SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
SCHEDULE 13D
Under the Securities Exchange Act of 1934
(Amendment No. 7)*
GRUBB & ELLIS COMPANY
(Name of Issuer)
COMMON STOCK
(Title of Class of Securities)
40009-52-0
(CUSIP Number)
Martin H. Neidell
Stroock & Stroock & Lavan
7 HANOVER SQUARE, NEW YORK, NEW YORK 10004 212-806-5836
(Name, Address and Telephone Number of Person
Authorized to Receive Notices and Communications)
OCTOBER 22, 1996
(Date of Event which Requires Filing of this Statement)
If the filing person has previously filed a statement on Schedule 13G to report
the acquisition which is the subject of this Schedule 13D, and is filing this
schedule because of Rule 13d-1(b)(3) or (4), check the following box / /.
NOTE: Six copies of this statement, including all exhibits, should be
filed with the Commission. See Rule 13d-1(a) for other parties to whom copies
are to be sent.
*The remainder of this cover page shall be filled out for a reporting person's
initial filing on this form with respect to the subject class of securities, and
for any subsequent amendment containing information which would alter
disclosures provided in a prior cover page.
The information required on the remainder of this cover page shall not be deemed
to be "filed" for the purpose of Section 18 of the Securities Exchange Act of
1934 ("Act") or otherwise subject to the liabilities of that section of the Act
but shall be subject to all other provisions of the Act (however, see the
Notes).
Page 1 of _____ Pages
<PAGE>
SCHEDULE 13D
CUSIP No. 40009-52-0 Page 2 of Pages
1 NAME OF REPORTING PERSON
S.S. OR I.R.S. IDENTIFICATION NO. OF ABOVE PERSON
Warburg, Pincus Investors, L.P.
2 CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP* (a)| |
(b)| X |
3 SEC USE ONLY
4 SOURCE OF FUNDS*
WC
5 CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT TO
ITEMS 2(d) OR 2(e) | |
6 CITIZENSHIP OR PLACE OF ORGANIZATION
Delaware
NUMBER OF 7 SOLE VOTING POWER
SHARES
BENEFICIALLY 8 SHARED VOTING POWER 12,790,403
OWNED BY
EACH 9 SOLE DISPOSITIVE POWER
REPORTING
PERSON 10 SHARED DISPOSITIVE POWER
WITH 12,790,403
11 AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON
12,790,403
12 CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES CERTAIN SHARES*
| |
13 PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11)
73.4%
14 TYPE OF REPORTING PERSON*
PN
<PAGE>
SCHEDULE 13D
CUSIP No. 40009-52-0 Page 3 of Pages
1 NAME OF REPORTING PERSON
S.S. OR I.R.S. IDENTIFICATION NO. OF ABOVE PERSON
2 E. M. Warburg, Pincus & Co., Inc.
CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP*
(a)| |
3 SEC USE ONLY
4 SOURCE OF FUNDS*
Not Applicable
5 CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT TO
ITEMS 2(d) OR 2(e) / /
6 CITIZENSHIP OR PLACE OF ORGANIZATION
Delaware
NUMBER OF 7 SOLE VOTING POWER
SHARES
BENEFICIALL 8 SHARED VOTING POWER 12,790,403
OWNED BY
EACH 9 SOLE DISPOSITIVE POWER
REPORTING
PERSON 10 SHARED DISPOSITIVE POWER 12,790,403
WITH
11 AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON
12,790,403
12 CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES CERTAIN SHARES*
| |
13 PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11)
73.4%
14 TYPE OF REPORTING PERSON*
CO
<PAGE>
SCHEDULE 13D
CUSIP No. 40009-52-0 Page 4 of Pages
1 NAME OF REPORTING PERSON
S.S. OR I.R.S. IDENTIFICATION NO. OF ABOVE PERSON
E.M. Warburg, Pincus & Company
2 CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP*
(a)| |
(b)| X |
3 SEC USE ONLY
4 SOURCE OF FUNDS*
Not Applicable
5 CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT TO
ITEMS 2(d) OR 2(e)
| |
6 CITIZENSHIP OR PLACE OF ORGANIZATION
New York
NUMBER OF 7 SOLE VOTING POWER
SHARES
BENEFICIALLY 8 SHARED VOTING POWER 12,790,403
OWNED BY
EACH 9 SOLE DISPOSITIVE POWER
REPORTING
PERSON 10 SHARED DISPOSITIVE POWER 12,790,403
WITH
11 AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON
12,790,403
12 CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES CERTAIN SHARES*
| |
13 PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11)
73.4%
14 TYPE OF REPORTING PERSON*
PN
<PAGE>
SCHEDULE 13D
CUSIP No. 40009-52-0 Page 5 of Pages
1 NAME OF REPORTING PERSON
S.S. OR I.R.S. IDENTIFICATION NO. OF ABOVE PERSON
Warburg, Pincus & Co.
2 CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP*
(a)| |
(b)| X |
3 SEC USE ONLY
4 SOURCE OF FUNDS*
Not Applicable
5 CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT TO
ITEMS 2(d) OR 2(e) | |
6 CITIZENSHIP OR PLACE OF ORGANIZATION
New York
NUMBER OF 7 SOLE VOTING POWER
SHARES
BENEFICIALLY 8 SHARED VOTING POWER 12,790,403
OWNED BY
EACH 9 SOLE DISPOSITIVE POWER
REPORTING
PERSON 10 SHARED DISPOSITIVE POWER 12,790,403
WITH
11 AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON
12,790,403
12 CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES CERTAIN SHARES*
| |
13 PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11)
73.4%
14 TYPE OF REPORTING PERSON*
PN
<PAGE>
This Amendment No. 7 to Schedule 13D is being filed on behalf of Warburg,
Pincus Investors, L.P. ("WPI") and certain of its affiliated entities (the
"Reporting Entities") relating to the common stock, par value $.01 per share
(the "Common Stock"), of Grubb & Ellis Company, a Delaware corporation (the
"Company"). Terms defined in the original Schedule 13D, as amended, shall have
the same meaning when used herein. This amendment is being filed pursuant to
Rule 13d-2 of the General Rules and Regulations under the Securities Exchange
Act of 1934, as amended.
ITEM 2. IDENTITY AND BACKGROUND.
Schedule I attached hereto sets forth certain additional information with
respect to each director and executive officer of E.M. Warburg and each general
partner of WPI, WPC and EMW.
ITEM 3. SOURCE AND AMOUNT OF FUNDS OR OTHER CONSIDERATION.
The aggregate purchase price of the Securities (as hereinafter defined) of
the Company acquired by WPI was $23 million, plus accrued interest on notes.
These funds were obtained from the general funds of WPI.
ITEM 4. PURPOSE OF TRANSACTION.
The Securities were acquired for investment purposes. The Reporting
Entities may from time to time acquire additional securities of the Company
through open market or privately negotiated transactions depending on market
conditions and other considerations which the Reporting Entities may deem
relevant. The Reporting Entities intend to review their investment in the
Company on a continuing basis and, depending upon price and availability of
securities of the Company, subsequent developments affecting the Company, the
Company's business and prospects, general stock market and economic conditions,
tax considerations and other factors deemed relevant, may decide to increase or
decrease the size of their investment in the Company.
ITEM 5. INTEREST IN SECURITIES OF THE ISSUER.
On October 22, 1996, WPI acquired from The Prudential Insurance Company of
America ("Prudential"), pursuant to a Sale and Assignment Agreement the
following securities (the "Securities") of the Company owned by Prudential: (a)
$5,000,000 Principal Amount Amended and Restated Revolving Credit Note due
November 1, 1999; (b) $6,500,000 Amended and Restated 9.90% Senior Note due
November 1, 1998; (c) $3,500,000 Principal Amount Amended and Restated 9.90%
Senior Note due November 1, 1998; (d) $10,900,834.33 Principal Amount Amended
and Restated 10.65% Subordinated Payment-In-Kind Note due November 1, 2001; (e)
$1,520,058.79 Principal Amount 11.65% Subordinated Payment-In-Kind Note due
November 1, 2001; (f) $723,517.03 Principal Amount 11.65% Subordinated
Payment-In-Kind Note due November 1, 2001; (g) 130,233 Shares of Junior
Convertible Preferred Stock; and (h) Warrants to subscribe for an aggregate of
350,000 shares of Common Stock.
As the result of the foregoing transaction, WPI is the beneficial owner of
12,790,403 shares of Common Stock through its direct ownership of (i) 4,277,433
shares of Common Stock, (ii) 127,150 shares of Senior Preferred Stock which are
convertible into an aggregate of 4,828,548 shares of Common Stock, (iii) 128,266
shares of Junior Convertible Preferred Stock which are convertible into an
aggregate of 2,322,064 shares of Common Stock, and (iv) warrants to purchase an
aggregate of 1,362,358 shares of Common Stock. The shares of Convertible
Preferred Stock and warrants, upon conversion and exercise, when combined with
the Common Stock currently held by WPI, represent approximately 73.4% of the
shares of Common Stock calculated in accordance with Rule 13d-3(d)(1)(i). WPC,
EMW and E.M. Warburg may be deemed to own beneficially the shares of Common
Stock beneficially owned by WPI.
ITEM 6. CONTRACTS, ARRANGEMENTS, UNDERSTANDINGS OR RELATIONSHIPS WITH RESPECT
TO SECURITIES OF THE ISSUER.
The Stockholders Agreement was amended to eliminate Prudential as a party
thereto. Prudential has agreed to convert its holdings of Junior Convertible
Preferred Stock of the Company into Common Stock of the Company if WPI converts
all its holdings of Preferred Stock to Common Stock.
Pursuant to an Option Agreement dated October 21, 1996, WPI has granted to
the Company the option to purchase all the Securities acquired by it from
Prudential at the purchase price paid by WPI to Prudential, together with
interest at the rate of 10% per annum through January 31, 1997 and 12% per annum
thereafter. The option expires April 16, 1997. WPI has agreed with the Company
that no interest or dividends will accrue or be due or payable on the Securities
during the term of the option. Upon the grant of the option, the Company
extended the expiration date of WPI's warrants to purchase in the aggregate
1,012,358 shares of Common Stock of the Company from January 29, 1998 to January
29, 2002.
The Sale and Assignment Agreement and Option Agreement are attached hereto
as exhibits and the statements contained herein with respect to such agreements
are qualified in their entirety by reference to the complete text of such
agreements.
ITEM 7. MATERIAL TO BE FILED AS EXHIBITS.
1. Sale and Assignment Agreement dated as of October 21,
1996 between Prudential and WPI.
2. Option Agreement dated as of October 21, 1996 between
the Company and WPI.
<PAGE>
SIGNATURE
After reasonable inquiry and to the best of my knowledge and belief, I
certify that the information set forth in this statement is true, complete and
correct.
WARBURG, PINCUS INVESTORS, L.P.
By: WARBURG, PINCUS & CO.,
General Partner
By:/S/ REUBEN S. LEIBOWITZ
Reuben S. Leibowitz, Partner
E. M. WARBURG, PINCUS & CO., INC.
By:/S/ REUBEN S. LEIBOWITZ
Reuben S. Leibowitz, Managing
Director
E. M. WARBURG, PINCUS & COMPANY
By:/S/ REUBEN S. LEIBOWITZ
Reuben S. Leibowitz, Partner
WARBURG, PINCUS & CO.
By:/S/ REUBEN S. LEIBOWITZ
Reuben S. Leibowitz, Partner
Dated: October 23, 1996
<PAGE>
EXHIBIT INDEX
EXHIBIT DESCRIPTION PAGE NO.
1 Sale and Assignment Agreement dated
as of October 21, 1996 between
Prudential and WPI.
2 Option Agrement dated as of October
21, 1996 between the Company and
WPI.
<PAGE>
SCHEDULE I
Set forth below is the name, position and present principal occupation of
each of the directors and executive officers of E. M. Warburg, Pincus & Co.,
Inc. ("EMW") and of each of the general partners of Warburg, Pincus Investors,
L.P. ("WPI"), E.M. Warburg Pincus & Company ("EMWP") and Warburg, Pincus & Co.
("WP"). EMW, EMWP, WPI, and WP are hereinafter collectively referred to as the
"Reporting Entities". Except as otherwise indicated, the business address of
each of such persons is 466 Lexington Avenue, New York, New York 10017, and each
of such persons is a citizen of the United States.
Directors and Executive Officers
OF E. M. WARBURG, PINCUS & CO., INC.
Present Principal Occupation
in Addition to Position with
EMW, if any, and Positions
Name and Position With the Reporting Entities
Lionel I. Pincus, Chairman Managing Partner, WP and EMWP;
of the Board and Chief Managing Partner, Pincus & Co.
Executive Officer (See Partners of WP.)
John L. Vogelstein, Vice Partner, WP and EMWP.
Chairman of the Board
John L. Furth, Vice Partner, WP and EMWP.
Chairman of the Board
Harold Brown, Senior Partner, WP and EMWP.
Managing Director
Rodman W. Moorhead III, Partner, WP and EMWP.
Senior Managing Director
Susan Black, Managing Partner, WP and EMWP.
Director
Christopher W. Brody, Partner, WP and EMWP.
Managing Director
Dale C. Christensen*,
Managing Director
- --------
* Citizen of Canada.
<PAGE>
Errol M. Cook, Partner, WP and EMWP.
Managing Director
W. Bowman Cutter, Partner, WP and EMWP.
Managing Director
Elizabeth B. Dater, Partner, WP and EMWP.
Managing Director
Stephen Distler, Partner, WP and EMWP.
Managing Director and
Treasurer
Louis G. Elson, Partner, WP and EMWP.
Managing Director
Stuart M. Goode, Partner, WP and EMWP.
Managing Director
Stewart K.P. Gross, Partner, WP and EMWP.
Managing Director
Patrick T. Hackett, Partner, WP and EMWP.
Managing Director
Jeffrey A. Harris, Partner, WP and EMWP.
Managing Director
Robert S. Hillas, Partner, WP and EMWP.
Managing Director
A. Michael Hoffman Partner, WP and EMWP.
Managing Director
William H. Janeway, Partner, WP and EMWP.
Managing Director
Douglas M. Karp, Partner, WP and EMWP.
Managing Director
Charles R. Kaye, Partner, WP and EMWP.
Managing Director
Richard H. King*,
Managing Director
Henry Kressel, Partner, WP and EMWP.
Managing Director
Joseph P. Landy, Partner, WP and EMWP.
- --------
* Citizen of United Kingdom.
<PAGE>
Managing Director
Sidney Lapidus, Partner, WP and EMWP.
Managing Director
Reuben S. Leibowitz, Partner, WP and EMWP.
Managing Director
Stephen J. Lurito, Partner, WP and EMWP.
Managing Director
Spencer S. Marsh III, Partner, WP and EMWP.
Managing Director
Edward J. McKinley, Partner, WP and EMWP.
Managing Director
Howard H. Newman, Partner, WP and EMWP.
Managing Director
Anthony G. Orphanos, Partner, WP and EMWP.
Managing Director
Dalip Pathak*,
Managing Director
Daphne D. Philipson, Partner, WP and EMWP.
Managing Director
Eugene L. Podsiadlo, Partner, WP and EMWP.
Managing Director
Ernest H. Pomerantz, Partner, WP and EMWP.
Managing Director
Arnold M. Reichman, Partner, WP and EMWP.
Managing Director
Roger Reinlieb, Partner, WP and EMWP.
Managing Director
John D. Santoleri, Partner, WP and EMWP.
Managing Director
Sheila N. Scott, Partner, WP and EMWP.
Managing Director
Dominic H. Shorthouse*,
Managing Director
- --------
* Citizen of United Kingdom.
<PAGE>
Peter Stalker III Partner, WP and EMWP.
Managing Director
David A. Tanner, Partner, WP and EMWP.
Managing Director
James E. Thomas, Partner, WP and EMWP.
Managing Director
Elizabeth H. Weatherman, Partner, WP and EMWP.
Managing Director
Joanne R. Wenig, Partner, WP and EMWP.
Managing Director
George U. Wyper, Partner, WP and EMWP.
Managing Director
<PAGE>
General Partners of
Warburg, Pincus & Co.
and
E.M. Warburg, Pincus & Company
Present Principal Occupation
in Addition to Position with
Warburg, Pincus & Co. and E.M.
Warburg, Pincus & Company and
Positions with the Reporting
Name Entities
Susan Black (See Directors and Executive
Officers of EMW.)
Christopher W. Brody (See Directors and Executive
Officers of EMW.)
Harold Brown (See Directors and Executive
Officers of EMW.)
Errol M. Cook (See Directors and Executive
Officers of EMW.)
W. Bowman Cutter (See Directors and Executive
Officers of EMW.)
Elizabeth B. Dater (See Directors and Executive
Officers of EMW.)
Stephen Distler (See Directors and Executive
Officers of EMW.)
Louis G. Elson (See Directors and Executive
Officers of EMW.)
John L. Furth (See Directors and Executive
Officers of EMW.)
Stuart M. Goode (See Directors and Executive
Officers of EMW.)
Stewart K.P. Gross (See Directors and Executive
Officers of EMW.)
Patrick T. Hackett (See Directors and Executive
Officers of EMW.)
Jeffrey A. Harris (See Directors and Executive
Officers of EMW.)
Robert S. Hillas (See Directors and Executive
Officers of EMW.)
A. Michael Hoffman (See Directors and Executive
Officers of EMW.)
William H. Janeway (See Directors and Executive
Officers of EMW.)
Douglas M. Karp (See Directors and Executive
Officers of EMW.)
Charles R. Kaye (See Directors and Executive
Officers of EMW.)
Henry Kressel (See Directors and Executive
Officers of EMW.)
Joseph P. Landy (See Directors and Executive
Officers of EMW.)
Sidney Lapidus (See Directors and Executive
Officers of EMW.)
Reuben S. Leibowitz (See Directors and Executive
Officers of EMW.)
Stephen J. Lurito (See Directors and Executive
Officers of EMW.)
Spencer S. Marsh III (See Directors and Executive
Officers of EMW.)
Edward J. McKinley (See Directors and Executive
Officers of EMW.)
Rodman W. Moorhead III (See Directors and Executive
Officers of EMW.)
Howard H. Newman (See Directors and Executive
Officers of EMW.)
Anthony G. Orphanos (See Directors and Executive
Officers of EMW.)
Daphne D. Philipson (See Directors and Executive
Officers of EMW.)
Lionel I. Pincus (See Directors and Executive
Officers of EMW.)
Eugene L. Podsiadlo (See Directors and Executive
Officers of EMW.)
Ernest H. Pomerantz (See Directors and Executive
Officers of EMW.)
Arnold M. Reichman (See Directors and Executive
Officers of EMW.)
Roger Reinlieb (See Directors and Executive
Officers of EMW.)
John D. Santoleri (See Directors and Executive
Officers of EMW.)
Sheila N. Scott (See Directors and Executive
Officers of EMW.)
Peter Stalker III (See Directors and Executive
Officers of EMW.)
David A. Tanner (See Directors and Executive
Officers of EMW.)
James E. Thomas (See Directors and Executive
Officers of EMW.)
John L. Vogelstein (See Directors and Executive
Officers of EMW.)
Elizabeth H. Weatherman (See Directors and Executive
Officers of EMW.)
Joanne R. Wenig (See Directors and Executive
Officers of EMW.)
George U. Wyper (See Directors and Executive
Officers of EMW.)
Pincus & Co.*
NL & Co.*
General Partner of
Warburg, Pincus Investors, L.P.
Warburg, Pincus & Co. (See General Partners of WP.)
- --------
* New York limited partnership; primary activity is ownership of
partnership interest in WP.
Exhibit 1
SALE AND ASSIGNMENT AGREEMENT dated as of October 21, 1996 between THE
PRUDENTIAL INSURANCE COMPANY OF AMERICA ("Seller") and WARBURG, PINCUS
INVESTORS, L.P. ("Buyer").
1. Subject to the terms and conditions hereof, on the Closing Date (as
defined below), Seller hereby agrees to sell, transfer and assign to Buyer,
without recourse, representation or warranty of any kind except as set forth
herein, and Buyer hereby agrees to purchase from Seller, the Securities for an
aggregate purchase price equal to $23,318,034.72 (the "Purchase Price"). For
purposes of this Agreement, "Securities" means (a) $5,000,000 Principal Amount
Amended and Restated Revolving Credit Note due November 1, 1999; (b) $6,500,000
Amended and Restated 9.90% Senior Note due November 1, 1998; (c) $3,500,000
Principal Amount Amended and Restated 9.90% Senior Note due November 1, 1998;
(d) $10,900,834.33 Principal Amount Amended and Restated 10.65% Subordinated
Payment-In-Kind Note due November 1, 2001; (e) $1,520,058.79 Principal Amount
11.65% Subordinated Payment-in-Kind Note, due November 1, 2001; (f) $723,517.03
Principal Amount 11.65% Subordinated Payment-In-Kind Note due November 1, 2001;
(g) 130,233 Shares of Junior Convertible Preferred Stock; (h) Restated Stock
Subscription Warrant No. 16 to Subscribe for 200,000 Shares of Common Stock; and
(i) New Stock Subscription Warrant No. 17 to Subscribe for 150,000 Shares of
Common Stock, all of Grubb & Ellis Company (the "Company") issued pursuant to
(i) that certain Senior Note, the Subordinated Note and Revolving Credit Note
Agreement between the Company and Seller, dated as of November 2, 1992, as
amended from time to time (the "Note Agreement") and (ii) that certain
Securities Purchase Agreement between the Company and Seller, dated as of
November 2, 1992 (the "Securities Purchase Agreement").
2. The purchase and sale of the Securities will take place on October
22, 1996 or such later date as the parties hereto shall mutually agree (the
"Closing Date") and on the Closing Date Seller will deliver the Securities to
Buyer, together with duly executed bond or stock powers, as applicable, payable
to the order of Buyer and an incumbency certificate, against payment of (a)
$19,739,109.72 in immediately available funds to Seller's account number
890-0304-391 at Bank of New York, New York, N.Y., ABA number 021-000-018 and (b)
$3,578,925 in immediately available funds to Seller's account number
890-0304-944 at Bank of New York, New York, N.Y., ABA number 021-000-018.
3. Seller hereby represents and warrants as of the date hereof and as
of the Closing Date that: (a) Neither Seller nor anyone acting on its behalf has
offered the Securities or any of them by means of any general solicitation or
general advertising and neither Seller nor anyone acting on its behalf has taken
any action which would subject the sale of the Securities to Buyer to the
registration provisions of Section 5 of the Securities Act of 1933, as amended
(the "Act"); (b) Seller has provided Buyer with a true, correct and complete
copy of the Securities, the Note Agreement and the Securities Purchase
Agreement; (c) Seller is the sole legal, record and beneficial owner of the
Securities with good title thereto free and clear of any liens, claims, options
or other encumbrances; (d) Seller has full power, authority and legal right to
sell the Securities; (e) Seller has been the sole beneficial owner of the
Securities since their respective dates of issuance; (f) the $3,500,000
Principal Amount 9.90% Senior Note constitutes an asset of a pooled separate
account of Seller (the "Separate Account") subject to the prohibited transaction
rules in Section 406 of the Employee Retirement Income Security Act of 1974, as
amended ("ERISA"); and (g) following execution by Buyer of a letter in the form
attached hereto as Exhibit A, Seller has provided Buyer with a list of sponsors
of employee benefit plans that participate in the Separate Account to the extent
of 10% or more (the "10% Plans"). Seller further represents and warrants that as
of the date hereof, and after giving effect to the sale of the Securities to
Buyer as contemplated herein, it holds for its own account the following
securities of the Company: (a) 19,767 shares of Junior Convertible Preferred
Stock and (b) 397,549 shares of Common Stock, par value $.01 per share.
4. As of the date hereof and as of the Closing Date, Buyer hereby (a)
acknowledges that the Securities have not been registered under the Act or the
securities or blue sky laws of any jurisdiction and agrees that it is not
acquiring the Securities with a view to sale or distribution in violation of
applicable securities laws; (b) confirms that Buyer has received a copy of the
Note Agreement, the Securities Purchase Agreement and the Securities, and such
other documents and information which Buyer has deemed necessary and appropriate
to make its own credit analysis and decision to purchase the Securities, and has
independently and without reliance on Seller, other than reliance upon the
representations, warranties and covenants of the Seller made herein, made its
own analysis and decision to enter into this Agreement and to purchase the
Securities; (c) represents and warrants that (i) in the normal course of its
business it invests in securities and is familiar with the terms of securities
with characteristics similar to the Securities and by reason of its business and
financial experience possesses such knowledge, sophistication and experience in
business and financial matters so as to be capable of evaluating the risks and
merits of an investment in the Securities; (ii) on the Closing Date, after
giving effect to the purchase contemplated hereby, Buyer will not be a
party-in-interest to any of the 10% Plans; and (iii) neither it nor any of its
affiliates is currently, and none of them has been at any time during the twelve
month period immediately preceding the date hereof, engaged in substantive
discussions with any party (other than the Company, with respect to the option
agreement referred to in paragraph 8(a) below, or Seller) with respect to either
(x) a sale of the Company or substantially all of its assets, or (y) a sale of
all or a part of the securities of the Company held by Buyer (including
Securities purchased hereunder), nor does Buyer have any present intention to
engage in any such transaction. Buyer further confirms that it has obtained a
representation from the Company for the benefit of Seller in substantially the
form attached hereto as Exhibit B.
5. Seller hereby agrees that if Buyer exercises its right to convert
all of its holdings of the Company's preferred stock to shares of the Company's
common stock, Seller will (promptly upon receipt of written notice that Buyer
has effected such conversion) exercise its right to convert the shares of the
Company's Junior Convertible Preferred Stock held by it (the "Retained Preferred
Shares") to shares of the Company's common stock in accordance with the
provisions of the Company's Certificate of Incorporation governing such
conversion as in effect on the date hereof. Seller further agrees (a) that the
provisions of this paragraph 5 shall (i) be binding on any transferee of the
Retained Preferred Shares and (ii) be specifically enforceable against Seller
and (b) that Seller shall cause any such transferee to agree that this paragraph
5 shall be specifically enforceable against it.
6. Seller hereby agrees that it will record the Purchase Price on its
books and records as follows: $1,000 of the Purchase Price will be allocated to
the sale of the Securities referred to in subparagraphs 1(g) - (i) hereof, and
the balance will be allocated to the sale of the Securities referred to in
subparagraphs 1(a) - (f).
7. Seller and Buyer hereby acknowledge that each of them may possess
material non-public information with respect to the Company not known to the
other, and each agrees to hold the other harmless with respect to any such
information.
8. The obligations of the parties under this Agreement are subject to
the satisfaction of the following conditions: (a) the Company and Buyer shall
have executed an option agreement with respect to the Securities in
substantially the form attached hereto as Exhibit C; and (b) there shall have
been executed by the parties hereto an amendment to that certain Stockholders
Agreement, dated as of January 29, 1993, as heretofore amended, among the
Company, Seller, Buyer and Joe F. Hanauer, terminating Seller's obligations
thereunder and pursuant to which Seller releases all of its rights under such
agreement.
9. Each party hereto shall execute and deliver all further documents or
instruments reasonably requested by the other party in order to effect the
intent and purposes of this Agreement and obtain the full benefit of this
Agreement.
10. THIS AGREEMENT SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE
WITH THE LAWS OF THE STATE OF NEW YORK WITHOUT REFERENCE TO THE CONFLICTS OF
LAWS PROVISIONS THEREOF AND SHALL BE BINDING UPON AND INURE TO THE BENEFIT OF
BUYER AND SELLER AND THEIR RESPECTIVE SUCCESSORS AND ASSIGNS.
11. This Agreement, together with the letter referred to in paragraph
3(g) hereof, constitutes the complete agreement of the parties with respect to
the subject matter hereof, and supersedes all prior communications and
agreements of the parties with respect thereto, all of which have become merged
and integrated into this Agreement. This Agreement cannot be amended, modified
or waived, except by a writing executed by each of the parties hereto.
12. This Agreement may be executed in two or more counterparts, each of
which shall be deemed an original but which together shall constitute one and
the same instrument.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
executed as of the date first above written.
THE PRUDENTIAL INSURANCE COMPANY
OF AMERICA
By: /S/ STEPHEN R. HAECKEL
Name: Stephen R. Haeckel
Title: Vice President
WARBURG, PINCUS INVESTORS, L.P.
By: Warburg, Pincus & Co.
its General Partner
By: /S/ JOHN D. SANTOLERI
Name: John D. Santoleri
Title: Partner
<PAGE>
Exhibit A
Warburg, Pincus Investors, L.P.
466 Lexington Avenue
New York, N.Y. 10017-3147
October 15, 1996
The Prudential Insurance Company
of America
Four Gateway Center
100 Mulberry Street
Newark, New Jersey 07102-4069
Attention: Deborah G. Shulevitz
Re: $3,500,000 Principal Amount 9.90% Senior Note of Grubb &
Ellis Company due November 1, 1998 (the "Note")
Ladies and Gentlemen:
We refer to the proposed purchase of the Note by Warburg, Pincus Investors,
L.P. from The Prudential Insurance Company of America ("Prudential").
We understand that the Note constitutes an asset of a separate account
maintained by Prudential and that, in order to permit us to conclude that the
proposed purchase will not involve any "prohibited transaction" under the
Employee Retirement Income Security Act of 1974, as amended, Prudential will
disclose to us the names of certain employee benefit plans participating to the
extent of 10% or more in such separate account. In order to induce Prudential to
make such disclosure, we agree that any such information disclosed to us (i)
will be held by us in strict confidence and will not be disclosed by us to
anyone other than our employees and legal counsel and (ii) will be used by us
and our legal counsel solely for the purpose of determining whether the proposed
purchase would involve such a "prohibited transaction."
Very truly yours,
WARBURG PINCUS INVESTORS, L.P.
By: Warburg, Pincus & Co.,
its General Partner
By:/S/ JOHN D. SANTOLERI
Partner
<PAGE>
Exhibit B
Grubb & Ellis
October ___, 1996
The Prudential Insurance
Company of America
Four Gateway Center
100 Mulberry Street
Newark, New Jersey 07102
Gentlemen:
Please be advised that Grubb & Ellis Company (the "Company") is not
currently, nor has it been at any time during the twelve month period
immediately preceding the date of the Sale and Assignment Agreement dated as of
October __, 1996, between The Prudential Insurance Company of America and
Warburg, Pincus Investors, L.P., engaged in substantive discussions with any
party with respect to a sale of all or substantially all of the Company or its
assets, nor does the Company have any present intention to engage in any such
transaction.
Very truly yours,
GRUBB & ELLIS COMPANY
By:/S/ JOE F. HANAUER
Joe F. Hanauer
Chairman
By:/S/ NEIL YOUNG
Neil Young
President & CEO
Exhibit 2
E.M. WARBURG, PINCUS & CO., INC.
466 Lexington Avenue, New York, N.Y., 10017-3147
October 21, 1996
Grubb & Ellis Company
10275 West Higgins Road, Suite 300
Rosemont, IL 60018
Attention: Mr. Neil Young
Gentlemen:
Warburg, Pincus Investors, L.P. ("WPI") has offered to purchase from The
Prudential Insurance Company of America ("Prudential") all of the debt and
warrants and 130,233 shares of preferred stock in Grubb & Ellis Company (the
"Company") which are currently held by Prudential (the "Securities").
Specifically, the Securities include Prudential's revolving credit note(s);
senior note(s); PIK note(s) (collectively, the "Notes"); warrants and
convertible preferred stock in the Company.
Upon acceptance of this letter as indicated by your signature below, WPI hereby
grants to the Company an option, for the Option Term set forth below, to
purchase the Securities as an entirety, effective upon WPI's purchase of the
Securities from Prudential, on the following terms:
1. EXERCISE PRICE: $23 million plus any accrued and unpaid
interest due to WPI as per paragraph 2, below. No interest
or dividends will accrue or be due or payable on the
Securities during the Option Term, described below,
notwithstanding any stated interest or dividend rate or
other terms of such Securities.
2. INTEREST: The Company will pay WPI interest at an annual rate of 10%
through the last day of January, 1997 and 12% thereafter, payable on
the last day of each month during the Option Term, in arrears, based on
WPI's $23 million cost to purchase the Securities.
3. TERM: From the date of purchase of the Securities by WPI
through April 16, 1997 (the "Option Term").
4. CLOSING: The closing will occur two business days after
receipt by WPI of written notice of the Company's intent to
exercise the option, with the purchase price payable in
immediately available funds against delivery of the Notes
which shall be marked "Canceled" and certificates
representing the Securities to be sold. WPI will transfer
title to the Securities free and clear of any lien or
encumbrance. WPI and the Company agree to sign such
documents as are necessary to effect the cancellation of the
Notes and the assignment and transfer of the Securities from
WPI to the Company as provided herein.
Effective upon grant of this option, the Company will extend the expiration date
on WPI's warrants to purchase in the aggregate 1,012,358 shares of Company
common stock from the current expiration of January 29, 1998 to January 29,
2002.
The accrual and payment of any and all interest and dividends under the terms of
the Securities will be waived during the Option Term. If the option is not
exercised, interest and dividends on the Securities will begin to accrue
pursuant to the terms of the Securities effective April 16, 1997, and the
interest provided for pursuant to paragraph 2 herein shall cease.
The Company will reimburse WPI for interest paid by WPI to Prudential on behalf
of the Company in connection with WPI's purchase of the Securities from
Prudential, presently anticipated to be approximately $305,000, upon completion
of such purchase.
Each of WPI and the Company agrees that the other is or may be in possession of
material inside information with respect to the Company and waives any claims
with respect thereto.
During the Option Term the Securities shall be legended to state that the
Securities are subject to this option agreement. Any assignment of the
Securities by WPI during the Option Term shall be subject to this option
agreement.
If the above terms are acceptable, please sign below indicating your acceptance
and return a signed copy to me via facsimile.
Very truly yours,
WARBURG, PINCUS INVESTORS, L.P.
By: Warburg, Pincus & Co.
By: /S/ JOHN D. SANTOLERI
John D. Santoleri, Partner
ACCEPTED AND AGREED
GRUBB & ELLIS COMPANY
By: /S/ ROBERT J. WALNER
Name: ROBERT J. WALNER
Title: SENIOR VICE PRESIDENT
