Exhibit 10.1
Execution Copy
GRUBB & ELLIS COMPANY
$30,000,000
7.95% CONVERTIBLE SENIOR NOTES DUE 2015
PURCHASE AGREEMENT
May 3, 2010
JMP Securities LLC
600 Montgomery Street, Suite 1100
San Francisco, California 94111
Ladies and Gentlemen:
Grubb & Ellis Company, a Delaware corporation (the “Company”), confirms its
agreement with JMP Securities LLC (the “Initial Purchaser”) with respect to the
issuance and sale by the Company to the Initial Purchaser of $30 million
principal amount of the Company’s 7.95% Convertible Senior Notes due 2015 (the
“Initial Securities”). In addition, the Company has granted to the Initial
Purchaser an option to purchase up to an additional $4.5 million principal
amount of the Company’s 7.95% Convertible Senior Notes due 2015 (the “Option
Securities” and, together with the Initial Securities, the “Securities”). The
Securities, including under certain circumstances accrued interest thereon, will
be convertible into shares (the “Underlying Shares”) of the common stock, par
value $0.01 per share, of the Company (the “Common Stock”), subject to and in
accordance with the terms and conditions of the Indenture (as defined below).
The Securities will be issued pursuant to an Indenture (the “Indenture”) to be
dated on or about May 7, 2010 by and between the Company and U.S. Bank, in its
capacity as trustee (the “Trustee”). This Agreement, the Securities, the
Indenture, and the Registration Rights Agreement (as defined below) are herein
referred to collectively as the “Operative Documents.”
Upon original issuance of the Securities, and until such time as the same is no
longer required under the applicable requirements of the Securities Act of 1933,
as amended (the "Securities Act”) and the rules and regulations thereunder (the
“Securities Act Regulations”), the Securities (and all securities issued in
exchange therefor or in substitution thereof) shall bear the following legend:
“THIS SECURITY AND THE COMMON STOCK ISSUABLE UPON CONVERSION OF THIS SECURITY
HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE
“SECURITIES ACT”) OR THE SECURITIES LAWS OF ANY STATE OR OTHER JURISDICTION, AND
MAY NOT BE OFFERED, SOLD, PLEDGED OR OTHERWISE TRANSFERRED EXCEPT IN ACCORDANCE
WITH THE FOLLOWING SENTENCE.
BY ITS ACQUISITION HEREOF OR OF A BENEFICIAL INTEREST HEREIN, THE ACQUIRER:

  (1)  
REPRESENTS THAT IT IS A “QUALIFIED INSTITUTIONAL BUYER” (AS DEFINED IN RULE 144A
UNDER THE SECURITIES ACT (“RULE 144A”)), (B) IT IS AN INSTITUTIONAL “ACCREDITED
INVESTOR” (AS DEFINED IN RULE 501(a)(1), (2), (3) OR (7) UNDER THE SECURITIES
ACT), OR (C) IT IS AN INDIVIDUAL “ACCREDITED INVESTOR” (AS DEFINED IN RULE
501(a) (4), (5) OR (6) UNDER THE SECURITIES ACT); AND

 

 

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  (2)  
AGREES FOR THE BENEFIT OF THE COMPANY THAT IT WILL NOT OFFER, SELL, PLEDGE OR
OTHERWISE TRANSFER THIS SECURITY OR ANY BENEFICIAL INTEREST HEREIN PRIOR TO THE
DATE THAT IS THE LATER OF (X) ONE YEAR AFTER THE LAST ORIGINAL ISSUE DATE HEREOF
OR SUCH SHORTER PERIOD OF TIME AS PERMITTED BY RULE 144 UNDER THE SECURITIES ACT
OR ANY SUCCESSOR PROVISION THERETO AND (Y) SUCH LATER DATE, IF ANY, AS MAY BE
REQUIRED BY APPLICABLE LAW, EXCEPT:

  (A)  
TO GRUBB & ELLIS COMPANY (THE “COMPANY”) OR ANY SUBSIDIARY THEREOF, OR

  (B)  
PURSUANT TO A REGISTRATION STATEMENT WHICH HAS BECOME EFFECTIVE UNDER THE
SECURITIES ACT, OR

  (C)  
TO A QUALIFIED INSTITUTIONAL BUYER IN COMPLIANCE WITH RULE 144A UNDER THE
SECURITIES ACT, OR

  (D)  
PURSUANT TO AN EXEMPTION FROM REGISTRATION PROVIDED BY RULE 144 UNDER THE
SECURITIES ACT OR ANY OTHER AVAILABLE EXEMPTION FROM THE REGISTRATION
REQUIREMENTS OF THE SECURITIES ACT.

PRIOR TO THE REGISTRATION OF ANY TRANSFER IN ACCORDANCE WITH (2)(D) ABOVE, THE
COMPANY AND THE TRUSTEE RESERVE THE RIGHT TO REQUIRE THE DELIVERY OF SUCH LEGAL
OPINIONS, CERTIFICATIONS OR OTHER EVIDENCE AS MAY REASONABLY BE REQUIRED IN
ORDER TO DETERMINE THAT THE PROPOSED TRANSFER IS BEING MADE IN COMPLIANCE WITH
THE SECURITIES ACT AND APPLICABLE STATE SECURITIES LAWS. NO REPRESENTATION IS
MADE AS TO THE AVAILABILITY OF ANY EXEMPTION FROM THE REGISTRATION REQUIREMENTS
OF THE SECURITIES ACT.”
The Securities will be offered and sold to the Initial Purchaser pursuant to an
exemption from the registration requirements under the Securities Act. The
Company has prepared a preliminary offering memorandum, dated April 22, 2010 (as
subsequently supplemented, if applicable, and including all information
incorporated by reference therein, the “Preliminary Offering Memorandum”), and
will prepare a final offering memorandum, dated the date hereof (such final
offering memorandum, and including all information incorporated by reference
therein, the “Offering Memorandum”), relating to the Company and its
Subsidiaries (as defined below) and the Securities. For purposes of this
Agreement, “Time of Sale Memorandum” means the Preliminary Offering Memorandum
together with any Issuer Written Information (as defined below) issued at or
prior to 5:00 P.M., New York City time, on May 3, 2010 or such other time as
agreed by the Company and the Initial Purchaser (such date and time, the “Time
of Sale”). The Company will prepare a final term sheet (the “Final Term Sheet”),
in the form set forth in Schedule C hereto, reflecting the final terms of the
Securities, in form and substance satisfactory to the Initial Purchaser. “Issuer
Written Information” means (i) any writing intended for general distribution to
investors as evidenced by its being specified in Schedule A hereto, (ii) any
“road show” that is a “written communication” within the meaning of the
Securities Act and (iii) the Final Term Sheet. The Time of Sale Memorandum and
the Offering Memorandum are collectively referred to as the “Offering
Memorandums.” In addition, any reference to the Time of Sale Memorandum or the
Offering Memorandum shall be deemed to refer to any documents incorporated by
reference therein as of the date of such Time of Sale Memorandum or the Offering
Memorandum, as the case may be. Any reference to

 

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any amendment or supplement to any Time of Sale Memorandum or the Offering
Memorandum shall be deemed to refer to and include any document filed by the
Company under the Securities Exchange Act of 1934, as amended (the “Exchange
Act”), with the U.S. Securities and Exchange Commission (the "Commission”) after
the date of such Time of Sale Memorandum or the Offering Memorandum, as the case
may be, but prior to the date of such amendment or supplement, as and to the
extent incorporated by reference in such Time of Sale Memorandum or the Offering
Memorandum, as the case may be.
The Initial Purchaser has advised the Company that the Initial Purchaser will
make offers to sell the Securities on the terms set forth in the Offering
Memorandum, as amended or supplemented, solely to persons whom the Initial
Purchaser reasonably believes to be (i) “qualified institutional buyers,” as
defined in Rule 144A under the Securities Act (such persons referred to in
clause (i) above, “QIBs,” and such sales referenced in clause (i), the “Exempt
Resales”), (ii) institutional “accredited investors,” as defined in
Rule 501(a)(1), (2), (3) or (7) under the Securities Act, or (iii) individual
“accredited investors,” as defined in Rule 501(a)(4), (5) or (6) under the
Securities Act) (such persons referred to in clauses (ii) and (iii) above,
“Accredited Investors,” and such sales referenced in clauses (ii) and (iii), the
“Exempt Sales”). The QIBs and Accredited Investors are collectively referred to
herein as “Eligible Purchasers.” The Initial Purchaser will offer the Securities
to such Eligible Purchasers on the terms set forth in the Time of Sale
Memorandum. Sales, if any, to Accredited Investors will be made by the Company
directly to those Accredited Investors pursuant to a separate purchase agreement
between the Company and such Accredited Investors dated as of the date hereof
(the “Accredited Investor Purchase Agreement”), but the Initial Purchaser shall
receive a placement agency fee for such sales as set forth therein.
The holders of the Securities will have registration rights with respect to the
Securities and the Underlying Shares, as set forth in the registration rights
agreement (the “Registration Rights Agreement”) to be dated as of the Closing
Time (as defined below), by and among the Company and the Initial Purchaser for
the benefit of the holders of the Securities and the Underlying Shares.
Section 1. Representations and Warranties.
(a) Representations and Warranties by the Company. The Company represents and
warrants to the Initial Purchaser as of the date hereof as of 5:00 p.m., the
Time of Sale, the Closing Time (as defined below) and any Additional Closing
Time (as defined below), and agrees with the Initial Purchaser as follows:
(i) Time of Sale Memorandum and Offering Memorandum. Neither (A) the Time of
Sale Memorandum, as of the Time of Sale, nor (B) any amendments or supplements
to the Time of Sale Memorandum, as of the date of such amendment or supplement,
nor (C) the Time of Sale Memorandum, as so amended or supplemented, if
applicable, as of the Closing Time, nor (D) the Offering Memorandum, as of its
date and as of the Closing Time, nor the Time of Sale Memorandum or Offering
Memorandum as of any Additional Closing Time, in each instance, after giving
effect to the filing by the Company with the Commission on April 29, 2010 of an
amendment on Form 10-K/A to the Company’s annual report on Form 10-K for the
fiscal year ended December 31, 2009, included or will include an untrue
statement of a material fact or omitted or will omit to state a material fact
necessary in order to make the statements therein, in the light of the
circumstances under which they were made, not misleading. The representations
and warranties in this subsection shall not apply to statements in or omissions
from the Time of Sale Memorandum or the Offering Memorandum made solely in
reliance upon and in conformity with written information furnished to the
Company by the Initial Purchaser expressly for use therein. For purposes of this
Agreement, the only information so furnished shall be (a) the information in the
second paragraph under the heading “Where You Can Find More Information” in the
Offering Memorandum, (b) the information in the first sentence in the sixth
paragraph under the

 

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heading “Plan of Distribution” in the Offering Memorandums, (c) the information
in the third sentence in the seventh paragraph under the heading “Plan of
Distribution” in the Offering Memorandums and (d) the information in the last
paragraph under the heading “Plan of Distribution” in the Offering Memorandums
(collectively, the “Initial Purchaser Information”).
(ii) Incorporated Documents. The documents incorporated or deemed to be
incorporated by reference in the Time of Sale Memorandum and the Offering
Memorandum, at the time such documents were or hereafter are filed with the
Commission, complied and will comply in all material respects with the
requirements of the Securities Act and the rules and regulations of the
Commission thereunder (the “Securities Act Regulations”) or the Exchange Act and
the rules and regulations of the Commission thereunder (the “Exchange Act
Regulations”), as applicable.
(iii) Good Standing of the Company. The Company has been duly incorporated and
is validly existing as a corporation in good standing under the laws of the
State of Delaware and has the corporate power and authority to own, lease and
operate its properties and to conduct its business as described in each of the
Offering Memorandums and to enter into and perform its obligations under the
Operative Documents. The Company is duly qualified as a foreign corporation to
transact business and is in good standing in each other jurisdiction in which
the conduct of its business or its ownership or leasing of property requires
such qualification, except where the failure to so qualify or to be licensed
would not have a material adverse effect on the condition (financial or
otherwise), business, earnings, properties, assets, results of operations or
prospects of the Company and its Subsidiaries (as defined below) taken as a
whole (a “Material Adverse Effect”).
(iv) Good Standing and Capitalization of Subsidiaries. Each subsidiary of the
Company (each a "Subsidiary” and collectively, the “Subsidiaries”), which
includes, without limitation, each significant subsidiary (as defined in
Rule 1-02(w) of Regulation S-X) of the Company (the "Significant Subsidiaries”),
which Significant Subsidiaries are listed on Exhibit A, has been duly
incorporated, formed or organized and is validly existing as a corporation,
limited liability company, or limited partnership (as the case may be) in good
standing under the laws of the jurisdiction of its formation with all requisite
corporate, limited liability company, or limited partnership (as applicable)
power and authority to own, lease and operate its properties and to conduct its
business as described in the Offering Memorandums. Each such Subsidiary is duly
qualified as a foreign corporation to transact business and is in good standing
in each jurisdiction in which the conduct of its business or its ownership or
leasing of property requires such qualification, except where the failure to so
qualify or be licensed would not have a Material Adverse Effect. All of the
issued and outstanding capital stock or other ownership interests of each such
Subsidiary has been duly authorized and validly issued and is fully paid and
non-assessable, and have been issued in compliance with all federal and state
securities laws. The capital stock or other ownership interests of each such
Subsidiary owned by the Company directly or through its Subsidiaries are owned
free and clear of any security interest, mortgage, pledge, lien, encumbrance,
claim or equity. None of the outstanding shares of capital stock of any
wholly-owned Subsidiary and, to the knowledge of the Company, any other
Subsidiary was issued in violation of the preemptive or similar rights of any
securityholder of such Subsidiary.
(v) Independent Accountants. Ernst & Young LLP, the accountants who have
certified the audited financial statements and supporting schedules of the
Company incorporated by reference in the Offering Memorandums, are independent
registered public accountants as required by the Securities Act, Securities Act
Regulations, Exchange Act, Exchange Act Regulations and the Public Accounting
Oversight Board.
(vi) Financial Statements. The financial statements and schedules, including the
notes thereto, incorporated by reference in the Offering Memorandums present
fairly in all material

 

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respects the combined financial position of the Company and its Subsidiaries
presented therein as of and at the dates indicated, and the consolidated results
of operations, shareowners’ equity and cash flows for the Company and its
Subsidiaries for the periods specified. Such financial statements and schedules
have been prepared in conformity with accounting principles generally accepted
in the United States (“GAAP”) applied on a consistent basis throughout the
periods involved, except as may be expressly stated in the related notes
thereto. The supporting schedules present fairly in all material respects the
information required to be stated therein and in accordance with GAAP. The
selected consolidated financial data included in the Offering Memorandums
present fairly in all material respects the information shown therein and have
been compiled on a basis consistent with that of the audited financial
statements included therein. No other financial statements or schedules would be
required to be included in the Offering Memorandums if the financial statements
and schedules incorporated by reference in the Offering Memorandums were
included in a registration statement filed by the Company on Form S-1 under the
Securities Act and the Securities Act Regulations on the respective dates of the
Offering Memorandums. All disclosures contained in the Offering Memorandums
regarding “non-GAAP financial measures” (as such term is defined by the rules
and regulations of the Commission) comply in all material respects with
Regulation G under the Exchange Act and Item 10 of Regulation S-K of the
Securities Act Regulations, to the extent applicable.
(vii) Absence of Certain Changes. Since the date as of which information is
given in the Time of Sale Memorandum: (A) neither the Company nor any of its
Subsidiaries have incurred any material liability or obligation, direct or
contingent, nor entered into any material transaction not in the ordinary course
of business; (B) the Company has not purchased any of its outstanding capital
stock, nor declared, paid or otherwise made any dividend or distribution of any
kind on its capital stock other than ordinary and customary dividends stated in
the Time of Sale Memorandum; (C) there has not been any change in the capital
stock or material short-term debt or long-term debt of the Company and its
Subsidiaries; and (D) the Company has not altered materially its method of
accounting or the manner in which it keeps its accounting books and records
(viii) Material Adverse Effect. Neither the Company nor any Subsidiary has
sustained since the date of the latest audited financial statements included in
the Time of Sale Memorandum any material loss or interference with its business
from fire, explosion, flood or other calamity, whether or not covered by
insurance, or from any labor dispute or court or governmental action, order or
decree, otherwise than as set forth or contemplated in the Time of Sale
Memorandum. Since the date as of which information is given in the Time of Sale
Memorandum, there has not been any (A) change in the capital stock or members’
equity, as applicable, or long-term debt of the Company or any of its
Subsidiaries, or (B) Material Adverse Effect.
(ix) Capitalization. The authorized, issued and outstanding capital stock of the
Company is as set forth under column entitled “Actual” under the heading
“Capitalization” and conforms in all material respects to the description
thereof under “Description of Capital Stock,” in each case as set forth in the
Offering Memorandums or in the Registration Statement on Form S-1/A filed with
the Commission on March 26, 2010, as such description is incorporated by
reference in the Offering Memorandums. As of the date hereof and the Closing
Time, the issued and outstanding capital stock of the Company will be in all
material respects as set forth in the Time of Sale Memorandum. The outstanding
shares of Common Stock and Preferred Stock and the other outstanding securities
of the Company have been duly authorized and validly issued and are fully paid
and non-assessable, and have been issued in compliance with all federal and
state securities laws. None of such outstanding shares of Common Stock or
Preferred Stock or other outstanding securities were issued in violation of
preemptive or other similar rights of any securityholder of the Company. There
are no securities or instruments containing anti-dilution or similar provisions
that will be triggered by the issuance of the Securities.

 

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(x) Authorization of Operative Documents. The Company has the requisite
corporate power and authority to enter into and to consummate the transactions
contemplated by each of the Operative Documents to which it is a party and
otherwise to carry out its obligations hereunder and thereunder, including,
without limitation, to issue the Securities in accordance with the terms hereof.
The Company’s execution and delivery of each of the Operative Documents to which
it is a party and the consummation by it of the transactions contemplated hereby
and thereby (including, but not limited to, the sale and delivery of the
Securities) have been duly authorized by all necessary corporate action on the
part of the Company, and no further corporate action is required by the Company,
its Board of Directors or its shareowners in connection therewith, including,
without limitation, under the rules and regulations of the New York Stock
Exchange (the “NYSE”). Each of the Operative Documents have been duly
authorized, executed, and delivered by the Company.
(xi) Binding Obligation. Each of the Operative Documents, when duly executed and
delivered in accordance with its terms by each of the parties thereto, will be
the legal, valid and binding obligation of the Company, enforceable against the
Company in accordance with its terms, except as may be limited by bankruptcy,
insolvency, reorganization, moratorium or similar laws affecting creditors’
rights generally, and by general equitable principles, and except to the extent
that the indemnification and contribution provisions may be limited by federal
or state securities laws and public policy considerations in respect thereof. At
the Closing Time, the Indenture will conform in all material respects to the
requirements of the Trust Indenture Act of 1939, as amended (the "Trust
Indenture Act”), under rules and regulations of the Commission applicable to an
Indenture that it qualified thereunder.
(xii) Authorization of Securities. The Securities have been duly and validly
authorized by the Company for issuance and sale to the Initial Purchaser
pursuant to this Agreement and, when duly executed, issued, authenticated and
delivered in accordance with the terms of the Indenture against payment therefor
in accordance with the terms of this Agreement and the Indenture, will
constitute valid and legally binding obligations of the Company, enforceable
against the Company in accordance with their terms except as may be limited by
bankruptcy, insolvency, reorganization, moratorium or similar laws affecting
creditors’ rights generally, and by general equitable principles, and except to
the extent that the indemnification and contribution provisions may be limited
by federal or state securities laws and public policy considerations in respect
thereof and will be in the form contemplated by, and entitled to the benefits of
the Indenture.
(xiii) Authorization of Underlying Shares. Upon issuance and delivery of the
Securities in accordance with this Agreement and the Indenture, the Securities
will be convertible at the option of the holder thereof into shares of the
Underlying Shares in accordance with the terms of the Securities and the
Indenture. The Underlying Shares have been duly authorized and reserved for
issuance upon such conversion by all necessary corporate action and such shares,
when issued in accordance with the terms of the Indenture and the Securities,
will be validly issued, fully paid and non-assessable, free and clear of all
liens, encumbrances, equities or claims, and the issuance of the Underlying
Shares will not be subject to any preemptive or similar rights, provided that
the issuance of the Securities will entitle certain holders of the Company’s 12%
Cumulative Participating Perpetual Convertible Preferred Stock to purchase up to
approximately $1.9 million of 12% Convertible Senior Notes in accordance with
the terms of that certain Registration Rights Agreement dated as of October 27,
2009 by and among the Company and such holders (the “Limited Preemptive Right”).
The certificates to be used to evidence the Underlying Shares will comply in all
material respects with all applicable legal requirements, the requirements of
the charter and bylaws of the Company, and the requirements of the NYSE. No
holder of Underlying Shares will be subject to personal liability solely by
reason of being such a holder.

 

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(xiv) Description of Operative Documents. Each of the Operative Documents
conforms in all material respects to the description thereof contained in each
of the Offering Memorandums.
(xv) Absence of Defaults and Conflicts. Neither the Company nor any of its
Subsidiaries is in (A) violation of its organizational documents, (B) material
and adverse default (whether with or without the giving of notice or passage of
time or both) in the performance or observance of any obligation, agreement,
covenant or condition contained in any license, lease, indenture, mortgage, deed
of trust, loan agreement, credit agreement, operating agreement, property
management agreement, franchise agreement or other agreement or instrument to
which it is a party or by which it or any of its properties may be bound,
(C) violation of any order of which the Company has been made aware in writing
of any court, arbitrator or governmental body having jurisdiction over the
Company or its properties or assets, or (D) violation of, or in receipt of
written notice that it is in violation of, any statute, rule or regulation of
any governmental authority applicable to the Company. The issuance and sale of
the Securities by the Company, the issuance of the Underlying Shares by the
Company, and the compliance by the Company with all of the provisions of the
Operative Documents and all other transactions contemplated by the Operative
Documents do not and will not: (A) conflict with, or result in any breach of, or
constitute a default under nor constitute any event which (with notice, lapse of
time, or both) would constitute a breach of or default under (i) any provisions
of the charter or bylaws or other organizational documents of the Company or any
Subsidiary, (ii) any provision of any license, lease, indenture, mortgage, deed
of trust, loan agreement, credit agreement, operating agreement, property
management agreement, franchise agreement or other agreement or instrument to
which the Company or any Subsidiary is a party or by which any of them or their
respective properties or assets may be bound or affected after giving effect to
the use of proceeds as set forth in the Offering Memorandums, (iii) any law or
regulation binding upon or applicable to the Company or any Subsidiary or any of
their respective properties or assets (including, without limitation, the rules
and regulations of the NYSE, except for fulfilling the shareowner notice
requirements under the rules and regulations of the NYSE) or (iv) any decree,
judgment or order applicable to the Company or any Subsidiary; or (B) except as
contemplated in the Operative Documents, result in the creation or imposition of
any lien, charge, claim or encumbrance upon any property or assets of the
Company or any Subsidiary.
(xvi) Absence of Proceedings; Accuracy of Exhibits. There are no legal or
governmental proceedings pending or, to the Company’s knowledge, threatened to
which the Company or any of its Subsidiaries or any of their respective officers
or directors is a party or to which any of the properties of the Company or any
of its Subsidiaries is subject that would be required by applicable law or
regulation to be described in the documents incorporated by reference in each of
the Offering Memorandums that are not described in each of the Offering
Memorandums or any affiliate transactions, off-balance sheet transactions,
statutes, regulations, contracts, licenses, agreements, leases or other
documents that would be required by applicable law or regulation to be described
in the documents incorporated by reference in each of the Offering Memorandums
that are not described in each of the Offering Memorandums.
(xvii) Possession of Intellectual Property. The Company and its Subsidiaries own
or possess, or can acquire on reasonable terms, all material licenses,
inventions, copyrights, know-how (including trade secrets and other confidential
information, systems or procedures), trademarks, service marks, and trade names
currently employed by them in connection with the business now operated by them,
and neither the Company nor any of its Subsidiaries has received any notice of
infringement of or conflict with asserted rights of others with respect to any
of the foregoing.
(xviii) Absence of Further Requirements. No consent, approval, authorization or
order of, or filing, registration or qualification with, any governmental body
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court is required for the execution, delivery, performance or consummation by
the Company of its obligations under the Operative Documents, including the
issuance and sale of the Securities to be issued and sold by the Company
hereunder and the issuance of the Underlying Shares by the Company, except
(A) such consents, approvals, authorizations, orders, filings, qualifications or
registration as may be required by the securities or Blue Sky laws of the
various states, (B) such consents, approvals, authorizations, orders, filings,
qualifications or registration as will be obtained or completed by the Closing
Time, (C) filings with the Commission and the NYSE to be made in connection with
the issuance of the Underlying Shares and pursuant to the Registration Rights
Agreement and orders or approvals related thereto, or (D) a Form D as may be
required under federal securities laws.
(xix) Absence of Manipulation. Neither the Company nor any of its affiliates has
taken, nor will the Company or any affiliate take, directly or indirectly, any
action designed to, or which constituted, or might reasonably be expected to
cause or result in, the stabilization or manipulation of the price of any
security of the Company to facilitate the sale or resale of the Securities.
(xx) Obligations to Issue Securities. Except for the Underlying Shares, shares
reserved for issuance upon exercise of outstanding options under publicly
disclosed option plans and shares reserved for convertible, exchangeable or
exercisable securities disclosed in the Time of Sale Memorandum, no shares of
capital stock of the Company or its Subsidiaries are reserved for any purpose.
Except as described in the immediately preceding sentence or in the Time of Sale
Memorandum, there are no outstanding (A) securities of the Company or any of its
Subsidiaries convertible into or exchangeable for any capital stock, partnership
interests, membership interests, or other equity interests, as the case may be,
in the Company or any of its Subsidiaries, (B) options, rights (preemptive or
otherwise, other than the Limited Preemptive Right) or warrants to purchase or
subscribe for shares of Common Stock, Preferred Stock, or any other securities
of the Company, or (C) obligations of the Company or any of its Subsidiaries to
issue any such securities, options, rights or warrants.
(xxi) No Integration. There has been no sale, offer for sale, solicitation of an
offer to buy or negotiation by the Company or any of its Subsidiaries in respect
of any security that would be integrated with the offering of the Securities in
a manner that would require the registration of the Securities under the
Securities Act. When the Securities are issued and delivered pursuant to this
Agreement and the Indenture, the Securities will not be of the same class
(within the meaning of Rule 144A under the Securities Act) as securities of the
Company that are listed on a national securities exchange registered under
Section 6 of the Exchange Act or that are quoted in a United States automated
inter-dealer quotation system.
(xxii) Possession of Licenses and Permits. Each of the Company and its
Subsidiaries has all necessary licenses, authorizations, consents and approvals
and has made all necessary filings required under any foreign, federal, state or
local law, regulation or rule, and has obtained all necessary authorizations,
consents and approvals from other persons, required in order to conduct its
business as described in the Offering Memorandums, except where the failure to
have such license, authorization, consent or approval or to make such filing
would not have a Material Adverse Effect. Neither the Company nor any of its
Subsidiaries is in violation of, in default under, or has received any notice
regarding a possible violation, default or revocation of any such license,
authorization, consent or approval of any foreign, federal, state or local law,
regulation or rule or any decree, order or judgment applicable to the Company or
any Subsidiary, except where the failure to have such license, authorization,
consent or approval or to make such filing would not have a Material Adverse
Effect.
(xxiii) Title to Property. The Company and its Subsidiaries have good and
marketable title in fee simple to, or a valid leasehold interest in, all real
property described in the Offering Memorandums as owned by them (the “Company
Properties”), and good and marketable title to all

 

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personal property owned by them that is material to the business of the Company,
in each case free and clear of all liens, encumbrances, security interests and
defects except such as are described in each of the Offering Memorandums or such
as do not materially affect the value of such property and do not materially
interfere with the use made and proposed to be made of such property by the
Company and its Subsidiaries; and any Company Properties, buildings and
equipment held under lease by the Company and its Subsidiaries and described in
each of the Offering Memorandums are held by them under valid, subsisting and
enforceable leases (such leases, the “Company Leases”) with such exceptions as
are not material and do not materially interfere with the use made and proposed
to be made of such property and buildings by the Company and its Subsidiaries.
Neither the Company nor any of its Subsidiaries is in default under any of the
Company Leases, relating to, or any of the mortgages or other security documents
or other agreements encumbering or otherwise recorded against, the Company
Properties, and neither the Company nor any of its Subsidiaries knows of any
event, which, but for the passage of time or the giving of notice, or both,
would constitute a default under any of such documents.
(xxiv) Title Insurance. The Company or its Subsidiaries have either (A) an
owner’s or leasehold title insurance policy, from a nationally recognized title
insurance company licensed to issue such policy, on each of the Company
Properties that insures the fee or leasehold interest, as the case may be, in
the Company Properties, which policies include only commercially reasonable
exceptions, and with coverage in amounts at least equal to amounts that are
generally deemed in the Company’s industry to be commercially reasonable in the
markets where the Company Properties are located, or (B) one or more lender’s
title insurance policies insuring the lien of the mortgages encumbering the
Company Properties with coverage, in the aggregate, equal to the maximum
aggregate principal amount of indebtedness incurred by the Company or its
Subsidiaries and secured by the Company Properties.
(xxv) Code Compliance. Each of the Company Properties complies in all material
respects with all applicable codes, laws and regulations (including, without
limitation, building and zoning codes, laws and regulations and laws relating to
access to the Company Properties); and neither the Company nor any of its
Subsidiaries has knowledge of any pending or threatened condemnation proceeding,
zoning change or other proceeding or action.
(xxvi) Environmental Laws. Each of the Company and its Subsidiaries (A) is in
compliance in all material respects with any and all applicable foreign,
federal, state and local laws, regulations and rules relating to the protection
of human health and safety, the environment or hazardous or toxic substances or
wastes, pollutants or contaminants (“Environmental Laws”), (B) has received all
permits, licenses or other approvals required of it under applicable
Environmental Laws to conduct its business and (C) is in compliance with all
terms and conditions of any such permit, license or approval. There are no costs
or liabilities associated with Environmental Laws (including, without
limitation, any capital or operating expenditures required for clean up, closure
of properties or compliance with Environmental Laws or any permit, license or
approval, any related constraints on operating activities and any potential
liabilities to third parties).
The Company has received no notice of, and has no knowledge of, any occurrence
or circumstance which, with notice or passage of time, or both, would give rise
to a claim under or pursuant to any federal, state or local environmental
statute or regulation or under common law, pertaining to Hazardous Materials (as
defined below) on or originating from any of the Company Properties or arising
out of the conduct of the Company, including, without limitation, a claim under
or pursuant to any Environmental Statute (as defined below). None of the Company
Properties is included or, to the Company’s knowledge, is proposed for inclusion
on the National Priorities List issued pursuant to CERCLA (as defined below) by
the U.S. Environmental Protection Agency or on any similar list or

 

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inventory issued pursuant to any other Environmental Statute or issued by any
other governmental authority.
As used herein, “Hazardous Materials” shall include, without limitation, any
flammable explosives, radioactive materials, hazardous materials, hazardous
wastes, toxic substances, or related materials, asbestos or any hazardous
material as defined by any federal, state or local environmental law, ordinance,
rule or regulation including without limitation the Comprehensive Environmental
Response, Compensation, and Liability Act of 1980, as amended, 42 U.S.C.
Sections 9601-9675 (“CERCLA”), the Hazardous Materials Transportation Act, as
amended, 49 U.S.C. Sections 1801-1819, the Resource Conservation and Recovery
Act, as amended, 42 U.S.C. Sections 6901-6992K, the Emergency Planning and
Community Right-to-Know Act of 1986, 42 U.S.C. Sections 11001-11050, the Toxic
Substances Control Act, 15 U.S.C. Sections 2601-2671, the Federal Insecticide,
Fungicide and Rodenticide Act, 7 U.S.C. Sections 136-136y, the Clean Air Act, 42
U.S.C. Sections 7401-7642, the Clean Water Act (Federal Water Pollution Control
Act), 33 U.S.C. Sections 1251-1387, the Safe Drinking Water Act, 42 U.S.C.
Sections 300f-330j-26, and the Occupational Safety and Health Act, 29 U.S.C.
Sections 651-678, as any of the above statutes may be amended from time to time,
and in the regulations promulgated pursuant to each of the foregoing
(individually, an “Environmental Statute”) or by any federal, state or local
governmental authority having or claiming jurisdiction over any of the Company
Properties and other assets described in the Offering Memorandums.
(xxvii) Absence of Labor Dispute. No material labor dispute with the employees
of the Company or any of its Subsidiaries exists or, to the knowledge of the
Company, is imminent. The Company is not aware of any existing, threatened, or
imminent labor disturbance by the employees of any of their principal suppliers,
manufacturers, customers or contractors.
(xxviii) Mortgage Loans. The Company and its Subsidiaries are in compliance with
all of their mortgage loans and all covenants therein, financial and otherwise.
(xxix) Property Improvement Plans. Neither the Company nor any of its
Subsidiaries is subject to any material property improvement plan required by
franchisors.
(xxx) Investment Company Act. Neither the Company nor any of its Subsidiaries
is, or after giving effect to the offering and sale of the Securities and the
application of the proceeds thereof as described in the Offering Memorandums
will be, required to register as an “investment company” as such term is defined
in the Investment Company Act of 1940, as amended, and the rules and regulations
promulgated thereunder (the “Investment Company Act”).
(xxxi) Insurance. The Company and its Subsidiaries are insured by insurers of
recognized financial responsibility against such losses and risks and in such
amounts as the Company believes are prudent and customary in the businesses in
which they are engaged, and neither the Company nor any of its Subsidiaries has
any reason to believe that it will not be able to renew its existing insurance
coverage as and when such coverage expires or to obtain similar coverage from
similar insurers as may be necessary to continue its business at a similar cost.
(xxxii) Material Contracts. Except as set forth in the Company’s Annual Report
on Form 10-K/A for the year ended December 31, 2009, the Company has not sent or
received any communication regarding termination of, or intent not to renew, any
of the material contracts or agreements referred to, described in or filed as an
exhibit to the Company’s Annual Report on Form 10-K/A for the year ended
December 31, 2009, or any other filing made by the Company with the Commission
during the period from January 1, 2010 to the date immediately preceding the
Closing Time (such filings, the “SEC Filings”), including, without limitation,
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management agreement with respect to the Company Properties, and no such
termination or non-renewal has been threatened by the Company or, to the
Company’s knowledge, to any other party to such contract or agreement.
(xxxiii) Internal Control Over Financial Reporting. The Company and each of its
Subsidiaries maintains a system of internal control over financial reporting (as
such term is defined in Rules 13a-15(f) and 15d-15(f) under the Exchange Act)
designed to provide reasonable assurance regarding the reliability of financial
reporting and the preparation of financial statements for external purposes in
accordance with GAAP, and such internal control over financial reporting is
effective to perform the functions for which it was established.
(xxxiv) Registration Rights. There are no persons with registration or other
similar rights to have any securities issued by the Company registered under the
Securities Act except for (A) registration rights contained in agreements filed
as exhibits to the Company’s Annual Report on Form 10-K/A for the year ended
December 31, 2009, including exhibits incorporated by reference therein and
(B) pursuant to the Registration Rights Agreement.
(xxxv) Compliance with the Sarbanes-Oxley Act. There is and has been no failure
on the part of the Company or its Subsidiaries, or directors or officers of the
Company or any of its Subsidiaries in their capacity as such, to comply in all
material respects with any applicable provision of the Sarbanes-Oxley Act of
2002, as amended, and the applicable rules and regulations promulgated in
connection therewith (the “Sarbanes-Oxley Act”) including, without limitation,
Section 402 related to loans, and Sections 302 and 906 related to
certifications.
(xxxvi) Independent Directors. The members of the Audit Committee, Compensation
Committee and Nominating and Corporate Governance Committee of the Board of
Directors of the Company are “independent directors” within the meaning of the
listing standards and rules of the NYSE, and, with respect to the Audit
Committee, the Commission. All of the members of the Audit Committee are
financially literate within the meaning of the listing standards and rules of
the NYSE and at least one member of the Audit Committee is an “audit committee
financial expert,” within the meaning of Item 401(h) of Regulation S-K
promulgated under the Exchange Act.
(xxxvii) ERISA Liabilities. The Company does not have, and does not anticipate
incurring, any material liabilities under the Employee Retirement Income
Security Act of 1974, as amended, including the regulations and published
interpretations thereunder (“ERISA”), or Section 4975 of the Internal Revenue
Code of 1986, as amended, and the regulations and published interpretations
thereunder.
(xxxviii) Plan Assets. The assets of the Company and its Subsidiaries do not
constitute “plan assets” of an ERISA regulated employee benefit plan.
(xxxix) Taxes. The Company and each of its Subsidiaries have accurately prepared
and timely filed all federal, state and other tax returns and extensions
(“Returns”) that are required to be filed by each such entity; all such Returns
are true, correct and complete in all material respects; and all foreign,
federal, state, county or local taxes, charges, fees, levies, fines, penalties
or other assessments, including all net income, gross income, sales and use, ad
valorem, transfer, gains, profits, excise, franchise, real and personal
property, gross receipts, capital stock, disability, employment, payroll,
license, estimated, stamp, custom duties, severance or withholding taxes or
charges imposed by any governmental authority (including any interest and
penalties (civil or criminal) on or additions to any such taxes and any expenses
incurred in connection with the determination, settlement or litigation of any
tax liability), in each case, to the extent material (“Taxes”), shown in such
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received by the Company or any of its Subsidiaries or otherwise due and payable
or claimed to be due and payable by any governmental authority, have been paid,
except for any such tax, charge, fee, levy, fine, penalty or other assessment
that (A) is currently being contested in good faith, or (B) is immaterial in
amount. Neither the Company nor any of its Subsidiaries has requested any
extension of time within which to file any Return, which Return has not since
been filed. Neither the Company nor any of its Subsidiaries has executed any
outstanding waivers or comparable consents regarding the application of the
statute of limitations with respect to any Taxes or Returns. No audits or other
administrative proceedings or court proceedings are presently pending nor
threatened against the Company or any of its Subsidiaries with regard to any
Taxes or Returns of the Company or any of its Subsidiaries, and no taxing
authority has notified the Company or any of its Subsidiaries in writing that it
intends to investigate its tax affairs.
(xl) Litigation. Except as disclosed in each of the Offering Memorandums, there
are no pending actions, suits or proceedings against or affecting the Company,
any of its Subsidiaries or any of their respective properties that (a) if
determined adversely to the Company or any of its Subsidiaries, would reasonably
be expected to have, individually or in the aggregate, a Material Adverse
Effect, (b) would materially and adversely affect the ability of the Company or
its Subsidiaries to perform their respective obligations under the Operative
Documents, or (c) are otherwise material in the context of the sale of the
Securities; and no such actions, suits or proceedings are, to the knowledge of
the Company, threatened or contemplated.
(xli) Proceeds. None of the proceeds received by the Company from the offering
of the Securities will be used to further any action in violation or
contravention of the U.S.A. Patriot Act or otherwise violate or contravene the
rules, regulations, or policies of the U.S. Office of Foreign Assets Control.
(xlii) No Relationships. No material relationship, direct or indirect, exists
between or among any of the Company, on the one hand, and the directors,
officers, shareowners, customers or suppliers of the Company, on the other hand,
which would be required pursuant to the regulations applicable to Form 10-K to
be described in an annual report filed by the Company on Form 10-K with the
Commission (if such Form 10-K were filed on the date hereof) which is not so
described in each of the Offering Memorandums.
(xliii) Registration of Securities and Listing Approval. The Common Stock is
registered pursuant to Section 12(b) of the Exchange Act and, prior to or upon
the Closing Time, the Underlying Shares will be approved for listing on the
NYSE, subject to official notice of issuance.
(xliv) Disclosure Controls. The Company maintains disclosure controls and
procedures (as such term is defined in Rules 13a-15(e) and 15d-15(e) under the
Exchange Act); such disclosure controls and procedures are designed to ensure
that information required to be disclosed by the Company in the reports that it
files under the Exchange Act is recorded, processed, summarized and reported,
within the time periods specified in the Commission’s rules and forms and is
accumulated and communicated to the Company’s management, including its Chief
Executive Officer and its Chief Financial Officer, as appropriate to allow
timely decisions regarding disclosure and such disclosure controls and
procedures are effective to perform the functions for which they were
established.
(xlv) Statistical and Market-Related Data. The statistical and market-related
data included in each of the Offering Memorandums are based on or derived from
sources which the Company believes to be reliable and accurate, and the Company
has received all consents necessary to use such statistical and market-related
data in the Offering Memorandums.

 

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(xlvi) Commission Comment Letters. There are no comments outstanding under any
letters from the staff of the Commission relating to the Company’s filings with
the Commission other than comments which (i) have been responded to by the
Company and (ii) are not material to the Company.
(xlvii) No Registration. No registration under the Securities Act of the
Securities is required for the sale of the Securities to the Initial Purchaser
as contemplated hereby or for the Exempt Resales contemplated hereunder assuming
(A) that the purchasers who buy the Securities in the Exempt Resales are QIBs
and (B) the accuracy of the Initial Purchaser’s representations regarding the
absence of general solicitation in connection with the sale of Securities to the
Initial Purchaser and the Exempt Resales contained herein. No form of general
solicitation or general advertising (as defined in Regulation D under the
Securities Act) was used by the Company or any of its representatives in
connection with the offer and sale of any of the Securities or in connection
with Exempt Resales or Exempt Sales, including, but not limited to, articles,
notices or other communications published in any newspaper, magazine, or similar
medium or broadcast over television or radio, or any seminar or meeting whose
attendees have been invited by any general solicitation or general advertising.
(xlviii) Rule 144A. Each of the Offering Memorandums as of their dates, contains
the information specified in, and meets the requirements of, Rule 144A(d)(4)
under the Securities Act.
(xlix) Regulations T, U and X. Neither of the execution, delivery and
performance of this Agreement, nor the issuance and sale of the Securities, nor
the issuance of the Underlying Shares, nor the application of the proceeds from
the issuance and sale of the Securities, nor the consummation of the
transactions contemplated thereby as set forth in each of the Offering
Memorandums, will violate Regulations T, U or X promulgated by the Board of
Governors of the Federal Reserve System or analogous foreign laws and
regulations.
(l) Finder’s Fees. Except pursuant to this Agreement, there are no contracts,
agreements or understandings between the Company or its Subsidiaries and any
other person that would give rise to a valid claim against the Company or any of
its Subsidiaries or the Initial Purchaser for a brokerage commission, finder’s
fee or like payment in connection with the issuance, purchase and sale of the
Securities or the Underlying Shares. The Company shall indemnify, pay, and hold
the Initial Purchaser harmless against, any liability, loss or expense
(including, without limitation, attorneys’ fees and out-of-pocket expenses)
arising in connection with any such claim.
(li) Money Laundering Laws. The operations of the Company and its Subsidiaries
are and have been conducted at all times in compliance with applicable financial
recordkeeping and reporting requirements of the Currency and Foreign
Transactions Reporting Act of 1970, as amended, the money laundering statutes of
all jurisdictions, the rules and regulations thereunder and any related or
similar rules, regulations or guidelines, issued, administered or enforced by
any governmental agency (collectively, the “Money Laundering Laws”) and no
action, suit or proceeding by or before any court or governmental agency,
authority or body or any arbitrator involving the Company or any of its
Subsidiaries with respect to the Money Laundering Laws is pending or, to the
best knowledge of the Company, threatened.
(lii) Office of Foreign Assets Control. Neither the Company nor any of its
Subsidiaries nor, to the knowledge of the Company, any director, officer, agent,
employee, or affiliate of the Company or any of its Subsidiaries is currently
subject to any sanctions administered by the Office of Foreign Assets Control of
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(liii) Foreign Corrupt Practices Act. Neither the Company nor any of the
Subsidiaries nor, to the knowledge of the Company, any director, officer, agent,
employee, or affiliate of the Company or any of the Subsidiaries, is aware of or
has taken any action, directly or indirectly, that would result in a violation
by such persons of the Foreign Corrupt Practices Act of 1977, as amended, and
the rules and regulations thereunder (the “FCPA”), including, without
limitation, making use of the mails or any means or instrumentality of
interstate commerce corruptly in furtherance of an offer, payment, promise to
pay or authorization of the payment of any money, or other property, gift,
promise to give, or authorization of the giving of anything of value to any
“foreign official” (as such term is defined in the FCPA) or any foreign
political party or official thereof or any candidate for foreign political
office, in contravention of the FCPA, and the Company, the Subsidiaries and, to
the knowledge of the Company, its affiliates have conducted their businesses in
compliance with the FCPA and have instituted and maintain policies and
procedures designed to ensure, and which are reasonably expected to continue to
ensure, continued compliance therewith.
(liv) Reservation of Underlying Shares. The Company has reserved, and will
continue to reserve, free of any preemptive or similar rights of shareowners of
the Company, a number of unissued shares of Common Stock, sufficient to issue
and deliver the Underlying Shares into which the Securities are convertible and
has taken all such actions required and permitted to be taken to reserve for
issuance all Underlying Shares issuable upon conversion of the Securities in
accordance with their terms.
(lv) Application of Takeover Protections; Rights Agreements. The Company has not
adopted any shareowner rights plan or similar arrangement relating to
accumulations of beneficial ownership of Common Stock or a change in control of
the Company. The Company and its Board of Directors have taken all necessary
action, if any, in order to render inapplicable any control share acquisition,
business combination, poison pill (including any distribution under a rights
agreement) or other similar anti-takeover provision under the Company’s
certificate of incorporation or other organizational documents or the laws of
the jurisdiction of its incorporation or otherwise which is or could become
applicable to the Initial Purchaser solely as a result of the transactions
contemplated by this Agreement, including, without limitation, the Company’s
issuance of the Securities and the Initial Purchaser’s ownership of the
Securities.
(lvi) Shell Company Status. The Company is not, and has never been, an issuer
identified in Rule 144(i)(1) of the Securities Act.
(b) Officer’s Certificates. Any certificate signed by any officer of the Company
or any of its Subsidiaries delivered to the Initial Purchaser or to counsel for
the Initial Purchaser shall be deemed a representation and warranty by the
Company, or such Subsidiary, to the Initial Purchaser as to the matters covered
thereby.
(c) Representations and Warranties by the Initial Purchaser. The Initial
Purchaser represents, warrants, and covenants to the Company and agrees that:
(i) The Initial Purchaser will offer the Securities for sale solely to QIBs upon
the terms and conditions set forth in this Agreement and the Offering
Memorandums. The Initial Purchaser is a QIB, with such knowledge and experience
in financial and business matters as are necessary in order to evaluate the
merits and risks of an investment in the Securities.
(ii) The Initial Purchaser (A) is not acquiring the Securities with a view to
any distribution thereof that would violate the Securities Act or the securities
laws of any state of the United States or any other applicable jurisdiction and
(b) will be reoffering and reselling the Securities

 

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only to QIBs in reliance on the exemption from the registration requirements of
the Securities Act provided by Rule 144A.
(iii) No form of general solicitation or general advertising (within the meaning
of Regulation D under the Securities Act) has been or will be used by the
Initial Purchaser or any of its representatives in connection with the offer and
sale of any of the Securities, including, but not limited to, articles, notices
or other communications published in any newspaper, magazine, or similar medium
or broadcast over television or radio, or any seminar or meeting whose attendees
have been invited by a general solicitation or general advertising.
(iv) In connection with the Exempt Resales, the Initial Purchaser will solicit
offers to buy the Securities only from, and will offer to sell the Securities
only to, QIBs. The Initial Purchaser further (A) agrees that it will offer to
sell the Securities only to, and will solicit offers to buy the Securities only
from Eligible Purchasers that the Initial Purchaser reasonably believes are
QIBs; (B) acknowledges and agrees that, in the case of such QIBs, that such
Securities will not have been registered under the Securities Act and may be
resold, pledged or otherwise transferred only (I) to a person whom the seller
reasonably believes is a QIB purchasing for its own account or for the account
of a QIB in a transaction meeting the requirements of Rule 144A under the
Securities Act, (II) in a transaction meeting the requirements of Rule 144 under
the Securities Act, (III) in accordance with another exemption from the
registration requirements of the Securities Act, (IV) to the Company or any of
its Subsidiaries, or (V) pursuant to an effective registration statement under
the Securities Act and, in each case, in accordance with any applicable
securities laws of any state of the United States or any other applicable
jurisdiction; and (C) acknowledges that it will notify any purchaser of the
Securities of the resale restrictions set forth in clause (B) above.
The Initial Purchaser acknowledges that the Company and, for purposes of the
opinions to be delivered to the Initial Purchaser pursuant to Section 5 hereof,
counsel for the Company and counsel for the Initial Purchaser will rely upon the
accuracy and truth of the foregoing representations and hereby consents to such
reliance.
Section 2. Sale and Delivery to Initial Purchaser; Closing.
(a) Initial Securities. On the basis of the representations and warranties
herein contained and subject to the terms and conditions herein set forth, the
Company agrees to issue and sell to the Initial Purchaser and the Initial
Purchaser agrees to purchase from the Company, the Initial Securities at the
purchase price set forth in Schedule B attached hereto.
(b) Option Securities. In addition, on the basis of the representations and
warranties herein contained and upon the terms and subject to the conditions
herein set forth, the Company hereby grants an option to the Initial Purchaser
to purchase the Option Securities, at the purchase price set forth in Schedule B
attached hereto. The option hereby granted will expire 45 days after the date
hereof and may be exercised in whole or in part from time to time only for the
purpose of covering overallotments made in connection with the offering and
distribution of the Initial Securities upon notice by the Initial Purchaser to
the Company setting forth the amount of Option Securities as to which the
Initial Purchaser is then exercising the option and the time and date of payment
and delivery for such Option Securities. Any such time and date of delivery (a
"Date of Delivery”) shall be determined by the Initial Purchaser, but shall not
be later than June 17, 2010, nor in any event prior to the Closing Time.
(c) Payment and Delivery. Payment for the Securities shall be made by wire
transfer in immediately available funds to the account specified by the Company
to the Initial Purchaser in the case of the Initial Securities, at the offices
of Cooley LLP, at 10:00 a.m., New York City time, on

 

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May 7, 2010, or at such other time or place on the same or such other date, not
later than the fifth business day thereafter, as the Initial Purchaser and the
Company may agree upon in writing, or, in the case of the Option Securities, on
the date and at the time and place specified by the Initial Purchaser in the
written notice of the Initial Purchaser’s election to purchase such Option
Securities. The time and date of such payment for the Initial Securities is
referred to herein as the “Closing Time” and the time and date for such payment
for the Option Securities, if other than the Closing Time, is herein referred to
as the “Additional Closing Time”. Payment for the Securities to be purchased at
the Closing Time or the Additional Closing Time, as the case may be, shall be
made against delivery to the nominee of The Depository Trust Company (“DTC”),
for the account of the Initial Purchaser of the Securities to be purchased on
such date of one or more global securities representing the Securities
(collectively, the “Global Note”), with any transfer taxes payable in connection
with the sale of such Securities duly paid by the Company. The Global Note will
be made available for inspection by the Initial Purchaser at the office of
Cooley LLP not later than 10:00 a.m., New York City time, on the business day
prior to the Closing Time or the Additional Closing Time, as the case may be.
Section 3. Covenants of the Company. The Company covenants with the Initial
Purchaser as follows:
(a) Compliance with Securities Regulations and Commission Requests. The Company,
subject to Section 3(b) hereof, will notify the Initial Purchaser promptly, and
confirm the notice in writing (i) of the issuance by any securities commission
of any stop order suspending the qualification or exemption from qualification
of any Securities for offering or sale in any jurisdiction or the initiation or
threatening of any proceedings for such purposes by any securities commission or
other regulatory authority and (ii) at any time prior to the completion of the
initial resale by the Initial Purchaser of all of the Securities (which shall be
the Closing Time unless the Company is notified otherwise by the Initial
Purchaser by not later than the Closing Time), of the happening of any event
that makes any statement of a material fact made in the Time of Sale Memorandum
or the Offering Memorandum untrue or that requires the making of any additions
to or changes in the Time of Sale Memorandum or the Offering Memorandum in order
to make the statements therein, in the light of the circumstances under which
they are made, not misleading. The Company shall use its reasonable best efforts
to prevent the issuance of any order suspending the qualification or exemption
of any Securities under any securities or Blue Sky laws and, if at any time any
securities commission or other regulatory authority shall issue an order
suspending the qualification or exemption of any Securities under any securities
or Blue Sky laws, the Company shall use its reasonable best efforts to obtain
the withdrawal or lifting of such order at the earliest possible time.
(b) Filing of Amendments and Exchange Act Documents. At any time prior to the
completion of the initial resale by the Initial Purchaser of all of the
Securities (which shall be the Closing Time unless the Company is notified
otherwise by the Initial Purchaser prior to the Closing Time), the Company will
not amend or supplement the Offering Memorandums (other than pursuant to the
filing of all reports required by the Exchange Act) unless the Initial Purchaser
shall previously have been advised thereof and shall not have objected thereto
within a reasonable time after being furnished a copy thereof. The Company shall
promptly prepare or cause to be prepared, upon the Initial Purchaser’s request,
any amendment or supplement to the Time of Sale Memorandum or the Offering
Memorandum that may be necessary in connection with such Exempt Resales.
(c) Delivery of Offering Memorandum. The Company has delivered to the Initial
Purchaser, without charge, as many copies of the Preliminary Offering Memorandum
as the Initial Purchaser has reasonably requested and will deliver to the
Initial Purchaser, without charge, as many copies of the Offering Memorandum as
the Initial Purchaser may reasonably request, and the Company consents to the
use of the Time of Sale Memorandum and the Offering Memorandum, and any

 

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amendments and supplements thereto required pursuant hereto, by the Initial
Purchaser in connection with the Exempt Resales made in compliance with this
Agreement.
(d) Continued Compliance with Securities Laws. If any event shall occur as a
result of which, in the judgment of the Company or in the reasonable opinion of
counsel for the Company or counsel for the Initial Purchaser, it becomes
necessary to amend or supplement the Time of Sale Memorandum or the Offering
Memorandum in order to make the statements therein, in the light of the
circumstances when such Time of Sale Memorandum or Offering Memorandum is
delivered to Eligible Purchasers, not misleading, or if it is necessary to amend
or supplement the Time of Sale Memorandum or the Offering Memorandum to comply
with applicable law, (i) to notify the Initial Purchaser (ii) forthwith to
prepare an appropriate amendment or supplement to such Time of Sale Memorandum
or the Offering Memorandum so that the statements therein as so amended or
supplemented will not, in the light of the circumstances when it is so
delivered, be misleading, or so that such Time of Sale Memorandum or the
Offering Memorandum will comply with applicable law. If the Time of Sale
Memorandum is being used to solicit offers to buy the Securities at a time when
the Offering Memorandum is not yet available to prospective purchasers and any
event shall occur or condition exist as a result of which it is necessary to
amend or supplement the Time of Sale Memorandum in order to make the statements
therein, in the light of the circumstances, not misleading, or if, in the
opinion of counsel for the Initial Purchaser, it is necessary to amend or
supplement the Time of Sale Memorandum to comply with applicable law, forthwith
to prepare and furnish to the Initial Purchaser upon request, either amendments
or supplements to the Time of Sale Memorandum so that the statements in the Time
of Sale Memorandum as so amended or supplemented will not, in the light of the
circumstances when delivered to a prospective purchaser, be misleading or so
that the Time of Sale Memorandum, as amended or supplemented, will comply with
applicable law.
(e) Blue Sky Qualifications. The Company will use its reasonable best efforts,
in cooperation with the Initial Purchaser, to qualify the Securities for
offering and sale under the applicable securities laws of such states and other
jurisdictions as the Initial Purchaser may designate and to maintain such
qualifications in effect for a period of not less than one year from the date
hereof; provided, however, that the Company shall not be obligated to file any
general consent to service of process or to qualify as a foreign corporation or
as a dealer in securities in any jurisdiction in which it is not so qualified or
to subject itself to taxation in respect of doing business in any jurisdiction
in which it is not otherwise so subject. The Company will also supply the
Initial Purchaser with such information as is necessary for the determination of
the legality of the Securities for investment under the laws of such
jurisdictions as the Initial Purchaser may request.
(f) Integration. The Company will not sell, offer for sale or solicit offers to
buy or otherwise negotiate in respect of any security (as defined in the
Securities Act) that would be integrated with the sale of the Securities in a
manner that would require the registration under the Securities Act of the sale
to the Initial Purchaser or the Eligible Purchasers of the Securities or to take
any other action that would result in the Exempt Resales not being exempt from
registration under the Securities Act.
(g) General Solicitation. The Company will not solicit any offer to buy or offer
to sell the Securities by means of any form of general solicitation or general
advertising (as those terms are used in Regulation D under the Securities Act)
or in any manner involving a public offering within the meaning of Section 4(2)
of the Securities Act.
(h) Rule 144 Information. For so long as any of the Securities remain
outstanding and during any period in which the Company is not subject to
Section 13 or 15(d) of the Exchange Act, the Company will make available to any
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sale thereof and any prospective purchaser of such Securities from such holder
or beneficial owner, the information required by Rule 144A(d)(4) under the
Securities Act.
(i) Regulation M. The Company will not take any action prohibited by
Regulation M under the Exchange Act in connection with the distribution of the
Securities contemplated hereby.
(j) PORTAL. The Company will use its commercially reasonable best efforts to
assist the Initial Purchaser in effecting the inclusion of the Securities in The
PORTALSM Market and to obtain approval of the Securities by DTC for “book-entry”
transfer.
(k) Use of Proceeds. The Company will use the net proceeds received by it from
the sale of the Securities substantially in the manner specified in the Time of
Sale Memorandum under “Use of Proceeds.”
(l) Listing. The Company will use its commercially reasonable best efforts to
promptly effect the listing of the Underlying Shares on the NYSE.
(m) Restriction on Sale of Securities. During a period of 90 days from the date
of the Offering Memorandum, the Company will not, without the prior written
consent of the Initial Purchaser, (i) directly or indirectly, offer, pledge,
sell, contract to sell, sell any option or contract to purchase, purchase any
option or contract to sell, grant any option, right or warrant to purchase or
otherwise transfer or dispose of any share of Common Stock or other security of
the Company or any of its Subsidiaries or any security convertible into or
exercisable or exchangeable for Common Stock or other securities of the Company
or any of its Subsidiaries or file any registration statement under the
Securities Act (other than a Registration Statement on Form S-8 or filed
pursuant to the Registration Rights Agreement or in satisfaction of any
outstanding registration right referenced in the Offering Memorandums) with
respect to any of the foregoing or (ii) enter into any swap or any other
agreement or any transaction that transfers, in whole or in part, directly or
indirectly, the economic consequence of ownership of the Common Stock, whether
any such swap or transaction described in clause (i) or (ii) above is to be
settled by delivery of Common Stock or such other securities, in cash or
otherwise. The foregoing sentence shall not apply to (A) any Securities to be
sold by the Company hereunder, (B) issuances of equity incentive awards pursuant
to the Company’s equity incentive plans, (C) issuance of any Underlying Shares
upon conversion of Securities, (D) the issuance of any Common Stock or other
securities upon the exercise of any outstanding options or warrants or upon the
conversion of the Company’s 12% Cumulative Participating Perpetual Convertible
Preferred Stock, (E) issuances of any equity awards pursuant to an employment
agreement or arrangement or equity compensation plan approved by the Company’s
Board of Directors, (F) any securities of the Company and/or any Subsidiary
issued in connection with any merger, acquisition, joint venture or other
strategic transaction approved by the Company’s Board of Directors, or (G) any
securities of the Company or any Subsidiary issued, pledged or hypothecated in
connection with any credit facility entered into by the Company and/or any
Subsidiary.
(n) Sarbanes-Oxley Act. The Company will comply with all applicable securities
and other applicable laws, rules and regulations, including, without limitation,
the Sarbanes-Oxley Act, and use its reasonable best efforts to cause the
Company’s directors and officers, in their capacities as such, to comply with
such laws, rules, and regulations, including, without limitation, the provisions
of the Sarbanes-Oxley Act.
(o) Available Shares. The Company will reserve and keep available at all times,
free of preemptive rights and other similar rights, but subject to the Limited
Preemptive Right, a sufficient

 

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number of shares of Common Stock for the purpose of enabling the Company to
satisfy any obligations to issue the Underlying Shares.
(p) Transfer Agent. The Company will maintain a transfer agent and, if necessary
under the jurisdiction of incorporation of the Company, a registrar for the
Common Stock.
(q) Investment Company. The Company will take such steps as shall be necessary
to ensure that the Company does not become an “investment company” as such term
is defined under the Investment Company Act.
(r) Usury Laws. The Company will not voluntarily claim the benefit of any usury
laws against the holders of any Securities.
(s) DTC. The Company will comply in all material respects with its agreements
set forth in the representation letter to DTC relating to the approval of the
Securities by DTC for “book-entry” transfer.
(t) Further Assurances. The Company will use its reasonable best efforts to do
and perform all things to be done or performed under this Agreement by it prior
to or after the Closing Time and to satisfy all conditions precedent on its part
to the delivery of the Securities.
Section 4. Payment of Expenses.
(a) Expenses. The Company will reimburse the Initial Purchaser at the Closing
Time for all reasonable, documented expenses incurred by the Initial Purchaser
in carrying out the terms of this Agreement, including but not limited to
travel, telephone, facsimile, courier and disbursements, and any legal expenses
and disbursements payable to the Initial Purchaser’s counsel in connection with
the preparation of and transactions contemplated by the Offering Memorandum;
provided, however, that notwithstanding the foregoing or anything else set forth
in this Agreement to the contrary, under no circumstances whatsoever shall the
Company be obligated to reimburse the Initial Purchaser for any expenses
incurred by the Initial Purchaser pursuant to this Agreement, or otherwise in
connection with the transactions contemplated by this Agreement or the Offering
Memorandum, in excess of Two Hundred Thousand Dollars ($200,000) in the
aggregate (the “Expense Cap”).
(b) Termination of Agreement. If this Agreement is terminated by the Initial
Purchaser in accordance with the provisions of Section 5 or 11 hereof, the
Company shall reimburse the Initial Purchaser for all of its reasonable out of
pocket expenses, including the reasonable fees and disbursements of counsel for
the Initial Purchaser, subject in all instances, however, to the Expense Cap.
Section 5. Conditions of Initial Purchaser’s Obligations. The obligations of the
Initial Purchaser hereunder are subject to the accuracy of the representations
and warranties of the Company contained in Section 1 hereof or in certificates
of any officer of the Company or any Subsidiary of the Company delivered
pursuant to the provisions hereof, to the performance by the Company of its
covenants and other obligations hereunder, and to the following further
conditions:
(a) Opinion of Counsel for Company. At the Closing Time, the Initial Purchaser
shall have received the opinion, dated as of the Closing Date, of Zukerman Gore
Brandeis & Crossman, LLP, counsel for the Company, substantially in the form
attached as Exhibit B hereto, subject to customary qualifications, and such
other opinions as the Initial Purchaser may reasonably request. With respect to
this Section 5(a), Zukerman Gore Brandeis & Crossman, LLP may state that its
beliefs are based upon its participation in the preparation of the Offering
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supplements thereto and review and discussion of the contents thereof, but are
without independent check or verification, except as specified.
(b) Opinion of Counsel for Initial Purchaser. At the Closing Time, the Initial
Purchaser shall have received the opinion, dated as of the Closing Date, of
Cooley LLP, counsel for the Initial Purchaser, in form and substance
satisfactory to the Initial Purchaser. With respect to this Section 5(b), Cooley
LLP may state that its beliefs are based upon its participation in the
preparation of the Offering Memorandums and any amendments or supplements
thereto and review and discussion of the contents thereof, but are without
independent check or verification, except as specified.
(c) Officers’ Certificate. At the Closing Time, there shall not have been, since
the date hereof or since the respective dates as of which information is given
in the Offering Memorandum or the Time of Sale Offering Memorandum, (i) any
downgrading, nor shall any notice have been given of any intended or potential
downgrading or of any review for a possible change that does not indicate the
direction of the possible change, in the rating according any of the Company’s
securities by any “nationally recognized statistical rating organization,” as
such term is defined for purposes of Rule 436(g)(2) under the Securities Act,
(ii) any adverse change, or any development involving a prospective adverse
change, in the condition, financial or otherwise, or in the earnings, assets,
business affairs, business prospects, or operations of the Company and its
Subsidiaries, taken as a whole, or in the fee, ground lease, and mortgage
interests, in the properties which the Company and its Subsidiaries will own
and/or operate as of the Closing Time, whether or not arising in the ordinary
course of business, which would be material to the Company and its Subsidiaries,
taken as a whole, (iii) transactions or acquisitions entered into by the Company
or any of its Subsidiaries, other than those in the ordinary course of business
which would not reasonably be expected to be material to the Company and its
Subsidiaries, taken as a whole, (iv) any dividend or distribution of any kind,
declared, paid or made by the Company on any class of its capital stock, or
(v) any change in the capital stock of the Company or any increase in
indebtedness of Company or any of its Subsidiaries or in the indebtedness
encumbering the properties which the Company and its Subsidiaries will own
and/or operate as of the Closing Time, which would reasonably be expected to
have a Material Adverse Effect, and the Initial Purchaser shall have received a
certificate of the chief financial or chief accounting officer of the Company,
dated as of the Closing Time, to the effect that (i) there has been no such
material adverse change, (ii) the statements above are true and correct as of
the Closing Time, (iii) the representations and warranties in Section 1(a)
hereof are true and correct with the same force and effect as though expressly
made at and as of the Closing Time, and (iv) the Company has complied with all
agreements and satisfied all conditions on its part to be performed or satisfied
at or prior to the Closing Time.
(d) Officers’ Certificates Regarding Financials. The Initial Purchaser shall
have received from the Company certificates, dated as of the Closing Time, from
each of the (i) Chief Executive Officer and (ii) Chief Accounting Officer or
Interim Chief Financial Officer of the Company in the form of such certificates
as delivered by such officers, and agreed upon by the Initial Purchaser, on the
date of this Agreement.
(e) Accountant’s Comfort Letter. Prior to the time of the execution of this
Agreement, the Initial Purchaser shall have received from Ernst & Young LLP a
letter dated such date, in form and substance satisfactory to the Initial
Purchaser, together with signed or reproduced copies of such letter for the
Initial Purchaser containing statements and information of the type ordinarily
included in accountants’ “comfort letters” to initial purchasers in offerings of
securities made pursuant to Rule 144A with respect to the financial statements
and certain financial information contained in the Offering Memorandums.

 

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(f) Bring-down Comfort Letter. On the Closing Date, the Initial Purchaser shall
have received from Ernst & Young LLP a letter, dated as of the Closing Date, to
the effect that they reaffirm the statements made in the letter furnished
pursuant to Section 5(d) hereof, except that the specified date referred to
shall be a date not more than three business days prior to the Closing Date.
(g) Approval of Listing. At the Closing Time, the Underlying Shares shall have
been approved for listing on the NYSE, subject only to official notice of
issuance.
(h) Additional Documents. At the Closing Time, counsel for the Initial Purchaser
shall have been furnished with such documents and opinions as they may
reasonably require for the purpose of enabling them to pass upon the issuance
and sale of the Securities and authorization of the Underlying Shares as herein
contemplated, or in order to evidence the accuracy of any of the representations
or warranties, or the fulfillment of any of the conditions, herein contained;
and all proceedings taken by the Company in connection with the issuance and
sale of the Securities as herein contemplated shall be satisfactory in form and
substance to the Initial Purchaser and counsel for the Initial Purchaser.
(i) Indenture. The Company and the Trustee shall have entered into the
Indenture.
(j) Registration Rights Agreement. The Company and the Initial Purchaser shall
have entered into the Registration Rights Agreement.
(k) Termination of Agreement. If any condition specified in this Section 5 shall
not have been fulfilled when and as required to be fulfilled, this Agreement may
be terminated by the Initial Purchaser by notice to the Company at any time at
or prior to the Closing Time, and such termination shall be without liability of
any party to any other party except as provided in Section 4 hereof and except
that Sections 1, 6, 7 and 8 hereof shall survive any such termination and remain
in full force and effect.
Section 6. Indemnification.
(a) Indemnification of Initial Purchaser. The Company agrees to indemnify and
hold harmless the Initial Purchaser, its affiliates, as such term is defined in
Rule 501(b) under the Securities Act (each, an “Affiliate”), the selling agents
of the Initial Purchaser and each person, if any, who controls the Initial
Purchaser within the meaning of Section 15 of the Securities Act or Section 20
of the Exchange Act, as follows:
(i) against any and all loss, liability, claim, damage and expense whatsoever,
as incurred, arising out of any untrue statement or alleged untrue statement of
a material fact contained in the Preliminary Offering Memorandum or the Offering
Memorandum (or any amendment or supplement thereto), or the omission or alleged
omission therefrom of a material fact necessary in order to make the statements
therein, in the light of the circumstances under which they were made, not
misleading;
(ii) against any and all loss, liability, claim, damage and expense whatsoever,
as incurred, to the extent of the aggregate amount paid in settlement of any
litigation, or any investigation or proceeding by any governmental agency or
body, commenced or threatened, or of any claim whatsoever based upon any such
untrue statement or omission, or any such alleged untrue statement or omission;
(iii) against any and all expense whatsoever, as incurred (including the fees
and disbursements of counsel chosen by the Initial Purchaser, as applicable),
reasonably incurred in

 

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investigating, preparing or defending against any litigation, or any
investigation or proceeding by any governmental agency or body, commenced or
threatened, or any claim whatsoever based upon any such untrue statement or
omission, or any such alleged untrue statement or omission, to the extent that
any such expense is not paid under (i) or (ii) above;
provided, however, that this indemnity agreement shall not apply to any loss,
liability, claim, damage or expense to the extent arising out of any untrue
statement or omission or alleged untrue statement or omission made solely in
reliance upon and in conformity with the Initial Purchaser Information.
(b) Indemnification of Company, Directors, and Officers. The Initial Purchaser
agrees to indemnify and hold harmless the Company, its directors and officers,
and each person, if any, who controls the Company within the meaning of
Section 15 of the Securities Act or Section 20 of the Exchange Act, against any
and all loss, liability, claim, damage and expense described in the indemnity
contained in Section 6(a) hereof, as incurred, but only with respect to untrue
statements or omissions, or alleged untrue statements or omissions, made in the
Preliminary Offering Memorandum (or any amendment or supplement thereto) or the
Offering Memorandum (or any amendment or supplement thereto) solely in reliance
upon and in conformity with the Initial Purchaser Information.
(c) Actions against Parties; Notification. Each indemnified party shall give
notice promptly in writing to each indemnifying party of any action commenced
against it in respect of which indemnity may be sought hereunder, but failure to
so notify an indemnifying party shall not relieve such indemnifying party from
any liability hereunder to the extent it is not materially prejudiced as a
result thereof and in any event shall not relieve it from any liability which it
may have otherwise than on account of this indemnity agreement. Upon the request
of the indemnified party, the indemnifying party shall retain counsel reasonably
satisfactory to the indemnified party. In the case of parties indemnified
pursuant to Section 6(a) hereof, counsel to the indemnified parties shall be
selected by the Initial Purchaser and, in the case of parties indemnified
pursuant to Section 6(b) hereof, counsel to the indemnified parties shall be
selected by the Company. In any such proceeding, any indemnified party shall
have the right to retain its own counsel, but the fees and expenses of such
counsel shall be at the expense of such indemnified party unless (i) the
indemnifying party and the indemnified party shall have mutually agreed to the
retention of such counsel or (ii) the named parties to any such proceeding
(including any impleaded parties) include both the indemnifying party and the
indemnified party and the representation of both parties by the same counsel
would be inappropriate due to actual or potential differing interests between
them. In no event shall the indemnifying parties be liable for fees and expenses
of more than one counsel (in addition to any local counsel) separate from their
own counsel for all indemnified parties in connection with any one action or
separate but similar or related actions in the same jurisdiction arising out of
the same general allegations or circumstances. No indemnifying party shall,
without the prior written consent of the indemnified parties, settle or
compromise or consent to the entry of any judgment with respect to any
litigation, or any investigation or proceeding by any governmental agency or
body, commenced or threatened, or any claim whatsoever in respect of which
indemnification or contribution could be sought under this Section 6 or
Section 7 hereof (whether or not the indemnified parties are actual or potential
parties thereto), unless such settlement, compromise or consent (i) includes an
unconditional release of each indemnified party from all liability arising out
of such litigation, investigation, proceeding or claim and (ii) does not include
a statement as to or an admission of fault, culpability or a failure to act by
or on behalf of any indemnified party.
(d) Settlement without Consent if Failure to Reimburse. The indemnifying party
shall not be liable for any settlement of any proceeding effected without its
written consent, but if settled with such consent or if there be a final
judgment for the plaintiff, the indemnifying party agrees to indemnify the
indemnified party from and against any loss or liability by reason of such
settlement of judgment. Notwithstanding the foregoing sentence, if at any time
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requested an indemnifying party to reimburse the indemnified party for fees and
expenses of counsel as contemplated by Section 6(c) hereof, such indemnifying
party agrees that it shall be liable for any settlement of any proceeding
effected without its consent if (i) such settlement is entered into more than
45 days after receipt by such indemnifying party of the aforesaid request,
(ii) such indemnifying party shall have received notice of the terms of such
settlement at least 30 days prior to such settlement being entered into and
(iii) such indemnifying party shall not have reimbursed such indemnified party
in accordance with such request prior to the date of such settlement.
Section 7. Contribution. If the indemnification provided for in Section 6 hereof
is for any reason unavailable to or insufficient to hold harmless an indemnified
party in respect of any losses, liabilities, claims, damages or expenses
referred to therein, then each indemnifying party shall contribute to the
aggregate amount of such losses, liabilities, claims, damages and expenses
incurred by such indemnified party, as incurred, (i) in such proportion as is
appropriate to reflect the relative benefits received by the Company, on the one
hand, and the Initial Purchaser, on the other hand, from the offering of the
Securities pursuant to this Agreement or (ii) if the allocation provided by
clause (i) is not permitted by applicable law, in such proportion as is
appropriate to reflect not only the relative benefits referred to in clause
(i) above but also the relative fault of the Company and the Initial Purchaser,
respectively, in connection with the statements or omissions which resulted in
such losses, liabilities, claims, damages or expenses, as well as any other
relevant equitable considerations.
The relative benefits received by the Company, on the one hand, and the Initial
Purchaser, on the other hand, in connection with the offering of the Securities
pursuant to this Agreement shall be deemed to be in the same respective
proportions as the total net proceeds from the offering of the Securities
pursuant to this Agreement (before deducting expenses, but exclusive of accrued
interest amounts), as described under the heading “Use of Proceeds” in the
Offering Memorandum bear to the aggregate original principal amount of the
Securities as set forth on the cover of the Offering Memorandum.
The relative fault of the Company, on the one hand, and the Initial Purchaser,
on the other hand, shall be determined by reference to, among other things,
whether any such untrue or alleged untrue statement of a material fact or
omission or alleged omission to state a material fact relates to information
supplied by the Company or the Initial Purchaser and the parties’ relative
intent, knowledge, access to information and opportunity to correct or prevent
such statement or omission.
The Company and the Initial Purchaser agree that it would not be just and
equitable if contribution pursuant to this Section 7 were determined by pro rata
allocation or by any other method of allocation that does not take account of
the equitable considerations referred to above in this Section 7. The aggregate
amount of losses, liabilities, claims, damages and expenses incurred by an
indemnified party and referred to above in this Section 7 shall be deemed to
include any legal or other expenses reasonably incurred by such indemnified
party in investigating, preparing or defending against any litigation, or any
investigation or proceeding by any governmental agency or body, commenced or
threatened, or any claim whatsoever based upon any such untrue or alleged untrue
statement or omission or alleged omission.
Notwithstanding the provisions of this Section 7, the Initial Purchaser shall
not be required to contribute any amount in excess of the amount by which the
total price at which the Securities purchased by it and resold by it pursuant to
the terms and conditions of this Agreement exceeds the amount of any damages
which the Initial Purchaser has otherwise been required to pay by reason of any
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No person guilty of fraudulent misrepresentation (within the meaning of Section
11(f) of the Securities Act) shall be entitled to contribution from any person
who was not guilty of such fraudulent misrepresentation.
For purposes of this Section 7, each person, if any, who controls the Initial
Purchaser within the meaning of Section 15 of the Securities Act or Section 20
of the Exchange Act and the Initial Purchaser’s Affiliates and selling agents
shall have the same rights to contribution as the Initial Purchaser, and each
director and officer of the Company and each person, if any, who controls the
Company within the meaning of Section 15 of the Securities Act or Section 20 of
the Exchange Act shall have the same rights to contribution as the Company.
Section 8. Representations, Warranties and Agreements to Survive. All
representations, warranties and agreements contained in this Agreement or in
certificates of officers of the Company or any of its Subsidiaries submitted
pursuant hereto, shall remain operative and in full force and effect regardless
of (i) any investigation made by or on behalf of (A) the Initial Purchaser or
any of its Affiliates, selling agents, officers or directors, or any person
controlling the Initial Purchaser, or (B) the Company or any of its Affiliates
and (ii) delivery of and payment for the Securities.
Section 9. Termination of Agreement.
(a) Termination; General. The Initial Purchaser may terminate this Agreement, by
notice to the Company, at any time at or prior to Closing Time (i) if there has
been, since the time of execution of this Agreement or since the respective
dates as of which information is given in the Offering Memorandums (exclusive of
any supplement thereto), any material adverse change in the condition, financial
or otherwise, or in the earnings, business affairs or business prospects of the
Company and its Subsidiaries considered as one enterprise, whether or not
arising in the ordinary course of business, or (ii) if there has occurred any
material adverse change in the financial markets in the United States or the
international financial markets, any outbreak of hostilities or escalation
thereof or other calamity or crisis or any change or development involving a
prospective change in national or international political, financial or economic
conditions, in each case, the effect of which is such as to make it, in the
judgment of the Initial Purchaser, impracticable or inadvisable to market the
Securities or to enforce contracts for the sale of the Securities, or (iii) if
trading in any securities of the Company has been suspended or materially
limited by the Commission or the NYSE, or if trading generally on the NYSE has
been suspended or materially limited, or minimum or maximum prices for trading
have been fixed, or maximum ranges for prices have been required, by any of said
exchanges or by such system or by order of the Commission, FINRA, or any other
governmental authority, or (iv) a material disruption has occurred in commercial
banking or securities settlement or clearance services in the United States, or
(v) if a banking moratorium has been declared by either Federal or New York
authorities.
(b) Liabilities. If this Agreement is terminated pursuant to this Section 9,
such termination shall be without liability of any party to any other party
except as provided in Section 4 hereof, and provided further that Sections 1, 6,
7, 8 and 9 shall survive such termination and remain in full force and effect.
Section 10. Default by the Initial Purchaser. If the Initial Purchaser shall
fail at the Closing Time to purchase the Securities that it is obligated to
purchase hereunder, then this Agreement shall terminate without liability on the
part of any non-defaulting party; provided, however, that the provisions of
Sections 1, 4, 6, 7, 8 and 11 shall remain in full force and effect. No action
taken pursuant to this Section 10 shall relieve the Initial Purchaser from
liability, if any, in respect of such default.

 

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Section 11. Default by the Company. If the Company shall fail at the Closing
Time to sell the Securities that it is obligated to sell hereunder, then this
Agreement shall terminate without any liability on the part of any
non-defaulting party; provided, however, that the provisions of Sections 1, 4,
6, 7, 8 and 11 shall remain in full force and effect. No action taken pursuant
to this Section 11 shall relieve the Company from liability, if any, in respect
of such default.
Section 12. Notices. All notices and other communications hereunder shall be in
writing and shall be deemed to have been duly given if mailed or transmitted by
any standard form of telecommunication. Notices to the Initial Purchaser shall
be directed to the Initial Purchaser at JMP Securities LLC, 600 Montgomery
Street, Suite 1100, San Francisco, California 94111, Facsimile: (415) 835-8920,
Attention: Kent Ledbetter, David Fullerton, Anthony Wayne and Stephanie Shum,
with a copy to Cooley LLP, 101 California Street, Fifth Floor, San Francisco,
California 94111, Facsimile: (415) 693-2222, Attention: Gian-Michele a Marca,
Esq.; notices to the Company shall be directed to Grubb & Ellis Company, 1551
North Tustin Avenue, Suite 300, Santa Ana, California 92705, Facsimile:
(714) 918-9170, Attention: Thomas D’Arcy, President and Chief Executive Officer,
with a copy to: Zukerman Gore Brandeis & Crossman, LLP, 875 Third Avenue, New
York, New York 10022, Facsimile: (212) 223-6433, Attention: Clifford A.
Brandeis, Esq. and Joseph E. Maloney, Esq.
Section 13. No Advisory or Fiduciary Relationship. The Company acknowledges and
agrees that (a) the purchase and sale of the Securities pursuant to this
Agreement, including the determination of the offering price of the Securities
and any related discounts and commissions, is an arm’s-length commercial
transaction between the Company, on the one hand, and the Initial Purchaser, on
the other hand, (b) in connection with the purchase and sale of the Securities
pursuant to this Agreement and the process leading to such transaction the
Initial Purchaser is and has been acting solely as a principal and is not the
agent or fiduciary of the Company or its shareowners, creditors, employees, or
any other party, (c) the Initial Purchaser has not assumed and will not assume
any advisory or fiduciary responsibility in favor of the Company with respect to
the purchase and sale of the Securities pursuant to this Agreement or the
process leading thereto (irrespective of whether the Initial Purchaser has
advised or is currently advising the Company on other matters) and the Initial
Purchaser has no obligation to the Company with respect to the purchase and sale
of the Securities pursuant to this Agreement except the obligations expressly
set forth in this Agreement, (d) the Initial Purchaser and its Affiliates may be
engaged in a broad range of transactions that involve interests that differ from
those of the Company, and (e) the Initial Purchaser has not provided any legal,
accounting, regulatory, or tax advice with respect to the offering contemplated
hereby and the Company has consulted its own legal, accounting, regulatory and
tax advisors to the extent it deemed appropriate.
Section 14. Integration. This Agreement supersedes all prior agreements and
understandings (whether written or oral) between the Company and the Initial
Purchaser with respect to the subject matter hereof.
Section 15. Parties. This Agreement shall each inure to the benefit of and be
binding upon the Initial Purchaser, the Company, and their respective
successors. Nothing expressed or mentioned in this Agreement is intended or
shall be construed to give any person, firm or corporation, other than the
Initial Purchaser, the Company, and their respective successors and the
controlling persons and officers and directors referred to in Sections 6 and 7
hereof and their heirs and legal representatives, any legal or equitable right,
remedy or claim under or in respect of this Agreement or any provision herein
contained. This Agreement and all conditions and provisions hereof are intended
to be for the sole and exclusive benefit of the Initial Purchaser, the Company,
and their respective successors, and said controlling persons and officers and
directors and their heirs and legal representatives, and for the benefit of no
other person, firm, or corporation. No Eligible Purchaser shall be deemed to be
a successor by reason merely of such purchase.

 

25.

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Section 16. Governing Law. This Agreement shall be governed by and construed in
accordance with the laws of the State of New York.
Section 17. Time. Time shall be of the essence of this Agreement. Except as
otherwise set forth herein, specified times of day refer to New York City time.
Section 18. Counterparts. This Agreement may be executed in any number of
counterparts, each of which shall be deemed to be an original, but all such
counterparts shall together constitute one and the same Agreement.
Section 19. Effect of Headings. The section headings herein are for convenience
only and shall not affect the construction of this Agreement.
[Signature page follows.]

 

26.

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If the foregoing is in accordance with your understanding of our agreement,
please sign and return to the Company a counterpart hereof, whereupon this
instrument, along with all counterparts, will become a binding agreement between
the Initial Purchaser and the Company in accordance with its terms.

              Very truly yours,
 
            Grubb & Ellis Company
 
       
 
  By:   /s/ Thomas P. D’Arcy
 
       
 
       
 
  Name:   Thomas P. D’Arcy
 
       
 
       
 
  Title:   Chief Executive Officer and President
 
       

Confirmed And Accepted,
as of the date first above written:
JMP Securities LLC

         
By:
  /s/ David Fullerton
 
   
 
       
Name:
  David Fullerton
 
   
 
       
Title:
  MD
 
   

[Signature Page to Purchase Agreement]

 

 

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Schedule A
ADDITIONAL TIME OF SALE INFORMATION
None

 

 

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Schedule B
1. The purchase price for the Securities to be paid by the Initial Purchaser
shall be the sum of (a) 95% of the original principal amount of the Securities
plus (b) accrued interest on the Securities from May 7, 2010.

 

 

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Schedule C
FINAL TERM SHEET