1
Exhibit 10.4
PREFERRED STOCK PURCHASE AGREEMENT
PREFERRED STOCK PURCHASE AGREEMENT, dated as of November 25,
1996 (the "Agreement"), between Brim, Inc., an Oregon corporation (the
"Purchaser"), and General Electric Capital Corporation, a New York corporation
(the "Seller").
BACKGROUND
A. The Purchaser has entered into the following series of agreements:
(i) That Investment Agreement dated November 21, 1996 (the "Investment
Agreement") by and between Purchaser and Golder, Thoma, Xxxxxxx, Xxxxxx Fund IV,
L.P. ("Xxxxxx Xxxxx") which contemplates, among other things, that Xxxxxx Xxxxx
and/or its designee will acquire certain newly issued shares of common and
preferred stock of the Purchaser (the "Investment Transaction").
(ii) That Merger Agreement dated November27, 1996 (the "BSL Merger
Agreement") by and among the Purchaser, Brim Senior Living, Inc. ("BSL") and
Encore Senior Living, LLC ("Encore"), pursuant to which, among other things, BSL
will be merged with and into Encore and certain assets of the Purchaser related
to the business conducted by BSL will be sold to Encore (the "BSL Merger and
Related Transactions").
(iii) That Stock Purchase Agreement dated November 27, 1996 (the "MSL
Stock Purchase Agreement") by and between the Purchaser and CC Lantana, Inc.
("CC") pursuant to which, among other things, CC will acquire from Purchaser all
of the issued and outstanding stock of its wholly owned subsidiary Meridian
Senior Living, Inc. (the "MSL Transaction").
(iv) That Purchase Agreement dated November 25, 1996 (the "Meridian
Purchase Agreement") by and among Purchaser and K. Xxxxx XxXxxxxxxx and Xxxxx
Xxxxxxxx pursuant to which, among other things, Messrs. Xxxxxxxx and XxXxxxxxxx
will acquire from Purchaser its limited partnership interest in Meridian Park
Village Limited Partnership (the "Meridian Park Transaction").
1
2
(v) That Purchase Agreement dated November 25, 1996 (the "Plaza
Purchase Agreement") by and among Purchaser, certain subsidiaries of Purchaser
and Plaza Enterprises, LLC ("Plaza"), pursuant to which, among other things,
Plaza will acquire from Purchaser and such subsidiaries certain medical office
buildings and a home health business in which Purchaser and said subsidiaries
are currently engaged (the "Plaza Transaction").
Hereinafter the Investment Transaction, the BSL Merger and Related
Transactions, the MSL Transaction, the Meridian Park Transaction and the Plaza
Transaction will be collectively referred to as the "Transactions" and the
Investment Agreement, the BSL Merger Agreement, the MSL Stock Purchase
Agreement, the Meridian Purchase Agreement and the Plaza Purchase Agreement will
be collectively referred to as the "Transaction Documents."
B. In connection with its entering into the Transaction Documents, the
Purchaser has requested that the Seller enter into this Agreement pursuant to
which the Purchaser shall repurchase all 96,000 shares of Series A Cumulative
Convertible Preferred Stock of the Purchaser (the "Preferred Stock") owned by
Seller (the "Seller's Shares") upon the terms and subject to the conditions
hereinafter set forth.
TERMS
In consideration of the respective representations, warranties,
covenants and agreements of the parties set forth in this Agreement, the
parties hereto agree as follows:
1. Representations and Warranties of Seller. Seller hereby represents
and warrants to Purchaser that:
(a) Organization. Seller is duly organized, validly existing and in
good standing under the laws of the jurisdiction of its organization, and has
all requisite power and authority to own, lease and operate its properties and
to carry on its business as now being conducted.
(b) Share Ownership. Seller owns 96,000 shares of Preferred Stock of
record or beneficially, as of the date hereof. Seller owns all such shares free
and clear of all liens, encumbrances, equities or claims.
2
3
(c) Authority. Seller has all requisite corporate power and authority
to execute and deliver this Agreement, to perform its obligations hereunder and
to consummate the transactions contemplated hereby. The execution and delivery
of this Agreement by Seller, the performance of this Agreement by Seller and the
consummation of the transactions contemplated hereby have been duly authorized
by all necessary corporate action and no other corporate proceeding on the part
of Seller is necessary to authorize this Agreement or to consummate the
transactions contemplated hereby. This Agreement has been duly executed and
delivered by Seller and, assuming the due authorization, execution and delivery
hereof by Purchaser, constitutes the valid and binding obligation of Seller,
enforceable against Seller in accordance with its terms, except as such
enforceability may be limited by creditors' rights laws or general principles of
equity.
(d) No Conflict: Required Filings and Consents.
(i) The execution and delivery of this Agreement by Seller does not,
and the performance of this Agreement by Seller and the consummation of the
transactions contemplated hereby will not, conflict with or violate any of the
Certificate of Incorporation or Bylaws of Seller, conflict with or violate any
laws applicable to Seller or by or to which any of Seller's properties or assets
is bound or subject or result in any breach of or constitute a default (or an
event that with notice or lapse of time or both would become a default) under,
or give to others any rights of termination, amendment, acceleration or
cancellation of, or require payment under, or result in the creation of a lien
on any of the properties or assets of Seller, pursuant to any note, bond,
mortgage, indenture, contract, agreement, lease, license, permit, franchise or
other instrument or obligation to which Seller is a party or by which Seller or
any of Seller's properties or assets is bound or subject, in each case, other
than any conflict, violation, breach, default, right, payment or lien which
would not, individually or in the aggregate, have a material adverse effect on
the Seller or on its ability to sell the Seller's Shares to Purchaser pursuant
to this Agreement.
(ii) The execution and delivery of this Agreement by Seller does not,
and the performance by Seller of this Agreement and the consummation of the
3
4
transactions contemplated hereby will not, require Seller to obtain any consent,
approval, authorization or permit of, or to make any filing with or notification
to, any governmental entity, in each case, other than any consent, approval,
authorization, permit, filing or notification, which, if not made or obtained,
would not, individually or in the aggregate, have a material adverse effect on
the Seller or on its ability to sell the Seller's Shares to Purchaser pursuant
to this Agreement.
(e) Absence of Litigation. There is no claim, action, suit, proceeding
or investigation of any kind, at law or in equity (including actions or
proceedings seeking injunctive relief), by or before any governmental entity
pending or, to the knowledge of Seller, threatened against Seller or affecting
any of Seller's businesses, assets or rights that would impair Seller's ability
to consummate the transactions contemplated hereby and Seller is not a party or
subject to or in default under any judgment, order or decree of any governmental
entity that could impair its ability to consummate the transactions under this
Agreement.
(f) Brokers. No broker, finder or investment banker is entitled to any
brokerage, finder's or other fee or commission in connection with the
transactions contemplated by this Agreement based upon arrangements made by or
on behalf of Seller.
(g) Purchaser's Proxy Statement. Seller has received and reviewed a
copy of the Proxy Statement dated November 29, 1996 (the "Proxy Statement)
regarding the Transactions (as defined in the Investment Agreement).
2. Representations and Warranties of Purchaser. Purchaser hereby
represents and warrants to Seller that:
(a) Organization. Purchaser is a corporation duly organized and validly
existing under the laws of the State of Oregon and has all requisite corporate
power and corporate authority to own, lease and operate its properties and to
carry on its business as now being conducted.
4
5
(b) Authority. Purchaser has all requisite corporate power and
corporate authority to execute and deliver this Agreement, to perform its
obligations hereunder and to consummate the transactions contemplated hereby.
The execution and delivery of this Agreement by Purchaser, the performance of
this Agreement by Purchaser and the consummation of the transactions
contemplated hereby have been duly authorized by all necessary corporate action
(including, without limitation, approval by the Purchaser's Board of Directors)
and no other corporate proceeding on the part of Purchaser is necessary to
authorize this Agreement or to consummate the transactions contemplated hereby
other than the approval of the consummation of the transactions contemplated
hereby by the shareholders of Purchaser. This Agreement has been duly executed
and delivered by Purchaser and, assuming the due authorization, execution and
delivery hereof by Seller and approval of the Transactions by the shareholders
of Purchaser, constitutes the valid and binding obligation of Purchaser,
enforceable against Purchaser in accordance with its terms, except as such
enforceability may be limited by applicable creditors' rights laws or general
principles of equity.
(c) No Conflict: Required Filings and Consents.
(i) The execution and delivery of this Agreement by Purchaser does not,
and the performance of this Agreement by Purchaser and the consummation of the
transactions contemplated hereby will not, conflict with or violate the Restated
Certificate of Incorporation or By-Laws of Purchaser, conflict with or violate
any laws applicable to Purchaser or by or to which any of its properties or
assets is bound or subject or result in any breach of or constitute a default
(or an event that with notice or lapse of time or both would become a default)
under, or give to others any rights of termination, amendment, acceleration or
cancellation of, or require payment under, or result in the creation of a lien
on any of the properties or assets of Purchaser, pursuant to any note, bond,
mortgage, indenture, contract, agreement, lease, license, permit, franchise or
other instrument or obligation to which Purchaser is a party or by which
Purchaser or any of its properties or assets is bound or subject, in each case,
other than any conflict, violation, breach, default, right, payment or lien
which would not, individually or in the aggregate, have a material adverse
effect on the
5
6
Purchaser or on its ability to purchase the Seller's Shares from
Seller pursuant to this Agreement.
(ii) The execution and delivery of this Agreement by Purchaser does
not, and the performance by Purchaser of this Agreement and the consummation of
the transactions contemplated hereby will not, require Purchaser to obtain any
consent, approval, authorization or permit of, or to make any filing with or
notification to, any governmental entity other than those provided for in the
Transaction Documents and other than any consent, approval, authorization,
permit, filing or notification, which, if not made or obtained, would not,
individually or in the aggregate, have a material adverse effect on the
Purchaser or on its ability to purchase the Seller's Shares from Seller pursuant
to this Agreement.
(d) Brokers. No broker, finder, or investment banker is entitled to any
brokerage, finder's or other fee or commission in connection with the
transactions contemplated by this Agreement based upon arrangements made by or
on behalf of Purchaser, other than that fee due to Xxxxx Xxxxxx which has acted
as a financial advisor to Purchaser in connection with the Transactions, which
fee shall be paid by, and remain the sole responsibility of, Purchaser in the
case of the BSL Merger and Related Transactions and of Xxxxxx Xxxxx in the case
of the Investment Transaction, in each case, under the terms of the Transaction
Documents.
(e) Disclosure. The Proxy Statement does not contain any untrue
statement of a material fact or omit to state a material fact necessary in order
to make the statements contained therein in light of the circumstances under
which they were made not misleading. True and complete copies of each of the
Transaction Documents have been furnished to Seller and there are no other oral
or written agreements or commitments relating to the Transactions.
(f) Absence of Litigation. There is no claim, action, suit, proceeding
or investigation of any kind, at law or in equity (including actions or
proceedings seeking injunctive relief), by or before any governmental entity
pending or, to the knowledge of Purchaser, threatened against Purchaser or
affecting any of
6
7
Purchaser's businesses, assets or rights that would impair Purchaser's ability
to consummate the transactions contemplated hereby and Purchaser is not a party
or subject to or in default under any judgment, order or decree of any
governmental entity that could impair its ability to consummate the transactions
under this Agreement.
3. Purchase and Sale of Shares.
(a) At the Closing provided for in Section 4 of this Agreement (the
"Closing") and subject to the conditions set forth in Section 5 of this
Agreement, the Seller will sell, transfer and deliver the Seller's Shares to the
Purchaser (duly endorsed for transfer in blank or accompanied by stock transfer
powers duly executed in blank, with all necessary stock transfer tax stamps
affixed and canceled) and the Purchaser will purchase the Seller's Shares for
the following amount: Thirty Million Three Thousand One Hundred Six and no/100
Dollars ($30,003,106), representing an accrued dividend of Two Million Six
Hundred Twenty Four Thousand and no/100 Dollars ($2,624,000) and Twenty Seven
Million Three Hundred Seventy Nine Thousand One Hundred Six and no/100 Dollars
($27,379,106) as the purchase price for the Seller's Shares. The foregoing
assumes that the Closing occurs on or after December 1 and on or before December
15, 1996. In the event the Closing occurs after the date of this Agreement but
prior to December 1, the Purchaser will purchase the Seller's Shares for the
following amount: Twenty Nine Million Nine Hundred Eighty Seven Thousand One
Hundred Six and no/100 Dollars ($29,987,106), representing an accrued dividend
of Two Million Five Hundred Ninety Two Thousand and no/100 Dollars ($2,592,000)
and Twenty Seven Million Three Hundred Ninety Five Thousand One Hundred Six and
no/100 Dollars ($27,395,106) as the purchase price for the Seller's Shares. The
foregoing also assumes the costs to the Company of the Senior Living Transaction
shall not exceed $500,000. In the event the costs are greater or less than said
amount, the amount due to Seller shall be adjusted accordingly.
(b) In addition, Seller shall have an interest in Two Million One
Hundred Sixty Eight Thousand Eight Hundred Forty Four and no/100 Dollars
7
8
($2,168,844) of the amounts deposited by the purchasers under the Investment
Agreement, the BSL Merger Agreement and the MSL Stock Purchase Agreement in the
Escrow Accounts and the Agents/Legal Fees Expense Account created under the
terms thereof, each in accordance with the terms of the Investment Agreement,
the BSL Merger Agreement and the MSL Stock Purchase Agreement and any escrow
agreements executed pursuant thereto and in any distribution which may be made
under Section 1.08 of the Investment Agreement.
(c) Each of Seller and Purchaser will, upon request of the other,
promptly execute and deliver all additional documents reasonably deemed by the
requesting party to be necessary, appropriate or desirable to effect, complete
and evidence the sale and purchase, assignment, and transfer of the Seller's
Shares pursuant to this Agreement. In the event of any change in the number of
Seller's Shares outstanding by recapitalization, declaration of a stock split or
combination or payment of a stock dividend or the like, the number of Seller's
Shares to be transferred to the Purchaser and purchase price to be made to the
Seller shall be adjusted accordingly.
4. Closing. The closing of the purchase and sale hereunder shall take
place immediately after the consummation of the Investment in accordance with
the terms of the Investment Agreement at the offices of Purchaser, or at such
other time and place as the parties may mutually agree. At the Closing, Seller
shall deliver the Seller's Shares and the Purchaser shall pay the purchase price
therefore and the accrued dividends thereon in accordance with the provisions of
Section 3 hereof.
5. Conditions.
(a) The obligations of each of the parties to this Agreement shall be
subject to the satisfaction or waiver, if applicable, at the Closing of each of
the following conditions, each of which may be satisfied concurrently:
8
9
(i) the Transactions contemplated by the terms of the Transaction
Documents shall have been consummated; and
(ii) no order, decree or injunction of a court of competent
jurisdiction which prevents the consummation of the transactions contemplated by
this Agreement or of the Transactions contemplated by the Transaction Documents
shall be in effect.
(b) The obligations of the Purchaser under this Agreement shall also be
subject to the representations and warranties of the Seller being true, correct
and complete in all material respects as of the date hereof and as of the
Closing, and the Seller having complied with its covenants hereunder.
(c) The obligations of the Seller under this Agreement shall be subject
to the representations and warranties of the Purchaser being true, correct and
complete in all material respects as of the date hereof and as of the Closing,
and the Purchaser having complied with its covenants hereunder.
6. Prohibited Transactions. From the date hereof through the Closing
or the earlier termination or expiration of this Agreement, except as provided
for herein, the Seller agrees not to:
(a) sell, transfer, pledge, assign or otherwise dispose of, or enter
into any contract, option or other arrangement or understanding with respect to
the sale, transfer, pledge, assignment or other disposition of any of the
Seller's Shares; or
(b) grant any proxies, deposit any or all of the Seller's Shares into a
voting trust or enter into a voting agreement with respect to any of the
Seller's Shares.
7. Termination of Certain Agreements. Each of Seller and Purchaser
hereby irrevocably consents to the termination of, and hereby terminates
effective upon the purchase of the Seller's Shares at the Closing, the following
agreements
9
10
to which Seller and Purchaser are a party and by which Seller and Purchaser or
Seller's Shares are or may be bound:
(a) That Stock Purchase Agreement dated as of July 16, 1993 between
Purchaser and Seller;
(b) That Shareholders' Agreement dated as of July 16, 1993 between
Purchaser and Seller and the shareholders listed therein (the "GE Shareholders
Agreement");
(c) That Registration Rights Agreement dated as of July 16, 1993
between Purchaser and Seller.
8. Waivers and Consents. In consideration for the purchase of the
Seller's Shares and the representations and warranties of Purchaser set forth
herein, Seller does hereby:
(a) Irrevocably waive any right to participate as (i) a member in
Encore, (ii) a member in Plaza, (iii) a shareholder in Purchaser or (iv) a
general or limited partner in Meridian after the closing of the Transactions;
provided, however, that nothing herein shall be construed as a waiver by Seller
of its right to participate in the receipt of any funds which may be distributed
from the escrow accounts created under the terms of the Investment Agreement,
the BSL Merger Agreement and the MSL Stock Purchase Agreement or which may be
distributed pursuant to Section 1.08 of the Investment Agreement. Seller
acknowledges and agrees that Xxxxxx Xxxxx and/or its designee, Encore, Plaza, CC
and Messrs. XxXxxxxxxx and Xxxxxxxx, respectively, are and shall be intended
third party beneficiaries of this Section 8.
(b) Consent to the transfer, immediately prior to the consummation of
the merger of Purchaser and Carryco, Inc. contemplated by the Investment
Agreement, by those persons identified in the Investment Agreement as Carryover
10
11
Shareholders of certain of their shares of Purchaser to Carryco, Inc. in
accordance with the terms of the Investment Agreement.
(c) Consent to the amendment of the Purchaser's Articles of
Incorporation to increase the number of authorized preferred shares to include
the junior redeemable preferred shares, the junior paid in kind preferred shares
and the senior paid in kind preferred shares contemplated by the terms of the
Investment Agreement.
(d) Waive its right to appoint replacement directors to the Board of
Directors of Purchaser in the event of the resignation of the Investor Directors
(as defined in the GE Shareholders Agreement) prior to the consummation of the
Transactions; provided, however, that this waiver shall expire in the event this
Agreement is terminated in accordance with the provisions of Paragraph 13
hereof.
(e) Agree to vote in favor of the Transactions in its capacity as a
shareholder of Purchaser.
9. Injunctive Relief. Each party hereto acknowledges that money damages
would be both incalculable and an insufficient remedy for any breach of this
Agreement by such party and that any such breach would cause Purchaser, on the
one hand, and Seller, on the other hand, irreparable harm. Accordingly, each
party hereto also agrees that, in the event of any breach of the provisions of
this Agreement by such party, Purchaser, on the one hand, and Seller, on the
other hand, shall be entitled to equitable relief without the requirement of
posting a bond or other security, including in the form of injunctions and
orders for specific performance in addition to all other remedies available to
such other party at law or in equity.
10. Information. Purchaser shall give Seller prompt notice of any
amendment to any of the Transaction Documents and of any proposed waiver of
any of the conditions to the closing of the Transactions provided for therein.
11
12
11. Indemnification. In connection with the transactions contemplated
hereby, each of Seller and Purchaser agrees to indemnify and hold the other
harmless from and against any and all damages, claims, liabilities or
obligations resulting from any breach by Seller or Purchaser, as the case may
be, of any of their respective representations or warranties contained herein.
12. Expenses. Each party hereto shall pay its own expenses incurred in
connection with this Agreement.
13. Termination. This Agreement may be terminated by either party
hereto at any time after December 15, 1996, if the transactions contemplated
hereby have not been consummated prior to such time. Seller may terminate this
Agreement if any of the Transaction Documents are amended in any material
respect or if any of the conditions to closing provided for therein are waived
other than a waiver by the purchasers/investors thereunder or a waiver by
Purchaser which is approved by Seller, which approval shall not be unreasonably
withheld. In addition, this Agreement will terminate automatically and become
null and void without any action by the parties hereto in the event that any of
the Transaction Documents is terminated prior to the consummation of the
transactions contemplated therein. In the event of termination of this Agreement
as provided in this Section, this Agreement shall be null and void (including
without limitation, Sections 7 and 8 hereof) provided that nothing contained
herein shall relieve any party to this Agreement from liability for breach of
this Agreement.
14. Survival. All representations, warranties and agreements made by
Seller and Purchaser in this Agreement shall survive the Closing hereunder and
any investigation at any time made by or on behalf of any party hereto.
15. Amendment: Modification: Assignment. This Agreement may not be
modified, amended, altered or supplemented except upon the execution and
delivery of a written agreement executed by the parties hereto. This Agreement
shall be binding upon and shall inure to the benefit of and be enforceable by
the parties and their respective successors and assigns; provided that, no party
to this
12
13
Agreement may assign any of its rights or obligations under this Agreement
without the prior consent of the other party.
16. Notices. All notices, claims, requests, demands and other
communications hereunder must be in writing and shall be deemed to have been
duly given upon receipt as follows:
(a) If to Purchaser:
Brim, Inc.
000 XX 000xx Xxxxxx
Xxxxxxxx, XX 00000
Attention: X.X. Xxxx
with a copy to:
Xxxxx X. Xxxxxxxxx
The Xxxxxxxxx Group
0000 Xxxxxx Xxxxxx
Xxxxx 000
Xxxxxxx, XX 00000
(b) If to Seller:
General Electric Capital Corporation
000 Xxxx Xxxxx Xxxx
Xxxxxxxx, XX 00000
Attention: Equity Capital Group, Counsel and Risk Management
with copy to:
Xxxxxxx Xxxxxx, Esq.
Xxxxxxx Xxxxxxx & Xxxxxxxx
000 Xxxxxxxxx Xxxxxx
Xxx Xxxx, XX 00000-0000
or to such other address as the person to whom notice is to be given may have
previously furnished to the other party in writing.
13
14
17. Counterparts. This Agreement may be executed in two or more
counterparts, each of which shall be deemed to be an original but all of which
together shall constitute one and the same instrument.
18. Governing Law. This Agreement shall be governed by and construed
in accordance with the laws of the State of Oregon, regardless of the laws that
might otherwise govern under applicable principles of conflicts of law.
IN WITNESS WHEREOF, this Preferred Stock Purchase Agreement
has been duly executed and delivered by a duly authorized officer of Purchaser
and by Seller on the day and year first written above.
BRIM, INC.
By: /s/ X. X. Xxxx
-------------------------------------
Name: X. X. Xxxx
Title: President
GENERAL ELECTRIC CAPITAL CORPORATION
By: /s/ Xxxxxxx X. XxXxxxx
-------------------------------------
Name: Xxxxxxx X. XxXxxxx
Title: Department Operations Manager
The undersigned being parties to the GE Shareholder Agreement do hereby consent
to the termination thereof pursuant to Paragraph 8 of the foregoing Preferred
Stock Purchase Agreement:
/s/ X. X. Xxxx
----------------------------------
X. X. Xxxx
/s/ Xxxxx X. Xxxxxxxx
----------------------------------
Xxxxx X. Xxxxxxxx
14
15
/s/ K. Xxxxx XxXxxxxxxx
-------------------------------------
K. Xxxxx XxXxxxxxxx
/s/ Xxxx X. Xxxxxx
-------------------------------------
Xxxx X. Xxxxxx
/s/ Xxxxxx X. Xxxxxx
-------------------------------------
Xxxxxx X. Xxxxxx
15
