SUBORDINATION
AGREEMENT, dated as of September 30, 2009 (this “
Agreement ”), among KOJAIAN MANAGEMENT
CORPORATION, a Michigan corporation (the “ Subordinated
Lender ”), GRUBB & ELLIS COMPANY (the “
Borrower ”), and DEUTSCHE BANK TRUST COMPANY
AMERICAS, as administrative agent, in its capacity as
administrative agent under the Credit Agreement (as defined below)
(the “ Administrative Agent ”), for the
benefit of the Lender Parties (as defined below).
Reference
is made to the Third Amended and Restated Credit Agreement dated as
of May 18, 2009 (as amended, amended and restated,
supplemented or otherwise modified from time to time, the “
Credit Agreement ”) by and among the Borrower,
the guarantors named therein, the Administrative Agent, the
financial institutions identified therein as lender parties (the
“ Lender Parties ”), Deutsche Bank Trust
Company Americas, as syndication agent, and Deutsche Bank
Securities Inc., as sole book running manager and sole lead
arranger.
Terms
used herein and not otherwise defined herein shall have the
meanings assigned to such terms in the Credit Agreement. All
references to articles, sections, exhibits and schedules shall be
deemed references to articles and sections of, and exhibits and
schedules to, this Agreement, unless the context shall otherwise
require.
The
ability under the Credit Agreement of the Borrower to incur
Subordinated Debt to the Subordinated Lender is conditioned upon
the execution and delivery by the Subordinated Lender and the
Borrower of an agreement in the form hereof pursuant to which the
Subordinated Lender agrees to subordinate its rights with respect
to the Subordinated Obligations (as defined below) to the rights of
the Senior Lenders (as defined below) under the Credit Agreement,
all on the terms set forth herein.
Accordingly,
the Subordinated Lender, the Borrower and the Administrative Agent,
on behalf of itself and each Senior Lender (and each of their
respective successors or assigns), hereby agrees as
follows:
SECTION
1. Subordination . (a) The Subordinated Lender hereby
agrees that all its right, title and interest in and to the
Subordinated Obligations (as defined below) shall be subordinate
and junior in right of payment to the rights of the Lender Parties
and the Administrative Agent (each, as defined in the Credit
Agreement and collectively, the “ Senior
Lenders ”) in respect of the Obligations of the
Borrower and the Guarantors arising under the Credit Agreement and
the other Loan Documents, including the payment of principal,
premium (if any), interest (including interest accruing on or after
the filing of any petition in bankruptcy or for any reorganization
relating to the Borrower or any Subsidiary whether or not a claim
for post-filing interest is allowed or allowable in any such
proceeding), fees, charges, expenses, indemnities, reimbursement
obligations, Guarantees and all other amounts payable thereunder or
in respect thereof (collectively, the “ Senior
Obligations ”). For purposes hereof, “
Subordinated Obligations ” means all
obligations of the Borrower to the Subordinated Lender with respect
to that certain Senior Subordinated Convertible Note in the amount
of $5,000,000 dated September 30, 2009 executed by the
Borrower in favor of the Subordinated Lender and all replacements
thereof and substitutions therefor (the “ Subordinated
Note ”).
(b) The
Borrower and the Subordinated Lender agree that no payment (whether
directly, by purchase, redemption or exercise of any right of
setoff or otherwise) in respect of the Subordinated Obligations,
whether as principal, interest or otherwise, and whether in cash,
securities or other property, shall be made by or on behalf of the
Borrower or received, accepted or demanded, directly or indirectly,
by or on behalf of the Subordinated Lender at any time prior to the
indefeasible payment in
full in cash of
all Senior Obligations (other than indemnification obligations and
other contingent obligations not then due and payable) (“
Payment in Full of the Senior Obligations ”).
For avoidance of doubt, the Senior Obligations shall be deemed to
have been paid “in full” for purposes of the foregoing
definition upon the payment of the DPO Amount subject to and in
accordance with the provisions of Section 2.06(a)(ii) of the
Credit Agreement.
(c) Upon
any distribution of the assets of the Borrower or upon any
dissolution, winding up, liquidation or reorganization of the
Borrower, whether in bankruptcy, insolvency, reorganization,
arrangement or receivership proceedings or otherwise, or upon any
assignment for the benefit of creditors or any other marshalling of
the assets and liabilities of the Borrower, or
otherwise:
(i) the Senior
Lenders shall first be entitled to Payment in Full of the Senior
Obligations before the Subordinated Lender shall be entitled to
receive any payment on account of the Subordinated Obligations of
the Borrower, whether of principal, interest or otherwise;
and
(ii) any payment
by, or on behalf of, or distribution of the assets of, the Borrower
of any kind or character, whether in cash, securities or other
property, to which the Subordinated Lender would be entitled except
for the provisions of this Section 1 shall be paid or
delivered by the person making such payment or distribution
(whether a trustee in bankruptcy, a receiver, custodian or
liquidating trustee or otherwise) directly to the Administrative
Agent, for the benefit of the Senior Lenders as contemplated by the
Loan Documents, until the indefeasible payment in full of all
Senior Obligations (other than indemnification obligations and
other contingent obligations not then due and payable).
Prior to
Payment in Full of the Senior Obligations, the Subordinated Lender
agrees not to ask, demand, sue for or take or receive from the
Borrower in cash, securities or other property or by setoff,
purchase or redemption (including, without limitation, from or by
way of collateral), payment of all or any part of the Subordinated
Obligations. In addition, the Subordinated Lender agrees that in
connection with any proceeding involving the Borrower under any
bankruptcy, insolvency, reorganization, arrangement, receivership
or similar law (i) the Administrative Agent is irrevocably
authorized and empowered (in its own name or in the name of the
Subordinated Lender or otherwise), but shall have no obligation, to
demand, sue for, collect and receive every payment or distribution
referred to in the preceding sentence and give acquittance therefor
and to file claims and proofs of claim and take such other action
(including, without limitation, voting the applicable Subordinated
Obligations and enforcing any security interest or other Lien
securing payment of such Subordinated Obligations) as the
Administrative Agent may deem necessary or advisable for the
exercise or enforcement of any of the rights or interest of the
Senior Lenders and (ii) the Subordinated Lender shall duly and
promptly take such action as the Administrative Agent may request
to (A) collect amounts in respect of the applicable
Subordinated Obligations for the account of the Senior Lenders and
to file appropriate claims or proofs of claim in respect of such
Subordinated Obligations, (B) execute and deliver to the
Administrative Agent such irrevocable powers of attorney,
assignments or other instruments as the Administrative Agent may
request in order to enable the Administrative Agent to enforce any
and all claims with respect to, and any security interests and
other Liens securing payment of, the applicable Subordinated
Obligations and (C) collect and receive any and all payments
or distributions which may be payable or deliverable upon or with
respect to the applicable Subordinated Obligations. A copy of this
Agreement may be filed with any court as evidence of the Senior
Lenders’ right, power and authority hereunder.
(d) In
the event that any payment by, or on behalf of, or distribution of
the assets of, the Borrower of any kind or character, whether in
cash, securities or other property, and whether directly, by
purchase, redemption, exercise of any right of setoff or otherwise,
shall be received by or on behalf of the Subordinated Lender or any
Affiliate thereof at a time when such payment is prohibited by
this
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Agreement, such
payment or distribution shall be held by the Subordinated Lender or
Affiliate in trust (segregated from other property of the
Subordinated Lender or Affiliate) for the benefit of, and shall
forthwith be paid over to, the Administrative Agent, for the
benefit of the Senior Lenders (pro rata, in accordance with the
respective amounts of the Senior Obligations owed to each of the
Senior Lenders), until the Payment in Full of the Senior
Obligations.
(e) Subject
to the prior Payment in Full of the Senior Obligations, the
Subordinated Lender shall be subrogated to the rights of the Senior
Lenders to receive payments or distributions in cash, securities or
other property of the Borrower applicable to the Senior Obligations
until Payment in Full of the Senior Obligations, and, as between
and among the Borrower, its creditors (other than the Senior
Lenders) and the Subordinated Lender, no such payment or
distribution made to the Senior Lenders by virtue of this Agreement
that otherwise would have been made to the Subordinated Lender
shall be deemed to be a payment by the Borrower on account of the
Subordinated Obligations, it being understood that the provisions
of this paragraph (e) are intended solely for the purpose of
defining the relative rights of the Subordinated Lender and the
Senior Lenders.
(f) Without
the prior written consent of the Administrative Agent, the Borrower
shall not give, or permit to be given, and the Subordinated Lender
shall not receive, accept or demand, (i) any security of any nature
whatsoever for any Subordinated Obligations on any property or
assets, whether now existing or hereafter acquired, of the Borrower
or any subsidiary of the Borrower, unless such security shall by
its terms be subject to enforcement and collection by the
Administrative Agent in connection with any action in respect of
enforcement or collection taken under paragraph (c) above or
(ii) any guaranty, of any nature whatsoever, by the Borrower
or any subsidiary of the Borrower, of any Subordinated Obligations
other than any guaranty subordinated to the Senior Obligations on
terms substantially identical to (and no less favorable in any
significant respect to the Senior Lenders than) those hereof. The
Subordinated Lender agrees that all the proceeds of any such
security or guaranty shall be subject to the provisions hereof with
respect to payments and other distributions in respect of the
Subordinated Obligations.
(g) The
Subordinated Lender and the Borrower agree that all Subordinated
Obligations shall at all times be evidenced by the Subordinated
Note, which the Administrative Agent has reviewed and approved. The
Subordinated Note shall be subject in all respects to the terms of
this Agreement and shall contain the following legend:
“Notwithstanding anything contained herein
to the contrary, neither the principal of nor the interest on, nor
any other amounts payable in respect of, the indebtedness created
or evidenced by this instrument of record shall become due or be
paid or payable, except to the extent permitted under the
Subordination Agreement dated as of September 30, 2009 among
the Subordinated Lender, the Borrower and Deutsche Bank Trust
Company Americas, in its capacity as Administrative Agent, which
Subordination Agreement is incorporated herein with the same effect
as if fully set forth herein.”.
(h) The
Subordinated Lender agrees that, except for claims submitted in any
proceeding contemplated by Section 1(c) hereof, it will not, prior
to the Payment in Full of the Senior Obligations, take any action
to cause any Subordinated Obligations to become payable prior to
their scheduled maturity (which, in the case of any demand notes,
shall be the date demand is made thereunder) or exercise any
remedies or take any action or proceeding to enforce any
Subordinated Obligation if the payment of such Subordinated
Obligation is then prohibited by this Agreement, and the
Subordinated Lender further agrees not to file, or to join with any
other creditors of the Borrower in filing, any petition commencing
any bankruptcy, insolvency, reorganization, arrangement or
receivership proceeding or any assignment for the benefit of
creditors against or in respect of the Borrower or any other
marshalling of
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the assets and
liabilities of the Borrower ( provided that this prohibition
shall in no event be construed so as to limit the Subordinated
Lender’s right to cause any Subordinated Obligations to
become payable prior to their scheduled maturity if all the
outstanding Advances under the Credit Agreement have been declared
due and payable prior to their scheduled maturity dates). The
Subordinated Lender further agrees, to the fullest extent permitted
under applicable law, that it will not cause the Borrower to file
any such petition, commence any such proceeding or make any such
assignment referred to above until the Payment in Full of the
Senior Obligations.
SECTION
2. Waivers and Consents . (a) The Subordinated Lender
waives the right to compel that the Collateral or any other assets
or property of the Borrower or the assets or property of any
Guarantor of the Senior Obligations or any other Person be applied
in any particular order to discharge
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