Exhibit 10.43
STOCK PURCHASE AGREEMENT AND
AGREEMENT CONCERNING OPTION SHARES
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THIS STOCK PURCHASE AGREEMENT AND AGREEMENT CONCERNING OPTION SHARES (this
"Agreement"), is made and entered as of the 7th day of May, 1997, by and among
The Prime Group, Inc., an Illinois corporation ("PGI"), Prime Group VI , L.P.,
an Illinois limited partnership ("PG6LP"), and Xxxxxx X. Xxxxxxxx, Xx., an
individual currently residing at 00 Xxxxx Xxxx, Xxxxxxxx, Xxx Xxxxxx 00000
("DWC").
WITNESSETH
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WHEREAS, PGI and DWC are parties to that certain Stock Option and Deposit
Agreement (the "Stock Option Agreement"), dated as of the date hereof, pursuant
to which PGI grants to DWC the option to purchase 100,000 shares (the "Option
Shares") of common stock of Brookdale Living Communities, Inc., a Delaware
corporation ("Brookdale"); and
WHEREAS, in connection with the initial public offering of Brookdale, which
was completed on the date hereof, (i) PGI received 1,382,410 shares (the "PGI
Shares") of common stock of Brookdale, (ii) Prime Group Limited Partnership, an
Illinois limited partnership and an affiliate of PGI ("PGLP"; PGI, PG6LP and
PGLP are sometimes referred to herein collectively as the "Prime Entities"),
received 320,633 shares (the "PGLP Shares") of common stock of Brookdale, (iii)
Xxxx X. Xxxxxxx ("MJS ") received 296,957 shares (the "MJS Shares") of common
stock of Brookdale and (iv) PG6LP purchased 2,500,000 shares (the "PG6LP
Shares") of common stock of Brookdale for $10.695 per share; and
WHEREAS, PG6LP financed a portion of the purchase price for the PG6LP
shares with the proceeds of a loan (the "HR Loan") in the amount of Eighteen
Million and no/100 Dollars ($18,000,000.00) made to PG6LP by Healthcare Realty
Trust Incorporated, a Maryland real estate investment trust ("HR"); and
WHEREAS, to satisfy a requirement imposed by HR as a condition to making
the HR Loan, all of the PGLP Shares, all of the MJS Shares, all of the PG6LP
Shares (the "Pledged PG6LP Shares") and 1,369,910 of the PGI Shares (the
"Pledged PGI Shares") were pledged to HR to secure the repayment of the HR Loan
(all shares pledged to HR to secure the HR Loan are referred to herein,
collectively as the "Pledged Shares"); and
WHEREAS, the Pledged PGI Shares include the Option Shares; and
WHEREAS, DWC desires to purchase from PG6LP, and PG6LP desires to sell to
DWC,
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25,000 shares (including any adjustments pursuant to paragraph 1(c) below, the
"Purchase Shares") of common stock of Brookdale upon the terms and subject to
the conditions set forth in this Agreement; and
WHEREAS, the Pledged PG6LP Shares include the Purchase Shares.
NOW THEREFORE, in consideration for the mutual agreements, covenants,
representations and warranties set forth herein, and for other good and valuable
consideration, the receipt and sufficiency of which we hereby acknowledged, the
parties hereto agree as follows:
1. PG6PL hereby agrees to sell the Purchase Shares to DWC, and DWC hereby
agrees to purchase the Purchase Shares from PG6LP, upon the following terms and
conditions:
(a) The purchase price (the "Purchase Price") for the Purchase Shares
shall be Two Hundred Seventy-Two Thousand Seven Hundred Twenty-Two and
50/100 Dollars ($272,722.50), payable at the Closing (defined below) in
immediately available funds. The Purchase Price shall be reduced by the
amount of any cash distributions received by PG6LP with respect to the
Purchase Shares to the extent any such cash distribution exceeds the
aggregate amount of the Unpaid Portions (defined below) as of the date on
which such cash distribution is received.
(b) From and after the date hereof until the Closing, DWC shall pay
to PG6LP the following:
(i) Until the HR Loan is repaid or refinanced, but subject
to the provisions of subparagraph 1(b)(iii) hereof, (A) on the first
business day of each month, commencing June 1, 1997, DWC shall pay
PG6LP an amount calculated at the rate of 10.25% per annum on the
Purchase Price, computed on the basis of a year of 360 days and actual
days elapsed, and (B) on each June 30, 1997, September 30, 1997,
December 31, 1997 and March 31, 1998, DWC shall pay PG6LP the sum of
Two Thousand Six Hundred Seventy-Three and 75/100 Dollars ($2,673.75).
(ii) After the HR Loan is repaid or refinanced, but subject to
the provisions of subparagraph 1(b)(iii) hereof, on the first business
day of each month, commencing on the first month following the date on
which the HR Loan is repaid or refinanced, DWC shall pay PG6LP an
amount calculated at the rate of 8.75% per annum on the Purchase
Price, computed on the basis of a year of 360 days and actual days
elapsed. (The amounts payable pursuant to subparagraphs 1(b)(i) and
1(b)(ii) hereof are referred to as the "Periodic Payments".)
(iii) DWC shall be obligated to pay only one-half of the Periodic
Payments otherwise payable pursuant to subparagraph 1(b)(i) and
1(b)(ii) hereof unless and until DWC receives bonuses or other cash
compensation (other than base salary) from
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Brookdale from and after the date hereof. In the event any portion of
the Periodic Payments (the "Unpaid Portion") are not paid in
accordance with this subparagraph 1(b)(iii) because DWC has not
received a sufficient amount of bonuses or other cash compensation
(other than base salary), said Unpaid Portion shall accrue (without
interest). The Unpaid Portion (or a portion thereof) shall be payable
by DWC to PG6LP promptly following the receipt by DWC of a bonus or
other cash compensation from Brookdale, upon which, DWC shall pay PGI
the lesser of (A) the aggregate amount of the Unpaid Portions not
previously paid or (B) the amount of the bonus or the cash
compensation (other than base salary) received by DWC from Brookdale
(net of income tax withholdings and other payroll deductions). In
addition, the amount of the Unpaid Portions shall be reduced by the
amount of any cash distributions received by PG6LP with respect to the
Purchase Shares. Any Unpaid Portions not paid prior to the Closing
shall be due and payable in full at the Closing.
(c) The Purchase Shares shall be adjusted for or include, as the case
may be, any stock issued by Brookdale with respect to the Purchase Shares
as a result of or in connection with a stock dividend, stock split, spin-
off or other non-cash distributions occurring prior to the Closing.
(d) PG6LP will notify DWC in writing of the amounts due PG6LP under
this paragraph 1. In the event DWC fails to pay any amount due and payable
pursuant to subparagraph 1(b) hereof within fifteen (15) business days
after written notice from PG6LP to DWC, PG6LP shall have the right to
terminate the right of DWC to purchase the Purchase Shares.
(e) The purchase and sale of the Purchase Shares (the "Closing")
pursuant to this subparagraph 1 shall occur on a date (the "Closing Date")
designated by DWC upon not less than five (5) business days written notice
to PG6LP; provided, however, the Closing Date shall not be later than May
8, 2000. In the event the Closing does not occur on or before May 8, 2000,
DWC's right to purchase the Purchase Shares, and PG6LP's obligation to sell
the Purchase Shares, shall automatically terminate.
(f) DWC shall have no voting rights as a shareholder with respect to
the Purchase Shares until the Closing of the purchase and sale of the
Purchase Shares.
(g) In the event DWC acquires the Option Shares before DWC pays in
full all amounts payable under this paragraph 1, DWC shall pledge the
Option Shares to PG6LP to secure DWC's obligation to pay the Purchase
Price, the Periodic Payments and the Unpaid Portions pursuant to this
paragraph 1.
(h) Notwithstanding anything in this Agreement to the contrary, in
the event of a failure by DWC to pay the Purchase Price and the Periodic
Payments, PG6LP's remedies shall be limited to (i) terminating the
agreement for the sale and purchase of the Xxxxxxxx
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Xxxxxx, (xx) terminating the Stock Option Agreement (to the extent DWC has
not previously exercised the option under the Stock Option Agreement and
purchased some or all of the Option Shares), (iii) foreclosing on the
Option Shares previously acquired by DWC and pledged to PG6LP to secure the
payments due under this paragraph 1, and (iv) bringing an action at law to
recover from DWC the portion of the Periodic Payments which are due and
payable by DWC under paragraph 1(b) hereof excluding that portion of the
Periodic Payments which are payable only to the extent of bonuses and other
cash compensation (other than base salary) received by DWC.
2. (a) DWC hereby acknowledges, consents to and approves the pledge by
PG6LP to HR of the Pledged PG6LP Shares, including the Purchase Shares.
DWC hereby subordinates his right to purchase the Purchase Shares pursuant
to paragraph 1 hereof to the rights and interests of HR in the Purchase
Shares as set forth in that certain Pledge and Security Agreement, dated as
of the date hereof, between PG6LP and HR. DWC acknowledges and agrees that
DWC shall not be entitled to purchase the Purchase Shares unless and until
the pledge of the Pledged PG6LP Shares to HR is terminated, and
acknowledges and agrees that a foreclosure by HR on the Purchase Shares
shall not affect DWC's obligation to pay to PGI the Purchase Price, the
Periodic Payments and the Unpaid Portions in accordance with paragraph 1
hereof even if PGI does not own some or all of the Purchase Shares, as if
DWC purchased the Purchase Shares as of the date hereof in consideration
for the delivery to PGI of a note in the principal amount equal to the
Purchase Price.
(b) DWC hereby acknowledges, consents to and approves the pledge by
PGI to HR of the Option Shares. DWC hereby subordinates his rights and
interests in and to the Option Shares to the rights and interest of HR in
the Option Shares as set forth in that certain Pledge and Security
Agreement, dated as of the date hereof, between PGI and HR. DWC
acknowledges and agrees that DWC shall not be entitled to exercise his
option to purchase the Option Shares, unless and until the pledge of the
Pledged PGI Shares to HR is terminated.
(c) (i) In the event HR forecloses on all of the Pledged Shares, PGI
shall pay to DWC an amount equal to 125,000 (representing the
aggregate number of Purchase Shares and the Option Shares) multiplied
by the Effective Per Share Foreclosure Sales Price (defined below),
but only to the extent of the aggregate amount of cash, if any,
received by the Prime Entities in connection with such foreclosure
(after all amounts due under the HR Loan have been paid in full and
after PGI has satisfied its obligations to MJS with respect to the
Pledged MJS Shares pursuant to that certain letter agreement, dated as
of the date hereof (the "PGI/MJS Letter Agreement"), a copy of which
is attached hereto as Exhibit A); provided, however, that any cash to
which DWC is entitled under this subparagraph 2(c)(i) shall be applied
against, and shall reduce, the amount of the Purchase Price, together
with the aggregate amount of all accrued but unpaid Periodic Payments
(including the aggregate amount of all Unpaid Portions), with the
balance payable to DWC, and the obligations of the parties
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hereto under paragraph 1 hereof shall terminate.
(ii) In the event HR forecloses on some but not all of the
Pledged Shares, and if at least 421,957 of the Pledged Shares are
returned to the Prime Entities and MJS in connection with such
foreclosure (after all amounts due under the HR Loan have been paid in
full), (A) the Prime Entities shall deliver to MJS up to 296,957 of
the returned Pledged Shares in accordance with the PGI/MJS Letter
Agreement, and (B) the Prime Entities shall deliver 100,000 of the
returned Pledged Shares to DWC upon the exercise by DWC of the option
to purchase the Option Shares and the payment by DWC to PGI of the
purchase price for the Option Shares in accordance with the terms of
the Stock Option Agreement, and DWC shall, in turn, pledge such
100,000 shares to PG6LP to secure DWC's obligation to purchase the
Purchase Shares in accordance with paragraph 1 of this Agreement.
(iii) In the event HR forecloses on some but not all of the
Pledged Shares, and if at least 396,957 but less than 421,957 of the
Pledged Shares are returned to the Prime Entities and MJS in
connection with such foreclosure (after all amounts due under the HR
Loan have been paid in full), (A) the Prime Entities shall deliver to
MJS up to 296,957 of the returned Pledged Shares in accordance with
the PGI/MJS Letter Agreement, (B) the Prime Entities shall deliver
100,000 of the returned Pledged Shares to DWC upon the exercise by DWC
of the option to purchase the Option Shares and the payment by DWC to
PGI of the purchase price for the Option Shares in accordance with the
terms of the Stock Option Agreement, and DWC shall, in turn, pledge
such 100,000 shares to PG6LP to secure DWC's obligation to purchase
the Purchase Shares in accordance with paragraph 1 of this Agreement;
provided, however, that the number of Purchase Shares which PG6LP is
obligated to deliver to DWC pursuant to paragraph 1 hereof shall be
reduced to the remaining balance of the Pledged Shares returned to the
Prime Entities, and the Purchase Price shall be reduced by an amount
equal to the lesser of (1) the number by which the number of Purchase
Shares is reduced pursuant to this paragraph 2(c)(iii) multiplied by
the Effective Per Share Foreclosure Sales Price and (2) the aggregate
amount of cash received by the Prime Entities in connection with the
HR foreclosure (after all amounts due under the HR Loan have been paid
in full).
(iv) In the event HR forecloses on some but not all of the
Pledged Shares, and if at least 296,957 but less than 396,957 of the
Pledged Shares are returned to the Prime Entities and MJS in
connection with such foreclosure (after all amounts due under the HR
Loan have been paid in full), (A) the Prime Entities shall deliver to
MJS up to 296,957 of the returned Pledged Shares in accordance with
the PGI/MJS Letter Agreement, (B) the number of Option Shares which
DWC has an option to purchase pursuant to the Stock Option Agreement
shall be reduced by the remaining balance of the returned Pledged
Shares and such returned Pledged Shares shall be delivered to DWC upon
the exercise by DWC of the option to purchase such shares pursuant
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to the Stock Option Agreement and the payment by DWC of an amount
equal to $0.01 per share, and DWC shall, in turn, pledge such shares
to PG6LP to secure DWC's obligation to purchase the Purchase Shares in
accordance with paragraph 1 of this Agreement, (C) PG6LP shall not be
required to deliver any Purchase Shares at the Closing pursuant to
paragraph 1 hereof, and (D) the Purchase Price payable by DWC pursuant
to paragraph 1 of this Agreement shall be reduced by an amount equal
to the lesser of (1) the Effective Per Share Foreclosure Sales Price
multiplied by the sum of 25,000 plus the number of shares by which the
Option Shares are reduced pursuant to subparagraph (B) of this
paragraph 2(c)(iv), and (2) the aggregate amount of cash, if any,
received by the Prime Entities in connection with the HR foreclosure
(after all amounts due under the HR Loan have been paid in full).
(v) In the event HR forecloses on some but not all of the
Pledged Shares, and if less than 296,957 of the Pledged Shares are
returned to the Prime Entities and MJS in connection with such
foreclosure (after all amounts due under the HR Loan have been paid in
full) (A) (1) the Prime Entities shall deliver to MJS all of the
Pledged Shares returned to the Prime Entities in accordance with the
PGI/MJS Letter Agreement, and (2) PGI shall pay to MJS all or a
portion of any cash received by the Prime Entities in connection with
the HR foreclosure in accordance with the PGI/MJS Letter Agreement,
and (B) PGI shall pay to DWC an amount equal to the lesser of (1) the
balance of the cash, if any, received by the Prime Entities in
connection with HR foreclosure and (2) 125,000 multiplied by the
Effective Per Share Foreclosure Sales Price, provided, however, the
Prime Entities shall retain such cash to the extent of, and shall
apply such cash against, the amount of the Purchase Price, together
with the aggregate amount of all accrued but unpaid Periodic Payments
(including the aggregate amount of all Unpaid Portions) payable by DWC
under paragraph 1 hereof, and the obligations of the parties hereto
under paragraph 1 hereof shall terminate.
(vi) For purposes hereof, (a) the term "Effective Per Share
Foreclosure Sales Price") shall mean the quotient of (A) the amount by
which the aggregate amount due under the HR Loan (including interest,
fees, costs and expenses payable thereunder) is reduced in connection
with the HR foreclosure, divided by (B) the number of Pledged Shares
on which HR forecloses, (b) Pledged Shares shall be deemed to have
been foreclosed on by HR to the extent such Pledged Shares are sold by
HR, and (c) the Pledged Shares returned to the Prime Entities and MJS
shall include the Pledged Shares with respect to which HR has released
the pledge and its security interests and, accordingly, a Prime Entity
or MJS holds such Pledged Shares free and clear of any pledge or
security interest in favor of HR.
3. (a) PGI hereby agrees that, in connection with the repayment or
refinancing of the HR Loan, PGI will cause the pledge to HR of the Option
Shares to be released and terminated, and that, following such release and
termination of the pledge to HR of the Option Shares, PGI will deposit the
Option Shares with Winston & Xxxxxx, as "Escrow Agent" under the
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Stock Option Agreement and the Option Shares shall thereafter be held in
accordance with the terms of the Stock Option Agreement.
(b) PG6LP hereby agrees that, in connection with the repayment or
refinancing of the HR Loan, PG6LP will cause the pledge to HR of the
Purchase Shares to be released and terminated, and that, following said
release and termination of the pledge to HR of the Purchase Shares, PG6LP
will hold the Purchase Shares free and clear of all pledges, liens,
security interests and other encumbrances unless and pursuant to paragraph
1 hereof terminates, and, at DWC's request, PG6LP will deposit the Purchase
Shares in an escrow with Winston & Xxxxxx or another escrow agent
reasonably acceptable to PG6LP and DWC pursuant to an escrow agreement
reasonably acceptable to PG6LP and DWC.
4. 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
or 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 DWC, to:
Xxxxxx X. Xxxxxxxx, Xx.
c/o Brookdale Living Communities, Inc.
00 Xxxx Xxxxxx Xxxxx
Xxxxxxx, Xxxxxxxx 00000
Telecopy Number: (000) 000-0000
If to PGI, to:
The Prime Group, Inc.
00 Xxxx Xxxxxx Xxxxx, Xxxxx 0000
Xxxxxxx, Xxxxxxxx 00000
Attention: Xxxxxxx X. Xxxxxxx
Telecopy Number: (000) 000-0000
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With a copy to:
The Prime Group, Inc.
00 Xxxx Xxxxxx Xxxxx, Xxxxx 0000
Xxxxxxx, Xxxxxxxx 00000
Attention: Xxxxxx X. Xxxxxx, Esq.
Telecopy Number: (000) 000-0000
If to PG6LP, to:
Prime Group VI, L.P.
c/o The Prime Group, Inc.
00 Xxxx 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 Xxxx Xxxxxx Xxxxx, Xxxxx 0000
Xxxxxxx, Xxxxxxxx 00000
Attention: Xxxxxx X. Xxxxxx, Esq.
Telecopy Number: (000) 000-0000
5. 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.
6. 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.
7. None of PGI, PG6LP or DWC may assign its rights or obligations
hereunder without the prior written consent of the other parties. This
Agreement shall be binding upon and inure to the benefit of the parties hereto
and their respective successors and permitted assigns and shall be binding upon
and inure to the benefit of DWC's heirs.
8. This Agreement may be amended, and compliance with any provision
hereof may be waived, but only in a written instrument signed by PGI, PG6LP and
DWC.
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9. 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).
10. 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.
11. The term "business day" shall mean any day other than a Saturday,
Sunday or any other day on which banks in the Chicago, Illinois are required or
authorized to close.
[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.
THE PRIME GROUP, INC.
By: Xxxxxxx X. Xxxxxxx
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Title: President
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PRIME GROUP VI, L.P.
By: PGLP, Inc.
Managing General Partner
By: Xxxxxxx X. Xxxxxxx
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Title: President
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Name: Xxxxxxx X. Xxxxxxx
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Xxxxxx X. Xxxxxxxx, Xx.
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Xxxxxx X. Xxxxxxxx, Xx.
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EXHIBIT A
PGI/MJS LETTER AGREEMENT
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