Exhibit 10.1
AMENDMENT NO. 1 TO
CREDIT AGREEMENT
This AMENDMENT NO. 1, dated as of July 22, 2011 (this “Amendment”), to the
Credit Agreement dated as of April 15, 2011 (the “Credit Agreement”), is entered
into by and among (1) GRUBB & ELLIS COMPANY, a Delaware corporation (the “Parent
Guarantor”), (2) GRUBB & ELLIS MANAGEMENT SERVICES, INC., a Delaware corporation
(the “Borrower”); (3) the other guarantors party hereto (the “Guarantors” and,
together with the Borrower and the Parent Guarantor, each a “Loan Party” and
collectively, the “Loan Parties”); (4) each lender party hereto (collectively,
the “Lenders”); and (5) COLFIN GNE LOAN FUNDING, LLC, as administrative agent
for the Lenders (in such capacity, the “Administrative Agent”).
RECITALS
WHEREAS, subject to the terms and conditions of this Amendment, the parties
hereto wish to: (i) waive any existing Events of Default (if any) arising in
connection with Section 7.1 prior to the date hereof; (ii) acknowledge and
consent to the Parent Guarantor’s sale of Daymark and its Subsidiaries (the
“Daymark Disposition”) and the terms of the restructured intercompany payable by
the Parent Guarantor in favor of Daymark, in each case to the extent and on the
terms set forth herein; and (iii) amend the Credit Agreement and certain
exhibits thereto, as provided herein; and
NOW, THEREFORE, in consideration of the covenants made hereunder, and other good
and valuable consideration, the receipt and legal sufficiency of which is hereby
acknowledged, the parties hereto hereby agree as follows:
SECTION 1. Definitions. Capitalized terms used herein and not otherwise defined
shall have the meanings set forth for such terms in the Credit Agreement, as
amended by this Amendment.
SECTION 2. Amendments to Credit Agreement. The Credit Agreement is hereby
amended as follows:
(a) The definition of “Net Worth” is hereby amended by deleting such definition
in its entirety and replacing it with the following:
““Net Worth”: at any date, (A) the sum of (i) the net worth of the Borrower and
its Subsidiaries, determined on a consolidated basis in accordance with GAAP,
plus (ii) any Loans (other than any PIK Amounts) included in such net worth
calculation, minus (B) any intercompany Receivable from the Parent Guarantor
which is eliminated or set off in consolidation of the Parent Guarantor’s
financial statements.”
(b) Exhibit H is hereby amended by deleting such exhibit in its entirety and
replacing it with the exhibit attached hereto as Exhibit A.
SECTION 3. Acknowledgement of Reimbursement Obligation. Each Loan Party
acknowledges that the costs and expenses of the Administrative Agent and its
Affiliates for which it is responsible under Section 10.5 of the Credit
Agreement include, without limitation, the reasonable fees and disbursements of
counsel to the Administrative Agent in connection with this Amendment. Without
limiting the generality of the foregoing, the Borrower agrees to pay all
invoices and statements for such costs and expenses relating to this Amendment
submitted to the Borrower by the Administrative Agent or its Affiliates or
directly submitted to the Borrower by any such legal counsel promptly after
receipt of such invoices and statements by the Borrower.

 

 

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SECTION 4. Conditions to Effectiveness of this Amendment. The effectiveness of
this Amendment is subject to the satisfaction of the following conditions:
(a) Execution of Counterparts. The Administrative Agent shall have received
counterparts of (i) this Amendment duly executed by each Loan Party, the
Administrative Agent and each Lender, (ii) (a) amendments to the Closing Date
Warrants duly executed by each party thereto and (b) the Waiver to Commitment
Letter, dated as of July 22, 2011, duly executed by each party thereto, in each
case, in form and substance satisfactory to the Administrative Agent and (iii)
duly executed and delivered control agreements with respect to each Deposit
Account, Securities Account and Commodity Account listed on Schedule 8 to the
Perfection Certificate (other than the Accounts (as such term is defined in the
Guarantee and Collateral Agreement) of Daymark and its Subsidiaries), in each
case, in form and substance reasonably satisfactory to the Administrative Agent.
(b) Security Interests. The Administrative Agent shall have a valid and
perfected, first priority security interest in all Collateral as of the date
hereof.
(c) Approvals. All governmental and third party approvals necessary in
connection with the Loan Documents, the continuing operations of the Group
Members and the transactions contemplated hereby shall have been obtained and be
in full force and effect, and all applicable waiting periods shall have expired
without any action being taken or threatened by any competent authority that
would restrain, prevent or otherwise impose adverse conditions on the financing
contemplated hereby.
(d) Accuracy of Representations and Warranties. After giving effect to this
Amendment, each of the representations and warranties made by any Loan Party in
or pursuant to the Loan Documents shall be true and correct in all material
respects (except that any representation and warranty that is qualified by or
subject to materiality or “Material Adverse Effect” shall be true and correct in
all respects) on and as of the date hereof as if made on and as of the date
hereof, except to the extent such representations and warranties expressly
relate to an earlier date, in which case, such representations and warranties
shall be true and correct in all material respects (except that any
representation and warranty that is qualified by materiality or subject to
“Material Adverse Effect” shall be true and correct in all respects) on and as
of such earlier date.
(e) No Default or Event of Default. After giving effect to this Amendment, no
Default or Event of Default shall have occurred and be continuing on the date
hereof.
(f) Payment of Fees and Expenses. The Lenders (on a pro rata basis in accordance
with their respective commitments as of the date hereof) shall have received a
closing fee in the aggregate amount of $180,000, and the Lenders and the
Administrative Agent shall have received all other fees required to be paid, and
all expenses (including: (i) fees and expenses of the financial advisor to the
Lenders and their Affiliates and (ii) the reasonable fees and expenses of legal
counsel) required to be reimbursed, on or before the date hereof.
SECTION 5. Approval and Release Documentation.
(a) Without limiting the other requirements set forth in Section 7.5(h) of the
Credit Agreement (except to the extent expressly set forth below in this
Section), the Administrative Agent and the Required Lenders hereby: (i) consent
to and approve the Daymark Disposition on terms and conditions set forth in the
stock purchase agreement attached hereto as Exhibit B (the “Daymark SPA”) and
with such amendments and modifications thereto that are immaterial and do not
adversely impact the Lenders (it being agreed that such amendments and
modifications may include, without limitation, amendments to the provisions of
the Daymark SPA set forth on

 

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Schedule 5(a)(i) hereto); (ii) consent to the restructuring of the intercompany
payable owed by the Parent Guarantor to Daymark as contemplated under the
Daymark SPA (such restructured debt being referred to herein as the
“Restructured Daymark Note”) and with such amendments and modifications thereto
that are immaterial and do not adversely impact the Lenders (it being agreed
that such amendments and modifications may include, without limitation,
amendments to the provisions of the Restructured Daymark Note set forth on
Schedule 5(a)(ii) hereto); (iii) notwithstanding anything to the contrary set
forth in Section 7.2 of the Credit Agreement, expressly consent for purposes of
Section 7.2 of the Credit Agreement to the existence of the restructured
Indebtedness on the terms described in clause (ii) of this Section 5(a); and
(iv) agree that the 10-day prior delivery requirement contained in
Section 7.5.(h)(iv) of the Credit Agreement shall be satisfied if the
certificate and other information required thereby are delivered prior to or
concurrently with the consummation of the Daymark Disposition.
(b) Upon the occurrence of each of (i) the satisfaction of the requirements set
forth in Section 7.5(h) of the Credit Agreement (in the case of
Section 7.5(h)(iv), subject to the terms of Section 5(a)(iv) herein), (ii) the
consummation of the Daymark Disposition and (iii) the delivery to the
Administrative Agent of a duly executed copy of the Daymark SPA and the
Restructured Daymark Note, the Administrative Agent agrees to execute and
deliver a guaranty and lien release for Daymark and its Subsidiaries
substantially in the form attached hereto as Exhibit C or such other form as the
Administrative Agent shall agree with the Borrower.
SECTION 6. Waiver. The Administrative Agent and the Lenders hereby waive any and
all defaults, violations or breaches under the Credit Agreement (if any)
relating to Borrower’s failure to comply with Section 7.1 of the Credit
Agreement or to meet any other Net Worth requirement provided for as a condition
to borrowing under the Credit Agreement, in each case, prior to the date hereof,
provided, that, such waiver is limited precisely as written and shall not be
deemed to (i) waive compliance with the provisions of Section 7.1 or any other
provisions of the Credit Agreement for any future periods, (ii) be a waiver of
any other term or condition of the Credit Agreement or any of the other Loan
Documents, or (iii) prejudice any right or rights which the Administrative Agent
or the other Lenders may now have or may have in the future under, in connection
with, or with respect to the Credit Agreement or any of the other Loan
Documents.
SECTION 7. Representations and Warranties. The Borrower, the Parent Guarantor
and each other Guarantor represent and warrant as follows:
(a) Authority. The execution, delivery and performance by each Loan Party of
this Amendment and each other Credit Document executed, or to be executed, by
such Loan Party and the consummation of the transactions contemplated hereby and
thereby (i) are within the power of such Loan Party and (ii) have been duly
authorized by all necessary actions on the part of such Loan Party.
(a) Enforceability. Each of this Amendment and each other Loan Document
executed, or to be executed, by each Loan Party has been, or will be, duly
executed and delivered by such Loan Party and constitutes, or will constitute, a
legal, valid and binding obligation of such Loan Party, enforceable against such
Loan Party in accordance with its terms, except as limited by bankruptcy,
insolvency or other laws of general application relating to or affecting the
enforcement of creditors’ rights generally and general principles of equity.
(b) Non-Contravention. The execution and delivery by each Loan Party of this
Amendment and the other Loan Documents executed by such Loan Party and the
performance and consummation of the transactions contemplated hereby and thereby
do not (i) violate any Requirement of Law applicable to such Loan Party;
(ii) violate any provision of, or result in the breach or the acceleration of,
or entitle any other Person to accelerate (whether after the giving of notice or
lapse of time or both), any Contractual Obligation of such Loan Party, except as
could not reasonably be expected to have, either individually or in the
aggregate, a Material Adverse Effect; (iii) result in the creation or imposition
of any Lien (or the obligation to create or impose any Lien) upon any material
property, asset or revenue of such Loan Party (except such Liens as may be
created in favor of the Administrative Agent for the benefit of itself and the
Lenders pursuant to this Amendment or the other Loan Documents) or (iv) violate
any provision of any existing law, rule, regulation, order, writ, injunction or
decree of any court or Governmental Authority to which it is subject.

 

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(c) Reaffirmation. The Borrower and the Parent Guarantor hereby reaffirms, for
the benefit of the Lenders and the Administrative Agent, the accuracy in all
material respects each representation and warranty contained in Section 4 of the
Credit Agreement on and as of the date hereof (except for representations and
warranties expressly made as of a specified date, which shall be true in all
material respects as of such date). Each Loan Party shall be deemed to have
reaffirmed, for the benefit of the Lenders and the Administrative Agent, the
accuracy in all material respects each representation and warranty contained in
Section 4 of the Guarantee and Collateral Agreement on and as of the date hereof
(except for representations and warranties expressly made as of a specified
date, which shall be true in all material respects as of such date).
(d) No Default or Event of Default. As of the date hereof, both before and after
giving effect to this Amendment, no Default or Event of Default has occurred and
is continuing.
SECTION 8. Validity of Obligations and Liens.
(a) Validity of Obligations. Each Loan Party acknowledges and agrees that each
Loan Party is indebted to the Lenders and the Administrative Agent for the
Obligations, without defense, counterclaim or offset of any kind and each Loan
Party hereby ratifies and reaffirms the validity, enforceability and binding
nature of such Obligations.
(b) Validity of Guarantees. The Parent Guarantor and each other Guarantor, as a
Guarantor under the Guarantee and Collateral Agreement hereby (i) acknowledges
and agrees to the terms of this Amendment and (ii) confirms and agrees that
notwithstanding the effectiveness of this Amendment, the Guarantee and
Collateral Agreement is, and shall continue to be, in full force and effect and
the Guarantee and Collateral Agreement is hereby ratified and confirmed in all
respects, except that, on and after the effectiveness of this Amendment, each
reference in the Guarantee and Collateral Agreement to the “Credit Agreement”,
“thereunder”, “thereof” or words of like import shall mean and be a reference to
the Credit Agreement, as amended by this Amendment.
(c) Validity of Liens and Loan Documents. The Borrower and each Guarantor ratify
and reaffirm the validity and enforceability (without defense, counterclaim or
offset of any kind) of the Liens and security interests granted to secure any of
the Obligations or any Guarantee Obligation by any Loan Party to the
Administrative Agent, for the benefit of the Lenders, pursuant to the Loan
Documents to which any Loan Party is a party and hereby confirm and agree that
notwithstanding the effectiveness of this Amendment, and except as expressly
amended by this Amendment, each Loan Document is, and shall continue to be, in
full force and effect and each is hereby ratified and confirmed in all respects,
except that, on and after the effectiveness of this Amendment, each reference in
the Loan Documents to the “Credit Agreement”, “thereunder”, “thereof” or words
of like import shall mean and be a reference to the Credit Agreement as amended
by this Amendment.
SECTION 9. Execution in Counterparts. This Amendment may be executed by one or
more of the parties to this Amendment on any number of separate counterparts,
and all of said counterparts taken together shall be deemed to constitute one
and the same instrument. Delivery of an executed signature page of this
Amendment by email or facsimile transmission shall be effective as delivery of a
manually executed counterpart hereof. A set of the copies of this Amendment
signed by all the parties shall be lodged with the Borrower and the
Administrative Agent.

 

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SECTION 10. Continuing Effectiveness. Except as modified by this Amendment, the
Credit Agreement shall remain in full force and effect and is hereby ratified
and confirmed in all respects and this Amendment shall be a Loan Document for
all purposes, and references in the Credit Agreement to “the date hereof” and
“the date of this Agreement” and phrases of similar import, shall in all
instances be references to, and continue to refer to, April 15, 2011, and not
the date of this Amendment. This Amendment shall not constitute an amendment or
waiver of any provision of the Credit Agreement not expressly referred to
herein.
SECTION 11. Severability. Any provision of this Amendment that is prohibited or
unenforceable in any jurisdiction shall, as to such jurisdiction, be ineffective
to the extent of such prohibition or unenforceability without invalidating the
remaining provisions hereof, and any such prohibition or unenforceability in any
jurisdiction shall not invalidate or render unenforceable such provision in any
other jurisdiction.
SECTION 12. Integration. This Amendment and the other Loan Documents represent
the entire agreement of the Borrower, the Guarantors, the Administrative Agent
and the Lenders with respect to the subject matter hereof and thereof, and there
are no promises, undertakings, representations or warranties by the
Administrative Agent or any Lender relative to the subject matter hereof not
expressly set forth or referred to herein or in the other Loan Documents.
SECTION 13. GOVERNING LAW. THIS AMENDMENT AND THE RIGHTS AND OBLIGATIONS OF THE
PARTIES UNDER THIS AMENDMENT SHALL BE GOVERNED BY, AND CONSTRUED AND INTERPRETED
IN ACCORDANCE WITH, THE LAW OF THE STATE OF NEW YORK, WITHOUT REGARD TO
CONFLICTS OF LAW PRINCIPLES THAT WOULD REQUIRE THE APPLICATION OF THE LAWS OF
ANOTHER JURISDICTION.
SECTION 14. Submission To Jurisdiction; Waivers. Each Loan Party hereby
irrevocably and unconditionally:
(a) submits for itself and its property in any legal action or proceeding
relating to this Amendment and the other Loan Documents to which it is a party,
or for recognition and enforcement of any judgment in respect thereof, to the
exclusive general jurisdiction of any United States Federal or New York State
court sitting in the Borough of Manhattan in the City of New York;
(b) consents that any such action or proceeding may be brought in such courts
and waives any objection that it may now or hereafter have to the venue of any
such action or proceeding in any such court or that such action or proceeding
was brought in an inconvenient court and agrees not to plead or claim the same;
(c) agrees that service of process in any such action or proceeding may be
effected by mailing a copy thereof by registered or certified mail (or any
substantially similar form of mail), postage prepaid, to the Borrower at its
address set forth in Section 10.2 of the Credit Agreement or at such other
address of which the Administrative Agent shall have been notified pursuant
thereto;

 

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(d) agrees that nothing herein shall affect the right to effect service of
process in any other manner permitted by law or shall limit the right to sue in
any other jurisdiction; and
(e) waives, to the maximum extent not prohibited by law, any right it may have
to claim or recover in any legal action or proceeding referred to in this
Section any special, exemplary, punitive or consequential damages.
SECTION 15. WAIVER OF JURY TRIAL. EACH LOAN PARTY, THE ADMINISTRATIVE AGENT AND
THE LENDERS HEREBY IRREVOCABLY AND UNCONDITIONALLY WAIVE TRIAL BY JURY IN ANY
LEGAL ACTION OR PROCEEDING RELATING TO THIS AMENDMENT OR ANY OTHER LOAN DOCUMENT
AND FOR ANY COUNTERCLAIM THEREIN.
SECTION 16. Headings. Section and subsection headings in this Amendment are
included herein for convenience of reference only and shall not constitute a
part of this Amendment for any other purpose or be given any substantive effect.
SECTION 17. Successors and Assigns. This Amendment shall be binding upon and
inure to the benefit of each Loan Party, the Lenders, the Administrative Agent
and their respective successors and permitted assigns, except that no Loan Party
may assign or transfer any of its rights or obligations under this Amendment
without the prior written consent of the Administrative Agent and each Lender.
Any purported assignment or transfer by a Loan Party in violation of the
foregoing shall be null and void.
[signature pages follow]

 

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IN WITNESS WHEREOF, the parties hereto have caused this Amendment to be executed
by their respective officers thereunto duly authorized, as of the date first
above written.

            GRUBB & ELLIS MANAGEMENT SERVICES, INC., as Borrower
      By:   /s/ Thomas P. D’Arcy       Name:   Thomas P. D’Arcy       Title:  
President and Chief Executive Officer       GRUBB & ELLIS COMPANY, as Parent
Guarantor and as a Guarantor
      By:   /s/ Thomas P. D’Arcy        Name:   Thomas P. D’Arcy       Title:  
President and Chief Executive Officer  

 

 

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GUARANTORS:

            DAYMARK REALTY ADVISORS, INC., a Delaware corporation
      By:   /s/ Steven Shipp       Name:   Steven Shipp       Title:   President
and Chief Executive Officer       GRUBB & ELLIS EQUITY ADVISORS, LLC, a Delaware
limited liability company
      By:   /s/ Thomas P. D’arcy       Name:   Thomas P. D’arcy       Title:  
President       GRUBB & ELLIS HEALTHCARE REIT II ADVISOR, LLC, a Delaware
limited liability company
      By:   /s/ Thomas P. D’arcy       Name:   Thomas P. D’arcy       Title:  
President       GRUBB & ELLIS LANDAUER VALUATION ADVISORY SERVICES, LLC, a
Delaware limited liability company
      By:   /s/ Thomas P. D’arcy       Name:   Thomas P. D’arcy       Title:  
President       GRUBB & ELLIS REALTY INVESTORS, LLC, a Virginia limited
liability company
      By:   /s/ Steven Shipp       Name:   Steven Shipp       Title:   President
 

 

 

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            NNN REALTY ADVISORS, INC., a Delaware corporation
      By:   /s/ Steven Shipp       Name:   Steven Shipp       Title:   President
 

            TRIPLE NET PROPERTIES REALTY, INC., a California corporation
      By:   /s/ Steven Shipp       Name:   Steven Shipp       Title:   President
 

 

 

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            COLFIN GNE LOAN FUNDING, LLC, as Administrative Agent and as a
Lender
      By:   /s/ Mark M. Hedstrom       Name:   Mark M. Hedstrom       Title:  
Vice President  

 

 

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EXHIBIT A
FORM OF ADDITIONAL WARRANT
[See attached]

 

 

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EXHIBIT H
FORM OF ADDITIONAL WARRANTS
NEITHER THIS WARRANT NOR THE SECURITIES ISSUABLE UPON EXERCISE OF THIS WARRANT
HAVE BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR ANY STATE
SECURITIES LAWS, AND SUBJECT TO SECTION 6 BELOW, NO OFFER, SALE, TRANSFER,
ASSIGNMENT OR OTHER DISPOSITION MAY BE EFFECTED UNLESS (1) THERE IS AN EFFECTIVE
REGISTRATION STATEMENT UNDER SUCH ACT COVERING THE SECURITIES, (2) THE SALE IS
MADE IN ACCORDANCE WITH RULE 144 UNDER THE ACT OR (3) AN OPINION OF COUNSEL
REASONABLY SATISFACTORY TO COMPANY IS DELIVERED STATING THAT SUCH DISPOSITION IS
IN COMPLIANCE WITH AN AVAILABLE EXEMPTION FROM SUCH REGISTRATION (WHICH OPINION
MAY BE RENDERED BY IN-HOUSE COUNSEL).
WARRANT TO PURCHASE [___________] SHARES OF COMMON STOCK
Issue Date: [     ]
THIS CERTIFIES THAT, for value received, [_____] (together with its transferees,
“Holder”), is entitled to subscribe for and purchase [_____] [(_____)]shares
(the “Warrant Shares”) of fully paid and nonassessable $0.01 par value per share
Common Stock (the “Common Stock”) of Grubbs & Ellis Company, a Delaware
corporation (“Company”), at the Warrant Price (as hereinafter defined), subject
to the provisions and upon the terms and conditions hereinafter set forth.
Capitalized terms used but not otherwise defined herein shall have the meanings
ascribed in the Credit Agreement among Grubb & Ellis Management Services, Inc.,
as Borrower, Grubb & Ellis Company, as Parent Guarantor, the Several Lenders
from time to time parties thereto, and ColFin GNE Loan Funding, LLC, as
Administrative Agent, dated as of April 15, 2011 (as amended, the “Credit
Agreement”).
1. Warrant Price. The “Warrant Price” shall initially be one cent ($0.01) per
share, subject to adjustment as provided in Section 7 below.
2. Conditions to Exercise. Unless this Warrant has previously expired pursuant
to the terms specified herein, the purchase right represented by this Warrant
may be exercised, subject to adjustment as provided in Section 7 below, during
the term commencing on the Issue Date and ending at 5:00 P.M. Pacific time on
the third anniversary of the Issue Date of this Warrant (the “Expiration Date”)
only in the following circumstances:
(a) Exercisability Upon Satisfaction of Fundamental Change Condition. Holder may
exercise this Warrant on or before the Expiration Date upon the occurrence of a
Fundamental Change in which the consideration received for each share of Common
Stock has a fair market value equal to or greater than Seventy-One Cents ($0.71)
per share (the “Trigger Price”); provided that if an Early Termination Event
occurs this Warrant shall terminate and be of no further force and effect; or

 

 

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(b) Exercisability Upon Satisfaction of VWAP Condition. Holder may exercise this
Warrant on or before the Expiration Date beginning from the first date on which
the VWAP for any thirty (30) consecutive calendar day period following the date
hereof is equal to or greater than the Trigger Price.
(c) Most Favored Nation. The following shall be in effect for so long as any
Obligation is outstanding:
In addition to any adjustments provided in Section 7 hereof, if in connection
with any financing arrangement, the Issuer, its Affiliates or any subsidiary of
the Issuer issues any Options, or other equity linked securities to purchase
common stock of the Issuer or any subsidiary of the Issuer, with an exercise
condition that is based on a share price that is lower than the Trigger Price,
then the Trigger Price shall be adjusted downward (but not upward) to such lower
price without any further action on the part of any party.
In addition to any adjustments provided in Section 7 hereof, to the extent that
the Issuer, its Affiliates or any subsidiary of the Issuer issues any equity
linked security or arrangement other than an Option in connection with a
financing arrangement, the Trigger Price shall be equitably adjusted downward as
is necessary to provide the Holders the result set forth above.
3. Method of Exercise; Payment; Issuance of Shares; Issuance of New Warrant; Put
Rights. Subject to Section 2 hereof, the Warrant may be exercised, at the option
of the Holder, by any one or combination of the following methods:
(a) Cash Exercise. Subject to Section 2 hereof, the purchase right represented
by this Warrant may be exercised, by Holder, in whole or in part, by the
surrender of the original of this Warrant (together with a duly executed Notice
of Exercise in substantially the form attached hereto) at the principal office
of Company (as set forth in Section 20 below) and by providing payment to
Company, by wire transfer of immediately available funds, of an amount equal to
the product of the Warrant Price per share multiplied by the number of Warrant
Shares then being purchased. In the event of any exercise of the rights
represented by this Warrant, certificates for the shares of stock so purchased
(the “Share Certificates”) shall be in the name of, and delivered to, Holder, or
such other Person as such Holder may direct (subject to the terms of transfer
contained herein and upon payment by such Holder of any applicable transfer
taxes). Such delivery shall be made within 3 Trading Days after the exercise of
this Warrant and at Company’s expense and, unless this Warrant has been fully
exercised or expired, a new Warrant having terms and conditions substantially
identical to this Warrant and representing the portion of the Warrant Shares, if
any, with respect to which this Warrant shall not have been exercised, shall
also be issued to Holder within 3 Trading Days after the exercise of this
Warrant.
(b) Cashless Exercise. Subject to Section 2 hereof, if the Per Share Market
Value of one share of Common Stock on the date of exercise is greater than the
Warrant Price (at the date of calculation as set forth below), in lieu of
exercising this Warrant by payment of cash, Holder may exercise this Warrant by
a cashless exercise by surrender of this Warrant at the principal office of
Company together with the properly endorsed Notice of Exercise in which event
Company shall issue to Holder a number of shares of Common Stock computed using
the following formula:
X = Y - (A)(Y)
                    B

 

 

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Where
  X =   the number of shares of Common Stock to be issued to Holder.
 
       
 
  Y =   the number of shares of Common Stock purchasable upon exercise of all of
the Warrant or, if only a portion of the Warrant is being exercised, the portion
of the Warrant being exercised.
 
       
 
  A =   the Warrant Price.
 
       
 
  B =   the Per Share Market Value of one share of Common Stock on the date of
exercise.

In the event of any exercise of the rights represented by this Warrant, the
Share Certificates shall be in the name of, and delivered to, Holder, or such
other Person as such Holder may direct (subject to the terms of transfer
contained herein and upon payment by such Holder of any applicable transfer
taxes). Such delivery shall be made within 3 Trading Days after the exercise of
this Warrant and at Company’s expense and, unless this Warrant has been fully
exercised or expired, a new Warrant having terms and conditions substantially
identical to this Warrant and representing the portion of the Warrant Shares, if
any, with respect to which this Warrant shall not have been exercised, shall
also be issued to Holder within 3 Trading Days after the exercise of this
Warrant.
(c) Loan Reduction Exercise. Subject to Section 2 hereof, the purchase right
represented by this Warrant may be exercised, by Holder, in whole or in part, by
the surrender of the original of this Warrant (together with a duly executed
Notice of Exercise in substantially the form attached hereto) at the principal
office of Company and by delivering to Company an executed amendment to the
Credit Agreement, reducing the principal amount owed by an amount equal to the
product of the Warrant Price per share multiplied by the number of Warrant
Shares then being purchased. In the event of any exercise of the rights
represented by this Warrant, Share Certificates shall be in the name of, and
delivered to, Holder, or such other Person as such Holder may direct (subject to
the terms of transfer contained herein and upon payment by such Holder of any
applicable transfer taxes). Such delivery shall be made within 3 Trading Days
after the exercise of this Warrant and at Company’s expense and, unless this
Warrant has been fully exercised or expired, a new Warrant having terms and
conditions substantially identical to this Warrant and representing the portion
of the Warrant Shares, if any, with respect to which this Warrant shall not have
been exercised, shall also be issued to Holder within 3 Trading Days after the
exercise of this Warrant.
4. Representations and Warranties of Holder and Company.
(a) Representations and Warranties by Holder. Holder represents and warrants to
Company with respect to this purchase as follows:
(i) Authorization. All company action on the part of Holder, its officers,
directors, shareholders, members or partners, as applicable, necessary for the
authorization, execution, delivery and performance of its obligations under this
Warrant has been taken and this Warrant constitutes the legally binding and
valid obligation of Holder enforceable in accordance with its terms.
(ii) Evaluation. Holder has substantial experience in evaluating and investing
in private placement transactions of securities of companies similar to Company
so that Holder is capable of evaluating the merits and risks of its investment
in Company and has the capacity to protect its interests.

 

 

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(iii) Resale. Holder is acquiring this Warrant and the Warrant Shares issuable
upon exercise of this Warrant (collectively the “Securities”) for investment for
its own account, not as a nominee or agent, and not with a view to, or for
resale in connection with, any distribution thereof. Holder understands that the
Securities have not been registered under the Securities Act of 1933, as amended
(the “Act”) by reason of a specific exemption from the registration provisions
of the Act which depends upon, among other things, the bona fide nature of the
investment intent as expressed herein and the other representations and
warranties of Holder contained herein.
(iv) Rule 144. Holder acknowledges that the Securities must be held indefinitely
unless subsequently registered under the Act or an exemption from such
registration is available. Holder is aware of the provisions of Rule 144
promulgated under the Act which permit limited resale of shares purchased in a
private placement subject to the satisfaction of certain conditions.
(v) Accredited Investor. Holder is an “accredited investor” within the meaning
of Regulation D promulgated under the Act.
(vi) Opportunity To Discuss. Holder has read, understood, and is familiar with
Company’s public filings available at the Securities and Exchange Commission’s
website and has had an opportunity to discuss Company’s business, management and
financial affairs with its management and an opportunity to review Company’s
facilities. Holder understands that such discussions, as well as the written
information issued by Company, were intended to describe the aspects of
Company’s business and prospects which Company believes to be material but were
not necessarily a thorough or exhaustive description.
(b) Representations and Warranties by Company. Company hereby represents and
warrants to Holder as follows:
(i) Corporate Organization and Authority. Company (a) is a corporation duly
organized, validly existing, and in good standing in its jurisdiction of
incorporation, and (b) has the corporate power and authority to own and operate
its properties and to carry on its business as now conducted. Company is
qualified as a foreign corporation in all jurisdictions where such qualification
is required except in each jurisdiction in which failure to so qualify would not
have a material adverse effect on the business, operations, assets, liabilities,
results of operations or financial condition of Company.
(ii) Corporate Power. Company has all requisite legal and corporate power and
authority to execute, issue and deliver this Warrant, to issue the Warrant
Shares issuable upon exercise or conversion of this Warrant, and to carry out
and perform its obligations under this Warrant and any related agreements.
(iii) Authorization; Enforceability. All corporate action on the part of
Company, its officers, directors and shareholders necessary for the
authorization, execution, delivery and performance of its obligations under this
Warrant and for the authorization, issuance and delivery of this Warrant and the
Warrant Shares issuable upon exercise of this Warrant has been taken and this
Warrant constitutes the legally binding and valid obligation of Company
enforceable in accordance with its terms, except as enforceability may be
limited by applicable bankruptcy, insolvency, reorganization, or similar laws
relating to or affecting the enforcement of creditors’ rights, or to principles
of equity.

 

 

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(iv) Valid Issuance of Warrant and Warrant Shares. This Warrant has been validly
issued and is free of restrictions on transfer other than restrictions on
transfer set forth herein and under applicable state and federal securities
laws. The Warrant Shares issuable upon conversion of this Warrant, when issued,
sold and delivered in accordance with the terms of this Warrant for the
consideration expressed herein, will be duly and validly issued, fully paid and
nonassessable, and will be free of restrictions on transfer other than
restrictions on transfer set forth herein and under applicable state and federal
securities laws. Subject to applicable restrictions on transfer, the issuance
and delivery of this Warrant and the Warrant Shares issuable upon exercise or
conversion of this Warrant are not subject to any preemptive or other similar
rights or any liens or encumbrances except as specifically set forth in
Company’s Certificate of Incorporation or this Warrant or except as created by
Holder. Subject to the accuracy of Holder’s representations and warranties
contained in Section 4(a), the offer, sale and issuance of the Warrant Shares,
as contemplated by this Warrant, are exempt from the prospectus and registration
requirements of applicable United States federal and state securities laws, and
neither Company nor any authorized agent acting on its behalf has or will take
any action hereafter that would cause the loss of such exemption.
(v) No Conflict. The execution, delivery, and performance of this Warrant will
not result in (a) any violation of, conflict with, or constitute a default
under, with or without the passage of time or the giving of notice (1) any
provision of Company’s Certificate of Incorporation or by-laws; (2) any
provision of any material judgment, decree, or order to which Company is a
party, by which it is bound, or to which any of its material assets are subject;
(3) any material contract, obligation, or commitment to which Company is a party
or by which it is bound; or (4) any material statute, rule, or governmental
regulation applicable to Company, or (b) the creation of any lien, charge or
encumbrance upon any material assets of Company.
(vi) Capitalization. The capitalization table of Company attached hereto as
Annex A is complete and accurate as of [_____] and reflects (a) all outstanding
capital stock of Company and (b) all outstanding warrants, options, conversion
privileges, preemptive rights or other rights or agreements to purchase or
otherwise acquire or issue any equity securities or convertible securities of
Company. Company has authorized the issuance of a total of 20,000,000 shares of
Preferred Stock, 1,000,000 of which have been designated as Series A Preferred
Stock, and 200,000,000 shares of Common Stock and no other shares of preferred
stock have been designated or issued.
5. Legends.
(a) Legend. Each certificate representing the Warrant Shares shall be endorsed
with substantially the following legend:
THESE SECURITIES HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS
AMENDED, OR ANY STATE SECURITIES LAWS AND MAY NOT BE OFFERED, SOLD, TRANSFERRED,
ASSIGNED OR OTHERWISE DISPOSED OF UNLESS (1) THERE IS AN EFFECTIVE REGISTRATION
STATEMENT UNDER SUCH ACT COVERING THE SECURITIES, (2) THE SALE IS MADE IN
ACCORDANCE WITH RULE 144 UNDER THE ACT OR (3) AN OPINION OF COUNSEL REASONABLY
SATISFACTORY TO COMPANY IS DELIVERED STATING THAT SUCH DISPOSITION IS IN
COMPLIANCE WITH AN AVAILABLE EXEMPTION FROM SUCH REGISTRATION (WHICH OPINION MAY
BE RENDERED BY IN-HOUSE COUNSEL).

 

 

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Company need not enter into its stock records a transfer of Warrant Shares
unless the conditions specified in the foregoing legend are satisfied. Company
may also instruct its transfer agent not to allow the transfer of any of the
Warrant Shares unless the conditions specified in the foregoing legend are
satisfied.
(b) Removal of Legend and Transfer Restrictions. The legend relating to the Act
endorsed on a certificate pursuant to paragraph 5(a) of this Warrant shall be
removed and Company shall issue a certificate without such legend to Holder if
(i) the Securities are registered under the Act and a prospectus meeting the
requirements of Section 10 of the Act is available, or (ii) Company has received
an opinion of counsel (which may include the opinion of in-house counsel)
reasonably satisfactory to Company to the effect that public sale, transfer or
assignment of the Securities may be made without registration and without
compliance with any restriction.
6. Conditions to Transfer or Exercise of Warrant. Subject to the further
provisions of this Section 6, this Warrant and the Warrant Shares represented
hereby may be sold, transferred, conveyed or assigned by Holder. This Warrant
may not be transferred to any person who is not an “accredited investor,” as
such term is defined in Regulation D promulgated under the Act. It shall be a
condition to any transfer or exercise of this Warrant that at the time of such
transfer or exercise, Holder shall provide Company with a representation in
writing that Holder or transferee is acquiring this Warrant and the shares of
Common Stock to be issued upon exercise for investment purposes only, not as a
nominee or agent, and not with a view to any sale or distribution. As further
condition to each transfer, at the request of Company, Holder shall surrender
this Warrant to Company and the transferee shall receive and accept a Warrant,
of like terms, tenor and date, executed by Company.
7. Adjustment for Certain Events.
(a) Adjustment Exceptions. The number of Warrant Shares issuable upon exercise
of this Warrant shall be subject to adjustment from time to time as provided in
this Section 7 (in each case, after taking into consideration any prior
adjustments pursuant to this Section 7); provided that this Section 7 will not
apply to: (i) the issuance of any Additional Warrants; (ii) the issuance of any
Common Stock upon the exercise of the Closing Date Warrants or any Additional
Warrants; (iii) the issuance of Common Stock upon conversion of the Company’s
existing outstanding 12% cumulative participating perpetual convertible
preferred stock upon the terms and subject to the conditions of the Certificate
of the Powers, Designations, Preferences and Rights of the 12% Cumulative
Participating Perpetual Convertible Preferred Stock as such conversion terms
thereof are in effect as of April 15, 2011; (iv) the issuance of Common Stock
upon conversion of the Company’s existing outstanding 7.95% convertible senior
securities due 2015, upon the terms and subject to the conditions of the
Indenture for the 7.95% Convertible Senior Securities due 2015 as such
conversion terms thereof are in effect as of April 15, 2011; and (v) the
issuance of Common Stock as equity compensation to employees, officers,
directors and independent contractor brokers (in each case including as
inducements to new hires or appointees) (collectively the “Equity Compensation
Grants”), provided that this exception to the adjustment provisions of this
Section 7 is limited to the following Equity Compensation Grants: (A) the
issuance of any shares of common stock pursuant to any outstanding (as of
April 15, 2011) options, restricted stock awards, stock appreciation rights,
phantom stock rights or other equity grants (the “Existing Equity
Compensation”), and (B) the issuance of an additional 2,000,000 shares of Common
Stock in the form of options, restricted stock awards, stock appreciation
rights, phantom stock rights or other equity grants (the “Additional Equity
Compensation”) and the issuance of the Common Stock underlying such Additional
Equity Compensation plus any Additional Equity Compensation and any Existing
Equity Compensation that is forfeited, expired or terminated provided that any
amount issued in excess of the above will result in any requisite adjustment
under this Section 7.

 

 

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(b) Adjustment to Number of Warrant Shares Upon Issuance of Common Stock. Except
in the case of an event described in either Section 7(d) or Section 7(e), if
Company shall, at any time or from time to time after the Issue Date, issue or
sell, or in accordance with Section 7(c) is deemed to have issued or sold, any
shares of Common Stock without consideration or for consideration per share less
than either: (i) the Per Share Market Value or (ii) the Trigger Price, as such
amounts are proportionately adjusted for stock splits, reverse stock splits,
stock combinations, stock dividends and other distributions and
recapitalizations affecting the Common Stock after the Issue Date, (collectively
the “Original Prices” and the greater of (i) or (ii) the “Original Adjustment
Price”), then immediately upon such issuance or sale (or deemed issuance or
sale), the number of Warrant Shares issuable upon exercise of this Warrant
immediately prior to any such issuance or sale (or deemed issuance or sale)
shall be increased to a number of Warrant Shares equal to the product obtained
by multiplying the number of Warrant Shares issuable upon exercise of this
Warrant immediately prior to such issuance or sale (or deemed issuance or sale)
by a fraction (which shall in no event be less than one):
(i) the numerator of which shall be the number of shares of Common Stock then
outstanding immediately after such issuance or sale (or deemed issuance or
sale); and
(ii) the denominator of which shall be the sum of (A) the number of shares of
Common Stock then outstanding immediately prior to such issuance or sale (or
deemed issuance or sale) plus (B) the aggregate number of shares of Common Stock
which the aggregate amount of consideration, if any, received by Company upon
such issuance or sale (or deemed issuance or sale) would purchase at the
Original Adjustment Price.
(c) Effect of Certain Events on Adjustment to Number of Warrant Shares. For
purposes of determining the adjusted number of Warrant Shares under Section 7(b)
hereof, the following shall be applicable:
(i) Issuance of Options. If Company shall, at any time or from time to time
after the Issue Date, in any manner grant or sell (whether directly or by
assumption in a merger or otherwise) any Options, whether or not such Options or
the right to convert or exchange any Convertible Securities issuable upon the
exercise of such Options are immediately exercisable, and the price per share
(determined as provided in this paragraph and in Section 7(c)(v)) for which
Common Stock is issuable upon the exercise of such Options or upon the
conversion or exchange of Convertible Securities issuable upon the exercise of
such Options is less than either of the Original Prices in effect immediately
prior to the time of the granting or sale of such Options, then the total
maximum number of shares of Common Stock issuable upon the exercise of such
Options or upon conversion or exchange of the total maximum amount of
Convertible Securities issuable upon the exercise of such Options shall be
deemed to have been issued as of the date of granting or sale of such Options
(and thereafter shall be deemed to be outstanding for purposes of adjusting the
number of Warrant Shares under Section 7(b)), at a price per share equal to the
quotient obtained by dividing (A) the sum (which sum shall constitute the
applicable consideration received for purposes of Section 7(b)) of (x) the total
amount, if any, received or receivable by Company as consideration for the
granting or sale of all such Options, plus (y) the minimum aggregate amount of
additional consideration payable to Company upon the exercise of all such
Options, plus (z), in the case of such Options which relate to Convertible
Securities, the minimum aggregate amount of additional consideration, if any,
payable to Company upon the issuance or sale of all such Convertible Securities
and the conversion or exchange of all such Convertible Securities, by (B) the
total maximum number of shares of Common Stock issuable upon the exercise of all
such Options or upon the conversion or exchange of all Convertible Securities
issuable upon the exercise of all such Options. Except as otherwise provided in
Section 7(c)(iii), no further adjustment of the number of Warrant Shares shall
be made upon the actual issuance of Common Stock or of Convertible Securities
upon exercise of such Options or upon the actual issuance of Common Stock upon
conversion or exchange of Convertible Securities issuable upon exercise of such
Options.

 

 

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(ii) Issuance of Convertible Securities. If Company shall, at any time or from
time to time after the Issue Date, in any manner grant or sell (whether directly
or by assumption in a merger or otherwise) any Convertible Securities, whether
or not the right to convert or exchange any such Convertible Securities is
immediately exercisable, and the price per share (determined as provided in this
paragraph and in Section 7(c)(v)) for which Common Stock is issuable upon the
conversion or exchange of such Convertible Securities is less than either of the
Original Prices in effect immediately prior to the time of the granting or sale
of such Convertible Securities, then the total maximum number of shares of
Common Stock issuable upon conversion or exchange of the total maximum amount of
such Convertible Securities shall be deemed to have been issued as of the date
of granting or sale of such Convertible Securities (and thereafter shall be
deemed to be outstanding for purposes of adjusting the number of Warrant Shares
pursuant to Section 7(b)), at a price per share equal to the quotient obtained
by dividing (A) the sum (which sum shall constitute the applicable consideration
received for purposes of Section 7(b)) of (x) the total amount, if any, received
or receivable by Company as consideration for the granting or sale of such
Convertible Securities, plus (y) the minimum aggregate amount of additional
consideration, if any, payable to Company upon the conversion or exchange of all
such Convertible Securities, by (B) the total maximum number of shares of Common
Stock issuable upon the conversion or exchange of all such Convertible
Securities. Except as otherwise provided in Section 7(c)(iii), (A) no further
adjustment of the number of Warrant Shares shall be made upon the actual
issuance of Common Stock upon conversion or exchange of such Convertible
Securities and (B) no further adjustment of the number of Warrant Shares shall
be made by reason of the issue or sale of Convertible Securities upon exercise
of any Options to purchase any such Convertible Securities for which adjustments
of the number of Warrant Shares have been made pursuant to the other provisions
of this Section 7(c).
(iii) Change in Terms of Options or Convertible Securities. Upon any change in
any of (A) the total amount received or receivable by Company as consideration
for the granting or sale of any Options or Convertible Securities referred to in
Section 7(c)(i) or Section 7(c)(ii) hereof, (B) the minimum aggregate amount of
additional consideration, if any, payable to Company upon the exercise of any
Options or upon the issuance, conversion or exchange of any Convertible
Securities referred to in Section 7(c)(i) or Section 7(c)(ii) hereof, (C) the
rate at which Convertible Securities referred to in Section 7(c)(i) or
Section 7(c)(ii) hereof are convertible into or exchangeable for Common Stock,
or (D) the maximum number of shares of Common Stock issuable in connection with
any Options referred to in Section 7(c)(i) hereof or any Convertible Securities
referred to in Section 7(c)(ii) hereof, then (whether or not the original
issuance or sale of such Options or Convertible Securities resulted in an
adjustment to the number of Warrant Shares pursuant to this Section 7) the
number of Warrant Shares issuable upon exercise of this Warrant at the time of
such change shall be adjusted or readjusted, as applicable, to the number of
Warrant Shares which would have been in effect at such time pursuant to the
provisions of this Section 7 had such Options or Convertible Securities still
outstanding provided for such changed consideration, conversion rate or maximum
number of shares, as the case may be, at the time initially granted, issued or
sold, but only if as a result of such adjustment or readjustment, the number of
Warrant Shares issuable upon exercise of this Warrant is increased.

 

 

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(iv) Treatment of Expired or Terminated Options or Convertible Securities. Upon
the expiration or termination of any unexercised Option (or portion thereof) or
any unconverted or unexchanged Convertible Security (or portion thereof) for
which any adjustment (either upon its original issuance or upon a revision of
its terms) was made pursuant to this Section 7 (including without limitation
upon the redemption or purchase for consideration of all or any portion of such
Option or Convertible Security by Company), the number of Warrant Shares then
issuable upon exercise of this Warrant shall forthwith be changed pursuant to
the provisions of this Section 7 to the number of Warrant Shares which would
have been in effect at the time of such expiration or termination had such
unexercised Option (or portion thereof) or unconverted or unexchanged
Convertible Security (or portion thereof), to the extent outstanding immediately
prior to such expiration or termination, never been issued, provided that this
Section 7(c)(iv) will not apply to the extent the Warrant is exercised.
(v) Calculation of Consideration Received. If Company shall, at any time or from
time to time after the Issue Date, issue or sell, or is deemed to have issued or
sold in accordance with Section 7(c), any shares of Common Stock, Options or
Convertible Securities: (A) for cash, the consideration received therefor shall
be deemed to be the net amount received by Company therefor; (B) for
consideration other than cash, the amount of the consideration other than cash
received by Company shall be the fair value of such consideration, except where
such consideration consists of marketable securities, in which case the amount
of consideration received by Company shall be the Per Share Market Value for
such securities as of the end of business on the date of receipt of such
securities; (C) for no specifically allocated consideration in connection with
an issuance or sale of other securities of Company, together comprising one
integrated transaction, the amount of the consideration therefor shall be deemed
to be the fair value of such portion of the aggregate consideration received by
Company in such transaction as is attributable to such shares of Common Stock,
Options or Convertible Securities, as the case may be, issued in such
transaction; or (D) to the owners of the non-surviving entity in connection with
any merger in which Company is the surviving corporation, the amount of
consideration therefor shall be deemed to be the fair value of such portion of
the net assets and business of the non-surviving entity as is attributable to
such shares of Common Stock, Options or Convertible Securities, as the case may
be, issued to such owners. The net amount of any cash consideration shall be the
dollar amount thereof and the fair value of any consideration other than cash or
marketable securities shall be determined by an Independent Appraiser.
(vi) Record Date. For purposes of any adjustment to the number of Warrant Shares
in accordance with this Section 7, in case Company shall take a record of the
holders of its Common Stock for the purpose of entitling them (A) to receive a
dividend or other distribution payable in Common Stock, Options or Convertible
Securities or (B) to subscribe for or purchase Common Stock, Options or
Convertible Securities, then such record date shall be deemed to be the date of
the issue or sale of the shares of Common Stock deemed to have been issued or
sold upon the declaration of such dividend or the making of such other
distribution or the date of the granting of such right of subscription or
purchase, as the case may be, provided such distribution is actually made.
(vii) Treasury Shares. The number of shares of Common Stock outstanding at any
given time shall not include shares owned or held by or for the account of
Company or any of its wholly-owned subsidiaries, and the disposition of any such
shares (other than the cancellation or retirement thereof or the transfer of
such shares among Company and its wholly-owned subsidiaries) shall be considered
an issue or sale of Common Stock for the purpose of this Section 7.

 

 

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(viii) Other Dividends and Distributions. Subject to the provisions of this
Section 7(c), if Company shall, at any time or from time to time after the Issue
Date, make or declare, or fix a record date for the determination of holders of
Common Stock entitled to receive, a dividend or any other distribution payable
in securities of Company (other than a dividend or distribution of shares of
Common Stock, Options or Convertible Securities in respect of outstanding shares
of Common Stock), cash or other property, then, and in each such event,
provision shall be made so that the Holder shall receive upon exercise of the
Warrant, in addition to the number of Warrant Shares receivable thereupon, the
kind and amount of securities of Company, cash or other property which the
Holder would have been entitled to receive had the Warrant been exercised in
full into Warrant Shares on the date of such event and had the Holder
thereafter, during the period from the date of such event to and including the
Exercise Date (as hereinafter defined), retained such securities, cash or other
property receivable by them as aforesaid during such period, giving application
to all adjustments called for during such period under this Section 7 with
respect to the rights of the Holder; provided, that no such provision shall be
made if the Holder receives, simultaneously with the distribution to the holders
of Common Stock, a dividend or other distribution of such securities, cash or
other property in an amount equal to the amount of such securities, cash or
other property as the Holder would have received if the Warrant had been
exercised in full into Warrant Shares on the date of such event.
(d) Adjustment to Number of Warrant Shares Upon Dividend, Subdivision or
Combination of Common Stock. If Company shall, at any time or from time to time
after the Issue Date, (i) pay a dividend or make any other distribution upon the
Common Stock or any other capital stock of Company payable in shares of Common
Stock or in Options or Convertible Securities, or (ii) subdivide (by any stock
split, recapitalization or otherwise) its outstanding shares of Common Stock
into a greater number of shares, the number of Warrant Shares issuable upon
exercise of this Warrant immediately prior to any such dividend, distribution or
subdivision shall be proportionately increased. If Company at any time combines
(by combination, reverse stock split or otherwise) its outstanding shares of
Common Stock into a smaller number of shares, the number of Warrant Shares
issuable upon exercise of this Warrant immediately prior to such combination
shall be proportionately decreased. Any adjustment under this Section 7(d) shall
become effective at the close of business on the date the dividend, subdivision
or combination becomes effective.
(e) Adjustment to Number of Warrant Shares Upon Reorganization,
Reclassification, Consolidation or Merger. Subject to Section 2(a), in the event
of any (i) capital reorganization of Company, (ii) reclassification of the stock
of Company (other than a change in par value or from par value to no par value
or from no par value to par value or as a result of a stock dividend or
subdivision, split-up or combination of shares), (iii) consolidation or merger
of Company with or into another Person, (iv) sale of all or substantially all of
Company’s assets to another Person, (v) transaction constituting a Fundamental
Change or (v) other similar transaction (other than any such transaction covered
by Section 7(d)), in each case which entitles the holders of Common Stock to
receive (either directly or upon subsequent liquidation) stock, securities or
assets with respect to or in exchange for Common Stock, each Warrant shall,
immediately after such reorganization, reclassification, consolidation, merger,
sale or similar transaction, remain outstanding and shall thereafter, in lieu of
or in addition to (as the case may be) the number of Warrant Shares then
exercisable under this Warrant, be exercisable for the kind and number of shares
of stock or other securities or assets of Company or of the successor Person
resulting from such transaction to which the Holder would have been entitled
upon such reorganization, reclassification, consolidation, merger, sale or
similar transaction if the Holder had exercised this Warrant in full immediately
prior to the time of such reorganization, reclassification, consolidation,
merger, sale or similar transaction and acquired the applicable number of
Warrant Shares then issuable hereunder as a result of such exercise (without
taking into account any limitations or restrictions on the exercisability of
this Warrant); and, in such case, appropriate adjustment (in form and substance
satisfactory to the Holder) shall be

 

 

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made with respect to the Holder’s rights under this Warrant to insure that the
provisions of this Section 7 hereof shall thereafter be applicable, as nearly as
possible, to this Warrant in relation to any shares of stock, securities or
assets thereafter acquirable upon exercise of this Warrant. In the event of a
Fundamental Change, following which the Warrants would cease to represent the
right to acquire securities, no adjustment shall be made pursuant to the terms
hereof. The provisions of this Section 7(e) shall similarly apply to successive
reorganizations, reclassifications, consolidations, mergers, sales or similar
transactions. Company shall not effect any such reorganization,
reclassification, consolidation, merger, sale or similar transaction unless,
prior to the consummation thereof, the successor Person (if other than Company)
resulting from such reorganization, reclassification, consolidation, merger,
sale or similar transaction, shall assume, by written instrument substantially
similar in form and substance to this Warrant and satisfactory to the Holder,
the obligation to deliver to the Holder such shares of stock, securities or
assets which, in accordance with the foregoing provisions, such Holder shall be
entitled to receive upon exercise of this Warrant. Notwithstanding anything to
the contrary contained herein, if the Warrant is exercisable in accordance with
Section 2 hereof with respect to any corporate event or other transaction
contemplated by the provisions of this Section 7(e), the Holder shall have the
right to elect prior to the consummation of such event or transaction, to give
effect to the exercise rights contained in Section 3 instead of giving effect to
the provisions contained in this Section 7(e) with respect to this Warrant.
(f) Certain Events. If any event of the type contemplated by the provisions of
this Section 7 but not expressly provided for by such provisions (including,
without limitation, the granting of stock appreciation rights, phantom stock
rights or other rights with equity features) occurs, then the Board shall make
an appropriate adjustment in the number of Warrant Shares issuable upon exercise
of this Warrant so as to protect the rights of the Holder in a manner consistent
with the provisions of this Section 7; provided, that no such adjustment
pursuant to this Section 7(f) shall decrease the number of Warrant Shares
issuable as otherwise determined pursuant to this Section 7.
8. Notice of Adjustments. Whenever the kind or number of securities issuable
under this Warrant shall be adjusted pursuant to Section 7 hereof, Company shall
prepare a certificate signed by an officer of Company setting forth, in
reasonable detail, the event requiring the adjustment, the amount of the
adjustment, the method by which such adjustment was calculated, and number or
kind of shares issuable upon exercise of this Warrant after giving effect to
such adjustment, and shall cause copies of such certificate to be mailed (by
certified or registered mail, return receipt required, postage prepaid) within
thirty (30) days of such adjustment to Holder as set forth in Section 20 hereof.
9. Financial and Other Reports. From time to time up to the earlier of the
Expiration Date or the complete exercise of this Warrant, Company shall furnish
to Holder, if Company is a private company, (a) unaudited consolidated and, if
available, consolidating balance sheets, statements of operations and cash flow
statements within 30 days of each fiscal month of each fiscal year, certified by
Company’s president or chief financial officer, and (b) Company’s complete
annual audited consolidated and, if available, consolidating balance sheets,
statements of operations and cash flow statements certified by an independent
certified public accountant selected by Company within 120 days of the fiscal
year end or, if sooner, promptly following such time as Company’s Board of
Directors receives the audit. If Company is a publicly held company, it shall
deliver to Holder quarterly unaudited consolidated and, if available,
consolidating balance sheets, statements of operations and cash flow statements
and annual audited consolidated and, if available, consolidating balance sheets,
statements of operations and cash flow statements, certified by a recognized
firm of certified public accountants, within 5 days after the statements are
required to be provided to the SEC. All such statements are to be prepared using
GAAP and, if Company is a publicly held company, are to be in compliance with
SEC requirements. At the time of Company’s delivery of quarterly financial
statements in accordance with this Section 9, Company shall also deliver to
Holder an updated capitalization table of Company in the form attached hereto as
Annex A. For so long as Company is a privately held company, Holder agrees to
hold in confidence and trust and not to improperly use or disclose any
information provided to or learned by Holder in connection with its rights under
this Section 9 regarding the business as conducted by Company as of today’s date
on the same terms and conditions as set forth in Section 11.8 of the Credit
Agreement.

 

 

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10. Transferability of Warrant. This Warrant is transferable on the books of
Company at its principal office by the registered Holder upon surrender of this
Warrant properly endorsed, subject to compliance with Section 6 and applicable
federal and state securities laws. Company shall issue and deliver to the
transferee a new Warrant representing the Warrant so transferred. Upon any
partial transfer, Company will issue and deliver to Holder a new Warrant with
respect to the Warrant not so transferred. Holder shall not have any right to
transfer any portion of this Warrant to any direct competitor of Company or to
any significant shareholder or any direct or indirect subsidiary of any such
direct competitor of the Company which is known or should be known as such to
the Holder.
11. Registration Rights. Company grants registration rights to Holder of this
Warrant for any Common Stock of Company obtained by Holder upon exercise or
conversion of this Warrant, pursuant to the Registration Rights Agreement dated
as of April 15, 2011 between Grubb & Ellis Company CDCF II GNE Holding, LLC and
CFI GNE Warrant Investor, LLC and subject to pro rata limitations on the number
of securities which can be included in a registration among other persons who
have the right to register securities pursuant to “piggyback” rights afforded to
such persons.
12. No Fractional Shares. No fractional share of Common Stock will be issued in
connection with any exercise or conversion hereunder, but in lieu of such
fractional share Company shall make a cash payment therefor upon the basis of
the Warrant Price then in effect.
13. Charges, Taxes and Expenses. Issuance of certificates for shares of Common
Stock upon the exercise or conversion of this Warrant shall be made without
charge to Holder for any United States or state of the United States documentary
stamp tax or other incidental expense with respect to the issuance of such
certificate, all of which taxes and expenses shall be paid by Company, and such
certificates shall be issued in the name of Holder.
14. No Shareholder Rights Until Exercise; Additional Rights. Except as expressly
provided herein, this Warrant does not entitle Holder to any voting rights or
other rights as a shareholder of Company prior to the exercise hereof. Company
agrees that if it shall at any time in any manner grant to or confer upon any
other holder of a warrant any right or benefit that has the effect of
establishing rights or otherwise benefiting the holder of any such warrant, in
their capacity as holder of such warrant, in a manner more favorable than the
rights and benefits established in favor of the Holder (“Additional Rights”)
then, in each case, the Holder shall automatically and without further action on
behalf of Holder or Company receive substantially the same rights and benefits
as the Additional Rights afforded to such other holder of a warrant.
15. Registry of Warrant. Company shall maintain a registry showing the name and
address of the registered Holder of this Warrant. This Warrant may be
surrendered for exchange or exercise, in accordance with its terms, at such
office or agency of Company, and Company and Holder shall be entitled to rely in
all respects, prior to written notice to the contrary, upon such registry.

 

 

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16. Loss, Theft, Destruction or Mutilation of Warrant. Upon receipt by Company
of evidence reasonably satisfactory to it of the loss, theft, destruction or
mutilation of this Warrant, and, in the case of loss, theft, or destruction, of
indemnity reasonably satisfactory to it, and, if mutilated, upon surrender and
cancellation of this Warrant, Company will execute and deliver a new Warrant,
having terms and conditions substantially identical to this Warrant, in lieu
hereof.
17. Definitions. For purposes of this Warrant, the following terms have the
following meanings:
“Affiliate” of any specified Person means any other Person directly or
indirectly controlling or controlled by or under direct or indirect common
control with such specified Person. For the purposes of this definition,
“control” when used with respect to any specified Person means the power to
direct the management and policies of such Person, directly or indirectly,
whether through the ownership of voting securities, by contract or otherwise;
and the terms “controlling” and “controlled” have meanings correlative to the
foregoing.
“Board” means the board of directors of Company.
“Capital Stock” of any person means any and all shares, interests,
participations, rights or other equivalents (however designated) of corporate
stock or other equity participations, including partnership interests, whether
general or limited, of such person and any rights (other than debt securities
convertible and exchangeable into an equity interest), warrants or options to
acquire an equity interest in such person.
“Convertible Securities” means any securities (directly or indirectly)
convertible into or exchangeable for Common Stock, but excluding Options.
“Early Termination Event” means any consummation of (a) any recapitalization,
reclassification or change of Common Stock (other than changes resulting from a
subdivision or combination) as a result of which Common Stock would be converted
into cash, or (b) any consolidation or merger involving Company pursuant to
which Common Stock will be converted into cash; provided that in the case of
either (a) or (b) of this definition, the applicable transaction is an all-cash
transaction, and each holder of Common Stock receives an amount less than the
Trigger Price.
“Exercise Date” means, for any given exercise of this Warrant, the date on which
the conditions to such exercise as set forth in Section 2 shall have been
satisfied at or prior to 5:00 p.m., Pacific time, on a Business Day, including,
without limitation, the receipt by Company of the Exercise Agreement, the
Warrant and the Aggregate Exercise Price.
“Fundamental Change” means the occurrence after the time of the Issue Date, the
following:
(a) any “person” or “group” (as such terms are used in Sections 13(d) and 14(d)
of the Exchange Act or any successor provisions to either of the foregoing),
including any group acting for the purpose of acquiring, holding, voting or
disposing of securities within the meaning of Rule 13d-5(b)(1) under the
Exchange Act, becomes the “beneficial owner” (as defined in Rule 13d-3 under the
Exchange Act, except that a person will be deemed to have “beneficial ownership”
of all shares that any such person has the right to acquire, whether such right
is exercisable immediately or only after the passage of time), directly or
indirectly, of 50% or more of the total voting power of Company’s Voting Stock
(other than as a result of any merger, share exchange, transfer of assets or
similar transaction solely for the purpose of changing Company’s jurisdiction of
incorporation and resulting in a reclassification, conversion or exchange of
outstanding shares of Common Stock solely into shares of Common Stock of the
surviving entity); or

 

 

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(b) consummation of (A) any recapitalization, reclassification or change of
Common Stock (other than changes resulting from a subdivision or combination) as
a result of which Common Stock would be converted into, or exchanged for, stock,
other securities, other property or assets, or (B) any statutory share exchange,
consolidation or merger involving Company pursuant to which Common Stock will be
converted into cash, securities or other property, or (C) any sale, transfer,
assignment, lease, conveyance or other disposition, directly or indirectly, of
all or substantially all Company’s assets and the assets of Company’s
Subsidiaries, considered as a whole (other than a disposition of such assets as
an entirety or virtually as an entirety to a wholly-owned Subsidiary) shall have
occurred, provided that the following shall not be a Fundamental Change:
(i) any transaction pursuant to which holders of Company’s Capital Stock
immediately prior to the transaction are entitled to exercise, directly or
indirectly, 50% or more of the total voting power of all shares of Capital Stock
entitled to vote generally in the election of directors of the continuing or
surviving Person immediately after the transaction; or
(ii) any merger, share exchange, transfer of assets or similar transaction
solely for the purpose of changing Company’s jurisdiction of incorporation and
resulting in a reclassification, conversion or exchange of outstanding shares of
common stock solely into shares of common stock of the surviving entity; or
(c) during any period of two consecutive years, individuals who at the beginning
of such period constituted the Board of Directors (together with any new
directors whose nomination, election or appointment by such board or whose
nomination for election by Company’s stockholders was approved by a vote of a
majority of the directors then still in office who were either directors at the
beginning of such period or whose election, nomination or appointment was
previously so approved) cease for any reason to constitute 50% or more of the
Board of Directors then in office; or
(d) Company’s stockholders shall have approved any plan of liquidation or
dissolution; or
(e) the Common Stock (or other common stock into which the Securities are then
convertible pursuant to the terms of this Indenture) ceases to be listed on the
New York Stock Exchange, the Nasdaq Global Select Market, the Nasdaq Global
Market or the NYSE Amex (or their respective successors).
“Independent Appraiser” means a nationally recognized or major regional
investment banking firm or firm of independent certified public accountants of
recognized standing (which may be the firm that regularly examines the financial
statements of Company) that is regularly engaged in the business of appraising
the Capital Stock or assets of corporations or other entities as going concerns,
and which is not affiliated with either Company or the Holder of any Warrant.
“Options” means any warrants or other rights or options to subscribe for or
purchase Common Stock or Convertible Securities.

 

 

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“Per Share Market Value” means on any particular date (a) the last sale price
per share of the Common Stock on such date on the NYSE Amex (or their respective
successors) or another registered national stock exchange on which the Common
Stock is then listed, or if there is no such price on such date, then the
closing bid price or last sale price, as applicable, on such exchange or
quotation system on the date nearest preceding such date, or (b) if the Common
Stock is not listed then on the NYSE Amex (or their respective successors). or
any registered national stock exchange, the closing bid price or last sale
price, as applicable, for a share of Common Stock in the over the counter
market, as reported by the OTC Bulletin Board or in the National Quotation
Bureau Incorporated or similar organization or agency succeeding to its
functions of reporting prices) at the close of business on such date, or (c) if
the Common Stock is not then reported by the OTC Bulletin Board or the National
Quotation Bureau Incorporated (or similar organization or agency succeeding to
its functions of reporting prices), then the average of the “Pink Sheet” quotes
for the five (5) Trading Days preceding such date of determination, or (d) if
the Common Stock is not then publicly traded the fair market value of a share of
Common Stock as determined by an Independent Appraiser mutually agreeable to
Company and the Holder; provided, that all determinations of the Per Share
Market Value shall be appropriately adjusted for any stock dividends, stock
splits or other similar transactions during such period. The determination of
fair market value by an Independent Appraiser shall be based upon the fair
market value of Company determined on a going concern basis as between a willing
buyer and a willing seller and taking into account all relevant factors
determinative of value, and shall be final and binding on all parties. In
determining the fair market value of any shares of Common Stock, no
consideration shall be given to any restrictions on transfer of the Common Stock
imposed by agreement or by federal or state securities laws, or to the existence
or absence of, or any limitations on, voting rights.
“Person” means any individual, sole proprietorship, partnership, limited
liability company, corporation, joint venture, trust, incorporated organization
or government or department or agency thereof.
“Trading Day” means a day on which the principal Trading Market is open for
trading.
“Trading Market” means any of the following markets or exchanges on which the
Common Shares are listed or quoted for trading on the date in question: the NYSE
AMEX, the Nasdaq Capital Market, the Nasdaq Global Market, the Nasdaq Global
Select Market or the New York Stock Exchange (or any successors to any of the
foregoing).
“Voting Stock” of any person means Capital Stock of such person which ordinarily
has voting power for the election of directors (or persons performing similar
functions) of such person, whether at all times or only for so long as no senior
class of securities has such voting power by reason of any contingency.
“VWAP” means, for any date, the price determined by the first of the following
clauses that applies: (a) if the Common Shares are then listed or quoted on a
Trading Market, the daily volume weighted average price of the Common Shares for
such date (or the nearest preceding date) on the Trading Market on which the
Common Shares are then listed or quoted as reported by Bloomberg L.P. (based on
a Trading Day from 9:30 a.m. (New York City time) to 4:02 p.m. (New York City
time)), (b) if the OTC Bulletin Board is not a Trading Market, the volume
weighted average price of the Common Shares for such date (or the nearest
preceding date) on the OTC Bulletin Board, (c) if the Common Shares are not then
listed or quoted for trading on the OTC Bulletin Board and if prices for the
Common Shares are then reported in the “Pink Sheets” published by Pink OTC
Markets, Inc. (or a similar organization or agency succeeding to its functions
of reporting prices), the most recent bid price per Common Share so reported, or
(d) in all other cases, the fair market value of a Common Share as determined by
an Independent Appraiser selected in good faith by the holders of a majority in
interest of the Warrants then outstanding and reasonably acceptable to the
Company, the fees and expenses of which shall be paid by the Company.

 

 

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18. Miscellaneous.
(a) Issue Date. The provisions of this Warrant shall be construed and shall be
given effect in all respect as if it had been issued and delivered by Company on
April 15, 2011.
(b) Successors. This Warrant shall be binding upon any successors or assigns of
Company.
(c) Headings. The headings used in this Warrant are used for convenience only
and are not to be considered in construing or interpreting this Warrant.
(d) Saturdays, Sundays, Holidays. If the last or appointed day for the taking of
any action or the expiration of any right required or granted herein shall be a
Saturday or a Sunday or shall be a legal holiday in the State of New York, then
such action may be taken or such right may be exercised on the next succeeding
day not a legal holiday.
(e) Attorney’s Fees. In the event of any dispute between the parties concerning
the terms and provisions of this Warrant, the party prevailing in such dispute
shall be entitled to collect from the other party all costs incurred in such
dispute, including reasonable attorney’s fees.
19. No Impairment. Company will not, by amendment of its Certificate of
Incorporation or any other voluntary action, avoid or seek to avoid the
observance or performance of any of the terms of this Warrant, but will at all
times in good faith assist in the carrying out of all such terms and in the
taking of all such action as may be necessary or appropriate in order to protect
the rights of Holder against impairment.
20. Addresses. Any notice required or permitted hereunder shall be in writing
and shall be mailed by overnight courier, registered or certified mail, return
receipt requested, and postage prepaid, or otherwise delivered by hand or by
messenger, addressed as set forth below, or at such other address as Company or
Holder shall have furnished to the other party in accordance with the delivery
instructions set forth in this Section 20.

         
 
  If to Company:   Grubb & Ellis Company
1551 N. Tustin Ave., Suite 300
Santa Ana, CA 92705
Attn: Chief Financial Officer
 
       
 
  With Copies to:   Zukerman, Gore, Brandeis & Crossman, LLP
875 Third Avenue
New York, NY 10022
Attn: Clifford A. Brandeis
 
       
 
  If to Holder:   [_____]
Attn: [_____]
 
       
 
  With Copies to:   Skadden, Arps, Slate, Meagher & Flom LLP
300 South Grand Avenue, Suite 3400
Los Angeles, California 90071
Attn: Rick Madden and Kristine Dunn

 

 

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If mailed by registered or certified mail, return receipt requested, and postage
prepaid, notice shall be deemed to be given five (5) days after being sent, and
if sent by overnight courier, by hand or by messenger, notice shall be deemed to
be given when delivered (if on a business day, and if not, on the next business
day).
21. WAIVER OF JURY TRIAL. EACH OF THE PARTIES HERETO HEREBY WAIVES TO THE
FULLEST EXTENT PERMITTED BY APPLICABLE LAW, ANY RIGHT IT MAY HAVE TO A TRIAL BY
JURY IN RESPECT OF ANY LITIGATION DIRECTLY OR INDIRECTLY ARISING OUT OF, UNDER
OR IN CONNECTION WITH THIS WARRANT OR THE WARRANT SHARES.
22. GOVERNING LAW. THIS WARRANT SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE
WITH THE LAWS OF THE STATE OF NEW YORK, WITHOUT GIVING EFFECT TO THE CONFLICTS
OF LAWS PRINCIPLES THEREOF THAT WOULD REQUIRE THE APPLICATION OF ANOTHER STATE’S
LAWS.
[Remainder of page intentionally left blank]

 

 

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IN WITNESS WHEREOF, Company has caused this Warrant to be executed by its
officer thereunto duly authorized.
GRUBBS & ELLIS COMPANY

             
By:
                     
 
  Name:        
 
  Title:  
 
   
 
     
 
   

Dated as of  _____,  _____.

 

 

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                      Accepted and Agreed to    
 
                    By: [__________________________]    
 
               
 
  By:                          
 
      Name:        
 
      Title:  
 
   
 
         
 
   

 

 

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NOTICE OF EXERCISE
To:
[Name of Company]

                                        

                                        

                                        

2.   The undersigned Warrantholder (“Holder”) elects to acquire shares of the
Common Stock (the “Common Stock”) of  _____  (the “Company”), pursuant to the
terms of the Stock Purchase Warrant issued effective [•] (the “Warrant”).   3.  
Holder exercises its rights under the Warrant as set forth below:

  (     )   Holder elects to purchase  _____  shares of Common Stock as provided
in Section 3(a) and tenders herewith a check in the amount of $_____  as payment
of the purchase price.

  (     )   Holder elects to convert the purchase rights into shares of Common
Stock as provided in Section 3(b) of the Warrant.

  (     )   Holder elects to convert the purchase rights into shares of Common
Stock as provided in Section 3(c) of the Warrant.

4.   Holder surrenders the Warrant with this Notice of Exercise.

Holder represents that it is acquiring the aforesaid shares of Common Stock for
investment and not with a view to or for resale in connection with distribution
and that Holder has no present intention of distributing or reselling the
shares.
Please issue a certificate representing the shares of the Common Stock in the
name of Holder or in such other name as is specified below:

             
 
  Name:        
 
     
 
   
 
           
 
  Address:        
 
     
 
   
 
           
 
  Taxpayer I.D.:        
 
     
 
   

 

 

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                      [NAME OF HOLDER]    
 
               
 
  By:                          
 
      Name:        
 
      Title:  
 
   
 
         
 
   
 
                    Date: _______ ___, 20____    

 

 

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ANNEX A
FORM OF
CAPITALIZATION TABLE
(as of June 30, 2011)

                                              Number of Shares       Amount    
        Outstanding (or Shares   Class of Stock or Equity   Authorized    
Amount     underlying such equity   Interest   (if applicable)     Outstanding  
  interest)  
Common Stock; $0.01 par value
    200,000,000       69,921,581 (1)     69,921,581  
Preferred Stock; $0.01 par value
    19,000,000       0       0  
12% Cumulative Participating Perpetual Convertible Preferred Stock; $0.01 par
value
    1,000,000       965,700       58,527,214  
Options
    (2)       321,400       321,400  
Unvested Restricted Stock
    (2)       4,257,843       4,257,843  
Phantom Stock
    NA     4,058,251       4,058,251  
Treasury Stock
    NA     1,267,974       1,267,974  
7.95% convertible senior securities due 2015; convertible at the rate of 445.583
Shares for each $1,000 principal amount
    NA   $ 31,500,000       14,035,865  

      (1)   Includes Unvested Restricted Stock set forth on this table, but does
not include Phantom Stock set forth in this table.   (2)   590,175 Shares
remaining available for future issuance under previously authorized equity
compensation plans.

 

 

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EXHIBIT B
FORM OF DAYMARK SALE AGREEMENT
[Provided under separate cover]

 

 

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EXHIBIT C
FORM OF GUARANTY AND LIEN RELEASE
[Provided under separate cover]