to the Revolving Credit Commitment of such Lender Party. All references to Notes in the Loan Documents shall mean Notes, if any, to the extent issued hereunder.

          (b) The Register maintained by the Administrative Agent pursuant to Section 9.07(d) shall include a control account, and a subsidiary account for each Lender Party, in which accounts (taken together) shall be recorded (i) the date and amount of each Borrowing made hereunder, the Type of Advances comprising such Borrowing and, if appropriate, the Interest Period applicable thereto, (ii) the terms of each Assignment and Acceptance delivered to and accepted by it, (iii) the amount of any principal or interest due and payable or to become due and payable from the Borrower to each Lender Party hereunder, and (iv) the amount of any sum received by the Administrative Agent from the Borrower hereunder and each Lender Party’s share thereof.

          (c) Entries made in good faith by the Administrative Agent in the Register pursuant to subsection (b) above, and by each Lender Party in its account or accounts pursuant to subsection (a) above, shall be prima facie evidence of the amount of principal and interest due and payable or to become due and payable from the Borrower to, in the case of the Register, each Lender Party and, in the case of such account or accounts, such Lender Party, under this Agreement, absent manifest error; provided, however, that the failure of the Administrative Agent or such Lender Party to make an entry, or any

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finding that an entry is incorrect, in the Register or such account or accounts shall not limit or otherwise affect the obligations of the Borrower under this Agreement.

     SECTION 2.17 Extension of Termination Date. (a) At least 30 days and no sooner than 60 days prior to the Termination Date, the Borrower, by written notice to the Administrative Agent, may request, with respect to the Commitments then outstanding, a single extension of the Termination Date until January 5, 2011. The Administrative Agent shall promptly notify each Lender of such request, and the Termination Date in effect at such time shall, effective as at the Termination Date (the “Extension Date”) and subject to the conditions set forth in this Section 2.17, be extended for such additional period, provided that such extension shall be available if and only if: (i) no Prepayment Failure Event shall have occurred prior to the Extension Date and the aggregate principal amount of Revolving Credit A Advances outstanding on the Extension Date does not exceed the amount set forth on Schedule 2.06(e)(iii), (ii) the Administrative Agent and the Required Lenders have agreed, in their sole discretion, upon financial covenants with which the Loan Parties shall comply during the extension term and the Loan Parties shall have executed and delivered an amendment to this Agreement on or prior to the Extension Date confirming the effectiveness of such financial covenants during the extension term, and (iii) on the Extension Date, the following statements shall be true in all material respects and the Administrative Agent shall have received for the account of each Lender Party a certificate signed by a duly authorized officer of the Borrower, dated the Extension Date, stating that: (x) the representations and warranties contained in the Loan Documents are true and correct on and as of the Extension Date, and (y) no Default has occurred and is continuing or would result from such extension. In the event an extension is effected pursuant to this Section 2.17, the aggregate principal amount of all Advances shall be repaid in full ratably to the Lenders on the Termination Date as so extended. As of the Extension Date, any and all references in this Agreement, the Notes, if any, or any of the other Loan Documents to the “Termination Date” shall refer to the Termination Date as so extended.

          (b) The Borrower shall pay to the Administrative Agent for the account of the Lenders an extension fee in an amount equal to 0.25% of the total Commitments then outstanding, payable on the Extension Date.

     SECTION 2.18 Lender Pro Rata Shares. The Revolving Credit Advances outstanding under the Existing Agreement on the Effective Date shall be deemed to have been made under, and amended and restated by, this Agreement on the date hereof without executing any further documentation. As of the Effective Date, each Facility is fully funded and each Lender holds the respective Revolver B Pro Rata Share and Revolver A Pro Rata Share of the Facility set forth in Schedule I.

ARTICLE III

CONDITIONS OF LENDING

     SECTION 3.01 Conditions Precedent. The obligation of the Administrative Agent and the Lead Arranger to enter into this Agreement, and the obligation of each Lender to make an Advance is subject to the satisfaction of the following conditions precedent before or concurrently with the date hereof (the “Effective Date”):

     (a) The Administrative Agent and the Lead Arranger shall have received on or before the Effective Date the following, each dated such day (unless otherwise specified), in form and substance satisfactory to the Administrative Agent and the Lead Arranger (unless otherwise specified) and (except for the Notes) in sufficient copies for each Lender Party:

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     (i) The Notes payable to the order of the Lenders to the extent requested by the Lenders pursuant to the terms of Section 2.16.

     (ii) A third amended and restated security agreement in substantially the form of Exhibit D hereto (together with each other security agreement and security agreement supplement delivered pursuant to Section 5.01(j), in each case as amended, the “Security Agreement”), duly executed by each Loan Party, together with:

     (A) certificates representing the Pledged Equity referred to therein accompanied by undated stock powers executed in blank and instruments evidencing the Pledged Debt indorsed in blank,

     (B) proper financing statements in form appropriate for filing under the Uniform Commercial Code of all jurisdictions that the Administrative Agent may deem necessary or desirable in order to perfect and protect the first priority liens and security interests created under the Security Agreement, covering the Collateral described in the Security Agreement,

     (C) the Intellectual Property Security Agreement duly executed by each Loan Party,

     (D) evidence of the completion of all other recordings and filings of or with respect to the Security Agreement that the Administrative Agent may deem necessary or desirable in order to perfect and protect the security interest created thereunder,

     (E) evidence of the insurance required by the terms of the Security Agreement, and

     (F) evidence that all other action that the Administrative Agent may deem necessary or desirable in order to perfect and protect the first priority liens and security interests created under the Security Agreement has been taken (including, without limitation, receipt of duly executed payoff letters and UCC-3 termination statements covering, among others, those UCC-1 financing statements listed on Schedule 3.01(a)(ii)(F) hereto).

     (iii) Certified copies of the resolutions of the Board of Directors of each Loan Party approving each Loan Document to which it is or is to be a party and the transactions contemplated thereby, and of all documents evidencing other necessary corporate action and governmental and other third party approvals and consents, if any, with respect to each Loan Document to which it is or is to be a party and the transactions contemplated thereby.

     (iv) A copy of a certificate of the Secretary of State of the jurisdiction of incorporation of each Loan Party, dated reasonably near the Effective Date certifying that (1) such Loan Party has paid all franchise taxes to the date of such certificate and (2) such Loan Party is duly incorporated and in good standing or presently subsisting under the laws of the State of the jurisdiction of its incorporation.

     (v) A certificate of each Loan Party, signed on behalf of such Loan Party by its Chief Financial Officer or its Chief Executive Officer and its Secretary or any

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Assistant Secretary, dated as of the Effective Date (the statements made in which certificate shall be true on and as of the Effective Date), certifying as to (A) amendments to the charter of such Loan Party, if any, since the Existing Agreement Date (and providing certified copies of any such amendments), (B) amendments to the bylaws of such Loan Party, if any, since the Existing Agreement Date (providing certified copies of any such amendments), (C) the due incorporation and good standing or valid existence of such Loan Party as a corporation organized under the laws of the jurisdiction of its incorporation, and the absence of any proceeding for the dissolution or liquidation of such Loan Party, (D) the truth of the representations and warranties contained in the Loan Documents as though made on and as of the Effective Date and (E) the absence of any event occurring and continuing, on or after the Existing Agreement Date, that constitutes a Default.

     (vi) A certificate of the Secretary or an Assistant Secretary of each Loan Party certifying the names and true signatures of the officers of such Loan Party authorized to sign each Loan Document to which it is or is to be a party and the other documents to be delivered hereunder and thereunder.

     (vii) Certificates, in form and substance satisfactory to the Lender Parties, attesting to the Solvency of each Loan Party from its Chief Financial Officer or its Chief Executive Officer.

     (viii) Such financial, business and other information regarding each Loan Party and its Subsidiaries as the Lender Parties shall have requested, including, without limitation, information as to possible contingent liabilities, tax matters, environmental matters, obligations under Plans, Multiemployer Plans and Welfare Plans, collective bargaining agreements and other arrangements with employees, audited annual financial statements dated December 31, 2008, interim financial statements dated the end of the most recent fiscal quarter for which financial statements are available (or, in the event the Lender Parties’ due diligence review reveals material changes since such financial statements, as of a later date within 45 days of the day of the Effective Date).

     (ix) Evidence of insurance naming the Administrative Agent as additional insured and loss payee with such responsible and reputable insurance companies or associations, and in such amounts and covering such risks, as is satisfactory to the Lender Parties, including, without limitation, business interruption insurance.

     (x) A Notice of Borrowing and a Breakage Indemnity Letter.

     (xi) A favorable opinion of Zukerman Gore Brandeis & Crossman, LLP, special counsel for the Loan Parties, in substantially the form of Exhibit F hereto and as to such other matters as any Lender Party through the Administrative Agent may reasonably request.

     (xii) The Lender Warrants pursuant to the Warrant Agreement and such other documentation as may be required by the Lender Parties in connection therewith.

     (xiii) A favorable opinion of Zukerman Gore Brandeis & Crossman, LLP, special counsel for the Loan Parties, in substantially the form of Exhibit J hereto, with respect to the Lender Warrants and as to such other matters as any Lender through the Administrative Agent may reasonably request.

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     (b) The Lender Parties shall be satisfied with the corporate and legal structure and capitalization of each Loan Party and each of its Subsidiaries the Equity Interests in which Subsidiaries is being pledged pursuant to the Loan Documents, including the terms and conditions of the charter, bylaws and each class of Equity Interests in each Loan Party and each such Subsidiary and of each agreement or instrument relating to such structure or capitalization.

     (c) [Intentionally Omitted].

     (d) [Intentionally Omitted].

     (e) There shall exist no action, suit, investigation, litigation or proceeding affecting any Loan Party or any of its Subsidiaries pending or threatened before any Governmental Authority that (i) is reasonably likely to have Material Adverse Effect other than the matters described on Schedule 4.01(f) hereto (the “Disclosed Litigation”) or (ii) purports to affect the legality, validity or enforceability of any Loan Document or the consummation of the transactions contemplated by this Agreement, and there shall have been no adverse change in the status, or financial effect on any Loan Party or any of its Subsidiaries, of the Disclosed Litigation from that described on Schedule 4.01(f) hereto.

     (f) All Governmental Authorizations and third party consents and approvals necessary in connection with the transactions contemplated by this Agreement shall have been obtained (without the imposition of any conditions that are not acceptable to the Lender Parties) and shall remain in effect; all applicable waiting periods in connection with the transactions contemplated by this Agreement shall have expired without any action being taken by any competent authority, and no law or regulation shall be applicable in the judgment of the Lender Parties, in each case that restrains, prevents or imposes materially adverse conditions upon the transactions contemplated by this Agreement or the rights of the Loan Parties or their Subsidiaries freely to transfer or otherwise dispose of, or to create any Lien on, any properties now owned or hereafter acquired by any of them.

     (g) The Lender Parties shall have completed a due diligence investigation of the Loan Parties, the Borrower and their respective Subsidiaries in scope, and with results, satisfactory to the Lender Parties; without limiting the generality of the foregoing, the Lender Parties shall have been given such access to the management, records, books of account, contracts and properties of the Borrower and its Subsidiaries as they shall have requested.

     (h) The Borrower shall have paid all accrued fees of the Administrative Agent and the Lender Parties and all reasonable accrued expenses of the Administrative Agent (including the reasonable accrued fees and expenses of counsel to the Administrative Agent).

     (i) The Administrative Agent and the Required Lenders shall have received and approved the Approved Budget pursuant to the terms of Section 5.03(f).

     (j) The Administrative Agent and the Required Lenders shall have received, reasonably in advance of the Effective Date to allow the Administrative Agent and the Required Lenders sufficient time to review and approve, the Recapitalization Plan.

     (k) The Borrower shall have deposited funds into the L/C Collateral Account in an amount approved by the Issuing Bank as sufficient to cash collateralize 100% of the Available Amount of all Letters of Credit outstanding as of the Effective Date. The Borrower and the Lender Parties acknowledge that this Section 3.01(k) shall be satisfied on the Effective Date by

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   the deposit of a Revolving Credit B Borrowing in the proper amount directly into the L/C Collateral Account.

     SECTION 3.02 Conditions Precedent to Each Borrowing and any Extension. The obligation of each Appropriate Lender to make an Advance on the occasion of each Borrowing, and, if requested by the Borrower, the extension of the Termination Date pursuant to Section 2.17, shall be subject to the further conditions precedent that on the date of such Borrowing or extension (a) the Borrower shall have delivered to the Administrative Agent a Notice of Borrowing together with (i) a statement of cash flows of the Borrower and its Subsidiaries in detail satisfactory to the Administrative Agent and the Required Lenders, and (ii) the then current Budget Reconciliation and Cash Flow Variance Report in compliance with Section 5.03(e), (b) the following statements shall be true and the Administrative Agent shall have received for the account of such Lender or the Issuing Bank a certificate signed by a duly authorized officer of the Borrower, dated the date of such Borrowing or issuance or extension, stating:

     (i) that the representations and warranties contained in each Loan Document are correct on and as of such date, before and after giving effect to such Borrowing or issuance or extension and to the application of the proceeds therefrom, as though made on and as of such date, other than any such representations or warranties that, by their terms, refer to a specific date other than the date of such Borrowing or issuance or extension;

     (ii) that no Default has occurred and is continuing, or would result from such Borrowing or issuance or extension or from the application of the proceeds therefrom;

     (iii) that no Material Adverse Change has occurred since December 31, 2008;

     (iv) that attached to such certificate is a detailed break-down showing the manner in which such funds will be held as Permitted Cash Reserves or expended in accordance with the Approved Budget, in detail satisfactory to the Administrative Agent and the Required Lenders;

     (v) that all prior Advances drawn under this Agreement have been held or expended by the Borrower in accordance with the Approved Budget (subject to the Permitted Variance provided for in Section 5.03(e));

     (vi) that the then current Budget Reconciliation and Cash Flow Variance Report attached to the Notice of Borrowing is true and correct and complies with the requirements of Section 5.03(e); provided, however, that this clause (vi) shall apply only to Advances made from and after May 15, 2009;

     (vii) that such funds will be applied to fund Permitted Cash Reserves or disbursed to pay items due and payable in the then current week in accordance with the Approved Budget;

     (viii) that no Budget Non-Compliance Event has occurred and is continuing; and

     (ix) that no Prepayment Failure Event has occurred.

and (c) the Administrative Agent shall have received such other approvals, opinions or documents as the Administrative Agent or the Required Lenders may request.

     SECTION 3.03 Determinations Under Section 3.01. For purposes of determining compliance with the conditions specified in Section 3.01, each Lender Party shall be deemed to have consented to, approved or accepted or to be satisfied with each document or other matter required thereunder to be

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consented to or approved by or acceptable or satisfactory to the Lender Parties unless an officer of the Administrative Agent responsible for the transactions contemplated by the Loan Documents shall have received notice from such Lender Party prior to the Effective Date specifying its objection thereto and, such Lender Party shall not have made available to the Administrative Agent such Lender Party’s ratable portion of such Borrowing.

ARTICLE IV

REPRESENTATIONS AND WARRANTIES

     SECTION 4.01 Representations and Warranties of the Borrower. The Borrower represents and warrants as follows:

     (a) The Borrower and each of its Subsidiaries (i) is a corporation or limited liability company, as the case may be, duly organized, validly existing and in good standing under the laws of its jurisdiction of organization, (ii) subject to Section 5.01(r)(i), is duly qualified and in good standing in each other jurisdiction in which it owns or leases property or in which the conduct of its business requires it to so qualify or be licensed except where the failure to so qualify or be licensed would not have a Material Adverse Effect, and (iii) has all requisite power and authority (including, without limitation, all Governmental Authorizations) to own or lease and operate its properties and to carry on its business as now conducted and as proposed to be conducted. All of the outstanding Equity Interests in the Borrower have been validly issued and are fully paid, non-assessable and owned free and clear of all Liens.

     (b) Set forth on Schedule 4.01(b) hereto is a complete and accurate list of all Subsidiaries of each Loan Party, showing as of the date hereof (as to each such Subsidiary) the jurisdiction of its incorporation, the number of shares of each class of its Equity Interests authorized, and the number outstanding, on the date hereof and the percentage of each such class of its Equity Interests owned (directly or indirectly) by such Loan Party and the number of shares covered by all outstanding options, warrants, rights of conversion or purchase and similar rights at the date hereof, and indicating as to each Subsidiary whether such Subsidiary is a Domestic Subsidiary or Foreign Subsidiary, as appropriate. All of the outstanding Equity Interests in each Loan Party’s Subsidiaries have been validly issued, are fully paid and non-assessable and are owned by such Loan Party or one or more of its Subsidiaries free and clear of all Liens, except those created under the Collateral Documents.

     (c) The execution, delivery and performance by each Loan Party of each Loan Document to which it is or is to be a party, and the consummation of the transactions contemplated by this Agreement, are within such Loan Party’s corporate powers, have been duly authorized by all necessary corporate action, and do not (i) contravene such Loan Party’s charter or bylaws, (ii) violate any law, rule, regulation (including, without limitation, Regulation X of the Board of Governors of the Federal Reserve System), order, writ, judgment, injunction, decree, determination or award, (iii) conflict with or result in the breach of, or constitute a default or require any payment to be made under, any contract, loan agreement, indenture, mortgage, deed of trust, lease or other instrument binding on or affecting any Loan Party, any of its Subsidiaries or any of their properties or (iv) except for the Liens created under the Loan Documents, result in or require the creation or imposition of any Lien upon or with respect to any of the properties of any Loan Party or any of its Subsidiaries. No Loan Party or any of its Subsidiaries is in violation of any such law, rule, regulation, order, writ, judgment, injunction, decree, determination or award or in breach of any such contract, loan agreement, indenture, mortgage, deed of trust, lease or other instrument.

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     (d) No Governmental Authorization, and no notice to or filing with, any Governmental Authority or any other third party is required for (i) the due execution, delivery, recordation, filing or performance by any Loan Party of any Loan Document to which it is or is to be a party, or for the consummation of the transactions contemplated by this Agreement, (ii) the grant by any Loan Party of the Liens granted by it pursuant to the Collateral Documents, (iii) the perfection or maintenance of the Liens created under the Collateral Documents (including the first priority nature thereof) or (iv) the exercise by the Administrative Agent or any Lender Party of its rights under the Loan Documents or the remedies in respect of the Collateral pursuant to the Collateral Documents, except for the authorizations, approvals, actions, notices and filings listed on Schedule 4.01(d) hereto, all of which have been duly obtained, taken, given or made and are in full force and effect.

     (e) This Agreement has been, and each other Loan Document when delivered hereunder will have been, duly executed and delivered by each Loan Party party thereto. This Agreement is, and each other Loan Document when delivered hereunder will be, the legal, valid and binding obligation of each Loan Party party thereto, enforceable against such Loan Party in accordance with its terms.

     (f) There is no action, suit, investigation, litigation or proceeding affecting the Borrower or any other Loan Party or any of their properties or revenues, including any Environmental Action, pending or threatened before any Governmental Authority or arbitrator that (i) would be reasonably likely to have a Material Adverse Effect (other than the Disclosed Litigation) or (ii) purports to affect the legality, validity or enforceability of any Loan Document or the consummation of the transactions contemplated thereby, and there has been no adverse change in the status, or financial effect on any Loan Party or any of its Subsidiaries, of the Disclosed Litigation from that described on Schedule 4.01(f) hereto.

     (g) After giving effect to the restatement of the Borrower’s financial statements as described in the Borrower’s Form NT 10-K filed with the Securities and Exchange Commission on March 17, 2009, the Consolidated balance sheet of the Borrower and its Subsidiaries as at December 31, 2008, and the related Consolidated statement of income and Consolidated statement of cash flows of the Borrower and its Subsidiaries for the fiscal year then ended, accompanied by an unqualified opinion of Ernst & Young LLP, independent public accountants, duly certified by the Chief Financial Officer of the Borrower, copies of which have been furnished to each Lender Party, fairly present the Consolidated financial condition of the Borrower and its Subsidiaries as at such date and the Consolidated results of operations of the Borrower and its Subsidiaries for the periods ended on such date, all in accordance with generally accepted accounting principles applied on a consistent basis, and since December 31, 2008, there has been no Material Adverse Change.

     (h) [Intentionally Omitted].

     (i) The Consolidated forecasted statement of income and statement of cash flows of the Borrower and its Subsidiaries delivered to the Lender Parties pursuant to Section 3.01(a)(viii) or 5.03 were prepared in good faith on the basis of the assumptions stated therein, which assumptions were fair in light of the conditions existing at the time of delivery of such forecasts, and represented, at the time of delivery, the Borrower’s best estimate of its future financial performance.

     (j) No information, exhibit or report furnished by or on behalf of any Loan Party to the Administrative Agent or any Lender Party in connection with the negotiation and syndication

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of the Loan Documents or pursuant to the terms of the Loan Documents contained any untrue statement of a material fact or omitted to state a material fact necessary to make the statements made therein not misleading.

     (k) The Borrower is not engaged in the business of extending credit for the purpose of purchasing or carrying Margin Stock, and no proceeds of any Advance or drawings under any Letter of Credit will be used to purchase or carry any Margin Stock or to extend credit to others for the purpose of purchasing or carrying any Margin Stock.

     (l) Neither any Loan Party nor any of its Subsidiaries is an “investment company”, or an “affiliated person” of, or “promoter” or “principal underwriter” for, an “investment company”, as such terms are defined in the Investment Company Act of 1940, as amended. Neither any Loan Party nor any of its Subsidiaries is a “holding company”, or a “subsidiary company” of a “holding company”, or an “affiliate” of a “holding company” or of a “subsidiary company” of a “holding company”, as such terms are defined in the Public Utility Holding Company Act of 1935, as amended. Neither the making of any Advances, nor the issuance of any Letters of Credit, nor the application of the proceeds or repayment thereof by the Borrower, nor the consummation of the other transactions contemplated by the Loan Documents, will violate any provision of any such Act or any rule, regulation or order of the Securities and Exchange Commission thereunder.

     (m) Neither any Loan Party nor any of its Subsidiaries is a party to any indenture, loan or credit agreement or any lease or other agreement or instrument or subject to any charter or corporate restriction that would be reasonably likely to have a Material Adverse Effect.

     (n) All filings and other actions necessary or desirable to perfect and protect the security interest in the Collateral created under the Collateral Documents have been duly made or taken and are in full force and effect, and the Collateral Documents create in favor of the Administrative Agent for the benefit of the Secured Parties a valid and, together with such filings and other actions, perfected first priority security interest in the Collateral, securing the payment of the Secured Obligations, and all filings and other actions necessary or desirable to perfect and protect such security interest have been duly taken. The Loan Parties are the legal and beneficial owners of the Collateral free and clear of any Lien, except for the liens and security interests created or permitted under the Loan Documents.

     (o) Each Loan Party is, individually and together with its Subsidiaries, Solvent.

     (p) (i) Set forth on Schedule 4.01(p) hereto is a complete and accurate list of all Plans and Welfare Plans.

     (ii) No ERISA Event has occurred or is reasonably expected to occur with respect to any Plan that has resulted in or is reasonably expected to result in a material liability of any Loan Party or any ERISA Affiliate.

     (iii) Schedule B (Actuarial Information) to the most recent annual report (Form 5500 Series) for each Plan, as applicable, copies of which have been filed with the Internal Revenue Service and furnished to the Lender Parties, is complete and accurate and fairly presents the funding status of such Plan, as applicable, and since the date of such Schedule B there has been no material adverse change in such funding status.

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     (iv) To the Borrower’s best knowledge, neither any Loan Party nor any ERISA Affiliate has incurred or is reasonably expected to incur any Withdrawal Liability to any Multiemployer Plan.

     (v) To the Borrower’s best knowledge, neither any Loan Party nor any ERISA Affiliate has been notified by the sponsor of a Multiemployer Plan that such Multiemployer Plan is in reorganization or has been terminated, within the meaning of Title IV of ERISA, and, to the Borrower’s best knowledge, no such Multiemployer Plan is reasonably expected to be in reorganization or to be terminated, within the meaning of Title IV of ERISA.

     (q) (i) Except as otherwise set forth on Schedule 4.01(q) hereto, the operations and properties of each Loan Party and each of its Subsidiaries comply in all material respects with all applicable Environmental Laws and Environmental Permits, all past non-compliance with such Environmental Laws and Environmental Permits has been resolved without ongoing obligations or costs, and no circumstances exist to the best of such Loan Party’s knowledge that are reasonably likely to (A) form the basis of an Environmental Action against any Loan Party or any of its Subsidiaries or any of their properties that could have a Material Adverse Effect or (B) cause any such property to be subject to any restrictions on ownership, occupancy, use or transferability under any Environmental Law.

     (ii) None of the properties currently or formerly owned or operated by any Loan Party or any of its Subsidiaries is listed or proposed for listing on the NPL or on the CERCLIS or any analogous foreign, state or local list or is adjacent to any such property; there are no and never have been any underground or aboveground storage tanks or any surface impoundments, septic tanks, pits, sumps or lagoons in which Hazardous Materials are being or have been treated, stored or disposed on any property currently owned or operated by any Loan Party or any of its Subsidiaries or, to the best of its knowledge, on any property formerly owned or operated by any Loan Party or any of its Subsidiaries; there is no asbestos or asbestos-containing material on any property currently owned or operated by any Loan Party or any of its Subsidiaries; and Hazardous Materials have not been released, discharged or disposed of on any property currently or formerly owned or operated by any Loan Party or any of its Subsidiaries. This representation does not include properties that are or were managed by any Loan Party or any of its Subsidiaries in its capacity as property manager for a third party client so long as the agreement pursuant to which such Loan Party or Subsidiary acts as property manager for such properties provides for the indemnification of such Loan Party or Subsidiary, or does not subject such Loan Party or Subsidiary to liability, for the matters described in clause (ii), and so long as the Loan Party or its Subsidiary has not violated any provision of such agreement where such violation would to any extent void or terminate such indemnity or release from liability.

     (iii) Neither any Loan Party nor any of its Subsidiaries is undertaking, and has not completed, either individually or together with other potentially responsible parties, any investigation or assessment or remedial or response action relating to any actual or threatened release, discharge or disposal of Hazardous Materials at any site, location or operation, either voluntarily or pursuant to the order of any governmental or regulatory authority or the requirements of any Environmental Law, except with respect to any de minimis investigation or assessment or remedial or response action at a property that is or was managed by any Loan Party or its Subsidiaries in its capacity as property manager for a third party client so long as the agreement pursuant to which such Loan Party or Subsidiary acts as property manager for such property provides for the indemnification of such Loan Party or Subsidiary, or does not subject such Loan Party or Subsidiary to liability, for such release, and so long as the Loan Party or its Subsidiary has not violated any provision of such agreement where such violation would to any

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extent void or terminate such indemnity or release from liability, and so long as such investigation or assessment or remedial or response action is or was conducted in a manner not reasonably expected to result in material liability to such Loan Party or Subsidiary; and all Hazardous Materials generated, used, treated, handled or stored at, or transported to or from, any property currently or formerly owned or operated by any Loan Party or any of its Subsidiaries have been disposed of in a manner not reasonably expected to result in material liability to any Loan Party or any of its Subsidiaries.

     (r) (i) Neither any Loan Party nor any of its Subsidiaries is party to any tax sharing agreement other than a tax sharing agreement approved by the Required Lenders.

     (ii) Each Loan Party and each of its Subsidiaries and Affiliates has filed, has caused to be filed or has been included in all tax returns (Federal, state, local and foreign) required to be filed and has paid all taxes shown thereon to be due, together with applicable interest and penalties.

     (s) Neither the business nor the properties of any Loan Party or any of its Subsidiaries are affected by any fire, explosion, accident, strike, lockout or other labor dispute, drought, storm, hail, earthquake, embargo, act of God or of the public enemy or other casualty (whether or not covered by insurance) that would be reasonably likely to have a Material Adverse Effect.

     (t) Set forth on Schedule 4.01(t) hereto is a complete and accurate list of all Existing Debt, showing as of the date hereof the obligor and the principal amount outstanding thereunder.

     (u) [Intentionally Omitted].

     (v) Set forth on Schedule 4.01(v) hereto is a complete and accurate list of all Liens on the property or assets of any Loan Party or any of its Subsidiaries, showing as of the date hereof the lienholder thereof, the principal amount of the obligations secured thereby and the property or assets of such Loan Party or such Subsidiary subject thereto.

     (w) Set forth on Schedule 4.01(w) hereto is a complete and accurate list of all owned Borrower Properties showing as of the date hereof the street address, county or other relevant jurisdiction, state, record owner and book and estimated fair value thereof. Each Loan Party or such Subsidiary has good, marketable and insurable fee simple title to such real property, free and clear of all Liens, other than Liens created or permitted by the Loan Documents (including, without limitation, the first mortgage liens securing the GERA Existing Financing).

     (x) (i) Set forth on Schedule 4.01(x)(i) hereto is a complete and accurate list of all leased Borrower Properties, showing as of the date hereof the street address, city or other relevant jurisdiction, state, lessor, lessee and expiration date thereof. Each such lease is the legal, valid and binding obligation of the lessor thereof, enforceable in accordance with its terms.

     (ii) Set forth on Schedule 4.01(x)(ii) hereto is a complete and accurate list of all leases of real property under which any Loan Party is the lessor, showing as of the date hereof the street address, city or other relevant jurisdiction, state, lessor, lessee and expiration date thereof. Each such lease is the legal, valid and binding obligation of the lessee thereof, enforceable in accordance with its terms.

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     (y) Set forth on Schedule 4.01(y) hereto is a complete and accurate list of all Investments held by any Loan Party or any of its Subsidiaries on the date hereof, showing as of the date hereof the amount, obligor or issuer and maturity, if any, thereof.

     (z) Set forth on Schedule 4.01(z) hereto is a complete and accurate list of all Material Contracts of each Loan Party and its Subsidiaries, showing as of the date hereof the parties, subject matter and term thereof. Each such Material Contract has been duly authorized, executed and delivered by all parties thereto, has not been amended or otherwise modified, is in full force and effect and is binding upon and enforceable against all parties thereto in accordance with its terms, and there exists no default under any Material Contract by any party thereto.

     (aa) Set forth on Schedule 4.01(aa) hereto is a complete and accurate list of all patents, trademarks, trade names, service marks and copyrights, and all applications therefor and licenses thereof, of each Loan Party or any of its Subsidiaries, showing as of the date hereof the jurisdiction in which registered, the registration number, the date of registration and the expiration date.

     (bb) Set forth on Schedule 4.01(bb) hereto is a complete and accurate list of all Subsidiaries of the Borrower which are not Guarantors. Each of the Subsidiaries listed on Schedule 4.01(bb) is (i) prohibited by applicable law or regulation from acting as a Guarantor, (ii) bound by contractual restrictions prohibiting such Subsidiary from acting as a Guarantor which restrictions were not entered into for the purpose of avoiding acting as a Guarantor hereunder, or (iii) an Inactive Subsidiary that the Borrower shall cause to be dissolved within ninety (90) days after the Effective Date. All other Subsidiaries of the Borrower are Guarantors hereunder.

     (cc) Set forth on Schedule 4.01(cc) hereto is a complete and accurate list of all Contingent Obligations (including all such obligations in respect of Legacy TIC Syndications) of any Loan Party or any of their Subsidiaries on the date hereof, showing as of the date hereof the obligor and the principal amount outstanding thereunder.

     (dd) Set forth on Schedule 4.01(dd) hereto is a complete and accurate list of all existing Investments of any Loan Party or any of their Subsidiaries in connection with any Legacy TIC Syndications on the date hereof. The Borrower has previously disclosed in writing to the Administrative Agent all guarantees and Contingent Obligations in connection therewith and such disclosure was accurate and complete.

     (ee) Set forth on Schedule 4.01(ee) hereto is a complete and accurate list of all direct and indirect Subsidiaries (the “Inactive Subsidiaries”) of each Loan Party which (i) are inactive and hold either no assets or a nominal amount of assets, and (ii) the Borrower is planning to dissolve on or prior to the correlative date listed for such Inactive Subsidiary on Schedule 4.01(ee), showing as of the date hereof (as to each such Subsidiary) the full legal name of such Inactive Subsidiary, the applicable parent Loan Party, the jurisdiction of its incorporation and the date on which such Inactive Subsidiary is expected to dissolve. The Borrower has delivered to the Administrative Agent all of the stock certificates or membership certificates, as applicable, for each Inactive Subsidiary.

     (ff) Neither (i) Grubb & Ellis Asset Services Company nor (ii) Grubb & Ellis Southeast Partners, Inc. were released by any Lender Party or Loan Party as a Guarantor under Section 8.01. Both entities have been duly dissolved pursuant to applicable law.

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ARTICLE V

COVENANTS OF THE BORROWER

     SECTION 5.01 Affirmative Covenants. So long as any Advance or any other Obligation of any Loan Party under any Loan Document shall remain unpaid, any Letter of Credit shall be outstanding or any Lender Party shall have any Commitment hereunder, the Borrower will:

     (a) Compliance with Laws, Etc. Comply, and cause each of its Subsidiaries to comply, in all material respects, with all applicable laws, rules, regulations and orders, such compliance to include, without limitation, compliance with ERISA, the Patriot Act, the Racketeer Influenced and Corrupt Organizations Chapter of the Organized Crime Control Act of 1970 and, with respect to open market purchases by the Borrower of the Borrower’s common equity, a tender offer therefor or a similar transaction or series of transactions, the Securities Exchange Act of 1934, as amended, and the rules and regulations promulgated thereunder.

     (b) Payment of Taxes, Etc. Pay and discharge, and cause each of its Subsidiaries to pay and discharge, before the same shall become delinquent, (i) all taxes, assessments and governmental charges or levies imposed upon it or upon its property and (ii) all lawful claims that, if unpaid, might by law become a Lien upon its property; provided, however, that neither the Borrower nor any of its Subsidiaries shall be required to pay or discharge any such tax, assessment, charge or claim that is being contested in good faith and by proper proceedings and as to which appropriate reserves are being maintained, unless and until (i) in the case of income, real estate or other taxes, any Lien resulting therefrom attaches to its property and either (x) becomes enforceable against its other creditors or (y) the failure to make such payment would result in the attempted or actual foreclosure of a Lien against any of the Property of the Borrower or its Subsidiaries or (ii) the failure to make such payment would constitute an Event of Default pursuant to Section 6.01(e).

     (c) Compliance with Environmental Laws. Comply, and cause each of its Subsidiaries and all lessees and other Persons operating or occupying its properties to comply, in all material respects, with all applicable Environmental Laws and Environmental Permits; obtain and renew, and cause each of its Subsidiaries to obtain and renew, all Environmental Permits necessary for its operations and properties; and conduct, and cause each of its Subsidiaries to conduct, any investigation, study, sampling and testing, and undertake any cleanup, removal, remedial or other action necessary to remove and clean up all Hazardous Materials from any of its properties, in accordance with the requirements of all Environmental Laws; provided, however, that neither the Borrower nor any of its Subsidiaries shall be required to undertake any such cleanup, removal, remedial or other action to the extent that its obligation to do so is being contested in good faith and by proper proceedings and appropriate reserves are being maintained with respect to such circumstances.

     (d) Maintenance of Insurance. Maintain, and cause each of its Subsidiaries to maintain, insurance with responsible and reputable insurance companies or associations in such amounts and covering such risks as is usually carried by companies engaged in similar businesses and owning similar properties in the same general areas in which the Borrower or such Subsidiary operates, and, simultaneously with the delivery of the Compliance Certificate for the third fiscal quarter pursuant to Section 5.03(c), provide to the Administrative Agent copies of current certificates of insurance with respect to each insurance coverage maintained by the Borrower and each of its Subsidiaries.

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     (e) Preservation of Corporate Existence, Etc. Preserve and maintain, and cause each of its Subsidiaries to preserve and maintain, its existence, legal structure, legal name, rights (charter and statutory), permits, licenses, approvals, privileges and franchises; provided, however, that the Borrower and its Subsidiaries may consummate any merger or consolidation permitted under Section 5.02(d) and provided further that neither the Borrower nor any of its Subsidiaries shall be required to preserve any right, permit, license, approval, privilege or franchise if the Board of Directors of the Borrower or such Subsidiary shall determine that the preservation thereof is no longer desirable in the conduct of the business of the Borrower or such Subsidiary, as the case may be, and that the loss thereof is not disadvantageous in any material respect to the Borrower, such Subsidiary or the Lender Parties.

     (f) Visitation Rights. At any reasonable time and from time to time, permit the Administrative Agent or any of the Lender Parties, or the Administrative Agent or representatives thereof, to examine and make copies of and abstracts from the records and books of account of, and visit the properties of, the Borrower and any of its Subsidiaries, and to discuss the affairs, finances and accounts of the Borrower and any of its Subsidiaries with any of their officers or directors and with their independent certified public accountants.

     (g) Keeping of Books. Keep, and cause each of its Subsidiaries to keep, proper books of record and account, in which full and correct entries shall be made of all financial transactions and the assets and business of the Borrower and each such Subsidiary in accordance with generally accepted accounting principles in effect from time to time.

     (h) Maintenance of Properties, Etc. Maintain and preserve, and cause each of its Subsidiaries to maintain and preserve, all of its properties that are used or useful in the conduct of its business in good working order and condition, ordinary wear and tear excepted.

     (i) Transactions with Affiliates. Conduct, and cause each of its Subsidiaries to conduct, all transactions otherwise permitted under the Loan Documents with any of their Affiliates on terms that are not less favorable to the Borrower or such Subsidiary than it would obtain in a comparable arms’-length transaction with a Person not an Affiliate, provided that any such transaction must be in the ordinary course of business of the Borrower or such Subsidiary or permitted under Section 5.02(e)(v).

     (j) Covenant to Guarantee Obligations and Give Security. Upon (x) the request of the Administrative Agent following the occurrence and during the continuance of a Default, (y) the formation or acquisition of any new direct or indirect Subsidiaries by any Loan Party, or (z) the acquisition of any property for a purchase price in excess of $500,000 by any Loan Party, and such property, in the judgment of the Administrative Agent, shall not already be subject to a perfected first priority security interest in favor of the Administrative Agent for the benefit of the Secured Parties, then in each case at the Borrower’s expense:

     (i) in connection with the formation or acquisition of a Subsidiary that is not (x) a CFC or (y) a Subsidiary that is held directly or indirectly by a CFC, within 10 days after such formation or acquisition, cause each such Subsidiary, and cause each direct and indirect parent of such Subsidiary (if it has not already done so), to duly execute and deliver to the Administrative Agent a Guaranty Supplement, in substantially the form of Exhibit E hereto, guaranteeing the other Loan Parties’ obligations under the Loan Documents,

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     (ii) within 10 days after (A) such request furnish to the Administrative Agent a description of the real and personal properties of the Loan Parties and their respective Subsidiaries in detail satisfactory to the Administrative Agent and (B) such formation or acquisition, furnish to the Administrative Agent a description of the real and personal properties of such Subsidiary or the real and personal properties so acquired, in each case in detail satisfactory to the Administrative Agent,

     (iii) within 15 days after (A) such request or acquisition of property for a purchase price in excess of $500,000 by any Loan Party, duly execute and deliver, and cause each Loan Party to duly execute and deliver, to the Administrative Agent such additional mortgages, pledges, assignments, security agreement supplements, intellectual property security agreement supplements and other security agreements as specified by, and in form and substance satisfactory to the Administrative Agent, securing payment of all the Obligations of such Loan Party under the Loan Documents and constituting Liens on all such properties and (B) such formation or acquisition of any new Subsidiary, duly execute and deliver and cause each Subsidiary to duly execute and deliver to the Administrative Agent mortgages, pledges, assignments, security agreement supplements, intellectual property security agreement supplements and other security agreements as specified by, and in form and substance satisfactory to the Administrative Agent, securing payment of all of the obligations of such Subsidiary under the Loan Documents, provided that (A) the stock of any Subsidiary held by a CFC shall not be pledged and (B) if such new property is Equity Interests in a CFC, only 66% of such Equity Interests shall be pledged in favor of the Secured Parties,

     (iv) within 30 days after such request, formation or acquisition, take, and cause each Loan Party and each newly acquired or newly formed Subsidiary (other than any Subsidiary that is a CFC or a Subsidiary that is held directly or indirectly by a CFC) to take, whatever action (including, without limitation, the recording of mortgages, the filing of Uniform Commercial Code financing statements, the giving of notices and the endorsement of notices on title documents) may be necessary or advisable in the opinion of the Administrative Agent to vest in the Administrative Agent (or in any representative of the Administrative Agent designated by it) valid and subsisting Liens on the properties purported to be subject to the mortgages, pledges, assignments, security agreement supplements, intellectual property security agreement supplements and security agreements delivered pursuant to this Section 5.01(j), enforceable against all third parties in accordance with their terms,

     (v) within 60 days after such request, formation or acquisition, deliver to the Administrative Agent, upon the request of the Administrative Agent in its sole discretion, a signed copy of a favorable opinion, addressed to the Administrative Agent and the other Secured Parties, of counsel for the Loan Parties acceptable to the Administrative Agent as to (1) the matters contained in clauses (i), (iii) and (iv) above, (2) such guaranties, guaranty supplements, mortgages, pledges, assignments, security agreement supplements, intellectual property security agreement supplements and security agreements being legal, valid and binding obligations of each Loan Party party thereto enforceable in accordance with their terms, as to the matters contained in clause (iv) above, (3) such recordings, filings, notices, endorsements and other actions being sufficient to create valid perfected Liens on such properties, and (4) such other matters as the Administrative Agent may reasonably request,

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     (vi) as promptly as practicable after such request, formation or acquisition, deliver, upon the request of the Administrative Agent in its sole discretion, to the Administrative Agent with respect to each parcel of real property owned or held by each Loan Party and each newly acquired or newly formed Subsidiary (other than any Subsidiary that is a CFC or a Subsidiary that is held directly or indirectly by a CFC) title reports, title insurance policies, surveys and engineering, soils and other reports, environmental assessment reports and estoppel and consent agreements, each in scope, form and substance satisfactory to the Administrative Agent, provided, however, that to the extent that any Loan Party or any of its Subsidiaries shall have otherwise received any of the foregoing items with respect to such real property, such items shall, promptly after the receipt thereof, be delivered to the Administrative Agent, and

     (vii) at any time and from time to time, promptly execute and deliver, and cause to execute and deliver, each Loan Party and each newly acquired or newly formed Subsidiary (other than any Subsidiary that is a CFC or a Subsidiary that is held directly or indirectly by a CFC) any and all further instruments and documents and take, and cause each Loan Party and each newly acquired or newly formed Subsidiary (other than any Subsidiary that is a CFC or a Subsidiary that is held directly or indirectly by a CFC) to take, all such other action as the Administrative Agent may deem necessary or desirable in obtaining the full benefits of, or in perfecting and preserving the Liens of, such guaranties, mortgages, pledges, assignments, security agreement supplements, intellectual property security agreement supplements and security agreements.

     For the avoidance of doubt, nothing contained in this Section 5.01(j) shall be deemed to require the Borrower to mortgage to the Administrative Agent or the Lender Parties any property currently subject to a mortgage by any of the GERA Property Acquisition Subsidiaries which secures the GERA Existing Financing.

     (k) Further Assurances. (i) Promptly upon request by the Administrative Agent, or any Lender Party through the Administrative Agent, correct, and cause each of its Subsidiaries promptly to correct, any material defect or error that may be discovered in any Loan Document or in the execution, acknowledgment, filing or recordation thereof, and

     (ii) Promptly upon request by the Administrative Agent, or any Lender Party through the Administrative Agent, do, execute, acknowledge, deliver, record, re-record, file, re-file, register and re-register any and all such further acts, deeds, conveyances, pledge agreements, mortgages, deeds of trust, trust deeds, assignments, financing statements and continuations thereof, termination statements, notices of assignment, transfers, certificates, assurances and other instruments as the Administrative Agent, or any Lender Party through the Administrative Agent, may reasonably require from time to time in order to (A) carry out more effectively the purposes of the Loan Documents, (B) to the fullest extent permitted by applicable law, subject any Loan Party’s or any of its Subsidiaries’ properties, assets, rights or interests to the Liens now or hereafter intended to be covered by any of the Collateral Documents, (C) perfect and maintain the validity, effectiveness and priority of any of the Collateral Documents and any of the Liens intended to be created thereunder and (D) assure, convey, grant, assign, transfer, preserve, protect and confirm more effectively unto the Secured Parties the rights granted or now or hereafter intended to be granted to the Secured Parties under any Loan Document or under any other instrument executed in connection with any Loan Document to which any Loan Party or any of its Subsidiaries is or is to be a party, and cause each of its Subsidiaries to do so.

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     (l) Preparation of Environmental Reports. At the request of the Administrative Agent from time to time, provide to the Lender Parties within 60 days after such request, at the expense of the Borrower, an environmental site assessment report for any of its or its Subsidiaries’ properties described in the Mortgages, prepared by an environmental consulting firm acceptable to the Administrative Agent, indicating the presence or absence of Hazardous Materials and the estimated cost of any compliance, removal or remedial action in connection with any Hazardous Materials on such properties; without limiting the generality of the foregoing, if the Administrative Agent determines at any time that a material risk exists that any such report will not be provided within the time referred to above, the Administrative Agent may retain an environmental consulting firm to prepare such report at the expense of the Borrower, and the Borrower hereby grants and agrees to cause any Subsidiary that owns any property described in the Mortgages to grant at the time of such request to the Administrative Agent, the Lender Parties, such firm and the Administrative Agent or representatives thereof an irrevocable non-exclusive license, subject to the rights of tenants, to enter onto their respective properties to undertake such an assessment.

     (m) Compliance with Terms of Leaseholds. Make all payments and otherwise perform all obligations in respect of all leases of real property to which the Borrower or any of its Subsidiaries is a party, keep such leases in full force and effect and not allow such leases to lapse or be terminated or any rights to renew such leases to be forfeited or cancelled, notify the Administrative Agent of any default by any party with respect to such leases and cooperate with the Administrative Agent in all respects to cure any such default, and cause each of its Subsidiaries to do so, except, in any case, where the failure to do so, either individually or in the aggregate, is not reasonably likely to have a Material Adverse Effect.

     (n) Cash Concentration Accounts. Maintain, and cause each of its Subsidiaries to maintain, main cash concentration accounts into which all proceeds of Collateral are paid with one or more banks acceptable to the Administrative Agent that have accepted the assignment of such accounts to the Administrative Agent for the benefit of the Secured Parties pursuant to the Security Agreement.

     (o) Interest Rate Hedging. Maintain at all times all interest rate Hedge Agreements existing on the date hereof or replacements thereof (i) with Persons acceptable to the Administrative Agent, (ii) providing either an interest-rate swap for a fixed rate of interest acceptable to the Administrative Agent or an interest-rate cap at an interest rate acceptable to the Administrative Agent, and (iii) otherwise on terms and conditions acceptable to the Administrative Agent and for an expense consistent with the Approved Budget.

     (p) Performance of Material Contracts. Perform and observe all the terms and provisions of each Material Contract to be performed or observed by it, maintain each such Material Contract in full force and effect, enforce each such Material Contract in accordance with its terms, take all such action to such end as may be from time to time requested by the Administrative Agent and, upon request of the Administrative Agent, make to each other party to each such Material Contract such demands and requests for information and reports or for action as any Loan Party or any of its Subsidiaries is entitled to make under such Material Contract, and cause each of its Subsidiaries to do so, except, in any case, where the failure to do so, either individually or in the aggregate, is not reasonably likely to have a Material Adverse Effect.

     (q) Inactive Subsidiaries. Dissolve each Inactive Subsidiary on or prior to the correlative date listed for such Inactive Subsidiary on Schedule 4.01(ee), and upon the

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Administrative Agent’s surrender to the Borrower of the stock certificates or membership certificates, as applicable, for any Inactive Subsidiary that is dissolved, mark such stock certificates or membership certificates, as applicable, cancelled and place them into the minute book for such dissolved Inactive Subsidiary, provided, however, that if such Inactive Subsidiary is not dissolved within ninety (90) days after the Effective Date, such Inactive Subsidiary shall become and be a Guarantor hereunder not later than such 90^th day after the Effective Date.

     (r) Post Closing Matters. (i) Within twenty (20) days subsequent to the Effective Date, the Borrower will deliver to the Administrative Agent Securities Account Control Agreements or Account Control Agreements, as applicable, with respect to each of the pledged Securities Accounts or Deposit Accounts, as applicable, listed on Schedule 5.01(r)(i) hereto, each of which shall be duly executed by all of the parties thereto other than the Administrative Agent.

     (ii) Simultaneously with the delivery of the Account Control Agreements and Securities Account Control Agreements pursuant to clause (i) above, the Borrower shall deliver to the Administrative Agent a favorable opinion of Zukerman Gore Brandeis & Crossman, LLP, special counsel for the Loan Parties, in substantially the form of Exhibit K hereto, and as to such other matters as any Lender Party through the Administrative Agent may reasonably request.

     (iii) Within twenty (20) days subsequent to the Effective Date, the Borrower shall comply with Section 4(b) of the Security Agreement with respect to the Pledged Equity in respect of Grubb & Ellis Aga Realty Income Fund.

     (iv) Within ten (10) Business Days subsequent to the Effective Date, the Borrower will deliver to the Administrative Agent the Initial Pledged Debt identified as “Promissory notes issued from time to time by various TIC and Master Lease Programs” on Schedule II to the Security Agreement.

     (v) Within five (5) Business Days subsequent to the Effective Date, the Borrower will deliver to the Administrative Agent the Initial Pledged Debt issued by Grubb & Ellis Apartment REIT Holdings, L.P.

     (vi) Within ten (10) Business Days subsequent to the Effective Date, the Borrower will deliver to the Administrative Agent (a) a certificate of the Chief Financial Officer or Chief Executive Officer of Grubb & Ellis Healthcare REIT II Advisor, LLC that complies with the requirements set forth in Section 3.01(a)(v) and (b) an original certificate evidencing the Pledged Equity in respect of Grubb & Ellis Healthcare REIT II Advisor, LLC.

     (s) Sale of Danbury Real Property. Cause GERA Danbury LLC to complete the sale of all real property owned or held by it and apply the Net Cash Proceeds of such sale in accordance with Section 2.06(e) by June 1, 2009, unless such date is extended with the approval of the Administrative Agent and the Required Lenders.

     (t) Sale of Real Property. Cause each Limited Purpose Subsidiary other than GERA Danbury LLC to use commercially reasonable best efforts to complete the sale, transfer or other disposition of all real property owned or held by such Limited Purpose Subsidiary and apply the Net Cash Proceeds of such sale in accordance with Section 2.06(e) such that by September 30, 2009 (i) no real property owned or held by any such Limited Purpose Subsidiary appears on

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the balance sheet of the Borrower or any of its Subsidiaries, and (ii) there is no continuing recourse for the Debt secured by such real property or any other Obligations pertaining thereto to the Borrower or any of its Subsidiaries except for (x) the applicable Limited Purpose Subsidiary and (y) the existing recourse to NNN Realty Advisors, Inc. related to the Debt secured by the real property located at 200 Galleria Parkway, Atlanta, Georgia, provided that any settlement or payment in connection with such recourse obligations shall be subject to the prior approval of the Administrative Agent and the Required Lenders.

     (u) 2008 Form 10-K. File the Borrower’s Annual Report on Form 10-K with the Securities and Exchange Commission within ten (10) Business Days after the Effective Date.

     (v) [Intentionally Omitted].

     (w) Approved Budget. At all times conduct its business in accordance with the Approved Budget and make all payments and expenditures in accordance with the Approved Budget, to the satisfaction of the Administrative Agent.

     (x) Recapitalization Plan. Diligently implement the Recapitalization Plan and complete each step provided by the Recapitalization Plan by the date specified for such completion in the Recapitalization Plan; provided, however, that if the Borrower shall fail to consummate the recapitalization transaction contemplated by such Recapitalization Plan by the date specified in such Recapitalization Plan, then, notwithstanding any provision herein to the contrary, such failure shall not consititute an Event of Default hereunder so long as the Borrower shall comply with Section 2.06(e)(iv).

     (y) Permitted Cash Reserves. At all times maintain all Permitted Cash Reserves in a deposit account or securities account in which the Administrative Agent holds a first priority perfected security interest and with respect to which the depository institution or securities intermediary with which such account has been established has entered into an Account Control Agreement under and as defined in the Security Agreement.

     (z) Net Proceeds of Mandatory Prepayment Events. Cause the portion of any Net Proceeds of Mandatory Prepayment Events that is not required to be applied to prepay Advances pursuant to Section 2.06 to be held in a deposit account (i) established by and maintained with the Administrative Agent in the name of the Administrative Agent, and (ii) with respect to which the Borrower or applicable Subsidiary has delivered a supplement to the Security Agreement pursuant to which the Administrative Agent has been granted a first priority security interest in such account.

   SECTION 5.02 Negative Covenants. So long as any Advance or any other Obligation of any Loan Party under any Loan Document shall remain unpaid, any Letter of Credit shall be outstanding or any Lender Party shall have any Commitment hereunder, the Borrower will not, at any time:

     (a) Liens, Etc. Create, incur, assume or suffer to exist, or permit any of its Subsidiaries to create, incur, assume or suffer to exist, any Lien on or with respect to any of its properties of any character (including, without limitation, accounts) whether now owned or hereafter acquired, or sign or file or suffer to exist, or permit any of its Subsidiaries to sign or file or suffer to exist, under the Uniform Commercial Code of any jurisdiction, a financing statement that names the Borrower or any of its Subsidiaries as debtor, or sign or suffer to exist, or permit any of its Subsidiaries to sign or suffer to exist, any security agreement authorizing

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any secured party thereunder to file such financing statement, or assign, or permit any of its Subsidiaries to assign, any accounts or other right to receive income, except:

     (i) Liens created under the Loan Documents;

     (ii) Permitted Liens;

     (iii) Liens existing on the date hereof and described on Schedule 4.01(v) hereto, provided that no such Lien is spread to cover any additional property after the Effective Date and that the principal amount of Debt secured thereby is not increased;

     (iv) purchase money Liens upon or in equipment acquired or held by the Borrower or any of its Subsidiaries in the ordinary course of business to secure the purchase price of such equipment or to secure Debt incurred solely for the purpose of financing the acquisition of any such equipment to be subject to such Liens, or Liens existing on any such equipment at the time of acquisition (other than any such Liens created in contemplation of such acquisition that do not secure the purchase price), or extensions, renewals or replacements of any of the foregoing for the same or a lesser amount; provided, however, that no such Lien shall extend to or cover any equipment other than the equipment being acquired, and no such extension, renewal or replacement shall extend to or cover any equipment not theretofore subject to the Lien being extended, renewed or replaced;

     (v) any interest or title of a lessor under any lease entered into by the Borrower or any Subsidiary in the ordinary course of its business and covering only the assets so leased (and related general intangibles and identifiable proceeds specifically related to such assets);

     (vi) [Intentionally Omitted];

     (vii) Liens in respect of goods consigned to the Borrower or any of its Subsidiaries in the ordinary course of business, provided that such Liens are limited to the goods so consigned;

     (viii) the replacement, extension, or renewal of any Lien permitted under clause (iii) or (vi) above upon or in the same property theretofore subject thereto or the replacement, extension or renewal (without increase in the amount or change in any direct or contingent obligor) of the Debt secured thereby; and

     (ix) Liens permitted under Section 5.02(l).

     (b) Debt and Preferred Interests. Create, incur, assume or suffer to exist, or permit any of its Subsidiaries to create, incur, assume or suffer to exist, any Debt, or create, incur, assume or suffer to exist, or permit any of its Subsidiaries to create, incur, assume or suffer to exist any Preferred Interests, in each case except (so long as such exceptions are consistent with the Approved Budget):

     (i) in the case of the Borrower,

     (A) Debt in respect of Hedge Agreements entered into in accordance with Section 5.01(o) designed to hedge against fluctuations in interest rates

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incurred in the ordinary course of business and consistent with prudent business practice with the aggregate Agreement Value thereof not to exceed $2,000,000 at any time outstanding, and

     (B) Debt owed to a Subsidiary of the Borrower, which Debt (x) shall, in the case of Debt owed to a Loan Party, constitute Pledged Debt, (y) shall be on terms acceptable to the Administrative Agent and (z) if evidenced by promissory notes, such promissory notes shall be in form and substance satisfactory to the Administrative Agent and shall, in the case of Debt owed to a Loan Party, be pledged as security for the Obligations of the holder thereof under the Loan Documents to which such holder is a party and delivered to the Administrative Agent pursuant to the terms of the Security Agreement;

     (ii) in the case of any Subsidiary of the Borrower, Debt owed to the Borrower or to a Subsidiary of the Borrower, provided that in each case such Debt (x) shall, in the case of Debt owed to a Loan Party, constitute Pledged Debt, (y) shall be on terms acceptable to the Administrative Agent and (z) shall be evidenced by promissory notes in form and substance satisfactory to the Administrative Agent and such promissory notes shall, in the case of Debt owed to a Loan Party, be pledged as security for the Obligations of the holder thereof under the Loan Documents to which such holder is a party and delivered to the Administrative Agent pursuant to the terms of the Security Agreement;

     (iii) in the case of the Borrower and its Subsidiaries,

     (A) Debt under the Loan Documents,

     (B) Debt secured by Liens permitted by Section 5.02(a)(iv),

     (C) Capitalized Leases permitted under Section 5.02(h) and entered into in the ordinary course of business,

     (D) (x) the Existing Debt, and (y) any Debt extending the maturity of, or refunding or refinancing, in whole or in part, any Existing Debt, provided that the terms of any such extending, refunding or refinancing Debt, and of any agreement entered into and of any instrument issued in connection therewith, are otherwise permitted by the Loan Documents, provided further that the principal amount of such Existing Debt shall not be increased above the principal amount thereof outstanding immediately prior to such extension, refunding or refinancing, and the direct and contingent obligors therefor shall not be changed, as a result of or in connection with such extension, refunding or refinancing, provided still further that the terms relating to principal amount, amortization, maturity, collateral (if any) and subordination (if any), and other material terms taken as a whole, of any such extending, refunding or refinancing Debt, and of any agreement entered into and of any instrument issued in connection therewith, are not less favorable in any material respect to the Loan Parties or the Lender Parties than the terms of any agreement or instrument governing the Existing Debt being extended, refunded or refinanced and the interest rate applicable to any such extending, refunding or refinancing Debt does not exceed the then applicable market interest rate,

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     (E) [Intentionally Omitted],

     (F) Contingent Obligations (1) [intentionally omitted], (2) described on Schedule 4.01(cc), (3) arising in connection with indemnity programs for employees and or agents, (4) in respect of loans and advances made to employees and/or agents pursuant to the Commission Advance Program or on account of errors and omissions insurance coverage programs, and (5) in respect of any guarantee of primary obligations of a Legacy TIC Syndication existing on the date hereof, provided that such Contingent Obligations described in this clause (5) shall not exceed, in respect of any Legacy TIC Syndication, the amount set forth on Schedule 4.01(cc) with respect to such Legacy TIC Syndication,

     (G) Debt under any insurance premium financing arrangement entered into in the ordinary course of business, and

     (H) Debt for Borrowed Money which is (i) not secured by any Lien, (ii) on economic and any other terms satisfactory in all respects to the Administrative Agent in its sole discretion, and (iii) subordinated in all respects to the Obligations of the Loan Parties hereunder pursuant to a subordination agreement in form and substance satisfactory in all respects to the Administrative Agent in its sole discretion, provided, however, that the terms of such subordination agreement shall permit the obligor of such subordinated Debt to make payments in respect of such Debt if (x) no Default or Event of Default shall have occurred and be continuing at the time of such payment or would result therefrom, (y) prior to the date on which such payment is made the Borrower shall have satisfied the prepayment obligation set forth in Section 2.06(e)(iii) hereof, and (z) the funds used for such payment have been received by the Borrower as a result of the consummation of a recapitalization transaction in accordance with the Recapitalization Plan and are not funds generated by the business operations of the Borrower and its Subsidiaries.

     (I) other Debt subordinated to Debt incurred hereunder and/or Preferred Interests, in each case in amounts and on terms and conditions satisfactory to the Administrative Agent and Required Lenders;

provided, however, that notwithstanding the provisions of subsections (iii)(A) through (iii)(I) above, the aggregate amount of all Debt described in subsections (iii)(B), (iii)(C) and (iii)(D)(y) above that is secured by Liens shall not exceed $20,000,000 at any time outstanding.

     (c) Change in Nature of Business. Make, or permit any of its Subsidiaries to make, any material change in the nature of its business as carried on at the date hereof; or engage in, or permit any of its Subsidiaries to engage in, any business other than businesses that are reasonably related to the real estate services business, or other services businesses (in the scope that is currently operated by the “Business Services” unit of Grubb & Ellis Management Services, Inc.) or, with respect to any Limited Purpose Subsidiary, the ownership and operation of real property.

     (d) Mergers, Etc. Merge into or consolidate with any Person or permit any Person to merge into it, or permit any of its Subsidiaries to do so, except that:

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     (i) any Subsidiary of the Borrower may merge into or consolidate with any other Subsidiary of the Borrower, provided that in the case of any such merger or consolidation, the Person formed by such merger or consolidation shall be a Subsidiary of the Borrower, provided further that, in the case of any such merger or consolidation to which a Guarantor is a party, the Person formed by such merger or consolidation shall be a Guarantor;

     (ii) [Intentionally Omitted];

     (iii) in connection with any sale or other disposition permitted under Section 5.02(e) (other than clause (ii) thereof), any Subsidiary of the Borrower may merge into or consolidate with any other Person or permit any other Person to merge into or consolidate with it;

     (iv) [Intentionally Omitted]; and

     (v) any of the Borrower’s Subsidiaries may merge into the Borrower;

provided, however, that in each case, immediately before and after giving effect thereto, no Default shall have occurred and be continuing and, in the case of any such merger to which the Borrower is a party, the Borrower is the surviving corporation.

     (e) Sales, Etc., of Assets. Sell, lease, transfer or otherwise dispose of, or permit any of its Subsidiaries to sell, lease, transfer or otherwise dispose of, any assets, or grant any option or other right to purchase, lease or otherwise acquire any assets, except:

     (i) Dispositions of assets in the ordinary course of its business and the granting of any option or other right to purchase, lease or otherwise acquire assets in the ordinary course of its business;

     (ii) in a transaction authorized by Section 5.02(d);

     (iii) the sale or issuance of the Equity Interests of any Subsidiary to the Borrower or any Subsidiary;

     (iv) the Disposition of other assets by the Borrower or any Subsidiary so long as (A) the purchase price paid to the Borrower or such Subsidiary for such asset shall be not less than the fair market value of such asset at the time of such sale, (B) at least 95% of the purchase price for such asset shall be paid to the Borrower or such Subsidiary in cash or Cash Equivalents, (C) the aggregate purchase price paid to the Borrower and all of its Subsidiaries for such asset and all other assets sold by the Borrower and its Subsidiaries during the same Fiscal Year pursuant to this clause (iv) shall not exceed $1,000,000 and (D) the Net Cash Proceeds of such sale are applied to prepay Advances pursuant to Section 2.06(e); and

     (v) the (direct or indirect) sale of any Real Property Assets to an unaffiliated third party in accordance with Section 5.01(s) and Section 5.01(t) for fair market value and consideration consisting of at least 95% cash.

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     (f) Investments. Make or hold, or permit any of its Subsidiaries to make or hold, any Investment in any Person or assets, except (so long as such exceptions are consistent with the Approved Budget):

        (i) (A) equity Investments by the Borrower and its Subsidiaries in their Subsidiaries outstanding on the date hereof and (B) additional equity Investments in Loan Parties;

     (ii) Investments by the Borrower and its Subsidiaries in Cash Equivalents;

     (iii) Investments existing on the date hereof and described on Schedule 4.01(y) hereto;

     (iv) Investments by the Borrower in Hedge Agreements permitted under Section 5.01(o);

     (v) Investments consisting of intercompany Debt permitted under Section 5.02(b);

     (vi) Extensions of trade credit in the ordinary course of business;

        (vii) Promissory notes and other similar non-cash consideration received by the Borrower and any Loan Party in connection with the Dispositions permitted by Section 5.02(e);

        (viii) Loans and advances in the ordinary course of business to vendors or suppliers of the Borrower and any other Loan Party or relating to relocation expenses;

     (ix) [Intentionally Omitted]; and

        (x) Loans or other advances under the Commission Advance Program to, or on account of errors and omissions insurance premium payments for, employees and/or agents and in accordance with the Approved Budget.

     (g) Restricted Payments. Declare or pay any dividends, purchase, redeem, retire, defease or otherwise acquire for value any of its Equity Interests now or hereafter outstanding, return any capital to its stockholders, partners or members (or the equivalent Persons thereof) as such, make any distribution of assets, Equity Interests, obligations or securities to its stockholders, partners or members (or the equivalent Persons thereof) as such, or permit any of its Subsidiaries to do any of the foregoing, or permit any of its Subsidiaries to purchase, redeem, retire, defease or otherwise acquire for value any Equity Interests in the Borrower (collectively, “Restricted Payments”), except that, so long as no Default shall have occurred and be continuing at the time of any action described below or would result therefrom, any Loan Party may make Restricted Payments to another Loan Party.

     (h) Lease Obligations. Create, incur, assume or suffer to exist, or permit any of its Subsidiaries to create, incur, assume or suffer to exist, any obligations as lessee (i) for the rental or hire of real or personal property in connection with any sale and leaseback transaction, or (ii) for the rental or hire of other real or personal property of any kind (other than a lease for office space to be occupied by the Borrower or its Subsidiaries and leases entered into in the ordinary course of business for the benefit of tenants or owners of real property managed by the

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Borrower or its Subsidiaries to the extent any payments required to be made thereunder by the Borrower or its Subsidiaries are paid or promptly reimbursable by such tenants or owners) under leases or agreements to lease (including, without limitation, Capitalized Leases) having an original term of one year or more that would cause the direct and contingent liabilities of the Borrower and its Subsidiaries, on a Consolidated basis, in respect of all such obligations described in this clause (ii) to exceed $2,500,000 payable in any Measurement Period.

     (i) Amendments of Constitutive Documents. Amend, or permit any of its Subsidiaries to amend, its certificate of incorporation or bylaws or other constitutive documents, other than in connection with any such amendment required for the issuance of equity securities not in excess of the authorized capital of the Borrower or any Subsidiary as of the Effective Date.

     (j) Accounting Changes. Make or permit, or permit any of its Subsidiaries to make or permit, any change in (i) accounting policies or reporting practices, except as required by generally accepted accounting principles, or (ii) Fiscal Year.

     (k) Prepayments, Etc., of Debt. (i) Prepay, redeem, purchase, defease or otherwise satisfy prior to the scheduled maturity thereof in any manner, or make any payment in violation of any subordination terms of, any Debt, except (w) the prepayment of the Advances in accordance with the terms of this Agreement, (x) regularly scheduled or required repayments or redemptions of Existing Debt, (y) any prepayments or redemptions of Existing Debt in connection with a refunding or refinancing of such Existing Debt permitted by Section 5.02(b)(iii)(D) or (z) the prepayment of any Non-Recourse Debt in connection with the (direct or indirect) sale of any Investment in real property pursuant to Section 5.01(s), Section 5.01(t) or Section 5.02(e)(v), or (ii) amend, modify or change in any manner any term or condition of any Existing Debt, or permit any of its Subsidiaries to do any of the foregoing other than to prepay any Debt payable to the Borrower.

     (l) Negative Pledge. Enter into or suffer to exist, or permit any of its Subsidiaries to enter into or suffer to exist, any agreement prohibiting or conditioning the creation or assumption of any Lien upon any of its property or assets except (i) in favor of the Secured Parties or (ii) in connection with (A) any Existing Debt, (B) any purchase money Debt permitted by Section 5.02(b)(iii)(B), in each case solely to the extent that the agreement or instrument governing such Debt prohibits a Lien on the property subject thereto, (C) any Capitalized Lease permitted by Section 5.02(b)(iii)(C) solely to the extent that such Capitalized Lease prohibits a Lien on the property subject thereto, or (D) in connection with a lease of real property, the Borrower may grant the landlord, as security for its performance under the lease, a Lien on the Borrower’s tangible personal property physically located within the leased premises; provided, however, that the aggregate fair market value of such property pledged as collateral shall not exceed $100,000.

     (m) Partnerships, Etc. Except as provided for in the Approved Budget, become a general partner in any general or limited partnership or joint venture, or permit any of its Subsidiaries to do so; provided, however, that notwithstanding the foregoing, but subject to the limitations on Investments set forth in Section 5.02(f), the Borrower and any other Loan Party may (1) be a general or limited partner in any general or limited partnership, (2) be a member or manager of, or hold a limited liability company interest in, a limited liability company, (3) be a joint venturer or hold a joint venture interest in any joint venture or (4) maintain existing equity investments in real estate portfolios and Persons which own or manage commercial real estate (each a “Restricted Investment”), provided that each of the following requirements is met:

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        (i) the Loan Party making the Investment shall, to the extent permitted by applicable investment contracts and other documents relating to such Investment, grant and cause to be perfected a first priority security interest or other first lien position (except for Permitted Liens) of the Loan Party’s interest in the property constituting the Restricted Investment;

        (ii) the nature of the Investment and the Person or property subject to the Investment shall not result in the Loan Party becoming directly or contingently liable for any obligations of such Person or related to such property in excess of the amount of the Investment, nor shall the Investment constitute a direct investment by the Loan Party in real property or real property improvements;

        (iii) no Default exists at the time such Restricted Investment is made or would occur as a result of such Restricted Investment; and

        (iv) under no circumstances shall the aggregate amount of such Restricted Investments made after the Effective Date exceed $3,000,000.

     (n) Speculative Transactions. Engage, or permit any of its Subsidiaries to engage, in any transaction involving commodity options or futures contracts or any similar speculative transactions.

     (o) Formation of Subsidiaries. Organize or invest, or permit any of its Subsidiaries to organize or invest, in any new Subsidiary except (i) CFCs and special purpose vehicles organized in the ordinary course of business by the Borrower or its Subsidiaries, which may be capitalized, only to the extent contemplated (if at all) in the Approved Budget, in an amount not to exceed $100,000 individually and $300,000 in the aggregate, and (ii) as permitted under Section 5.02(f)(i), (v), or (vii).

     (p) Payment Restrictions Affecting Subsidiaries. Directly or indirectly, enter into or suffer to exist, or permit any of its Subsidiaries to enter into or suffer to exist, any agreement or arrangement limiting the ability of any of its Subsidiaries to declare or pay dividends or other distributions in respect of its Equity Interests or repay or prepay any Debt owed to, make loans or advances to, or otherwise transfer assets to or invest in, the Borrower or any Subsidiary of the Borrower (whether through a covenant restricting dividends, loans, asset transfers or investments, a financial covenant or otherwise), except (i) the Loan Documents, (ii) any agreement or instrument evidencing Existing Debt, and (iii) any agreement in effect at the time such Subsidiary becomes a Subsidiary of the Borrower, so long as such agreement was not entered into solely in contemplation of such Person becoming a Subsidiary of the Borrower.

     (q) Amendment, Etc., of Material Contracts. Cancel or terminate any Material Contract or consent to or accept any cancellation or termination thereof, amend or otherwise modify any Material Contract or give any consent, waiver or approval thereunder, waive any default under or breach of any Material Contract, agree in any manner to any other amendment, modification or change of any term or condition of any Material Contract or take any other action in connection with any Material Contract that would materially impair the value of the interest or rights of any Loan Party thereunder or that would materially impair the interest or rights of the Administrative Agent or any Lender Party, or permit any of its Subsidiaries to do any of the foregoing.

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     (r) Bonuses. Except in each case to the extent provided (if at all) in the Approved Budget, make cash payments or make commitments to make cash payments in connection with the hiring or engagement of officers, employees or representatives of the Borrower or any of its Subsidiaries or make cash payments or make commitments to make cash payments of bonuses or similar cash payments to any employee, executive or consultant of the Borrower or any of its Subsidiaries.

     (s) Subsidiary Debt. Cause or permit any Subsidiaries of the Borrower which are neither Guarantors nor Limited Purpose Subsidiaries to create, assume, incur or suffer to exist any Debt.

     (t) Capital Expenditures. Other than in accordance with the Approved Budget, make any Capital Expenditure or create, incur, assume or suffer to exist any obligation to make any Capital Expenditure, or permit any of its Subsidiaries to do any of the foregoing.

     (u) Legacy TIC Syndication. Make any guarantees or special payments related to any Legacy TIC Syndication other than in accordance with the Approved Budget.

     (v) ACH Payments. Make any payment, deposit, transfer or other disbursement to, or through, any ACH Deposit Account (as such term is defined in the Security Agreement), other than in accordance with the Approved Budget.

     (w) Approved Budget. Amend or otherwise modify, or permit any of its Subsidiaries to amend or otherwise modify, the Approved Budget without the prior written consent of the Administrative Agent and the Required Lenders.

     (x) Recapitalization Plan. Amend or otherwise modify, or permit any of its Subsidiaries to amend or otherwise modify, the Recapitalization Plan without the prior written consent of the Administrative Agent and the Required Lenders.

     (y) Fixed Charges. Create, incur, assume or suffer to exist, or permit any of its Subsidiaries to create, incur, assume or suffer to exist, any Fixed Charges other than in accordance with the Approved Budget.

     (z) Inactive Subsidiaries. Conduct, or permit its Subsidiaries to conduct, any new business in the Inactive Subsidiaries, or transfer, or permit its Subsidiaries to transfer, any Collateral or any other assets into the Inactive Subsidiaries without the prior written consent of the Administrative Agent and the Required Lenders.

   SECTION 5.03 Reporting Requirements. So long as any Advance or any other Obligation of any Loan Party under any Loan Document shall remain unpaid, any Letter of Credit shall be outstanding or any Lender Party shall have any Commitment hereunder, the Borrower will furnish to the Administrative Agent and the Lender Parties:

        (a) Default Notice. As soon as possible and in any event within three (3) Business Days after the occurrence of each Default or any event, development or occurrence reasonably likely to have a Material Adverse Effect continuing on the date of such statement, a statement of the chief financial officer of the Borrower setting forth details of such Default and the action that the Borrower has taken and proposes to take with respect thereto.

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     (b) Annual Financials. As soon as available and in any event no later than one (1) Business Day after the Borrower files its annual report on Form 10-K with the United States Securities and Exchange Commission, but in no event later than 105 days after the end of each Fiscal Year (provided, however, the Borrower shall provide the items required to be delivered under this Section 5.03(b) solely with respect to the year 2008 by May 22, 2009), a copy of the annual audit report for such year for the Borrower and its Subsidiaries on a Consolidated basis, including therein a Consolidated balance sheet of the Borrower and its Subsidiaries as of the end of such Fiscal Year and a Consolidated statement of income and a Consolidated statement of cash flows of the Borrower and its Subsidiaries for such Fiscal Year, in each case accompanied by an unqualified opinion of Ernst & Young LLP or other independent public accountants of recognized standing acceptable to the Required Lenders, together with (i) a certificate of such accounting firm to the Lender Parties stating that in the course of the regular audit of the business of the Borrower and its Subsidiaries, which audit was conducted by such accounting firm in accordance with generally accepted auditing standards, such accounting firm has obtained no knowledge that a Default has occurred and is continuing, or if, in the opinion of such accounting firm, a Default has occurred and is continuing, a statement as to the nature thereof, (ii) a Compliance Certificate, provided that in the event of any change in generally accepted accounting principles used in the preparation of such financial statements, the Borrower shall also provide a statement of reconciliation conforming such financial statements to GAAP, and (iii) a certificate of the Chief Financial Officer of the Borrower stating that no Default has occurred and is continuing or, if a Default has occurred and is continuing, a statement as to the nature thereof and the action that the Borrower has taken and proposes to take with respect thereto.

     (c) Quarterly Financials. As soon as available and in any event no later than one (1) Business Day after the Borrower files its quarterly report on Form 10-Q with the United States Securities and Exchange Commission, but in no event later than 50 days after the end of each of the first three quarters of each Fiscal Year, a Consolidated balance sheet of the Borrower and its Subsidiaries as of the end of such quarter and a Consolidated statement of income and a Consolidated statement of cash flows of the Borrower and its Subsidiaries for the period commencing at the end of the previous fiscal quarter and ending with the end of such fiscal quarter and a Consolidated statement of income and a Consolidated statement of cash flows of the Borrower and its Subsidiaries for the period commencing at the end of the previous Fiscal Year and ending with the end of such quarter, setting forth in each case in comparative form the corresponding figures for the corresponding date or period of the preceding Fiscal Year, all in reasonable detail and duly certified (subject to normal year-end audit adjustments) by the Chief Financial Officer of the Borrower as having been prepared in accordance with GAAP, together with (i) a certificate of said officer stating that no Default has occurred and is continuing or, if a Default has occurred and is continuing, a statement as to the nature thereof and the action that the Borrower has taken and proposes to take with respect thereto, and (ii) a Compliance Certificate, provided that in the event of any change in generally accepted accounting principles used in the preparation of such financial statements, the Borrower shall also provide a statement of reconciliation conforming such financial statements to GAAP.

     (d) Monthly Financials. As soon as possible and in any event within thirty (30) days after the end of each calendar month, a Consolidated balance sheet of the Borrower and its Subsidiaries as of the end of the most recently completed month and a Consolidated statement of income and a Consolidated statement of cash flows of the Borrower and its Subsidiaries for the period commencing at the end of the previous month and ending with the end of such month and a Consolidated statement of income and a Consolidated statement of cash flows of the Borrower and its Subsidiaries for the period commencing at the end of the previous Fiscal

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Year and ending with the end of such month, and unaudited statements of gross revenues and operating and other expenses with respect to each parcel of real property owned or held by any Limited Purpose Subsidiary, in each case in form and detail satisfactory to the Administrative Agent, setting forth in each case in comparative form the corresponding figures for the corresponding month of the preceding Fiscal Year, all in reasonable detail and duly certified by the Chief Financial Officer of the Borrower.

     (e) Budget Reconciliation and Cash Flow Variance. Commencing with the calendar week ending May 22, 2009, as soon as available and in any event not later than the second Business Day of each calendar week, a budget reconciliation and cash flow variance report covering the period commencing with the week in which the Effective Date occurs and ending on the last day of the calendar week immediately preceding delivery of the report, in substantially the form of Exhibit H hereto and otherwise in detail, form and substance satisfactory in all respects to the Administrative Agent and the Required Lenders (the “Budget Reconciliation and Cash Flow Variance Report”), reconciling all revenues as well as all payments and expenditures made by the Borrower and its Subsidiaries with the Approved Budget together with (i) a cash balance report (showing day-end balances) and (ii) a weekly cumulative cash flow variance report showing not more than the greater of (x) a 15% cumulative negative variance between actual cumulative net cash flow (consisting of total cash revenues less total cash expenditures) and the cumulative net cash flow projected in the Approved Budget for the period covered thereby, or (y) a $1,500,000 cumulative negative variance between actual cumulative net cash flow and the cumulative net cash flow projected in the Approved Budget for the period covered thereby (the greater of (x) or (y), the “Permitted Variance”); provided, however, that the Borrower’s failure to comply with the Permitted Variance in any week (each, a “Budget Non-Compliance Event”) shall not constitute an Event of Default hereunder unless and until Budget Non-Compliance Events shall have occurred for three (3) consecutive calendar weeks. For avoidance of doubt and for illustrative purposes only, the Borrower shall be in compliance with clause (x) above for a subject calendar week if the Approved Budget through the end of the subject calendar week shall project cumulative net cash flow of $10,000,000, and the actual cumulative net cash flow of the Borrower and its Subsidiaries for the period from the Effective Date through the end of the subject calendar week shall not be less than $8,500,000.

     (f) Approved Budget and Cash Flow Projection. (i) As soon as available and in any event not later than 10 days prior to the Effective Date, a consolidated, detailed monthly budget prepared on a line-item basis for calendar months April 2009 through December 2009, in detail, form and substance satisfactory to the Administrative Agent and the Required Lenders showing all revenues projected to be received and all expenditures projected to be made by the Borrower and its Subsidiaries in the course of their business operations for the period covered thereby (such cash flow projection and budget, as modified or replaced from time to time with the approval of the Administrative Agent and the Required Lenders, including without limitation any Revised Approved Budget pursuant to Section 2.06(e)(iv), the “Approved Budget”), and (ii) as soon as available and in any event not earlier than 60 days and not later than 30 days prior to the end of 2009 and each subsequent calendar year, a proposed consolidated, detailed monthly budget prepared on a line-item basis for the following calendar year, in detail, form and substance satisfactory to the Administrative Agent and the Required Lenders showing all revenues projected to be received and all expenditures projected to be made by the Borrower and its Subsidiaries in the course of their business operations for the period covered thereby. Administrative Agent and the Required Lenders shall review each proposed budget after receipt thereof and Borrower shall promptly make any and all changes as Administrative Agent or the Required Lenders may request. As soon as available, Borrower shall provide to the Lenders

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significant revisions, if any, of the Approved Budget or any subsequent budget and projections. Any amendments to or replacements of the Approved Budget shall be required to be approved by the Administrative Agent and the Required Lenders. The initial Approved Budget is attached as Schedule VII hereto.

     (g) Recapitalization Plan Status Reports. Periodically in accordance with the Recapitalization Plan, status reports with respect to implementation of the Recapitalization Plan in detail, form and substance satisfactory in all respects to the Administrative Agent and the Required Lenders. It is understood and agreed that the Borrower’s compliance with the reporting requirements set forth on page 3 of the Recapitalization Plan shall satisfy this Section 5.03(g) so long as such reporting is rendered in accordance with the Recapitalization Plan and is in detail, form and substance satisfactory in all respects to the Administrative Agent and the Required Lenders.

     (h) [Intentionally Omitted].

     (i) Litigation. Promptly after the commencement thereof, notice of all actions, suits, investigations, litigation and proceedings before any Governmental Authority affecting any Loan Party or any of its Subsidiaries of the type described in Section 4.01(f), and promptly after the occurrence thereof, notice of any adverse change in the status or the financial effect on any Loan Party or any of its Subsidiaries of the Disclosed Litigation from that described on Schedule 4.01(f) hereto.

     (j) Securities Reports. Promptly after the sending or filing thereof, copies of all proxy statements, financial statements and reports that any Loan Party or any of its Subsidiaries sends to its stockholders, and copies of all regular, periodic and special reports, and all registration statements, that any Loan Party or any of its Subsidiaries files with the Securities and Exchange Commission or any governmental authority that may be substituted therefor, or with any national securities exchange.

     (k) Agreement Notices. (i) Promptly upon (A) receipt of any notice, request or other document received by any Loan Party or any of its Subsidiaries under or pursuant to any Material Contract or instrument, indenture, loan or credit or similar agreement regarding or related to any breach or default by any party thereto or any other event that could materially impair the value of the interests or the rights of any Loan Party or otherwise have a Material Adverse Effect or (B) the granting of any amendment, modification or waiver of any provision of any Material Contract or instrument, indenture, loan or credit or similar agreement, that could materially impair the value of the interests or rights of any Loan Party or otherwise have a Material Adverse Effect, the Company shall give written notice to the Administrative Agent containing a detailed description thereof, and, (ii) from time to time upon request by the Administrative Agent, such information and reports regarding the Material Contracts and such instruments, indentures and loan and credit and similar agreements as the Administrative Agent may reasonably request.

     (l) ERISA. (i) ERISA Events and ERISA Reports. (A) Promptly and in any event within 10 days after any Loan Party or any ERISA Affiliate knows or has reason to know that any ERISA Event has occurred, a statement of the Chief Financial Officer of the Borrower describing such ERISA Event and the action, if any, that such Loan Party or such ERISA Affiliate has taken and proposes to take with respect thereto and (B) on the date any records, documents or other information must be furnished to the PBGC with respect to any Plan pursuant to Section 4010 of ERISA, a copy of such records, documents and information.

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       (ii) Plan Terminations. Promptly and in any event within two Business Days after receipt thereof by any Loan Party or any ERISA Affiliate, copies of each notice from the PBGC stating its intention to terminate any Plan or to have a trustee appointed to administer any Plan.

       (iii) Plan Annual Reports. At the time of the delivery of the Compliance Certificate pursuant to Section 5.03(b) or promptly upon the request of any Lender Party, copies of each Schedule B (Actuarial Information) to the annual report (Form 5500 Series) with respect to each Plan, as applicable.

       (iv) Multiemployer Plan Notices. Promptly and in any event within five Business Days after receipt thereof by any Loan Party or any ERISA Affiliate from the sponsor of a Multiemployer Plan, copies of each notice concerning (A) the imposition of Withdrawal Liability by any such Multiemployer Plan, (B) the reorganization or termination, within the meaning of Title IV of ERISA, of any such Multiemployer Plan or (C) the amount of liability incurred, or that may be incurred, by such Loan Party or any ERISA Affiliate in connection with any event described in clause (A) or (B).

     (m) Environmental Conditions. Promptly after the assertion or occurrence thereof, notice of any Environmental Action against or of any noncompliance by any Loan Party or any of its Subsidiaries with any Environmental Law or Environmental Permit that could (i) reasonably be expected to have a Material Adverse Effect or (ii) cause any property described in the Mortgages to be subject to any restrictions on ownership, occupancy, use or transferability under any Environmental Law.

     (n) Other Information. Such other information respecting the business, condition (financial or otherwise), operations, performance, properties or prospects of any Loan Party or any of its Subsidiaries as the Administrative Agent, or any Lender Party through the Administrative Agent, may from time to time request.

   SECTION 5.04 [Intentionally Omitted]

ARTICLE VI

EVENTS OF DEFAULT

   SECTION 6.01 Events of Default. If any of the following events (“Events of Default”) shall occur and be continuing:

     (a) (i) the Borrower shall fail to pay any principal of any Advance when the same shall become due and payable or (ii) the Borrower shall fail to pay any interest on any Advance, or any Loan Party shall fail to make any other payment under any Loan Document, in each case under this clause (ii) within three days after the same shall become due and payable; or

     (b) any representation or warranty made by any Loan Party (or any of its officers) under or in connection with any Loan Document shall prove to have been incorrect in any material respect when made; or

     (c) the Borrower shall fail to perform or observe any term, covenant or agreement contained in Section 2.06 (other than Section 2.06(e)(iii)), 2.14, 5.01 (other than to the extent

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provided in the proviso to Section 5.01(x) and subject to compliance with the requirements of such proviso), 5.02 or 5.03; or

     (d) any Loan Party shall fail to perform or observe any other term, covenant or agreement contained in any Loan Document on its part to be performed or observed if such failure shall remain unremedied for 10 Business Days after the earlier of the date on which (i) any officer of a Loan Party becomes aware of such failure or (ii) written notice thereof shall have been given to the Borrower by the Administrative Agent or any Lender Party; or

     (e) any Loan Party or any of its Subsidiaries shall fail to pay any principal of, premium or interest on or any other amount payable in respect of any Debt of such Loan Party or such Subsidiary that is outstanding in a principal amount (or, in the case of any Hedge Agreement, an Agreement Value) of at least $500,000 either individually or in the aggregate for all such Loan Parties and Subsidiaries (but excluding Debt outstanding hereunder), when the same becomes due and payable (whether by scheduled maturity, required prepayment, acceleration, demand or otherwise), and such failure shall continue after the applicable grace period, if any, specified in the agreement or instrument relating to such Debt; or any other event shall occur or condition shall exist under any agreement or instrument relating to any such Debt and shall continue after the applicable grace period, if any, specified in such agreement or instrument, if the effect of such event or condition is to accelerate, or to permit the acceleration of, the maturity of such Debt or otherwise to cause, or to permit the holder thereof to cause, such Debt to mature; or any such Debt shall be declared to be due and payable or required to be prepaid or redeemed (other than by a regularly scheduled required prepayment or redemption), purchased or defeased, or an offer to prepay, redeem, purchase or defease such Debt shall be required to be made, in each case prior to the stated maturity thereof; or

     (f) any Loan Party or any of its Subsidiaries shall generally not pay its debts as such debts become due, or shall admit in writing its inability to pay its debts generally, or shall make a general assignment for the benefit of creditors; or any proceeding shall be instituted by or against any Loan Party or any of its Subsidiaries seeking to adjudicate it a bankrupt or insolvent, or seeking liquidation, winding up, reorganization, arrangement, adjustment, protection, relief, or composition of it or its debts under any law relating to bankruptcy, insolvency or reorganization or relief of debtors, or seeking the entry of an order for relief or the appointment of a receiver, trustee or other similar official for it or for any substantial part of its property and, in the case of any such proceeding instituted against it (but not instituted by it) that is being diligently contested by it in good faith, either such proceeding shall remain undismissed or unstayed for a period of 30 days or any of the actions sought in such proceeding (including, without limitation, the entry of an order for relief against, or the appointment of a receiver, trustee, custodian or other similar official for, it or any substantial part of its property) shall occur; or any Loan Party or any of its Subsidiaries shall take any corporate action to authorize any of the actions set forth above in this subsection (f); or

     (g) any judgments or orders, either individually or in the aggregate, for the payment of money in excess of $500,000 shall be rendered against any Loan Party or any of its Subsidiaries and either (i) enforcement proceedings shall have been commenced by any creditor upon such judgment or order or (ii) there shall be any period of 10 consecutive days during which a stay of enforcement of such judgment or order, by reason of a pending appeal or otherwise, shall not be in effect; provided, however, that any such judgment or order shall not give rise to an Event of Default under this Section 6.01(g) if and for so long as (A) the amount of such judgment or order is covered by a valid and binding policy of insurance between the defendant and the insurer, which shall be rated at least “A” by A.M. Best Company, covering full payment thereof

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and (B) such insurer has been notified, and has not disputed the claim made for payment, of the amount of such judgment or order; or

     (h) any non-monetary judgment or order shall be rendered against any Loan Party or any of its Subsidiaries that is reasonably likely to have a Material Adverse Effect, and there shall be any period of 10 consecutive days during which a stay of enforcement of such judgment or order, by reason of a pending appeal or otherwise, shall not be in effect; or

     (i) any provision of any Loan Document after delivery thereof pursuant to Section 3.01 or 5.01(j) shall for any reason cease to be valid and binding on or enforceable against any Loan Party party to it, or any such Loan Party shall so state in writing; or

     (j) any Collateral Document or financing statement after delivery thereof pursuant to Section 3.01 or 5.01(j) shall for any reason (other than pursuant to the terms thereof) cease to create a valid and perfected first priority lien on and security interest in the Collateral purported to be covered thereby; or

     (k) an “Event of Default” (as defined in any Mortgage) shall have occurred and be continuing; or

     (l) a Change of Control shall occur; or

     (m) any ERISA Event shall have occurred with respect to a Plan and the sum (determined as of the date of occurrence of such ERISA Event) of the Insufficiency of such Plan and the Insufficiency of any and all other Plans with respect to which an ERISA Event shall have occurred and then exist (or the liability of the Loan Parties and the ERISA Affiliates related to such ERISA Event) exceeds $500,000; or

     (n) any Loan Party or any ERISA Affiliate shall have been notified by the sponsor of a Multiemployer Plan that it has incurred Withdrawal Liability to such Multiemployer Plan in an amount that, when aggregated with all other amounts required to be paid to Multiemployer Plans by the Loan Parties and the ERISA Affiliates as Withdrawal Liability (determined as of the date of such notification), exceeds $500,000 or requires payments exceeding $250,000 per annum; or

     (o) any Loan Party or any ERISA Affiliate shall have been notified by the sponsor of a Multiemployer Plan that such Multiemployer Plan is in reorganization or is being terminated, within the meaning of Title IV of ERISA, and as a result of such reorganization or termination the aggregate annual contributions of the Loan Parties and the ERISA Affiliates to all Multiemployer Plans that are then in reorganization or being terminated have been or will be increased over the amounts contributed to such Multiemployer Plans for the plan years of such Multiemployer Plans immediately preceding the plan year in which such reorganization or termination occurs by an amount exceeding $250,000; or

     (p) there shall occur any Material Adverse Change;

then, and in any such event, the Administrative Agent (i) shall at the request, or may with the consent, of the Required Lenders, by notice to the Borrower, declare the Commitments of each Lender Party and the obligation of each Lender Party to make Advances (other than Letter of Credit Advances by the Issuing Bank or a Revolving Credit B Lender pursuant to Section 2.03(c)) to be terminated, whereupon the same shall forthwith terminate, and (ii) shall at the request, or may with the consent, of the Required Lenders,

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(A) by notice to the Borrower, declare the Notes, all interest thereon and all other amounts payable under this Agreement and the other Loan Documents to be forthwith due and payable, whereupon the Notes, all such interest and all such amounts shall become and be forthwith due and payable, without presentment, demand, protest or further notice of any kind, all of which are hereby expressly waived by the Borrower, and (B) by notice to each party required under the terms of any agreement in support of which a Letter of Credit is issued, request that all Obligations under such agreement be declared to be due and payable; provided, however, that in the event of an actual or deemed entry of an order for relief with respect to the Borrower under the Federal Bankruptcy Code, (x) the Commitments of each Lender Party and the obligation of each Lender Party to make Advances (other than Letter of Credit Advances by the Issuing Bank or a Revolving Credit B Lender pursuant to Section 2.03(c)) shall automatically be terminated and (y) the Notes, all such interest and all such amounts shall automatically become and be due and payable, without presentment, demand, protest or any notice of any kind, all of which are hereby expressly waived by the Borrower.

     SECTION 6.02 Actions in Respect of the Letters of Credit upon Default. If at any time the Administrative Agent determines that any funds held in the L/C Collateral Account are subject to any right or claim of any Person other than the Administrative Agent and the Lender Parties or that the total amount of such funds is less than the aggregate Available Amount of all Letters of Credit, the Borrower will, forthwith upon demand by the Administrative Agent, pay to the Administrative Agent, as additional funds to be deposited and held in the L/C Collateral Account, an amount equal to the excess of (a) such aggregate Available Amount over (b) the total amount of funds, if any, then held in the L/C Collateral Account that the Administrative Agent determines to be free and clear of any such right and claim. Upon the drawing of any Letter of Credit for which funds are on deposit in the L/C Collateral Account, such funds shall be applied to reimburse the Issuing Bank or Revolving Credit B Lenders, as applicable, to the extent permitted by applicable law. After each Letter of Credit issued or deemed to have been issued hereunder expires or terminates without being drawn upon, and/or after the Letter of Credit Advances with respect to each Letter of Credit have been paid, amounts on deposit in the L/C Collateral Account (if any) shall be applied by the Administrative Agent to pay other outstanding amounts due under the Loan Documents or shall be returned to the Borrower.

ARTICLE VII

THE ADMINISTRATIVE AGENT

     SECTION 7.01 Authorization and Action. (a) Each Lender Party (in its capacities as a Lender, the Issuing Bank (if applicable) and on behalf of itself and its Affiliates as potential Hedge Banks) hereby appoints and authorizes the Administrative Agent to take such action as agent on its behalf and to exercise such powers and discretion under this Agreement and the other Loan Documents as are delegated to the Administrative Agent by the terms hereof and thereof, together with such powers and discretion as are reasonably incidental thereto. As to any matters not expressly provided for by the Loan Documents (including, without limitation, enforcement or collection of the Notes), the Administrative Agent shall not be required to exercise any discretion or take any action, but shall be required to act or to refrain from acting (and shall be fully protected in so acting or refraining from acting) upon the instructions of the Required Lenders, and such instructions shall be binding upon all Lender Parties and all holders of Notes; provided, however, that no Administrative Agent shall be required to take any action that exposes the Administrative Agent to personal liability or that is contrary to this Agreement or applicable law. The Administrative Agent agrees to give to each Lender Party prompt notice of each notice given to it by the Borrower pursuant to the terms of this Agreement.

          (b) In furtherance of the foregoing, each Lender Party (in its capacities as a Lender, the Issuing Bank (if applicable) and on behalf of itself and its Affiliates as potential Hedge

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Banks) hereby appoints and authorizes the Administrative Agent to act as the agent of such Lender Party for purposes of acquiring, holding and enforcing any and all Liens on Collateral granted by any of the Loan Parties to secure any of the Secured Obligations, together with such powers and discretion as are reasonably incidental thereto. In this connection, the Administrative Agent (and any Supplemental Collateral Agent appointed by the Administrative Agent pursuant to Section 7.01(c) for purposes of holding or enforcing any Lien on the Collateral (or any portion thereof) granted under the Collateral Documents, or for exercising any rights or remedies thereunder at the direction of the Administrative Agent), shall be entitled to the benefits of this Article VII (including, without limitation, Section 7.05 as though such Supplemental Collateral Agent was the “Administrative Agent” under the Loan Documents) as if set forth in full herein with respect thereto.

          (c) The Administrative Agent may execute any of its duties under this Agreement or any other Loan Document (including for purposes of holding or enforcing any Lien on the Collateral (or any portion thereof) granted under the Collateral Documents or of exercising any rights and remedies thereunder at the direction of the Administrative Agent) by or through agents, employees or attorneys-in-fact and shall be entitled to advice of counsel and other consultants or experts concerning all matters pertaining to such duties. The Administrative Agent may also from time to time, when the Administrative Agent deems it to be necessary or desirable, appoint one or more trustees, co-trustees, collateral co-agents, collateral subagents or attorneys-in-fact (each, a “Supplemental Collateral Agent”) with respect to all or any part of the Collateral; provided, however, that no such Supplemental Administrative Agent shall be authorized to take any action with respect to any Collateral unless and except to the extent expressly authorized in writing by the Administrative Agent. Should any instrument in writing from the Borrower or any other Loan Party be required by any Supplemental Collateral Agent so appointed by the Administrative Agent to more fully or certainly vest in and confirm to such Supplemental Collateral Agent such rights, powers, privileges and duties, the Borrower shall, or shall cause such Loan Party to, execute, acknowledge and deliver any and all such instruments promptly upon request by the Administrative Agent. If any Supplemental Collateral Agent, or successor thereto, shall die, become incapable of acting, resign or be removed, all rights, powers, privileges and duties of such Supplemental Collateral Agent, to the extent permitted by law, shall automatically vest in and be exercised by the Administrative Agent until the appointment of a new Supplemental Collateral Agent. No Administrative Agent shall be responsible for the negligence or misconduct of the Administrative Agent, attorney-in-fact or Supplemental Collateral Agent that it selects in accordance with the foregoing provisions of this Section 7.01(c) in the absence of the Administrative Agent’s gross negligence or willful misconduct.

     SECTION 7.02 Administrative Agent’s Reliance, Etc. Neither the Administrative Agent nor any of its respective directors, officers, agents or employees shall be liable for any action taken or omitted to be taken by it or them under or in connection with the Loan Documents, except for its or their own gross negligence or willful misconduct. Without limitation of the generality of the foregoing, the Administrative Agent: (a) may treat the payee of any Note as the holder thereof until, in the case of the Administrative Agent, the Administrative Agent receives and accepts an Assignment and Acceptance entered into by the Lender that is the payee of such Note, as assignor, and an Eligible Assignee, as assignee, or, in the case of any other Administrative Agent, the Administrative Agent has received notice from the Administrative Agent that it has received and accepted such Assignment and Acceptance, in each case as provided in Section 8.07; (b) may consult with legal counsel (including counsel for any Loan Party), independent public accountants and other experts selected by it and shall not be liable for any action taken or omitted to be taken in good faith by it in accordance with the advice of such counsel, accountants or experts; (c) makes no warranty or representation to any Lender Party and shall not be responsible to any Lender Party for any statements, warranties or representations (whether written or oral) made in or in connection with the Loan Documents; (d) shall not have any duty to ascertain or to inquire as to the performance, observance or satisfaction of any of the terms, covenants or conditions of any Loan

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Document on the part of any Loan Party or the existence at any time of any Default under the Loan Documents or to inspect the property (including the books and records) of any Loan Party; (e) shall not be responsible to any Lender Party for the due execution, legality, validity, enforceability, genuineness, sufficiency or value of, or the perfection or priority of any lien or security interest created or purported to be created under or in connection with, any Loan Document or any other instrument or document furnished pursuant thereto; and (f) shall incur no liability under or in respect of any Loan Document by acting upon any notice, consent, certificate or other instrument or writing (which may be by telegram, telecopy or attached to electronic mail) believed by it to be genuine and signed or sent by the proper party or parties.

     SECTION 7.03 DBTCA and Affiliates. With respect to its Commitments, the Advances made by it and the Notes issued to it, DBTCA shall have the same rights and powers under the Loan Documents as any other Lender Party and may exercise the same as though it were not the Administrative Agent; and the term “Lender Party” or “Lender Parties” shall, unless otherwise expressly indicated, include DBTCA in its individual capacity. DBTCA and its affiliates may accept deposits from, lend money to, act as trustee under indentures of, accept investment banking engagements from and generally engage in any kind of business with, any Loan Party, any of its Subsidiaries and any Person that may do business with or own securities of any Loan Party or any such Subsidiary, all as if DBTCA was not the Administrative Agent and without any duty to account therefor to the Lender Parties. The Administrative Agent shall not have any duty to disclose any information obtained or received by it or any of its Affiliates relating to any Loan Party or any of its Subsidiaries to the extent such information was obtained or received in any capacity other than as the Administrative Agent.

     SECTION 7.04 Lender Party Credit Decision. Each Lender Party acknowledges that it has, independently and without reliance upon the Administrative Agent or any other Lender Party and based on the financial statements referred to in Section 4.01 and such other documents and information as it has deemed appropriate, made its own credit analysis and decision to enter into this Agreement. Each Lender Party also acknowledges that it will, independently and without reliance upon the Administrative Agent or any other Lender Party and based on such documents and information as it shall deem appropriate at the time, continue to make its own credit decisions in taking or not taking action under this Agreement.

     SECTION 7.05 Indemnification. (a) Each Lender Party severally agrees to indemnify the Administrative Agent (to the extent not promptly reimbursed by the Borrower) from and against such Lender Party’s ratable share (determined as provided below) of any and all liabilities, obligations, losses, damages, penalties, actions, judgments, suits, costs, expenses or disbursements of any kind or nature whatsoever that may be imposed on, incurred by, or asserted against the Administrative Agent in any way relating to or arising out of the Loan Documents or any action taken or omitted by the Administrative Agent under the Loan Documents (collectively, the “Indemnified Costs”); provided, however, that no Lender Party shall be liable for any portion of such liabilities, obligations, losses, damages, penalties, actions, judgments, suits, costs, expenses or disbursements resulting from the Administrative Agent’s gross negligence or willful misconduct as found in a final, non-appealable judgment by a court of competent jurisdiction. Without limitation of the foregoing, each Lender Party agrees to reimburse the Administrative Agent promptly upon demand for its ratable share of any costs and expenses (including, without limitation, fees and expenses of counsel) payable by the Borrower under Section 8.04, to the extent that the Administrative Agent is not promptly reimbursed for such costs and expenses by the Borrower. In the case of any investigation, litigation or proceeding giving rise to any Indemnified Costs, this Section 7.05 applies whether any such investigation, litigation or proceeding is brought by any Lender Party or any other Person.

          (b) Each Lender Party severally agrees to indemnify the Issuing Bank (to the extent not promptly reimbursed by the Borrower) from and against such Lender Party’s ratable share (determined as

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provided below) of any and all liabilities, obligations, losses, damages, penalties, actions, judgments, suits, costs, expenses or disbursements of any kind or nature whatsoever that may be imposed on, incurred by, or asserted against the Issuing Bank in any way relating to or arising out of the Loan Documents or any action taken or omitted by the Issuing Bank under the Loan Documents; provided, however, that no Lender Party shall be liable for any portion of such liabilities, obligations, losses, damages, penalties, actions, judgments, suits, costs, expenses or disbursements resulting from the Issuing Bank’s gross negligence or willful misconduct as found in a final, non-appealable judgment by a court of competent jurisdiction. Without limitation of the foregoing, each Lender Party agrees to reimburse the Issuing Bank promptly upon demand for its ratable share of any costs and expenses (including, without limitation, fees and expenses of counsel) payable by the Borrower under Section 8.04, to the extent that the Issuing Bank is not promptly reimbursed for such costs and expenses by the Borrower.

          (c) For purposes of this Section 7.05, the Lender Parties’ respective ratable shares of any amount shall be determined, at any time, according to the sum of (i) the aggregate principal amount of the Advances outstanding at such time and owing to the respective Lender Parties, (ii) their respective Pro Rata Shares of the aggregate Available Amount of all Letters of Credit outstanding at such time, and (iii) their respective Unused Revolving Credit B Commitments at such time, provided that the aggregate principal amount of Letter of Credit Advances owing to the Issuing Bank shall be considered to be owed to the Revolving Credit B Lenders ratably in accordance with their respective Revolving Credit B Commitments. The failure of any Lender Party to reimburse the Administrative Agent or the Issuing Bank, as the case may be, promptly upon demand for its ratable share of any amount required to be paid by the Lender Parties to the Administrative Agent or the Issuing Bank, as the case may be, as provided herein shall not relieve any other Lender Party of its obligation hereunder to reimburse the Administrative Agent or the Issuing Bank, as the case may be, for its ratable share of such amount, but no Lender Party shall be responsible for the failure of any other Lender Party to reimburse the Administrative Agent or the Issuing Bank, as the case may be, for such other Lender Party’s ratable share of such amount. Without prejudice to the survival of any other agreement of any Lender Party hereunder, the agreement and obligations of each Lender Party contained in this Section 7.05 shall survive the payment in full of principal, interest and all other amounts payable hereunder and under the other Loan Documents.

     SECTION 7.06 Successor Administrative Agents. The Administrative Agent may resign as to any or all of the Facilities at any time by giving written notice thereof to the Lender Parties and the Borrower and may be removed as to all of the Facilities at any time with or without cause by the Required Lenders; provided, however, that any removal of the Administrative Agent will not be effective until it has also been replaced as Letter of Credit Issuing Bank and released from all of its obligations in respect thereof. Upon any such resignation or removal, the Required Lenders shall have the right to appoint a successor Administrative Agent as to such of the Facilities as to which the Administrative Agent has resigned or been removed. If no successor Administrative Agent shall have been so appointed by the Required Lenders, and shall have accepted such appointment, within 30 days after the retiring Administrative Agent’s giving of notice of resignation or the Required Lenders’ removal of the retiring Administrative Agent, then the retiring Administrative Agent may, on behalf of the Lender Parties, appoint a successor Administrative Agent, which shall be a commercial bank organized under the laws of the United States or of any State thereof and having a combined capital and surplus of at least $250,000,000. Upon the acceptance of any appointment as Administrative Agent hereunder by a successor Administrative Agent as to all of the Facilities and upon the execution and filing or recording of such financing statements, or amendments thereto, and such amendments or supplements to the Mortgages, and such other instruments or notices, as may be necessary or desirable, or as the Required Lenders may request, in order to continue the perfection of the Liens granted or purported to be granted by the Collateral Documents, such successor Administrative Agent shall succeed to and become vested with all the rights, powers, discretion, privileges and duties of the retiring Administrative Agent, and the retiring Administrative Agent shall be discharged from its duties and obligations under the Loan

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Documents. Upon the acceptance of any appointment as Administrative Agent hereunder by a successor Administrative Agent as to less than all of the Facilities and upon the execution and filing or recording of such financing statements, or amendments thereto, and such amendments or supplements to the Mortgages, and such other instruments or notices, as may be necessary or desirable, or as the Required Lenders may request, in order to continue the perfection of the Liens granted or purported to be granted by the Collateral Documents, such successor Administrative Agent shall succeed to and become vested with all the rights, powers, discretion, privileges and duties of the retiring Administrative Agent as to such Facilities, other than with respect to funds transfers and other similar aspects of the administration of Borrowings under such Facilities, issuances of Letters of Credit (notwithstanding any resignation as Administrative Agent with respect to the Letter of Credit Facility) and payments by the Borrower in respect of such Facilities, and the retiring Administrative Agent shall be discharged from its duties and obligations under this Agreement as to such Facilities, other than as aforesaid. If within 45 days after written notice is given of the retiring Administrative Agent’s resignation or removal under this Section 7.06 no successor Administrative Agent shall have been appointed and shall have accepted such appointment, then on such 45^th day (a) the retiring Administrative Agent’s resignation or removal shall become effective, (b) the retiring Administrative Agent shall thereupon be discharged from its duties and obligations under the Loan Documents and (c) the Required Lenders shall thereafter perform all duties of the retiring Administrative Agent under the Loan Documents until such time, if any, as the Required Lenders appoint a successor Administrative Agent as provided above. After any retiring Administrative Agent’s resignation or removal hereunder as Administrative Agent as to any of the Facilities shall have become effective, the provisions of this Article VII shall inure to its benefit as to any actions taken or omitted to be taken by it while it was Administrative Agent as to such Facilities under this Agreement.

ARTICLE VIII

GUARANTY

     SECTION 8.01 Guaranty; Limitation of Liability. (a) Each Guarantor, jointly and severally, hereby absolutely, unconditionally and irrevocably guarantees the punctual payment when due, whether at scheduled maturity or on any date of a required prepayment or by acceleration, demand or otherwise, of all Obligations of each other Loan Party now or hereafter existing under or in respect of the Loan Documents (including, without limitation, any extensions, modifications, substitutions, amendments or renewals of any or all of the foregoing Obligations), whether direct or indirect, absolute or contingent, and whether for principal, interest, premiums, fees, indemnities, contract causes of action, costs, expenses or otherwise (such Obligations being the “Guaranteed Obligations”), and agrees to pay any and all expenses (including, without limitation, fees and expenses of counsel) incurred by the Administrative Agent or any other Secured Party in enforcing any rights under this Guaranty or any other Loan Document. Without limiting the generality of the foregoing, each Guarantor’s liability shall extend to all amounts that constitute part of the Guaranteed Obligations and would be owed by any other Loan Party to any Secured Party under or in respect of the Loan Documents but for the fact that they are unenforceable or not allowable due to the existence of a bankruptcy, reorganization or similar proceeding involving such other Loan Party.

          (b) Each Guarantor, and by its acceptance of this Guaranty, the Administrative Agent and each other Secured Party, hereby confirms that it is the intention of all such Persons that this Guaranty and the Obligations of each Guarantor hereunder not constitute a fraudulent transfer or conveyance for purposes of Bankruptcy Law, the Uniform Fraudulent Conveyance Act, the Uniform Fraudulent Transfer Act or any similar foreign, federal or state law to the extent applicable to this Guaranty and the Obligations of each Guarantor hereunder. To effectuate the foregoing intention, the Administrative Agent, the other Secured Parties and the Guarantors hereby irrevocably agree that the Obligations of each Guarantor under this Guaranty at any time shall be limited to the maximum amount

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as will result in the Obligations of such Guarantor under this Guaranty not constituting a fraudulent transfer or conveyance.

          (c) Each Guarantor hereby unconditionally and irrevocably agrees that in the event any payment shall be required to be made to any Secured Party under this Guaranty or any other guaranty, such Guarantor will contribute, to the maximum extent permitted by law, such amounts to each other Guarantor and each other guarantor so as to maximize the aggregate amount paid to the Secured Parties under or in respect of the Loan Documents.

          (d) Each Guarantor hereby unconditionally and irrevocably waives any right (including without limitation any such right arising under California Civil Code Section 2815) to revoke this Guaranty and acknowledges that this Guaranty is continuing in nature and applies to all Guaranteed Obligations, whether existing now or in the future.

          (e) Each Guarantor hereby unconditionally and irrevocably waives (i) any and all rights and defenses available to it by reason of Sections 2787 to 2855, inclusive, 2899 and 3433 of the California Civil Code, including without limitation any and all rights or defenses such Guarantor may have by reason of protection afforded to the principal with respect to any of the Guaranteed Obligations, or to any other guarantor of any of the Guaranteed Obligations with respect to any of such guarantor’s obligations under its guaranty, in either case pursuant to the antideficiency or other laws of the State of California limiting or discharging the principal’s indebtedness or such guarantor’s obligations, including without limitation Section 580a, 580b, 580d or 726 of the California Code of Civil Procedure, (ii) any defense arising by reason of any claim or defense based upon an election of remedies by the Administrative Agent or any other Secured Party that in any manner impairs, reduces, releases or otherwise adversely affects the subrogation, reimbursement, exoneration, contribution or indemnification rights of such Guarantor or other rights of such Guarantor to proceed against any of the other Loan Parties, any other guarantor or any other Person or any collateral and (iii) any defense based on any right of set-off or counterclaim against or in respect of the Obligations of such Guarantor hereunder. No other provision of the Guaranty shall be construed as limiting the generality of any of the covenants and waivers set forth in this paragraph. As provided below, this Guaranty shall be governed by, and shall be construed and enforced in accordance with, the laws of the State of New York. This paragraph is included solely out of an abundance of caution, and shall not be construed to mean that any of the above-referenced provisions of California law are in any way applicable to this Guaranty or to any of the Guaranteed Obligations.

          (f) Each Guarantor waives any claim, right or remedy, direct or indirect, that such Guarantor now has or may hereafter have against any Loan Party or any of its assets in connection with this Guaranty or the performance by such Guarantor of its obligations hereunder, in each case whether such claim, right or remedy arises in equity, under contract, by statute (including without limitation under California Civil Code Section 2847, 2848 or 2849), under common law or otherwise and including without limitation (a) any right of subrogation, reimbursement or indemnification that such Guarantor now has or may hereafter have against any such Loan Party, (b) any right to enforce, or to participate in, any claim, right or remedy that any Secured Party now has or may hereafter have against any Loan Party, and (c) any benefit of, and any right to participate in, any collateral or security now or hereafter held by any Secured Party.

          (g) Each Guarantor acknowledges that the Administrative Agent may, without notice to or demand upon such Guarantor and without affecting the liability of such Guarantor under this Guaranty, foreclose under any mortgage by nonjudicial sale, and each Guarantor hereby waives any defense to the recovery by the Administrative Agent and the other Secured Parties against such Guarantor of any deficiency after such nonjudicial sale and any defense or benefits that may be afforded by applicable law

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(including, without limitation, Sections 580a and 580d of the California Code of Civil Procedure or any other law of any other jurisdiction having similar effect).

     SECTION 8.02 Guaranty Absolute. Each Guarantor guarantees that the Guaranteed Obligations will be paid strictly in accordance with the terms of the Loan Documents, regardless of any law, regulation or order now or hereafter in effect in any jurisdiction affecting any of such terms or the rights of any Secured Party with respect thereto. The Obligations of each Guarantor under or in respect of this Guaranty are independent of the Guaranteed Obligations or any other Obligations of any other Loan Party under or in respect of the Loan Documents, and a separate action or actions may be brought and prosecuted against each Guarantor to enforce this Guaranty, irrespective of whether any action is brought against the Borrower or any other Loan Party or whether the Borrower or any other Loan Party is joined in any such action or actions. The liability of each Guarantor under this Guaranty shall be irrevocable, absolute and unconditional irrespective of, and each Guarantor hereby irrevocably waives any defenses it may now have or hereafter acquire in any way relating to, any or all of the following:

     (a) any lack of validity or enforceability of any Loan Document or any agreement or instrument relating thereto;

     (b) any change in the time, manner or place of payment of, or in any other term of, all or any of the Guaranteed Obligations or any other Obligations of any other Loan Party under or in respect of the Loan Documents, or any other amendment or waiver of or any consent to departure from any Loan Document, including, without limitation, any increase in the Guaranteed Obligations resulting from the extension of additional credit to any Loan Party or any of its Subsidiaries or otherwise;

     (c) any taking, exchange, release or non-perfection of any Collateral or any other collateral, or any taking, release or amendment or waiver of, or consent to departure from, any other guaranty, for all or any of the Guaranteed Obligations;

     (d) any manner of application of Collateral or any other collateral, or proceeds thereof, to all or any of the Guaranteed Obligations, or any manner of sale or other disposition of any Collateral or any other collateral for all or any of the Guaranteed Obligations or any other Obligations of any Loan Party under the Loan Documents or any other assets of any Loan Party or any of its Subsidiaries;

     (e) any change, restructuring or termination of the corporate structure or existence of any Loan Party or any of its Subsidiaries;

     (f) any failure of any Secured Party to disclose to any Loan Party any information relating to the business, condition (financial or otherwise), operations, performance, properties or prospects of any other Loan Party now or hereafter known to such Secured Party (each Guarantor waiving any duty on the part of the Secured Parties to disclose such information);

     (g) the failure of any other Person to execute or deliver this Guaranty, any Guaranty Supplement or any other guaranty or agreement or the release or reduction of liability of any Guarantor or other guarantor or surety with respect to the Guaranteed Obligations; or

     (h) any other circumstance (including, without limitation, any statute of limitations) or any existence of or reliance on any representation by any Secured Party that might otherwise constitute a defense available to, or a discharge of, any Loan Party or any other guarantor or surety.

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This Guaranty shall continue to be effective or be reinstated, as the case may be, if at any time any payment of any of the Guaranteed Obligations is rescinded or must otherwise be returned by any Secured Party or any other Person upon the insolvency, bankruptcy or reorganization of the Borrower or any other Loan Party or otherwise, all as though such payment had not been made.

     SECTION 8.03 Waivers and Acknowledgments. (a) Each Guarantor hereby unconditionally and irrevocably waives promptness, diligence, notice of acceptance, presentment, demand for performance, notice of nonperformance, default, acceleration, protest or dishonor and any other notice with respect to any of the Guaranteed Obligations and this Guaranty and any requirement that any Secured Party protect, secure, perfect or insure any Lien or any property subject thereto or exhaust any right or take any action against any Loan Party or any other Person or any Collateral.

          (b) Each Guarantor hereby unconditionally and irrevocably waives any right to revoke this Guaranty and acknowledges that this Guaranty is continuing in nature and applies to all Guaranteed Obligations, whether existing now or in the future.

          (c) Each Guarantor hereby unconditionally and irrevocably waives (i) any defense arising by reason of any claim or defense based upon an election of remedies by any Secured Party that in any manner impairs, reduces, releases or otherwise adversely affects the subrogation, reimbursement, exoneration, contribution or indemnification rights of such Guarantor or other rights of such Guarantor to proceed against any of the other Loan Parties, any other guarantor or any other Person or any Collateral and (ii) any defense based on any right of set-off or counterclaim against or in respect of the Obligations of such Guarantor hereunder.

          (d) Each Guarantor acknowledges that the Administrative Agent may, without notice to or demand upon such Guarantor and without affecting the liability of such Guarantor under this Guaranty, foreclose under any mortgage by nonjudicial sale, and each Guarantor hereby waives any defense to the recovery by the Administrative Agent and the other Secured Parties against such Guarantor of any deficiency after such nonjudicial sale and any defense or benefits that may be afforded by applicable law.

          (e) Each Guarantor hereby unconditionally and irrevocably waives any duty on the part of any Secured Party to disclose to such Guarantor any matter, fact or thing relating to the business, condition (financial or otherwise), operations, performance, properties or prospects of any other Loan Party or any of its Subsidiaries now or hereafter known by such Secured Party.

          (f) Each Guarantor acknowledges that it will receive substantial direct and indirect benefits from the financing arrangements contemplated by the Loan Documents and that the waivers set forth in Section 8.02 and this Section 8.03 are knowingly made in contemplation of such benefits.

     SECTION 8.04 Subrogation. Each Guarantor hereby unconditionally and irrevocably agrees not to exercise any rights that it may now have or hereafter acquire against the Borrower, any other Loan Party or any other insider guarantor that arise from the existence, payment, performance or enforcement of such Guarantor’s Obligations under or in respect of this Guaranty or any other Loan Document, including, without limitation, any right of subrogation, reimbursement, exoneration, contribution or indemnification and any right to participate in any claim or remedy of any Secured Party against the Borrower, any other Loan Party or any other insider guarantor or any Collateral, whether or not such claim, remedy or right arises in equity or under contract, statute or common law, including, without limitation, the right to take or receive from the Borrower, any other Loan Party or any other insider guarantor, directly or indirectly, in cash or other property or by set-off or in any other manner, payment or security on account of such claim, remedy or right, unless and until all of the Guaranteed Obligations and all other amounts payable under this Guaranty shall have been paid in full in cash, all Letters of Credit

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and all Secured Hedge Agreements shall have expired or been terminated and the Commitments shall have expired or been terminated. If any amount shall be paid to any Guarantor in violation of the immediately preceding sentence at any time prior to the latest of (a) the payment in full in cash of the Guaranteed Obligations and all other amounts payable under this Guaranty, (b) the Termination Date and (c) the latest date of expiration or termination of all Letters of Credit and all Secured Hedge Agreements, such amount shall be received and held in trust for the benefit of the Secured Parties, shall be segregated from other property and funds of such Guarantor and shall forthwith be paid or delivered to the Administrative Agent in the same form as so received (with any necessary endorsement or assignment) to be credited and applied to the Guaranteed Obligations and all other amounts payable under this Guaranty, whether matured or unmatured, in accordance with the terms of the Loan Documents, or to be held as Collateral for any Guaranteed Obligations or other amounts payable under this Guaranty thereafter arising. If (i) any Guarantor shall make payment to any Secured Party of all or any part of the Guaranteed Obligations, (ii) all of the Guaranteed Obligations and all other amounts payable under this Guaranty shall have been paid in full in cash, (iii) the Termination Date shall have occurred and (iv) all Letters of Credit and all Secured Hedge Agreements shall have expired or been terminated, the Secured Parties will, at such Guarantor’s request and expense, execute and deliver to such Guarantor appropriate documents, without recourse and without representation or warranty, necessary to evidence the transfer by subrogation to such Guarantor of an interest in the Guaranteed Obligations resulting from such payment made by such Guarantor pursuant to this Guaranty.

     SECTION 8.05 Guaranty Supplements. Upon the execution and delivery by any Person of a guaranty supplement in substantially the form of Exhibit E hereto (each, a “Guaranty Supplement”), (a) such Person shall be referred to as an “Additional Guarantor” and shall become and be a Guarantor hereunder, and each reference in this Guaranty to a “Guarantor” shall also mean and be a reference to such Additional Guarantor, and each reference in any other Loan Document to a “Guarantor” shall also mean and be a reference to such Additional Guarantor, and (b) each reference herein to “ this Guaranty”, “hereunder”, “hereof” or words of like import referring to this Guaranty, and each reference in any other Loan Document to the “Guaranty”, “thereunder”, “thereof” or words of like import referring to this Guaranty, shall mean and be a reference to this Guaranty as supplemented by such Guaranty Supplement.

     SECTION 8.06 Subordination. Each Guarantor hereby subordinates any and all debts, liabilities and other Obligations owed to such Guarantor by each other Loan Party (the “Subordinated Obligations”) to the Guaranteed Obligations to the extent and in the manner hereinafter set forth in this Section 8.06:

     (a) Prohibited Payments, Etc. Except during the continuance of a Default (including the commencement and continuation of any proceeding under any Bankruptcy Law relating to any other Loan Party), each Guarantor may receive payments from any other Loan Party on account of the Subordinated Obligations. After the occurrence and during the continuance of any Default (including the commencement and continuation of any proceeding under any Bankruptcy Law relating to any other Loan Party), however, unless the Required Lenders otherwise agree, no Guarantor shall demand, accept or take any action to collect any payment on account of the Subordinated Obligations.

     (b) Prior Payment of Guaranteed Obligations. In any proceeding under any Bankruptcy Law relating to any other Loan Party, each Guarantor agrees that the Secured Parties shall be entitled to receive payment in full in cash of all Guaranteed Obligations (including all interest and expenses accruing after the commencement of a proceeding under any Bankruptcy Law, whether or not constituting an allowed claim in such proceeding (“Post-Petition Interest”)) before such Guarantor receives payment of any Subordinated Obligations.

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     (c) Turn-Over. After the occurrence and during the continuance of any Default (including the commencement and continuation of any proceeding under any Bankruptcy Law relating to any other Loan Party), each Guarantor shall, if the Administrative Agent so requests, collect, enforce and receive payments on account of the Subordinated Obligations as trustee for the Secured Parties and deliver such payments to the Administrative Agent on account of the Guaranteed Obligations (including all Post-Petition Interest), together with any necessary endorsements or other instruments of transfer, but without reducing or affecting in any manner the liability of such Guarantor under the other provisions of this Guaranty.

     (d) Administrative Agent Authorization. After the occurrence and during the continuance of any Default (including the commencement and continuation of any proceeding under any Bankruptcy Law relating to any other Loan Party), the Administrative Agent is authorized and empowered (but without any obligation to so do), in its discretion, (i) in the name of each Guarantor, to collect and enforce, and to submit claims in respect of, Subordinated Obligations and to apply any amounts received thereon to the Guaranteed Obligations (including any and all Post-Petition Interest), and (ii) to require each Guarantor (A) to collect and enforce, and to submit claims in respect of, Subordinated Obligations and (B) to pay any amounts received on such obligations to the Administrative Agent for application to the Guaranteed Obligations (including any and all Post-Petition Interest).

     SECTION 8.07 Continuing Guaranty; Assignments. This Guaranty is a continuing guaranty and shall (a) remain in full force and effect until the latest of (i) the payment in full in cash of the Guaranteed Obligations and all other amounts payable under this Guaranty, (ii) the Termination Date and (iii) the latest date of expiration or termination of all Letters of Credit and all Secured Hedge Agreements, (b) be binding upon the Guarantor, its successors and assigns and (c) inure to the benefit of and be enforceable by the Secured Parties and their successors, transferees and assigns. Without limiting the generality of clause (c) of the immediately preceding sentence, any Secured Party may assign or otherwise transfer all or any portion of its rights and obligations under this Agreement (including, without limitation, all or any portion of its Commitments, the Advances owing to it and the Note or Notes held by it) to any other Person, and such other Person shall thereupon become vested with all the benefits in respect thereof granted to such Secured Party herein or otherwise, in each case as and to the extent provided in Section 9.07. No Guarantor shall have the right to assign its rights hereunder or any interest herein without the prior written consent of the Secured Parties.

ARTICLE IX

MISCELLANEOUS

     SECTION 9.01 Amendments, Etc. No amendment or waiver of any provision of this Agreement or the Notes or any other Loan Document, nor consent to any departure by any Loan Party therefrom, shall in any event be effective unless the same shall be in writing and signed (or, in the case of the Collateral Documents, consented to) by the Required Lenders (other than Defaulting Lenders), and then such waiver or consent shall be effective only in the specific instance and for the specific purpose for which given; provided, however, that (a) no amendment, waiver or consent shall, unless in writing and signed by all of the Lender Parties (other than any Lender Party that is, at such time, a Defaulting Lender), do any of the following at any time: (i) waive any of the conditions specified in Section 3.02, (ii) change the number of Lenders or the percentage of (x) the Commitments, (y) the aggregate unpaid principal amount of the Advances or (z) the aggregate Available Amount of outstanding Letters of Credit that, in each case, shall be required for the Lenders or any of them to take any action hereunder, (iii) reduce or limit the obligations of any Guarantor under Section 8.01 or release such Guarantor or otherwise limit such Guarantor’s liability with respect to the Obligations owing to the Administrative

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Agent and the Lender Parties, (iv) release all or substantially all of the Collateral in any transaction or series of related transactions or permit the creation, incurrence, assumption or existence of any Lien on all or substantially all of the Collateral in any transaction or series of related transactions to secure any Obligations other than Obligations owing to the Secured Parties under the Loan Documents, (v) amend Section 2.13 or this Section 9.01, (vi) increase the Commitments of the Lenders, (vii) reduce the principal of, or interest on, the Notes or any fees or other amounts payable hereunder, (viii) except as otherwise provided in Section 2.17, postpone any date scheduled for any payment of principal of, or interest on, the Notes pursuant to Section 2.04 or 2.07 or any date fixed for payment of fees or other amounts payable hereunder, or (ix) limit the liability of any Loan Party under any of the Loan Documents and (b) no amendment, waiver or consent shall, unless in writing and signed by the Required Lenders and each Lender (other than any Lender that is, at such time, a Defaulting Lender) that has a Commitment under, or is owed any amounts under or in respect of, the Revolving Credit Facility if such Lender is directly and adversely affected by such amendment, waiver or consent: (i) increase the Commitments of such Lender; (ii) reduce the principal of, or stated rate of interest on, the Notes held by such Lender or any fees or other amounts stated to be payable hereunder to such Lender; or (iii) postpone any date scheduled for any payment of principal of, or interest on, the Notes pursuant to Section 2.04 or 2.07 or any date fixed for any payment of fees hereunder or any Guaranteed Obligations payable under the Subsidiaries Guaranty; provided further that no amendment, waiver or consent shall, unless in writing and signed by the Swing Line Bank or the Issuing Bank, as the case may be, in addition to the Lenders required above to take such action, affect the rights or obligations of the Swing Line Bank or of the Issuing Banks, as the case may be, under this Agreement, and provided further that no amendment, waiver or consent shall, unless in writing and signed by the Administrative Agent in addition to the Lenders required above to take such action, affect the rights or duties of the Administrative Agent under this Agreement or the other Loan Documents.

     SECTION 9.02 Notices, Etc. All notices and other communications provided for hereunder shall be in writing (including telegraphic, telecopy or electronic mail communication) and mailed, telegraphed, telecopied, sent by electronic mail (with an electronic attachment containing a hand-written signature and with immediate confirmation by mail, telephone or telecopier) or delivered, if to the Borrower, at its address at 1551 North Tustin Avenue, Suite 300, Santa Ana, California 92705, Attention: Chief Financial Officer, telecopier number (714) 667-0315 (with a copy to the General Counsel following written notice of such request by the Borrower to the other parties); if to any Guarantor, at its address at c/o Grubb & Ellis Company, 1551 North Tustin Avenue, Suite 300, Santa Ana, California 92705, Attention: Chief Financial Officer, telecopier number (714) 667-0315 (with a copy to the General Counsel of Grubb & Ellis Company following written notice of such request by a Guarantor to the other parties); if to any Initial Lender Party, at its Domestic Lending Office specified opposite its name on Schedule I hereto; if to any other Lender Party, at its Domestic Lending Office specified in the Assignment and Acceptance pursuant to which it became a Lender Party; and if to the Administrative Agent, at its address at 200 Crescent Court, Suite 550, Dallas, Texas 75201, Attention: Linda J. Davis, telecopier number (214) 740-7910; or, as to any party, at such other address as shall be designated by such party in a written notice to the other parties. All such notices and other communications shall, when mailed or telecopied, be effective when deposited in the mails or transmitted by telecopier, respectively, except that notices and communications to the Administrative Agent pursuant to Article II, III or VII shall not be effective until received by the Administrative Agent. Delivery by telecopier of an executed counterpart of a signature page to any amendment or waiver of any provision of this Agreement or the Notes or of any Exhibit hereto to be executed and delivered hereunder shall be effective as delivery of an original executed counterpart thereof.

     SECTION 9.03 No Waiver; Remedies. No failure on the part of any Lender Party or the Administrative Agent to exercise, and no delay in exercising, any right hereunder or under any Note or any other Loan Document shall operate as a waiver thereof; nor shall any single or partial exercise of any

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such right preclude any other or further exercise thereof or the exercise of any other right. The remedies herein provided are cumulative and not exclusive of any remedies provided by law.

     SECTION 9.04 Costs and Expenses. (a) The Borrower agrees to pay on demand (i) all reasonable costs and expenses of the Lead Arranger and the Administrative Agent in connection with the preparation, execution, delivery, administration, modification and amendment of, or any consent or waiver under, the Loan Documents (including, without limitation, (A) all due diligence, collateral review, syndication, transportation, computer, duplication, appraisal, audit, insurance, consultant, search, filing and recording fees and expenses and (B) the reasonable fees and expenses of counsel for the Lead Arranger and the Administrative Agent with respect thereto (including, without limitation, with respect to reviewing and advising on matters required to be completed by the Loan Parties on a post-closing basis), with respect to advising the Administrative Agent as to its rights and responsibilities, or the perfection, protection or preservation of rights or interests, under the Loan Documents, with respect to negotiations with any Loan Party or with other creditors of any Loan Party or any of its Subsidiaries arising out of any Default or any events or circumstances that may give rise to a Default and with respect to presenting claims in or otherwise participating in or monitoring any bankruptcy, insolvency or other similar proceeding involving creditors’ rights generally and any proceeding ancillary thereto) and (ii) all costs and expenses of the Lead Arranger and the Administrative Agent and each Lender Party in connection with the enforcement of the Loan Documents, whether in any action, suit or litigation, or any bankruptcy, insolvency or other similar proceeding affecting creditors’ rights generally (including, without limitation, the reasonable fees and expenses of counsel for the Lead Arranger and the Administrative Agent and each Lender Party with respect thereto).

          (b) The Borrower agrees to indemnify, defend and save and hold harmless the Lead Arranger, the Administrative Agent, each Lender Party and each of their Affiliates and their respective officers, directors, employees, agents and advisors (each, an “Indemnified Party”) from and against, and shall pay on demand, any and all claims, damages, losses, liabilities and expenses (including, without limitation, reasonable fees and expenses of counsel) that may be incurred by or asserted or awarded against any Indemnified Party, in each case arising out of or in connection with or by reason of (including, without limitation, in connection with any investigation, litigation or proceeding or preparation of a defense in connection therewith) (i) the Facilities, the actual or proposed use of the proceeds of the Advances or the Letters of Credit, the Loan Documents or any of the transactions contemplated thereby or (ii) the actual or alleged presence of Hazardous Materials on any property of any Loan Party or any of its Subsidiaries or any Environmental Action relating in any way to any Loan Party or any of its Subsidiaries, except to the extent such claim, damage, loss, liability or expense is found in a final, non-appealable judgment by a court of competent jurisdiction to have resulted from such Indemnified Party’s gross negligence or willful misconduct. In the case of an investigation, litigation or other proceeding to which the indemnity in this Section 9.04(b) applies, such indemnity shall be effective whether or not such investigation, litigation or proceeding is brought by any Loan Party, its directors, shareholders or creditors or an Indemnified Party or any other Person, whether or not any Indemnified Party is otherwise a party thereto and whether or not the transactions contemplated by this Agreement are consummated. The Borrower also agrees not to assert any claim against the Administrative Agent, any Lender Party or any of their Affiliates, or any of their respective officers, directors, employees, agents and advisors, on any theory of liability, for special, indirect, consequential or punitive damages arising out of or otherwise relating to the Facilities, the actual or proposed use of the proceeds of the Advances or the Letters of Credit, the Loan Documents or any of the transactions contemplated by the Loan Documents.

          (c) If any payment of principal of, or Conversion of, any Eurodollar Rate Advance is made by the Borrower to or for the account of a Lender Party other than on the last day of the Interest Period for such Advance, as a result of a payment or Conversion pursuant to Section 2.06, 2.09(b)(i) or 2.10(d), acceleration of the maturity of the Notes pursuant to Section 6.01 or for any other reason, or if

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the Borrower fails to make any payment or prepayment of an Advance for which a notice of prepayment has been given or that is otherwise required to be made, whether pursuant to Section 2.04, 2.06 or 6.01 or otherwise, the Borrower shall, upon demand by such Lender Party (with a copy of such demand to the Administrative Agent), pay to the Administrative Agent for the account of such Lender Party any amounts required to compensate such Lender Party for any additional losses, costs or expenses that it may reasonably incur as a result of such payment or Conversion or such failure to pay or prepay, as the case may be, including, without limitation, any loss (including loss of anticipated profits), cost or expense incurred by reason of the liquidation or reemployment of deposits or other funds acquired by any Lender Party to fund or maintain such Advance.

          (d) If any Loan Party fails to pay when due any costs, expenses or other amounts payable by it under any Loan Document, including, without limitation, fees and expenses of counsel and indemnities, such amount may be paid on behalf of such Loan Party by the Administrative Agent or any Lender Party, in its sole discretion.

          (e) Without prejudice to the survival of any other agreement of any Loan Party hereunder or under any other Loan Document, the agreements and obligations of the Borrower contained in Sections 2.10 and 2.12 and this Section 9.04 shall survive the payment in full of principal, interest and all other amounts payable hereunder and under any of the other Loan Documents.

     SECTION 9.05 Right of Set-off. Upon (a) the occurrence and during the continuance of any Event of Default and (b) the making of the request or the granting of the consent specified by Section 6.01 to authorize the Administrative Agent to declare the Notes due and payable pursuant to the provisions of Section 6.01, the Administrative Agent and each Lender Party and each of their respective Affiliates is hereby authorized at any time and from time to time, to the fullest extent permitted by law, to set off and otherwise apply any and all deposits (general or special, time or demand, provisional or final) at any time held and other indebtedness at any time owing by the Administrative Agent, such Lender Party or such Affiliate to or for the credit or the account of the Borrower against any and all of the Obligations of the Borrower now or hereafter existing under the Loan Documents, irrespective of whether the Administrative Agent or such Lender Party shall have made any demand under this Agreement or such Note or Notes and although such Obligations may be unmatured. The Administrative Agent and each Lender Party agrees promptly to notify the Borrower after any such set-off and application; provided, however, that the failure to give such notice shall not affect the validity of such set-off and application. The rights of the Administrative Agent and each Lender Party and their respective Affiliates under this Section are in addition to other rights and remedies (including, without limitation, other rights of set-off) that the Administrative Agent, such Lender Party and their respective Affiliates may have.

     SECTION 9.06 Binding Effect. This Agreement shall become effective when it shall have been executed by the Borrower and the Administrative Agent and the Administrative Agent shall have been notified by each Initial Lender Party that such Initial Lender Party has executed it and thereafter shall be binding upon and inure to the benefit of the Borrower, the Administrative Agent and each Lender Party and their respective successors and assigns, except that the Borrower shall not have the right to assign its rights hereunder or any interest herein without the prior written consent of the Lender Parties.

     SECTION 9.07 Assignments and Participations. (a) Each Lender may assign to one or more Eligible Assignees all or a portion of its rights and obligations under this Agreement (including, without limitation, all or a portion of its Commitment or Commitments, the Advances owing to it and the Note or Notes held by it); provided, however, that (i) each such assignment shall be of a uniform, and not a varying, percentage of all rights and obligations under and in respect of any or all Facilities, (ii) except in the case of an assignment to a Person that, immediately prior to such assignment, was a Lender, an Affiliate of any Lender or an Approved Fund of any Lender or an assignment of all of a Lender’s rights

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and obligations under this Agreement, the aggregate amount of the Commitments being assigned to such Eligible Assignee pursuant to such assignment (determined as of the date of the Assignment and Acceptance with respect to such assignment) shall in no event be less than $1,000,000 and shall be in an integral multiple of $500,000 (or such lesser amount as shall be approved by the Administrative Agent) under each Facility for which a Commitment is being assigned, (iii) each such assignment shall be to an Eligible Assignee, (iv) no such assignments shall be permitted without the consent of the Administrative Agent until the Administrative Agent shall have notified the Lender Parties that syndication of the Commitments hereunder has been completed and (v) the parties to each such assignment shall execute and deliver to the Administrative Agent, for its acceptance and recording in the Register, an Assignment and Acceptance, together with any Note or Notes subject to such assignment and a processing and recordation fee of $3,500.

          (b) Upon such execution, delivery, acceptance and recording, from and after the effective date specified in such Assignment and Acceptance, (i) the assignee thereunder shall be a party hereto and, to the extent that rights and obligations hereunder have been assigned to it pursuant to such Assignment and Acceptance, have the rights and obligations of a Lender or Issuing Bank, as the case may be, hereunder and (ii) the Lender or Issuing Bank assignor thereunder shall, to the extent that rights and obligations hereunder have been assigned by it pursuant to such Assignment and Acceptance, relinquish its rights (other than its rights under Sections 2.10, 2.12 and 9.04 to the extent any claim thereunder relates to an event arising prior to such assignment) and be released from its obligations under this Agreement (and, in the case of an Assignment and Acceptance covering all of the remaining portion of an assigning Lender’s or Issuing Bank’s rights and obligations under this Agreement, such Lender or Issuing Bank shall cease to be a party hereto).

          (c) By executing and delivering an Assignment and Acceptance, each Lender Party assignor thereunder and each assignee thereunder confirm to and agree with each other and the other parties thereto and hereto as follows: (i) other than as provided in such Assignment and Acceptance, such assigning Lender Party makes no representation or warranty and assumes no responsibility with respect to any statements, warranties or representations made in or in connection with any Loan Document or the execution, legality, validity, enforceability, genuineness, sufficiency or value of, or the perfection or priority of any lien or security interest created or purported to be created under or in connection with, any Loan Document or any other instrument or document furnished pursuant thereto; (ii) such assigning Lender Party makes no representation or warranty and assumes no responsibility with respect to the financial condition of any Loan Party or the performance or observance by any Loan Party of any of its obligations under any Loan Document or any other instrument or document furnished pursuant thereto; (iii) such assignee confirms that it has received a copy of this Agreement, together with copies of the financial statements referred to in Section 4.01 and such other documents and information as it has deemed appropriate to make its own credit analysis and decision to enter into such Assignment and Acceptance; (iv) such assignee will, independently and without reliance upon the Administrative Agent, such assigning Lender Party or any other Lender Party and based on such documents and information as it shall deem appropriate at the time, continue to make its own credit decisions in taking or not taking action under this Agreement; (v) such assignee confirms that it is an Eligible Assignee; (vi) such assignee appoints and authorizes the Administrative Agent to take such action as agent on its behalf and to exercise such powers and discretion under the Loan Documents as are delegated to the Administrative Agent by the terms hereof and thereof, together with such powers and discretion as are reasonably incidental thereto; and (vii) such assignee agrees that it will perform in accordance with their terms all of the obligations that by the terms of this Agreement are required to be performed by it as a Lender or Issuing Bank, as the case may be.

          (d) The Administrative Agent shall maintain at its address referred to in Section 8.02 a copy of each Assignment and Acceptance delivered to and accepted by it and a register for the

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recordation of the names and addresses of the Lender Parties and the Commitment under each Facility of, and principal amount of the Advances owing under each Facility to, each Lender Party from time to time (the “Register”). The entries in the Register shall be conclusive and binding for all purposes, absent manifest error, and the Borrower, the Administrative Agent and the Lender Parties may treat each Person whose name is recorded in the Register as a Lender Party hereunder for all purposes of this Agreement. The Register shall be available for inspection by the Borrower or the Administrative Agent or any Lender Party at any reasonable time and from time to time upon reasonable prior notice.

          (e) Upon its receipt of an Assignment and Acceptance executed by an assigning Lender Party and an assignee, together with any Note or Notes subject to such assignment, the Administrative Agent shall, if such Assignment and Acceptance has been completed and is in substantially the form of Exhibit C hereto, (i) accept such Assignment and Acceptance, (ii) record the information contained therein in the Register and (iii) give prompt notice thereof to the Borrower and each other Administrative Agent. In the case of any assignment by a Lender, within five Business Days after its receipt of such notice, the Borrower, at its own expense, shall execute and deliver to the Administrative Agent in exchange for the surrendered Note or Notes a new Note to the order of such Eligible Assignee in an amount equal to the Commitment assumed by it under each Facility pursuant to such Assignment and Acceptance and, if any assigning Lender has retained a Commitment hereunder under such Facility, a new Note to the order of such assigning Lender in an amount equal to the Commitment retained by it hereunder. Such new Note or Notes shall be in an aggregate principal amount equal to the aggregate principal amount of such surrendered Note or Notes, shall be dated the effective date of such Assignment and Acceptance and shall otherwise be in substantially the form of Exhibit A.

          (f) The Issuing Bank may assign to an Eligible Assignee not less than all of its rights and obligations under the undrawn portion of its Letter of Credit Commitment at any time; provided, however, that (i) each such assignment shall be to an Eligible Assignee and (ii) the parties to each such assignment shall execute and deliver to the Administrative Agent, for its acceptance and recording in the Register, an Assignment and Acceptance, together with a processing and recordation fee of $3,500.

          (g) Each Lender Party may sell participations to one or more Persons (other than any Loan Party or any of its Affiliates) in or to all or a portion of its rights and obligations under this Agreement (including, without limitation, all or a portion of its Commitments, the Advances owing to it and the Note or Notes (if any) held by it); provided, however, that (i) such Lender Party’s obligations under this Agreement (including, without limitation, its Commitments) shall remain unchanged, (ii) such Lender Party shall remain solely responsible to the other parties hereto for the performance of such obligations, (iii) such Lender Party shall remain the holder of any such Note for all purposes of this Agreement, (iv) the Borrower, the Administrative Agent and the other Lender Parties shall continue to deal solely and directly with such Lender Party in connection with such Lender Party’s rights and obligations under this Agreement and (v) no participant under any such participation shall have any right to approve any amendment or waiver of any provision of any Loan Document, or any consent to any departure by any Loan Party therefrom, except to the extent that such amendment, waiver or consent would reduce the principal of, or interest on, the Notes or any fees or other amounts payable hereunder, in each case to the extent subject to such participation, postpone any date fixed for any payment of principal of, or interest on, the Notes or any fees or other amounts payable hereunder, in each case to the extent subject to such participation, or release all or substantially all of the Collateral.

          (h) Any Lender Party may, in connection with any assignment or participation or proposed assignment or participation pursuant to this Section 8.07, disclose to the assignee or participant or proposed assignee or participant any information relating to the Borrower furnished to such Lender Party by or on behalf of the Borrower; provided, however, that prior to any such disclosure, the assignee

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or participant or proposed assignee or participant shall agree to preserve the confidentiality of any Confidential Information received by it from such Lender Party.

          (i) Notwithstanding any other provision set forth in this Agreement, any Lender Party may at any time create a security interest in all or any portion of its rights under this Agreement (including, without limitation, the Advances owing to it and the Note or Notes held by it) in favor of any Federal Reserve Bank in accordance with Regulation A of the Board of Governors of the Federal Reserve System.

          (j) Notwithstanding anything to the contrary contained herein, any Lender that is a fund that invests in bank loans may create a security interest in all or any portion of the Advances owing to it and the Note or Notes held by it to the trustee for holders of obligations owed, or securities issued, by such fund as security for such obligations or securities, provided that unless and until such trustee actually becomes a Lender in compliance with the other provisions of this Section 9.07, (i) no such pledge shall release the pledging Lender from any of its obligations under the Loan Documents and (ii) such trustee shall not be entitled to exercise any of the rights of a Lender under the Loan Documents even though such trustee may have acquired ownership rights with respect to the pledged interest through foreclosure or otherwise.

          (k) Notwithstanding anything to the contrary contained herein, any Lender Party (a “Granting Lender”) may grant to a special purpose funding vehicle identified as such in writing from time to time by the Granting Lender to the Administrative Agent and the Borrower (an “SPC”) the option to provide all or any part of any Advance that such Granting Lender would otherwise be obligated to make pursuant to this Agreement, provided that (i) nothing herein shall constitute a commitment by any SPC to fund any Advance, and (ii) if an SPC elects not to exercise such option or otherwise fails to make all or any part of such Advance, the Granting Lender shall be obligated to make such Advance pursuant to the terms hereof. The making of an Advance by an SPC hereunder shall utilize the Commitment of the Granting Lender to the same extent, and as if, such Advance were made by such Granting Lender. Each party hereto hereby agrees that (i) no SPC shall be liable for any indemnity or similar payment obligation under this Agreement for which a Lender Party would be liable, (ii) no SPC shall be entitled to the benefits of Sections 2.10 and 2.12 (or any other increased costs protection provision) and (iii) the Granting Bank shall for all purposes, including, without limitation, the approval of any amendment or waiver of any provision of any Loan Document, remain the Lender Party of record hereunder. In furtherance of the foregoing, each party hereto hereby agrees (which agreement shall survive the termination of this Agreement) that, prior to the date that is one year and one day after the payment in full of all outstanding commercial paper or other senior Debt of any SPC, it will not institute against, or join any other person in instituting against, such SPC any bankruptcy, reorganization, arrangement, insolvency, or liquidation proceeding under the laws of the United States or any State thereof. Notwithstanding anything to the contrary contained in this Agreement, any SPC may (i) with notice to, but without prior consent of, the Borrower and the Administrative Agent and with the payment of a processing fee of $500, assign all or any portion of its interest in any Advance to the Granting Lender and (ii) disclose on a confidential basis any non-public information relating to its funding of Advances to any rating agency, commercial paper dealer or provider of any surety or guarantee or credit or liquidity enhancement to such SPC. This subsection (k) may not be amended without the prior written consent of each Granting Lender, all or any part of whose Advances are being funded by the SPC at the time of such amendment.

     SECTION 9.08 Execution in Counterparts. This Agreement may be executed in any number of counterparts and by different parties hereto in separate counterparts, each of which when so executed shall be deemed to be an original and all of which taken together shall constitute one and the same

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agreement. Delivery by telecopier of an executed counterpart of a signature page to this Agreement shall be effective as delivery of an original executed counterpart of this Agreement.

     SECTION 9.09 No Liability of the Issuing Bank. The Borrower assumes all risks of the acts or omissions of any beneficiary or transferee of any Letter of Credit with respect to its use of such Letter of Credit. Neither the Issuing Bank nor any of its officers or directors shall be liable or responsible for: (a) the use that may be made of any Letter of Credit or any acts or omissions of any beneficiary or transferee in connection therewith; (b) the validity, sufficiency or genuineness of documents, or of any endorsement thereon, even if such documents should prove to be in any or all respects invalid, insufficient, fraudulent or forged; (c) payment by the Issuing Bank against presentation of documents that do not comply with the terms of a Letter of Credit, including failure of any documents to bear any reference or adequate reference to the Letter of Credit; or (d) any other circumstances whatsoever in making or failing to make payment under any Letter of Credit, except that the Borrower shall have a claim against the Issuing Bank, and the Issuing Bank shall be liable to the Borrower, to the extent of any direct, but not consequential, damages suffered by the Borrower that the Borrower proves were caused by (i) the Issuing Bank’s willful misconduct or gross negligence as determined in a final, non-appealable judgment by a court of competent jurisdiction in determining whether documents presented under any Letter of Credit comply with the terms of the Letter of Credit or (ii) the Issuing Bank’s willful failure to make lawful payment under a Letter of Credit after the presentation to it of a draft and certificates strictly complying with the terms and conditions of the Letter of Credit. In furtherance and not in limitation of the foregoing, the Issuing Bank may accept documents that appear on their face to be in order, without responsibility for further investigation, regardless of any notice or information to the contrary.

     SECTION 9.10 Confidentiality; Patriot Act. Neither the Administrative Agent nor any Lender Party shall disclose any Confidential Information to any Person without the consent of the Borrower, other than (a) to the Administrative Agent’s or such Lender Party’s Affiliates and their officers, directors, employees, agents and advisors and to actual or prospective Eligible Assignees and participants, and then only on a confidential basis, (b) as required by any law, rule or regulation or judicial process, (c) as requested or required by any state, Federal or foreign authority or examiner (including the National Association of Insurance Commissioners or any similar organization or quasi-regulatory authority) regulating such Lender Party, (d) to any rating agency when required by it, provided that, prior to any such disclosure, such rating agency shall undertake to preserve the confidentiality of any Confidential Information relating to the Loan Parties received by it from such Lender Party, (e) in connection with any litigation or proceeding to which the Administrative Agent or such Lender Party or any of its Affiliates may be a party or (f) in connection with the exercise of any right or remedy under this Agreement or any other Loan Document. Each of the Lenders hereby notifies each Loan Party that, pursuant to the requirements of the Patriot Act, it is required to obtain, verify and record information that identifies each Loan Party, which information includes names and addresses and other information that will allow it to identify each Loan Party in accordance with the Patriot Act.

     SECTION 9.11 Release of Collateral. Upon the sale, lease, transfer or other disposition of any item of Collateral of any Loan Party in accordance with the terms of the Loan Documents, the Administrative Agent will, at the Borrower’s expense, execute and deliver to such Loan Party such documents as such Loan Party may reasonably request to evidence the release of such item of Collateral from the assignment and security interest granted under the Collateral Documents in accordance with the terms of the Loan Documents.

     SECTION 9.12 Jurisdiction, Etc. (a) Each of the parties hereto hereby irrevocably and unconditionally submits, for itself and its property, to the nonexclusive jurisdiction of any New York State court or Federal court of the United States of America sitting in New York City, and any appellate court from any thereof, in any action or proceeding arising out of or relating to this Agreement or any of

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the other Loan Documents to which it is a party, or for recognition or enforcement of any judgment, and each of the parties hereto hereby irrevocably and unconditionally agrees that all claims in respect of any such action or proceeding may be heard and determined in any such New York State court or, to the fullest extent permitted by law, in such Federal court. Each of the parties hereto agrees that a final judgment in any such action or proceeding shall be conclusive and may be enforced in other jurisdictions by suit on the judgment or in any other manner provided by law. Nothing in this Agreement shall affect any right that any party may otherwise have to bring any action or proceeding relating to this Agreement or any of the other Loan Documents in the courts of any jurisdiction.

          (b) Each of the parties hereto irrevocably and unconditionally waives, to the fullest extent it may legally and effectively do so, any objection that it may now or hereafter have to the laying of venue of any suit, action or proceeding arising out of or relating to this Agreement or any of the other Loan Documents to which it is a party in any New York State or Federal court. Each of the parties hereto hereby irrevocably waives, to the fullest extent permitted by law, the defense of an inconvenient forum to the maintenance of such action or proceeding in any such court.

     SECTION 9.13 Governing Law. This Agreement and the Notes shall be governed by, and construed in accordance with, the laws of the State of New York.

     SECTION 9.14 Waiver of Jury Trial. Each of the Borrower, the Administrative Agent and the Lender Parties irrevocably waives all right to trial by jury in any action, proceeding or counterclaim (whether based on contract, tort or otherwise) arising out of or relating to any of the Loan Documents, the Advances, the Letters of Credit or the actions of the Administrative Agent or any Lender Party in the negotiation, administration, performance or enforcement thereof.

     SECTION 9.15 Pre-Negotiation Agreement. This Agreement and the other Loan Documents shall each constitute a “written agreement” within the meaning of Section 3 of the Pre-Negotiation Agreement.

     SECTION 9.16 Limited Waiver. To the extent any Defaults or Events of Default existed under the Existing Agreement that would not have existed had this Agreement become effective as of December 31, 2008, such Defaults or Events of Default are waived for the period ending on the Effective Date of this Agreement.

[Signature Pages Follow]

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          IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be executed by their respective officers thereunto duly authorized, as of the date first above written.

GRUBB & ELLIS COMPANY
By	/s/ Richard W. Pehlke
	Name: Richard W. Pehlke
	Title: EVP & CFO
GRUBB & ELLIS AFFILIATES, INC.
By	/s/ Richard W. Pehlke
	Name: Richard W. Pehlke
	Title: CFO
GRUBB & ELLIS MANAGEMENT SERVICES, INC.
By	/s/ Richard W. Pehlke
	Name: Richard W. Pehlke
	Title: CFO
GRUBB & ELLIS OF ARIZONA, INC.
By	/s/ Richard W. Pehlke
	Name: Richard W. Pehlke
	Title: CFO
GRUBB & ELLIS CONSULTING SERVICES COMPANY
By	/s/ Richard W. Pehlke
	Name: Richard W. Pehlke
	Title: CFO
GRUBB & ELLIS INSTITUTIONAL PROPERTIES, INC.
By	/s/ Richard W. Pehlke
	Name: Richard W. Pehlke
	Title: CFO

GRUBB & ELLIS OF MICHIGAN, INC.
By	/s/ Richard W. Pehlke
	Name: Richard W. Pehlke
	Title: CFO
GRUBB & ELLIS MORTGAGE GROUP, INC.
By	/s/ Richard W. Pehlke
	Name: Richard W. Pehlke
	Title: CFO
GRUBB & ELLIS OF NEVADA, INC.
By	/s/ Richard W. Pehlke
	Name: Richard W. Pehlke
	Title: CFO
GRUBB & ELLIS NEW YORK, INC.
By	/s/ Richard W. Pehlke
	Name: Richard W. Pehlke
	Title: CFO
GRUBB & ELLIS ADVISERS OF CALIFORNIA, INC.
By	/s/ Richard W. Pehlke
	Name: Richard W. Pehlke
	Title: CFO
HSM INC.
By	/s/ Richard W. Pehlke
	Name: Richard W. Pehlke
	Title: CFO
WM. A. WHITE/GRUBB & ELLIS INC.
By	/s/ Richard W. Pehlke
	Name: Richard W. Pehlke
	Title: CFO

LANDAUER HOSPITALITY INTERNATIONAL, INC.
By	/s/ Richard W. Pehlke
	Name: Richard W. Pehlke
	Title: CFO
LANDAUER SECURITIES, INC.
By	/s/ Richard W. Pehlke
	Name: Richard W. Pehlke
	Title: CFO
GRUBB & ELLIS MANAGEMENT SERVICES OF MICHIGAN, INC.
By	/s/ Richard W. Pehlke
	Name: Richard W. Pehlke
	Title: CFO
GRUBB & ELLIS EUROPE, INC.
By	/s/ Richard W. Pehlke
	Name: Richard W. Pehlke
	Title: CFO
NNN REALTY ADVISORS, INC.
By	/s/ Michael J. Rispoli
	Name: Michael J. Rispoli
	Title: CFO
GRUBB & ELLIS REALTY INVESTORS, LLC
By	/s/ Michael J. Rispoli
	Name: Michael J. Rispoli
	Title: CFO
TRIPLE NET PROPERTIES REALTY, INC.
By	/s/ Michael J. Rispoli
	Name: Michael J. Rispoli
	Title: CFO

GRUBB & ELLIS RESIDENTIAL MANAGEMENT, INC.
By	/s/ Michael J. Rispoli
	Name: Michael J. Rispoli
	Title: CFO
GERA PROPERTY ACQUISITION LLC
By	/s/ Richard W. Pehlke
	Name: Richard W. Pehlke
	Title: CFO
GERA 6400 SHAFER LLC
By	/s/ Richard W. Pehlke
	Name: Richard W. Pehlke
	Title: CFO
GERA ABRAMS CENTRE LLC
By	/s/ Richard W. Pehlke
	Name: Richard W. Pehlke
	Title: CFO
GRUBB & ELLIS ALESCO GLOBAL ADVISORS, LLC
By	/s/ Joseph Welsh
	Name: Joseph Welsh
	Title: Chief Financial Officer
NNN/ROC APARTMENT HOLDINGS, LLC
By	/s/ Michael J. Rispoli
	Name: Michael J. Rispoli
	Title: CFO
GRUBB & ELLIS HOUSING, LLC
By	/s/ Michael J. Rispoli
	Name: Michael J. Rispoli
	Title: CFO
GRUBB & ELLIS APARTMENT REIT ADVISOR, LLC
By	/s/ Stanley J. Olander, Jr.
	Name: Stanley J. Olander, Jr.
	Title: CEO and President

GRUBB & ELLIS HEALTHCARE REIT ADVISOR, LLC
By	/s/ Jeffery T. Hanson
	Name:  Jeffery T. Hanson
	Title:     CEO
GRUBB & ELLIS HEALTHCARE REIT II ADVISOR, LLC
By	/s/ Jeffery T. Hanson
	Name:  Jeffery T. Hanson
	Title:     CEO
NNN ROCKY MOUNTAIN EXCHANGE, LLC
By	/s/ Michael J. Rispoli
	Name:  Michael J. Rispoli
	Title:     CFO
NNN 200 GALLERIA MEMBER, LLC
By	/s/ Michael J. Rispoli
	Name:  Michael J. Rispoli
	Title:     CFO

ACKNOWLEDGED AND
AGREED TO WITH RESPECT TO
SECTIONS 2.06(e) and 5.01(s):
GERA DANBURY LLC
By:	/s/ Richard W. Pehlke
	Name:  Richard W. Pehlke
	Title:    CFO

	DEUTSCHE BANK TRUST COMPANY
	AMERICAS, as Administrative Agent,
	Initial Lender, Initial Issuing Bank
By	/s/ James Rolison
	Name:  James Rolison
	Title:    Managing Director
By	/s/ George R. Reynolds
	Name:  George R. Reynolds
	Title:    Director

JPMORGAN CHASE BANK, N.A.,
as a Lender
By	/s/ Jacqueline P. Yardley
	Name: Jacqueline P. Yardley
	Title: Senior Vice President

KEYBANK NATIONAL ASSOCIATION,
as a Lender
By	/s/ James T. Freel
	Name: James T. Freel
	Title: Senior Vice President

FIFTH THIRD BANK,
as a Lender
	By	/s/ Matthew D. Rodgers
		Name: Matthew D. Rodgers
		Title: Vice President

EX-10.62

Exhibit 10.62

THIRD AMENDED AND RESTATED SECURITY AGREEMENT

Dated May 18, 2009

From

The Grantors referred to herein

as Grantors

to

DEUTSCHE BANK TRUST COMPANY AMERICAS,

as Administrative Agent

T A B L E O F C O N T E N T S

Section		Page
Section 1.	Grant of Security		2
Section 2.	Security for Obligations		6
Section 3.	Grantors Remain Liable		6
Section 4.	Delivery and Control of Security Collateral		6
Section 5.	Maintaining the Account Collateral		8
Section 6.	Investing of Amounts in the Collateral Account and the L/C Collateral Account		9
Section 7.	Release of Amounts		9
Section 8.	Maintaining Electronic Chattel Paper, Transferable Records and Letter-of-Credit Rights and Giving Notice of Commercial Tort Claims		10
Section 9.	Representations and Warranties		10
Section 10.	Further Assurances		14
Section 11.	As to Equipment and Inventory		16
Section 12.	Insurance		16
Section 13.	Post-Closing Changes; Bailees; Collections on Assigned Agreements, Receivables and Related Contracts		17
Section 14.	As to Intellectual Property Collateral		18
Section 15.	Voting Rights; Dividends; Etc.		19
Section 16.	As to the Assigned Agreements		21
Section 17.	Payments Under the Assigned Agreements		21
Section 18.	As to Letter-of-Credit Rights		22
Section 19.	Transfers and Other Liens; Additional Shares		22
Section 20.	Administrative Agent Appointed Attorney-in-Fact		22
Section 21.	Administrative Agent May Perform		23
Section 22.	The Administrative Agent’s Duties		23
Section 23.	Remedies		23

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Section		Page
Section 24.	Indemnity and Expenses		25
Section 25.	Amendments; Waivers; Additional Grantors; Etc.		25
Section 26.	Notices, Etc.		26
Section 27.	Continuing Security Interest; Assignments under the Credit Agreement		26
Section 28.	Release; Termination		26
Section 29.	Execution in Counterparts		27
Section 30.	The Mortgages		27
Section 31.	Governing Law		27

Schedules I	-	Location, Chief Executive Office, Place Where Agreements Are Maintained, Type Of Organization, Jurisdiction Of Organization And Organizational Identification Number
Schedule II	-	Pledged Equity and Pledged Debt
Schedule III	-	Assigned Agreements
Schedule IV	-	Locations of Equipment and Inventory
Schedule V	-	Changes in Name, Location, Etc.
Schedule VI	-	Patents, Trademarks and Trade Names, Copyrights and IP Agreements
Schedule VII	-	Account Collateral
Schedule VIII	-	Intentionally Omitted
Schedule IX	-	Commercial Tort Claims
Schedule X	-	Letters of Credit
Exhibits
Exhibit A	-	Form of Security Agreement Supplement
Exhibit B	-	Form of Account Control Agreement
Exhibit C	-	Form of Consent and Agreement
Exhibit D	-	Form of Securities Account Control Agreement
Exhibit E	-	Form of Commodity Account Control Agreement
Exhibit F	-	Form of Intellectual Property Security Agreement
Exhibit G	-	Form of Intellectual Property Security Agreement Supplement
Exhibit H	-	Form of Consent to Assignment of Letter of Credit Rights
Exhibit I	-	Form of Account Control Ratification
Exhibit J	-	Form of ACH Account Control Agreement

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THIRD AMENDED AND RESTATED SECURITY AGREEMENT

          THIRD AMENDED AND RESTATED SECURITY AGREEMENT dated May 18, 2009 made by GRUBB & ELLIS COMPANY, a Delaware corporation (the “Borrower”), the other Persons listed on the signature pages hereof and the Additional Grantors (as defined in Section 25) (the Borrower, the Persons so listed and the Additional Grantors being, collectively, the “Grantors”), to DEUTSCHE BANK TRUST COMPANY AMERICAS, as administrative agent (in such capacity, together with any successor administrative agent appointed pursuant to Article VII of the Credit Agreement (as hereinafter defined), the “Administrative Agent”) for the Secured Parties (as defined in the Credit Agreement).

          PRELIMINARY STATEMENTS.

          (1) The Borrower has entered into a Third Amended and Restated Credit Agreement dated as of May 18, 2009 (said Agreement, as it may hereafter be amended, amended and restated, supplemented or otherwise modified from time to time, being the “Credit Agreement”) with the Lender Parties and the Administrative Agent (each as defined therein).

          (2) Pursuant to the Credit Agreement, the Grantors are entering into this Agreement in order to grant to the Administrative Agent for the ratable benefit of the Secured Parties a security interest in the Collateral (as hereinafter defined).

          (3) Each Grantor is the owner of the shares of stock or other Equity Interests (the “Initial Pledged Equity”) set forth opposite such Grantor’s name on and as otherwise described in Part I of Schedule II hereto and issued by the Persons named therein and of the indebtedness (the “Initial Pledged Debt”) set forth opposite such Grantor’s name on and as otherwise described in Part II of Schedule II hereto and issued by the obligors named therein.

          (4) The Borrower has security entitlements (the “Pledged Security Entitlements”) with respect to all the financial assets (the “Pledged Financial Assets”) credited from time to time to the Borrower’s accounts (the “Securities Accounts”), as described in Part III of Schedule VII hereto.

          (5) The Borrower has opened the Automated Clearing House deposit accounts (the “ACH Deposit Accounts”), as described in Part I of Schedule VII hereto, and the other deposit accounts (the “Other Deposit Accounts” and, together with the ACH Deposit Accounts, the “Deposit Accounts”), as described in Part II of Schedule VII hereto.

          (6) A Letter of Credit collateral deposit account has been opened with Deutsche Bank Trust Company Americas, in the name of the Administrative Agent and under the sole control and dominion of the Administrative Agent (the “L/C Collateral Account”).

          (7) It is a condition precedent to the making of Advances and the issuance of Letters of Credit by the Lender Parties under the Credit Agreement and the entry into Secured Hedge Agreements by the Hedge Banks from time to time that the Grantors shall have granted the assignment and security interest and made the pledge and assignment contemplated by this Agreement.

          (8) Each Grantor will derive substantial direct and indirect benefit from the transactions contemplated by the Loan Documents.

          (9) Terms defined in the Credit Agreement and not otherwise defined in this Agreement are used in this Agreement as defined in the Credit Agreement. Further, unless otherwise

defined in this Agreement or in the Credit Agreement, terms defined in Article 8 or 9 of the UCC (as defined below) and/or in the Federal Book Entry Regulations (as defined below) are used in this Agreement as such terms are defined in such Article 8 or 9 and/or the Federal Book Entry Regulations. “UCC” means the Uniform Commercial Code as in effect, from time to time, in the State of New York; provided that, if perfection or the effect of perfection or non-perfection or the priority of any security interest in any Collateral is governed by the Uniform Commercial Code as in effect in a jurisdiction other than the State of New York, “UCC” means the Uniform Commercial Code as in effect from time to time in such other jurisdiction for purposes of the provisions hereof relating to such perfection, effect of perfection or non-perfection or priority. The term “Federal Book Entry Regulations” means (a) the federal regulations contained in Subpart B (“Treasury/Reserve Automated Debt Entry System (TRADES)”) governing book-entry securities consisting of U.S. Treasury bills, notes and bonds and Subpart D (“Additional Provisions”) of 31 C.F.R. Part 357, 31 C.F.R. § 357.2, § 357.10 through § 357.15 and § 357.40 through § 357.45 and (b) to the extent substantially identical to the federal regulations referred to in clause (a) above (as in effect from time to time), the federal regulations governing other book-entry securities.

          NOW, THEREFORE, in consideration of the premises and in order to induce the Lender Parties to make Advances and issue Letters of Credit under the Credit Agreement and to induce the Hedge Banks to enter into Secured Hedge Agreements from time to time, each Grantor hereby agrees with the Administrative Agent for the ratable benefit of the Secured Parties as follows:

          Section 1. Grant of Security. Each Grantor hereby grants to the Administrative Agent, for the ratable benefit of the Secured Parties, a security interest in, such Grantor’s right, title and interest in and to the following, in each case, as to each type of property described below, whether now owned or hereafter acquired by such Grantor, wherever located, and whether now or hereafter existing or arising (collectively, the “Collateral”):

     (a) all equipment in all of its forms, including, without limitation, all machinery, tools, motor vehicles, vessels, aircraft, furniture and fixtures, and all parts thereof and all accessions thereto and all software related thereto, including, without limitation, software that is embedded in and is part of the equipment (any and all such property being the “Equipment”);

     (b) all inventory in all of its forms, including, without limitation, (i) all raw materials, work in process, finished goods and materials used or consumed in the manufacture, production, preparation or shipping thereof, (ii) goods in which such Grantor has an interest in mass or a joint or other interest or right of any kind (including, without limitation, goods in which such Grantor has an interest or right as consignee) and (iii) goods that are returned to or repossessed or stopped in transit by such Grantor), and all accessions thereto and products thereof and documents therefor, and all software related thereto, including, without limitation, software that is embedded in and is part of the inventory (any and all such property being the “Inventory”);

     (c) all accounts, chattel paper (including, without limitation, tangible chattel paper and electronic chattel paper), instruments (including, without limitation, promissory notes), deposit accounts, letter-of-credit rights, general intangibles (including, without limitation, payment intangibles) and other obligations of any kind, whether or not arising out of or in connection with the sale or lease of goods or the rendering of services and whether or not earned by performance, and all rights now or hereafter existing in and to all supporting obligations and in and to all security agreements, mortgages, Liens, leases, letters of credit and other contracts securing or otherwise relating to the foregoing property (any and all of such accounts, chattel paper, instruments, deposit accounts, letter-of-credit rights, general intangibles and other obligations, to the extent not referred to in clause (d), (e) or (f) below, being the “Receivables”,

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and any and all such supporting obligations, security agreements, mortgages, Liens, leases, letters of credit and other contracts being the “Related Contracts”); provided however that the security interest granted under this Section 1(c) shall not attach to any of the Receivables or Related Contracts that by their terms, prohibit or require the consent of any Person (other than the Grantor) as a condition to the creation by such Grantor of a lien thereon, but only, in all cases, to the extent, and for so long as, such prohibition is not terminated or rendered unenforceable or otherwise deemed ineffective by the UCC or any other applicable law;

(d) the following (the “Security Collateral”):

     (i) the Initial Pledged Equity and the certificates, if any, representing the Initial Pledged Equity, and all dividends, distributions, return of capital, cash, instruments and other property from time to time received, receivable or otherwise distributed in respect of or in exchange for any or all of the Initial Pledged Equity and all subscription warrants, rights or options issued thereon or with respect thereto;

     (ii) the Initial Pledged Debt and the instruments, if any, evidencing the Initial Pledged Debt, and all interest, cash, instruments and other property from time to time received, receivable or otherwise distributed in respect of or in exchange for any or all of the Initial Pledged Debt;

     (iii) all additional shares of stock and other Equity Interests from time to time acquired by such Grantor in any manner (such shares and other Equity Interests, together with the Initial Pledged Equity, being the “Pledged Equity”), and the certificates, if any, representing such additional shares or other Equity Interests, and all dividends, distributions, return of capital, cash, instruments and other property from time to time received, receivable or otherwise distributed in respect of or in exchange for any or all of such shares or other Equity Interests and all subscription warrants, rights or options issued thereon or with respect thereto;

     (iv) all additional indebtedness from time to time owed to such Grantor (such indebtedness, together with the Initial Pledged Debt, being the “Pledged Debt”) and the instruments, if any, evidencing such indebtedness, and all interest, cash, instruments and other property from time to time received, receivable or otherwise distributed in respect of or in exchange for any or all of such indebtedness;

     (v) the Securities Accounts, all Pledged Security Entitlements with respect to all Pledged Financial Assets from time to time credited to the Securities Accounts, and all Pledged Financial Assets, and all dividends, distributions, return of capital, interest, cash, instruments and other property from time to time received, receivable or otherwise distributed in respect of or in exchange for any or all of such Pledged Security Entitlements or such Pledged Financial Assets and all subscription warrants, rights or options issued thereon or with respect thereto; and

     (vi) all other investment property (including, without limitation, all (A) securities, whether certificated or uncertificated, (B) security entitlements, (C) securities accounts, (D) commodity contracts and (E) commodity accounts) in which such Grantor has now, or acquires from time to time hereafter, any right, title or interest in any manner, and the certificates or instruments, if any, representing or evidencing such investment property, and all dividends, distributions, return of capital, interest, distributions, value, cash, instruments and other property from time to time received, receivable or otherwise

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distributed in respect of or in exchange for any or all of such investment property and all subscription warrants, rights or options issued thereon or with respect thereto;

     (e) each of the Material Contracts to which such Grantor is now or may hereafter become a party, the IP Agreements (as hereinafter defined), and each Hedge Agreement to which such Grantor is now or may hereafter become a party, in each case as such agreements may be amended, amended and restated, supplemented or otherwise modified from time to time (collectively, the “Assigned Agreements”), including, without limitation, (i) all rights of such Grantor to receive moneys due and to become due under or pursuant to the Assigned Agreements, (ii) all rights of such Grantor to receive proceeds of any insurance, indemnity, warranty or guaranty with respect to the Assigned Agreements, (iii) claims of such Grantor for damages arising out of or for breach of or default under the Assigned Agreements and (iv) the right of such Grantor to terminate the Assigned Agreements, to perform thereunder and to compel performance and otherwise exercise all remedies thereunder (all such Collateral being the “Agreement Collateral”); provided, however, that this Section 1(e) shall not apply to any Material Contract pursuant to the terms of which it would be a breach or default for Grantor to grant the security interest contemplated by this Section 1(e) or would require the consent of any Person (other than the Grantor) as a condition to the creation by the Grantor of a lien thereunder.

     (f) the following (collectively, the “Account Collateral”):

     (i) any collateral deposit account opened by the Borrower with Deutsche Bank Trust Company Americas (or such other financial institution as the Administrative Agent may direct), in the name of the Administrative Agent and under the sole control and dominion of the Administrative Agent and subject to the terms of this Agreement (the “Collateral Account”), the L/C Collateral Account and the Deposit Accounts and all funds and financial assets from time to time credited thereto (including, without limitation, all Cash Equivalents), all interest, dividends, distributions, cash, instruments and other property from time to time received, receivable or otherwise distributed in respect of or in exchange for any or all of such funds and financial assets, and all certificates and instruments, if any, from time to time representing or evidencing the Collateral Account, the L/C Collateral Account and the Deposit Accounts;

     (ii) all promissory notes, certificates of deposit, deposit accounts, checks and other instruments from time to time delivered to or otherwise possessed by the Administrative Agent for or on behalf of such Grantor, including, without limitation, those delivered or possessed in substitution for or in addition to any or all of the then existing Account Collateral;

     (iii) all interest, dividends, distributions, cash, instruments and other property from time to time received, receivable or otherwise distributed in respect of or in exchange for any or all of the then existing Account Collateral; and

     (g) the following (collectively, the “Intellectual Property Collateral”):

     (i) all patents, patent applications, utility models and statutory invention registrations, all inventions claimed or disclosed therein and all improvements thereto (“Patents”);

     (ii) all trademarks, service marks, domain names, trade dress, logos, designs, slogans, trade names, business names, corporate names and other source identifiers,

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whether registered or unregistered (provided that no security interest shall be granted in United States intent-to-use trademark applications to the extent that, and solely during the period in which, the grant of a security interest therein would impair the validity or enforceability of such intent-to-use trademark applications under applicable federal law), together, in each case, with the goodwill symbolized thereby (“Trademarks”);

     (iii) all copyrights, including, without limitation, copyrights in Computer Software (as hereinafter defined), internet web sites and the content thereof, whether registered or unregistered (“Copyrights”);

     (iv) all computer software, programs and databases (including, without limitation, source code, object code and all related applications and data files), firmware and documentation and materials relating thereto, together with any and all maintenance rights, service rights, programming rights, hosting rights, test rights, improvement rights, renewal rights and indemnification rights and any substitutions, replacements, improvements, error corrections, updates and new versions of any of the foregoing (“Computer Software”);

     (v) all confidential and proprietary information, including, without limitation, know-how, trade secrets, manufacturing and production processes and techniques, inventions, research and development information, databases and data, including, without limitation, technical data, financial, marketing and business data, pricing and cost information, business and marketing plans and customer and supplier lists and information (collectively, “Trade Secrets”), and all other intellectual, industrial and intangible property of any type, including, without limitation, industrial designs and mask works;

     (vi) all registrations and applications for registration for any of the foregoing, including, without limitation, those registrations and applications for registration set forth in Schedule VI hereto (as such Schedule VI may be supplemented from time to time by supplements to this Agreement, each such supplement being substantially in the form of Exhibit G hereto (an “IP Security Agreement Supplement”) executed by such Grantor to the Administrative Agent from time to time), together with all reissues, divisions, continuations, continuations-in-part, extensions, renewals and reexaminations thereof;

     (vii) all tangible embodiments of the foregoing, all rights in the foregoing provided by international treaties or conventions, all rights corresponding thereto throughout the world and all other rights of any kind whatsoever of such Grantor accruing thereunder or pertaining thereto;

     (viii) all agreements, permits, consents, orders and franchises relating to the license, development, use or disclosure of any of the foregoing to which such Grantor, now or hereafter, is a party or a beneficiary, including, without limitation, the agreements set forth in Schedule VI hereto (“IP Agreements”); and

     (ix) any and all claims for damages and injunctive relief for past, present and future infringement, dilution, misappropriation, violation, misuse or breach with respect to any of the foregoing, with the right, but not the obligation, to sue for and collect, or otherwise recover, such damages;

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     (h) all commercial tort claims described in Schedule IX hereto (collectively the “Commercial Tort Claims Collateral”);

     (i) all books and records (including, without limitation, customer lists, credit files, printouts and other computer output materials and records) of such Grantor pertaining to any of the Collateral; and

     (j) all proceeds of, collateral for, income, royalties and other payments now or hereafter due and payable with respect to, and supporting obligations relating to, any and all of the Collateral (including, without limitation, proceeds, collateral and supporting obligations that constitute property of the types described in clauses (a) through (i) of this Section 1 and this clause (j)) and, to the extent not otherwise included, all (A) payments under insurance (whether or not the Administrative Agent is the loss payee thereof), or any indemnity, warranty or guaranty, payable by reason of loss or damage to or otherwise with respect to any of the foregoing Collateral, (B) tort claims, including, without limitation, all commercial tort claims and (C) cash.

          Section 2. Security for Obligations. This Agreement secures, in the case of each Grantor, the payment of all Obligations of each Loan Party now or hereafter existing under the Loan Documents, whether direct or indirect, absolute or contingent, and whether for principal, reimbursement obligations, interest, fees, premiums, penalties, indemnifications, contract causes of action, costs, expenses or otherwise (all such Obligations being the “Secured Obligations”).

          Section 3. Grantors Remain Liable. Anything herein to the contrary notwithstanding, (a) each Grantor shall remain liable under the contracts and agreements included in such Grantor’s Collateral to the extent set forth therein to perform all of its duties and obligations thereunder to the same extent as if this Agreement had not been executed, (b) the exercise by the Administrative Agent of any of the rights hereunder shall not release any Grantor from any of its duties or obligations under the contracts and agreements included in the Collateral and (c) no Secured Party shall have any obligation or liability under the contracts and agreements included in the Collateral by reason of this Agreement or any other Loan Document, nor shall any Secured Party be obligated to perform any of the obligations or duties of any Grantor thereunder or to take any action to collect or enforce any claim for payment assigned hereunder.

          Section 4. Delivery and Control of Security Collateral. (a) All certificates or instruments representing or evidencing Security Collateral shall be delivered to and held by or on behalf of the Administrative Agent pursuant hereto and shall be in suitable form for transfer by delivery, or shall be accompanied by duly executed instruments of transfer or assignment in blank, all in form and substance satisfactory to the Administrative Agent. The Administrative Agent shall have the right, at any time in its discretion and without notice to any Grantor, to transfer to or to register in the name of the Administrative Agent or any of its nominees any or all of the Security Collateral, subject only to the revocable rights specified in Section 15(a). For the better perfection of the Administrative Agent’s rights in and to the Security Collateral, each Grantor shall forthwith, upon the pledge hereunder of any Security Collateral in which it has any right, title or interest, cause such Security Collateral to be registered in the name of the Administrative Agent or such of its nominees as the Administrative Agent shall direct, subject only to the revocable rights specified in Section 15(a). In addition, the Administrative Agent shall have the right at any time to exchange certificates or instruments representing or evidencing Security Collateral for certificates or instruments of smaller or larger denominations. Also, the Administrative Agent shall have the right at any time to convert Security Collateral consisting of financial assets credited to the Securities Accounts to Security Collateral consisting of financial assets held directly by the Administrative Agent, and to convert Security Collateral consisting of financial assets held directly by the

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Administrative Agent to Security Collateral consisting of financial assets credited to the Securities Accounts.

          (b) With respect to any Security Collateral in which any Grantor has any right, title or interest and that constitutes an uncertificated security, such Grantor will cause the issuer thereof either (i) to register the Administrative Agent as the registered owner of such security or (ii) to agree in an authenticated record with such Grantor and the Administrative Agent that such issuer will comply with instructions with respect to such security originated by the Administrative Agent without further consent of such Grantor, such authenticated record to be in form and substance satisfactory to the Administrative Agent. With respect to any Security Collateral in which any Grantor has any right, title or interest and that is not an uncertificated security, upon the request of the Administrative Agent, such Grantor will notify each such issuer of Pledged Equity that such Pledged Equity is subject to the security interest granted hereunder.

          (c) With respect to any Security Collateral in which any Grantor has any right, title or interest and that constitutes a security entitlement in which the Administrative Agent is not the entitlement holder, such Grantor will cause the securities intermediary with respect to such security entitlement either (i) to identify in its records the Administrative Agent as the entitlement holder of such security entitlement against such securities intermediary or (ii) to agree in an authenticated record with such Grantor and the Administrative Agent that such securities intermediary will comply with entitlement orders (that is, notifications communicated to such securities intermediary directing transfer or redemption of the financial asset to which such Grantor has a security entitlement) originated by the Administrative Agent without further consent of such Grantor, such authenticated record to be in substantially the form of Exhibit D hereto or otherwise in form and substance satisfactory to the Administrative Agent (such agreement being a “Securities Account Control Agreement”).

          (d) With respect to any Security Collateral in which any Grantor has any right, title or interest and that constitutes a commodity contract, such Grantor shall cause the commodity intermediary with respect to such commodity contract to agree in an authenticated record with such Grantor and the Administrative Agent that such commodity intermediary will apply any value distributed on account of such commodity contract as directed by the Administrative Agent without further consent of such Grantor, such authenticated record to be in substantially the form of Exhibit E hereto or otherwise in form and substance satisfactory to the Administrative Agent (such agreement being a “Commodity Account Control Agreement”, and all such authenticated records, together with all Securities Account Control Agreements being, collectively, “Security Control Agreements”).

          (e) No Grantor will change or add any securities intermediary or commodity intermediary that maintains any securities account or commodity account in which any of the Collateral is credited or carried, or change or add any such securities account or commodity account, in each case without first complying with the above provisions of this Section 4 in order to perfect the security interest granted hereunder in such Collateral.

          (f) Upon the request of the Administrative Agent, such Grantor will notify each such issuer of Pledged Debt that such Pledged Debt is subject to the security interest granted hereunder.

          (g) Notwithstanding anything to the contrary herein, each Grantor shall not be required to comply with Section 1 and this Section 4 with respect to Initial Pledged Equity that is identified as “Pledged Joint Venture Investments” and “Pledged REIT Investments” so long as such Grantor promptly uses commercially reasonable efforts to seek all consents and other required approvals for the pledge of such Initial Pledged Equity and fail to obtain same. Upon receipt of such required approvals, such Grantor shall comply with Section 1 and this Section 4 with respect to such Initial

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Pledged Equity. If any Grantor fails to obtain any required approval within forty-five days from the date hereof, such Grantor shall provide a report to the Administrative Agent on the date that is forty-five days from the date hereof showing in reasonable detail the efforts undertaken by such Grantor to seek such approval.

          (h) Notwithstanding anything to the contrary herein, Grantor shall have the right to (i) modify the terms of and forgive the indebtedness of, the Initial Pledged Debt identified as “Promissory notes issued from time to time by various TIC and Master Lease Programs” and (ii) modify the terms of, including, but not limited to, extending the maturity date of, the Initial Pledged Debt issued by Grubb & Ellis Apartment REIT, Inc., in each case in the ordinary course of business consistent with past practice without the consent of any Lender Party.

          Section 5. Maintaining the Account Collateral. So long as any Advance or any other Obligation of any Loan Party under any Loan Document shall remain unpaid, any Letter of Credit shall be outstanding, any Secured Hedge Agreement shall be in effect or any Lender Party shall have any Commitment:

     (a) Each Grantor will maintain all Account Collateral only with the Administrative Agent or with banks (the “Pledged Account Banks”) that have agreed, in a record authenticated by the Grantor, the Administrative Agent and the Pledged Account Banks, to (i) comply with instructions originated by the Administrative Agent directing the disposition of funds in the Account Collateral without the further consent of the Grantor and (ii) waive or subordinate in favor of the Administrative Agent all claims of the Pledged Account Banks (including, without limitation, claims by way of a security interest, lien or right of setoff or right of recoupment) to the Account Collateral, which authenticated record shall be substantially in the form of Exhibit J hereto for ACH Deposit Accounts or Exhibit B hereto for Other Deposit Accounts, or shall otherwise be in form and substance satisfactory to the Administrative Agent (the “Account Control Agreement”).

     (b) Each Grantor will (i) immediately instruct each Person obligated at any time to make any payment to such Grantor for any reason (an “Obligor”) to make such payment to a Deposit Account and (ii) deposit in a Deposit Account or pay to the Administrative Agent for deposit in a Deposit Account, at the end of each Business Day, all proceeds of Collateral and all other cash of such Grantor.

     (c) Each Grantor agrees that it will not add any bank that maintains a deposit account for such Grantor or open any new deposit account with any then existing Pledged Account Bank unless (i) the Administrative Agent shall have received at least 10 days’ prior written notice of such additional bank or such new deposit account and (ii) the Administrative Agent shall have received, in the case of a bank or Pledged Account Bank that is not the Administrative Agent, an Account Control Agreement authenticated by such new bank and such Grantor, or a supplement to an existing Account Control Agreement with such then existing Pledged Account Bank, covering such new deposit account (and, upon the receipt by the Administrative Agent of such Account Control Agreement or supplement, Schedule VII hereto shall be automatically amended to include such Deposit Account). Each Grantor agrees that it will not terminate any bank as a Pledged Account Bank or terminate any Account Collateral.

     (d) Upon any termination by a Grantor of any Deposit Account by such Grantor, or any Pledged Account Bank with respect thereto, such Grantor will immediately (i) transfer all funds and property held in such terminated Deposit Account to another Deposit Account listed in Part II of Schedule VII and (ii) notify all Obligors that were making payments to such Deposit

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Account to make all future payments to another Deposit Account listed in Part II of Schedule VII hereto so that the Administrative Agent shall have a continuously perfected security interest in such Account Collateral, funds and property. Each Grantor agrees to terminate any or all Account Collateral and Account Control Agreements upon request by the Administrative Agent.

     (e) The Borrower may draw checks on, and otherwise withdraw amounts only from, the Deposit Accounts and in such amounts as may be required in the ordinary course of business (including, without limitation, to pay or prepay Debt outstanding under the Loan Documents).

     (f) The Administrative Agent shall have sole right to direct the disposition of funds with respect to the Collateral Account and the L/C Collateral Account; and it shall be a term and condition of each of the Collateral Account and the L/C Collateral Account, notwithstanding any term or condition to the contrary in any other agreement relating to the Collateral Account and the L/C Collateral Account, as the case may be, that no amount (including, without limitation, interest on Cash Equivalents credited thereto) will be paid or released to or for the account of, or withdrawn by or for the account of, the Borrower or any other Person from the Collateral Account and the L/C Collateral Account, as the case may be.

     (g) The Administrative Agent may, (i) at any time and without notice to, or consent from, the Grantor, transfer, or direct the transfer of, funds from the Account Collateral to satisfy the Grantor’s obligations under the Loan Documents if an Event of Default shall have occurred and be continuing and (ii) at any time after the Collateral Account has been opened and without notice to, or consent from, the Grantor, transfer, or direct the transfer of, funds from the Deposit Accounts to the Collateral Account.

          Section 6. Investing of Amounts in the Collateral Account and the L/C Collateral Account. The Administrative Agent will, subject to the provisions of Sections 5, 7 and 23, at any time after the Collateral Account or L/C Collateral Account, as the case may be, has been opened, from time to time (a) invest, or direct the applicable Pledged Account Bank to invest, amounts received with respect to the Collateral Account and the L/C Collateral Account in such Cash Equivalents credited to (A) the Collateral Account and the L/C Collateral Account, respectively, as the Borrower may select and the Administrative Agent may approve or (B) in the case of Cash Equivalents consisting of Securities Collateral, a securities account in which the Administrative Agent is the securities intermediary or a securities account subject to a Securities Account Control Agreement, and (b) invest interest paid on the Cash Equivalents referred to in clause (a) above, and reinvest other proceeds of any such Cash Equivalents that may mature or be sold, in each case in such Cash Equivalents credited in the same manner. Interest and proceeds that are not invested or reinvested in Cash Equivalents as provided above shall be deposited and held in the relevant Collateral Account or L/C Collateral Account. In addition, the Administrative Agent shall have the right at any time to exchange, or direct the applicable Pledged Account Bank to exchange, such Cash Equivalents for similar Cash Equivalents of smaller or larger determinations, or for other Cash Equivalents, credited to the Collateral Account or the L/C Collateral Account, as the case may be.

          Section 7. Release of Amounts. So long as no Default under Section 6.01(a) or (f) of the Credit Agreement or Event of Default shall have occurred and be continuing, the Administrative Agent will pay and release, or direct the applicable Pledged Account Bank to pay and release, to the Borrower or at its order or, at the request of the Borrower, to the Administrative Agent to be applied to the Obligations of the Borrower under the Loan Documents, in the case of the L/C Collateral Account, such amount, if any, as is then on deposit in the L/C Collateral Account to the extent permitted to be released under the terms of the Credit Agreement and, in the case of the Collateral Account, the amount, if any, by which the aggregate principal amount of the Cash Equivalents credited to the Collateral

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Account exceeds all amounts then due and payable under the Loan Documents together with all accrued and unpaid interest and fees under the Credit Agreement.

          Section 8. Maintaining Electronic Chattel Paper, Transferable Records and Letter-of-Credit Rights and Giving Notice of Commercial Tort Claims. So long as any Advance or any other Obligation of any Loan Party under any Loan Document shall remain unpaid, any Letter of Credit shall be outstanding, any Secured Hedge Agreement shall be in effect or any Lender Party shall have any Commitment:

     (a) Each Grantor will maintain all (i) electronic chattel paper so that the Administrative Agent has control of the electronic chattel paper in the manner specified in Section 9-105 of the UCC and (ii) all transferable records so that the Administrative Agent has control of the transferable records in the manner specified in Section 16 of the Uniform Electronic Transactions Act, as in effect in the jurisdiction governing such transferable record (“UETA”);

     (b) Each Grantor will maintain all letter-of-credit rights assigned to the Administrative Agent, including, without limitation, all letter-of-credit rights associated with each letter of credit that is designated on Schedule X as constituting Collateral (each, a “Collateral L/C”), if any, so that the Administrative Agent has control of the letter-of-credit rights in the manner specified in Section 9-107 of the UCC; and

     (c) Each Grantor will immediately give notice to the Administrative Agent of any commercial tort claim that may arise in the future and will immediately execute or otherwise authenticate a supplement to this Agreement, and otherwise take all necessary action, to subject such commercial tort claim to the first priority security interest created under this Agreement.

          Section 9. Representations and Warranties. Each Grantor represents and warrants as follows:

     (a) Such Grantor’s exact legal name, as defined in Section 9-503(a) of the UCC, is correctly set forth in Schedule I hereto. Such Grantor has only the trade names, domain names and marks listed on Schedule VI hereto. Such Grantor is located (within the meaning of Section 9-307 of the UCC) and has its chief executive office and the office in which it maintains the original copies of each Assigned Agreement and Related Contract to which such Grantor is a party and all originals of all chattel paper that evidence Receivables of such Grantor, in the state or jurisdiction set forth in Schedule I hereto. The information set forth in Schedule I hereto with respect to such Grantor is true and accurate in all respects. Such Grantor has not previously changed its name, location, chief executive office, place where it maintains its agreements, type of organization, jurisdiction of organization or organizational identification number from those set forth in Schedule I hereto except as disclosed in Schedule V hereto.

     (b) All of the Equipment and Inventory of such Grantor are located at the places specified therefor in Schedule IV hereto, as such Schedule IV may be amended from time to time pursuant to Section 11(a). Within the 3 years preceding the execution of this Agreement, such Grantor has not previously changed the location of its Equipment and Inventory except as set forth in Schedule V hereto. All Security Collateral consisting of certificated securities and instruments have been delivered to the Administrative Agent. Original copies of each Assigned Agreement and all originals of all chattel paper that evidence Receivables have been delivered to the Administrative Agent, in each case to the extent that delivery thereof to the Administrative Agent is required under the Credit Agreement. None of the Receivables or Agreement Collateral

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is evidenced by a promissory note or other instrument that has not been delivered to the Administrative Agent.

     (c) Such Grantor is the legal and beneficial owner of the Collateral of such Grantor free and clear of any Lien, claim, option or right of others, except for the security interest created under this Agreement or permitted under the Credit Agreement. No effective financing statement or other instrument similar in effect covering all or any part of such Collateral or listing such Grantor or any trade name of such Grantor as debtor is on file in any recording office, except such as may have been filed in favor of the Administrative Agent relating to the Loan Documents or as otherwise permitted under the Credit Agreement.

     (d) Such Grantor has exclusive possession and control of the Equipment and Inventory other than Inventory stored at any leased premises or warehouse for which a landlord’s or warehouseman’s agreement, in form and substance satisfactory to the Administrative Agent, is in effect and which leased premises or warehouse is so indicated by an asterisk on Schedule IV hereto, as such Schedule IV may be amended from time to time pursuant to Section 11(a). In the case of Equipment and Inventory located on leased premises or in warehouses, no lessor or warehouseman of any premises or warehouse upon or in which such Equipment or Inventory is located has (i) issued any warehouse receipt or other receipt in the nature of a warehouse receipt in respect of any Equipment or Inventory, (ii) issued any document for any of such Grantor’s Equipment or Inventory, (iii) received notification of any secured party’s interest (other than the security interest granted hereunder) in such Grantor’s Equipment or Inventory or (iv) any Lien, claim or charge (based on contract, statute or otherwise) on such Equipment and Inventory.

     (e) The Pledged Equity pledged by such Grantor hereunder has been duly authorized and validly issued and is fully paid and non-assessable. With respect to the Pledged Equity that is an uncertificated security, such Grantor has caused the issuer thereof either (i) to register the Administrative Agent as the registered owner of such security or (ii) to agree in an authenticated record with such Grantor and the Administrative Agent that such issuer will comply with instructions with respect to such security originated by the Administrative Agent without further consent of such Grantor. If such Grantor is an issuer of Pledged Equity, such Grantor confirms that it has received notice of such security interest. The Pledged Debt pledged by such Grantor hereunder has been duly authorized, authenticated or issued and delivered, is the legal, valid and binding obligation of the issuers thereof, is evidenced by one or more promissory notes (which notes have been delivered to the Administrative Agent) and is not in default.

     (f) The Initial Pledged Equity pledged by such Grantor constitutes the percentage of the issued and outstanding Equity Interests of the issuers thereof indicated on Schedule II hereto. The Initial Pledged Debt constitutes all of the outstanding indebtedness owed to such Grantor by the issuers thereof and is outstanding in the principal amount indicated on Schedule II hereto.

     (g) All of the investment property and all shares of stock or other Equity Interests, including without limitation equity ownership interests in tenant in common ownership vehicles and unconsolidated joint ventures holding real estate, owned by such Grantor and all Debt owed to such Grantor is listed on Schedule II hereto.

     (h) The Assigned Agreements to which such Grantor is a party, true and complete copies of which (other than the Hedge Agreements) have been furnished to each Secured Party, have been duly authorized, executed and delivered by such Grantor and, to such Grantor’s knowledge, by all other parties thereto, have not been amended, amended and restated, supplemented or otherwise modified, are in full force and effect and are binding upon and

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enforceable against such Grantor and, to such Grantor’s knowledge, against all other parties thereto in accordance with their terms. There exists no default under any Assigned Agreement to which such Grantor is a party by such Grantor or, to such Grantor’s knowledge, by any other party thereto.

     (i) Such Grantor has no deposit accounts, other than the Account Collateral listed on Schedule VII hereto, as such Schedule VII may be amended from time to time pursuant to Section 5(d), and legal, binding and enforceable Account Control Agreements are in effect for each deposit account that constitutes Account Collateral (other than Account Collateral consisting of deposit accounts maintained with the Administrative Agent). With respect to Account Control Agreements executed prior to December 2007, where the ownership of the account holder has changed or as requested by the Administrative Agent, legal, binding and enforceable account control ratifications, substantially in the form of Exhibit I hereto, or shall otherwise be in form and substance satisfactory to the Administrative Agent (each, an “Account Control Ratification”) are in effect. Such Grantor has instructed all existing Obligors to make all payments to a Deposit Account.

     (j) Such Grantor is not a beneficiary or assignee under any letter of credit, other than the letters of credit described in Schedule X hereto, as such Schedule X may be amended from time to time, and legal, binding and enforceable Consents to Assignment of Letter of Credit Rights, in the form of the Consent to Assignment of Letter of Credit Rights attached hereto as Exhibit H, are in effect for each Collateral L/C. Such Grantor has instructed all issuers and nominated persons under any Collateral L/C in which the Grantor is the beneficiary or assignee to make all payments to a Deposit Account.

     (k) All filings and other actions (including, without limitation, (A) actions necessary to obtain control of Collateral as provided in Sections 9-104, 9-105, 9-106 and 9-107 of the UCC and Section 16 of UETA and (B) actions necessary to perfect the Administrative Agent’s security interest with respect to Collateral evidenced by a certificate of ownership) necessary to perfect the security interest in the Collateral of such Grantor created under this Agreement have been duly made or taken and are in full force and effect, and this Agreement creates in favor of the Administrative Agent for the benefit of the Secured Parties a valid and, together with such filings and other actions, perfected first priority security interest in the Collateral of such Grantor, securing the payment of the Secured Obligations.

     (l) No authorization or approval or other action by, and no notice to or filing with, any governmental authority or regulatory body or any other third party is required for (i) the grant by such Grantor of the security interest granted hereunder or for the execution, delivery or performance of this Agreement by such Grantor, (ii) the perfection or maintenance of the security interest created hereunder (including the first priority nature of such security interest), except for the filing of financing and continuation statements under the UCC, the recordation of the Intellectual Property Security Agreements referred to in Section 14(f) with the U.S. Patent and Trademark Office and the U.S. Copyright Office and the actions described in Section 4 with respect to Security Collateral, or (iii) the exercise by the Administrative Agent of its voting or other rights provided for in this Agreement or the remedies in respect of the Collateral pursuant to this Agreement, except as may be required in connection with the disposition of any portion of the Security Collateral by laws affecting the offering and sale of securities generally.

     (m) The Inventory that has been produced or distributed by such Grantor has been produced in compliance with all requirements of applicable law, including, without limitation, the Fair Labor Standards Act.

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     (n) As to itself and its Intellectual Property Collateral:

     (i) The operation of such Grantor’s business as currently conducted or as contemplated to be conducted and the use of the Intellectual Property Collateral in connection therewith, to such Grantor’s knowledge, do not conflict with, infringe, misappropriate, dilute, misuse or otherwise violate the intellectual property rights of any third party.

     (ii) Such Grantor is the exclusive owner of all right, title and interest in and to the Intellectual Property Collateral, and is entitled to use all Intellectual Property Collateral subject only to the terms of the IP Agreements.

     (iii) The Intellectual Property Collateral set forth on Schedule VI hereto includes all of the patents, patent applications, domain names, trademark registrations and applications, copyright registrations and applications and IP Agreements owned by such Grantor.

     (iv) The Intellectual Property Collateral is subsisting and has not been adjudged invalid or unenforceable in whole or part, and to the best of such Grantor’s knowledge, is valid and enforceable. Such Grantor is not aware of any uses of any item of Intellectual Property Collateral that could be expected to lead to such item becoming invalid or unenforceable.

     (v) Such Grantor has made or performed all filings, recordings and other acts and has paid all required fees and taxes to maintain and protect its interest in each and every item of Intellectual Property Collateral in full force and effect throughout the world, and to protect and maintain its interest therein including, without limitation, recordations of any of its interests in the Patents and Trademarks with the U.S. Patent and Trademark Office and in corresponding national and international patent offices, and recordation of any of its interests in the Copyrights with the U.S. Copyright Office and in corresponding national and international copyright offices. Such Grantor has used proper statutory notice in connection with its use of each patent, trademark and copyright in the Intellectual Property Collateral.

     (vi) No claim, action, suit, investigation, litigation or proceeding has been asserted or is pending or threatened in writing against such Grantor (i) based upon or challenging or seeking to deny or restrict the Grantor’s rights in or use of any of the Intellectual Property Collateral, (ii) alleging that the Grantor’s rights in or use of the Intellectual Property Collateral or that any services provided by, processes used by, or products manufactured or sold by, such Grantor infringe, misappropriate, dilute, misuse or otherwise violate any patent, trademark, copyright or any other proprietary right of any third party, or (iii) alleging that the Intellectual Property Collateral is being licensed or sublicensed in violation or contravention of the terms of any license or other agreement. To such Grantor’s knowledge, no Person is engaging in any activity that infringes, misappropriates, dilutes, misuses or otherwise violates the Intellectual Property Collateral or the Grantor’s rights in or use thereof. Except as set forth on Schedule VI hereto, such Grantor has not granted any license, release, covenant not to sue, non-assertion assurance, or other right to any Person with respect to any part of the Intellectual Property Collateral. The consummation of the transactions contemplated by the Transaction Documents will not result in the termination or impairment of any of the Intellectual Property Collateral.

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     (vii) With respect to each IP Agreement: (A) such IP Agreement is valid and binding and in full force and effect and represents the entire agreement between the respective parties thereto with respect to the subject matter thereof; (B) such IP Agreement will not cease to be valid and binding and in full force and effect on terms identical to those currently in effect as a result of the rights and interest granted herein, nor will the grant of such rights and interest constitute a breach or default under such IP Agreement or otherwise give any party thereto a right to terminate such IP Agreement; (C) such Grantor has not received any notice of termination or cancellation under such IP Agreement; (D) such Grantor has not received any notice of a breach or default under such IP Agreement, which breach or default has not been cured; (E) such Grantor has not granted to any other third party any rights, adverse or otherwise, under such IP Agreement; and (F) neither such Grantor nor any other party to such IP Agreement is in breach or default thereof in any material respect, and no event has occurred that, with notice or lapse of time or both, would constitute such a breach or default or permit termination, modification or acceleration under such IP Agreement.

     (viii) To the best of such Grantor’s knowledge, (A) none of the Trade Secrets of such Grantor has been used, divulged, disclosed or appropriated to the detriment of such Grantor for the benefit of any other Person other than such Grantor; (B) no employee, independent contractor or agent of such Grantor has misappropriated any trade secrets of any other Person in the course of the performance of his or her duties as an employee, independent contractor or agent of such Grantor; and (C) no employee, independent contractor or agent of such Grantor is in default or breach of any term of any employment agreement, non-disclosure agreement, assignment of inventions agreement or similar agreement or contract relating in any way to the protection, ownership, development, use or transfer of such Grantor’s Intellectual Property Collateral.

     (ix) No Grantor or Intellectual Property Collateral is subject to any outstanding consent, settlement, decree, order, injunction, judgment or ruling restricting the use of any Intellectual Property Collateral or that would impair the validity or enforceability of such Intellectual Property Collateral.

     (o) Such Grantor has no commercial tort claims (as defined in Section 9-102(13) of the UCC) other than those listed in Schedule IX hereto.

     (p) Such Grantor has no commodity contracts or commodity accounts.

     (q) Such Grantor has no security entitlements with respect to any financial assets other than Pledged Equity, Pledged Debt and entitlements credited to the Securities Accounts identified in Part III of Schedule VII and legal, binding and enforceable Securities Control Agreements are in effect for each Securities Account. With respect to Securities Control Agreements executed prior to December 2007, where the ownership of the account holder has changed or as requested by the Administrative Agent, legal, binding and enforceable Account Control Ratifications are in effect.

     (r) All of the Assigned Agreements are listed on Schedule III hereto.

          Section 10. Further Assurances. (a) Each Grantor agrees that from time to time, at the expense of such Grantor, such Grantor will promptly execute and deliver, or otherwise authenticate, all further instruments and documents, and take all further action that may be necessary or desirable, or that the Administrative Agent may request, in order to perfect and protect any pledge or security interest

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granted or purported to be granted by such Grantor hereunder or to enable the Administrative Agent to exercise and enforce its rights and remedies hereunder with respect to any Collateral of such Grantor. Without limiting the generality of the foregoing, each Grantor will promptly with respect to Collateral of such Grantor: (i) mark conspicuously each document included in Inventory, each chattel paper included in Receivables, each Related Contract, each Assigned Agreement and, at the request of the Administrative Agent, each of its records pertaining to such Collateral with a legend, in form and substance satisfactory to the Administrative Agent, indicating that such document, chattel paper, Related Contract, Assigned Agreement or Collateral is subject to the security interest granted hereby; (ii) if any such Collateral shall be evidenced by a promissory note or other instrument or chattel paper, deliver and pledge to the Administrative Agent hereunder such note or instrument or chattel paper duly indorsed and accompanied by duly executed instruments of transfer or assignment, all in form and substance satisfactory to the Administrative Agent; (iii) execute or authenticate and file such financing or continuation statements, or amendments thereto, and such other instruments or notices, as may be necessary or desirable, or as the Administrative Agent may request, in order to perfect and preserve the security interest granted or purported to be granted by such Grantor hereunder; (iv) deliver and pledge to the Administrative Agent for benefit of the Secured Parties certificates representing Security Collateral that constitutes certificated securities, accompanied by undated stock or bond powers executed in blank; (v) take all action necessary to ensure that the Administrative Agent has control of Collateral consisting of deposit accounts, electronic chattel paper, investment property, letter-of-credit rights and transferable records as provided in Sections 9-104, 9-105, 9-106 and 9-107 of the UCC and in Section 16 of UETA; (vi) at the request of the Administrative Agent, take all action to ensure that the Administrative Agent’s security interest is noted on any certificate of ownership related to any Collateral evidenced by a certificate of ownership; (vii) at the request of the Administrative Agent, cause the Administrative Agent to be the beneficiary under Collateral L/Cs, with the exclusive right to make all draws under the Collateral L/Cs, and with all rights of a transferee under Section 5-114(e) of the UCC; and (viii) deliver to the Administrative Agent evidence that all other action that the Administrative Agent may deem reasonably necessary or desirable in order to perfect and protect the security interest created by such Grantor under this Agreement has been taken. From time to time upon request by the Administrative Agent, each Grantor will, at such Grantor’s expense, cause to be delivered to the Administrative Agent, for the benefit of the Secured Parties, an opinion of counsel, from outside counsel reasonably satisfactory to the Administrative Agent, as to such matters relating to the transactions contemplated hereby as the Administrative Agent may reasonably request.

          (b) Each Grantor hereby authorizes the Administrative Agent to file one or more financing or continuation statements, and amendments thereto, including, without limitation, one or more financing statements indicating that such financing statements cover all assets or all personal property (or words of similar effect) of such Grantor, in each case without the signature of such Grantor, and regardless of whether any particular asset described in such financing statements falls within the scope of the UCC or the granting clause of this Agreement. A photocopy or other reproduction of this Agreement or any financing statement covering the Collateral or any part thereof shall be sufficient as a financing statement where permitted by law. Each Grantor ratifies its authorization for the Administrative Agent to have filed such financing statements, continuation statements or amendments filed prior to the date hereof.

          (c) Each Grantor will furnish to the Administrative Agent from time to time statements and schedules further identifying and describing the Collateral of such Grantor and such other reports in connection with such Collateral as the Administrative Agent may reasonably request, all in reasonable detail.

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          (d) Within two Business Days after the request of the Administrative Agent, the Borrower shall open the Collateral Account and the L/C Collateral Account with Deutsche Bank Trust Company Americas, or such other financial institution as the Administrative Agent may direct.

          Section 11. As to Equipment and Inventory. (a) Each Grantor will keep the Equipment and Inventory of such Grantor (other than Inventory sold in the ordinary course of business) at the places therefor specified in Section 9(b) or at such other locations designated by the Grantor by written notice to the Administrative Agent within 10 days of the placement of any Equipment and Inventory at such other locations. Upon the giving of such notice, Schedule IV shall be automatically amended to add any new locations specified in the notice.

          (b) Each Grantor will cause the Equipment of such Grantor to be maintained and preserved in the same condition, repair and working order as when new, ordinary wear and tear excepted, and in accordance with any manufacturer’s manual, and will forthwith, or in the case of any loss or damage to any of such Equipment as soon as practicable after the occurrence thereof, make or cause to be made all repairs, replacements and other improvements in connection therewith that are necessary or desirable to such end. Each Grantor will promptly furnish to the Administrative Agent a statement respecting any loss or damage to any of the Equipment or Inventory of such Grantor.

          (c) Each Grantor will pay promptly when due all property and other taxes, assessments and governmental charges or levies imposed upon, and all claims (including, without limitation, claims for labor, materials and supplies) against, the Equipment and Inventory of such Grantor, except to the extent payment thereof is not required by Section 5.01(b) of the Credit Agreement. In producing its Inventory, each Grantor will comply with all requirements of applicable law, including, without limitation, the Fair Labor Standards Act.

          Section 12. Insurance. (a) Each Grantor will, at its own expense, maintain insurance with respect to the Equipment and Inventory of such Grantor in such amounts, against such risks, in such form and with such insurers, as shall be satisfactory to the Administrative Agent from time to time. Each policy of each Grantor for liability insurance shall provide for all losses to be paid on behalf of the Administrative Agent and such Grantor as their interests may appear, and each policy for property damage insurance shall provide for all losses (except for losses of less than $500,000 per occurrence) to be paid directly to the Administrative Agent. Each such policy shall in addition (i) name such Grantor and the Administrative Agent as insured parties thereunder (without any representation or warranty by or obligation upon the Administrative Agent) as their interests may appear, (ii) contain the agreement by the insurer that any loss thereunder shall be payable to the Administrative Agent notwithstanding any action, inaction or breach of representation or warranty by such Grantor, (iii) provide that there shall be no recourse against the Administrative Agent for payment of premiums or other amounts with respect thereto and (iv) provide that at least 10 days’ prior written notice of cancellation or of lapse shall be given to the Administrative Agent by the insurer. Each Grantor will, at the request of the Administrative Agent, duly execute and deliver instruments of assignment of such insurance policies to comply with the requirements of Section 11 and cause the insurers to acknowledge notice of such assignment.

          (b) Reimbursement under any liability insurance maintained by any Grantor pursuant to this Section 12 may be paid directly to the Person who shall have incurred liability covered by such insurance. In case of any loss involving damage to Equipment or Inventory when subsection (c) of this Section 12 is not applicable, the applicable Grantor will make or cause to be made the necessary repairs to or replacements of such Equipment or Inventory, and any proceeds of insurance properly received by or released to such Grantor shall be used by such Grantor, except as otherwise required hereunder or by the Credit Agreement, to pay or as reimbursement for the costs of such repairs or replacements.

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          (c) So long as no Event of Default shall have occurred and be continuing, all insurance payments received by the Administrative Agent in connection with any loss, damage or destruction of any Inventory or Equipment will be released by the Administrative Agent to the applicable Grantor for the repair, replacement or restoration thereof, subject to such terms and conditions with respect to the release thereof as the Administrative Agent may reasonably require. To the extent that (i) the amount of any such insurance payments exceeds the cost of any such repair, replacement or restoration, or (ii) such insurance payments are not otherwise required by the applicable Grantor to complete any such repair, replacement or restoration required hereunder, the Administrative Agent will not be required to release the amount thereof to such Grantor and may hold or continue to hold such amount in the Collateral Account as additional security for the Secured Obligations of such Grantor (except that the Administrative Agent will direct the applicable Pledged Account Bank to release to such Grantor any such amount if and to the extent that any prepayment of Obligations is required under the Credit Agreement in connection with the receipt of such amount and such prepayment has been made). Upon the occurrence and during the continuance of any Event of Default or the actual or constructive total loss (in excess of $500,000 per occurrence) of any Equipment or Inventory, all insurance payments in respect of such Equipment or Inventory shall be paid to the Administrative Agent and shall, in the Administrative Agent’s sole discretion, (i) be released to the applicable Grantor to be applied as set forth in the first sentence of this subsection (c) or (ii) be held as additional Collateral hereunder or applied as specified in Section 23(b).

          Section 13. Post-Closing Changes; Bailees; Collections on Assigned Agreements, Receivables and Related Contracts. (a) No Grantor will change its name, type of organization, jurisdiction of organization, organizational identification number or location from those set forth in Section 9(a) of this Agreement without first giving at least 30 days’ prior written notice to the Administrative Agent and taking all action required by the Administrative Agent for the purpose of perfecting or protecting the security interest granted by this Agreement. No Grantor will change the location of the Equipment and Inventory or the place where it keeps the originals of the Assigned Agreements and Related Contracts to which such Grantor is a party and all originals of all chattel paper that evidence Receivables of such Grantor from the locations therefor specified in Sections 9(a) and 9(b) without first giving the Administrative Agent 30 days’ prior written notice of such change. No Grantor will become bound by a security agreement authenticated by another Person (determined as provided in Section 9-203(d) of the UCC) without giving the Administrative Agent 30 days’ prior written notice thereof and taking all action required by the Administrative Agent to ensure that the perfection and first priority nature of the Administrative Agent’s security interest in the Collateral will be maintained. Each Grantor will hold and preserve its records relating to the Collateral, including, without limitation, the Assigned Agreements and Related Contracts, and will permit representatives of the Administrative Agent at any time during normal business hours to inspect and make abstracts from such records and other documents. If the Grantor does not have an organizational identification number and later obtains one, it will forthwith notify the Administrative Agent of such organizational identification number.

          (b) If any Collateral of any Grantor is at any time in the possession or control of a warehouseman, bailee or agent, or if the Administrative Agent so requests such Grantor will (i) notify such warehouseman, bailee or agent of the security interest created hereunder, (ii) instruct such warehouseman, bailee or agent to hold all such Collateral solely for the Administrative Agent’s account subject only to the Administrative Agent’s instructions (which shall permit such Collateral to be removed by such Grantor in the ordinary course of business until the Administrative Agent notifies such warehouseman, bailee or agent that an Event of Default has occurred and is continuing), (iii) use commercially reasonable efforts, to cause such warehouseman, bailee or agent to authenticate a record acknowledging that it holds possession of such Collateral for the Administrative Agent’s benefit and shall act solely on the instructions of the Administrative Agent without the further consent of the Grantor or any other Person, and (iv) make such authenticated record available to the Administrative Agent.

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          (c) Except as otherwise provided in this subsection (c), each Grantor will continue to collect, at its own expense, all amounts due or to become due such Grantor under the Assigned Agreements, Receivables and Related Contracts. In connection with such collections, such Grantor may take (and, at the Administrative Agent’s direction, will take) such action as such Grantor or the Administrative Agent may deem necessary or advisable to enforce collection of the Assigned Agreements, Receivables and Related Contracts; provided, however, that the Administrative Agent shall have the right at any time, upon written notice to such Grantor of its intention to do so, to notify the Obligors under any Assigned Agreements, Receivables and Related Contracts of the assignment of such Assigned Agreements, Receivables and Related Contracts to the Administrative Agent and to direct such Obligors to make payment of all amounts due or to become due to such Grantor thereunder directly to the Administrative Agent and, upon such notification and at the expense of such Grantor, to enforce collection of any such Assigned Agreements, Receivables and Related Contracts, to adjust, settle or compromise the amount or payment thereof, in the same manner and to the same extent as such Grantor might have done, and to otherwise exercise all rights with respect to such Assigned Agreements, Receivables and Related Contracts, including, without limitation, those set forth set forth in Section 9-607 of the UCC. After receipt by any Grantor of the notice from the Administrative Agent referred to in the proviso to the preceding sentence, (i) all amounts and proceeds (including, without limitation, instruments) received by such Grantor in respect of the Assigned Agreements, Receivables and Related Contracts of such Grantor shall be received in trust for the benefit of the Administrative Agent hereunder, shall be segregated from other funds of such Grantor and shall be forthwith, but in no event prior to the date on which the Collateral Account has been opened, paid over to the Administrative Agent in the same form as so received (with any necessary indorsement) to be deposited in the Collateral Account and either (A) released to such Grantor on the terms set forth in Section 7 so long as no Event of Default shall have occurred and be continuing or (B) if any Event of Default shall have occurred and be continuing, applied as provided in Section 23(b) and (ii) such Grantor will not adjust, settle or compromise the amount or payment of any Receivable or amount due on any Assigned Agreement or Related Contract, release wholly or partly any Obligor thereof, or allow any credit or discount thereon. No Grantor will permit or consent to the subordination of its right to payment under any of the Assigned Agreements, Receivables and Related Contracts to any other indebtedness or obligations of the Obligor thereof.

          Section 14. As to Intellectual Property Collateral. (a) With respect to each item of its Intellectual Property Collateral, each Grantor agrees to take, at its expense, all necessary steps, including, without limitation, in the U.S. Patent and Trademark Office, the U.S. Copyright Office and any other governmental authority, to (i) maintain the validity and enforceability of such Intellectual Property Collateral and maintain such Intellectual Property Collateral in full force and effect, and (ii) pursue the registration and maintenance of each patent, trademark, or copyright registration or application, now or hereafter included in such Intellectual Property Collateral of such Grantor, including, without limitation, the payment of required fees and taxes, the filing of responses to office actions issued by the U.S. Patent and Trademark Office, the U.S. Copyright Office or other governmental authorities, the filing of applications for renewal or extension, the filing of affidavits under Sections 8 and 15 of the U.S. Trademark Act, the filing of divisional, continuation, continuation-in-part, reissue and renewal applications or extensions, the payment of maintenance fees and the participation in interference, reexamination, opposition, cancellation, infringement and misappropriation proceedings. No Grantor shall, without the written consent of the Administrative Agent, discontinue use of or otherwise abandon any Intellectual Property Collateral, or abandon any right to file an application for patent, trademark, or copyright, unless such Grantor shall have previously determined that such use or the pursuit or maintenance of such Intellectual Property Collateral is no longer desirable in the conduct of such Grantor’s business and that the loss thereof would not be reasonably likely to have a Material Adverse Effect, in which case, such Grantor will give prompt notice of any such abandonment to the Administrative Agent.

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          (b) Each Grantor agrees promptly to notify the Administrative Agent if such Grantor becomes aware (i) that any item of the Intellectual Property Collateral may have become abandoned, placed in the public domain, invalid or unenforceable, or of any adverse determination or development regarding such Grantor’s ownership of any of the Intellectual Property Collateral or its right to register the same or to keep and maintain and enforce the same, or (ii) of any adverse determination or the institution of any proceeding (including, without limitation, the institution of any proceeding in the U.S. Patent and Trademark Office or any court) regarding any item of the Intellectual Property Collateral.

          (c) In the event that any Grantor becomes aware that any item of the Intellectual Property Collateral is being infringed or misappropriated by a third party, such Grantor shall promptly notify the Administrative Agent and shall take such actions, at its expense, as such Grantor or the Administrative Agent deems reasonable and appropriate under the circumstances to protect or enforce such Intellectual Property Collateral, including, without limitation, suing for infringement or misappropriation and for an injunction against such infringement or misappropriation.

          (d) Each Grantor shall use proper statutory notice in connection with its use of each item of its Intellectual Property Collateral. No Grantor shall do or permit any act or knowingly omit to do any act whereby any of its Intellectual Property Collateral may lapse or become invalid or unenforceable or placed in the public domain.

          (e) Each Grantor shall take all steps which it or the Administrative Agent deems reasonable and appropriate under the circumstances to preserve and protect each item of its Intellectual Property Collateral, including, without limitation, maintaining the quality of any and all products or services used or provided in connection with any of the Trademarks, consistent with the quality of the products and services as of the date hereof, and taking all steps necessary to ensure that all licensed users of any of the Trademarks use such consistent standards of quality.

          (f) With respect to its Intellectual Property Collateral, each Grantor agrees to execute or otherwise authenticate an agreement, in substantially the form set forth in Exhibit F hereto or otherwise in form and substance satisfactory to the Administrative Agent (an “Intellectual Property Security Agreement”), for recording the security interest granted hereunder to the Administrative Agent in such Intellectual Property Collateral with the U.S. Patent and Trademark Office, the U.S. Copyright Office and any other governmental authorities necessary to perfect the security interest hereunder in such Intellectual Property Collateral.

          (g) Each Grantor agrees that should it obtain an ownership interest in any item of the type set forth in Section 1(g) that is not on the date hereof a part of the Intellectual Property Collateral (“After-Acquired Intellectual Property”) (i) the provisions of this Agreement shall automatically apply thereto, and (ii) any such After-Acquired Intellectual Property and, in the case of trademarks, the goodwill symbolized thereby, shall automatically become part of the Intellectual Property Collateral subject to the terms and conditions of this Agreement with respect thereto. Each Grantor shall give prompt written notice to the Administrative Agent identifying the After-Acquired Intellectual Property, and such Grantor shall execute and deliver to the Administrative Agent with such written notice, or otherwise authenticate, an agreement substantially in the form of Exhibit G hereto or otherwise in form and substance satisfactory to the Administrative Agent (an “IP Security Agreement Supplement”) covering such After-Acquired Intellectual Property which IP Security Agreement Supplement shall be recorded with the U.S. Patent and Trademark Office, the U.S. Copyright Office and any other governmental authorities necessary to perfect the security interest hereunder in such After-Acquired Intellectual Property.

          Section 15. Voting Rights; Dividends; Etc. (a) So long as no Default under Section 6.01(a) or (f) of the Credit Agreement or Event of Default shall have occurred and be continuing:

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     (i) Each Grantor shall be entitled to exercise any and all voting and other consensual rights pertaining to the Security Collateral of such Grantor or any part thereof for any purpose other than originate Entitlement Orders (as defined in any Securities Account Control Agreement) with respect to the Securities Account or the Commodity Account; provided however, that such Grantor will not exercise or refrain from exercising any such right if such action would have a material adverse effect on the value of the Security Collateral or any part thereof.

     (ii) Each Grantor shall be entitled to receive and retain any and all dividends, interest and other distributions paid in respect of the Security Collateral of such Grantor if and to the extent that the payment thereof is not otherwise prohibited by the terms of the Loan Documents; provided, however, that any and all

     (A) dividends, interest and other distributions paid or payable other than in cash in respect of, and instruments and other property received, receivable or otherwise distributed in respect of, or in exchange for, any Security Collateral,

     (B) dividends and other distributions paid or payable in cash in respect of any Security Collateral in connection with a partial or total liquidation or dissolution or in connection with a reduction of capital, capital surplus or paid-in-surplus and

     (C) cash paid, payable or otherwise distributed in respect of principal of, or in redemption of, or in exchange for, any Security Collateral

shall be, and shall be forthwith delivered to the Administrative Agent to hold as, Security Collateral and shall, if received by such Grantor, be received in trust for the benefit of the Administrative Agent, be segregated from the other property or funds of such Grantor and be forthwith delivered to the Administrative Agent as Security Collateral in the same form as so received (with any necessary indorsement).

     (iii) The Administrative Agent will execute and deliver (or cause to be executed and delivered) to each Grantor all such proxies and other instruments as such Grantor may reasonably request for the purpose of enabling such Grantor to exercise the voting and other rights that it is entitled to exercise pursuant to paragraph (i) above and to receive the dividends or interest payments that it is authorized to receive and retain pursuant to paragraph (ii) above.

          (b) Upon the occurrence and during the continuance of a Default under Section 6.01(a) or (f) of the Credit Agreement or an Event of Default:

     (i) All rights of each Grantor (x) to exercise or refrain from exercising the voting and other consensual rights that it would otherwise be entitled to exercise pursuant to Section 15(a)(i) shall, upon notice to such Grantor by the Administrative Agent, cease and (y) to receive the dividends, interest and other distributions that it would otherwise be authorized to receive and retain pursuant to Section 15(a)(ii) shall automatically cease, and all such rights shall thereupon become vested in the Administrative Agent, which shall thereupon have the sole right to exercise or refrain from exercising such voting and other consensual rights and to receive and hold as Security Collateral such dividends, interest and other distributions.

     (ii) All dividends, interest and other distributions that are received by any Grantor contrary to the provisions of paragraph (i) of this Section 15(b) shall be received in trust for the benefit of the Administrative Agent, shall be segregated from other funds of such Grantor and

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shall be forthwith paid over to the Administrative Agent as Security Collateral in the same form as so received (with any necessary indorsement).

     (iii) The Administrative Agent shall be authorized to send to each Securities Intermediary or Commodity Intermediary as defined in and under any Security Control Agreement a Notice of Exclusive Control as defined in and under such Security Control Agreement.

     Section 16. As to the Assigned Agreements. (a) Each Grantor will at its expense:

     (i) perform and observe all terms and provisions of the Assigned Agreements to be performed or observed by it, maintain the Assigned Agreements to which it is a party in full force and effect, enforce the Assigned Agreements to which it is a party in accordance with the terms thereof and take all such action to such end as may be requested from time to time by the Administrative Agent; and

     (ii) furnish to the Administrative Agent promptly upon receipt thereof copies of all notices, requests and other documents received by such Grantor under or pursuant to the Assigned Agreements to which it is a party, and from time to time (A) furnish to the Administrative Agent such information and reports regarding the Assigned Agreements and such other Collateral of such Grantor as the Administrative Agent may reasonably request and (B) upon request of the Administrative Agent make to each other party to any Assigned Agreement to which it is a party such demands and requests for information and reports or for action as such Grantor is entitled to make thereunder.

          (b) Each Grantor agrees that it will not, except to the extent otherwise permitted under the Credit Agreement:

     (i) cancel or terminate any Assigned Agreement to which it is a party or consent to or accept any cancellation or termination thereof;

     (ii) amend, amend and restate, supplement or otherwise modify any such Assigned Agreement or give any consent, waiver or approval thereunder;

     (iii) waive any default under or breach of any such Assigned Agreement; or

     (iv) take any other action in connection with any such Assigned Agreement that would impair the value of the interests or rights of such Grantor thereunder or that would impair the interests or rights of any Secured Party.

          (c) Each Grantor hereby consents on its behalf and on behalf of its Subsidiaries to the assignment and pledge to the Administrative Agent for benefit of the Secured Parties of each Assigned Agreement to which it is a party by any other Grantor hereunder.

          Section 17. Payments Under the Assigned Agreements. (a) Each Grantor agrees, and has effectively so instructed each other party to each Assigned Agreement to which it is a party, that all payments due or to become due under or in connection with such Assigned Agreement will be made directly to a Deposit Account.

          (b) All moneys received or collected pursuant to subsection (a) above shall be (i) released to the applicable Grantor on the terms set forth in Section 7 so long as no Default under

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Section 6.01(a) or (f) of the Credit Agreement or Event of Default shall have occurred and be continuing or (ii) if any Default under Section 6.01(a) or (f) of the Credit Agreement or Event of Default shall have occurred and be continuing, applied as provided in Section 23(b).

          Section 18. As to Letter-of-Credit Rights. (a) Each Grantor, by granting a security interest in its Receivables consisting of letter-of-credit rights to the Administrative Agent, intends to (and hereby does) assign to the Administrative Agent its rights (including its contingent rights) to the proceeds of all Related Contracts consisting of letters of credit of which it is or hereafter becomes a beneficiary or assignee. Each Grantor will promptly cause the issuer of each Collateral L/C and each nominated person (if any) with respect thereto to consent to such assignment of the proceeds thereof in substantially the form of the Consent to Assignment of Letter of Credit Rights attached hereto as Exhibit H or otherwise in form and substance satisfactory to the Administrative Agent and deliver written evidence of such consent to the Administrative Agent.

          (b) Upon the occurrence of a Default under Section 6.01(a) or (f) of the Credit Agreement or Event of Default, each Grantor will, promptly upon request by the Administrative Agent, (i) notify (and such Grantor hereby authorizes the Administrative Agent to notify) the issuer and each nominated person with respect to each of the Related Contracts consisting of Collateral L/Cs and any payments due or to become due in respect thereof are to be made directly to the Administrative Agent or its designee and (ii) arrange for the Administrative Agent to become the transferee beneficiary of the Collateral L/Cs.

          Section 19. Transfers and Other Liens; Additional Shares. (a) Each Grantor agrees that it will not (i) sell, assign or otherwise dispose of, or grant any option with respect to, any of the Collateral, other than sales, assignments and other dispositions of Collateral, and options relating to Collateral, permitted under the terms of the Credit Agreement, or (ii) create or suffer to exist any Lien upon or with respect to any of the Collateral of such Grantor except for the pledge, assignment and security interest created under this Agreement and Permitted Liens.

          (b) In the case where a subsidiary of a Loan Party is the issuer of Pledged Equity each Grantor agrees that it will (i) cause each issuer of the Pledged Equity pledged by such Grantor not to issue any Equity Interests or other securities in addition to or in substitution for the Pledged Equity issued by such issuer, except to such Grantor, and (ii) pledge hereunder, immediately upon its acquisition (directly or indirectly) thereof, any and all additional Equity Interests or other securities.

          Section 20. Administrative Agent Appointed Attorney-in-Fact . Each Grantor hereby irrevocably appoints the Administrative Agent such Grantor’s attorney-in-fact, with full authority in the place and stead of such Grantor and in the name of such Grantor or otherwise, from time to time, upon the occurrence and during the continuance of a Default, in the Administrative Agent’s discretion, to take any action and to execute any instrument that the Administrative Agent may deem necessary or advisable to accomplish the purposes of this Agreement, including, without limitation:

     (a) to obtain and adjust insurance required to be paid to the Administrative Agent pursuant to Section 12,

     (b) to ask for, demand, collect, sue for, recover, compromise, receive and give acquittance and receipts for moneys due and to become due under or in respect of any of the Collateral,

     (c) to receive, indorse and collect any drafts or other instruments, documents and chattel paper, in connection with clause (a) or (b) above, and

22

     (d) to file any claims or take any action or institute any proceedings that the Administrative Agent may deem necessary or desirable for the collection of any of the Collateral or otherwise to enforce compliance with the terms and conditions of any Assigned Agreement or the rights of the Administrative Agent with respect to any of the Collateral.

          Section 21. Administrative Agent May Perform. If any Grantor fails to perform any agreement contained herein, the Administrative Agent may, but without any obligation to do so and without notice, itself perform, or cause performance of, such agreement, and the expenses of the Administrative Agent incurred in connection therewith shall be payable by such Grantor under Section 24.

          Section 22. The Administrative Agent’s Duties. (a) The powers conferred on the Administrative Agent hereunder are solely to protect the Secured Parties’ interest in the Collateral and shall not impose any duty upon it to exercise any such powers. Except for the safe custody of any Collateral in its possession and the accounting for moneys actually received by it hereunder, the Administrative Agent shall have no duty as to any Collateral, as to ascertaining or taking action with respect to calls, conversions, exchanges, maturities, tenders or other matters relative to any Collateral, whether or not any Secured Party has or is deemed to have knowledge of such matters, or as to the taking of any necessary steps to preserve rights against any parties or any other rights pertaining to any Collateral. The Administrative Agent shall be deemed to have exercised reasonable care in the custody and preservation of any Collateral in its possession if such Collateral is accorded treatment substantially equal to that which it accords its own property.

          (b) Anything contained herein to the contrary notwithstanding, the Administrative Agent may from time to time, when the Administrative Agent deems it to be necessary, appoint one or more subagents (each a “Subagent”) for the Administrative Agent hereunder with respect to all or any part of the Collateral. In the event that the Administrative Agent so appoints any Subagent with respect to any Collateral, (i) the assignment and pledge of such Collateral and the security interest granted in such Collateral by each Grantor hereunder shall be deemed for purposes of this Security Agreement to have been made to such Subagent, in addition to the Administrative Agent, for the ratable benefit of the Secured Parties, as security for the Secured Obligations of such Grantor, (ii) such Subagent shall automatically be vested, in addition to the Administrative Agent, with all rights, powers, privileges, interests and remedies of the Administrative Agent hereunder with respect to such Collateral, and (iii) the term “Administrative Agent,” when used herein in relation to any rights, powers, privileges, interests and remedies of the Administrative Agent with respect to such Collateral, shall include such Subagent; provided, however, that no such Subagent shall be authorized to take any action with respect to any such Collateral unless and except to the extent expressly authorized in writing by the Administrative Agent.

          Section 23. Remedies. If any Event of Default shall have occurred and be continuing:

     (a) The Administrative Agent may exercise in respect of the Collateral, in addition to other rights and remedies provided for herein or otherwise available to it, all the rights and remedies of a secured party upon default under the UCC (whether or not the UCC applies to the affected Collateral) and also may: (i) require each Grantor to, and each Grantor hereby agrees that it will at its expense and upon request of the Administrative Agent forthwith, assemble all or part of the Collateral as directed by the Administrative Agent and make it available to the Administrative Agent at a place and time to be designated by the Administrative Agent that is reasonably convenient to both parties; (ii) without notice except as specified below, sell the Collateral or any part thereof in one or more parcels at public or private sale, at any of the Administrative Agent’s offices or elsewhere, for cash, on credit or for future delivery, and upon

23

such other terms as the Administrative Agent may deem commercially reasonable; (iii) occupy any premises owned or leased by any of the Grantors where the Collateral or any part thereof is assembled or located for a reasonable period in order to effectuate its rights and remedies hereunder or under law, without obligation to such Grantor in respect of such occupation; and (iv) exercise any and all rights and remedies of any of the Grantors under or in connection with the Collateral, or otherwise in respect of the Collateral, including, without limitation, (A) any and all rights of such Grantor to demand or otherwise require payment of any amount under, or performance of any provision of, the Assigned Agreements, the Receivables, the Related Contracts and the other Collateral, (B) withdraw, or cause or direct the withdrawal, of all funds with respect to the Account Collateral and (C) exercise all other rights and remedies with respect to the Assigned Agreements, the Receivables, the Related Contracts and the other Collateral, including, without limitation, those set forth in Section 9-607 of the UCC. Each Grantor agrees that, to the extent notice of sale shall be required by law, at least ten days’ notice to such Grantor of the time and place of any public sale or the time after which any private sale is to be made shall constitute reasonable notification. The Administrative Agent shall not be obligated to make any sale of Collateral regardless of notice of sale having been given. The Administrative Agent may adjourn any public or private sale from time to time by announcement at the time and place fixed therefor, and such sale may, without further notice, be made at the time and place to which it was so adjourned.

     (b) Any cash held by or on behalf of the Administrative Agent and all cash proceeds received by or on behalf of the Administrative Agent in respect of any sale of, collection from, or other realization upon all or any part of the Collateral may, in the discretion of the Administrative Agent, be held by the Administrative Agent as collateral for, and/or then or at any time thereafter applied (after payment of any amounts payable to the Administrative Agent pursuant to Section 24) in whole or in part by the Administrative Agent for the ratable benefit of the Secured Parties against, all or any part of the Secured Obligations, in the following manner:

     (i) first, paid to the Administrative Agent for any amounts then owing to the Administrative Agent pursuant to Section 9.04 of the Credit Agreement or otherwise under the Loan Documents; and

     (ii) second, ratably (A) paid to the Lender Parties and the Hedge Banks, respectively, for any amounts then owing to them, in their capacities as such, under the Loan Documents ratably in accordance with such respective amounts then owing to such Lender Parties and the Hedge Banks, provided that, for purposes of this Section 23, the amount owing to any such Hedge Bank pursuant to any Secured Hedge Agreement to which it is a party (other than any amount therefore accrued and unpaid) shall be deemed to be equal to the Agreement Value therefor and (B) deposited as Collateral in the L/C Collateral Account up to an amount equal to 100% of the aggregate Available Amount of all outstanding Letters of Credit, provided that in the event that any such Letter of Credit is drawn, the Administrative Agent shall pay to the Issuing Bank that issued such Letter of Credit the amount held in the L/C Collateral Account in respect of such Letter of Credit, provided further that, to the extent that any such Letter of Credit shall expire or terminate undrawn and as a result thereof the amount of the Collateral in the L/C Collateral Account shall exceed 100% of the aggregate Available Amount of all then outstanding Letters of Credit, such excess amount of such Collateral shall be applied in accordance with the remaining order of priority set out in this Section 23(b).

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Any surplus of such cash or cash proceeds held by or on the behalf of the Administrative Agent and remaining after payment in full of all the Secured Obligations shall be paid over to the applicable Grantor or to whomsoever may be lawfully entitled to receive such surplus.

     (c) All payments received by any Grantor under or in connection with any Assigned Agreement or otherwise in respect of the Collateral shall be received in trust for the benefit of the Administrative Agent, shall be segregated from other funds of such Grantor and shall be forthwith paid over to the Administrative Agent in the same form as so received (with any necessary indorsement).

     (d) The Administrative Agent may, without notice to any Grantor except as required by law and at any time or from time to time, charge, set-off and otherwise apply all or any part of the Secured Obligations against any funds held with respect to the Account Collateral or in any other deposit account.

     (e) In the event of any sale or other disposition of any of the Intellectual Property Collateral of any Grantor, the goodwill symbolized by any Trademarks subject to such sale or other disposition shall be included therein, and such Grantor shall supply to the Administrative Agent or its designee such Grantor’s know-how and expertise, and documents and things relating to any Intellectual Property Collateral subject to such sale or other disposition, and such Grantor’s customer lists and other records and documents relating to such Intellectual Property Collateral and to the manufacture, distribution, advertising and sale of products and services of such Grantor.

          Section 24. Indemnity and Expenses. (a) Each Grantor agrees to indemnify, defend and save and hold harmless each Secured Party and each of their Affiliates and their respective officers, directors, employees, agents and advisors (each, an “Indemnified Party”) from and against, and shall pay on demand, any and all claims, damages, losses, liabilities and expenses (including, without limitation, reasonable fees and expenses of counsel) that may be incurred by or asserted or awarded against any Indemnified Party, in each case arising out of or in connection with or resulting from this Agreement (including, without limitation, enforcement of this Agreement), except to the extent such claim, damage, loss, liability or expense is found in a final, non- appealable judgment by a court of competent jurisdiction to have resulted from such Indemnified Party’s gross negligence or willful misconduct.

          (b) Each Grantor will upon demand pay to the Administrative Agent the amount of any and all reasonable expenses, including, without limitation, the reasonable fees and expenses of its counsel and of any experts and agents, that the Administrative Agent may incur in connection with (i) the administration of this Agreement, (ii) the custody, preservation, use or operation of, or the sale of, collection from or other realization upon, any of the Collateral of such Grantor, (iii) the exercise or enforcement of any of the rights of the Administrative Agent or the other Secured Parties hereunder or (iv) the failure by such Grantor to perform or observe any of the provisions hereof.

          Section 25. Amendments; Waivers; Additional Grantors; Etc. (a) No amendment or waiver of any provision of this Agreement, and no consent to any departure by any Grantor herefrom, shall in any event be effective unless the same shall be in writing and signed by the Administrative Agent, and then such waiver or consent shall be effective only in the specific instance and for the specific purpose for which given. No failure on the part of the Administrative Agent or any other Secured Party to exercise, and no delay in exercising any right hereunder, shall operate as a waiver thereof; nor shall any single or partial exercise of any such right preclude any other or further exercise thereof or the exercise of any other right.

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          (b) Upon the execution and delivery, or authentication, by any Person of a security agreement supplement in substantially the form of Exhibit A hereto (each a “Security Agreement Supplement”), (i) such Person shall be referred to as an “Additional Grantor” and shall be and become a Grantor hereunder, and each reference in this Agreement and the other Loan Documents to “Grantor” shall also mean and be a reference to such Additional Grantor, and each reference in this Agreement and the other Loan Documents to “Collateral” shall also mean and be a reference to the Collateral of such Additional Grantor, and (ii) the supplemental schedules I-X attached to each Security Agreement Supplement shall be incorporated into and become a part of and supplement Schedules I-X, respectively, hereto, and the Administrative Agent may attach such supplemental schedules to such Schedules; and each reference to such Schedules shall mean and be a reference to such Schedules as supplemented pursuant to each Security Agreement Supplement.

          Section 26. Notices, Etc. All notices and other communications provided for hereunder shall be either (i) in writing (including telegraphic, telecopier or telex communication) and mailed, telegraphed, telecopied, telexed or otherwise delivered or (ii) by electronic mail (if electronic mail addresses are designated as provided below) confirmed immediately in writing, in the case of the Borrower or the Administrative Agent, addressed to it at its address specified in the Credit Agreement and, in the case of each Grantor other than the Borrower, addressed to it at its address specified in the Credit Agreement or on the signature page to the Security Agreement Supplement pursuant to which it became a party hereto; or, as to any party, at such other address as shall be designated by such party in a written notice to the other parties. All such notices and other communications shall, when mailed, telegraphed, telecopied, telexed, sent by electronic mail or otherwise, be effective when deposited in the mails, delivered to the telegraph company, telecopied, confirmed by telex answerback, sent by electronic mail and confirmed in writing, or otherwise delivered (or confirmed by a signed receipt), respectively, addressed as aforesaid; except that notices and other communications to the Administrative Agent shall not be effective until received by the Administrative Agent. Delivery by telecopier of an executed counterpart of any amendment or waiver of any provision of this Agreement or of any Security Agreement Supplement or Schedule hereto shall be effective as delivery of an original executed counterpart thereof.

          Section 27. Continuing Security Interest; Assignments under the Credit Agreement. This Agreement shall create a continuing security interest in the Collateral and shall (a) remain in full force and effect until the latest of (i) the payment in full in cash of the Secured Obligations, (ii) the Termination Date and (iii) the termination or expiration of all Letters of Credit and all Secured Hedge Agreements, (b) be binding upon each Grantor, its successors and assigns and (c) inure, together with the rights and remedies of the Administrative Agent hereunder, to the benefit of the Secured Parties and their respective successors, transferees and assigns. Without limiting the generality of the foregoing clause (c), any Lender Party may assign or otherwise transfer all or any portion of its rights and obligations under the Credit Agreement (including, without limitation, all or any portion of its Commitments, the Advances owing to it and the Note or Notes, if any, held by it) to any other Person, and such other Person shall thereupon become vested with all the benefits in respect thereof granted to such Lender Party herein or otherwise, in each case as provided in Section 8.07 of the Credit Agreement.

          Section 28. Release; Termination. (a) Upon any sale, lease, transfer or other disposition of any item of Collateral of any Grantor in accordance with the terms of the Loan Documents (other than sales of Inventory in the ordinary course of business), the Administrative Agent will, at such Grantor’s expense, execute and deliver to such Grantor such documents as such Grantor shall reasonably request to evidence the release of such item of Collateral from the assignment and security interest granted hereby; provided, however, that (i) at the time of such request and such release no Default shall have occurred and be continuing, (ii) such Grantor shall have delivered to the Administrative Agent, at least ten Business Days prior to the date of the proposed release, a written request for release describing

26

the item of Collateral and the terms of the sale, lease, transfer or other disposition in reasonable detail, including, without limitation, the price thereof and any expenses in connection therewith, together with a form of release for execution by the Administrative Agent and a certificate of such Grantor to the effect that the transaction is in compliance with the Loan Documents and as to such other matters as the Administrative Agent may request and (iii) the proceeds of any such sale, lease, transfer or other disposition required to be applied, or any payment to be made in connection therewith, in accordance with Section 2.06 of the Credit Agreement shall, to the extent so required, be paid or made to, or in accordance with the instructions of, the Administrative Agent when and as required under Section 2.06 of the Credit Agreement.

          (b) Upon the latest of (i) the payment in full in cash of the Secured Obligations, (ii) the Termination Date and (iii) the termination or expiration of all Letters of Credit and all Secured Hedge Agreements, the pledge and security interest granted hereby shall terminate and all rights to the Collateral shall revert to the applicable Grantor. Upon any such termination, the Administrative Agent will, at the applicable Grantor’s expense, execute and deliver to such Grantor such documents as such Grantor shall reasonably request to evidence such termination.

          Section 29. Execution in Counterparts. This Agreement may be executed in any number of counterparts, each of which when so executed shall be deemed to be an original and all of which taken together shall constitute one and the same agreement. Delivery of an executed counterpart of a signature page to this Agreement by telecopier shall be effective as delivery of an original executed counterpart of this Agreement.

          Section 30. The Mortgages. In the event that any of the Collateral hereunder is also subject to a valid and enforceable Lien under the terms of any Mortgage and the terms of such Mortgage are inconsistent with the terms of this Agreement, then with respect to such Collateral, the terms of such Mortgage shall be controlling in the case of fixtures and real estate leases, letting and licenses of, and contracts and agreements relating to the lease of, real property, and the terms of this Agreement shall be controlling in the case of all other Collateral.

          Section 31. Governing Law. This Agreement shall be governed by, and construed in accordance with, the laws of the State of New York.

[Signature Pages Follow]

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          IN WITNESS WHEREOF, each Grantor has caused this Agreement to be duly executed and delivered by its officer thereunto duly authorized as of the date first above written.

GRUBB & ELLIS COMPANY
By	/s/ Richard W. Pehlke
	Name: Richard W. Pehlke
	Title: EVP & CFO
GRUBB & ELLIS AFFILIATES, INC.
By	/s/ Richard W. Pehlke
	Name: Richard W. Pehlke
	Title: CFO
GRUBB & ELLIS MANAGEMENT SERVICES, INC.
By	/s/ Richard W. Pehlke
	Name: Richard W. Pehlke
	Title: CFO
GRUBB & ELLIS OF ARIZONA, INC.
By	/s/ Richard W. Pehlke
	Name: Richard W. Pehlke
	Title: CFO
GRUBB & ELLIS CONSULTING SERVICES COMPANY
By	/s/ Richard W. Pehlke
	Name: Richard W. Pehlke
	Title: CFO
GRUBB & ELLIS INSTITUTIONAL PROPERTIES, INC.
By	/s/ Richard W. Pehlke
	Name: Richard W. Pehlke
	Title: CFO

28

GRUBB & ELLIS OF MICHIGAN, INC.
By	/s/ Richard W. Pehlke
	Name: Richard W. Pehlke
	Title: CFO
GRUBB & ELLIS MORTGAGE GROUP, INC.
By	/s/ Richard W. Pehlke
	Name: Richard W. Pehlke
	Title: CFO
GRUBB & ELLIS OF NEVADA, INC.
By	/s/ Richard W. Pehlke
	Name: Richard W. Pehlke
	Title: CFO
GRUBB & ELLIS NEW YORK, INC.
By	/s/ Richard W. Pehlke
	Name: Richard W. Pehlke
	Title: CFO
GRUBB & ELLIS ADVISERS OF CALIFORNIA, INC.
By	/s/ Richard W. Pehlke
	Name: Richard W. Pehlke
	Title: CFO
HSM INC.
By	/s/ Richard W. Pehlke
	Name: Richard W. Pehlke
	Title: CFO

29

WM. A. WHITE/GRUBB & ELLIS INC.
By	/s/ Richard W. Pehlke
	Name: Richard W. Pehlke
	Title: CFO
LANDAUER HOSPITALITY INTERNATIONAL, INC.
By	/s/ Richard W. Pehlke
	Name: Richard W. Pehlke
	Title: CFO
LANDAUER SECURITIES, INC.
By	/s/ Richard W. Pehlke
	Name: Richard W. Pehlke
	Title: CFO
GRUBB & ELLIS MANAGEMENT SERVICES OF MICHIGAN, INC.
By	/s/ Richard W. Pehlke
	Name: Richard W. Pehlke
	Title: CFO
GRUBB & ELLIS EUROPE, INC.
By	/s/ Richard W. Pehlke
	Name: Richard W. Pehlke
	Title: CFO
NNN REALTY ADVISORS, INC.
By	/s/ Michael J. Rispoli
	Name: Michael J. Rispoli
	Title: CFO

30

GRUBB & ELLIS REALTY INVESTORS, LLC
By	/s/ Michael J. Rispoli
	Name: Michael J. Rispoli
	Title: CFO
TRIPLE NET PROPERTIES REALTY, INC.
By	/s/ Michael J. Rispoli
	Name: Michael J. Rispoli
	Title: CFO
GRUBB & ELLIS RESIDENTIAL MANAGEMENT, INC.
By	/s/ Michael J. Rispoli
	Name: Michael J. Rispoli
	Title: CFO
GERA PROPERTY ACQUISITION LLC
By	/s/ Richard W. Pehlke
	Name: Richard W. Pehlke
	Title: CFO
GERA 6400 SHAFER LLC
By	/s/ Richard W. Pehlke
	Name: Richard W. Pehlke
	Title: CFO
GERA ABRAMS CENTRE LLC
By	/s/ Richard W. Pehlke
	Name: Richard W. Pehlke
	Title: CFO

31

GRUBB & ELLIS ALESCO GLOBAL ADVISORS, LLC
By	/s/ Joseph Welsh
	Name: Joseph Welsh
	Title: Chief Financial Officer
NNN/ROC APARTMENT HOLDINGS, LLC
By	/s/ Michael J. Rispoli
	Name: Michael J. Rispoli
	Title: CFO
GRUBB & ELLIS HOUSING, LLC
By	/s/ Michael J. Rispoli
	Name: Michael J. Rispoli
	Title: CFO
GRUBB & ELLIS APARTMENT REIT ADVISOR, LLC
By	/s/ Stanley J. Olander, Jr.
	Name: Stanley J. Olander, Jr.
	Title: CEO and President
GRUBB & ELLIS HEALTHCARE REIT ADVISOR, LLC
By	/s/ Jeffrey T. Hanson
	Name: Jeffrey T. Hanson
	Title: CEO
GRUBB & ELLIS HEALTHCARE REIT II ADVISOR, LLC
By	/s/ Jeffrey T. Hanson
	Name: Jeffrey T. Hanson
	Title: CEO

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NNN ROCKY MOUNTAIN EXCHANGE, LLC.
By	/s/ Michael J. Rispoli
	Name: Michael J. Rispoli
	Title: CFO
NNN 200 GALLERIA MEMBER, LLC.
By	/s/ Michael J. Rispoli
	Name: Michael J. Rispoli
	Title: CFO

33

EX-21.1

Exhibit 21.1

Subsidiaries of Grubb & Ellis Company

Subsidiaries	State of Incorporation
1. Grubb & Ellis Advisers of California, Inc.	California
2. Grubb & Ellis Affiliates, Inc.	Delaware
3. Grubb & Ellis of Arizona, Inc.	Washington
4. Grubb & Ellis Europe, Inc.	California
5. Grubb & Ellis Institutional Properties, Inc.	California
6. Grubb & Ellis Management Services, Inc. (“GEMS”)	Delaware
Subsidiaries of Grubb & Ellis Management Services, Inc.:
a. Grubb & Ellis Management Services of Michigan, Inc. (“GEMS of Michigan”)	Michigan
b. Grubb & Ellis Management Services of Canada, Inc.	Canada
c. GEMS Mexicana, S. DE R.L. DE C.V.	Mexico
d. GEMS of Sweden, AB	Sweden
e. GEMS Korea, LLC	Korea
f. Middle East Real Estate Services, LLC	Delaware
7. Grubb & Ellis Mortgage Group, Inc.	California
8. Grubb & Ellis New York, Inc.	New York
9. Grubb & Ellis of Michigan, Inc.	Michigan
10. Grubb & Ellis of Nevada, Inc.	Nevada
11. Grubb & Ellis Consulting Services Company	Florida
Subsidiaries of Grubb & Ellis Consulting Services Company:
a. Landauer Hospitality International, Inc.	Delaware
b. Landauer Securities, Inc.	Massachusetts
12. HSM Inc.	Texas
13. Wm. A. White/Grubb & Ellis, Inc.	New York
14. GERA Property Acquisition LLC	Delaware
Subsidiaries of GERA Property Acquisition LLC
a. GERA 6400 Shafer LLC	Delaware
b. GERA Abrams Centre LLC	Delaware
c. GERA Danbury LLC	Delaware

Subsidiaries	State of Incorporation
15. NNN Realty Advisors, Inc.	Delaware
a. Grubb & Ellis Realty Investors, LLC	Virginia
Subsidiaries of Grubb & Ellis Realty Investors, LLC
1. NNN/ROC Apartment Holdings, LLC	Virginia
2. NNN Collateralized Senior Notes, LLC	Delaware
3. NNN Mission Residential Holdings, LLC	Virginia
4. Grubb & Ellis Healthcare REIT Advisor, LLC	Delaware
5. Grubb & Ellis Healthcare REIT Management, LLC	Virginia
6. Grubb & Ellis Apartment REIT Advisor, LLC	Virginia
7. Grubb & Ellis Apartment Management, LLC	Virginia
8. NNN Park At Spring Creek Leaseco, LP	Texas
9. NNN 6320 Lamar, LLC	Virginia
10. NNN Rocky Mountain Exchange, LLC	Virginia
11. NNN Met Center 10 SPE, LLC	Delaware
12. NNN Southpointe, LLC	Delaware
13. NNN/SOF Avallon Member, LLC	Delaware
a. NNN/SOF Avallon, LLC	Delaware
14. NNN 200 Galleria Member, LLC	Delaware
a. NNN 200 Galleria, LLC	Delaware
15. Grubb & Ellis Housing, LLC	Virginia
a. NNN St. Charles Leaseco, LLC	Delaware
b. NNN Sanctuary at Highland Oaks Leaseco, LLC	Delaware
b. Triple Net Properties Realty, Inc.	California
c. Grubb & Ellis Residential Management, Inc.	Delaware
d. Grubb & Ellis Alesco Global Advisors, LLC (“Alesco”)	California
e. Grubb & Ellis Securities, Inc.	California
f. Grubb & Ellis Investment Advisors, LLC	Delaware

EX-23.1

Exhibit 23.1

CONSENT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

We consent to the incorporation by reference in the Registration Statement (Form S-8 No. 333-147925) pertaining to the 2006 Omnibus Equity Plan of Grubb & Ellis Company of our reports dated May 27, 2009, with respect to the consolidated financial statements and schedules of Grubb & Ellis Company, and the effectiveness of internal control over financial reporting of Grubb & Ellis Company, included in this Annual Report (Form 10-K) for the year ended December 31, 2008.

/s/ Ernst & Young LLP

Irvine, California

May 27, 2009

EX-23.2

Exhibit 23.2

CONSENT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

We consent to the incorporation by reference in Registration Statement No. 333-147925 on Form S-8 of our report dated May 7, 2007 (May 27, 2009 as to the restatement discussed in Note 3 and of discontinued operations discussed in Note 19) relating to the financial statements and financial statement schedule of Grubb & Ellis Company (formerly NNN Realty Advisors, Inc.) and subsidiaries (“the Company”) for the year ended December 31, 2006, appearing in the Annual Report on Form 10-K of the Company for the year ended December 31, 2008.

/s/ Deloitte & Touche LLP

Los Angeles, California

May 27, 2009

EX-31.1

Exhibit 31.1

CERTIFICATION OF CHIEF EXECUTIVE OFFICER
Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002

I, Gary H. Hunt, certify that:

     1. I have reviewed this annual report on Form 10-K of Grubb & Ellis Company;

     2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

     3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

     4. The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

     (a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

     (b) Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

     (c) Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

     (d) Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

     5. The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):

     (a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

     (b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

Date: May 27, 2009

/s/ Gary H. Hunt  

Gary H. Hunt 

Interim Chief Executive Officer 

EX-31.2

Exhibit 31.2

CERTIFICATION OF CHIEF FINANCIAL OFFICER
Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002

I, Richard W. Pehlke, certify that:

     1. I have reviewed this annual report on Form 10-K of Grubb & Ellis Company;

     2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

     3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

     4. The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

     (a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

     (b) Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

     (c) Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

     (d) Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

     5. The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):

     (a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

     (b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

Date: May 27, 2009

/s/ Richard W. Pehlke  

Richard W. Pehlke 

Chief Financial Officer 

EX-32

Exhibit 32

Written Statement of Chief Executive Officer and Chief Financial Officer Pursuant
to Section 906 of the Sarbanes-Oxley Act of 2002

     The undersigned, the Interim Chief Executive Officer and the Chief Financial Officer of Grubb & Ellis Company (the “Company”), each hereby certifies that to his knowledge, on the date hereof:

     (a) the Form 10-K of the Company for the period ended December 31, 2008 filed on the date hereof with the Securities and Exchange Commission (the “Report”) fully complies with the requirements of Section 13 (a) or 15 (d) of the Securities Exchange Act of 1934; and

     (b) information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.

/s/ Gary H. Hunt  

Gary H. Hunt 

Interim Chief Executive Officer
May 27, 2009

/s/ Richard W. Pehlke  

Richard W. Pehlke 

Chief Financial Officer
May 27, 2009