EXHIBIT 4.2
AMENDED AND RESTATED STOCKHOLDERS AGREEMENT
This Amended and Restated Stockholders Agreement (the "Agreement") is
entered into effective as of August 15, 2003 by and among Fountain View, Inc., a
Delaware corporation (the "Company"), the individuals and entities listed on
Schedule A attached hereto, each of which has executed a Joinder Agreement in
substantially the form attached hereto as Exhibit A (a "Joinder Agreement"), and
any Person who hereafter becomes a stockholder of the Company as provided
herein.
Introduction
Reference is hereby made to that certain Stockholders Agreement dated
as of March 27, 1998 (the "Stockholders Agreement") among the Company, Heritage
Fund II, L.P. ("Heritage"), Heritage Investors II, L.L.C., Heritage Fund II
Investment Corporation, ▇▇▇▇▇▇ ▇▇▇▇▇▇ ("RS"), ▇▇▇▇▇▇ ▇▇▇▇▇▇ ("SS"), ▇▇▇▇▇▇▇
▇▇▇▇▇ ("▇▇▇▇▇") and certain other parties signatories thereto, as amended May 4,
1998 by and among the Company, Heritage, Baylor Health Care System ("Baylor"),
and ▇▇▇▇▇▇▇ Foundation ("▇▇▇▇▇▇▇") (as so amended, the "First Amended
Agreement").
On October 2, 2001, the Company filed a petition in the United States
Bankruptcy Court for the Central District of California, Los Angeles Division
(the "Bankruptcy Court") seeking relief under Chapter 11 of the United States
Bankruptcy Code, 11 U.S.C. Section 101-1130 (the "Bankruptcy Code").
This Agreement amends and restates the First Amended Agreement and is
adopted pursuant to the Debtors' Joint Plan of Reorganization, dated April 22,
2003, as amended (the "Reorganization Plan"), confirmed by an order (the
"Confirmation Order") of the Bankruptcy Court on July 10, 2003.
In accordance with the Reorganization Plan, the Company has agreed to
issue (i) 15,000 shares of its Series A Preferred Stock to the holders of Class
14 Allowed Claims, (ii) 58,642 shares of its Common Stock to the holders of
Class 9 Allowed Claims, (iii) 1,114,202 shares of its Common Stock to the
holders of Class 15 Allowed Claims, and (iv) 20,743 shares of its Common Stock
to the holders of Class 17 Allowed Claims, as each such term is defined in the
Reorganization Plan. The shares of Series A Preferred Stock and Common Stock to
be issued under the Reorganization Plan are referred to herein as the "New
Shares". It is a condition to the issuance of the New Shares that the holders
thereof agree to be bound by the terms of the Agreement.
Capitalized terms used herein and not otherwise defined shall have the
respective meanings given to them in Article VII at the end of this Agreement.
NOW, THEREFORE, in consideration of the mutual covenants herein
expressed, the parties hereto hereby agree as follows:
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ARTICLE I
BOARD OF DIRECTORS; VOTING
Section 1.01 Board Size. At all meetings (and written actions in lieu
of meetings) of stockholders of the Company at which the number of directors of
the Company is to be determined, each Stockholder shall vote all of such
Stockholder's Stock to fix the number of directors of the Company at the number
specified by a Majority of Investors.
Section 1.02 Election of Directors. At all meetings (and written
actions in lieu of meetings) of stockholders of the Company at which directors
are to be elected, each Stockholder shall vote all of such Stockholder's Stock
in favor of the election of:
(a) RS Directors. Two nominees of RS, which number shall be
increased if necessary to insure that the nominees of RS constitute not less
than twenty-five percent (25%) of the total number of directors (the "RS
Directors"), as long as RS holds any shares of Stock.
(b) ▇▇▇▇▇ Director. One nominee of ▇▇▇▇▇ (the "▇▇▇▇▇ Director"),
as long as ▇▇▇▇▇ holds any shares of Stock.
(c) Baylor Director. One nominee of Baylor ("Baylor Director"), as
long as Baylor holds any shares of Stock or Stock Equivalents.
(d) Investor Directors. Such number of nominees of a Majority of
Investors as may be designated by a Majority of Investors, up to the maximum
number of directors that constitute the whole Board after taking account of the
RS Directors, the ▇▇▇▇▇ Director and the Baylor Director (the "Investor
Directors").
Section 1.03 Removal. Each Stockholder agrees to vote such
Stockholder's Stock, at all meetings (and written actions in lieu of meetings)
of stockholders of the Company, (a) to remove any RS Director, if so requested
by RS, (b) to remove the ▇▇▇▇▇ Director, if so requested by a ▇▇▇▇▇ (c) to
remove any Baylor Director, if so requested by Baylor and (d) to remove any
Investor Director, if so requested by a Majority of Investors. Each Stockholder
agrees not to vote such Stockholder's Stock in favor of the removal of any
director other than in accordance with the preceding sentence.
Section 1.04 Vacancies. Each Stockholder agrees to vote such
Stockholder's Stock, at all meetings (and written actions in lieu of meetings)
of stockholders of the Company, (a) to fill any vacancy on the Board of
Directors of the Company (the "Board") caused by the resignation or removal of
any RS Director with a nominee selected by RS, (b) to fill any vacancy on the
Board caused by the resignation or removal of the ▇▇▇▇▇ Director with a nominee
selected by ▇▇▇▇▇, (c) to fill any vacancy on the Board caused by the
resignation or removal of the Baylor Director with a nominee selected by Baylor
and (d) to fill any vacancy on the Board caused by the resignation or removal of
any Investor Director with a nominee selected by a Majority of Investors.
Section 1.05 Meetings. The Board will meet not less often than
quarterly. Each Director shall be given at least three days prior notice of any
meeting and will be permitted to participate in any meeting by telephone. Any
Director may call a meeting of the Board.
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Section 1.06 Observation Rights. An Investor shall be entitled to have
one observer present at any meeting of the Board if such Investor holds at least
75,000 shares of Common Stock (appropriately adjusted for stock splits, stock
dividends, combinations and similar transactions) as of the date notice of such
meeting is delivered. The Company shall give each Investor who is listed on the
record books of the Company as holding the number of shares of Stock set forth
in the foregoing sentence at least three days prior notice of any meeting so
that each such Investor may designate an observer to be present at such meeting.
No observer pursuant to this Section 1.06 shall have any right to vote upon any
matters to be considered by the Board.
Section 1.07 Voting on Other Matters. If requested by Heritage, for as
long as Heritage holds more shares of Common Stock than any other Investor, the
Stockholders agree to vote their Stock on all matters to be voted upon by
holders of the Company's Securities (other than the election or removal of
directors, which is governed by the provisions of Section 1.01 to Section 1.06
hereof) as directed by Heritage, unless the effect of such matter on such
Stockholder differs materially and adversely from the effect on Heritage. Each
Stockholder hereby grants Heritage an irrevocable proxy, which is coupled with
an interest, to vote such Stockholder's Securities as provided in this Section.
Each Qualified Stockholder shall, if such Qualified Stockholder requests, be
given an opportunity to be heard by Heritage for the purpose of discussing the
exercise of such proxy, provided that such opportunity shall in no way limit the
scope or validity of such proxy.
ARTICLE II
PREEMPTIVE RIGHTS
Section 2.01 Notice of Issuance. The Company will give each Qualified
Stockholder (other than a Noteholder Stockholder that is not an "accreditor
investor" within the meaning of the Securities Act) at least 20 Business Days
prior written notice of any proposed sale or issuance by the Company of any
Securities, except for Exempt Issuances. Such notice will identify the
Securities to be issued, the approximate date of issuance, and the price and
other terms and conditions of the issuance. Such notice will also include an
offer (the "Offer") to transfer to each such Qualified Stockholder its
Proportionate Percentage of such Securities (the "Offered Securities") at the
price and on the other terms as are proposed for such sale or issuance, which
Offer by its terms shall remain open for a period of 15 Business Days from the
date of receipt of such notice and which Offer may be accepted by any such
Qualified Stockholder in such Qualified Stockholder's sole discretion. The Offer
will also specify each such Qualified Stockholder's Proportionate Percentage,
and the manner in which it was determined. The provisions of this Article II
shall not apply to any Noteholder Stockholder that is not an "accredited
investor" within the meaning of the Securities Act, whether or not such
Noteholder Stockholder is a Qualified Stockholder.
Section 2.02 Acceptance. Each Qualified Stockholder shall give notice
to the Company of such Qualified Stockholder's intention to accept an Offer
prior to the end of the 15-Business Day period of such Offer, setting forth the
portion of the Offered Securities which such Qualified Stockholder elects to
purchase and specifying the maximum number of additional Securities such
Qualified Stockholder is willing to purchase if any other Qualified Stockholder
declines to purchase all of such other Qualified Stockholder's Offered
Securities. If any Qualified
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Stockholder fails to subscribe for such Qualified Stockholder's Proportionate
Percentage of the Offered Securities, the other subscribing Qualified
Stockholders shall be entitled to purchase such Offered Securities as are not
subscribed for by such Qualified Stockholder, up to the number of additional
Securities specified in their notice in the same relative proportion in which
they were initially entitled to purchase the Offered Securities. The Company
shall notify each Qualified Stockholder within five days following the
expiration of the 15-Business Day period described above of the additional
amount of Offered Securities which each Qualified Stockholder may purchase
pursuant to the foregoing sentence and each Qualified Stockholder shall then
have five days from the delivery of such notice to indicate such additional
amount, if any, that such Qualified Stockholder wishes to purchase.
Section 2.03 Sale to Qualified Stockholders. Upon the closing of any
sale or issuance as to which the Company has given notice under Section 2.01,
the Qualified Stockholders shall purchase from the Company, and the Company
shall sell to the Qualified Stockholders the Offered Securities subscribed for
by the Qualified Stockholders at the price and on the terms specified in the
Offer, which shall be the same price and terms at which all other Persons
acquire such Securities in connection with such sale or issuance.
Section 2.04 Sale to Third Parties. If, but only if, the Qualified
Stockholders do not subscribe for all of the Offered Securities, the Company
shall have 150 days from the end of the foregoing 15-Business Day or five-day
period, whichever is applicable, to sell all or any part of such Offered
Securities as to which Qualified Stockholders have not accepted an Offer to any
other Persons, at a price and on terms and conditions which are no more
favorable to such other Persons or less favorable to the Company than those set
forth in the Offer. Any Offered Securities not purchased by the Qualified
Stockholders or other Persons in accordance with Section 2.03 and this Section
2.04 may not be sold or otherwise disposed of until they are again offered to
the Qualified Stockholders under the procedures specified in this Article II.
Section 2.05 Exempt Issuances. As used herein, "Exempt Issuances" means
(a) the issuance of Stock and Stock Equivalents to current employees,
consultants and directors of the Company or its subsidiaries (or to former
employees, consultants and directors of the Company or its subsidiaries pursuant
to the exercise of outstanding stock options or similar rights), (b) the
issuance of shares of Stock upon the conversion or exercise of Stock Equivalents
as to which the Company complied with the provisions of this Article II or was
not required to comply such provisions, including without limitation the
issuance of Common Stock upon the exercise of warrants to purchase Common Stock
issued on or about the date hereof, and (c) the issuance of Securities which the
Board determines in good faith should not, in the best interests of the Company,
be subject to the provisions of this Article II, provided that none of such
Securities are being issued to Heritage or its Affiliates.
Section 2.06 Issuances in Advance. Notwithstanding the foregoing, if
the Board determines that it should, in the best interests of the Company, issue
Securities which would otherwise be required to be offered under this Article II
prior to their issuance, it may issue such Securities without first complying
with Sections 2.01 and 2.02 above; provided that within 30 days after such
issuance, it offers each Qualified Stockholder the opportunity to purchase the
number of Securities that such Qualified Stockholder would have been entitled to
purchase in connection with the issuance of such Securities pursuant to the
provisions of Sections 2.01 and
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2.02 and it otherwise complies with the provisions and time periods set forth in
Sections 2.01 and 2.02 as if such issuance had not yet occurred.
ARTICLE III
TRANSFER RESTRICTIONS FOR STOCKHOLDERS
Section 3.01 No Transfer. No Stockholder (other than Heritage, as to
which this Article III shall not apply) may sell, pledge, give, assign,
distribute, hypothecate, mortgage or transfer (all hereinafter referred to as
"transfer") any Securities owned by such Stockholder, directly or indirectly, to
any other Person, except (a) in the case of Management Stockholders or
Investors, other than Heritage, upon compliance with the other provisions of
this Article III, (b) in the case of Noteholder Stockholders, upon compliance
with the other provisions of this Article III, provided that each Noteholder
Stockholder may transfer Securities only to (i) a Person that is then a
Stockholder or (ii) a Person that is not then a Stockholder if the number of
shares to be transferred to such Person is at least (x) 7,500 or (y) the total
number of shares then held by such Noteholder Stockholder, whichever is less, or
(c) in a Permitted Transfer without compliance with the other provisions of this
Article III. In addition, at such time as the Company determines that additional
transfers of Securities may result in it being required to register any of its
Securities under the Securities Exchange Act of 1934, as amended, taking into
account shares it may issue in the future, the Board, acting in good faith, may
limit the number of transferees of all Stockholders in such manner and amount as
it deems reasonable.
Section 3.02 Offer to Company and Qualified Stockholders. If a
Stockholder (the "Transferring Stockholder") desires to transfer any of such
Stockholder's Securities, such Stockholder shall first offer such Securities to
the Company and the other Qualified Stockholders by written notice (the "Initial
Notice") stating the Securities such Stockholder desires to transfer and the
proposed price (expressed in dollars) and terms of transfer (which shall be for
cash payable upon the transfer). The Company and each of the other Qualified
Stockholders shall then have 30 days within which to give notice (the "Return
Notice") of the maximum number of such Securities they wish to acquire at the
specified price and terms. Copies of each Return Notice shall be sent to the
Company, to the Transferring Stockholder and to each other Qualified
Stockholder. The Company shall be entitled to purchase any or all of the
Securities offered. If the Company elects to purchase fewer than all of the
Securities offered, each Qualified Stockholder (other than the Transferring
Stockholder) shall be entitled to acquire a pro rata portion of the balance of
the Securities remaining, determined in accordance with their Proportionate
Percentages. If any Qualified Stockholder elects to acquire less than such
Qualified Stockholder's pro rata portion of the available Securities, the other
Qualified Stockholders may acquire a pro rata portion of the balance of the
Securities remaining. The Company and the Qualified Stockholders shall not be
entitled to acquire any Securities from the Transferring Stockholder unless they
have elected, in the aggregate, to purchase all of the Securities specified in
the Initial Notice.
Section 3.03 Payment. The Company shall, at the close of the 30-day
period provided in Section 3.02 for delivery of the Return Notice, confirm by
notice the Securities to be acquired by each Qualified Stockholder and by the
Company. Payment for such Securities shall be delivered within 30 days
thereafter at the price and on the terms specified in the Initial Notice,
against receipt from the Transferring Stockholder of certificates for the
Securities purchased,
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duly endorsed for transfer, free and clear of all liens, restrictions, claims
and encumbrances, except as provided in this Agreement and under applicable
securities laws.
Section 3.04 Right to Sell. If, at the close of the 30-day period
provided in Section 3.02 for delivery of the Return Notice, the Company and the
other Qualified Stockholders have not sent notice of their intention to acquire,
in the aggregate, all of the Securities offered, the Transferring Stockholder
shall have 120 days to transfer the Securities specified in the Initial Notice
at the price and on the terms set forth in the Initial Notice, or at a higher
price than the price specified therein. After the expiration of 120 days the
Transferring Stockholder may not transfer such Securities unless and until they
are again offered to the Company and the other Qualified Stockholders under the
procedures specified in this Article III, where applicable.
Section 3.05 Legends. All certificates or instruments representing
Securities issued to any party to this Agreement, other than the Noteholder
Stockholders, shall bear substantially the following legends:
(A) THE SECURITIES EVIDENCED HEREBY HAVE NOT BEEN REGISTERED UNDER THE
SECURITIES ACT OF 1933, AS AMENDED (THE "ACT"), OR THE SECURITIES LAWS
OF ANY STATE. SUCH SECURITIES HAVE BEEN ACQUIRED FOR INVESTMENT, AND
MAY NOT BE SOLD, TRANSFERRED, ASSIGNED, PLEDGED, OR HYPOTHECATED IN THE
ABSENCE OF EFFECTIVE REGISTRATION STATEMENTS COVERING SUCH SECURITIES
UNDER THE ACT AND ANY APPLICABLE STATE SECURITIES LAWS, UNLESS THE
HOLDER SHALL HAVE OBTAINED AN OPINION OF COUNSEL, SATISFACTORY TO THE
COMPANY, THAT SUCH REGISTRATION IS NOT REQUIRED.
(B) THE SECURITIES REPRESENTED HEREBY ARE SUBJECT TO RESTRICTIONS ON
TRANSFER AND OTHER OBLIGATIONS CONTAINED IN AN AMENDED AND RESTATED
STOCKHOLDERS AGREEMENT BETWEEN THE COMPANY AND CERTAIN OF ITS
STOCKHOLDERS, A COPY OF WHICH IS ON FILE WITH THE COMPANY AND WILL BE
FURNISHED WITHOUT COST TO THE HOLDER HEREOF UPON WRITTEN REQUEST TO THE
SECRETARY OF THE COMPANY.
All certificates or instruments representing Stock issued to the Noteholder
Stockholders shall bear substantially the legend set forth in clause (B) of this
Section 3.05.
ARTICLE IV
TRANSFERS BY HERITAGE
Section 4.01 Co-Sale Rights. If Heritage determines to transfer,
including without limitation any transfer pursuant to a merger, consolidation or
other business combination of the Company or any subsidiary with another person
or entity (except pursuant to a public offering), all or a portion of the Common
Stock held by it (any such transfer being referred to herein as a "Heritage
Transfer Event"), Heritage shall give prior notice thereof (the "Transfer Event
Notice") to the other Qualified Stockholders, indicating the overall value of
the Company
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implied by the transfer, the Common Stock to be transferred and the value of
such Common Stock in the proposed transfer, which value will be determined by
taking the overall Company value stated in the notice and allocating that value
among the Company's outstanding Securities in accordance with the liquidation
provisions of the Certificate of Incorporation (assuming the conversion of all
Stock Equivalents into Stock).
Each other Qualified Stockholder shall have the right, by giving notice
thereof to Heritage within 20 days after receipt of the Transfer Event Notice,
to include in such transfer the same proportion of its holdings of each class of
Stock or Stock Equivalents as Heritage transfers of its holdings of Common Stock
in such transaction; provided, that each holder of Series A Preferred Stock
shall be entitled to include all of such holder's shares of Series A Preferred
Stock in any such transfer that constitutes a Trigger Event. Except as provided
below, Heritage will not transfer any shares of Common Stock in a transaction
covered by this Section 4.01 unless the transferee also acquires any Stock or
Stock Equivalents requested by the other Qualified Stockholders pursuant to the
preceding sentence to be included in such transfer, at the applicable values
determined in accordance with the preceding paragraph (except as provided in
Section 4.04 below) and terms specified in the Transfer Event Notice and in the
same form of consideration received by Heritage, and as to which the other
Qualified Stockholders comply with the following paragraph. In the event that
more Stock or Stock Equivalents are requested to be included in any transfer
under this Section 4.01 than the transferee is willing to purchase, the
Securities to be transferred by Heritage and the other Qualified Stockholders to
such transferee shall be reduced pro rata among Heritage and such other
Qualified Stockholders based on the number of shares of Stock (assuming the
conversion of all Stock Equivalents) requested to be included in such transfer
(and subject to the prior rights of holders of Series A Preferred Stock to
transfer all their shares in a transfer that constitutes a Trigger Event).
Heritage shall have 150 days after the close of the 20-day period
specified above to transfer the shares of Common Stock described in the Transfer
Event Notice at the price (except as provided in Section 4.04 below) and on the
terms specified therein, together with any additional Stock or Stock Equivalents
to be included in such transfer pursuant to the preceding paragraph. Any
Qualified Stockholder whose Stock or Stock Equivalents are being transferred
pursuant hereto, in order to be entitled to have such Stock or Stock Equivalents
transferred, shall deliver on no less than five Business Days notice from
Heritage, at the time and place specified by Heritage, certificates representing
the Stock or Stock Equivalents to be transferred, duly endorsed for transfer to
the transferee designated by Heritage, free and clear of all liens,
restrictions, claims and encumbrances, except as provided in this Agreement and
under applicable securities laws.
Notwithstanding the foregoing, this Section 4.01 shall not apply to
transfers by Heritage to its partners which are required by Article X of its
Agreement of Limited Partnership, as in effect on May 4, 1998, a true and
correct copy of which Article X has been delivered to Baylor, if such partners
become parties to this Agreement.
Section 4.02 Required Transfers. Each Securityholder agrees, at
Heritage's request and upon not less than 20 days prior notice from Heritage, to
transfer in any transaction constituting a Heritage Transfer Event which occurs
on or after the occurrence of a Trigger Event (other than any transfer to an
Affiliate of Heritage), at a price (except as provided in Section 4.04 below)
and
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on terms determined in the manner applicable to transfers under Section 4.01,
the same proportion of its holdings of each class of Securities as Heritage
transfers of its holdings of Common Stock in such transaction, except that the
holders of Series A Preferred Stock may elect, if such Heritage Transfer Event
involves a Trigger Event, to transfer all shares of Series A Preferred Stock
held by them in such transaction.
Upon receipt of notice from Heritage under this Section 4.02, each
Securityholder shall deliver, on not less than five Business Days notice from
Heritage, at the time and place specified by Heritage, certificates representing
the Securities to be transferred, duly endorsed for transfer to the transferee
designated by Heritage, free and clear of all liens, restrictions, claims and
encumbrances, except as provided in this Agreement and under applicable
securities laws.
Section 4.03 Certain Obligations Relating to Transfer Events. The
Securityholders will (a) cooperate with Heritage in all respects in the
consummation of any Heritage Transfer Event, (b) vote their Securities in favor
of any Heritage Transfer Event, if requested by Heritage, and (c) execute all
agreements, documents and instruments reasonably required by Heritage, which
agreements, documents and instruments will be substantially similar to those
executed by Heritage to consummate such Heritage Transfer Event, provided,
however, that any obligation of the Securityholders with respect to
indemnification or representations, warranties and covenants shall be several
and not joint and that such obligations shall be limited for each Securityholder
to the amount of proceeds received by such Securityholder in such Heritage
Transfer Event (other than proceeds received with respect to shares of Series A
Preferred Stock held by such Securityholder, except with respect to
indemnification relating to title, authority to transfer and similar matters
relating to the sale of such shares of Series A Preferred Stock).
Section 4.04 Treatment of Stock Equivalents. For purposes of Sections
4.01 and 4.02, Stock Equivalents shall be deemed to be the same class of Stock
as the Securities for which they are exercisable or into which they are
convertible, but the price payable for them in connection with a Heritage
Transfer Event shall be reduced by the exercise price thereof or other
consideration required to be paid to the Company to acquire the underlying
Stock.
ARTICLE V
PUBLIC OFFERING
Section 5.01 Stand-Off in Connection with Initial Public Offering.
Notwithstanding anything to the contrary contained in this Agreement or in the
Certificate of Incorporation, in connection with a registered Public Offering of
the Company's Common Stock, the each Securityholder will execute all agreements,
documents and instruments reasonably required by a Majority of Investors,
consistent with this Section 5.01, whereby such Securityholder shall agree not
to sell, grant any option for the purchase of, or otherwise dispose of any
Securities (other than those included in such registration) for such period as
may be reasonably requested by the managing underwriter of any Public Offering
of the Company's Common Stock (not to exceed (A) 180 days thereafter, in the
case of the initial Public Offering of the Company's Common Stock or (B) 90 days
thereafter, in the case of any other registration).
Section 5.02 Termination. This Agreement will terminate upon the
consummation of an initial public offering of the Company's Common Stock.
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ARTICLE VI
MISCELLANEOUS
Section 6.01 Affiliate Transactions. The Company will not, and will not
permit any of its subsidiaries to, engage in any transaction with any Affiliate
of the Company other than (a) as expressly contemplated by this Agreement, (b)
issuances of Securities in compliance with (or which are exempt from) Article II
or (c) those transactions that are on a commercially-reasonable, arms-length
basis and that are approved by a disinterested majority of the Board.
Section 6.02 Information. The Company will provide to each Qualified
Stockholder (other than a Noteholder Stockholder) the following reports:
(a) Monthly Reports. As soon as available, a consolidated
balance sheet of the Company as at the end of such period and the related
consolidated statement of operations for such period and for the portion of the
Company's fiscal year ended on the last day of such month, in each case setting
forth in comparative form the corresponding figures for the same period and
portion of the next preceding fiscal year.
(b) Quarterly Reports. As soon as available, a
consolidated balance sheet of the Company as at the end of such period and the
related consolidated statements of operations, stockholders' equity and cash
flows for such period and for the portion of the Company's fiscal year ended on
the last day of such quarter, in each case setting forth in comparative form the
corresponding figures for the same period.
(c) Annual Reports. As soon as available, a consolidated
balance sheet of the Company as at the end of such year and the related
consolidated statements of income, stockholders' equity and cash flows for such
year, in each case setting forth in comparative form the corresponding figures
for the next preceding fiscal year, accompanied by the report on such
consolidated financial statements of national independent certified public
accountants selected by the Board.
(d) Securities Filings. As promptly as practicable and in
any event within five days after the same are available, copies of all periodic
and special reports, documents and registration statements which the Company
furnishes or files with the Securities and Exchange Commission or any securities
exchange.
(e) Board of Directors Information. As promptly as
practicable, copies of all information furnished by the Company to its directors
in connection with meetings of the Board.
(f) Other Information. Such other information relating to
the Company as from time to time may reasonably be requested.
Section 6.03 Inspection. The Company will permit any person designated
by a Qualified Stockholder (other than a Noteholder Stockholder), on reasonable
notice and during normal business hours, to visit and inspect any of the
properties, books and records of the Company or its subsidiaries and to discuss
issues relating to the Company with the Company's management.
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Section 6.04 Noteholder Stock Transfers. If a Noteholder transfers its
Noteholder Stock as permitted by this Agreement, such Noteholder Stock shall
continue to be classified as Noteholder Stock for purposes of this Agreement but
the holder thereof shall not become a Noteholder Stockholder by virtue of such
transfer. If a Person holds Noteholder Stock and other Stock, upon a transfer of
Stock by such Person, such Person shall be deemed to have first transferred the
other Stock and then transferred the Noteholder Stock.
Section 6.05 Other Activities of Securityholders and Directors.
Securityholders and their Affiliates may engage in and possess interests in
other business ventures and investment opportunities, except as provided in any
employment agreement between such Securityholder and the Company. Neither the
Company nor any other Securityholder shall have any rights in or to such
ventures or opportunities or the income or profits therefrom by reason of this
Agreement.
Section 6.06 Issuance of Certain Shares of Stock by the Company and its
Subsidiaries. The Company will not, at any time when any shares of Series A
Preferred Stock are outstanding, without the prior written consent of the
holders of a majority of the shares of Series A Preferred Stock then
outstanding, (i) issue any shares of preferred stock or other equity Securities
having rights or preferences which are senior to or pari passu with the rights
and preferences applicable to the Series A Preferred Stock with respect to
liquidation, dividends or redemption, or (ii) permit any of its subsidiaries
(other than any subsidiary whose assets or gross revenues, combined with the
assets or gross revenues of all other subsidiaries which have issued equity
Securities to any Person other than the Company or any other subsidiary of the
Company since April 30, 1998, did not exceed twenty percent (20%) of the
Company's consolidated assets or gross revenues, respectively, at any time
within the preceding twelve months) to issue any shares of their capital stock
to any Person other than the Company or any other subsidiary of the Company.
Notwithstanding the foregoing, the Company may issue any Stock without
regard to the restrictions contained in this Section 6.06 if at the time of such
issuance (A) the aggregate amount of outstanding indebtedness of the Company,
determined in accordance with generally accepted accounting principles,
including the issuance of Series A Preferred Stock and any preferred stock to
which this Section 6.06 is applicable, is not more than four (4) times the
EBITDA (as defined below) of the Company for the Company's four most recently
completed fiscal quarters, and (B) the Fixed Charge Coverage Ratio of the
Company, including the issuance of Series A Preferred Stock and any preferred
stock to which this Section 6.06 is applicable, is not less than 2.0 to 1. The
term "EBITDA" as used in this Section 6.06 shall mean consolidated net income,
after restoring thereto amounts deducted with respect to interest, taxes,
depreciation, amortization and other non-cash charges. The term "Fixed Charge
Coverage Ratio" as used in this Section 6.06 shall have the meaning set forth in
the Indenture of even date herewith with respect to the Company's Senior
Subordinated Secured Increasing Rate Notes due 2008.
Section 6.07 Payment of Certain Dividends and Redemptions with Respect
to Capital Stock. The Company will not, at any time when any shares of Series A
Preferred Stock are outstanding, without the prior written consent of the
holders of a majority of the shares of Series A Preferred Stock then
outstanding, (i) pay any amounts to the holders of shares of capital stock of
the Company (other than shares of Series A Preferred Stock or shares of
preferred stock issued pursuant to Section 6.06 hereof) in respect of a
redemption or repurchase of such shares which
10
exceed in the aggregate, collectively with any other payments made under clause
(i) or (ii) of this Section 6.07, the Section 6.07 Amount, or (ii) pay any
amounts to the holders of shares of capital stock of the Company (other than
shares of Series A Preferred Stock or shares of preferred stock issued pursuant
to Section 6.06 hereof) in respect of a dividend or distribution (A) while any
dividends with respect to shares of Series A Preferred Stock remain accrued but
not yet paid, unless the Company shall at such time pay a dividend with respect
to the shares of Series A Preferred Stock in an aggregate amount equal to the
amount of the proposed payment under this clause (ii) multiplied by a fraction,
the numerator of which is the amount of accrued but not yet paid dividends owed
with respect to shares of Series A Preferred Stock and the denominator of which
is the Section 6.07 Amount, and (B) which exceed in the aggregate, collectively
with any other payments made under clause (i) or clause (ii) of this Section
6.07, the Section 6.07 Amount. Any payments made with respect to shares of
Series A Preferred Stock pursuant to clause (ii) (A) above shall be excluded in
determining whether the Section 6.07 Amount has been exceeded.
Section 6.08 Failure to Deliver Securities. If any Securityholder fails
to deliver any Securities to be acquired, transferred or exchanged hereunder,
the acquiror may elect to establish a segregated account in the amount of the
price to be paid therefor, such account to be turned over to such Securityholder
upon delivery of instruments transferring the Securities. If a segregated
account is so established, the Company shall take such action as is appropriate
to transfer record title to the Securities from such Securityholder to the
acquiror. Each Securityholder hereby irrevocably grants the Company a power of
attorney to effectuate the purposes of this Section 6.08.
Section 6.09 Requirement to be Bound by Agreement. Unless waived by the
Board, notwithstanding anything to the contrary contained in this Agreement, no
Person shall acquire any Securities, whether by transfer from a Securityholder,
issuance by the Company or otherwise, and whether or not any such Securities are
subject to vesting or similar restrictions, unless such Person first executes a
Joinder Agreement, agreeing to be bound by all the terms of this Agreement. Upon
the execution of a Joinder Agreement by a Person, the Company shall amend
Schedule A to set forth the name and address of such Person. The Company shall
not issue any Securities or transfer any Securities on its books which have been
issued or transferred in violation of this Agreement, or treat as the owner of
such Securities, or accord the right to vote as such owner or pay dividends to,
any Person to which any such Securities shall have been issued or transferred in
violation of this Agreement.
Section 6.10 Exercise of Contractual Rights. The Company and its
Securityholders recognize, acknowledge and agree that the Securityholders have
substantial financial interests in the Company to preserve and that the exercise
by them of any of their respective rights under this Agreement or any of the
other agreements contemplated hereby shall not be deemed to constitute a lack of
good faith, a breach of fiduciary duties or unfair dealing.
Section 6.11 Specific Enforcement. Each Securityholder expressly agrees
that the other Securityholders and the Company would be irreparably damaged if
this Agreement is not specifically enforced. Upon a breach or threatened breach
of the terms or provisions of this Agreement by any Securityholder, the other
Securityholders and the Company shall, in addition to all other remedies, each
be entitled to a temporary or permanent injunction, and/or decree for
11
specific performance, in accordance with the provisions hereof, without the
necessity of proof of actual charges or the posting of a bond or other security.
Section 6.12 Successors and Assigns. Subject to the restrictions on
transfers set forth herein, this Agreement shall be binding upon and shall inure
to the benefit of the Securityholders and their respective successors,
successors-in-title, heirs and assigns, and each and every successor-in-interest
to any Securityholder shall hold all Securities subject to all of the terms and
provisions of this Agreement. None of the provisions of this Agreement shall be
for the benefit of or enforceable by any creditor of any Securityholder, or any
creditor of the Company other than a Securityholder who is such a creditor of
the Company.
Section 6.13 Waivers, Amendments, Etc. Except as otherwise provided
herein, no waiver, modification or amendment of this Agreement shall be valid or
binding unless such waiver, modification or amendment is in writing and duly
executed by (a) the Company, (b) Heritage, (c) a Majority of Investors (other
than Heritage) as to which the effect of such waiver, modification or amendment
(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, including but not limited to any rights under Sections 6.02 or
6.03 hereof, or create any material additional obligation for such Investors,
(d) a Majority of Management Stockholders as to which the effect of such waiver,
modification or amendment (A) differs in a material and adverse manner from the
effect on Heritage, or (B) would eliminate any of the material rights of such
Management Stockholders provided for in this Agreement, including but not
limited to any rights under Sections 6.02 or 6.03 hereof, or create any material
additional obligation for such Management Stockholders and (e) a Majority of
Noteholder Stockholders as to which the effect of such waiver, modification, or
amendment (A) differs in a material and adverse manner from the effect on
Heritage, or (B) would eliminate any of the material rights of Noteholder
Stockholders provided for in this Agreement or create any material additional
obligation for Noteholder Stockholders. Notwithstanding the foregoing, any
waiver, modification or amendment which requires any Investor, Management
Stockholder or Noteholder Stockholder to make additional cash contributions to
the Company shall require the consent of such Investor, Management Stockholder
or Noteholder Stockholder, as the case may be.
Section 6.14 Notices. All notices under this Agreement shall be in
writing. Any notice shall be deemed to have been duly given upon receipt if
delivered personally, mailed, certified mail, return receipt requested, sent by
facsimile, with verification of receipt and written confirmation provided by
another means permitted hereunder, or sent by nationally recognized overnight
delivery service, to the parties hereto at the addresses set forth on Schedule
A. Upon notice from any Securityholder of a change in address, the Company will
cause Schedule A to be amended to reflect the new address of such
Securityholder.
Section 6.15 Governing Law. This Agreement and the rights and
obligations of the parties hereunder shall be governed by and interpreted,
construed and enforced in accordance with the internal laws of the Commonwealth
of Massachusetts, without giving effect to principles of conflicts of laws or
choice of laws of the State of Massachusetts, and with respect to matters
covered thereby, the General Corporation Law of the State of Delaware. Wherever
possible, each provision of this Agreement shall be interpreted in such manner
as to be effective
12
and valid under applicable law, but if any provision hereof shall be prohibited
by or invalid under any such law, such provision shall be ineffective to the
extent of such prohibition or invalidity, without invalidating or nullifying the
remainder of such provision or any other provisions of this Agreement.
Section 6.16 Headings. The headings of Articles and Sections herein are
inserted for convenience of reference only and shall be ignored in the
construction or interpretation hereof.
Section 6.17 Counterparts. This Agreement may be executed in any number
of counterparts, and with counterpart signature pages, all of which together
shall for all purposes constitute one Agreement, binding on the Company and all
the Securityholders notwithstanding that not all Securityholders have signed the
same counterpart. The execution of a Joinder Agreement shall have the same
effect as executing a counterpart to this Agreement.
Section 6.18 Entire Agreement. This Agreement embodies the entire
agreement and understanding among the parties hereto with respect to the subject
matter hereof and supersedes all prior agreements and understandings relating to
such subject matter.
Section 6.19 Noteholder Stockholders. In accordance with the terms of
the Reorganization Plan, except as set forth in Article II with respect to
Noteholder Stockholders that are not "accredited investors" within the meaning
of Regulation D under the Securities Act, Section 6.02 and 6.03, each of the
Noteholder Stockholders shall be entitled to all of the rights and shall be
subject to all of the obligations of a Qualified Stockholder under this
Agreement, so long as the aggregate number of shares of Stock held by all
Noteholders is greater than 10,000.
ARTICLE VII
DEFINITIONS
For purposes of this Agreement, the following terms shall have the
following respective meanings:
Act shall have the meaning specified in Section 3.05.
Affiliate shall have the meaning given to it in Rule 405 promulgated
under the Securities Act.
Agreement shall mean this Amended and Restated Stockholders Agreement,
as amended from time to time.
Baylor shall have the meaning set forth in the Introduction.
Baylor Director shall have the meaning specified in Section 1.02.
Board shall have the meaning specified in Section 1.04.
▇▇▇▇▇▇▇ shall have the meaning specified in the Introduction.
13
Business Day shall mean any day on which businesses are generally open
in Los Angeles, California.
Certificate of Incorporation shall mean the Certificate of
Incorporation of the Company, as amended from time to time.
Common Stock shall mean the common stock, par value $0.01 per share, of
the Company.
Company shall have the meaning specified in the Preamble, and shall
also include any successor entity to the Company.
Exempt Issuances shall have the meaning specified in Section 2.05.
Heritage shall have the meaning specified in the Introduction.
Heritage Transfer Event shall have the meaning specified in Section
4.01
Initial Notice shall have the meaning specified in Section 3.02.
Investors shall mean Heritage, Heritage Investors II L.L.C., Heritage
Fund II Investment Corporation, HFV Holdings, LLC, Nassau 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
and each other Stockholder that first becomes a Stockholder as a result of
acquiring Stock from Heritage or from another Investor.
Investor Directors shall have the meaning specified in Section 1.02.
Joinder Agreement shall have the meaning set forth in the Preamble.
Majority of Management Stockholders shall mean Management Stockholders
who hold a majority of the Common Stock held by all Management Stockholders.
Majority of Investors shall mean Investors who hold a majority of the
Common Stock held by all Investors (assuming the exercise or conversion of all
Stock Equivalents held by all Investors); provided that any decision,
determination or actions to be made or taken by a Majority of Investors shall be
made or taken by Heritage as long as Heritage holds more shares of Common Stock
than any other Investor.
Majority of Noteholder Stockholders shall mean Noteholder Stockholders
who hold a majority of the Noteholder Stock held by all Noteholder Stockholders.
Management Stockholders shall mean all Stockholders that are not
Investors or Noteholder Stockholders.
Noteholders shall mean holders of the Company's Senior Subordinated
Secured Increasing Rate Notes due 2008.
14
Noteholder Stock shall mean all Common Stock distributed pursuant to
the Reorganization Plan to holders of the Company's Senior Subordinated Secured
Increasing Rate Notes due 2008 issued by the Company pursuant to that certain
trust indenture of even date herewith.
Noteholder Stockholder shall mean each Noteholder that holds any
Noteholder Stock.
Offer shall have the meaning specified in Section 2.01.
Offered Securities shall have the meaning specified in Section 2.01.
Permitted Transfers shall mean any of the following:
(a) Transfers of Securities of a Securityholder to the
trustees of a trust revocable by such Securityholder alone, the beneficiaries of
which consist solely of such Securityholder and transferees enumerated in clause
(d) below;
(b) Transfers of Securities between a Securityholder and
such Securityholder's guardian or conservator;
(c) Transfers of Securities of a deceased Securityholder
to such Securityholder's executors or administrators or to trustees under such
Securityholder's will and thereafter to transferees enumerated in clause (d)
below;
(d) Transfers of Securities of a Securityholder to the
spouse of such Securityholder, to any of such Securityholder's children or their
issue (or to custodians for the benefit of minor children or issue), or to such
Securityholder's parents or siblings;
(e) Transfers of Securities by any Securityholder which
is a corporation, partnership, limited liability company or other entity to any
owner or Affiliate of such Securityholder, provided that such Securityholder may
not transfer Securities to more than (i) a total of five (5) of its owners or
Affiliates pursuant to this clause (e) before December 31, 2004 (unless such
transfer relates to a liquidation or winding-up of such Securityholder, in which
case the maximum number specified in this clause (i) shall be 16), and (ii) a
total of sixteen (16) of its owners or Affiliates pursuant to this clause (e)
after January 1, 2005; and provided, further, that this clause (e) shall not be
applicable to transfers of Noteholder Stock.
(f) Transfers of warrants to purchase Common Stock of the
Company by Baylor or ▇▇▇▇▇▇▇ to any broker or agent retained by Baylor or
▇▇▇▇▇▇▇ with respect to their investment in the Company (up to a maximum of
warrants to purchase 20,742 shares of Common Stock in the aggregate) or
transfers of Securities of Baylor to Baylor Health Care System Foundation (in
any amount);
(g) Transfers of Securities by Heritage Fund II
Investment Corporation to any other Person;
(h) Transfers of Securities pursuant to Articles III or
IV; and
15
(i) In the case of the transfer of any Noteholder Stock
held by a Noteholder Stockholder that holds such Noteholder Stock in the
capacity of nominee, depository, agent, trustee or custodian for the benefit of
another Person, or that shall have investment authority over such Noteholder
Stock for the benefit of another Person, transfers of such Noteholder Stock to
another nominee, depository, agent, trustee or custodian for such Person or any
other party who shall have investment authority over such Noteholder Stock;
provided, however, that Securities transferred pursuant to clauses (a) - (f) may
not be further transferred under such clauses except to a Person that would have
been a permitted transferee thereof from the initial Securityholder who held
such Securities.
Person shall mean any natural person, corporation, limited liability
company, partnership, trust or other entity.
Proportionate Percentage of a Securityholder shall mean a fraction of
which (a) the numerator is the number of then outstanding shares of Common Stock
held by such Securityholder (assuming the exercise or conversion of all Stock
Equivalents held by such Securityholder), and (b) the denominator is the total
number of then outstanding shares of Common Stock (assuming the exercise or
conversion of all Stock Equivalents held by all Securityholders).
Public Offering shall mean a registered underwritten public offering of
shares of Common Stock.
Qualified Stockholder shall mean any Stockholder then holding more than
10,000 shares of Stock (assuming the exercise or conversion of all Stock
Equivalents held by such Stockholder, and appropriately adjusted for stock
splits, stock dividends, combinations and other similar transactions); provided
that (a) all shares of Stock held by a Stockholder and any transferees of such
Stockholder under clause (e) of the definition of Permitted Transfers shall be
aggregated for purposes of determining whether any of them is a Qualified
Stockholder, (b) all shares of Stock held by GS Private Equity Partners, L,P,
and GS Private Equity Partners Offshore, L.P. shall be aggregated for purposes
of determining whether any of them is a Qualified Stockholder, (c) all shares of
Stock held by Nassau Capital Partners II L.P. and NAS Partners I LLC shall be
aggregated for purposes of determining whether any of them is a Qualified
Stockholder, (d) all shares of Stock held by Baylor, ▇▇▇▇▇▇▇ and each transferee
of Baylor or ▇▇▇▇▇▇▇ permitted under clause (f) of the definition of Permitted
transfers shall be aggregated for purposes of determining whether any of them is
a Qualified Stockholder, and (e) all shares of Noteholder Stock held by all
Noteholders shall be aggregated for purposes of determining whether any of them
is a Qualified Stockholder.
Reorganization Plan shall have the meaning specified in the
Introduction.
Return Notice shall have the meaning specified in Section 3.02.
RS shall mean ▇▇▇▇▇▇ ▇▇▇▇▇▇.
▇▇▇▇▇ shall mean ▇▇▇▇▇▇▇ ▇▇▇▇▇.
16
Section 6.07 Amount shall mean $20,000,000.
Securities shall mean all Stock, Stock Equivalents and all other equity
securities of the Company, and any debt securities issued together with warrants
or similar rights, provided that the Company's Senior Subordinated Secured
Increasing Rate Notes shall not constitute "Securities" pursuant to this
Agreement.
Securities Act shall mean the Securities Act of 1933, as amended.
Securityholder shall mean the holder of any Securities.
Series A Preferred Stock shall mean the 15,000 shares of Series A
Preferred Stock, par value $0.01 per share, of the Company issued by the Company
pursuant to the Reorganization Plan.
SS shall mean ▇▇▇▇▇▇ ▇▇▇▇▇▇.
Stock shall mean all outstanding capital stock of the Company.
Stock Equivalents shall mean any equity or debt security convertible
into or exchangeable for any Stock, or any right, warrant or option to acquire
any Stock or such convertible or exchangeable equity interest or security.
Stockholder shall mean each Person who holds any Stock (and shall also
include Baylor and ▇▇▇▇▇▇▇ so long as they shall hold any Stock Equivalents).
transfer shall have the meaning specified in Section 3.01.
Transfer Event Notice shall have the meaning specified in Section 4.01
Transferring Stockholder shall have the meaning specified in Section
3.02.
Trigger Event shall mean any of the following: (A) the closing of a
Public Offering, (B) the sale of Stock in a single transaction or a series of
related transactions, or a merger or consolidation of the Company as a result of
which a majority of the outstanding Stock is not held by the initial parties to
the Stockholders Agreement and their transferees under clauses (a) through (f)
of the definition of "Permitted Transfers", or (C) the sale of all or
substantially all of the consolidated assets of the Company and its
Subsidiaries, approved as required by this Agreement.
[Signature Page Follows]
17
IN WITNESS WHEREOF, the parties hereto have signed and sworn to this
Agreement as of the date first above written.
FOUNTAIN VIEW, INC., a Delaware
corporation
By: \s\ ▇▇▇▇▇▇ ▇. ▇▇▇▇
-------------------------------
Name: ▇▇▇▇▇▇ ▇. ▇▇▇▇
Title: Secretary
[Fountain View, Inc. Amended and Restated Stockholders' Agreement]
S-1
SCHEDULE A
ADDRESSES FOR NOTICE
[Address of all signatories to Joinder to be inserted following execution of
Joinder, exhibit to be provided to such signatories upon completion]
Schedule A-1
EXHIBIT A
FORM OF JOINDER AGREEMENT
JOINDER TO AMENDED AND RESTATED STOCKHOLDERS AGREEMENT
The undersigned hereby executes this JOINDER TO AMENDED AND RESTATED
STOCKHOLDERS AGREEMENT effecting a joinder to the Amended and Restated
Stockholders Agreement effective as of August 15, 2003 (the "Stockholders
Agreement"), by and between Fountain View, Inc. a Delaware corporation (the
"Company"), and the parties identified on Schedule A attached thereto.
By its execution hereof, the undersigned agrees to be bound by the
terms and conditions of the Stockholders Agreement.
[If sent to a Noteholder Stockholder] [The undersigned hereby
represents and warrants to the Company that, as of the record date, April 15,
2003, it was the beneficial holder of the principal amount of the Company's
11 1/4% Senior Subordinated Notes due 2008 that is set forth below (the
"Principal Amount"). The undersigned acknowledges that the Company will rely on
and use the Principal Amount to determine the number of shares of the Company's
common stock that the undersigned is entitled to receive and agrees that, if the
Principal Amount is determined to overstate the principal amount of Notes held
by the undersigned, the Company is unilaterally authorized to cancel any shares
of common stock issued to the undersigned in respect of such overage amount.]
Date: ______________________________
STOCKHOLDER:
__________________________, a _____
By: _______________________________
Name: ____________________________
Title: ____________________________
[Aggregate principal amount of Notes Address:
beneficially owned on April 15, 2003:] _____________________________
_____________________________
$___________________________________ _____________________________
Telephone: ( ) ___________
with copies to:
Akin Gump ▇▇▇▇▇▇▇ ▇▇▇▇▇ & ▇▇▇▇ LLP
▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Attn: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇, Esq.
Exhibit A-1