EXHIBIT 10.36
INVESTMENT AGREEMENT
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This Investment Agreement (the "Agreement") is entered into as of March 27,
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1998 by and among Fountain View, Inc., a Delaware corporation (the "Company"),
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and Xxxxxx X. Xxxxxx, Xxxxxx Xxxxxx, Xxxxxxx X. Xxxxx ("Xxxxx"), Heritage Fund
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II, L.P. ("Heritage"), Heritage Investors II, L.L.C. ("Heritage Investors"),
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Heritage Fund II Investment Corporation ("HFIC"), HFV Holdings, LLC, Nassau
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Capital Partners II L.P., NAS Partners I LLC, Paribas North America, Inc.,
Phoenix Home Life Mutual Insurance Company, PMI Mezzanine Fund, L.P., GS Private
Equity Partners, L.P., GS Private Equity Partners Offshore, L.P. and Sutro
Investment Partners V, LLC (collectively, the "Investors").
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Introduction
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This Agreement is being entered into in connection with the acquisition
(the "Acquisition") of Summit Care Corporation ("Summit") by FV-SCC Acquisition
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Corp., a wholly-owned subsidiary of the Company (the "Sub"). The Acquisition
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will be structured as (i) a tender offer by the Sub for shares of Summit (the
"Offer"), followed by (ii) a merger of the Sub into Summit (the "Merger"),
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pursuant to an Agreement and Plan of Merger by and among Summit, the Company,
the Sub and Heritage dated as of February 6, 1998 (the "Merger Agreement").
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The Company will cause to be filed immediately prior to the purchase of
shares of Summit stock pursuant to the Offer (the "Tender Closing") an amendment
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to its Certificate of Incorporation (the "Amendment") reclassifying its capital
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stock and automatically converting the shares of its capital stock outstanding
immediately prior to such amendment into shares of the reclassified capital
stock of the Company. The Investors (other than HFIC) wish to invest certain
amounts in the Company in return for shares of the reclassified capital stock of
the Company, as more particularly described herein. HFIC wishes to purchase
certain securities which may in turn be purchased by Xxxxx and certain other
parties.
NOW, THEREFORE, for good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, the parties agree as follows:
Section 1. Recapitalization. Effective at the respective times set forth
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below, the stock ownership of the Company will be restructured, and the new
investments specified in this Agreement will be made. This Agreement
constitutes a plan of reorganization, and the transactions effected hereby are
intended
to qualify under Sections 351 and 368(a)(1)(E) of the Internal Revenue Code of
1986, as amended (the "Code").
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Section 2. Investments. The Investors will make new cash and other
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investments in the Company, as set forth on Schedule A hereto, in exchange for
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the issuance by the Company of the securities (the "Securities") set forth on
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Schedule A (the "Investment"), immediately prior to the Tender Closing, except
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that (a) Xxxxx agrees to purchase those securities which are indicated on
Schedule A as being purchased by HFIC on his behalf from HFIC at the effective
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time of the Merger, and (b) HFIC (or any other person or entity which HFIC may
designate, and which may become an "Investor" hereunder by executing a
counterpart of this Agreement) agrees to purchase certain of the Securities at
the effective time of the Merger as set forth on Schedule A. Each purchase of
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Series A Common Stock will be at a price of approximately $126.53 per share.
Xxxxx will purchase a portion of the Securities to be acquired by him for a
promissory note in a form acceptable to the Company.
Section 3. Closing. The closing of the Investments will take place at the
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times specified above. The Company will give at least 24 hour telephonic or
written notice of the date and time of closing. At closing, subject to the
satisfaction or waiver of the conditions set forth in Section 7, (a) all
payments to be made by the Investors will be made by wire transfer of
immediately available funds to an account designated by the Company, (b) the
Company and each Investor named in such agreements will execute (i) the
Stockholders Agreement in the form of Exhibit 3(b)(i) hereto (the "Stockholders
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Agreement") and (ii) the Registration Rights Agreement in the form of Exhibit
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3(b)(ii) hereto (the "Registration Rights Agreement"), and (c) the Company will
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issue to the Investors certificates representing the Securities acquired. The
closing will be conducted in person (if necessary), at a site designated by the
Company, or by mail, facsimile and delivery service.
Section 4. Representations and Warranties of the Company. The Company
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represents and warrants to the Investors as follows:
(a) Organization and Standing. The Company is a corporation duly
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organized, validly existing and in good standing under the laws of the State of
Delaware.
(b) Charter and By-Laws. The copies of the Certificate of
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Incorporation, as amended, and the By-Laws, as amended, of the Company furnished
to the Investors are true and correct in all respects. As of the Tender
Closing, the Company will amend its Certificate of Incorporation in the form
attached as Exhibit 4(b) hereto.
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(c) Authorization. This Agreement, the Amendment, the Stockholders
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Agreement and the Registration Rights Agreement (the "Related Agreements") have
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been duly authorized, executed and delivered by the Company and constitute the
valid and binding obligations of the Company enforceable in accordance with
their terms.
(d) No Conflicts. The execution and delivery of this Agreement and
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the Related Agreements and the issuance of the Securities to the Investors as
contemplated hereby will not (i) require any consent, authorization or approval
of or filing with any governmental entity or third party, or (ii) result in any
violation of, be in conflict with or constitute a default under, the charter or
by-laws of the Company or any law, statute, regulation, ordinance, contract,
agreement, instrument, judgment, decree or order to which the Company is a party
or by which the Company is bound.
(e) Compliance with Securities Laws. Subject to the accuracy of the
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representations and warranties of the Investors contained in Section 5 hereof,
the offer and sale of the Securities to the Investors hereunder constitute
transactions exempt from the registration and prospectus delivery requirements
of the Securities Act of 1933, as amended (the "1933 Act") and any applicable
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state securities and blue sky laws.
(f) Terms of Investment. The Company has not granted any of the
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Investors (other than Heritage, Mr. and Xxx. Xxxxxx and Xx. Xxxxx) terms or
conditions relating to their investment in the Company which are more favorable
than the terms or conditions granted to any of the other Investors, except as
expressly set forth in this Agreement or the Related Agreements.
(g) Capitalization. After giving effect to the transactions
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contemplated by this Agreement, (i) Schedule B hereto sets forth all of the
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outstanding shares of capital stock of the Company, (ii) except as set forth in
Schedule B hereto, there will be no outstanding options, warrants, convertible
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securities and other rights which may afford any person or entity the right to
acquire shares of any class of capital stock of the Company, or any stock
appreciation or phantom stock rights or arrangements, (iii) the Company will
have no obligation (contingent or otherwise) to repurchase any shares of its
outstanding capital stock, other than as set forth in its Certificate of
Incorporation or in the Stockholders Agreement, and (iv) the Securities will be
duly authorized, validly issued and outstanding, fully paid and nonassessable,
and free to the holders thereof of any liens, encumbrances and restrictions
(other than under applicable securities laws or the provisions of this Agreement
or the Related Agreements).
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(h) Use of Proceeds. The Company shall use the proceeds of the
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Investment solely to fund the obligations of the Company or its subsidiaries
relating to the Offer or the Merger, to refinance indebtedness of the Company or
its subsidiaries, and for working capital.
(i) Litigation. There are no suits, proceedings or investigations
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pending or, to the Company's knowledge, threatened against or affecting the
Company or any of its subsidiaries with respect to the issuance of the
Securities hereunder or seeking to enjoin or challenge the consummation thereof.
(j) Registration Rights. Except for registration rights granted
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pursuant to the Registration Rights Agreement to the Investors and certain other
parties, the Company has not granted any person the right to require the Company
to register any securities of the Company under the 1933 Act, whether on a
demand basis or in connection with the registration of securities of the Company
for its own account or for the account of any other person.
(k) Brokers. The Company has not dealt with any broker, finder,
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commission agent or other similar person in connection with the offer or sale of
the Securities to the Investors, and the Company is under no obligation to pay
any broker's fee, finder's fee, or commission in connection with such offer and
sale.
Section 5. Representations and Warranties of the Investors. Each of the
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Investors hereby represents and warrants severally and not jointly to the
Company and each holder of its securities as follows, and each Investor
acknowledges that the Investor has full knowledge that such persons intend to
rely on such representations and warranties:
(a) Review and Agreements. THE INVESTOR HAS READ CAREFULLY AND
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UNDERSTANDS THIS AGREEMENT AND THE OTHER AGREEMENTS REFERRED TO HEREIN, AND HAS
CONSULTED SUCH INVESTOR'S OWN ATTORNEY, ACCOUNTANT OR INVESTMENT ADVISER WITH
RESPECT TO THE INVESTMENTS CONTEMPLATED HEREBY AND THEIR SUITABILITY FOR THE
INVESTOR.
(b) Access to Information. The Company has made available to the
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Investor, during the course of this transaction and prior to the acquisition of
any Securities, the books and records of the Company and the opportunity to ask
questions of and receive answers from representatives of the Company concerning
the terms and conditions of the Securities and the business, affairs, operations
and finances of the Company and any other matters relevant to this investment.
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(c) Long-Term Investment. The Investor understands that the Investor
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must bear the economic risk of his investment for an indefinite period of time;
that the Securities have not been registered under the 1933 Act and, therefore,
cannot be resold unless they are subsequently registered under the 1933 Act or
unless exception from such registration is available; that the Investor is
purchasing the Securities for investment for the account of the Investor and not
with a view toward resale or other distribution thereof (except with respect to
HFIC); that the Investor agrees not to resell or otherwise dispose of all or any
part of the Securities acquired by the Investor, except as permitted by law,
including, without limitation, any regulations under the 1933 Act; that the
Company does not have any intention of registering the Securities under the 1933
Act or of supplying the information which may be necessary to enable the
Investor to sell any Securities; and that Rule 144 under the 1933 Act may not be
available as a basis for exemption from registration of any Securities
thereunder until at least two years from the date of acquisition of the
Securities.
(d) Suitability. With respect to each Investor that is an individual:
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(i) such Investor has adequate means of providing for his or her current and
future needs and personal contingencies and has no need for liquidity in
connection with his or her acquisition of the Securities; (ii) such Investor's
overall commitment to investments which are not readily marketable is not
disproportionate to his or her net worth, and his or her investment in the
Securities will not cause such overall commitment to become excessive; (iii)
such Investor can afford a complete loss of his or her investment in the
Securities; (iv) such Investor has evaluated the risks of purchasing the
Securities, and has determined that the Securities are a suitable investment for
him or her: and (v) such Investor has such knowledge and experience in
financial, securities, investments and business matters that he or she is
capable of evaluating the merits and risks of his or her acquisition of the
Securities.
(e) Accredited Investor. The Investor is an "accredited investor"
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within the meaning of Regulation D promulgated under the 1933 Act.
Section 6. Restrictions on Transfer. Each certificate representing the
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Securities shall be stamped or otherwise imprinted with a legend in
substantially the following form:
THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN
REGISTERED UNDER THE SECURITIES ACT OF 1933. SUCH SECURITIES MAY
NOT BE SOLD, OFFERED FOR SALE, PLEDGED OR HYPOTHECATED IN THE
ABSENCE OF AN EFFECTIVE REGISTRATION STATEMENT AS TO THE
SECURITIES UNDER SAID
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ACT OR AN OPINION OF COUNSEL SATISFACTORY TO THE CORPORATION THAT
SUCH REGISTRATION IS NOT REQUIRED.
Section 7. Conditions to Closing. The obligation of each of the Investors
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hereunder to purchase the Securities is subject to the satisfaction at or prior
to the closing of the following conditions:
(a) Representations and Warranties True. The representations and
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warranties contained in Section 4 shall be true and accurate in all material
respects on and as of the date of the Tender Closing with the same effect as
though made on and as of such date.
(b) No Material Adverse Change. There shall not have been a material
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adverse change in the business, financial condition or results of operations of
the Company from March 1, 1998 through the date of the Tender Closing.
(c) Tender Offer. The conditions precedent to the consummation of
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the Offer shall have been satisfied, and there shall have been no increase in
the price to be paid by the Sub over $21.00 per share.
(d) Execution of Related Agreements. The Company, the Investors and
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the other parties thereto shall have executed and delivered the Related
Agreements.
(e) Receipt of All Investments. The Company shall have received the
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consideration specified on Schedule A from each of the other Investors (except
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HFIC and Xx. Xxxxx).
(g) Opinion of Counsel to Company. The Investors shall have received
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an opinion of Xxxxxx, Xxxx & Xxxxxxx, counsel for the Company, dated as of date
of the closing, in the form of Exhibit C hereto.
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Section 8. Miscellaneous.
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(a) This Agreement supersedes and overrides all other agreements among
some or all of the parties with respect to the matters covered hereby (other
than the surviving representations, warranties, indemnities and related
provisions of the Stock Purchase and Contribution Agreement dated as of July 24,
1997 among the Company, the Xxxxxx and Xxxxxx Xxxxxx, HFIC and certain other
parties). If the Merger Agreement is terminated before the Tender Closing, this
Agreement will terminate, and be of no further force or effect. This Agreement
is governed by and construed in accordance with the internal laws of the
Commonwealth of Massachusetts (excluding its conflicts of laws
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principles). Jurisdiction of any litigation arising under this Agreement shall
be in California.
(b) The representations and warranties contained herein this
Agreement shall survive the execution, delivery and performance of this
Agreement.
(c) This Agreement or any term hereof may not be amended or waived
except with the written consent of (i) the Company, (ii) Heritage and (iii) a
majority-in-interest of the other Investors as to which the effect of such
amendment or waiver (A) differs in a material and adverse manner from the effect
on Heritage, or (B) would eliminate any of the material rights of such Investors
provided for in this Agreement or create any material additional obligation for
such Investors. Notwithstanding the foregoing, any waiver, modification or
amendment which requires any Investor to make additional cash contributions to
the Company shall require the consent of such Investor.
(d) This Agreement may be executed in two or more counterparts, and
with counterpart signature pages each of which shall be deemed an original, and
all of such counterparts together constitute but one and the same agreement.
One or more counterparts may be delivered by facsimile with the same force and
effect as an original.
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IN WITNESS WHEREOF, the parties have executed this Agreement as a sealed
instrument as of the date set forth above.
FOUNTAIN VIEW, INC.
By: /s/ Xxxxxx X. Xxxxxx /s/ Xxxxxx X. Xxxxxx
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(Title) Xxxxxx X. Xxxxxx
/s/ Xxxxxxx X. Xxxxx /s/ Xxxxxx Xxxxxx
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Xxxxxxx X. Xxxxx Xxxxxx Xxxxxx
HERITAGE INVESTORS II, L.L.C. HERITAGE FUND II, L.P.
By Heritage Partners Management By HF Partners II, L.L.C.,
Company, Inc., its manager its general partner
By: [SIGNATURE ILLEGIBLE] ^^ By: [SIGNATURE ILLEGIBLE] ^^
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(title) (title)
HERITAGE FUND II HFV HOLDINGS, LLC
INVESTMENT CORPORATION
By:
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its Manager
By: [SIGNATURE ILLEGIBLE] ^^ By: /s/ Xxxxxx XX. XxXxxxxxx
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(title) Xxxxxx XX. XxXxxxxxx (title)
Vice President
NASSAU CAPITAL PARTNERS II, L.P. PARIBAS NORTH AMERICA, INC.
By Nassau Capital L.L.C.,
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its general partner
By: /s/ Xxxx X. Xxxxxxx By: Xxxx X. Xxxxxxxx
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Xxxx X. Xxxxxxx (title) Xxxx X. Xxxxxxxx (title)
Member Financial Controller
PHOENIX HOME LIFE PMI MEZZANINE FUND, L.P.
MUTUAL INSURANCE COMPANY By: Pacific Mezzanine Investors, L.L.C.
its general partner
By: Xxxx X. Beer By: /s/ Xxxxxxxx X. Xxxxx
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(title) Xxxxxxxx X. Xxxxx (title)
Principal
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GS PRIVATE EQUITY GS PRIVATE EQUITY
PARTNERS, L.P. PARTNERS OFFSHORE, L.P.
By GS Private Equity By GS Private Equity Management
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Management, LLC Offshore, Inc.
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its general partner its general partner
By: GSAM ?anpar, LLC (its Management member)
By: /s/ Xxxxxx Xxxxxxx By: /s/ Xxxxxx Xxxxxxx
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Director (title) Director (title)
SUTRO INVESTMENT PARTNERS V, LLC NAS PARTNERS I, LLC
By _____________________, By XXXX X. XXXXXXX
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its Manager its Manager
By: [SIGNATURE ILLEGIBLE] ^^ By: [SIGNATURE ILLEGIBLE] ^^
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President (title) (title)
The undersigned, Xxxxx X. Xxxxxx, spouse of Xxxxxxx Xxxxx, hereby consents
to the foregoing agreement.
/s/ Xxxxx X. Xxxxxx
____________________________
Xxxxx X. Xxxxxx
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SCHEDULE A
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Investor Consideration Securities Acquired
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Heritage Fund II, $42,021,000 cash 332,101 shares of
L.P. Series A Common Stock
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Heritage Investors $42,000 cash 332 shares of Series
II, L.L.C. A Common Stock
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Xxxxxx X. and Xxxxxx $5,000,000 cash (for 39,516 shares of
Snukal Series A shares) Series A Common Stock
$6,259 (for Series B 62,599 shares of
shares) Series B Common Stock
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Xxxxxxx X. Xxxxx $1,437,000 cash (for 11,357 shares of
(HFIC on an interim 11,357 Series A Series A Common Stock
basis for 11,357 shares) (to be initially
shares of Series A purchased by HFIC)
Common Stock) $2,530,600 in a
promissory note (for 20,000 shares of
20,000 Series B Series A Common Stock
shares)
51,603 shares of
$5,160 (for Series B Series B Common Stock
shares)
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Heritage Fund II $15,000,000 cash 15,000 shares of
Investment Series A Preferred
Corporation Stock
(to be purchased at
the effective time of
the Merger)
Warrants to purchase
71,119 shares of
Series C Common
Stock, at an exercise
price of $0.01 per
share
(to be purchased at
the effective time of
the Merger)
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HFV Holdings, LLC $2,000,000 cash 15,806 shares of
Series A Common Stock
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Nassau Capital $4,969,098.40 cash 39,272 shares of
Partners II L.P. Series A Common Stock
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NAS Partners I LLC $30,901.60 cash 244 shares of Series
A Common Stock
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Paribas North $5,000,000 cash 39,516 shares of
America, Inc. Series A Common Stock
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Phoenix Home Life $2,000,000 cash 15,806 shares of
Mutual Insurance Series A Common Stock
Company
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PMI Mezzanine Fund, $7,500,000 cash 59,274 shares of
L.P. Series A Common Stock
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GS Private Equity $6,755,920 cash 53,393 shares of
Partners, L.P. Series A Common Stock
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GS Private Equity $3,244,080 cash 25,639 shares of
Partners Offshore, Series A Common Stock
L.P.
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Sutro Investment $2,000,000 cash 15,806 shares of
Partners V, LLC Series A Common Stock
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SCHEDULE B
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FOUNTAIN VIEW, INC.
Securities Outstanding After Merger
Series A Series B Series C Series A
Common Common Common Preferred
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Heritage Fund II L.P. 525,633
Heritage Fund II 71,119(W) 15,000
Investment Corporation
Heritage Investors II 429
L.L.C.
Xxxxxx and Xxxxxx Xxxxxx 149,484 62,599
Xxxxx Xxxxxxxx 8,294
Xxxxx Xxxxxxxx 8,294
Xxxxxx Xxxxxx 8,294
Xxxxxxx Xxxxx 11,357 51,603
20,000(N)
GS Private Equity 53,393
Partners, L.P.
GS Private Equity 25,639
Partners Offshore, L.P.
HFV Holdings, LLC 15,806
Nassau Capital Partners 39,272
II L.P.
NAS Partners I LLC 244
PMI Mezzanine Fund, L.P. 59,274
Paribas North America, 39,516
Inc.
Phoenix Home Life Mutual 15,806
Insurance Company
Sutro Investment Partners 15,806
V, LLC
Xxxxxxx Xxxxxxxxxx 138
Xxxx Xxxxxxxx 000
Xxxxxxx Xxxxxx 138
Xxxxxxx Xxxxxx 138
Xxxx Xxxxxx 138
Xxxxx Xxxxxxx 277
Xxxxxx Xxxx 277
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Series A Series B Series C Series A
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Common Common Common Preferred
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Norbalita Sapiandante 277
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Xxxxxxxxxxx Xxxxxx 277
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Xxxxxxx Xxxx 277
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Xxxxx Xxxxxx 692
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Xxxxx Xxxxx 692
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1,000,000 114,202 71,119 15,000
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W = Warrant
N = Exchanged for Note
