-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, CxXDnqg2w3F3I8p2rnoW71s8rtSUVVR5yUB7IXX2/t55PMuIjYhktxPDs8bkAnie TWMmmEnLOedoVAe16InXfQ== 0000899681-96-000333.txt : 19961027 0000899681-96-000333.hdr.sgml : 19961027 ACCESSION NUMBER: 0000899681-96-000333 CONFORMED SUBMISSION TYPE: SC 13D/A PUBLIC DOCUMENT COUNT: 3 FILED AS OF DATE: 19961024 SROS: NYSE SUBJECT COMPANY: COMPANY DATA: COMPANY CONFORMED NAME: GRUBB & ELLIS CO CENTRAL INDEX KEY: 0000216039 STANDARD INDUSTRIAL CLASSIFICATION: REAL ESTATE AGENTS & MANAGERS (FOR OTHERS) [6531] IRS NUMBER: 941424307 STATE OF INCORPORATION: DE FISCAL YEAR END: 0630 FILING VALUES: FORM TYPE: SC 13D/A SEC ACT: 1934 Act SEC FILE NUMBER: 005-32339 FILM NUMBER: 96647367 BUSINESS ADDRESS: STREET 1: ONE MONTGOMERY ST STE 3100 STREET 2: TELESIS TWR 9TH FLR CITY: SAN FRANCISCO STATE: CA ZIP: 94104 BUSINESS PHONE: 4159561990 MAIL ADDRESS: STREET 1: ONE MONTGOMERY ST STE 3100 STREET 2: TELESIS TWR 9TH FLR CITY: SAN FRANCISCO STATE: CA ZIP: 94104 FILED BY: COMPANY DATA: COMPANY CONFORMED NAME: WARBURG PINCUS & CO CENTRAL INDEX KEY: 0000929408 STANDARD INDUSTRIAL CLASSIFICATION: UNKNOWN SIC - 0000 [0000] IRS NUMBER: 136358475 STATE OF INCORPORATION: NY FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: SC 13D/A BUSINESS ADDRESS: STREET 1: 466 LEXINGTON AVENUE CITY: NEW YORK STATE: NY ZIP: 100173147 BUSINESS PHONE: 2128780600 MAIL ADDRESS: STREET 1: 466 LEXINGTON AVENUE STREET 2: NEW YORK CITY: NY STATE: NY ZIP: 100173147 SC 13D/A 1 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 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 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 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 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 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. 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 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. 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. 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. 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. 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 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. EX-1 2 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 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 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 EX-2 3 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 -----END PRIVACY-ENHANCED MESSAGE-----