UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
SCHEDULE 13D
Under the Securities Exchange Act of 1934
(Amendment No. 1)*
Regent Assisted Living, Inc.
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(Name of Issuer)
Common Stock
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(Title of Class of Securities)
758949 10 1
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(CUSIP Number)
Walter C. Bowen
Regent Assisted Living, Inc.
121 SW Morrison St., Suite 1000
Portland, OR 97204
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(Name, Address and Telephone Number
of Person Authorized to Receive
Notices and Communications)
December 16, 1996
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(Date of Event which Requires
Filing of this Statement)
If the filing person has previously filed a statement on Schedule 13G to report
the acquisition which is the subject of this Schedule 13D, and is filing this
schedule because of Rule 13d-1(b)(3) or (4), check the following box [ ].
NOTE: Six copies of this statement, including all exhibits, should be filed
with the Commission. See Rule 13d-1(a) for other parties to whom copies are
to be sent.
*The remainder of this cover page shall be filled out for a reporting
person's initial filing on this form with respect to the subject class of
securities, and for any subsequent amendment containing information which
would alter the disclosures provided in a prior cover page.
The information required in the remainder of this cover page shall not be
deemed to be "filed" for the purpose of Section 18 of the Securities
Exchange Act of 1934 ("Act") or otherwise subject to the liabilities of
that section of the Act but shall be subject to all other provisions of the
Act (however, see the Notes).
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SCHEDULE 13D
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CUSIP No. 758949 10 1 Page 2 of 8
1) NAME OF REPORTING PERSON
S.S. OR I.R.S. IDENTIFICATION NO. OF ABOVE PERSON
Walter C. Bowen
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2) CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP*
(a) [ ]
(b) [ X ]
3) SEC USE ONLY _____________________________________________________________
4) SOURCE OF FUNDS
PF
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5) CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED
PURSUANT TO ITEMS 2(d) or 2(e) [ ]
6) CITIZENSHIP OR PLACE OF ORGANIZATION
United States of America
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7) SOLE VOTING POWER
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8) SHARED VOTING POWER
NUMBER OF
4,899,667 shares of Common Stock (which includes
SHARES 1,666,667 shares issuable upon conversion of
1,283,785 shares of Series A Preferred Stock and
BENEFICIALLY 382,882 shares of Series B Preferred Stock, which
shares of Series A and Series B Preferred Stock
OWNED BY are held by Prudential Private Equity Investors
III, L.P. and are subject to a Stockholders
EACH Agreement with Mr. Bowen)
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REPORTING
9) SOLE DISPOSITIVE POWER
PERSON
3,233,000 shares of Common Stock
WITH --------------------------------------------------
10) SHARED DISPOSITIVE POWER
N/A
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11) AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON
3,233,000 shares of Common Stock
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12) CHECK IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES CERTAIN
SHARES* [ X ]
Excludes 1,666,667 shares issuable upon conversion of 1,283,785 shares
of Series A Preferred Stock and 382,282 shares of Series B Preferred
Stock, which shares of Series A and Series B Preferred Stock are held
by Prudential Private Equity Investors III, L.P. and are subject to a
Stockholders Agreement with Mr. Bowen.
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13) PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11)
69.8% of Common Stock
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14) TYPE OF REPORTING PERSON*
IN
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WALTER C. BOWEN
Amendment No. 1 to Statement on Schedule 13D
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Pursuant to Rule 13d-2(a) of Regulation 13D-G of the General Rules and
Regulations under the Securities Exchange Act of 1934, as amended (the "Act"),
the undersigned hereby amends his Schedule 13D Statement dated February 14,
1996, relating to the Common Stock of Regent Assisted Living, Inc. (the
"Company") (such initial Schedule 13D shall hereinafter be referred to as the
"Statement"). Pursuant to Rule 13d-2(c) of the General Rules and Regulations
under the Act, this Amendment No. 1 (the "Amendment") restates the text of the
Statement, which was filed in a paper format. There has been no material change
in the information included in the Statement except with respect to the
information contained in Items 5, 6 and 7 of the Statement.
Item 1. Security and Issuer
This Statement relates to shares of Common Stock ("Common Stock") of
Regent Assisted Living, Inc., an Oregon corporation (the "Company"). The
Company's principal executive offices are located at 121 SW Morrison St., Suite
1000, Portland, OR 97204.
Item 2. Identity and Background
This Statement is filed by Mr. Walter C. Bowen, an individual whose
business address is 121 SW Morrison St., Suite 1000, Portland, OR 97204. Mr.
Bowen is Chairman of the Board, President and Chief Executive Officer of the
Company, which constitutes Mr. Bowen's principal employment. The address of the
Company's principal executive offices is 121 SW Morrison St., Suite 1000,
Portland, OR 97204. Mr. Bowen is a citizen of the United States of America.
During the past five years, Mr. Bowen has not been convicted in a criminal
proceeding (excluding traffic violations or similar misdemeanors), nor has he
been a party to a civil proceeding of a judicial or administrative body of
competent jurisdiction and as a result of such proceeding was or is subject to
a judgment, decree or final order enjoining future violations of, or
prohibiting or mandating activities subject to, federal or state securities
laws or finding any violation with respect to such laws.
Item 3. Source and Amount of Funds or Other Consideration
Mr. Bowen used his personal funds to acquire the shares of Common Stock
described in Item 5 below. Except as described in Items 5 and 6, below, as of
the date of this Amendment, no arrangements with third parties have been made
with respect to financing the acquisition of additional shares of Common Stock.
Item 4. Purpose of Transaction
Mr. Bowen has acquired the shares of Common Stock indicated herein as
beneficially owned by him solely for investment purposes. Except as described
in Item 6 below, Mr. Bowen may elect to acquire additional shares of Common
Stock or to sell shares. Any such
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determination may be based on a number of factors, including the continued
employment of Mr. Bowen by the Company, the continued attractiveness of
investment in the Company at then prevailing market prices, the number of
shares of Common Stock that are available for purchase, the price or prices
thereof, general market conditions and other similar factors.
While Mr. Bowen reserves the right to develop plans or proposals in the
future with respect to the following items, except as described in Items 5 and
6, below, at the present time Mr. Bowen has no plans or proposals that relate
to or would result in any of the following:
(a) An extraordinary corporate transaction, such as a merger,
reorganization or liquidation, involving the Company or any of its
subsidiaries;
(b) Sale or transfer of a material amount of assets of the Company or any
of its subsidiaries;
(c) Any change in the present Board of Directors or management of the
Company, including any plans or proposals to change the number or term of
directors or to fill any existing vacancies on the Board.
(d) Any material change in the present capitalization or dividend policies
of the Company;
(e) Any other material change in the Company's business or corporate
structure;
(f) Changes in the Company's charter, bylaws or instruments corresponding
thereto or other actions which may impede the acquisition of control of the
Company by any person;
(g) Causing a class of securities of the Company to be delisted from a
national securities exchange or cease to be authorized to be quoted in an
inter-dealer quotation system of a registered national securities association;
(h) A class of equity securities of the Company becoming eligible for
termination of registration pursuant to Section 12(g)(4) of the Securities
Exchange Act of 1934, as amended; or
(i) Any action similar to any of those enumerated above.
Item 5. Interest in Securities of the Issuer
Under the rules and regulations of the Securities and Exchange Commission,
Mr. Bowen may be deemed to be the beneficial owner of 3,233,000 shares of
Company Common Stock, representing approximately 69.8 percent of the issued and
outstanding shares of Common Stock. Mr. Bowen purchased 233,000 of his shares
concurrently with the closing of the Company's initial public offering on
December 26, 1995 directly from the Company for $7.50 per share, for an
aggregate purchase price of $1,747,500 in cash. All of these shares of Common
Stock of which Mr. Bowen may be deemed to be the beneficial owner are held of
record by Mr. Bowen.
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Mr. Bowen shares voting power with respect to 1,283,785 shares of Series A
Preferred Stock and 382,882 shares of Series B Preferred Stock (collectively
the "PPEI Preferred Shares"), which PPEI Preferred Shares are held by
Prudential Private Equity Investors III, L.P. ("PPEI"), pursuant to a
Stockholders Agreement among the Company, PPEI and Mr. Bowen, dated as of
December 16, 1996 (the "Stockholders Agreement"). The PPEI Preferred Shares are
convertible into an aggregate of 1,666,667 shares of Company Common Stock,
subject to adjustment in accordance with its terms. The Stockholders Agreement
also places certain restrictions and requirements on Mr. Bowen regarding the
transfer and voting of his shares.
The percentage of outstanding shares of Common Stock of the Company set
out in the preceding paragraph is computed based on a total of 4,633,000 shares
of Common Stock outstanding, as disclosed in the Company's Form 10-QSB, filed
with the Securities and Exchange Commission for the quarterly period ending
September 30, 1996. The percentage is calculated treating all shares of Company
Common Stock issuable upon the exercise of options or warrants or upon the
conversion of a security of another class of the Company, including the shares
issuable upon the conversion of the PPEI Preferred Shares and the exercise of
the Warrant described below, as not outstanding.
As a result of the Stockholders Agreement, Mr. Bowen, PPEI and its
affiliates may be deemed to constitute a "group" for the purposes of Section
13(d)(3) of the Act. Mr. Bowen disclaims that he has agreed to act as a group
with PPEI or any of its affiliates other than as described in this Amendment.
The Stockholders Agreement was executed in connection with the purchase by
PPEI of the PPEI Preferred Shares and a Stock Purchase Warrant to purchase
200,000 shares of the Company's Common Stock at a price of $5.50 a share (the
"Warrant"), which Warrant is exerciseable only upon the occurrence of certain
events and is subject to adjustment in accordance with its terms. The
Stockholders Agreement obligates PPEI, with its affiliated investors, to vote
its shares of Company stock to establish and maintain a specified composition
for the Company's Board of Directors. As a result of PPEI's voting obligations
under the Stockholders Agreement, Mr. Bowen may be deemed to own beneficially
the shares held by PPEI. Mr. Bowen disclaims beneficial ownership of such
shares, and the filing of this Amendment shall not be construed as an admission
that Mr. Bowen is, for the purposes of Section 13(d) or 13(g) of the Act or for
any other purpose, the beneficial owner of any shares held by PPEI or any of
its affiliates.
The PPEI Preferred Shares represent 100 percent of the outstanding shares
of Preferred Stock of the Company. Currently, 1,666,667 shares of Common Stock
of the Company are issuable upon the conversion of the PPEI Preferred Shares,
which would represent 26.46 percent of the outstanding shares of Company Common
Stock after such conversion. If the Company does not obtain certificates of
occupancy for 1,000 new units during 1997, the conversion ratio of the PPEI
Preferred Shares will be adjusted in accordance with its terms so that the PPEI
Preferred Shares will then be convertible into 1,818,182 shares of Common Stock
and PPEI will then also be entitled to exercise the Warrant. In such event, the
shares of Common Stock of the Company issuable upon the conversion of the PPEI
Preferred Shares and the exercise of the Warrant would represent 30.34 percent
of the outstanding shares of Common Stock of the Company after such conversion
and exercise. These percentages are calculated treating all shares of Company
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Common Stock issuable upon the exercise of options or warrants or upon the
conversion of a security of another class of the Company, other than the
shares issuable upon the conversion of the PPEI Preferred Shares and the
exercise of the Warrant, as not outstanding.
Except as described in this Item 5, during the past 60 days, Mr. Bowen has
engaged in no transactions in shares of Common Stock.
Item 6. Contracts, Arrangements, Understandings or
Relationships with Respect to Securities of the Issuer
In September 1995, Mr. Bowen granted options to the following officers of
the Company to purchase the following numbers of shares of Common Stock from
Mr. Bowen at an exercise price of $6.00 per share: Eric W. Jacobsen, 85,000
shares; James W. Ekberg, 50,000 shares; and Steven L. Gish, 25,000 shares. Also
in September 1995, Mr. Bowen granted an option to each of Dennis Parfitt and
Gregory A. Roderick to purchase 5,000 shares of Common Stock from Mr. Bowen at
an exercise price of $8.00 per share. Mr. Roderick is an officer of the
Company. All of these options vested and became effective when they were
granted and are exercisable for a period of ten years from the date of grant,
subject to the terms of Option Agreements attached to the Statement as Exhibits
6.1 through 6.5.
The Stockholders Agreement requires the parties to take certain actions,
including maintaining the number of directors at eight, electing two directors
designated by PPEI and two directors from management designated by Mr. Bowen
and electing four outside directors designated by the parties to the
Stockholders Agreement. The Stockholders Agreement also places certain
restrictions on the transfer of stock by Mr. Bowen. Such restrictions do not
apply to any (i) transfers of up to 1,233,000 of his shares, or (ii) public
sales (as defined in the Stockholders Agreement) of Mr. Bowen's shares. The
Stockholders Agreement also permits the transfer by Mr. Bowen of his shares to
members of his family group or pursuant to the options to purchase 170,000
shares granted by Mr. Bowen in September 1995 and described above. The
Stockholders Agreement provides PPEI and its affiliated investors certain
rights to participate in certain sales of shares by Mr. Bowen. The Stockholders
Agreement also provides that Mr. Bowen, without the consent of holders of 66
2/3 of the PPEI Preferred Shares, will not vote his shares in favor of
specified actions, including mergers, a liquidation or dissolution, certain
amendments to the Restated Articles of Incorporation or certain amendments to
any stock option or ownership plan of the Company. The rights of PPEI under the
Stockholders Agreement terminate when PPEI, along with its affiliated
investors, owns less than 25 percent of the shares owned as of the date of the
Stockholders Agreement. The rights of Mr. Bowen under the Stockholders
Agreement terminate when he and his permitted transferees hold less than 25
percent of the shares held as of the date of the Stockholders Agreement. The
foregoing description of the Stockholders Agreement is qualified by reference
to such Stockholders Agreement, a copy of which is attached hereto as Exhibit
6.7.
Mr. Bowen entered into a lockup agreement with Needham & Company, Inc.,
whereby Mr. Bowen agreed not to sell or otherwise dispose of any of his
3,233,000 shares of Common Stock prior to December 15, 1996, without the prior
written consent of Needham & Company, Inc., except pursuant to the foregoing
options. A copy of this agreement is attached to the Statement as Exhibit 6.6.
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Except as described in this Amendment and in the Statement, Mr. Bowen is
not a party to any contract, arrangement, understanding or relationship with
any other person with respect to shares of Common Stock or Preferred Stock of
the Company, including but not limited to transfer or voting of any of the
securities, finder's fees, joint ventures, loan or option arrangements, puts or
calls, guarantees of profits, divisions of profits or loss, or the giving or
withholding of proxies.
Item 7. Material to be Filed as Exhibits
Filed as Exhibits are the following:
6.1 Option Agreements With Eric W. Jacobsen.*
6.2 Option Agreements With James W. Ekberg.*
6.3 Option Agreements With Steven L. Gish.*
6.4 Option Agreements With Dennis Parfitt.*
6.5 Option Agreements With Gregory A. Roderick.*
6.6 Lockup Agreement With Needham & Company, Inc.*
6.7 Stockholders Agreement among Prudential Private Equity Investors III,
L.P., Walter C. Bowen and the Company.
* Incorporated by reference to the Schedule 13D Statement dated February 14,
1996.
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Signature
After reasonable inquiry and to the best of my knowledge and belief, I
certify that the information set forth in this statement is true, complete and
correct.
January 21, 1997 WALTER C. BOWEN
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Date Walter C. Bowen
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REGENT ASSISTED LIVING, INC.
STOCKHOLDERS AGREEMENT
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THIS AGREEMENT is made as of December 16, 1996, between Regent Assisted
Living, Inc. , an Oregon corporation (the "Company"), Prudential Private Equity
Investors, III, L.P., a Delaware limited partnership (the "Investor"), and
Walter C. Bowen (the "Original Stockholder"). The Investor and the Original
Stockholder are collectively referred to as the "Stockholders" and individually
as a "Stockholder." Capitalized terms used herein are defined in paragraph 8
hereof.
The Investor shall purchase shares of the Company's preferred stock and a
warrant to purchase common stock pursuant to a purchase agreement between the
Investor and the Company dated as of the date hereof (the "Purchase
Agreement").
The Company and the Stockholders desire to enter into this Agreement for
the purposes, among others, of (i) establishing the composition of the
Company's Board of Directors (the "Board"), (ii) assuring continuity in the
management and ownership of the Company and (iii) limiting the manner and terms
by which the Original Stockholder's Stockholder Shares may be transferred. The
execution and delivery of this Agreement is a condition to the Investor's
purchase of the Company's stock and the contingent warrant pursuant to the
Purchase Agreement.
NOW, THEREFORE, in consideration of the mutual covenants contained herein
and other good and valuable consideration, the receipt and sufficiency of which
are hereby acknowledged, the parties to this Agreement hereby agree as follows:
1. Board of Directors.
(a) From and after the Closing (as defined in the Purchase Agreement) and
until the provisions of this paragraph 1 cease to be effective, each holder of
Stockholder Shares shall vote all of his Stockholder Shares which are voting
shares and any other voting securities of the Company over which such holder
has voting control and shall take all other reasonably necessary or desirable
actions within his control (whether in his capacity as a stockholder, director,
member of a board committee or officer of the Company or otherwise, and
including, without limitation, attendance at meetings in person or by proxy for
purposes of obtaining a quorum and execution of written consents in lieu of
meetings), and the Company shall take all reasonably necessary or desirable
actions within its control (including, without limitation, calling special
board and stockholder meetings), so that:
(i) the authorized number of directors on the Board shall be
established at eight directors;
<PAGE>
(ii) the following individuals shall be elected to the Board:
(A) two representatives designated by the Investor (the
"Investor Directors"), provided that the Investor Directors shall
initially be employees of the general partner of the Investor or
employees of the investment advisor of the Investor or its general
partner, and provided further that the Investor may subsequently
designate an industry executive as an Investor Director provided that
such industry executive is reasonably acceptable to a majority of the
other Directors;
(B) two members of the Company's management designated by the
Original Stockholder (the "Management Directors") provided that until
the second annual meeting of the Company's stockholders, Walter C.
Bowen and Steven L. Gish shall serve as the Management Directors; and
(C) four representatives designated by the Stockholders
(determined on the basis of a vote of a majority of the Stockholder
Shares held by the Stockholders), provided that such representatives
are not members of the Company's management or employees or officers
of the Company or its subsidiaries (the "Outside Directors");
(iii) there shall be an executive committee, a compensation committee
and an audit committee of the Board, each with at least one Investor
Director as a member thereof;
(iv) there shall be a conflicts committee of the Board (the
"Conflicts Committee") to consider and resolve all conflicts of interest
matters presented to the Board, and the Conflicts Committee shall be
composed of two Outside Directors and the two Investor Directors;
(v) any other committees of the Board shall be created only upon the
approval of a majority of the members of the Board and each such committee
(if any) shall have at least one Investor Director as a member;
(vi) the removal from the Board (with or without cause) of any
representative designated hereunder by the Investor or by the Original
Stockholder shall be at the Investor's or the Original Stockholder's
written request, respectively, but only upon such written request and
under no other circumstances, provided that if any director elected
pursuant to subparagraph (ii)(B) above ceases to be an employee of the
Company and its Subsidiaries, he shall be removed as a director promptly
after his employment ceases; and
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(vii) in the event that any representative designated hereunder by
the Investor or by the Original Stockholder ceases to serve as a member of
the Board during his term of office, the resulting vacancy on the Board
shall be filled by a representative designated by the Investor or the
Original Stockholder, respectively, as provided hereunder.
(b) The Company shall pay the reasonable out-of-pocket expenses incurred
by each director in connection with attending the meetings of the Board, and
any committee thereof. So long as any Investor Director serves on the Board and
for three years thereafter, the Company shall make a good faith effort to
secure and maintain directors and officers liability insurance coverage: (A) as
of the Closing, in the amount of $2,000,000, (B) as of January 1, 1997, in the
amount of $3,000,000 and (C) thereafter, in such amounts as are customary for
publicly traded corporations of similar size engaged in similar lines of
business as reasonably determined by the Board; and the Company's certificate
of incorporation and bylaws shall provide for indemnification and exculpation
of directors to the fullest extent permitted under applicable law. In addition,
the Company shall enter into indemnity agreements with the Investor Directors
in form and substance similar to the indemnity agreements the Company currently
has with the Management Directors.
(c) The rights of the Investor under this paragraph 1 shall terminate at
such time as the Investor and its Affiliates hold in the aggregate less than
25% of the Stockholder Shares held by the Investor on the date hereof; provided
that the Investor may assign its right to designate directors hereunder to any
Person or group of affiliated Persons who acquire more than 50% of the
Stockholder Shares held by the Investor as of the date hereof.
(d) The rights of the Original Stockholder under this paragraph 1 shall
terminate at such time as the Original Stockholder and his Permitted
Transferees hold in the aggregate less than 25% of the Stockholder Shares held
by such Persons on the date hereof.
(e) The provisions of this paragraph 1 shall terminate automatically and
be of no further force and effect upon the tenth anniversary of the date hereof
unless extended by the parties hereto.
(f) If any party fails to designate a representative to fill a
directorship pursuant to the terms of this paragraph 1, the election of an
individual to such directorship shall be accom plished in accordance with the
Company's bylaws and applicable law.
2. Contract Proceedings. The Company, the Original Stockholder and the
Investor hereby agree that:
(a) The Company shall have a right of first refusal on all sites to be
purchased, leased or otherwise secured for real estate development by any
Affiliate of the Original Stockholder (including, without limitation, Bowen
Development Company ("BDC")) except for
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the sites identified on the attached Exhibit A and the Conflicts Committee
shall determine whether or not the Company shall exercise such right;
(b) BDC or any other Affiliate of the Original Stockholder may continue as
contractor for the current Company projects in Boise, San Antonio, Folsom,
Roseville and Clovis, provided that the terms of such projects shall be equal
to hard costs, including general conditions (which consist of on-site costs),
plus 5% or less (for overhead and profit) as determined by the Conflicts
Committee;
(c) All of the other projects on which construction shall begin prior to
June 30, 1997, may be awarded to BDC upon BDC providing proof to the Conflicts
Committee that such contract is on terms no less favorable than the Company
would otherwise be able to obtain from a completely independent general
contractor, including a discounted contractors fee for awarding multiple
projects to one contractor, if applicable. In such cases, competitive bidding
shall not be required provided the Conflicts Committee determines that the
Company's construction schedule dictates that the time required to obtain such
bids would unduly delay construction and place the Company behind its current
projected schedule of openings; and
(d) All contracts pursuant to which construction will begin subsequent to
June 30, 1997, or any contract for the construction of a facility beyond the
initial twelve projects as set forth on the attached Exhibit B, shall require
competitive bidding on comparable terms and the approval of the Conflicts
Committee for a contract to be awarded to BDC.
3. Certain Voting Covenants. From and after the Closing (as defined in the
Purchase Agreement), the Original Stockholder and his Permitted Transferees
shall not vote any of his or their Stockholder Shares which are voting shares
and any other voting securities of the Company over which such holder has
voting control, in favor of the Company taking the following actions unless
such Original Stockholder or his Permitted Transferees first obtains the prior
written consent of the holders of at least 662/3% of the outstanding Preferred
Stock:
(a) merge or consolidate with any Person or permit any Subsidiary to merge
or consolidate with any Person (other than a wholly-owned Subsidiary) ;
(b) liquidate, dissolve or effect a recapitalization or reorganization in
any form of transaction (including, without limitation, any reorganization into
a limited liability company, a partnership or any other non-corporate entity
which is treated as a partnership for federal income tax purposes) ;
(c) except as expressly contemplated by the Purchase Agreement, make any
amendment to the Articles of Incorporation, the Articles of Amendment or the
Company's bylaws, or file any resolution of the Board with the Oregon Secretary
of State containing any provisions, which would increase the number of
authorized shares of the Preferred Stock or adversely affect or otherwise
impair the rights or the relative preferences and priorities of the holders of
the Preferred Stock or the Underlying Common Stock under the Purchase
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Agreement, the Restated Articles of Incorporation, as amended, the Company's
bylaws or the Registration Agreement;
(d) amend or modify any stock option plan or employee stock ownership plan
as in existence as of the Closing, other than to increase to 600,000 the number
of options for shares of the Company's common stock that may be issued under
the Company's 1995 Stock Incentive Plan, adopt any new stock option plan or
employee stock ownership plan or issue any shares of Common Stock to its or its
Subsidiaries' employees other than pursuant to the Company's existing stock
option and employee stock ownership plans; or
(e) any other corporate action of the type described in Section 3D of the
Purchase Agreement which requires the approval of the stockholders of the
Company under the laws of the State of Oregon (including, without limitation,
any provisions requiring a separate class or series vote), the Restated
Articles of Incorporation, as amended, the Company's bylaws or any other
statute, rule or regulation to which the Company is subject.
4. Representations and Warranties. Each Stockholder represents and
warrants that (i) such Stockholder is the record owner of the number of
Stockholder Shares set forth opposite its name on the Stockholder Schedule
attached hereto, (ii) this Agreement has been duly authorized, executed and
delivered by such Stockholder and constitutes the valid and binding obligation
of such Stockholder, enforceable in accordance with its terms, and (iii) such
Stockholder has not granted and is not a party to any proxy, voting trust or
other agreement which is inconsistent with, conflicts with or violates any
provision of this Agreement. No holder of Stockholder Shares shall grant any
proxy or become party to any voting trust or other agreement which is
inconsistent with, conflicts with or violates any provision of this Agreement.
5. Restrictions on Transfer of Stockholder Shares.
(a) Transfer of Stockholder Shares. The Original Stockholder shall not
sell, transfer, assign, pledge or otherwise dispose of (whether with or without
consideration and whether voluntarily or involuntarily or by operation of law)
any interest in his Stockholder Shares (a "Transfer"), except pursuant to the
provisions of this paragraph 4 or pursuant to a Public Sale and except for
Transfers of up to 1,233,000 of his Stockholder Shares (as appropriately
adjusted for any combination or subdivision of shares, stock dividend, stock
split or other recapitalization) (an "Exempt Sale"). The Original Stockholder
shall not consummate any Transfer (other than a Public Sale or an Exempt Sale)
until 30 days after the later of the delivery to the Company and the Investor
of the Original Stockholder's Sale Notice, unless the parties to the Transfer
have been finally determined pursuant to this paragraph 4 prior to the
expiration of such 30-day period (the "Election Period").
(b) Participation Rights. At least 30 days prior to any Transfer of
Stockholder Shares by the Original Stockholder (other than a Public Sale or an
Exempt Sale), the Original Stockholder shall deliver a written notice (the
"Sale Notice") to the Company and the Investor,
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specifying in reasonable detail the identity of the prospective transferee(s),
the number of shares to be transferred and the terms and conditions of the
Transfer. The Investor may elect to participate in the contemplated Transfer at
the same price per share (whether voting or non-voting stock) and on the same
terms by delivering written notice to the Original Stockholder within 30 days
after delivery of the Sale Notice. If the Investor has elected to participate
in such Transfer, the Original Stockholder and the Investor shall be entitled
to sell in the contemplated Transfer, at the same price and on the same terms,
a number of Stockholder Shares equal to the product of (i) the quotient
determined by dividing the percentage of Stockholder Shares owned by such
Person by the aggregate percentage of Stockholder Shares owned by the original
Stockholder and the Investor and (ii) the number of Stockholder Shares to be
sold in the contemplated Transfer.
For example, if the Sale Notice contemplated a sale of 100
Stockholder Shares by the Original Stockholder, and if the Original
Stockholder at such time owns 30% of all Stockholder Shares and if
the Investor elects to participate and owns 20% of all Stockholder
Shares, the Original Stockholder would be entitled to sell 60 shares
(30% / 50% x 100 shares) and the Investor would be entitled to sell
40 shares (20% / 50% x 100 shares).
The Original Stockholder shall use best efforts to obtain the agreement of the
prospective (transferees) to the participation of the Investor in any
contemplated Transfer and to the inclusion of the Warrant and the Preferred
Stock in the contemplated Transfer, and the Original Stockholder shall not
transfer any of its Stockholder Shares to any prospective transferee if such
prospective (transferees) declines to allow the participation of the Investor
or the inclusion of the Warrant and/or the Preferred Stock. If any portion of
the Warrant is included in any Transfer of Stockholder Shares under this
subparagraph 4(b), the purchase price for the Warrant shall be equal to the
full purchase price determined hereunder for the Stockholder Shares covered by
the portion of the Warrant to be transferred.
(c) Permitted Transfers. The restrictions set forth in this paragraph 4
shall not apply with respect to any Transfer of Stockholder Shares by the
Original Stockholder pursuant to (i) the stock option agreements dated as of
September 1, 1995 among the Company, the original Stockholder and each of
Messrs. Ekberg, Gish, Jacobsen, Parfitt and Roderick as originally executed, or
(ii) applicable laws of descent and distribution or among the Original
Stockholder's Family Group (referred to herein as "Permitted Transferees");
provided that, with respect to a Transfer permitted pursuant to clause (ii),
the restrictions contained in this paragraph 4 shall continue to be applicable
to the Stockholder Shares after any such Transfer and provided further that the
transferees of such Stockholder Shares shall have agreed in writing to be bound
by the provisions of this Agreement affecting the Stockholder Shares so
transferred. For purposes of this Agreement, "Family Group" means the Original
Stockholder's spouse and descendants (whether natural or adopted) and any trust
solely for the benefit of the Original Stockholders and/or the Original
Stockholder's spouse and/or descendants.
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<PAGE>
(d) Termination of Restrictions. The restrictions set forth in this
paragraph 4 shall continue with respect to the applicable Stockholder Share
held by the Original Stockholder until the date on which such Stockholder Share
has been transferred pursuant to this paragraph 4.
6. Holdback Agreement. The Original Stockholder shall not effect any
public sale or distribution of any Stockholder Shares or of any other capital
stock or equity securities of the Company, or any securities convertible into
or exchangeable or exercisable for such stock or securities, during the seven
days prior to and the 90-day period beginning on the effective date of any
underwritten Demand Registration or any underwritten Piggyback Registration (as
such terms are defined in the Registration Agreement dated as of the date
hereof between the Investor and the Company) unless the underwriters managing
the registration otherwise agree. The restrictions on the transfer of
Stockholder Shares set forth in this paragraph 5 shall continue with respect to
each Stockholder Share until such share is no longer held by the Original
Stockholder or his Permitted Transferees.
7. Legend. Each certificate evidencing Stockholder Shares and each
certificate issued in exchange for or upon the transfer of any Stockholder
Shares (if such shares remain Stockholder Shares after such transfer) shall be
stamped or otherwise imprinted with a legend in substantially the following
form:
"The securities represented by this certificate are subject
to a Stockholders Agreement dated as of December 16, 1996,
among the issuer of such securities (the "Company") and
certain of the Company's stockholders, as amended and
modified from time to time. A copy of such Stockholders
Agreement shall be furnished without charge by the Company
to the holder hereof upon written request."
The Company shall imprint such legend on certificates evidencing Stockholder
Shares outstanding as of the date hereof. The legend set forth above shall be
removed from the certificates evidencing any shares which cease to be
Stockholder Shares in accordance with paragraph 8 hereof.
8. Transfer. Prior to transferring any Stockholder Shares to any Person
other than a Public Sale, the holders of Stockholder Shares shall cause the
prospective transferee to be bound by this Agreement and to execute and deliver
to the Company and the other holders of Stockholder Shares a counterpart of
this Agreement.
9. Definitions.
"Board" has the meaning set forth in the preamble.
"Common Stock" means the Company's Common Stock, no par value.
7
<PAGE>
"Company" has the meaning set forth in the preamble.
"Investors" has the meaning set forth in the preamble.
"Investor Directors" has the meaning set forth in paragraph 1(a).
"Management Directors" has the meaning set forth in paragraph 1(a).
"Original Stockholder" has the meaning set forth in the preamble.
"Outside Directors" has the meaning set forth in paragraph 1(a).
"Permitted Transferee" has the meaning set forth in paragraph 4(c) hereof.
"Person" means an individual, a partnership, a corporation, a limited
liability company, an association, a joint stock company, a trust, a joint
venture, an unincorporated organization and a governmental entity or any
department, agency or political subdivision thereof.
"Preferred Stock" means the Company's Series A Preferred Stock, no par
value, and Series B Preferred Stock, no par value.
"Public Sale" means any sale of Stockholder Shares to the public pursuant
to an offering registered under the Securities Act or to the public through a
broker, dealer or market maker pursuant to the provisions of Rule 144 adopted
under the Securities Act.
"Purchase Agreement" has the meaning set forth in the preamble.
"Securities Act" means the Securities Act of 1933, as amended from time to
time.
"Stockholder Shares" means (i) any Common Stock purchased or otherwise
acquired by any Stockholder, (ii) any Common Stock issued or issuable directly
or indirectly upon conversion of the Preferred Stock or exercise of the warrant
and (iii) any Common Stock issued or issuable with respect to the securities
referred to in clauses (i) and (ii) above by way of stock dividend or stock
split or in connection with a combination of shares, recapitalization, merger,
consolidation or other reorganization. For purposes of this Agreement, any
Person who holds Preferred Stock or the Warrant shall be deemed to be the
holder of the Stockholder Shares issuable directly or indirectly upon
conversion of the Preferred Stock or exercise of the Warrant in connection with
the transfer thereof or otherwise and regardless of any restriction or
limitation on the conversion or exercise thereof. As to any particular
Stockholder Shares, such shares shall cease to be Stockholder Shares when they
have been (a) effectively registered under the Securities Act and disposed of
in accordance with the registration statement covering them or (b) distributed
to the public through a broker, dealer or market maker pursuant to Rule 144
under the Securities Act (or any similar provision then in force).
8
<PAGE>
"Stockholders" has the meaning set forth in the preamble.
"Subsidiary" means, with respect to any Person, any corporation, limited
liability company, partnership, association or other business entity of which
(i) if a corporation, a majority of the total voting power of shares of stock
entitled (without regard to the occurrence of any contingency) to vote in the
election of directors, managers or trustees thereof is at the time owned or
controlled, directly or indirectly, by that Person or one or more of the other
Subsidiaries of that Person or a combination thereof, or (ii) if a limited
liability company, partnership, association or other business entity, a
majority of the limited liability company, partnership or other similar
ownership interest thereof is at the time owned or controlled, directly or
indirectly, by any Person or one or more Subsidiaries of that Person or a
combination thereof. For purposes hereof, a Person or Persons shall be deemed
to have a majority ownership interest in a limited liability company,
partnership, association or other business entity if such Person or Persons
shall be allocated a majority of limited liability company, partnership,
association or other business entity gains or losses or shall be or control the
managing director or general partner of such limited liability company,
partnership, association or other business entity.
"Transfer" has the meaning set forth in paragraph 4(a).
"Warrant" means the stock purchase warrant issued to the Investor under
the Purchase Agreement exercisable into shares of Common Stock.
10. Transfers in Violation of Agreement. Any Transfer or attempted
Transfer of any Stockholder Shares in violation of any provision of this
Agreement shall be void, and the Company shall not record such Transfer on its
books or treat any purported transferee of such Stockholder Shares as the owner
of such shares for any purpose.
11. Amendment and Waiver. Except as otherwise provided herein, no
modification, amendment or waiver of any provision of this Agreement shall be
effective against the Company or the Stockholders unless such modification,
amendment or waiver is approved in writing by the Company or the holders of a
majority of the Stockholder Shares, the holders of a majority of the
Stockholder Shares held by the Original Investor and his Permitted Transferees
and the Investor. The failure of any party to enforce any of the provisions of
this Agreement shall in no way be construed as a waiver of such provisions and
shall not affect the right of such party thereafter to enforce each and every
provision of this Agreement in accordance with its terms.
12. Severability. Whenever possible, each provision of this Agreement
shall be interpreted in such manner as to be effective and valid under
applicable law, but if any provision of this Agreement is held to be invalid,
illegal or unenforceable in any respect under any applicable law or rule in any
jurisdiction, such invalidity, illegality or unenforceability shall not affect
the validity, legality or enforceability of any other provision of this
Agreement in such jurisdiction or affect the validity, legality or
enforceability of any provision in any other
9
<PAGE>
jurisdiction, but this Agreement shall be reformed, construed and enforced in
such jurisdiction as if such invalid, illegal or unenforceable provision had
never been contained herein.
13. Entire Agreement. Except as otherwise expressly set forth herein, this
Agreement embodies the complete agreement and understanding among the parties
hereto with respect to the subject matter hereof and supersedes and preempts
any prior understandings, agreements or representations by or among the
parties, written or oral, which may have related to the subject matter hereof
in any way.
14. Successors and Assigns. Except as otherwise provided herein, this
Agreement shall bind and inure to the benefit of and be enforceable by the
Company and its successors and assigns and the Stockholders and any subsequent
holders of Stockholder Shares and the respective successors and assigns of each
of them, so long as they hold Stockholder Shares.
15. Counterparts. This Agreement may be executed in multiple counterparts,
each of which shall be an original and all of which taken together shall
constitute one and the same agreement.
16. Remedies. The Company and the Stockholders shall be entitled to
enforce their rights under this Agreement specifically, to recover damages by
reason of any breach of any provision of this Agreement and to exercise all
other rights existing in their favor. The parties hereto agree and acknowledge
that money damages would not be an adequate remedy for any breach of the
provisions of this Agreement and that the Company and any Stockholder shall be
entitled to specific performance and/or injunctive relief from any court of law
or equity of competent jurisdiction (without posting a bond or other security)
in order to enforce or prevent any violation of the provisions of this
Agreement.
17. Notices. Any notice provided for in this Agreement shall be in writing
and shall be either personally delivered, or mailed first class mail (postage
prepaid) or sent by reputable overnight courier service (charges prepaid) to
the Company at the address set forth below and to any other recipient at the
address indicated on the schedules hereto and to any subsequent holder of
Stockholder Shares subject to this Agreement at such address as indicated by
the Company's records, or at such address or to the attention of such other
person as the recipient party has specified by prior written notice to the
sending party. Notices shall be deemed to have been given hereunder when
delivered personally, three days after deposit in the U.S. mail and one day
after deposit with a reputable overnight courier service. The Company's address
is:
Before December 27, 1996:
Regent Assisted Living, Inc.
2260 U.S. Bancorp Tower
111 S.W. Fifth Avenue
Portland, Oregon 97204
Attn: Chief Financial Officer
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<PAGE>
After December 27, 1996:
Regent Assisted Living, Inc.
121 S.W. Morrison, Suite 1000
Portland, OR 97204
Attn: Chief Financial Officer
At any time with a copy to:
Stoel Rives LLP
Attn: Mr. Todd A. Bauman
900 S.W. Fifth Avenue, Suite 2300
Portland, OR 97204-1268
18. GOVERNING LAW. THE CORPORATE LAW OF THE STATE OF OREGON SHALL GOVERN
ALL ISSUES AND QUESTIONS CONCERNING THE RELATIVE RIGHTS OF THE COMPANY AND ITS
STOCKHOLDERS. ALL OTHER ISSUES AND QUESTIONS CONCERNING THE CONSTRUCTION,
VALIDITY, INTERPRETATION AND ENFORCEABILITY OF THIS AGREEMENT AND THE EXHIBITS
AND SCHEDULES HERETO SHALL BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH,
THE LAWS OF THE STATE OF NEW YORK WITHOUT GIVING EFFECT TO ANY CHOICE OF LAW OR
CONFLICT OF LAW RULES OR PROVISIONS (WHETHER OF THE STATE OF NEW YORK OR ANY
OTHER JURISDICTION) THAT WOULD CAUSE THE APPLICATION OF THE LAWS OF ANY
JURISDICTION OTHER THAN THE STATE OF NEW YORK.
19. Business Days. If any time period for giving notice or taking action
hereunder expires on a day which is a Saturday, Sunday or legal holiday in the
state in which the Company's chief executive office is located, the time period
shall automatically be extended to the business day immediately following such
Saturday, Sunday or legal holiday.
20. Descriptive Headings. The descriptive headings of this Agreement are
inserted for convenience only and do not constitute a part of this Agreement.
* * * * *
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IN WITNESS WHEREOF, the parties hereto have executed this Agreement on the
day and year first above written.
REGENT ASSISTED LIVING, INC.
By
-------------------------------
Its
-------------------------------
PRUDENTIAL PRIVATE EQUITY
INVESTORS III, L.P.
By Prudential Equity
Investors, Inc.
Its General Partner
By Cornerstone Equity
Investors, L.L.C.
Its Investment Advisor
By
-------------------------------
Its Senior Managing Director
-------------------------------
-----------------------------------
WALTER C. BOWEN
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<PAGE>
SCHEDULE OF STOCKHOLDERS
------------------------
Name and Address Number of Stockholder Shares
- ---------------- ----------------------------
Prudential Private Equity 1,866,667<F1>
Investors III, L.P.
717 Fifth Avenue
New York, New York 10022
Attn: Dana O'Brien
Walter C. Bowen 3,233,000
c/o Regent Assisted Living, Inc.
121 S.W. Morrison, Suite 1000
Portland, OR 97204
- -------------
<F1> Subject to increases as provided for in the Restated Articles of
Incorporation, as amended.
<PAGE>
EXHIBIT A
---------
To Stockholders Agreement
Any property to be purchased pursuant to an agreement, right, option, or other
instrument in effect as of the date hereof, including, without limitation,
those rights described as follows:
1. Right to purchase excess land owned by the Company adjacent to its
Eugene site, as identified in the Affiliated Transactions Schedule.
2. Earnest Money Agreement fort the purchase of a single family home in
Aloha, Oregon which will provide access to a land-locked parcel owned
by Bowen Financial Services Corp. The property is adjacent to a low
income multi-family housing project and in a lower class
neighborhood.
3. Right to acquire approximately 20 acres of primarily forested land
adjacent to the land upon which Mr. Bowen is currently constructing
his family's primary residence. The parcel is zoned for development
of one single family residence.
4. Right to acquire all or a portion of the approximately 40 acres owned
by Hoyt Street Partners, an Oregon limited liability company. Mr.
Bowen has a 5 percent ownership interest. Members in the LLC have the
right to purchase the LLC's property but must comply with an
elaborate process by which the proposed development is identified to
members and members have the right to participate in such
development. The 40 acres is in an urban renewal area north of
downtown Portland.
<PAGE>
EXHIBIT B
---------
To Stockholders Agreement
The following twelve projects:
1. Boise, Idaho;
2. San Antonio, Texas;
3. Folsom, California;
4. Roseville, California;
5. Clovis, California;
6. Bakersfield, California;
7. Vacaville, California;
8. Rio Rancho, New Mexico;
9. Tucson, Arizona;
10. Henderson, Nevada;
11. Eugene, Oregon; and
12. Austin, Texas
