EXHIBIT 10.42
STOCK OPTION AND DEPOSIT AGREEMENT
This Stock Option and Deposit Agreement dated as of May 7, 1997 (the
"Date of Grant"), by and between ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇, ▇▇., an individual residing
in Cranbury, New Jersey (the "Optionee"), and The Prime Group, Inc., an Illinois
corporation ("PGI").
W I T N E S S E T H:
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WHEREAS, as used herein the term "Shares" shall mean shares of
Brookdale Living Communities, Inc., a Delaware corporation (the "Company")
common stock, par value $0.01 per share (the "Common Stock");
WHEREAS, the Optionee is a key employee of the Company;
WHEREAS, PGI is a stockholder of the Company;
WHEREAS, PGI desires to grant to the Optionee an option to purchase
from PGI 100,000 Shares for a purchase price per share of $.01, subject to the
terms and conditions hereinafter set forth;
WHEREAS, PGI has delivered to Healthcare Realty Trust Incorporated, a
Maryland real estate investment trust ("HRT"), a Guaranty dated as of May 7,
1997 (as amended, restated, modified or supplemented, the "PGI Guaranty"),
pursuant to which PGI has guaranteed the repayment by Prime Group VI, L.P.
("PG6LP") of an $18,000,000 loan (the "HRT Loan") made to it by HRT; and
WHEREAS, as security for the performance by it of its obligations
under the PGI Guaranty, PGI has pledged to HRT certain Shares, including the
Option Shares (as defined below), pursuant to that certain Pledge and Security
Agreement dated as of May 7, 1997 (as amended, restated, modified or
supplemented, the "PGI/HRT Pledge") between PGI and HRT;
WHEREAS, the repayment of the HRT Loan is also secured by the pledge
by PG6LP and Prime Group Limited Partnership ("PGLP") of certain Shares;
NOW, THEREFORE, for good and valuable consideration, the parties
hereto agree as follows:
1. Option. PGI hereby grants to the Optionee the right to purchase (the
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"Option"), subject to the terms, conditions and restrictions stated herein,
from PGI 100,000 Shares (the "Option Shares") at a price per share of $.01.
2. Escrow.
(a) Upon the termination of the PGI/HRT Pledge and the return of
the Certificate (as hereinafter defined) to PGI, PGI will
deposit the certificate (the "Certificate") representing the
Option Shares with Winston & ▇▇▇▇▇▇ (the "Escrow Agent") and
duly endorse in blank and transmit to the Escrow Agent a stock
power (in the form attached hereto as Exhibit A) for the
certificate representing the Shares.
(b) Upon its receipt of the Certificate from PGI, The Escrow Agent
will hold the Certificate and deliver it either to Optionee or
to PGI, as the case may be, in the manner and at the times
specified herein.
(c) During the period the Certificate is held by the Escrow Agent,
(i) PGI may not sell, transfer, pledge, exchange, hypothecate
or otherwise dispose of such Shares, (ii) PGI shall exercise
all voting rights with respect to the Shares, (iii) all
dividends and other distributions, whether of cash, stock or
otherwise, paid on the Shares and any stock issued in
connection with any stock splits shall be held by the Escrow
Agent for the benefit of PGI and Optionee and (iv) any cash
dividends or other cash distributions with respect to the
Shares shall be held in an interest bearing account for the
benefit of PGI and Optionee.
3. Vesting.
(a) The Option shall fully and completely vest on the first
anniversary of the Date of Grant; unless Optionee's employment
with the Company has previously been terminated by Optionee
without good reason (as determined under Section 5(b)(ii) of
that certain Employment Agreement (the "Employment Agreement"),
dated as of the date hereof, between Optionee and the Company).
Notwithstanding the foregoing, upon termination of Optionee's
employment with the Company by the Company by reason of
disability, or with or without cause, or by Optionee by reason
of death or a change of control (as determined under Sections
5(a), 5(b)(i) and 5(c) of the Employment Agreement) prior to
the first anniversary of the Date of Grant, the Option shall
immediately vest.
(b) If, at any time prior to the first anniversary of the Date of
Grant, Optionee's employment with the Company has been
terminated by Optionee without good reason (as determined under
Section 5(b)(ii) of the Employment Agreement), all Shares shall
be returned to PGI or its designee and this Stock Option and
Deposit Agreement shall terminate, and the Escrow Agent shall
deliver to PGI or its designee the Certificate for the Shares,
the stock power
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for such Shares and all dividends or other distributions with
respect to the Shares held by the Escrow Agent together with
all interest accrued thereon.
(c) Notwithstanding anything to the contrary herein, if at any
time, whether prior to or on or after the date on which the
Option shall have vested, HRT shall foreclose on the Option
Shares, the Option shall be cancelled; provided, however, that
the Optionee shall be entitled to share in any cash paid to
PGI, PG6LP, PGLP or ▇▇▇▇ ▇. ▇▇▇▇▇▇▇, and in any Shares pledged
to HRT to secure the repayment of the HRT Loan which are
returned to PGI, PG6LP, PGLP or ▇▇▇▇ ▇. ▇▇▇▇▇▇▇, in connection
with such foreclosure, in accordance with the applicable terms
of that certain Stock Purchase Agreement and Agreement
Concerning Option Shares, dated as of the date hereof, between
PGI and the Optionee.
4. Exercise Period. The Optionee (or in the event of the death of the
Optionee, the Optionee's success in interest) may exercise the Option at any
time after the Option has fully vested as provided herein, but prior to the
expiration of five years from the Date of Grant.
5. Manner of Exercise.
(a) Subject to Section 5(c) hereof, an exercisable Option, or any
exercisable portion thereof, may be exercised solely by delivery to the
Secretary of PGI or the Secretary's office (with a copy thereof to the Escrow
Agent) of all of the following prior to the time as of which such Option ceases
to be exercisable:
(i) notice in writing signed by the Optionee or other person then
entitled to exercise such Option or portion thereof, stating
that such Option or portion is exercised;
(ii) full payment (in cash or by check) for the Option Shares with
respect to which such Option is thereby exercised;
(iii) the payment to PGI of all amounts, if any, which it is required
to withhold under federal, state or local law in connection
with the exercise of the Option;
(iv) such representations and documents as PGI, in its absolute
discretion, deems necessary or advisable to effect compliance
with all applicable provisions of the Securities Act of 1933
and any other federal or state securities laws or regulations;
and
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(v) in the event that the Option or a portion thereof shall be
exercised by any person or persons other than the Optionee,
appropriate proof of the right of such person or persons to
exercise the Option or portion thereof.
(b) Upon such exercise of the Option as provided above, the Escrow
Agent shall deliver to Optionee the Certificate for the Shares, the stock power
for such Shares and all dividends or other distributions with respect to the
Shares held by the Escrow Agent together with all interest accrued thereon. In
the event that Optionee exercises the Option with respect to some, but not all
of the Option Shares, the Escrow Agent shall deliver the Certificate to the
Company and request that the Company issue to Optionee a replacement certificate
(the "Optionee Certificate") for the number of Shares for which Optionee has
exercised the Opt ion and to PGI a replacement certificate for the remaining
Shares (the "PGI Certificate"). The Optionee Certificate, together with all
dividends and other distributions with respect to the Shares represented by the
Optionee Certificate, shall be delivered to Optionee by the Escrow Agent. The
PGI Certificate, together with all dividends and other distributions with
respect to the Shares represented by the PGI Certificate and a new stock power
executed by PGI for the PGI Certificate, shall be held by the Escrow Agent
subject to the terms and conditions of this Stock Option and Deposit Agreement.
(c) Notwithstanding anything to the contrary herein, the Option may
not be exercised, in whole or in part, unless and until the PGI/HRT Pledge is
terminated and the Certificate is returned to PGI (or to the Escrow Agent at the
direction of PGI).
6. Transferability. This Option is personal to the Optionee and the same
may not in any manner or in any respect be assigned or transferred, other than
by will or the laws of descent and distribution.
7. Miscellaneous.
(a) The granting of this Option shall not be construed as giving to
the Optionee any right to be retained in the employ of the
Company.
(b) This Option shall not be treated as an incentive stock option
under the Internal Revenue Code of 1986, as amended.
(c) The validity, interpretation and effect of this Stock Option
and Deposit Agreement shall be governed by the laws of the
State of Delaware, excluding the "conflicts of laws" rules
thereof.
8. Acknowledgment of PGI Pledge. The Optionee does hereby acknowledge
and agree that (a) the Option Shares have been pledged by PGI to HRT pursuant to
the PGI/HRT Pledge to secure PGI's obligations under the PGI Guaranty, (b) the
Certificate has been delivered to HRT in accordance with the terms of the
PGI/HRT Pledge and (c) in the event that HRT forecloses on the Option Shares and
the Certificate in accordance with the terms of the PGI/HRT Pledge, the Option
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shall be cancelled; provided, however, the Optionee shall be entitled to share
in any cash paid to PGI, PG6LP, PGLP or ▇▇▇▇ ▇. ▇▇▇▇▇▇▇, and in any Shares
pledged to HRT to secure the repayment of the HRT Loan returned to PGI, PG6LP,
PGLP or ▇▇▇▇ ▇. ▇▇▇▇▇▇▇, in connection with such foreclosure, in accordance with
the applicable terms of that certain Stock Purchase Agreement and Agreement
Concerning Option Shares, dated as of the date hereof, between PGI and the
Optionee.
[SIGNATURE PAGES FOLLOW]
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IN WITNESS WHEREOF, the parties hereto have duly executed this Stock
Option and Deposit Agreement on the day and year first above written.
THE PRIME GROUP, INC.
By: /s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
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Title: President
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/s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇, ▇▇.
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▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇, ▇▇.
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The Escrow Agent hereby acknowledges receipt of the Certificate referred to
above and agrees to hold it in accordance with the terms of the foregoing Stock
Option and Deposit Agreement.
WINSTON & ▇▇▇▇▇▇
By:______________________________________
Title:___________________________________
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EXHIBIT A
STOCK POWER
FOR VALUE received The Prime Group, Inc. hereby sells, assigns and
transfers unto ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇, ▇▇. 100,000 Shares of the Brookdale Living
Communities, Inc. Common Stock and represented by Certificate Number ________
and does hereby irrevocably constitute and appoint ____________________________
Attorney to transfer the said stock on the books of Brookdale Living
Communities, Inc. with full power of substitution in the premises.
DATED:___________________ THE PRIME GROUP, INC.
By:___________________________________
Its:__________________________________
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