EXHIBIT 10.19
SECOND AMENDMENT TO STOCKHOLDERS' AGREEMENT
Reference is made to that certain Stockholders' Agreement (the
"Stockholders' Agreement") dated as of January 29 1993 and amended as of July 1,
1993 by and among Grubb & Ellis Company, a Delaware corporation (the "Company"),
Warburg, Pincus Investors, L.P., a Delaware limited partnership ("Warburg"), Joe
F. Hanauer ("Hanauer") and The Prudential Insurance Company of America, a New
Jersey insurance corporation ("Prudential"). Capitalized terms used herein
without definition shall have the meanings set forth in the Stockholders'
Agreement.
RECITALS
A. On March 28, 1994, the Company, Warburg and Prudential reached
agreement (the "Preliminary Agreement") upon the terms of a proposed financing
transaction to provide the Company with additional working capital, including:
(i) an interim credit facility pursuant to which Warburg agreed to make periodic
advances to the Company in an aggregate principal amount for all such advances
outstanding not to exceed $10 million (the "Bridge Loan"); (ii) a rights
offering by the Company (the "Rights Offering") in which the Company would issue
to each holder of Common Stock one nontransferable right (a "Right") to purchase
one share of Common Stock at a subscription price of $2.375 per share for each
share of Common Stock; (iii) a standby agreement (the "Standby Agreement")
pursuant to which Warburg agreed to acquire Rights not purchased by the
Company's stockholders in the Rights Offering up to an amount not to exceed $10
million, plus accrued interest on the Bridge Loan; (iv) amendments to the Note
Purchase Agreement (as amended from time to time) between Prudential and the
Company (the "Prudential Loan Agreement Amendments"); (v) amendments to the New
Prudential Warrants, the Warburg Warrants and the Preferred Stock held by
Warburg, Hanauer and Prudential; and (vi) subject to certain conditions, the
issuance of new warrants to Warburg and Prudential.
B. On July 21, 1994, Warburg and the Company entered into the
Standby Agreement.
C. On September 12, 1994, the stockholders of the Company approved
the Financing Transactions, which are more fully described in the Company's
Proxy Statement dated July 29, 1994 (the "Proxy Statement").
D. On the date hereof:
1. The Company completed the Rights Offering and Warburg
fulfilled its obligations under the Standby Agreement;
1
2. Prudential and the Company entered into the
Prudential Loan Agreement Amendments;
3. The Company filed with the Delaware Secretary of State
the Company's Restated Certificate of Incorporation (the "Charter Amendment")
and Warburg surrendered to the Company for cancellation certificates
representing all of its 128,266 shares of Senior Preferred Stock in exchange for
certificates representing 128,266 shares of Series B Senior Preferred Stock;
4. Warburg surrendered to the Company for cancellation the
Warburg Warrants in exchange for amended warrants to purchase an aggregate of
687,358 shares of Common Stock at an exercise price of $3.50 per share (the
"Warburg Amended Warrants");
5. Prudential surrendered to the Company for cancellation
the New Prudential Warrants in exchange for amended warrants to purchase 200,000
shares of Common Stock at an exercise price of $3.50 per share (the "Prudential
Amended Warrants");
6. The Company issued to Warburg new warrants to purchase
350,000 shares of Common Stock at an exercise price of $2.375 per share (the
"Warburg 1994 Warrants");
7. Warburg surrendered to the Company for cancellation all of
its Contingent Warrants (as defined in the Proxy Statement); and
8. The Company issued to Prudential new warrants to purchase
150,000 shares of Common Stock at an exercise price of $2.375 per share (the
"Prudential 1994 Warrants").
E. The parties desire to make certain amendments to the
Stockholders' Agreement.
NOW, THEREFORE, in acknowledgement of the foregoing recitals, the
parties hereby agree as follows:
1. Section l.l(g) of the Stockholders' Agreement is hereby amended
to read as follows:
(g) "Prudential Securities" shall mean the Junior Preferred Stock,
the Prudential Amended Warrants, the Prudential 1994 Warrants and the
Prudential Warrant Shares
2
and any and all issued shares of Prudential Registrable Securities.
2. Section l.l(s) of the Stockholders' Agreement is hereby amended
to read as follows:
(s) "Warburg Securities" shall mean the Senior Preferred Stock, the
Warburg Amended Warrants, the Warburg 1994 Warrants and any and all issued
shares of Warburg Registrable Securities.
3. The following definitions are hereby added to Section 1.1 of
the Stockholders' Agreement:
(t) "Preferred Stock" shall mean the Senior Preferred Stock and the
Junior Preferred Stock.
(u) "Senior Preferred Stock" shall mean the Series A Senior Preferred
Stock and the Series B Senior Preferred Stock.
(v) "Series A Senior Preferred Stock" shall mean the Company's Series A
Senior Convertible Preferred Stock, par value $.01 per share.
(w) "Series B Senior Preferred Stock" shall mean the Company's Series B
Senior Convertible Preferred Stock, par value $.01 per share.
4. References to the "date hereof" in the first paragraph of
Section 4.1(a) of the Stockholders' Agreement shall mean the date as of which
this Second Amendment to Stockholders' Agreement is executed.
5. The beginning of the third paragraph of Section 4.1(a) of the
Stockholders' Agreement is hereby amended by deleting the text up to and
including the first semi-colon in the second sentence therein and replacing it
with the following:
"Warburg Registrable Securities" shall include all shares of Common
Stock issued or issuable upon conversion of any Senior Preferred Stock,
all shares of Common Stock issued or issuable upon exercise of any Warburg
Amended Warrants or Warburg 1994 Warrants, any shares of Common Stock
acquired by Warburg pursuant to the Standby Agreement and any shares of
Common Stock acquired by Hanauer in connection with the Rights Offering
and "Prudential Registrable Securities" shall include all shares of Common
Stock issued or issuable upon conversion of any Junior Preferred Stock,
all shares of Common Stock issued or issuable upon exercise of any of the
Old Prudential Warrant
3
the Prudential Amended Warrants or the Prudential 1994 Warrants and any
shares of Common Stock acquired by Prudential in connection with the
Rights Offering (Warburg Registrable Securities and Prudential
Registrable Securities are sometimes collectively referred to herein
as "Registrable Securities"). Registrable Securities shall include
all shares of Common Stock, or Common Stock issued or issuable upon
conversion or exercise of any securities of the Company, which may be
issued or distributed with respect to, or in exchange for, the Preferred
Stock, the Warburg Amended Warrants, the Warburg 1994 Warrants, the
Prudential Warrant Shares, the Prudential Amended Warrants, the Prudential
1994 Warrants or any of the Common Stock referred to in the preceding
sentence pursuant to a stock dividend, stock split or other distribution,
merger, consolidation, recapitalization or reclassification or otherwise,
and any securities of the Company which may be issued or distributed with
respect to, or in exchange for, any such Common Stock or such other
securities pursuant to a stock dividend, stock split or other
distribution, merger, consolidation, recapitalization or reclassification
or otherwise;
6. References to the "date hereof" in Section 5.1 (b) of the
Stockholders' Agreement shall mean the date as of which this Second Amendment to
Stockholders' Agreement is executed.
7. All notices, other communications or documents given to the
parties pursuant to Section 5.3 and any copies thereof shall be given as set
forth in Section 5.3, except as follows:
(a) If to the Company, a copy to:
Latham & Watkins
505 Montgomery Street, Suite 1900
San Francisco, California 94111
Attention: Scott R. Haber, Esq.
Telecopy number: (415) 395-8095
(b) If to Warburg, a copy to:
Stroock & Stroock & Lavan
7 Hanover Square
New York, New York 10004
Attention: Martin H. Neidell, Esq.
Telecopy number: (212) 806-6006
(c) If to Prudential, a copy to:
Sonnenschein, Nath & Rosenthal
4
800 Sears Tower
Chicago, Illinois 60606
Attention: Mitchell L. Hollins, Esq.
Telecopy number: (312) 876-7934
8. Except as specifically provided herein, the terms and conditions of
the Stockholders' Agreement shall remain in full force and effect.
5
IN WITNESS WHEREOF, the parties hereto have executed this Second
Amendment to Stockholders' Agreement this 1st day of November, 1994.
GRUBB & ELLIS COMPANY, a Delaware
corporation
By: /s/ Robert J. Walner
---------------------------------------------
Name: Robert J. Walner
-------------------------------------------
Title: Senior Vice President and General Counsel
------------------------------------------
WARBURG, PINCUS INVESTORS, L.P., a
Delaware limited partnership
WARBURG PINCUS & CO.,
General Partner
By: /s/ Reuben S. Leibowitz
---------------------------------------------
Name: Reuben S. Leibowitz
-------------------------------------------
Title: Partner
------------------------------------------
THE PRUDENTIAL INSURANCE COMPANY OF
AMERICA, a New Jersey insurance
corporation
By: /s/ John P. Mullman
---------------------------------------------
Name: John P. Mullman
-------------------------------------------
Title: Vice President
------------------------------------------
JOE F. HANAUER, an individual
By: /s/ Joe F. Hanauer
---------------------------------------------
Joe F. Hanauer
-6-