Exhibit 4.2
VENTAS, INC.
NONQUALIFIED STOCK OPTION AGREEMENT
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THIS NONQUALIFIED STOCK OPTION AGREEMENT ("Agreement")
is made and entered into as of March 5, 1999 ("Effective
Date"), by and between VENTAS, INC., a Delaware corporation
("Company"), and XXXXX X. XXXXXX, an employee of the Company
("Optionee").
RECITALS:
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A. Company has entered into an employment agreement
with Optionee.
B. Company believes that the opportunity to
investment in Company's shares of Common Stock, having a par
value $.25 per share ("Common Stock"), should increase the
personal interest and special efforts of Optionee in
providing for the continued success and progress of the
Company.
AGREEMENT:
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NOW, THEREFORE, the parties agree as follows:
1. Grant of Option; Option Price. Company hereby
grants to Optionee, as a matter of separate inducement and
agreement in connection with Optionee's employment by
Company, and not in lieu of any salary or other compensation
for Optionee's services, the right and option to purchase
(the "Option") all or any part of an aggregate of two
hundred fifty thousand (250,000) shares of Common Stock
("Option Shares"), on the terms and conditions set forth
herein, subject to adjustment as provided in Section 6, at a
purchase price of the lesser of (a) eight and three-
sixteenths dollars ($8.1875) and (b) the closing price of a
share of Common Stock on the New York Stock Exchange on July
6, 1999 per share ("Option Price"). The Effective Date is
the date on which the Option was granted to Optionee
("Option Date").
2. Term of Option. The Option shall continue for a
term ending ten years from the Option Date ("Termination
Date").
3. Option Exercisable in Installments. Subject to
the other terms and conditions stated herein, the right to
exercise the Option shall vest in installments as follows:
(a) First Installment. Commencing on the Option
Date, Optionee may exercise the Option for up to eighty
three thousand three hundred thirty-four (83,334) Option
Shares.
(b) Second Installment. Commencing on the first
anniversary of the Option Date, Optionee may exercise the
Option for up to one hundred sixty-six thousand six hundred
sixty-seven (166,667) Option Shares, less the number of
Option Shares for which the Optionee has already exercised
the Option.
(c) Third Installment. Commencing on the second
anniversary of the Option Date, Optionee may exercise the
Option for up to two hundred fifty thousand (250,000) Option
Shares, less the number of Option Shares for which the
Optionee has already exercised the Option.
(d) Exercisability Upon Certain Events.
Notwithstanding the foregoing, in the event of (A) a Change
in Control as defined in the employment agreement made as of
March 5, 1999 between Company and Employee ("Employment
Agreement") other than an Early Change of Control (as
defined in the Employment Agreement), (B) termination of
Employee's employment by the Company other than for Cause
(as defined in the Employment Agreement), (C) termination of
Employee's employment by the Employee for Good Reason (as
defined in the Employment Agreement) or (D) the death or
Disability (as defined in the Employment Agreement) of
Employee, the Optionee may exercise the Option for up to two
hundred fifty thousand (250,000) Option Shares, less the
number of Option Shares for which the Optionee has already
exercised the Option.
4. Conditions to Exercise of the Option.
(a) Exercise of Option. Subject to the
provisions of Section 3, Optionee may exercise the Option by
delivering to the Company written notice ("Notice") of
exercise stating the number of Option Shares for which the
Option is being exercised accompanied by payment in the
amount of the Option Price multiplied by the number of
shares for which the Option is being exercised (the
"Exercise Price") in the manner provided in Section 4(b) and
making provision for any applicable withholding taxes.
(b) Payment of Exercise Price. Company shall
accept as payment for the Exercise Price (a) a check payable
to the order of Company, (b) the tender of Common Stock (by
either actual delivery of Common Stock or by attestation)
provided such Common Stock has been held by Optionee for at
least six months prior to tender, (c) "cashless exercise"
through a third party in a transaction independent of the
Company and properly structured to avoid any adverse
accounting consequences to the Company, (d) a combination of
the foregoing, or (e) by any other means which the Company
determines.
(c) Delivery of Shares on Exercise. As soon as
practicable after receipt of the Notice and payment of the
Exercise Price and any required withholding taxes, Company
shall deliver to Optionee, without transfer or issuance tax
or other incidental expense to Optionee, at the office of
Company, or at such other place as may be mutually
acceptable, or, at the election of Company, by certified
mail addressed to Optionee at the Optionee's address shown
in the employment records of Company, a certificate or
certificates for the number of shares of Common Stock set
forth in the Notice and for which Company has received
payment in the manner prescribed herein.
5. Restrictions on Transfer of Option. During
Optionee's lifetime, the Option shall be exercisable only by
Optionee, and neither the Option nor any right hereunder
shall be transferable except by will or the laws of descent
and distribution except as provided herein. The Optionee
may transfer all or part of the Option to (i) "family
members" as defined in the instructions to Form S-8
Registration Statement under the Securities Act of 1933, as
amended (dated February 25, 1999 and effective April 7,
1999) ("Family Members"), (ii) a trust in which Family
Members have more than fifty percent (50%) of the beneficial
interest, (iii) a foundation in which Family Members or the
Optionee control the management of assets or (iv) any other
entity in which Family Members or the Optionee own more than
fifty percent (50%) of the voting interests. The Option may
not be subject to execution or other similar process. If
Optionee attempts to alienate, assign, pledge, hypothecate
or otherwise dispose of the Option or any of the Optionee's
rights hereunder, except as provided herein, or in the event
of any levy or any attachment, execution or similar process
upon the rights or interests hereby conferred, Company may
terminate the Option by notice to Optionee and it shall
thereupon become null and void.
6. Adjustment to Option Shares. The number of Option
Shares shall be subject to adjustment in the same manner as
options under the 1997 Incentive Compensation Plan.
7. Change in Control. Without limitation on the
provisions of Section 3(d), upon a Change in Control as
defined in the 1997 Incentive Compensation Plan, Optionee
shall have the right to exercise the Option in full as to
all Option Shares. In addition, upon a Change in Control as
defined in the 1997 Incentive Compensation Plan, the
Optionee shall have the right to sell the Option back to the
Company for an amount equal to the excess of the fair market
value of the Option Shares subject to the Option over the
Option Price.
8. Agreement Does Not Grant Employment Rights.
Neither the granting of the Option, nor the exercise
thereof, shall be construed as granting to Optionee any
right to employment by Company, as to which the terms of the
Employment Agreement shall control.
9. Withholding. Optionee acknowledges that the
Company will be required to withhold certain taxes (with
federal income tax withholding calculated at the lower of
regular withholding rates or the rate for supplemental wages
(currently 28%))at the time Optionee exercises the Option.
Withholdings by the Company will not exceed the minimum
required by law.
10. Optionee Additional Rights.
(a) Registration Rights. The Company shall file
with the Securities and Exchange Commission (the
"Commission") a registration statement on Form S-8 (or any
successor or replacement form) under the Securities Act of
1933, as amended, with respect to the Option and the Option
Shares and shall cause such registration statement to be
continuously effective for as long as the Option is
exercisable and as may be required by the applicable rules
and regulations of the Commission. In addition, the
Optionee shall have registration rights with respect to the
Option Shares as set forth in the registration rights
agreement made as of September 30, 1999 between the Company
and Xxxxx X. Xxxxxx.
(b) Employment Agreement Rights. Notwithstanding
anything to the contrary herein, the Company intends that
Section 5(b) and Section 5(c) of the Employment Agreement
will be fully operative, effective, binding and enforceable
as of the Effective Date and agrees to adopt such employee
benefit plans, amendments to employee benefit plans or other
arrangements, as applicable, take such other acts and pay
such other amounts as are necessary to effectuate the
provisions of Section 5(b) and Section 5(c) of the
Employment Agreement as well as the other provisions of the
Employment Agreement effective on the Effective Date.
Without limitation of the foregoing, to the extent Optionee
experiences any economic or tax or other detriment or
diminution in benefit on account of or related to any of
such Sections or provisions not being fully operative,
effective, binding and enforceable on the Effective Date
fully in accordance with the terms and provisions of such
Sections or provisions, or any delay or failure to comply
with the provisions of such Sections or provisions, the
Company shall immediately take such actions, and pay such
amounts, as Optionee reasonably determines are appropriate
so that the Optionee achieves at least the same economic,
tax and other benefits the Optionee would have had if such
Section 5(b) and Section 5(c) and such other provisions of
the Employment Agreement were fully operative, effective,
binding and enforceable in accordance with their terms as of
the Effective Date.
11. Miscellaneous.
(a) No Rights as Stockholder. Neither Optionee,
nor any person entitled to exercise Optionee's rights
hereunder, shall have any of the rights of a stockholder
regarding the shares of Common Stock subject to the Option,
except after the exercise of the Option as provided herein.
(b) Captions. The captions and section headings
used herein are for convenience only, shall not be deemed
part of this Agreement and shall not in any way restrict or
modify the context and substance of any section or paragraph
of this Agreement.
(c) Governing Law. This Agreement shall be
governed by, and construed in accordance with, the laws of
the State of Delaware.
IN WITNESS WHEREOF, the parties have executed this
Agreement as of the day and year first above written.
VENTAS, INC.
By: -------------------------
("Company")
/s/ Xxxxx X. Xxxxxx
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("Optionee")
