-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, ML0rQBWhBR9B9J6GU0D7QKbpiVa160q4G6a5912yPwVpajM+qrYaoxpxoKnecPiw 838gVY0nOPJ7PhzmVJBGzw== 0000930413-02-001823.txt : 20020514 0000930413-02-001823.hdr.sgml : 20020514 ACCESSION NUMBER: 0000930413-02-001823 CONFORMED SUBMISSION TYPE: 8-K PUBLIC DOCUMENT COUNT: 6 CONFORMED PERIOD OF REPORT: 20020513 ITEM INFORMATION: Changes in control of registrant FILED AS OF DATE: 20020514 FILER: COMPANY DATA: COMPANY CONFORMED NAME: GRUBB & ELLIS CO CENTRAL INDEX KEY: 0000216039 STANDARD INDUSTRIAL CLASSIFICATION: REAL ESTATE AGENTS & MANAGERS (FOR OTHERS) [6531] IRS NUMBER: 941424307 STATE OF INCORPORATION: DE FISCAL YEAR END: 0630 FILING VALUES: FORM TYPE: 8-K SEC ACT: 1934 Act SEC FILE NUMBER: 001-08122 FILM NUMBER: 02647706 BUSINESS ADDRESS: STREET 1: 2215 SANDERS RD STREET 2: STE 400 CITY: NORTHBROOK STATE: IL ZIP: 60062 BUSINESS PHONE: 4159561990 MAIL ADDRESS: STREET 1: ONE MONTGOMERY ST STE 3100 STREET 2: TELESIS TWR 9TH FLR CITY: SAN FRANCISCO STATE: CA ZIP: 94104 8-K 1 c24456_8k-.txt CURRENT REPORT SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM 8-K CURRENT REPORT Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934 Date of Report (Date of earliest event reported) May 13, 2002 GRUBB & ELLIS COMPANY --------------------- (Exact name of registrant as specified in its charter) Delaware 1-8122 94-1424307 ------------------------------------------------------ (State or other (Commission (IRS Employer jurisdiction of File Number) Identification No.) formation) 2215 Sanders Road, Suite 400, Northbrook, Illinois 60062 (Address of principal executive offices) (Zip Code) Registrant's telephone number, including area code (847) 753-7500 Not Applicable -------------- (Former name or former address, if changed since last report) Item 1. Change in Control of Registrant. On May 13, 2002, the Company effected a closing of a financing with Kojaian Ventures, L.L.C. ("KV") pursuant to definitive documentation based upon that certain binding letter agreement dated April 14, 2002, (the "Letter Agreement"), as amended by a letter amendment dated May 13, 2002 (the "Letter Amendment"). The Board of Directors of the Company on May 13, 2002, upon the recommendation of a Special Committee of the Board of Directors (the "Special Committee"), authorized the entering into of the Letter Amendment. The Board of Directors of the Company, upon the recommendation of the Special Committee, had previously ratified on April 15, 2002, the Company's entering into of the Letter Agreement. The Special Committee's recommendations, and the Board of Directors' ratification and authorization, of the financing offered by KV pursuant to the Letter Agreement, as modified by the Letter Amendment (collectively, the "KV Transaction"), was based, in part, upon the fact that the KV Transaction, which replaced a financing provided by the Company's largest stockholder, Warburg Pincus Investors, L.P. ("Warburg Pincus") in March, 2002, was on more favorable terms and conditions to the Company than the Warburg Pincus financing. KV is wholly-owned by C. Michael Kojaian, who is a member of the Board of Directors of the Company and, along with his father, owns, subsequent to the closing of the KV transaction, approximately 20% of the Company's issued and outstanding Common Stock. In addition, certain affiliated real estate entities of KV, in the aggregate, are substantial clients of the Company. As more fully described below, as a consequence of the closing of the KV Transaction, it can reasonably be expected that a change in control of the Company will effectively occur. As previously disclosed by the Company in its Current Reports on Form 8-K filed on each of March 12, 2002 and April 19, 2002, on March 7, 2002, the Company, upon the approval of a majority of the disinterested members of the Company's Board of Directors, entered into a third amendment (the "Credit Amendment") to restructure the terms and conditions of its Amended and Restated term loan and revolving credit facility ("Credit Facility") dated as of December 31, 2000, among the Company, various financial institutions, and Bank of America, N.A. as agent and lender (collectively "the Banks"). Pursuant to the Credit Amendment, Warburg Pincus loaned the Company $5,000,000 at the rate of 15% per annum, compounded quarterly, in exchange for a convertible secured promissory note (the "5,000,000 Subordinated Note") and thereby became an additional junior lender under the Credit Facility. Upon the approval of the majority of the disinterested members of the Board of Directors, the Company, Warburg Pincus, and Bank of America, N.A. ("Bank of America"), as agent for the Banks, entered into an Option Agreement ("Option Agreement") simultaneously with the entering into of the Credit Amendment. Pursuant to the Option Agreement, the Company had the absolute, unconditional and irrevocable right to cause Warburg Pincus on June 3, 2002 to purchase from the Company a promissory note in the amount of $6,000,000 upon substantially similar terms and conditions as the $5,000,000 Subordinated Note (the "6,000,000 Subordinated Note"). 1 The entire $11,000,000 of indebtedness represented by the $5,000,000 Subordinated Note and the $6,000,000 Subordinated Note (collectively, the "$11,000,000 Subordinated Debt") was, under the contemplated transaction with Warburg Pincus', convertible, generally at the option of the holder, into (i) 11,000 shares of the Company's Series A Preferred Stock, having a coupon of 15% per annum, compounded quarterly, and a stated value of $1,000 per share, plus (ii) additional shares of Series A Preferred Stock representing accrued interest on, and reasonable costs of the holder attributable to, the $11,000,000 Subordinated Debt ((i) and (ii), collectively, the "Conversion Amount"). The $11,000,000 Subordinated Debt issuable to Warburg Pincus was also convertible in part, from time to time and generally at the option of the holder, into a pro rated portion of the Conversion Amount of Series A Preferred Stock. The Series A Preferred Stock issuable to Warburg Pincus was not convertible into any other securities of the Company or subject to redemption under any circumstances, but had a preference upon liquidation, dissolution and certain change in control transactions. In addition, the Series A Preferred Stock issuable to Warburg Pincus had veto rights with respect to certain corporate transactions and voting power equivalent to its liquidation preference on all matters that are subject to a stockholder vote. Further, the liquidation preference of the Series A Preferred Stock issuable to Warburg Pincus was the greater of (i) two (2) times the Conversion Amount, plus the accrued dividend thereon at the rate of 15% per annum, compounded quarterly, or (ii) the equivalent of 50% of the consideration to be paid to all equity holders of the Company on a fully diluted basis as if liquidation, dissolution or a change of control transaction occurred on March 7, 2002, subject to adjustments. Accordingly, the voting power of this Series A Preferred Stock issuable to Warburg Pincus, was 50% of the Company on a fully diluted basis, or approximately 58% on a primary share basis. Pursuant to the Option Agreement, provided that the Company received approximately $15,200,000 (plus accrued interest and certain costs) from the sale of equity and/or subordinated debt securities, the Company had the right to replace Warburg Pincus with respect to its $11,000,000 Subordinated Debt by tendering to Warburg Pincus, or its assigns, on or before April 30, 2002 (which, under certain circumstances, could be extended to May 14, 2002, and which circumstances were satisfied): (i) the entire principal amount of the $5,000,000 Subordinated Note, plus accrued interest thereon and reasonable costs of Warburg Pincus with respect thereto, and (ii) the sum of $4,158,431 to repurchase, at Warburg Pincus' average cost of $3.11 per share, 1,337,358 shares of Common Stock held by Warburg Pincus and/or its assigns, whereupon the $5,000,000 Subordinated Note would be cancelled and the Option Agreement, including Warburg Pincus' obligation to purchase the additional $6,000,000 Subordinated Note issuable thereunder, would automatically be terminated. Accordingly, on the closing of the KV Transaction on May 13, 2002, KV paid to the Company an aggregate of $15,386,580 (which is inclusive of the $1,000,000 good faith deposit delivered by KV to the Company upon the signing of the Letter Agreement) which provided the Company with the necessary funds, which the Company used, to (i) repay the $5,000,000 Subordinated Note and accrued interest thereon of $137,500, (ii) pay $100,000 of Warburg Pincus' reasonable, documented out-of-pocket expenses associated with the $5,000,000 Subordinated Note, (iii) repurchase, at cost, 1,337,358 shares of Common Stock held by Warburg Pincus for a price per share of $3.11, or an aggregate purchase price of $4,158,431, and (iv) pay down $6,000,000 of revolving debt under the Company's Credit Facility. In exchange therefore, KV received (i) a convertible subordinated note in the principal amount of 2 $11,237,500 (the "KV Debt"), and (ii) 1,337,358 shares of Common Stock at a price of $3.11 per share. As a consequence, upon the closing of the KV Transaction, the Option Agreement was terminated, and KV replaced Warburg Pincus as a junior lender under the Credit Facility. The Company has been advised by KV that the source of its funds are from its working capital, and are not borrowed from a lending institution or any other source. As noted above, the Special Committee recommended that the Board of Directors approve the KV Transaction, in part, because it was on more favorable terms and conditions to the Company than the financing provided by Warburg Pincus pursuant to the Option Agreement. The form of KV's investment pursuant to the KV Transaction is substantially identical to the form of the $11,000,000 Subordinated Debt that Warburg Pincus was to provide pursuant to the Option Agreement, PROVIDED, HOWEVER, that the KV Debt is more favorable to the Company in two (2) material respects. First, the interest rate on the KV Debt is 12% per annum as opposed to 15% per annum. Similarly, the Series A Preferred Stock into which the KV Debt is convertible has a coupon of 12% per annum, compounded quarterly, rather than 15% per annum, compounded quarterly. Second, subject to the Letter Amendment, the Series A Preferred Stock that KV is entitled to receive, like the Series A Preferred Stock that was issuable to Warburg Pincus, will have preference on liquidation, dissolution and certain change in control transactions, but in accordance with the Certificate of Amendment of Company's Certificate of Designations, Number, Voting Powers, Preferences and Rights of Series A Preferred Stock (the "Amended Series A Certificate of Designations"), KV's liquidation preference will be equal to the greater of (i) 1.5 times the Conversion Amount, plus the accrued dividend thereon at the rate of 12% per annum (provided such liquidation, dissolution, or change of control transaction takes place within twelve (12) months after May 13, 2002, and thereafter it will increase to 2 times the Conversion Amount plus the accrued dividend thereon at the rate of 12% per annum), or (ii) the equivalent of 40% percent of the consideration to be paid to all the equity holders of the Company, not on a fully diluted basis, but rather, on an "Adjusted Outstanding Basis." For purposes of determining this liquidation preference, the Adjusted Outstanding Basis is equal to the shares of Common Stock outstanding as of the date of the Letter Agreement, April 14, 2002 (the "Date of the KV Transaction"), plus the shares of Common Stock underlying the following options (i) those Common Stock options that have been granted and are outstanding as of May 13, 2002 that have an exercise price equal to or less than $5.00 per share (other than those Common Stock options, if any, that are cancelled within 12 months after the Date of the KV Transaction), plus (ii) all Common Stock options that are currently authorized and subsequently issued within twelve (12) months after May 13, 2002, plus (iii) 50% of all Common Stock options, if any, subsequently authorized and issued within twelve (12) months after the Closing of the KV Transaction ("Newly Authorized Options"), provided that the number of Newly Authorized Options to be taken into account for the purposes of this calculation shall not exceed the number of any Common Stock options cancelled during such 12-month period. Accordingly, subject to the Letter Amendment, the voting power of the Series A Preferred Stock, upon issuance to KV, is initially 40% of the Company on an Adjusted Outstanding Basis, and approximately 44% on a primary share basis. As a consequence, upon the closing of the KV Transaction, KV and its affiliated parties, subject to the Letter 3 Amendment, have the power to acquire voting control over the Company's shares by converting the KV Debt. In the event of the conversion of the KV Debt into Series A Preferred Stock, subject to the Letter Amendment, there will be a change in control of the Company, as KV and its affiliated parties would have in excess of 50% of the voting power of the Company (subject to adjustment) and Warburg Pincus, which currently owns approximately 48% of the issued and outstanding Common Stock of the Company, would have approximately 22% of the voting power of the Company (subject to adjustment). In connection with the closing of the KV Transaction, that certain voting agreement (the "Voting Agreement") entered into on January 24th, 1997, by C. Michael Kojaian and his father (collectively, the "Kojaians"), Warburg Pincus and the Goldman Sachs Group, Inc. ("Goldman Sachs"), pursuant to which each of the parties to the Voting Agreement have agreed to vote all of their shares for the other's Board nominees, is not being amended. Presently, Warburg Pincus has two (2) nominees on the Board of Directors, and each of the Kojaians and Goldman Sachs has one nominee on the Board of Directors. In order to effectuate and close the KV Transaction, the Company and KV entered into a definitive securities purchase agreement dated May 13, 2002, incorporating all of the terms of the Letter Agreement and the Letter Amendment ("the Securities Purchase Agreement"), pursuant to which the parties satisfied all of the closing conditions as required by the Letter Agreement, the two principal conditions of which (other than the delivery of consideration for the purchase of securities and the repayment to Warburg Pincus and the termination of the Option Agreement) were: (i) receipt of all necessary consents, approvals or waivers required by the Banks pursuant to the Credit Facility to close the KV Transaction, which was effected by the Company and the Banks entering into a Fourth Amendment to the Credit Facility (the "Fourth Amendment"); and (ii) receipt by the Special Committee from an independent financial advisor of a written opinion to the effect that the KV Transaction is fair to the Company from a financial point of view, which condition was satisfied by receipt of a written opinion, dated May 13, 2002, from Houlihan Lokey Howard & Zukin Financial Advisors, Inc. Pursuant to the Letter Amendment, the Company has the right, under certain circumstances and subject to certain conditions, to effectively unwind the KV Transaction. Specifically, until after the "Non-Voting Date" (as defined, and as same may be extended, as provided below), KV agreed, notwithstanding any conversion of the KV Debt into Series A Preferred Stock, that KV will (i) not exercise any of the rights, powers and preferences of the Series A Preferred Stock in a manner that could, directly or indirectly, hinder, prohibit, delay or prevent the consummation of, or materially alter the terms of, any potential acquisition of the Company either (a) through a sale of all or substantially all of the assets of the Company, (b) through an acquisition of an interest in the Common Stock of the Company by way of purchase (whether by public tender offer or otherwise), merger or consolidation, or (c) otherwise (each of subclauses (a), (b) and (c), a "Transaction"), and (ii) not transfer the KV Debt or the Series A Preferred Stock or any part thereof or interest therein to any third party unless such third party shall become a party to the Securities Purchase Agreement as if such transferee were KV. The term "Transaction" includes any acquisition of the Company in a transaction contemplated or permitted by a definitive binding agreement relating to another Transaction. The Non-Voting Date is May 31, 2002; provided, however, should the Company enter into a definitive binding agreement relating to a Transaction with a third party by such date, the Non-Voting Date shall be extended automatically until the earlier of (i) a closing of a Transaction, or (ii) September 30, 2002. 4 In the event that upon a closing of a Transaction KV has not converted the KV Debt into Series A Preferred Stock, the Company shall redeem the KV Debt for a cash amount equal to the principal amount of the KV Debt, PLUS all interest accrued thereon at the rate of 12% per annum, compounded quarterly, from May 13, 2002 through the date of repayment (the "Repayment Amount"), PLUS $2,000,000 (the "Alternate Payment Amount"), which Alternate Payment Amount shall be payable as consideration for the unwinding of the KV Transaction. Alternatively, in the event that prior to the closing of a Transaction KV has in fact converted the KV Debt into Series A Preferred Stock, KV shall receive a cash amount equal to the stated value of its Preferred Stock, PLUS dividends that have accrued since May 13, 2002 at the rate of 12% per annum, compounded quarterly, PLUS the Alternate Payment Amount, which Alternate Payment Amount shall be payable in lieu of the liquidation preference that KV would have received in accordance with the Amended Series A Certificate of Designations. Further, in connection with a Transaction, in the event that KV accepts the Alternate Payment Amount, KV shall not, shall cause certain of its affiliates not to, and shall not assist or encourage any stockholder of the Company to, seek to exercise appraisal rights with respect to, or otherwise challenge, a Transaction. If KV does not accept the Alternate Payment Amount, KV shall waive its right to receive the Alternate Payment Amount, but KV and certain of its affiliates shall otherwise retain all remedies at law with respect to such Transaction. Until after the Non-Voting Date, KV shall cause its controlling member not to, and not to agree to, voluntarily transfer, donate, sell, assign or otherwise dispose of any of the shares of Common Stock of the Company owned, directly or indirectly, by such stockholder. Finally, until after the Non-Voting Date, the Company will not issue or agree to issue any equity securities or securities or rights convertible into equity securities, other than (i) in connection with, and conditioned on the closing of, a Transaction, (ii) pursuant to any obligation of the Company contained in (a) any employment agreement in effect as of April 14, 2002, (b) certain employment agreements entered into subsequent to April 14, 2002, but prior to May 13, 2002, and (c) the Company's employee stock purchase plan, or (iii) upon the exercise or conversion, as the case may be, of any other options, warrants or derivative securities outstanding as of April 14, 2002. The Company's Common Stock is currently listed on the New York Stock Exchange ("NYSE") pursuant to a listing agreement (the "Listing Agreement"). As previously disclosed by the Company on January 22, 2002, the NYSE accepted the Company's proposed business plan to attain compliance with the NYSE's listing standards on or before July 4, 2003. As a result, the Company's Common Stock continues to be traded on the NYSE, subject to the Company maintaining compliance with its business plan, which is subject to periodic review by the NYSE. The Company had received notification from the NYSE of non-compliance with its listing standards on January 4, 2002. Pursuant to its Listing Agreement, the Company will seek to have the securities issued in the KV Transaction conform with all NYSE listing standards and policies. In the event that the Company is unable to obtain an exemption or waiver from the NYSE, the Company will be in violation of its Listing Agreement and its shares may be subject to delisting from the NYSE. The foregoing is only intended to be a summary of the terms of the Letter Amendment, the Securities Purchase Agreement, the KV Debt, the Amended Series A 5 Certificate of Designations, and the Fourth Amendment, and is not intended to be a complete discussion of any of such documents. Accordingly, the foregoing is qualified by reference to the full text of each of the Letter Amendment, the Securities Purchase Agreement, the KV Debt, the Amended Series A Certificate of Designations, and the Fourth Amendment, all of which are attached hereto as Exhibits to this Current Report on Form 8-K. 6 The following are filed as Exhibits to this Current Report on Form 8-K: 1. Letter Amendment dated May 13, 2002 by and between Grubb & Ellis Company and Kojaian Ventures, L.L.C. 2. Securities Purchase Agreement dated May 13, 2002 by and between Grubb & Ellis Company and Kojaian Ventures, L.L.C. 3. Convertible Subordinated Promissory Note and Security Agreement in the principal amount of $11,237,500 dated May 13, 2002 4. Certificate of Amendment of Certificate of Designations, Number, Voting Powers, Preferences and Rights of Series A Preferred Stock of Grubb & Ellis Company 5. Fourth Amendment to amended and restated term loan and revolving Credit Facility dated December 31, 2000, by and among the Company, various financial institutions, and Bank of America, N.A., as agent and lender. 7 SIGNATURES Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly authorized and caused the undersigned to sign this Report on the Registrant's behalf. GRUBB & ELLIS COMPANY By: ------------------------------------- Barry M. Barovick Chief Executive Officer and President ------------------------------------- Ian Y. Bress Chief Financial Officer Dated: May 14, 2002 8 EX-1 3 c24456_ex1.txt LETTER AGREEMENT Exhibit 1 May 13, 2002 Grubb & Ellis Company 2215 Sanders Road, Suite 400, Northbrook, IL 60062 Attention: Barry M. Barovick, Chief Executive Officer Re: Letter Agreement Mr. Barovick: Reference is herein made to that certain Letter Agreement, by and between Grubb & Ellis Company (the "Company") and Kojaian Ventures, L.L.C. ("KV"), dated April 14, 2002 (the "Letter Agreement") pursuant to which KV agreed to provide to the Company the money necessary for the Company to replace the financing provided by Warburg, Pincus Investors, L.P. ("Warburg") pursuant to the terms of that certain Option Agreement, dated as of March 7, 2002, by and among Warburg, the Company and Bank of America, N.A. (as Administrative Agent under that certain Amended and Restated Credit Agreement, dated as of December 31, 2000, among the Company, various financial institutions and Bank of America, N.A.) and Company agreed to issue securities to KV and undertake other acts in order to effectuate the transaction with KV. The transactions contemplated by the Letter Agreement are herein referred to as the "Kojaian Refinancing." This amendment and supplement to the Letter Agreement (this "Amendment") sets forth certain modifications to the agreement of the parties hereto with respect to the Kojaian Refinancing and modifies and amends the Letter Agreement. All defined terms contained herein, but not defined herein, shall have the meanings ascribed thereto in the Letter Agreement. In order to provide additional assurances of fairness to the shareholders of the Company and in light of KV's intention of not attempting to liquidate the Company, KV is willing, as provided herein, to limit its liquidation premium in the event the Company is acquired shortly after the Kojaian Refinancing. Grubb & Ellis Company May 10, 2002 Page 2 Until after the "Non-Voting Date" (as hereinafter defined), as same may be extended as provided below, KV hereby agrees that it will (i) not exercise any of the rights, powers and preferences of the Series A Preferred Stock ("Preferred Stock") that would be issued to KV should KV convert the promissory note to be issued to KV by the Company in connection with the Kojaian Refinancing (the "Note") in a manner that could, directly or indirectly, hinder, prohibit, delay or prevent the consummation of, or materially alter the terms of, any potential acquisition of the Company either (a) through a sale of all or substantially all of the assets of the Company, (b) through an acquisition of an interest in the common stock of the Company by way of purchase (whether by public tender offer or otherwise), merger or consolidation or (c) otherwise (each of clauses (a), (b) and (c), a "Transaction"), and (ii) not transfer the Note or the Preferred Stock or any part thereof or interest therein to any third party unless such third party shall become a party to this Amendment or the definitive documents related hereto as if such transferee were KV. For the avoidance of doubt, "Transaction" shall include any acquisition of the Company in a transaction contemplated or permitted by the definitive binding agreement relating to another Transaction. Until after the "Non-Voting Date," KV shall cause its controlling member not to, and not to agree to, voluntarily transfer, donate, sell, assign or otherwise dispose of any of the shares of common stock of the Company owned, directly or indirectly, by such stockholder. Until after the "Non-Voting Date," Company hereby agrees that it will not issue or agree to issue any equity securities or securities or rights convertible into equity securities, other than (i) in connection with, and conditioned on the closing of, a Transaction, (ii) pursuant to any obligation of the Company contained in (a) any employment agreement in effect as of April 14, 2002, (b) certain employment agreements of a regional managing director and an executive vice president for operations that were entered into between the Company and such parties after April 14, 2002 but prior to the date hereof and (c) the Company's employee stock purchase plan, or (iii) upon the exercise or conversion, as the case may be, of any other options, warrants or derivative securities outstanding as of April 14, 2002. The "Non-Voting Date" shall be May 31, 2002; provided, that, should Company enter into a definitive binding agreement relating to a Transaction between Company and a third party by such date, the Non-Voting Date shall be extended automatically until the earlier of (i) a closing of a Transaction, or (ii) September 30, 2002. For purposes of this Amendment, "affiliate" shall mean, with respect to any party, any other party directly or indirectly controlling, controlled by, or under direct or indirect common control with, such party. For the avoidance of doubt, "affiliate" shall not mean the father of the controlling member of KV. In the event of a closing of a Transaction contemplated by this Amendment, Company at the time of such closing shall redeem the Note for a cash amount equal to the principal amount of the Note, PLUS all interest accrued pursuant to the terms of the Note from the date of the closing of the Kojaian Refinancing through the date of repayment at the 12% interest rate contemplated in the Letter Agreement (such principal and interest shall be referred to herein as the "Repayment Amount"), PLUS $2,000,000 (the "Alternate Liquidation Amount"), which Alternate Liquidation Amount shall be payable as consideration for the termination of the Kojaian Refinancing in the event that the Note was not theretofore converted and in lieu of the liquidation premium as set forth in Grubb & Ellis Company May 10, 2002 Page 3 Section 3(a) of the Certificate of Amendment of Company's Certificate of Designations, Number, Voting Powers, Preferences and Rights of Series A Preferred Stock ("Amended Certificate") had the Note in fact been converted. However, should KV convert the Note into Preferred Stock prior to such closing, KV shall receive a cash amount equal to the stated value of its Preferred Stock, PLUS dividends that have accrued as outlined in Section 2 of the Amended Certificate, PLUS the Alternate Liquidation Amount, which Alternate Liquidation Amount shall be payable in lieu of the liquidation premium set forth in Section 3(a) of the Amended Certificate. In connection with a Transaction, if KV accepts the Alternate Liquidation Amount, KV shall not, shall cause its affiliates not to, and shall not assist or encourage any stockholder of the Company to, seek to exercise appraisal rights with respect to, or otherwise challenge, the Transaction. If KV does not accept the Alternate Liquidation Amount, KV shall waive its right to receive the Alternate Liquidation Amount, but KV and its affiliates shall otherwise retain all remedies at law with respect to such Transaction. Except as expressly set forth in this Amendment, the terms of the Letter Agreement are hereby ratified and confirmed in all respects and remain in full force and effect. Specifically, the parties confirm that they shall use their reasonable best efforts to close the transactions contemplated by the Letter Agreement on or before May 13, 2002. In the event of any inconsistency between the Letter Agreement and this Amendment, the terms of this Amendment shall control. Grubb & Ellis Company May 10, 2002 Page 4 This Amendment may be executed in counterparts, each of which shall be deemed an original, but all of which together shall constitute one and the same instrument. Delivery by facsimile of an executed counterpart of any signature page to this Amendment to be executed hereunder shall have the same effectiveness as the delivery of a manually executed counterpart thereof. Sincerely, KOJAIAN VENTURES, L.L.C., a Michigan limited liability company By: Kojaian Ventures-MM, Inc., a Michigan corporation, Managing Member By: /s/ C. Michael Kojaian ------------------------------- C. Michael Kojaian, President ACCEPTED AND AGREED: - -------------------- GRUBB & ELLIS COMPANY By /s/ Barry M. Barovick ---------------------------- Name: Barry M. Barovick Title: President, Chief Executive Officer EX-2 4 c24456_ex2.txt SECURITIES PURCHASE AGREEMENT Exhibit 2 ================================================================================ SECURITIES PURCHASE AGREEMENT DATED AS OF MAY 13, 2002 BY AND BETWEEN GRUBB & ELLIS COMPANY AND KOJAIAN VENTURES, L.L.C. ================================================================================ SECURITIES PURCHASE AGREEMENT SECURITIES PURCHASE AGREEMENT (this "Agreement") made as of May 13, 2002 by and between Grubb & Ellis Company, a Delaware corporation (the "Company") and Kojaian Ventures, L.L.C., a Michigan limited liability company ("Kojaian"). RECITALS: The facts (as represented by the parties as set forth below) upon which this Agreement is based are: A. In January of 2002, Warburg Pincus Investors, L.P. ("Warburg Pincus"), upon the exercise of common stock purchase warrants, acquired an aggregate of 1,337,358 shares (the "Warrant Shares") of the Company's common stock, par value $.01 per share, for an aggregate purchase price of $4,158,431; B. On March 7, 2002, the Company entered into a third amendment (the "Credit Amendment") to restructure the terms and conditions of its amended and restated credit agreement (the "Credit Facility") dated as of December 31, 2000, among the Company, various financial institutions and Bank of America, N.A. as agent and lender (collectively the "Banks"); C. Pursuant to the Credit Amendment, Warburg Pincus loaned the Company $5,000,000, at the rate of 15% per annum, compounded quarterly, in exchange for a convertible secured promissory note (the "$5,000,000 Warburg Note") and, thereby, became an additional, junior lender under the Credit Facility; D. Simultaneously with the entering into of the Credit Amendment, the Company, Warburg Pincus and Bank of America, N.A. ("Bank of America"), as agent for the Banks, entered into an option agreement (the "Option Agreement") pursuant to which the Company has the absolute, unconditional and irrevocable right, assignable to the Banks, to cause Warburg Pincus, on June 3, 2002, to purchase from the Company a promissory note in the amount of $6,000,000 upon substantially similar terms and conditions as the $5,000,000 Warburg Note (the "$6,000,000 Warburg Note") (the Warrant Shares, the $5,000,000 Warburg Note and the $6,000,000 Warburg Note are sometimes hereinafter collectively referred to as the "Warburg Financing"); E. Pursuant to the Option Agreement, the Company has the right (the "Refinancing Right") to replace the Warburg Financing on or before April 30, 2002, subject to extension to May 14, 2002 under certain circumstances, in accordance with the terms and conditions set forth in the Option Agreement, which extension Company has or will secure; 1 F. Kojaian desires to invest in the Company through the purchase of convertible debt and equity securities of the Company, and in doing so, provide the Company with the requisite funding so as to enable the Company to exercise the Refinancing Right under the Option Agreement; and G. On and effective April 14, 2002 the parties were bound, pursuant to a Letter Agreement, as amended by that certain Letter Amendment dated May 13, 2002 (such Letter Agreement, as amended by the Letter Amendment, hereinafter "Letter Agreement" and attached hereto as EXHIBIT A), to Kojaian being the party to enable the Company to exercise the Refinancing Right and succeeding to the positions of Warburg Pincus pursuant to the Warburg Financing, as modified by the Letter Agreement, by funding the monies necessary for the Company to perform its obligations under the Refinancing Right. NOW, THEREFORE, in consideration of the premises and of the respective representations and warranties hereinafter set forth and the respective covenants and agreements contained herein and intending to be legally bound hereby, the parties hereto agree as follows: ARTICLE I 1. SALE OF SECURITIES 1.1 ISSUANCE AND SALE OF STOCK. Subject to the terms and conditions herein stated, the Company agrees, for the benefit of Kojaian: (a) to issue and sell to Kojaian on the "Closing Date" (as that term is defined in SECTION 1.3 below), and Kojaian agrees to purchase from the Company on the Closing Date: (i) an aggregate of 1,337,358 shares of the Company's common stock, par value $.01 per share (the "Shares"); and (ii) an $11,237,500 subordinated convertible promissory note, bearing interest at the rate of twelve (12%) percent per annum, substantially identical to the $5,000,000 Warburg Note (other than in principal amount, interest and payee), and which shall be substantially in the form annexed hereto as EXHIBIT B (the "$11,000,000 Subordinated Note"); and (b) that the $11,000,000 Subordinated Note shall be convertible at any time and from time to time, in whole or in part, generally at the option of the holder, into shares of the Company's newly authorized and revised Series A preferred stock, having a par value of $.01 per share, and a stated value of $1,000 per share (the "Series A Preferred Stock"), and having such rights, preferences and designation as substantially set forth in that certain Certificate of Amendment of Certificate of Designations, Number, Voting Powers, Preferences and Rights of Series A Preferred Stock annexed hereto as EXHIBIT C, including but not limited to a preferred dividend at the rate of twelve (12%)percent per annum, and an initial preference on liquidation and corresponding voting rights of approximately forty (40%) percent (the "Series A Certificate of Designations"). The indebtedness evidenced by the $11,000,000 Subordinated 2 Note is sometimes hereinafter referred to as the "$11,000,000 Subordinated Debt" and the $11,000,000 Subordinated Note, the Shares, and the Series A Preferred Stock issuable upon conversion of the $11,000,000 Subordinated Note are sometimes hereinafter collectively referred to as the "Securities." 1.2 CONSIDERATION. As full and total consideration for the issuance and sale by the Company to Kojaian of the Securities to be acquired by Kojaian at the "Closing" (as that term is defined in SECTION 1.3 below), Kojaian shall pay to the Company on the Closing Date in immediately available funds (a) the aggregate sum of (i) $15,386,580, plus (ii) all interest due with respect to the $5,000,000 Warburg Note as of the date of the Closing, plus (iii) the reasonable, documented expenses incurred by Warburg Pincus in connection with the Option Agreement, not to exceed $100,000, less (b) the $1,000,000 earnest money deposit previously delivered by Kojaian to the Company on April 9, 2002 (the "Earnest Money Deposit"). 1.3 CLOSING. (a) The sale and issuance of the Securities (the "Closing") shall take place at 5:00 P.M. at the office of Zukerman Gore & Brandeis, LLP, 900 Third Avenue, New York, New York on or before May 13, 2002, or at such other time and date as the parties hereto may mutually agree. Such time and date, as same may be adjourned, is sometimes hereinafter referred to as the "Closing Date." Provided that the Closing shall take place no later than upon one day notice to Company from Kojaian after the satisfaction of the conditions set forth in Article V and Article VI. ARTICLE II 2. REPRESENTATIONS AND WARRANTIES OF THE COMPANY 2. REPRESENTATIONS AND WARRANTIES OF THE COMPANY. The Company warrants and represents, as of the date hereof and as of the Closing Date as if such representations and warranties were made on the Closing Date, as follows: 2.1 CORPORATE POWER AND AUTHORITY. The Company has the full legal right, power and authority to enter into this Agreement and to issue and sell the Securities to be issued pursuant to this Agreement, including but not limited to the issuance of Series A Preferred Stock issuable upon conversion of the $11,000,000 Subordinated Note in accordance with the terms set forth in the $11,000,000 Subordinated Note, and the delivery to Kojaian of the Securities pursuant to the provisions of this Agreement will transfer to Kojaian valid title thereto, free and clear of all liens, encumbrances, restrictions and claims of every kind except as set forth on SCHEDULE 2.1. 2.2 AUTHORIZATION AND NONCONTRAVENTION. This Agreement has been duly and validly authorized, executed and delivered by the Company and constitutes a valid and legally binding agreement of the Company, enforceable in accordance with its terms, subject, as to enforcement, to bankruptcy, insolvency, reorganization and other laws of general applicability relating to or affecting creditors' rights and to general equity principles. The execution and 3 delivery by the Company of this Agreement and the other agreements and instruments, to be executed and delivered by the Company in connection herewith do not and the consummation of the transactions contemplated hereby and thereby will not, except as set forth on SCHEDULE 2.2: (i) violate any provision of the Certificate of Incorporation or By-Laws of the Company; (ii) violate any provision of, or result in the termination or acceleration of, or default under, or entitle any party to accelerate (whether after the filing of notice or lapse of time or both) any obligation under, or result in the creation or imposition of any lien, charge, pledge, security interest or other encumbrance upon any of the assets of the Company pursuant to any provision of any mortgage, lien, lease, agreement, license, or instrument, or violate any law, regulation, order, arbitration award, judgment or decree to which the Company is a party or by which its property is bound; (iii) violate or conflict with, or create a default under, any other material restriction of any kind or character to which the Company is subject; (iv) require any governmental consent, authorization, filing, approval, or exemption, except as may be required by Regulation D promulgated under the Securities Act of 1933, as amended, and the rules and regulations promulgated thereunder (the "Securities Act"); or (v) violate any consent decree or requirement to which the Company is subject. 2.3 EXISTENCE AND GOOD STANDING. The Company is a corporation duly organized, validly existing and in good standing under the laws of the State of Delaware. The Company has the power to own its property and to carry on its business as it is now being conducted. The Company is duly qualified to do business and is in good standing in the jurisdictions in which the character or location of the properties owned or leased by the Company or the nature of the business conducted by the Company makes such qualification necessary, except where the failure to qualify individually or in the aggregate will not have a material adverse effect on the business of the Company. 2.4 CAPITAL STOCK. (a) A description of the authorized capital stock of the Company, together with the number of shares of each class outstanding, as of the Closing Date, is set forth on SCHEDULE 2.4 hereto. All of such shares of capital stock of the Company have been duly authorized, validly issued, are fully paid and non-assessable and were issued in compliance with all applicable federal and state securities laws. Other than as set forth on SCHEDULE 2.4, there are no securities directly or indirectly convertible into or exchangeable for any of the capital stock of the Company, and no options, warrants, rights, calls or commitments relating to such shares or other such securities are outstanding, and SCHEDULE 2.4 shall accurately set forth all of the material terms and conditions (exercise price, term, vesting, etc.) of all of the options, warrants, rights, calls or commitments set forth thereon. (b) As of the Closing Date, the Company shall not be subject to any obligation (contingent or otherwise) to repurchase or otherwise acquire or retire any shares of its capital stock and the Company shall not have any outstanding warrants, options, or other rights to acquire its capital stock, except as set forth on SCHEDULE 2.4 or in this Agreement. 4 (c) As of the Closing Date, sufficient shares of authorized but unissued Series A Preferred Stock will have been reserved by appropriate corporate action in connection with the prospective conversion of the $11,000,000 Subordinated Note. The issuance of the Series A Preferred Stock upon conversion of the $11,000,000 Subordinated Note will not require any further corporate action by the Company, nor will it conflict with any provision of any agreement to which the Company is a party or by which it or its assets are bound, except as set forth on SCHEDULE 2.2 hereof. 2.5 VALID ISSUANCE OF SECURITIES. When issued, sold and delivered in accordance with the terms hereof for the consideration expressed herein, each of the Shares and the Series A Preferred Stock issuable upon the conversion of the $11,000,000 Subordinated Debt, in whole or in part, will be duly and validly issued, fully paid, non-assessable and free of preemptive rights, and, when executed and delivered by the Company, each of this Agreement, and the Securities constitute valid and legally binding obligations of the Company, enforceable in accordance with their respective terms, except as enforceability may be limited by bankruptcy, insolvency, reorganization, moratorium or other law affecting creditor's rights generally and of general principles of equity (regardless of whether considered in a proceeding at law or in equity). Based in part upon the representations of Kojaian in this Agreement, the Securities will be issued in compliance with all applicable federal and state securities laws and the offer, sale and issuance of the Securities, including but not limited to the shares of the Series A Preferred Stock issuable upon conversion of the $11,000,000 Subordinated Debt, will constitute transactions exempt from the registration requirements of Section 5 of the Securities Act. 2.6 BROKER'S OR FINDER'S FEES. No agent, broker, person or firm acting on behalf of the Company is, or will be, entitled to any commission or broker's or finder's fees from any of the parties hereto, or from any person controlling, controlled by or under common control with any of the parties hereto, in connection with any of the transactions contemplated by this Agreement. Company agrees to indemnify and hold Kojaian harmless with respect to the foregoing. 2.7 RECITALS. The facts and circumstances as set forth in Recitals A. through E. and, as to the Company, G. are true, complete as to the matters set forth therein and correct. ARTICLE III 3. REPRESENTATIONS AND WARRANTIES OF KOJAIAN 3. REPRESENTATIONS AND WARRANTIES OF KOJAIAN. Kojaian hereby represents, warrants and agrees, as of the date hereof and as of the Closing Date, as if made on the Closing Date, as follows: 3.1 POWER AND AUTHORITY; AUTHORIZATION AND NONCONTRAVENTION. Kojaian has the full legal right, power and authority to enter into this Agreement and this Agreement has 5 been duly and validly authorized, executed and delivered by Kojaian and constitutes a valid and legally binding agreement of Kojaian, enforceable in accordance with its terms, subject, as to enforcement, to bankruptcy, insolvency, reorganization and other laws of general applicability relating to or affecting creditors' rights and to general equity principles. The execution and delivery by Kojaian of this Agreement and the other agreements and instruments to be executed and delivered by Kojaian in connection herewith do not and the consummation of the transactions contemplated hereby and thereby will not, except as set forth on SCHEDULE 3.1: (i) violate any provision of the Articles of Organization, Operating Agreement or any other like organizational or governing documents of Kojaian; (ii) violate any provision of, or result in the termination or acceleration of, or default under, or entitle any party to accelerate (whether after the filing of notice or lapse of time or both) any obligation under, or result in the creation or imposition of any lien, charge, pledge, security interest or other encumbrance upon any of the assets of Kojaian pursuant to any provision of any mortgage, lien, lease, agreement, license, or instrument, or violate any law, regulation, order, arbitration award, judgment or decree to which Kojaian is a party or by which its property is bound; (iii) violate or conflict with, or create a default under, any other material restriction of any kind or character to which Kojaian is subject; (iv) require any governmental consent, authorization, filing, approval, or exemption, except as may be required by Regulation D promulgated under the Securities Act (the "Securities Act"); or (v) violate any consent decree or requirement to which Kojaian is subject. 3.2 EXISTENCE AND GOOD STANDING. Kojaian is a limited liability company, validly existing and in good standing under the laws of the State of Michigan. Kojaian has the power to own its property and to carry on its business as it is now being conducted. All of the issued and outstanding equity securities of Kojaian are owned by C. Michael Kojaian, and no other person or entity has any direct or indirect right, agreement or understanding, contingent or otherwise, whether written or oral, to acquire any equity securities of Kojaian upon the exercise or conversion of any options, warrants, debt or other derivative securities of any nature whatsoever. 3.3 EXPERIENCE; CERTAIN RISKS. Kojaian has substantial experience in evaluating and investing in non-registered securities of publicly traded entities, is capable of evaluating the merits and risks of investment in the Company and has the capacity to protect its own interests. Kojaian hereby acknowledges that: (i) the Shares and the shares of Series A Preferred Stock issuable upon conversion of the $11,000,000 Subordinated Debt represent non-registered equity securities in a corporate entity that has an accumulated deficit; (ii) other than with respect to interest payments with respect to the $11,000,000 Subordinated Debt, no return on investment, whether through distributions, appreciation, transferability or otherwise, and no performance by, through or of the Company, has been promised, assured, represented or warranted by the Company, or by any director, officer, employee, agent or representative thereof; (iii) the Securities subscribed for under this Agreement, including but not limited to, the shares of Series A Preferred Stock issuable upon conversion of the $11,000,000 Subordinated Debt (x) are not registered under applicable federal or state securities laws, and thus may not be sold, conveyed, assigned or transferred unless registered under such laws or unless an exemption from registration is available under such laws, as more fully described below, and (y) although there 6 presently is a public market with respect to the Shares, the $11,000,000 Convertible Debt and the Series A Preferred Stock issuable upon conversion of the $11,000,000 Convertible Debt are not quoted, traded or listed for trading or quotation on any organized market or quotation system, and there have not been any representations made by the Company to Kojaian that the $11,000,000 Convertible Debt or the Series A Preferred Stock issuable upon conversion of the $11,000,000 Subordinated Debt will ever be quoted, traded or listed for trading or quotation on any organized market or quotation system or that there ever will be a public market for the $11,000,000 Convertible Debt or the Series A Preferred Stock or that there will continue to be a public market with respect to the Shares, and (iv) the purchase of the Securities is a speculative investment, involving a degree of risk, and is suitable only for a person or entity of adequate financial means who has no need for liquidity in this investment in that, among other things, (a) such person or entity may not be able to liquidate its investment in the event of an emergency or otherwise, (b) transferability is limited, and (c) in the event of a dissolution or otherwise, such person or entity could sustain a complete loss of its entire investment. Kojaian has adequate means of providing for its current financial needs and possible contingencies and has no need for liquidity of its investment in the Securities. Kojaian is able to bear the economic risks inherent in an investment in the Securities, and an important consideration bearing on its ability to bear the economic risk of the purchase of the Securities is whether Kojaian can afford a complete loss of its investment in the Securities, and Kojaian represents and warrants that it can afford such a complete loss. Kojaian has such knowledge and experience in business, financial, investment and banking matters (including, but not limited to investments in restricted, non-listed and non-registered securities) that Kojaian is capable of evaluating the merits, risks and advisability of an investment in the Securities. 3.4 ACCREDITED INVESTOR OR BUSINESS AND FINANCIAL EXPERIENCE. Kojaian is an accredited investor as defined in Rule 501 under the Securities Act of 1933. 3.5 INVESTMENT. Kojaian is acquiring the Securities for investment purposes only and solely for its own account, not as a nominee or agent, and not with the view towards the resale or distribution thereof. Kojaian understands that the Securities have not been, and will not be, registered under the Securities Act or qualified under any state securities laws, by reason of a specific exemption from the registration provisions of the Securities Act and various states' securities laws, which exemption depends upon, among other things, the bona fide nature of the investment intent and the accuracy of Kojaian's representations as expressed herein. Kojaian understands that, in the view of the United States Securities and Exchange Commission (the "SEC"), among other things, a purchase with a present intent to distribute or resell would represent a purchase and acquisition with an intent inconsistent with its representation to the Company, and the SEC might regard such a transfer as a deferred sale for which the registration exemption is not available. Consequently, Kojaian agrees and consents to the placement of a legend on the certificate(s) and the promissory note(s) evidencing the Securities, as the case may be, that they have not been registered under federal securities laws and applicable state securities laws. 3.6 RULE 144. Kojaian acknowledges that each of the Shares and the Series 7 A Preferred Stock issuable upon the conversion of the $11,000,000 Subordinated Debt must be held indefinitely unless subsequently registered under the Securities Act or unless an exemption from such registration is available. Kojaian is aware of the provisions of Rule 144 promulgated under the Securities Act which permit limited resale of equity securities purchased in a private placement subject to the satisfaction of certain conditions, including, among other things, in most circumstances (i) the existence of a public market for the securities, (ii) the availability of certain current public information about the Company, (iii) the resale occurring not less than one year after an investor has purchased and fully paid for the shares to be sold from the Company or affiliate of the Company, (iv) the sale being effected through a "broker's transaction" or in transactions directly with a "market maker" (as provided by Rule 144(f)) and (v) the number of shares being sold during any three-month period not exceeding specified limitations. 3.7 ACCESS TO INFORMATION; CURRENT STATUS WITH THE COMPANY. Kojaian expressly acknowledges that its equityholder, C. Michael Kojaian currently is, and has been a member of the Company's Board of Directors, continuously since December, 1996. Accordingly, Kojaian expressly acknowledges that in its capacity as a limited liability company and through its sole owner, C. Michael Kojaian, that it has had the full opportunity to discuss the Company's business, management, and financial affairs with the Company's management and executive officers and has had the opportunity to review the Company's facilities. Kojaian, in its capacity as a limited liability company and through its owner, C. Michael Kojaian, has also had an opportunity to ask questions of the executive officers of the Company, all of which questions have been answered to Kojaian's satisfaction. Notwithstanding the foregoing, Kojaian expressly acknowledges and agrees that he has not relied on any representation, warranty or statements, written or oral, other than the express representations and warranties contained herein and the information contained within the Company's regulatory filings with the Securities Exchange Commission, and that Kojaian's decision to purchase the Securities is not based on any promotional, marketing or sales materials, and Kojaian and his representatives have been afforded, prior to the purchase of the Securities, access to all documents and information that Kojaian deems material to an investment decision with respect to the purchase of the Securities hereunder. 3.8 BROKERS OR FINDERS. No agent, broker, person or firm acting on behalf of Kojaian is, or will be, entitled to any commission or broker's or finder's fees from any of the parties hereto, or from any person controlling or controlled by or under common control with any of the parties hereto, in connection with any of the transactions contemplated by this Agreement. Kojaian agrees to indemnify and hold the Company harmless with respect to the foregoing. 3.9 RECITALS. The facts and circumstances set forth in Recitals F. and, as to Kojaian, G. are true, complete as to the matters set forth therein and correct. 8 ARTICLE IV 4. COVENANTS OF THE PARTIES 4.1 NON-SOLICITATION. During the period from the date of this Agreement to the Closing Date, or the termination of this Agreement in accordance with the provisions of SECTION 8.12 below, whichever is earlier, the Company shall not directly or indirectly (i) initiate, solicit or encourage any inquiries or proposals that constitute, or could reasonably be expected to lead to, a proposal or offer for an alternative refinancing transaction of the type contemplated by this Agreement (an "Alternative Proposal"), (ii) engage in negotiations or discussions concerning (and shall cease any current negotiations or discussion concerning), or provide to any person or entity any confidential information or data relating to the Company for the purposes of, or otherwise cooperate with or assist or participate in, facilitate or encourage, any inquiries or the making of any Alternative Proposal, or (iii) agree to, approve or recommend any Alternative Proposal. Nothing in this SECTION 4.1 shall prevent the Company from providing confidential Company information to any director in connection with the exercise by such director of his fiduciary duties to the Company. 4.2 USE OF PROCEEDS. The Company shall use the consideration to be received from Kojaian pursuant to SECTION 1.2 above, plus the Earnest Money Deposit (collectively, the "Closing Proceeds") to exercise its Refinancing Right under the Option Agreement, and accordingly, the Company will use the Closing Proceeds solely to: (i) repurchase from Warburg Pincus the $5,000,000 Warburg Note for the principal amount thereof, and all accrued interest thereon, whereupon the $5,000,000 Warburg Note shall be cancelled and become null and void; (ii) repurchase from Warburg Pincus all of the Warrant Shares for an aggregate purchase price of $4,158,431; (iii) reimburse Warburg Pincus for all reasonable, documented out-of-pocket expenses incurred by Warburg Pincus in connection with the $5,000,000 Warburg Note, not to exceed $100,000; and (iv) deliver to the Banks $6,000,000 as a payment towards the amount currently outstanding under the revolving portion of the Credit Facility. 4.3 CERTAIN CORPORATE ACTIONS. Each of the parties shall use their reasonable best efforts to take any and all action to meet each of the conditions to closing set forth in Article V and VI hereunder, as applicable, and to keep each of their respective representations and warranties hereunder true, complete and correct from the date hereof through the Closing Date. 4.4 ISSUANCE OF SECURITIES. The Company shall not, prior to the expiration of the "Non-Voting Date," as that term is defined in, and is subject to extension pursuant to, Section 4(d) of the Series A Certificate of Designations, issue any additional common equity securities of the Company, or any options, warrants or debt or equity derivative securities that are exercisable or convertible, as the case may be, into equity securities of the Company; PROVIDED, HOWEVER, that the Company shall not be prohibited in any fashion whatsoever, from issuing any additional common equity securities of the Company, or any options, warrants, or debt or equity 9 derivative securities that are exercisable or convertible, as the case may be, into equity securities of the Company (i) in connection with a "Section 3(c)(ii) Liquidation" as that term is defined in the Series A Certificate of Designations, (ii) pursuant to any obligation set forth in any employment agreement in effect as of April 14, 2002 other than pursuant to each of that certain employment agreement of a regional managing director and that employment agreement of an executive vice president of operations, both of which agreements were entered into by the Company subsequent to April 14, 2002, (iii) upon the exercise or conversion, as the case may be, of any options, warrants or derivative securities outstanding as of April 14, 2002, or (iv) pursuant to the Company's employee stock purchase plan. 4.5 ALTERNATE LIQUIDATION RIGHTS. In the event the Corporation enters into a definitive binding agreement with respect to a Section 3(c)(ii) Liquidation on or before the "Non-Voting Date," as such term is defined in, and as such date may extended pursuant to, Section 4.6 below, which closes on or before the Non-Voting Date, then Kojaian shall not be entitled to receive the consideration set forth in Section 3(a) of the Series A Certificate of Designation, but rather, whether or not Kojaian has converted the $11,000,000 Subordinated Note into shares of Series A Preferred Stock at that time, Kojaian shall be entitled to receive, before payment of any consideration shall be made to the holders of Junior Stock, 100% of the "Series A Investment" plus the "Alternate Liquidation Amount" (as each of those terms are defined in SECTION 3(D)(I) of the Series A Certificate of Designations), provided, however, that in the event that Kojaian accepts the Alternate Liquidation Amount, then Kojaian expressly agrees that Kojaian shall not, shall cause Kojaian's "affiliates" (as defined in Section 4.6 below) not to, and shall not assist or encourage any stockholder of the Company to, under any circumstances whatsoever, seek, or be permitted to seek, to exercise any appraisal rights under Section 262 of the Delaware General Corporate Law, or otherwise seek, or be permitted to seek, to challenge the Section 3(c)(ii) Liquidation. Unless Kojaian expressly notifies the Company in writing within seven (7) days after KV receives the Alternate Liquidation Amount, which notice, to be effective, must be in accordance with the notice provisions set forth in SECTION 8.5 below and must also include the return of the entire Alternate Liquidation Amount, that Kojaian does not accept the Alternative Liquidation Amount, then Kojaian's shall automatically and irrevocably be deemed to have accepted the Alternate Liquidation Amount. In the event that, in accordance with the provisions of the preceding sentence, the Kojaian duly notifies the Corporation that it does not accept the Alternate Liquidation Preference, Kojaian shall be deemed to have irrevocably waived its right to receive such Alternate Liquidation Amount. 4.6 EXERCISE OF RIGHTS. Prior to May 31, 2002 (as same may be extended as provided below, the "Non-Voting Date"), Kojaian shall not exercise any voting rights, of any equity securities of the Company beneficially owned by Kojaian, in any manner whatsoever, that could directly or indirectly hinder, prohibit, delay or prevent the consummation of, or materially alter the terms of, a proposed Section 3(c)(ii) Liquidation, provided, that in the event the Company enters into a definitive binding agreement with respect to a Section 3(c)(ii) Liquidation on or before the Non-Voting Date, then the Non-Voting Date shall automatically be extended to 10 September 30, 2002. In addition, prior to the expiration of the Non-Voting Date, Kojaian shall not have the right, and shall cause its controlling member not to, and not to agree, to voluntarily transfer, donate, sell, assign or otherwise dispose of any preferred, common or other equity securities of the Corporation or any other interest therein. As used herein, the term "affiliate" or any correlative term shall mean, with respect to any party, any other party directly or indirectly controlling, controlled by, or under direct or indirect common control with, such party, or other than the father of the controlling member of Kojaian. ARTICLE V 5. CONDITIONS TO THE COMPANY'S OBLIGATIONS 5. CONDITIONS TO THE COMPANY'S OBLIGATIONS. The obligation of the Company to consummate the transactions contemplated by this Agreement on the Closing Date is conditioned upon satisfaction, on or prior to the Closing Date, of the following conditions: 5.1 TRUTH, COMPLETENESS AND CORRECTNESS OF REPRESENTATIONS AND WARRANTIES. The representations and warranties of Kojaian contained in this Agreement shall be true, complete and correct in all material respects on and as of the Closing Date with the same effect as though such representations and warranties had been made on and as of such date. 5.2 APPROVALS. Receipt of all consents, approvals or waivers from all parties or entities necessary to consummate the transactions herein contemplated, including but not limited to the receipt of all consents, approvals or waivers from the Banks under the Credit Facility that are necessary or desired to permit the consummation of the transactions contemplated by this Agreement. 5.3 RECEIPT OF CONSIDERATION. The Company shall have received by wire transfer to the Company or as directed by the Company the Closing Proceeds in accordance with the wire transfer instructions annexed hereto as SCHEDULE 5.3. 5.4 RECEIPT OF FAIRNESS OPINION. The special committee of the Company's Board of Directors shall have received a written opinion from Houlihan Lokey Howard & Zukin Financial Advisors, Inc., to the effect that the transactions contemplated by this Agreement are fair to the Company from a financial point of view. 5.5. AMENDMENT TO CREDIT FACILITY. The Credit Facility shall be appropriately amended so as to include the $11,000,000 Subordinated Debt as a junior subordinated debt thereunder, and eliminate any requirements regarding minimum equity ownership in the Company by Warburg Pincus, and Kojaian shall execute and deliver such amendment to the Credit Facility, a subordination agreement, and any and all other documentation as may be required by the Banks in order to evidence and effect same. 5.6 PROCEEDINGS. All proceedings and actions to be taken in connection 11 with the transactions contemplated by this Agreement, including but not limited to those under applicable securities laws, shall have been duly taken on a timely basis and all documents incident thereto shall be reasonably satisfactory in form and substance to the Company and its counsel, and the Company shall have received copies of all such documents and other evidences as it or its counsel may reasonably request in order to establish the consummation of such transactions and the taking of all proceedings in connection therewith. 5.7 TERMINATION OF OPTION AGREEMENT. The Option Agreement, and all rights and obligations of the parties thereunder, including but not limited to the $5,000,000 Warburg Note, shall be terminated and become null and void. ARTICLE VI 6. CONDITIONS TO KOJAIAN'S OBLIGATIONS 6. CONDITIONS TO KOJAIAN'S OBLIGATIONS. The obligation of Kojaian to consummate the transactions contemplated by this Agreement on the Closing Date is conditioned upon satisfaction, on or prior to such date, of the following conditions: 6.1 TRUTH, COMPLETENESS AND CORRECTNESS OF REPRESENTATIONS AND WARRANTIES. The representations and warranties of the Company contained in this Agreement shall be true, complete and correct in all material respects on and as of the Closing Date with the same effect as though such representations and warranties had been made on and as of such date. 6.2 APPROVALS. Receipt of all consents, approvals or waivers from all parties or entities necessary to consummate the transactions herein contemplated, including but not limited to the receipt of all consents, approvals or waivers from the Banks under the Credit Facility that are necessary or desired to permit the consummation of the transactions contemplated by this Agreement. 6.3 FILING OF SERIES A CERTIFICATE OF DESIGNATIONS. The Company shall have properly and validly filed with the Secretary of State of the State of Delaware an amendment to the Series A Certificate of Designations and shall have delivered evidence of same to Kojaian. 6.4 USE OF PROCEEDS. The Company shall use the proceeds from the sale of the Securities hereunder in accordance with the provisions set forth in SECTION 4.2 above. 6.5 VALID ISSUANCE. Each of the $11,000,000 Subordinated Note and the Shares to be issued and sold by the Company and to be acquired by Kojaian shall be (and the shares of Series A Preferred Stock issuable upon conversion of the $11,000,000 Subordinated Debt shall, upon issuance by the Company and acquisition by Kojaian, be) duly authorized and validly issued to Kojaian, free and clear of all liens, encumbrances, restrictions and claims of every kind. Kojaian shall have received one or more properly completed stock certificate(s) representing the Shares, and one or more duly executed promissory note(s) representing the 12 $11,000,000 Subordinated Debt, in each instance, in such denominations and in such names as Kojaian shall reasonably request. 6.6 PROCEEDINGS. All proceedings and actions to be taken in connection with the transactions contemplated by this Agreement, including but not limited to those under applicable securities laws, shall have been duly taken on a timely basis and all documents incident thereto shall be reasonably satisfactory in form and substance to Kojaian and its counsel, and Kojaian shall have received copies of all such documents and other evidences as it or its counsel may reasonably request in order to establish the consummation of such transactions and the taking of all proceedings in connection therewith. 6.7 TERMINATION OF OPTION AGREEMENT. The Option Agreement, and all rights and obligations of the parties thereunder, including but not limited to the $5,000,000 Warburg Note, shall be terminated and become null and void. ARTICLE VII 7. SURVIVAL OF REPRESENTATIONS AND WARRANTIES; INDEMNITY 7.1 SURVIVAL OF REPRESENTATIONS AND WARRANTIES. The respective representations and warranties, covenants, agreements and obligations of each of the Company and Kojaian contained in this Agreement or in any Schedule or Exhibit attached hereto, and the indemnification provisions set forth in this SECTION 7 hereof, shall survive the Closing. 7.2 INDEMNIFICATION BY THE PARTIES (a) Each of the parties hereto agrees to indemnify (the "Indemnifying Party") and hold the other and each of its respective partners, officers, directors, members, employees, counsel, accountants, agents, successors and assigns (collectively, an "Indemnified Party") harmless from any and all damages, liabilities, losses, costs or expenses (including, without limitation, reasonable counsel fees and expenses) suffered or paid, directly or indirectly, as a result of or arising out of the failure of any respective representation or warranty made by the Indemnifying Party in this Agreement or in any Schedule or Exhibit attached hereto to be true, complete and correct in all material respects as of the date of this Agreement and as of the Closing Date. (b) If any action, suit, proceeding or investigation is commenced, as to which an Indemnified Party proposes to demand indemnification, it shall notify the Indemnifying Party with reasonable promptness; PROVIDED, HOWEVER, that any failure by an Indemnified Party to notify the Indemnifying Party shall not relieve the Indemnifying Party from its obligations hereunder, except to the extent that the Indemnifying Party shall have been materially prejudiced in its ability to defend the action, suit, proceedings or investigation for which such indemnification is sought by reason of such failure. Except as set forth below, an Indemnifying Party shall have the right to retain counsel of its own choice, and the Indemnifying 13 Party shall pay the reasonable fees, reasonable expenses and reasonable disbursements of counsel selected by the Indemnifying Party; and such counsel shall to the extent consistent with its professional responsibilities, cooperate with the Indemnified Party and any counsel designated by the Indemnified Party, which counsel shall be the expense of the Indemnified Party. In the event the Indemnifying Party does not assume or fails to conduct in a diligent manner the defense of any claim or litigation resulting therefrom, (a) the Indemnified Party may defend, using its own counsel, against such claim or litigation, in such manner as it deems appropriate, including, but not limited to, settling such claim or litigation, on such terms as the Indemnified Party may deem appropriate, subject to first obtaining the prior written consent of the Indemnifying Party, which consent shall not be unreasonably withheld or delayed, and (b) the Indemnifying Party shall be entitled to participate in (but not control) the defense of such action, with its counsel and at its own expense. The Indemnifying Party shall pay the reasonable fees, reasonable expenses and reasonable disbursements of counsel selected by an Indemnified Party in the circumstances described in the previous sentence. If the Indemnifying Party thereafter seeks to question the manner in which the Indemnified Party defended such third party claim or the amount or nature of any such settlement, the Indemnifying Party shall have the burden to prove that the Indemnified Party did not defend or settle such third party claim in a reasonably prudent manner. The Indemnifying Party shall be liable for any settlement of any claim against an Indemnified Party made with the Indemnifying Party's written consent or made in connection with the circumstances described in the first sentence of the previous paragraph. The Indemnifying Party shall not, without prior written consent of an Indemnified Party, which consent shall not be unreasonably withheld or delayed, settle or compromise any claim, or permit a default or consent to the entry of any judgment in respect thereof; PROVIDED, HOWEVER, that notwithstanding the foregoing, the Indemnifying Party shall have the right to settle or compromise any claim provided that (i) the Indemnifying Party pays all sums, costs and expenses incident thereto, and (ii) Indemnifying Party obtains for the Indemnified Party a full, non-conditional absolute release. Each party agrees to cooperate fully with the other, such cooperation to include, without limitation, attendance at depositions and the production of relevant documents as may be reasonably requested by the other parties, provided that the Indemnifying Party will reimburse the Indemnified Party for all of its out-of-pocket expenses incurred in connection with such cooperation by the Indemnified Party. (c) In order to provide for just and equitable contribution, if a claim for indemnification pursuant to these indemnification provisions is made but it is found in a final judgment by a court of competent jurisdiction (not subject to further appeal) that such indemnification may not be enforced in such case, even though the express provisions hereof provide for indemnification in such case, then the Indemnifying Party (as applicable), on the one hand, and an Indemnified Party, on the other, shall contribute to the losses, claims, damages, obligations, penalties, judgments, awards, liabilities, costs and expenses to which the 14 indemnified persons may be subject in accordance with the relative benefits received by the Indemnifying Party (as the case may be), on the one hand, and an Indemnified Party, on the other hand, in connection with the statements, acts or omissions which resulted in expenses and the relevant equitable considerations shall also be considered. No person found liable for a fraudulent misrepresentation shall be entitled to contribution from any person who is not also found liable for such fraudulent misrepresentation. ARTICLE VIII 8. MISCELLANEOUS 8.1 PRESERVATION OF CONFIDENTIAL INFORMATION. Unless readily ascertainable from public or published information or trade sources, Kojaian until the Closing shall keep strictly confidential any and all non-public information obtained from the Company concerning the Company's properties, operations and business, and shall use any such information solely for the purpose of evaluating whether Kojaian wishes to make an investment in the Company pursuant to this Agreement. The provisions of this Section are in addition to, and not in lieu of, any other fiduciary obligations that the controlling member of Kojaian may have to the Company. 8.2 GOVERNING LAW. The interpretation and construction of this Agreement, and all matters relating hereto, shall be governed by the laws of the State of Delaware applicable to agreements executed and to be performed solely within such State, and each of the parties hereto irrevocably consents to the venue and jurisdiction of the federal and state courts located in the State of Delaware, County of Kent. 8.3 HEADINGS. The Article and Section captions used herein are for reference purposes only, and shall not in any way affect the meaning or interpretation of this Agreement. 8.4 PUBLICITY. Except as otherwise required by applicable federal securities laws, or as otherwise agreed to by the parties, none of the parties hereto shall issue any press release or make any other public disclosure or statement, in each case relating to, connected with or arising out of this Agreement or the transactions contemplated herein. Any statement or disclosure so issued or made by either party shall require the prior approval, not to be unreasonably withheld or delayed, of the other party hereto as to the contents and the manner of presentation and publication thereof. 8.5 NOTICES. All notices, requests, demands, other communications and deliveries required or desired to be given hereunder shall only be effective if given in writing by hand, 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 hand or 15 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): if to Kojaian, to: Kojaian Ventures, L.L.C. 39400 Woodward Avenue Suite 250 Bloomfield Hills, Michigan 48304 Telephone No. (248) 644-7600 Facsimile No. (248) 644-7620 with a copy simultaneously by like means to: Carson Fischer, P.L.C. Third Floor 300 East Maple Road Birmingham, Michigan 48009 Telephone No. (248) 644-4840 Facsimile No. (248) 644-1832 Attn: Robert M. Carson, Esq. if to the Company to: 55 East 59th Street New York, New York 10022 Telephone No. (212) 326-4744 Facsimile No. (212) 326-4903 Attn: Chief Executive Officer -and- 2215 Sanders Road Suite 400 Northbrook, Illinois 60062 Telephone No. (847) 753-7500 Facsimile No. (847) 753-9060 Attn: Chief Administrator Officer with a copy simultaneously by like means: 16 Zukerman Gore & Brandeis, LLP 900 Third Avenue New York, New York 10022 Telephone No. (212) 223-6700 Facsimile No. (212) 223-6433 Attention: Jeffrey D. Zukerman, Esq. -and- Gibson, Dunn & Crutcher LLP 200 Park Avenue 47th Floor New York, New York 10166 Telephone No. (212) 351-4000 Facsimile No. (212) 351-4035 Attention: Scott Kislin, Esq. 8.6 SUCCESSORS AND ASSIGNS. This Agreement may not be transferred, assigned, pledged or hypothecated by any party hereto, other than by operation of law. This Agreement shall be binding upon and shall inure to the benefit of the parties hereto and their respective successors and assigns. 8.7 COUNTERPARTS. This Agreement may be executed in two or more original or facsimile counterparts, all of which taken together shall constitute one instrument. 8.8 ENTIRE AGREEMENT. This Agreement, including the other documents referred to herein or annexed as Exhibits or Schedules hereto which form a part hereof, contains the entire understanding of the parties hereto with respect to the subject matter contained herein and therein and supersedes all prior agreements and understandings between the parties with respect to such subject matter, including but not limited to the Letter Agreement. 8.9 AMENDMENTS. This Agreement may not be changed orally, but only by an agreement in writing signed by the parties hereto. 8.10 SEVERABILITY. In case any provision in this Agreement shall be held invalid, illegal or unenforceable, the validity, legality and enforceability of the remaining provisions hereof will not in any way be affected or impaired thereby. 8.11 THIRD PARTY BENEFICIARIES. Each party hereto intends that this Agreement shall not benefit or create any right or cause of action in or on behalf of any Person other than the parties hereto. 8.12 TERMINATION OF AGREEMENT; RETURN OF EARNEST MONEY DEPOSIT. This Agreement shall terminate upon the earlier of: (i) 12:01 a.m. Eastern Daylight Savings Time, on 17 May 14, 2002 (unless the Closing shall have occurred prior to that time, in which case the provisions of SECTION 7.1 shall govern); (ii) the date on which any condition to Closing set forth in Article V or Article VI above becomes incapable of being satisfied by 12:01 a.m. Eastern Daylight Savings Time on May 14, 2002, and any such condition is not waived, provided, however, that the party asserting that a condition is not capable of being satisfied shall provide reasonable evidence supporting such determination to the other party); or (iii) upon the mutual agreement of the parties. In the event that a closing of the transactions contemplated by this Agreement does not occur for any reason other than solely as a result of a breach by Kojaian of this Agreement, then upon written request therefor, the Company shall immediately return the Earnest Money Deposit to Kojaian without interest or deduction. In all other instances, the Company shall be entitled to retain the Earnest Money Deposit, it being expressly understood and agreed that any such retention by the Company of the Earnest Money Deposit shall be in addition to, and not in lieu of, any further monetary or equitable remedies that the Company may be entitled to under law or equity, and under no circumstances whatsoever shall the Company's retention of the Earnest Money Deposit hereunder constitute liquidated damages. 8.13 WAIVER OF JURY TRIAL. The parties hereto waive all right to trial by jury of any action, suit or proceeding brought to enforce or defend any rights or remedies arising under or in connection with this Agreement or the transaction contemplated hereby whether grounded in tort, contract or otherwise. [SIGNATURE PAGE TO FOLLOW] 18 IN WITNESS WHEREOF, the parties have caused this Agreement to be executed as of the day and year first above written. COMPANY: GRUBB & ELLIS COMPANY By: /s/ Barry M. Barovick ------------------------------------ Name: Barry M. Barovick Title: Chief Executive Officer KOJAIAN VENTURES, L.L.C. a Michigan limited liability company By: KOJAIAN VENTURES-MM, INC. a Michigan Corporation, Managing Member By: /s/ C. Michael Kojaian ------------------------------------ Name: C. Michael Kojaian Title: President 19 EX-3.(I) 5 c24456_ex3.txt CERTIFICATE OF AMENDMENT Exhibit 3 CERTIFICATE OF AMENDMENT OF CERTIFICATE OF DESIGNATIONS, NUMBER, VOTING POWERS, PREFERENCES AND RIGHTS OF SERIES A PREFERRED STOCK OF GRUBB & ELLIS COMPANY (A DELAWARE CORPORATION) Pursuant to Section 151 of the General Corporation Law of the State of Delaware The undersigned DOES HEREBY CERTIFY that the following resolution was duly adopted by the Board of Directors of Grubb & Ellis Company, a Delaware corporation (hereinafter called the "Corporation"), with the preferences and rights set forth therein relating to dividends, redemption, dissolution and distribution of assets of the Corporation having been fixed by the Board of Directors pursuant to authority granted to it under the Corporation's Certificate of Incorporation and in accordance with the provisions of Section 151 of the General Corporation Law of the State of Delaware ("GCL"): RESOLVED: That the Corporation's Certificate of Designations, Number, Voting Powers, Preferences and Rights of Series A Preferred Stock dated March 7, 2002, and filed with the Secretary of State of the State of Delaware on March 8, 2002, is hereby amended by deleting Sections 1-7 thereof in their entirety; and it is further RESOLVED: That, pursuant to authority conferred upon the Board of Directors by the Certificate of Incorporation of the Corporation, the Board of Directors of this Corporation hereby amends the designations, powers, preferences and relative, participating, optional or other special rights, and the qualifications, limitations or restrictions thereof, of such shares (the "CERTIFICATE OF AMENDMENT"), in addition to those set forth in the Certificate of Incorporation of the Corporation, as follows: 1. DESIGNATION AND AMOUNT. The shares of such series shall be designated "Series A Preferred Stock," par value $.01 per share, (the "Series A Preferred Stock"), and the number of shares constituting such series shall be up to 60,000 shares. 2. DIVIDENDS. (a) The holders of Series A Preferred Stock shall be entitled to receive, when and as declared by the Board of Directors of the Corporation (the "Board of Directors"), out of the net profits of the Corporation, dividends per share equal to 12% per annum of the Stated Value (as herein defined) of such Series A Preferred Stock, before any dividends shall be declared, set apart for or paid upon the common stock, par value $.01 per share (the "Common Stock") of the Corporation, or any other stock ranking with respect to dividends or on liquidation junior to the Series A Preferred Stock (such stock being referred to hereinafter collectively as "Junior Stock") in any year. All dividends declared upon the Series A Preferred Stock shall be declared pro rata per share and compounded quarterly. For purposes hereof, the term "Stated Value" shall mean $1000.00 per share subject to appropriate adjustment in the event of any stock dividend, stock split, stock distribution or combination with respect to the Series A Preferred Stock. (b) Dividends on the Series A Preferred Stock shall be cumulative and shall continue to accrue whether or not declared and whether or not in any fiscal year there shall be net profits or surplus available for the payment of dividends in such fiscal year, so that if in any fiscal year or years, dividends in whole or in part are not paid upon the Series A Preferred Stock, unpaid dividends shall accumulate as against the holders of the Junior Stock. (c) In the event dividends on the Series A Preferred Stock are paid in additional shares of Series A Preferred Stock, the number of shares of Series A Preferred Stock to be issued in payment of the dividend with respect to each outstanding share of Series A Preferred Stock shall be determined by dividing the amount of the dividend per share that would have been payable had such dividend been paid in cash by the Stated Value. To the extent that any such dividend would result in the issuance of a fractional share of Series A Preferred Stock (which shall be determined with respect to the aggregate number of shares of Series A Preferred Stock held of record by each holder) then the amount of such fraction multiplied by the Stated Value shall be paid in cash (unless there are no legally available funds with which to make such cash payment, in which event such cash payment shall be made as soon as possible). (d) For so long as the Series A Preferred Stock remains outstanding, the Corporation shall not, without the prior consent of the holders of a majority of the outstanding shares of Series A Preferred Stock, pay any dividend upon the Junior Stock, whether in cash or other property (other than shares of Junior Stock), or purchase, redeem or otherwise acquire any such Junior Stock unless it has paid the dividend to the holders of the Series A Preferred Stock as described above. Notwithstanding the provisions of this Section 2(d), without declaring or paying dividends on the Series A Preferred Stock, the Corporation may, subject to applicable law, repurchase or redeem shares of capital stock of the Corporation from current or former officers or employees of the Corporation pursuant to the terms of repurchase or similar agreements in effect from time to time, provided that such agreements have been approved by the Board of Directors and the terms of such agreements provide for a repurchase or redemption price not in excess of the price per share paid by such employee for such share. 3. LIQUIDATION, DISSOLUTION OR WINDING UP. (a) In the event of any voluntary or involuntary liquidation, dissolution or winding up of the Corporation (a "Liquidation"), the holders of shares of Series A Preferred Stock then outstanding shall, subject to the provisions of Section 3(d) below, be entitled to be paid out of the assets of the Corporation available for distribution to its stockholders, after and subject to the payment in full of all amounts required to be distributed to the holders of any other series of preferred stock of the Corporation ranking on liquidation prior and in preference to the Series A Preferred Stock (any such preferred stock being referred to hereinafter as "Senior Preferred Stock") upon such Liquidation, but before payment of any consideration shall be made 2 to the holders of Junior Stock, consideration equal to the greater of (i) 150% of the Stated Value per share, plus any dividends thereon that are accrued but unpaid, or (ii) the amount such holder would have received assuming that each share of Series A Preferred Stock equaled 998 shares (the "Assumed Share Number") of Common Stock, which Assumed Share Number is based upon the number of "Adjusted Outstanding Shares" (as that term is defined in paragraph 5(b) below) on April 14, 2002, subject to further adjustment as provided in Section 5 and Section 6 hereof; PROVIDED, HOWEVER, that notwithstanding anything set forth herein to the contrary, in the event that a Liquidation does not occur, or a binding agreement to effect any such Liquidation has not been executed and delivered by the Company on or before May 13, 2003 (the "Adjustment Date"), then subclause (i) of this sentence shall automatically be deemed to be amended to be 200% of the Stated Value per share, plus any dividends thereon that are accrued but unpaid. If upon any Liquidation, at any time, the remaining assets of the Corporation available for the distribution to its stockholders after payment in full of amounts required to be paid or distributed to holders of Senior Preferred Stock shall be insufficient to pay the holders of shares of Series A Preferred Stock the full amount to which they shall be entitled, the holders of shares of Series A Preferred Stock, and any class of stock ranking on liquidation on a parity with the Series A Preferred Stock, shall share ratably in any distribution of the remaining assets and funds of the Corporation in proportion to the respective amounts which would otherwise be payable in respect to the shares held by them upon such distribution if all amounts payable on or with respect to said shares were paid in full. (b) After the payment of all preferential amounts required to be paid to the holders of Senior Preferred Stock and Series A Preferred Stock and any other series of preferred stock ("Preferred Stock") upon Liquidation, the holders of shares of Common Stock then outstanding shall be entitled to receive the remaining assets and funds of the Corporation available for distribution to its stockholders. (c) Liquidation as used in this Section 3 shall be deemed to include any transaction which is referred to in any one or more of the following clauses (i) through (iii): (i) any merger or consolidation involving the Corporation which meets the criteria set forth in clause (iii) below; (ii) the acquisition of the Corporation either (x) through the sale, conveyance, mortgage, pledge or lease of all or substantially all the assets of the Corporation, or (y) through the acquisition of an interest in the Company's common stock of the Company by way of purchase (whether by public tender offer or otherwise), merger or consolidation, or (z) otherwise; or (iii) Any transaction or series of transactions, where, other than any person or group who is or are current stockholders of the Corporation as of April 14, 2002 and/or any of their respective affiliates, a "person" or "group" (as such terms are used in Sections 13(d) and 14(d) of the Securities Exchange Act of 1934, as amended (the "Exchange Act")) is or becomes the "beneficial owner" (as defined by Rules 13d-3 and 13d-5 of the Exchange Act), directly or indirectly, of 50% or more of the outstanding capital stock of the Corporation. 3 (d) (i) Notwithstanding anything set forth herein to the contrary, in the event that the Corporation enters into a definitive binding agreement with respect to a transaction which is deemed to be a Liquidation as defined in Section 3(c)(ii) herein above (a "Section 3(c)(ii) Liquidation") on or before the "Non-Voting Date," as such term is defined in, and as such date may be extended pursuant to, Section 4(d) below, and the Section 3(c)(ii) Liquidation, or any transaction contemplated or permitted by the definitive binding agreement relating to the Section 3(c)(ii) Liquidation, closes on or before the Non-Voting Date, then the holder shall not be entitled to receive the consideration set forth in Section 3(a) above, but rather, shall be entitled to receive, before payment of any consideration shall be made to the holders of Junior Stock, 100% of the Stated Value per share plus any dividends thereon that are accrued but unpaid (the "Series A Investment") plus Two Million Dollars ($2,000,000) (the "Alternate Liquidation Amount"), PROVIDED, HOWEVER, that in the event that holder accepts the Alternate Liquidation Amount, then the holder expressly agrees that holder shall not, shall cause the Holder's "affiliates" (as defined in Section 4(d) below) not to, and shall not assist or encourage any stockholder of the Corporation to, under any circumstances whatsoever, seek, or be permitted to seek, to exercise any appraisal rights under Section 262 of the GCL, or otherwise seek, or be permitted to seek, to challenge the Section 3(c)(ii) Liquidation. Unless the holder expressly notifies the Corporation in writing within seven (7) days after holder has received the Alternate Liquidation Amount, which notice, to be effective, must be in accordance with the notice provisions set forth in Section (d)(ii) below and must also include the return of the entire Alternate Liquidation Amount, time being of the essence, that it does not accept the Alternate Liquidation Amount, then the holder shall automatically and irrevocably be deemed to have accepted the Alternate Liquidation Amount. In the event that, in accordance with the provisions of the immediately preceding sentence, the holder duly notifies the Corporation that it does not accept the Alternate Liquidation Amount, the holder shall be deemed to have irrevocably waived its right to receive such Alternate Liquidation Amount. As used in this Certificate of Amendment, the term Section 3(c)(ii) Liquidation shall mean not only the transaction that is deemed to be a Liquidation as defined in Section 3(c)(ii) above, but shall also include any transaction contemplated or permitted by the definitive binding agreement relating to the Section 3(c)(ii) Liquidation transaction. (ii) All notices, requests, demands, other communications and deliveries required or desired to be given hereunder shall only be effective if given in writing by hand, 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 hand or 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): If to the Corporation to: 4 Grubb & Ellis Company 55 East 59th Street New York, New York 10022 Telephone No. (212) 326-4744 Facsimile No. (212) 326-4903 Attn: Chief Executive Officer -and- 2215 Sanders Road Suite 400 Northbrook, Illinois 60062 Telephone No. (847) 753-7500 Facsimile No. (847) 753-9060 Attn: Chief Administrator Officer with a copy simultaneously by like means: Zukerman Gore & Brandeis, LLP 900 Third Avenue New York, New York 10022 Telephone No. (212) 223-6700 Facsimile No. (212) 223-6433 Attention: Jeffrey D. Zukerman, Esq. If to the holder of the Series A Preferred Stock: Kojaian Ventures, L.L.C. 39400 Woodward Avenue Suite 250 Bloomfield Hills, Michigan 48304 Telephone No. (248) 644-7600 Facsimile No. (248) 644-7620 with a copy simultaneously by like means to: Carson Fischer, P.L.C. Third Floor 300 East Maple Road Birmingham, Michigan 48009 Telephone No. (248) 644-4840 Facsimile No. (248) 644-1832 Attn: Robert M. Carson, Esq. 5 (e) In the event of any Liquidation, each holder of Series A Preferred Stock shall have the right to elect to receive the benefits of Section 6(e) in lieu of receiving payment in Liquidation, pursuant to this Section 3. Upon payment of all amounts due under this Section 3, the holder of any shares of Series A Preferred Stock shall have no further rights in respect of such shares. 4. VOTING. (a) Each issued and outstanding share of Series A Preferred Stock shall be entitled to the number of votes equal to the Assumed Share Number (as adjusted from time to time pursuant to Section 5 and Section 6), at each meeting of stockholders of the Corporation (or pursuant to any action by written consent) with respect to any and all matters presented to the stockholders of the Corporation (including increasing or decreasing the number of authorized shares of capital stock of the Corporation) for their action or consideration. (b) In addition to any other rights provided by law, the Corporation shall not, without first obtaining the affirmative vote or written consent of the holders of a majority of the outstanding shares of Series A Preferred Stock: (i) amend or repeal any provision of the Corporation's Certificate of Incorporation or By-Laws; (ii) authorize or effect the payment of dividends or the redemption or repurchase of any capital stock of the Corporation or rights to acquire capital stock of the Corporation; (iii) authorize or effect the issuance by the Corporation of any shares of capital stock or rights to acquire capital stock other than (x) pursuant to options, warrants, conversion or subscription rights in existence on March 7, 2002 (the "Initial Issuance Date") or thereafter approved with the consent of the holders of a majority of the then outstanding shares of Series A Preferred Stock or (y) pursuant to stock option, stock bonus or other employee stock plans for the benefit of the employees and consultants and outside directors of the Corporation or its subsidiaries in existence as of such date or thereafter approved with the consent of the holders of a majority of the then outstanding shares of Series A Preferred Stock; or (iv) authorize or effect (a) any sale, lease, transfer or other disposition of all or substantially all the assets of the Corporation; (b) any merger or consolidation or other reorganization of the Corporation with or into another corporation, (c) the acquisition by the Corporation of another entity by means of a purchase of all or substantially all of the capital stock or assets of such entity, or (d) a liquidation, winding up, dissolution or adoption of any plan for the same. (c) The Corporation shall not amend, alter or repeal the preferences, special rights or other powers of the Series A Preferred Stock so as to affect adversely the Series A Preferred Stock, without the written consent or affirmative vote of the holders of at least a majority of the then outstanding shares of Series A Preferred Stock, given in writing or by vote at a meeting, consenting or voting (as the case may be) separately as a class. For this purpose, the authorization or issuance of any series of Preferred Stock with preference or priority over, or 6 being on a parity with the Series A Preferred Stock as to the right to receive either dividends or amounts distributable upon liquidation, dissolution or winding up of the Corporation shall be deemed so to affect adversely the Series A Preferred Stock. (d) Notwithstanding anything set forth herein to the contrary, prior to May 31, 2002 (as same may be extended as provided below, the "Non-Voting Date"), the holder shall not exercise any voting rights, of any equity securities of the Corporation beneficially owned by the holder, in any manner whatsoever, that could directly or indirectly hinder, prohibit, delay or prevent the consummation of, or materially alter the terms of, a proposed Section 3(c)(ii) Liquidation, PROVIDED, that in the event the Corporation enters into a definitive binding agreement with respect to a Section 3(c)(ii) Liquidation on or before the Non-Voting Date, then the Non-Voting Date shall automatically be extended to September 30, 2002. In addition, prior to the expiration of the Non-Voting Date, the holder shall not have the right, and shall cause its controlling member not to, and not to agree, to voluntarily transfer, donate, sell, assign or otherwise dispose of any preferred, common or other equity securities of the Corporation or any other interest therein. As used herein, the term "affiliate" or any correlative term shall mean, with respect to any party, any other party directly or indirectly controlling, controlled by, or under direct or indirect common control with, such party, or other than the father of the controlling member of Kojaian Ventures, L.L.C. 5. CALCULATION OF ASSUMED SHARE NUMBER. The Assumed Share Number shall be determined by dividing the Stated Value by the Strike Price then in effect. (a) The initial strike price, subject to adjustment as provided herein, is equal to $1.00 (the "Strike Price") based upon the Adjusted Outstanding Shares as of April 14, 2002 as adjusted pursuant to Sections 5 and 6 hereof. The applicable Assumed Share Number and Strike Price from time to time in effect is subject to adjustment as hereinafter provided. The Assumed Share Number shall be calculated to the nearest share of Common Stock. (b) As used herein, the term "Adjusted Outstanding Shares" shall mean the shares of Common Stock outstanding as of April 14, 2002, plus the shares of Common Stock underlying and either issuable or issued upon (i) those Common Stock options that have been granted prior to and were outstanding on April 14, 2002, and that have an exercise price equal to or less than $5.00 per share (other than such Common Stock options, if any, that are cancelled on or before the Adjustment Date), plus (ii) all Common Stock options that are authorized as of April 14, 2002, and thereafter granted on or before the Adjustment Date, plus (iii) 50% of all Common Stock options, if any, authorized after April 14, 2002, and thereafter granted on or before the Adjustment Date ("Newly Authorized Options"), provided that the number of Newly Authorized Options to be taken into account for the purposes of this subclause (iii) shall not exceed the number of any Common Stock options cancelled on or before the Adjustment Date. Notwithstanding anything set forth herein to the contrary, in the event that a Liquidation shall be consummated before the Adjustment Date, then for purposes of calculating the Adjusted Outstanding Shares, the Adjustment Date shall be deemed to be the date of consummation of such liquidation. 7 (c) Whenever the Assumed Share Number and Strike Price shall be adjusted as provided in Section 6 hereof, the Corporation shall forthwith file at each office designated for the conversion of Series A Preferred Stock, a statement, signed by the Chairman of the Board, the President, any Vice President or Treasurer of the Corporation, showing in reasonable detail the facts requiring such adjustment and the Assumed Share Number that will be effective after such adjustment. The Corporation shall also cause a notice setting forth any such adjustments to be sent by mail, first class, postage prepaid, to each record holder of Series A Preferred Stock at his or its address appearing on the stock register. 6. ANTI-DILUTION PROVISIONS. (a) The Strike Price shall be subject to adjustment from time to time in accordance with this Section 6 commencing on April 14, 2002 (whether shares of the Series A Preferred Stock are outstanding or not). For purposes of this Section 6, the term "Number of Common Shares Deemed Outstanding" at any given time shall mean the number of Adjusted Outstanding Shares at such time (including (x) certain options, warrants and securities convertible into or exchangeable for shares of Common Stock and (y) without duplication, the number of shares of the Common Stock deemed to be outstanding under paragraphs 6(b)(1) to (9), inclusive, at such time, all in accordance with the provisions of this Section 6). (b) Except as provided in Section 6(c), 6(d) or 6(f) hereof, if and whenever on or after the Initial Issuance Date, the Corporation shall issue or sell, or shall in accordance with paragraphs 6(b)(1) to (9), inclusive, be deemed to have issued or sold any shares of its Common Stock for a consideration per share less than the Strike Price in effect immediately prior to the time of such issue or sale, then forthwith upon such issue or sale (the "Triggering Transaction"), the Strike Price shall, subject to paragraphs (1) to (9) of this Section 6(b), be reduced to the Strike Price (calculated to the nearest tenth of a cent) determined by dividing: (i) an amount equal to the sum of (x) the product derived by multiplying the Number of Common Shares Deemed Outstanding immediately prior to such Triggering Transaction by the Strike Price then in effect, plus (y) the consideration, if any, received by the Corporation upon consummation of such Triggering Transaction, by (ii) an amount equal to the sum of (x) the Number of Common Shares Deemed Outstanding immediately prior to such Triggering Transaction plus (y) the number of shares of Common Stock issued (or deemed to be issued in accordance with paragraphs 6(b)(1) to (9)) in connection with the Triggering Transaction. For purposes of determining the adjusted Strike Price under this Section 6(b), the following paragraphs (1) to (9), inclusive, shall be applicable: (1) In case the Corporation at any time shall in any manner grant (whether directly or by assumption in a merger or otherwise) any rights to subscribe for or to purchase, or any options for the purchase of, Common Stock or any stock or other securities convertible into or exchangeable for Common Stock (such rights or options being herein called "Options" and such convertible or exchangeable stock or securities being herein called "Convertible Securities"), 8 whether or not such Options or the right to convert or exchange any such Convertible Securities are immediately exercisable and the price per share for which the Common Stock is issuable upon exercise, conversion or exchange (determined by dividing (x) the total amount, if any, received or receivable by the Corporation as consideration for the granting of such Options, plus the minimum aggregate amount of additional consideration payable to the Corporation upon the exercise of all such Options, plus, in the case of such Options which relate to Convertible Securities, the minimum aggregate amount of additional consideration, if any, payable upon the issue or sale of such Convertible Securities and upon the conversion or exchange thereof, by (y) the total maximum number of shares of Common Stock issuable upon the exercise of such Options or the conversion or exchange of such Convertible Securities) shall be less than the Strike Price in effect immediately prior to the time of the granting of such Option, then the total maximum amount of Common Stock issuable upon the exercise of such Options or in the case of Options for Convertible Securities, upon the conversion or exchange of such Convertible Securities shall (as of the date of granting of such Options) be deemed to be outstanding and to have been issued and sold by the Corporation for such price per share. No adjustment of the Strike Price shall be made upon the actual issue of such shares of Common Stock or such Convertible Securities upon the exercise of such Options, except as otherwise provided in paragraph (3) below. (2) In case the Corporation at any time shall in any manner issue (whether directly or by assumption in a merger or otherwise) or sell any Convertible Securities, whether or not the rights to exchange or convert thereunder are immediately exercisable, and the price per share for which Common Stock is issuable upon such conversion or exchange (determined by dividing (x) the total amount received or receivable by the Corporation as consideration for the issue or sale of such Convertible Securities, plus the minimum aggregate amount of additional consideration, if any, payable to the Corporation upon the conversion or exchange thereof, by (y) the total maximum number of shares of Common Stock issuable upon the conversion or exchange of all such Convertible Securities) shall be less than the Strike Price in effect immediately prior to the time of such issue or sale, then the total maximum number of shares of Common Stock issuable upon conversion or exchange of all such Convertible Securities shall (as of the date of the issue or sale of such Convertible Securities) be deemed to be outstanding and to have been issued and sold by the Corporation for such price per share. No adjustment of the Strike Price shall be made upon the actual issue of such Common Stock upon exercise of the rights to exchange or convert under such Convertible Securities, except as otherwise provided in paragraph (3) below. (3) If the purchase price provided for in any Options referred to in paragraph (1), the additional consideration, if any, payable upon the conversion or exchange of any Convertible Securities referred to in paragraphs (1) or (2), or the rate at which any Convertible Securities referred to in paragraphs (1) or (2) are 9 convertible into or exchangeable for Common Stock shall change at any time, the Strike Price in effect at the time of such change shall forthwith be readjusted to the Strike Price which would have been in effect at such time had such Options or Convertible Securities still outstanding provided for such changed purchase price, additional consideration or conversion rate, as the case may be, at the time initially granted, issued or sold. (4) On the expiration of any Option, the issuance of which initially caused a reduction in the Conversion Price in accordance with the provisions of this Section 6(b), or the termination of any right to convert or exchange any Convertible Securities, the issuance of which initially caused a reduction in the Conversion Price in accordance with the provisions of this Section 6(b), the Strike Price then in effect hereunder shall forthwith be increased to the Strike Price which would have been in effect at the time of such expiration or termination had such Option or Convertible Securities, to the extent outstanding immediately prior to such expiration or termination, never been issued. (5) In case any Options shall be issued in connection with the issue or sale of other securities of the Corporation, together comprising one integral transaction in which no specific consideration is allocated to such Options by the parties thereto, such Options shall be deemed to have been issued without consideration. (6) In case any shares of Common Stock, Options or Convertible Securities shall be issued or sold or deemed to have been issued or sold for cash, the consideration received therefor shall be deemed to be the amount received by the Corporation therefor. In case any shares of Common Stock, Options or Convertible Securities shall be issued or sold for a consideration other than cash, the amount of the consideration other than cash received by the Corporation shall be the fair value of such consideration as determined in good faith by the Board of Directors. In case any shares of Common Stock, Options or Convertible Securities shall be issued in connection with any merger or acquisition in which the Corporation is the surviving corporation, the amount of consideration therefor shall be deemed to be the fair value of such portion of the net assets and business of the non-surviving corporation as shall be attributable to such Common Stock, Options or Convertible Securities, as the case may be. (7) The number of shares of Common Stock outstanding at any given time shall not include shares owned or held by or for the account of the Corporation, and the disposition of any shares so owned or held shall be considered an issue or sale of Common Stock for the purpose of this Section 6(b). (8) In case the Corporation shall declare a dividend or make any other distribution upon the stock of the Corporation payable in Options or Convertible Securities, then in such case any Options or Convertible Securities, as the case 10 may be, issuable in payment of such dividend or distribution shall be deemed to have been issued or sold without consideration. (9) For purposes of this Section 6(b), in case the Corporation shall take a record of the holders of its Common Stock for the purpose of entitling them (x) to receive a dividend or other distribution payable in Common Stock, Options or in Convertible Securities, or (y) to subscribe for or purchase Common Stock, Options or Convertible Securities, then such record date shall be deemed to be the date of the issue or sale of the shares of Common Stock deemed to have been issued or sold upon the declaration of such dividend or the making of such other distribution or the date of the granting of such right or subscription or purchase, as the case may be. (c) In the event the Corporation shall declare a dividend upon the Common Stock (other than a dividend payable in Common Stock) payable otherwise than out of earnings or earned surplus, determined in accordance with generally accepted accounting principles, including the making of appropriate deductions for minority interests, if any, in subsidiaries (herein referred to as "Liquidating Dividends"), then, Corporation shall pay the holders of the Series A Preferred Stock an amount equal to the aggregate value at the time of such exercise of all Liquidating Dividends based upon the Assumed Share Number, at the then applicable Strike Price prior to any payment to holders of Common Stock. For the purposes of this Section 6(c), a dividend other than in cash shall be considered payable out of earnings or earned surplus only to the extent that such earnings or earned surplus are charged an amount equal to the fair value of such dividend as determined in good faith by the Board of Directors. (d) In case the Corporation shall at any time (i) subdivide the outstanding Common Stock or (ii) issue a dividend on its outstanding Common Stock payable in shares of Common Stock, the Assumed Share Number in effect immediately prior to such dividend or combination shall be proportionately increased by the same ratio as the subdivision or dividend (with appropriate adjustments to the Strike Price in effect immediately prior to such subdivision or dividend). In case the Corporation shall at any time combine its outstanding Common Stock, the Assumed Share Number in effect immediately prior to such combination shall be proportionately decreased by the same ratio as the combination (with appropriate adjustments to the Strike Price in effect immediately prior to such combination). (e) If any capital reorganization or reclassification of the capital stock of the Corporation, or consolidation or merger of the Corporation with another corporation, or the sale of all or substantially all of its assets to another corporation shall be effected in such a way that holders of Common Stock shall be entitled to receive stock, securities, cash or other property with respect to or in exchange for Common Stock, then, as a condition of such reorganization, reclassification, consolidation, merger or sale, lawful and adequate provision shall be made whereby the holders of the Series A Preferred Stock shall have the right to acquire and receive, which right shall be prior to the rights of the holders of Junior Stock (but after and subject to the rights of holders of Senior Preferred Stock, if any), such shares of stock, securities, cash or other property issuable or payable (as part of the reorganization, reclassification, consolidation, merger or sale) with respect to or in exchange for such number of outstanding shares of Common Stock as would have been received based upon the Assumed Share Number at the Strike Price then in 11 effect. The Corporation will not effect any such consolidation, merger or sale, unless prior to the consummation thereof the successor corporation (if other than the Corporation) resulting from such consolidation or merger or the corporation purchasing such assets shall assume by written instrument mailed or delivered to the holders of the Series A Preferred Stock at the last address of each such holder appearing on the books of the Corporation, the obligation to deliver to each such holder such shares of stock, securities or assets as, in accordance with the foregoing provisions, such holder may be entitled to purchase. (f) The provisions of this Section 6 shall not apply to any Common Stock issued, issuable or deemed outstanding under paragraphs 6(b)(1) to (9) inclusive: (i) pursuant to options, warrants and conversion rights that are not deemed to be Adjusted Outstanding Shares, (ii) on conversion of the Series A Preferred Stock or the sale of any additional shares of Series A Preferred Stock, or (iii) any issuance of stock for which the holders of a majority of the outstanding shares of Series A Preferred Stock have waived in writing the rights contained in this Section 6. (g) If at any time or from time to time on or after the Initial Issuance Date, the Corporation shall grant, issue or sell any Options, Convertible Securities or rights to purchase property (the "Purchase Rights") pro rata to the record holders of any class of Common Stock and such grants, issuances or sales do not result in an adjustment of the Strike Price under Section 6(b) hereof, then each holder of Series A Preferred Stock shall be entitled to acquire (within thirty (30) days after the later to occur of the initial exercise date of such Purchase Rights or receipt by such holder of the notice concerning Purchase Rights to which such holder shall be entitled under Section 6(g)) and upon the terms applicable to such Purchase Rights either: (i) the aggregate Purchase Rights which such holder could have acquired if it had held the Assumed Share Number of shares of Common Stock immediately before the grant, issuance or sale of such Purchase Rights; provided that if any Purchase Rights were distributed to holders of Common Stock without the payment of additional consideration by such holders, corresponding Purchase Rights shall be distributed to the exercising holders of the Series A Preferred Stock as soon as possible after such exercise and it shall not be necessary for the exercising holder of the Series A Preferred Stock specifically to request delivery of such rights; or (ii) in the event that any such Purchase Rights shall have expired or shall expire prior to the end of said thirty (30) day period, the number of shares of Common Stock or the amount of property which such holder could have acquired upon such exercise at the time or times at which the Corporation granted, issued or sold such expired Purchase Rights. (h) If any event occurs as to which, in the opinion of the Board of Directors, the provisions of this Section 6 are not strictly applicable or if strictly applicable would not fairly protect the rights of the holders of the Series A Preferred Stock in accordance with the essential intent and principles of such provisions, then the Board of Directors shall make an adjustment in the application of such provisions, in accordance with such essential intent and principles, so as to protect such rights as aforesaid, but in no event shall any adjustment have the effect of increasing the Strike Price as otherwise determined pursuant to any of the provisions of this 12 Section 6 except in the case of a combination of shares of a type contemplated in Section 6(d) hereof and then in no event to an amount larger than the Strike Price as adjusted pursuant to Section 6(d) hereof. 7. LEGENDS. All shares of Series A Preferred Stock and Common Stock issuance upon conversion of the Series A Preferred Stock shall bear one or all of the following legends: (a) The Securities represented hereby have not been registered under the Securities Act of 1933, as amended (the "Act"), or under the Securities Laws of certain states. These securities are subject to restrictions on transferability and resale and may not be transferred or resold except as permitted under the Act and applicable state securities laws, pursuant to registration or exemption therefrom. Investors should be aware that they may be required to bear the financial risks of this investment for an indefinite period of time. The issuer of these securities may require an opinion of counsel in form and substance reasonably satisfactory to the issuer to the effect that any proposed transfer or resale is in compliance with the act and any applicable state securities laws." (b) Any legend required by the Blue Sky laws of any state to the extent such laws are applicable to the securities represented by the certificate so legended. 13 IN WITNESS WHEREOF, Grubb & Ellis Company has caused this Certificate of Designations, Number, Voting Powers, Preferences and Rights of Series A Convertible Preferred Stock to be duly executed by its CEO this 13th day of May, 2002. GRUBB & ELLIS COMPANY By /s/ Barry M. Barovick ----------------------------- Name: Barry M. Barovick Title: CEO 14 EX-4 6 c24456_ex4.txt CONVERTIBLE PROMISSORY NOTE Exhibit 4 THIS CONVERTIBLE PROMISSORY NOTE AND THE SECURITIES ISSUABLE UPON ITS CONVERSION HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE "ACT"), OR ANY STATE SECURITIES LAW, AND MAY NOT BE TRANSFERRED EXCEPT PURSUANT TO AN EFFECTIVE REGISTRATION UNDER THE ACT OR IN A TRANSACTION WHICH, IN THE OPINION OF COUNSEL REASONABLY SATISFACTORY TO GRUBB & ELLIS COMPANY, QUALIFIES AS AN EXEMPT TRANSACTION UNDER THE ACT AND THE RULES AND REGULATIONS PROMULGATED THEREUNDER. THE OBLIGATIONS OF THE MAKER UNDER THIS NOTE ARE SUBORDINATED PURSUANT TO A SUBORDINATION AGREEMENT DATED AS OF EVEN DATE HEREWITH IN FAVOR OF CERTAIN LENDERS TO THE MAKER CONVERTIBLE SUBORDINATED PROMISSORY NOTE AND SECURITY AGREEMENT May 13, 2002 $11,237,500 FOR VALUE RECEIVED, Grubb & Ellis Company (the "Maker"), hereby unconditionally promises to pay to the order of Kojaian Ventures, L.L.C. (the "Holder"), having an address at 39400 Woodward Avenue, Suite 250, Bloomfield Hills, Michigan 48304, at such address or at such other place as may be designated in writing by the Holder, or its assigns, the original aggregate principal sum of Eleven Million Two Hundred Thirty Seven Thousand Five Hundred Dollars and No Cents, (11,237,500), together with interest on the unpaid principal balance of this Note outstanding at a rate per annum equal to twelve percent (12%)(computed on the basis of the actual number of days elapsed in a 360-day year) compounded quarterly. All principal and accrued interest, plus reasonable, documented out-of-pocket expenses of the Holder incurred in connection with the issuance of this Note ("reasonable expenses"), shall be paid at the earlier of (a) at the option of the Holder, in cash to the Holder, or (b) at the Option of the Holder, by conversion of some or all of the principal amount then outstanding and accrued interest thereon plus reasonable expenses into shares of the Maker's newly created Series A Preferred Stock (as such term is defined in the Maker's Certificate of Amendment of Certificate of Designations, Number, Voting Powers, Preferences and Rights of Series A Convertible Preferred Stock (the "Certificate of Designation"), or (c) when such amounts are made automatically due and payable upon the occurrence of an Event of Default (as defined below) or (d) January 1, 2006 (the "Maturity Date); PROVIDED, HOWEVER, that no payments of any nature whatsoever shall be made with respect to the Note in contravention of the terms and provisions of the Amended and Restated Credit Agreement, dated as of December 31, 2000, as amended, among the Company, Various Financial Institutions, LaSalle Bank National Association, American National Bank and Trust Company of Chicago and Bank of America as same may be modified, extended, amended or supplemented at any time or from time to time (the "Credit Agreement"). Subject to the provisions of the Credit Agreement, the principal amount of this Note, plus accrued interest thereon and reasonable expenses with respect thereto, may be prepaid in cash, in whole or in part, at anytime and from time to time by Maker by the tendering of payment thereof to Holder. In addition, notwithstanding anything set forth herein to the contrary, Holder expressly agrees to convert the entire principal amount of this Note, plus all accrued interest thereon plus all reasonable expenses with respect thereto, into Series A Preferred Stock upon receipt of written notice from Maker (the "Conversion Notice") that, in the absence of Holder effecting such conversion, the Company will not be able to maintain the listing of its securities on the New York Stock Exchange. Any such conversion of the principal amount of this Note into Series A Preferred Stock in accordance with the provisions of the immediately preceding sentence shall be deemed to be effected upon the giving of the Conversion Notice. All cash payments by the Maker under this Note shall be in immediately available funds. The number of shares of Series A Preferred Stock to be issued to the Holder upon any conversion of principal and interest plus reasonable expenses hereunder shall be equal to the quotient obtained by dividing (i) the aggregate principal amount outstanding of this Note plus accrued and unpaid interest plus reasonable expenses to the date of conversion by (ii) the "Stated Value" (as defined in the Certificate of Designation) rounded up to the nearest whole share. In lieu of cash payment of interest hereon, on each date on which interest shall be payable, except in the case of interest due on the Maturity Date and upon an Event of Default of this Note, the principal amount of this Note shall be increased by an amount equal to the amount of interest payable on such interest payment date plus reasonable expenses. Further, upon an Event of Default, solely as a result of subclause (v) of such defined term below, Company shall also pay to Holder, in addition to all other payments due hereunder, the "Alternate Liquidation Amount" as that term is defined in Section 3(d) of the Certificate of Designation as if Holder had converted the Note into shares of Series A Preferred Stock, but only expressly in accordance with the express provisions with respect to the Alternate Liquidation Amount set forth in Section 3(d) of the Certificate of Designation. The Note is transferable and assignable to any person to whom such transfer is permissible under applicable law; PROVIDED, HOWEVER, that the Note and any part thereof or interest therein may not be transferred or assigned prior to the expiration of the "Non-Voting Date" as that term is defined in the Certificate of Designation. The Maker agrees to issue from time to time replacement Notes in the form hereof to facilitate such transfers and assignments. In addition, after delivery of an indemnity in form and substance satisfactory to the Maker, the Maker also agrees to issue a replacement Note if the Note is lost, stolen, mutilated or destroyed. 2 The Holder will be an "Additional Term Lender" under the Credit Agreement, and as such, shall share in the rights to all collateral granted to the "Administrative Agent" under the Credit Agreement on behalf of the "Lenders." All capitalized terms in this paragraph, unless otherwise defined herein to the contrary, shall have the meaning ascribed to them in the Credit Agreement. Every amount overdue under this Note shall bear interest from and after the date on which such amount first became overdue at an annual rate which is two (2) percentage points above the rate per year specified in the first paragraph of this Note (the "Default Interest Rate"). The Default Interest Rate shall be increased at an annual rate which is two (2) percentage points above the then current Default Interest Rate on the thirtieth day after the date on which the Note first became overdue and for each month thereafter that the Note remains overdue; PROVIDED, HOWEVER that the Default Interest Rate shall not exceed a maximum annual rate of 18%. Such interest on overdue amounts under this Note shall be payable on demand and shall accrue and be compounded monthly until the obligation of the Maker with respect to the payment of such interest has been discharged (whether before or after judgment). In no event shall any interest charged, collected or reserved under this Note exceed the maximum rate then permitted by applicable law and if any such payment is paid by the Maker, then such excess sum shall be credited by the Holder as a payment of principal. If at the time of conversion of this Note into shares of the Maker's capital stock, there are insufficient authorized shares of equity securities to permit conversion of this Note in full, then the Maker shall take all corporate action necessary to authorize a sufficient number of shares of equity securities to permit such conversion in full. No fractional shares of the Maker's capital stock will be issued upon conversion of this Note. In lieu of any fractional share to which the Holder would otherwise be entitled, the Maker will pay to the Holder in cash the amount of the unconverted principal and interest balance of this Note that would otherwise be converted into such fractional share. Upon conversion of this Note, the Holder shall surrender this Note, duly endorsed, at the principal offices of the Maker or any transfer agent of the Maker. At its expense, the Maker will, as soon as practicable thereafter, issue and deliver to such Holder, at such principal office, a certificate or certificates for the number of shares to which such Holder is entitled upon such conversion, together with other securities and property to which the Holder is entitled upon such conversion under the terms of this Note, including a check payable to the Holder for any cash amounts payable as described herein. Upon conversion of this Note and payment for fractional shares as provided above, the Maker will be forever released from all of its payment obligations and liabilities under this Note with regard to that portion of the principal amount and accrued interest being converted. All payments by the Maker under this Note shall be made without set-off, defense or counterclaim and be free and clear and without any deduction or withholding for any taxes or fees of any nature whatever, unless the obligation to make such deduction or withholding is imposed by law. No delay or omission on the part of the Holder in exercising any right under this Note shall operate as a waiver of such right or of any other right of the Holder, nor shall any delay, omission or waiver on any one occasion be deemed a bar to or waiver of the same or any other right on any future occasion. 3 Maker agrees that: (i) upon the failure to pay when due the then outstanding principal balance, accrued interest and reasonable expenses hereunder; (ii) if Maker (1) commences any voluntary proceeding under any provision of Title 11 of the United States Code, as now or hereafter amended, or commences any other proceeding, under any law, now or hereafter in force, relating to bankruptcy, insolvency, reorganization, liquidation, or otherwise to the relief of debtors or the readjustment of indebtedness, (2) makes any assignment for the benefit of creditors or a composition or similar arrangement with such creditors, or (3) appoints a receiver, trustee or similar judicial officer or agent to take charge of or liquidate any of its property or assets; (iii) upon the commencement against Maker of any involuntary proceeding of the kind described in paragraph (ii); (iv) the default by the Maker of any of its other debt obligations, including the breach of any provision of the Credit Agreement, or (v) upon the closing of a transaction that is deemed to be a Liquidation pursuant to Section 3(c)(ii) of the Certificate of Designation (any of (i) through (v), an "Event of Default"), all unpaid principal and accrued interest under this Note shall become immediately due and payable upon demand with ten (10) days written notice. The term "Person" means an individual, a corporation, a partnership, a limited liability company, an associate, a trust or any other entity or organization, including a government or political subdivision or an agency or instrumentality thereof. Upon the occurrence and continuance of an Event of Default, the Holder shall (a) be entitled to vote all Investment Property (as defined in the UCC) constituting Collateral, (b) be entitled to receive, hold and/or apply to the payment of the Obligations any dividends payable in respect of the Collateral, and (c) have all the rights and remedies of a secured party under the UCC. The Maker shall take such steps from time to time as may be requested by the Holder to ensure that the security interest created hereby shall constitute a first priority security interest under applicable law, including the UCC. This Note may be prepaid in whole or in part at any time or from time to time without premium or penalty. Any voluntary or mandatory prepayment of this Note shall be applied first to the payment of interest accrued and unpaid on this Note and second to the payment of principal. None of the terms or provisions of this Note may be excluded, modified or amended except by a written instrument duly executed by the Holder and the Maker expressly referring to this Note and setting forth the provision so excluded, modified or amended. Maker hereby forever waives presentment, demand, presentment for payment, protest, notice of protest, notice of dishonor of this Note and all other demands and notices in connection with the delivery, acceptance, performance and enforcement of this Note upon ten (10) days written notice. If action is instituted to collect on this Note, the Maker promises to pay all costs and expenses, including reasonable attorney's fees, incurred in connection with such action. 4 This Note shall be governed and construed in accordance with the laws of the State of Illinois applicable to agreements made and performed entirely in such State, without regard to conflict of laws principles thereof, and shall be binding upon the successors or assigns of the Maker and shall inure to the benefit of the successors and assigns of the Holder. GRUBB & ELLIS COMPANY By: /s/ Barry M. Barovick --------------------------- Name: Barry M. Barovick Title: CEO 5 EX-5 7 c24456_ex5.txt FOURTH AMENDMENT Exhibit 5 FOURTH AMENDMENT THIS FOURTH AMENDMENT dated as of May 13, 2002 (this "Amendment") amends the Amended and Restated Credit Agreement dated as of December 31, 2000 (as previously amended, the "Credit Agreement") among Grubb & Ellis Company (the "Borrower"), various financial institutions (the "Lenders") and Bank of America, N.A., as administrative agent (in such capacity, the "Administrative Agent"). Terms defined in the Credit Agreement are, unless otherwise defined herein or the context otherwise requires, used herein as defined therein. WHEREAS, the Borrower, the Lenders and the Administrative Agent have entered into the Credit Agreement; and WHEREAS, the parties hereto desire to amend the Credit Agreement in certain respects as more fully set forth herein; NOW, THEREFORE, the parties hereto agree as follows: SECTION 1 AMENDMENTS. Subject to the satisfaction of the conditions precedent set forth in Section 3 of this Amendment, the Credit Agreement is amended as follows: 1.1 ADDITION OF DEFINITIONS. The following new definitions are added to the Credit Agreement in proper sequence: "KOJAIAN INVESTORS" means, collectively, Kojaian Ventures, L.L.C., Mike Kojaian, C. Michael Kojaian and their respective Affiliates. "PERMITTED PERSON" means Warburg or the Kojaian Investors. 1.2 AMENDMENT TO DEFINITION OF "EQUITY OFFERING". The definition of "Equity Offering" is amended in its entirety to read as follows: "EQUITY OFFERING" means the issuance of equity of the Borrower, or Indebtedness that is convertible into equity of the Borrower, to one or more Persons in an amount not less than $11,000,000, in each case having terms reasonably acceptable to the Required Lenders. 1.3 AMENDMENT TO SECTION 9(K). Section 9(k) is amended in its entirety to read as follows: (k)(A) (i) No Permitted Person shall have the power to vote or direct the voting of securities having at least 35% of the ordinary voting power for the election of directors of the Borrower (determined on a fully diluted basis) and (ii) any "person" or "group" (as such terms are used in Sections 13(d) and 14(d) of the Exchange Act), excluding any Permitted Person and the members or partners thereof, shall become or obtain rights (whether by means or warrants, options or otherwise) to become, the "beneficial owner" (as defined in Rules 13(d)-3 and 13(d)-5 under the Exchange Act), directly or indirectly, of 35% or more of the outstanding common stock of the Borrower or (B) (i) a Permitted Person shall have the power to vote or direct the voting of securities having at least 35% or more of the ordinary voting power for the election of directors of the Borrower (determined on a fully diluted basis) and (ii) any "person" or "group" (as such terms are used in Sections 13(d) and 14(d) of the Exchange Act), excluding any Permitted Person and the members or partners thereof shall become or obtain rights (whether by means or warrants, options or otherwise) to become, the "beneficial owner" (as defined in Rules 13(d)-3 and 13(d)-5 under the Exchange Act), directly or indirectly, of a percentage ownership of the outstanding common stock of the Borrower that exceeds the percentage held by such Permitted Person. 1.4 AMENDMENT TO SECTION 12. Section 12.3 is amended in its entirety to read as follows: 12.3 PREPAYMENT OR CONVERSION OF ADDITIONAL TERM LOAN. The Borrower may prepay the Additional Term Loan made by Warburg (a) after all other Borrower Obligations have been paid in full in cash; or (b) so long as no Default or Event of Default exists or would result therefrom, with the proceeds of the Equity Offering. The Borrower may convert the Additional Term Loan into equity of the Borrower pursuant to the terms of a promissory note issued to the Additional Term Lender substantially in the form of Exhibit B to the Fourth Amendment to this Agreement. SECTION 2 REPRESENTATIONS AND WARRANTIES. The Borrower represents and warrants to the Administrative Agent and the Lenders that, after giving effect to the effectiveness hereof, (a) each warranty set forth in Section 5 of the Credit Agreement (other than those which speak as of a particular earlier date) is true and correct as of the date of the execution and delivery of this Amendment by the Borrower, with the same effect as if made on such date, and (b) no Event of Default or Default exists. SECTION 3 EFFECTIVENESS. The amendments set forth in SECTION 1 above shall become effective when the Administrative Agent shall have received (a) counterparts of this Amendment executed by the Borrower and the Required Lenders, (b) a Confirmation, substantially in the form of EXHIBIT A, signed by the Borrower and each Subsidiary Guarantor and (c) payment of all amounts payable to the Administrative Agent pursuant to Section 11.5 of the Credit Agreement, to the extent invoices therefor have been delivered to the Borrower. SECTION 4 MISCELLANEOUS. 4.1 Continuing Effectiveness, etc. As herein amended, the Credit Agreement shall remain in full force and effect and is hereby ratified and confirmed in all respects. After the effectiveness of this Amendment, all references in the Credit Agreement and the other Loan 2 Documents to "Credit Agreement" or similar terms shall refer to the Credit Agreement as amended hereby. 4.2 COUNTERPARTS. This Amendment may be executed in any number of counterparts and by the different parties on separate counterparts, and each such counterpart shall be deemed to be an original but all such counterparts shall together constitute one and the same Amendment. 4.3 GOVERNING LAW. This Amendment shall be a contract made under and governed by the laws of the State of Illinois applicable to contracts made and to be performed entirely within such state. 4.4 SUCCESSORS AND ASSIGNS. This Amendment shall be binding upon the Borrower, the Lenders and the Administrative Agent and their respective successors and assigns, and shall inure to the benefit of the Borrower, the Lenders and the Administrative Agent and the respective successors and assigns of the Lenders and the Administrative Agent. 4.5 OPTION AGREEMENT. The Required Lenders (a) acknowledge that the Borrower will exercise the Refinancing Option under and as defined in the Option Agreement on or prior to May 14, 2002 (the "Refinancing Closing Date"), (b) acknowledge that, effective on the Refinancing Closing Date (but only upon execution and delivery by Kojaian, as defined below, of a joinder agreement reasonably acceptable to the Administrative Agent), (i) Kojaian Ventures, L.L.C. ("Kojaian") will become the Additional Term Lender and will make an additional term loan (the "Kojaian Term Loan") to the Borrower in an amount equal to the sum of (x) $11,000,000 plus (y) accrued and unpaid interest on the Additional Term Loan made by Warburg plus (z) up to $100,000 of expenses of Warburg in connection with the making of the Additional Term Loan and related transactions, (ii) Warburg will cease to be the Additional Term Lender and (iii) except to the extent the context otherwise requires, any reference in the Credit Agreement to the "Additional Term Lender" shall be deemed to refer to Kojaian and any reference in the Credit Agreement to the "Additional Term Loan" shall be deemed to refer to the Kojaian Term Loan, and (c) consent to the issuance by the Borrower of a note to Kojaian substantially in the form of EXHIBIT B. 3 Delivered at Chicago, Illinois, as of the day and year first above written. GRUBB & ELLIS COMPANY By: /s/ Ian Y. Bress ------------------------------------ Title: Chief Financial Officer BANK OF AMERICA, N.A., as Administrative Agent By: Michael R. Heredia ------------------------------------ Title: Managing Director LENDERS: BANK OF AMERICA, N.A., as a Lender By: Michael R. Heredia ------------------------------------- Title: Managing Director LASALLE BANK NATIONAL ASSOCIATION, as Documentation Agent and as a Lender By: David Pelaia ------------------------------------ Title: Officer AMERICAN NATIONAL BANK AND TRUST COMPANY OF CHICAGO, as Syndication Agent and as a Lender By: Dennis Saletta ------------------------------------ Title: First Vice President S-1 Exhibit A CONFIRMATION Dated as of May __, 2002 To: Bank of America, N.A., individually and as Agent, and the other financial institutions party to the Credit Agreement referred to below Please refer to (a) the Amended and Restated Credit Agreement dated as of December 31, 2000 (as amended, the "Credit Agreement") among Grubb & Ellis Company, various financial institutions (the "Lenders") and Bank of America, N.A., as administrative agent (the "Administrative Agent"); (b) the other "Loan Documents" (as defined in the Credit Agreement), including the Guaranty and Collateral Agreement; and (c) the Fourth Amendment dated as of the date hereof to the Credit Agreement (the "Fourth Amendment"). Each of the undersigned hereby confirms to the Administrative Agent and the Lenders that, after giving effect to the Fourth Amendment and the transactions contemplated thereby, each Loan Document to which such undersigned is a party continues in full force and effect and is the legal, valid and binding obligation of such undersigned, enforceable against such undersigned in accordance with its terms. GRUBB & ELLIS COMPANY GRUBB & ELLIS CONSULTING SERVICES COMPANY GRUBB & ELLIS NEW YORK, INC. GRUBB & ELLIS OF MICHIGAN, INC. GRUBB & ELLIS OF NEVADA, INC. GRUBB & ELLIS OF OREGON, INC. GRUBB & ELLIS AFFILIATES, INC. GRUBB & ELLIS MANAGEMENT SERVICES, INC. GRUBB & ELLIS MANAGEMENT SERVICES OF MICHIGAN, INC. HSM INC. LANDAUER HOSPITALITY INTERNATIONAL, INC. By: /s/ Ian Y. Bress -------------------------------- Name: Ian Y. Bress Title: Chief Financial Officer -----END PRIVACY-ENHANCED MESSAGE-----