Exhibit VIII
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STOCK OPTION AGREEMENT
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THIS STOCK OPTION AGREEMENT (this "Agreement") dated as of May 7, 1997 is
between The Prime Group, Inc., a corporation duly organized and validly
existing under the laws of the State of Illinois (the "Shareholder"), and
Blackacre Bridge Capital L.L.C., a Delaware limited liability company (the
"Purchaser").
WHEREAS, as of the date hereof (the "IPO Date"), Brookdale Living
Communities, Inc., a Delaware corporation ("Brookdale"), has completed an
initial public offering of its Common Stock, $0.01 par value per share ("Common
Stock"), at an initial public offering price of $11.50 per share (the "IPO
Price");
WHEREAS, the Purchaser has issued a standby commitment (the "Commitment")
to the Shareholder pursuant to that certain standby commitment letter of the
Purchaser dated May 5, 1997 (the "Commitment Letter") to make a certain loan to
finance the purchase by the Shareholder (or an affiliate of the Shareholder) of
certain shares of the Common Stock issued and sold by Brookdale in the IPO; and
WHEREAS, as a condition to issuing the Commitment to the Shareholder, the
Purchaser has required that the Shareholder grant to the Purchaser an option to
purchase certain shares of Brookdale's Common Stock as set forth herein;
NOW, THEREFORE, in consideration of the premises and the covenants
hereinafter contained, and to induce the Purchaser to issue the Commitment to
the Shareholder, it is agreed as follows:
Section 1. Definitions. Capitalized terms used but not otherwise defined
herein shall have the meanings given to such terms in the form of Credit
Agreement attached to the Commitment Letter.
Section 2. Grant of Option. The Shareholder hereby grants to the
Purchaser an option (the "Option") to purchase 12,500 shares (the "Option
Shares") of Common Stock at a price per share equal to the lesser of the $12.00
or the arithmatic average of all closing prices of the Common Stock from the IPO
Date to that date which is six months after the IPO Date (the "Purchase Price").
Section 3. Term. The term of the Option will begin on the date hereof and
shall continue in effect until May 7, 2000.
Section 4. Exercise of Option.
(a) Upon the terms and conditions of this Agreement, the Purchaser may
exercise the Option, in whole but not in part, at any time prior to the
expiration thereof.
(b) The respective obligations of the Purchaser and the Shareholder to
consummate the sale of any of the Option Shares upon the exercise of the Option
shall be subject to each of the following conditions precedent: (i) there shall
be no proceeding pending before any court or governmental agent or
instrumentality to, or any preliminary or permanent injunction in effect which
would, prohibit or prevent consummation of the sale of the Option Shares to be
sold to the Purchaser; (ii) all applicable waiting periods under statutes,
regulations or rules applicable to the acquisition of the Option Shares to be
acquired by the Purchaser shall have expired or been terminated; (iii) the
representations and warranties contained herein shall be true and correct as of
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the Closing (as defined herein); and (iv) any required approvals or exemptions
under federal, state or foreign law shall have been obtained.
(c) In the event the Purchaser wishes to exercise the Option, the Purchaser
shall send a written notice to the Shareholder specifying the total number of
Option Shares the Purchaser intends to purchase pursuant to Section 2 hereof,
the place at which such purchase shall occur and a date not earlier than ten
business days from the date such notice is given for the closing of such
purchase (the "Closing").
Section 5. Closing. At the Closing:
(a) The Purchaser will make payment to the Shareholder of the aggregate
price for the Option Shares so purchased by delivery of immediately available
funds in lawful money of the United States in an amount equal to the product
obtained by multiplying the applicable Purchase Price by the number of Option
Shares to be purchased.
(b) Simultaneously with receipt of such payment, the Shareholder will
deliver or cause to be delivered to the Purchaser a stock certificate or
certificates representing the number of Option Shares so purchased, with stock
powers duly executed in blank.
Section 6. Representations and Warranties of the Shareholder. The
Shareholder hereby represents and warrants to the Purchaser as follows:
(i) the Shareholder is the legal, record and beneficial owner of
the Option Shares, subject to no Lien, but subject to the terms and
conditions of the Brookdale Documents;
(ii) the Shareholder has full corporate power, authority and
legal right to execute and deliver this Agreement;
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(iii) this Agreement constitutes a legal, valid and binding
obligation of the Shareholder enforceable against it in accordance with its
terms, except as enforceability may be limited by applicable bankruptcy,
insolvency, reorganization, moratorium or other similar laws affecting the
enforcement of creditors' rights generally and by general equitable
principles;
(iv) neither the execution and delivery by the Shareholder of this
Agreement, nor, subject to the Purchaser's compliance with applicable
federal and state securities laws with respect to the Purchaser's purchase
of any of the Option Shares, the consummation of the transactions herein
contemplated or compliance with the terms and provisions hereof will
conflict with or result in a breach of, or require any consent (except such
as has been obtained) under, any applicable law or regulation, or any
order, writ, injunction or decree of any Governmental Authority or any
Brookdale Document, or any material agreement or instrument to which the
Shareholder is a party or by which it is bound or to which it is subject,
or constitute a default under any such agreement or instrument, or result
in the creation or imposition of any Lien upon any of the assets of the
Shareholder pursuant to the terms of any such agreement or instrument; and
(v) Upon payment for the Option Shares pursuant to the Option, the
Purchaser will acquire good, legal and marketable title to the Option
Shares, free and clear of all claims, liens, charges or encumbrances not
created by or through the Purchaser, but subject to the terms and
provisions of the Brookdale Documents.
Section 7. Representations and Warranties of the Purchaser. The
Purchaser hereby represents and warrants to the Shareholder as follows:
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(a) Acknowledgment. The Purchaser acknowledges that it has been
offered an opportunity to solicit information with respect to the business,
affairs and financial condition of Brookdale, and that the Purchaser is capable
of evaluating the merits of its decision whether or not to purchase the Option
Shares pursuant to this Agreement.
(b) Authority Relative to this Agreement.
(i) the Purchaser has full limited liability company power,
authority and legal right to execute and deliver this Agreement; and
(ii) this Agreement constitutes a legal, valid and binding
obligation of the Purchaser enforceable against it in accordance with its
terms, except as enforceability may be limited by applicable bankruptcy,
insolvency, reorganization, moratorium or other similar laws affecting the
enforcement of creditors' rights generally and by general equitable
principles.
(c) No Distribution. The Purchaser understands that the Shareholder
is an "affiliate" (as defined in the Act (as hereinafter defined)) of Brookdale
and that any sale of the Option Shares (or any of them) to the Purchaser
pursuant to this Agreement will not have been registered under the Securities
Act of 1933, as amended (the "Act"), or the equivalent securities laws of any
state. The Purchaser agrees that it will acquire the Option Shares for its own
account only and will not sell any Option Shares unless such sale is registered
under the Act or unless an exemption from the registration thereof is available.
Section 8. Purchase and Sale of Option Shares. During the term of
the Option, the Shareholder shall not, directly or indirectly, sell, transfer,
tender, pledge, hypothecate or
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encumber any of the Option Shares; provided, however, that during such period
the Shareholder may sell the Option Shares pursuant to the Option.
Section 9. Notices. All notices and other communications provided for
herein (including, without limitation, any modifications of, or consents under,
this Agreement) shall be given or made by telecopy, or in writing and telecopied
(with confirmation), mailed, sent by overnight courier or delivered to the
intended recipient at the address specified below; or, as to any party, at such
other address as shall be designated by such party in a notice to each other
party. Except as otherwise provided in this Agreement, all such communications
shall be deemed to have been duly given when transmitted by telecopier (with
confirmation of receipt), or personally delivered or, in the case of a mailed or
couriered notice, upon receipt, in each case given or addressed as aforesaid.
The giving of any notice required hereunder may be waived in writing by the
party entitled to receive such notice.
If to the Purchaser, at:
Blackacre Bridge Capital L.L.C.
000 Xxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attention: X.X. Xxxxxx
Telecopy Number: (000) 000-0000
With a copy to:
Xxxxxxx Xxxxxxx & Wood
Xxx Xxxxx Xxxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attention: Xxxxxxxx Xxxxxxx
Telecopy Number: (000) 000-0000
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If to the Shareholder, at:
The Prime Group, Inc.
00 X. Xxxxxx Xxxxx, Xxxxx 0000
Xxxxxxx, Xxxxxxxx 00000
Attention: Xxxxxxx X. Xxxxxxx
Telecopy Number: (000) 000-0000
With a copy to:
The Prime Group, Inc.
00 X. Xxxxxx Xxxxx, Xxxxx 0000
Xxxxxxx, Xxxxxxxx 00000
Attention: Xxxxxx X. Xxxxxx, Esq.
Telecopy Number: (000) 000-0000
With a copy to:
Winston & Xxxxxx
00 X. Xxxxxx Xxxxx
Xxxxxxx, Xxxxxxxx 00000
Attention: Xxxxx X. Xxxxxx, Esq.
Telecopy Number: (000) 000-0000
Section 10. Severability. Any provision of this Agreement which is
prohibited or unenforceable in any jurisdiction shall, as to such jurisdiction,
be ineffective to the extent of such prohibition or unenforceability without
invalidating the remaining provisions hereof, and any such prohibition or
unenforceability in any jurisdiction shall not invalidate or render
unenforceable such provision in any other jurisdiction or invalidate any other
provision of this Agreement in such or any other jurisdiction.
Section 11. Separate Counterparts. This Agreement may be executed by
the parties hereto in counterparts, each of which when so executed and delivered
shall be an original, but all such counterparts shall together constitute but
one and the same instrument.
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Section 12. Successors and Assigns. Neither the Shareholder nor the
Purchaser may assign its rights or obligations hereunder without the prior
written consent of the other party. This Agreement shall be binding upon and
inure to the benefit of the parties hereto and their respective successors and
permitted assigns.
Section 13. Amendments and Waivers. This Agreement may be amended, and
compliance with any provision hereof may be waived, but only in a written
instrument signed by the Shareholder and the Purchaser.
Section 14. Headings. The headings of the sections herein are for
convenience of reference only and shall not define or limit any of the terms or
provisions hereof.
Section 15. GOVERNING LAW. THE TERMS OF THIS AGREEMENT SHALL BE GOVERNED
BY, AND SHALL BE CONSTRUED AND ENFORCED IN ACCORDANCE WITH, THE LAWS OF THE
STATE OF ILLINOIS (EXCLUSIVE OF ANY RULES AS TO CONFLICT OF LAWS).
Section 16. References to Other Documents. All defined terms used in this
Agreement which refer to other documents shall be deemed to refer to such other
documents as they may be amended from time to time, provided such documents were
not amended in breach of a covenant contained in this Agreement or any such
other document.
Section 17. No Rights as a Shareholder. The Purchaser shall have no rights
as a shareholder with respect to the Option Shares until the date of the sale of
the Option Shares upon the exercise of the Option. No adjustment will be made
for dividends or other distributions or rights for which the record date is
prior to the date of such issuance.
[signature page follows]
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IN WITNESS WHEREOF, the parties hereto have executed this Agreement to be
effective as of the date first set forth above.
PURCHASER:
BLACKACRE BRIDGE CAPITAL L.L.C.
By: /s/ Xxxxxxx X. Xxxxxx
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Name: Xxxxxxx X. Xxxxxx
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Title:
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SHAREHOLDER:
THE PRIME GROUP, INC.
By: /s/ Xxxxxxx X. Xxxxx
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Name: Xxxxxxx X. Xxxxx
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Its: Executive Vice President
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