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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20459
FORM 10-QSB
[ X ] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15 (d)
OF THE SECURITIES EXCHANGE ACT OF 1934
For the Quarterly period ended March 31, 1999
[ ] TRANSITION REPORT PURSUANT TO SECTION 12 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
For the Transition period from ____ to ____
Commission file number 0-27108
REGENT ASSISTED LIVING, INC.
(Exact name of registrant as specified in its charter)
OREGON 93-1171049
(State or other jurisdiction of (IRS Employer
incorporation or organization) Identification No.)
Suite 1000
121 SW Morrison St.
Portland, Oregon 97204
(Address of principal executive offices)
503-227-4000
(Registrant's telephone number, including area code)
Indicate by check mark whether Registrant (1) has filed all reports to be filed
by section 13 or 15 (d) of the Securities Exchange Act of 1934 during the
preceding 12 months (or for such shorter period that Registrant was required to
file such reports), and (2) has been subject to such filing requirements for the
past 90 days.
Yes [ X ] No [ ]
Shares of Registrant's Common Stock, No par value,
outstanding at May 12, 1999 - 4,633,000
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<PAGE>
REGENT ASSISTED LIVING, INC.
FORM 10-QSB
March 31, 1999
INDEX
Page
PART I - FINANCIAL INFORMATION
Item 1. Financial Statements
Condensed Consolidated Balance Sheets as of March 31, 1999
and December 31, 1998 . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
Condensed Consolidated Statements of Operations for the three months
ended March 31, 1999 and 1998 . . . . . . . . . . . . . . . . . . . . . . . . 4
Condensed Consolidated Statements of Cash Flows for the three months
ended March 31, 1999 and 1998 . . . . . . . . . . . . . . . . . . . . . . . . 5
Notes to Condensed Consolidated Financial Statements. . . . . . . . . . . . . 6
Item 2. Management's Discussion and Analysis or Plan of Operation. . . . . . 9
PART II - OTHER INFORMATION
Item 6. Exhibits and Reports on Form 8-K . . . . . . . . . . . . . . . . . .17
Page 2
<PAGE>
PART I - FINANCIAL INFORMATION
ITEM 1 - FINANCIAL STATEMENTS
<TABLE>
<CAPTION>
REGENT ASSISTED LIVING, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
ASSETS March 31, December 31,
1999 1998
(Unaudited)
<S> <C> <C>
Current assets:
Cash and cash equivalents $ 4,202,438 $ 4,483,048
Cash held in working capital escrow 997,074 734,408
Accounts receivable, net 350,245 287,483
Prepaid expenses 1,573,425 280,324
Construction advances receivable 223,583 481,819
------------ ------------
Total current assets 7,346,765 6,267,082
Restricted cash 2,760,082 2,757,981
Property and equipment, net 47,459,295 54,191,324
Investment in and advances to joint venture 211,679 261,995
Other assets 3,087,242 2,795,374
------------ ------------
Total assets $ 60,865,063 $ 66,273,756
============ ============
LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities:
Current portion of long-term debt $ 337,657 $ 284,481
Construction accounts payable 352,707 608,585
Accounts payable and other accrued expenses 5,269,731 3,812,061
------------ ------------
Total current liabilities 5,960,095 4,705,127
Long-term debt 35,188,849 40,704,567
Convertible subordinated notes 9,000,000 9,000,000
Deferred gains and development fees, net 6,881,416 6,022,773
Other liabilities 1,730,573 1,586,164
------------ ------------
Total liabilities 58,760,933 62,018,631
------------ ------------
Commitments
Shareholders' equity:
Preferred stock, no par value, 5,000,000 shares authorized;
1,666,667 shares issued and outstanding in 1999 and 1998 9,349,841 9,349,841
Common stock, no par value, 25,000,000 shares authorized;
4,633,000 shares issued and outstanding in 1999 and 1998 10,808,703 10,808,703
Accumulated deficit (18,054,414) (15,903,419)
------------ ------------
Total shareholders' equity 2,104,130 4,255,125
------------ ------------
Total liabilities and shareholders' equity $ 60,865,063 $ 66,273,756
============ ============
The accompanying notes are an integral part of these condensed consolidated
financial statements.
</TABLE>
Page 3
<PAGE>
<TABLE>
<CAPTION>
REGENT ASSISTED LIVING, INC.
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(Unaudited)
Three Months Ended Three Months Ended
March 31, 1999 March 31, 1998
<S> <C> <C>
Revenues:
Rental and service $ 11,846,037 $ 4,216,580
Management fees 80,539 71,625
------------- -------------
Total revenues 11,926,576 4,288,205
------------- -------------
Operating expenses:
Residence operating expenses 8,586,461 4,190,136
General and administrative 1,284,632 967,621
Lease expense 3,202,598 1,414,718
Depreciation and amortization 320,809 114,083
------------- -------------
Total operating expenses 13,394,500 6,686,558
------------- -------------
Operating loss (1,467,924) (2,398,353)
Interest income 83,590 75,989
Interest expense (524,606) (64,415)
Equity in losses of joint venture (86,316) (1,086)
Other income (loss), net (5,739) (7,710)
------------- -------------
Loss before income taxes (2,000,995) (2,395,575)
Provision for income taxes - -
------------- -------------
Net loss (2,000,995) (2,395,575)
Preferred stock dividends (150,000) (150,000)
------------- -------------
Net loss available to common shareholders $ (2,150,995) $ (2,545,575)
============= =============
Basic loss per common share $ (.46) $ (.55)
============= =============
Diluted loss per common share $ (.46) $ (.55)
============= =============
Weighted average common shares outstanding - basic 4,633,000 4,633,000
============= =============
Weighted average common shares outstanding - diluted 4,633,000 4,633,000
============= =============
The accompanying notes are an integral part of these condensed consolidated
financial statements.
</TABLE>
Page 4
<PAGE>
<TABLE>
<CAPTION>
REGENT ASSISTED LIVING, INC.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
Three Months Ended Three Months Ended
March 31, 1999 March 31, 1998
<S> <C> <C>
Cash flows from operating activities:
Net loss $ (2,000,995) $ (2,395,575)
Adjustments to reconcile net loss to net cash used
in operating activities:
Depreciation and amortization 320,809 114,083
Amortization of deferred gains and development fees (117,524) (55,596)
Equity interest in joint venture 86,316 -
Changes in other assets and liabilities:
Cash held in working capital escrow 284,220 (32,777)
Accounts receivable (62,762) (14,592)
Prepaid expenses (1,305,601) (137,579)
Other assets (144,409) (135,253)
Accounts payable and other accrued expenses 1,457,670 (107,303)
Other liabilities 144,409 138,839
------------- -------------
Net cash used in operating activities (1,337,867) (2,625,753)
------------- -------------
Cash flows from investing activities:
Purchases of property and equipment (2,758,883) (12,626,575)
Decrease in construction accounts payable (255,878) (93,890)
Investment in and advances to joint venture (36,000) -
Deposits to replacement reserve account, net (25,019) (16,567)
------------- -------------
Net cash used in investing activities (3,075,780) (12,737,032)
------------- -------------
Cash flows from financing activities:
Short-term borrowings - (4,500,000)
Proceeds from issuance of long-term debt 1,775,412 8,836,356
Payments on long-term debt (7,237,954) (18,607,328)
Construction (advances) payments 258,236 (170,933)
Payments and deposits for lease financing arrangements, net (151,986) (266,880)
Restricted cash for lease financing arrangements, net 22,918 30,704
Deferred development fees from lease financing arrangements (9,949) 190,000
Proceeds from lease financing arrangements 9,626,360 27,111,141
Proceeds from issuance of convertible subordinated notes - 4,500,000
Preferred stock dividends (150,000) (150,000)
------------- -------------
Net cash provided by financing activities 4,133,037 16,973,060
------------- -------------
Net increase (decrease) in cash and cash equivalents (280,610) 1,610,275
Cash and cash equivalents, beginning of period 4,483,048 1,805,096
------------- -------------
Cash and cash equivalents, end of period $ 4,202,438 $ 3,415,371
============= =============
The accompanying notes are an integral part of these condensed consolidated
financial statements.
</TABLE>
Page 5
<PAGE>
REGENT ASSISTED LIVING, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
1. Operations and Summary of Significant Accounting Policies:
The Company
Regent Assisted Living, Inc. ("the Company") is an owner, operator, and
developer of private-pay assisted living communities including stand-alone
Alzheimer's communities. Assisted living is part of a spectrum of long-term
care services that provide a combination of housing, personal services and
health care designed to respond to elderly individuals who require
assistance with activities of daily living in a manner that promotes
maximum independence.
As of March 31, 1999, the Company operated 26 assisted living communities
in nine western states. Of the 26 communities, one is owned in a joint
venture and accounted for under the equity method, and two are operated
under management contracts. In addition, the Company had four communities
under construction and seventeen under development. During the first
quarter of 1999, the Company opened one new stand-alone Alzheimer's care
community (Regent Court) in Modesto, California.
As of March 31, 1998, the Company operated 14 assisted living communities
in six states, including two under management contracts. During the first
quarter of 1998, the Company opened four new internally developed
communities, and completed the lease-acquistion of one community.
As of May 12, 1999, the Company had also commenced operations at its new
Regent Court community in Clackamas, Oregon and began construction on a new
Regent Court community in Corvallis, Oregon.
Basis of Presentation
The condensed consolidated financial statements include the accounts of the
Company and its majority owned subsidiary. All significant inter-company
accounts and transactions have been eliminated in consolidation.
Page 6
<PAGE>
REGENT ASSISTED LIVING, INC.
NOTES TO CONDENSED CONSOLIDATED
FINANCIAL STATEMENTS, Continued
1. Operations and Summary of Significant Accounting Policies, Continued:
The accompanying unaudited condensed consolidated financial statements as
of March 31, 1999, and for the three month periods ended March 31, 1999 and
1998, have been prepared in conformity with generally accepted accounting
principles. The financial information as of December 31, 1998, is derived
from the Company's Form 10-KSB for the year ended December 31, 1998.
Certain information or footnote disclosures normally included in financial
statements prepared in accordance with generally accepted accounting
principles have been condensed or omitted pursuant to the rules and
regulations of the Securities and Exchange Commission. In the opinion of
management, the accompanying condensed consolidated financial statements
include all adjustments necessary (which are of a normal and recurring
nature) for the fair presentation of the results of the interim periods
presented. The accompanying condensed consolidated financial statements
should be read in conjunction with the Company's audited consolidated
financial statements for the year ended December 31, 1998, included in the
Company's Form 10-KSB for the year ended December 31, 1998.
Operating results for the three months ended March 31, 1999, are not
necessarily indicative of the results that may be expected for the
remainder of the fiscal year ending December 31, 1999, or any portion
thereof.
2. Property and Equipment:
Property and equipment are stated at cost and consist of the following:
<TABLE>
<CAPTION>
March 31, December 31,
1999 1998
<S> <C> <C>
Land $ 2,734,391 $ 3,057,756
Buildings and improvements 24,554,209 29,747,219
Furniture and equipment 3,252,394 3,452,579
Construction in progress 18,578,536 19,375,174
------------ ------------
49,119,530 55,632,728
Less accumulated depreciation
and amortization 1,660,235 1,441,404
------------ ------------
Property and equipment, net $ 47,459,295 $ 54,191,324
============ ============
</TABLE>
Land, buildings and certain furniture and equipment serve as collateral for
long-term debt.
Page 7
<PAGE>
REGENT ASSISTED LIVING, INC.
NOTES TO CONDENSED CONSOLIDATED
FINANCIAL STATEMENTS, Continued
3. Administrative Services Agreement:
Pursuant to the terms of an Administrative Services Agreement, the Company
provides executive assistance, accounting and financial management
services, legal and administrative assistance, insurance, management
information services, and other management services as required by Bowen
Property Management Co., Bowen Financial Services Corp., Bowen Development
Company and Bowen Condominium Marketing, Inc., all of which are Oregon
corporations that are wholly owned or controlled by Mr. Bowen, the
Company's Chairman, President, and Chief Executive Officer. Under the terms
of the agreement, the Company will be reimbursed at its cost on a monthly
basis for all services provided.
4. Earnings (Loss) Per Common Share:
Basic earnings per share (EPS) and diluted EPS are computed using the
methods prescribed by Statement of Financial Accounting Standards (SFAS)
No. 128, Earnings Per Share. Basic EPS is calculated using income (loss)
attributable to common shares (after deducting preferred dividends) divided
by the weighted average number of common shares outstanding for the period.
Diluted EPS is calculated using income (loss) attributable to common shares
(after deducting preferred dividends and considering the effects of
dilutive common equivalent shares) divided by the weighted average number
of common shares and dilutive common shares outstanding for the period.
Basic and diluted earnings (loss) per common share includes a deduction of
preferred stock dividends declared, which totaled $150,000 for each three
month period ended March 31, 1999 and 1998.
Page 8
<PAGE>
ITEM 2. Management's Discussion and Analysis or Plan of Operation.
Overview
The Company
The Company reported revenue of $11.9 million and a net loss of $2.0 million for
the quarter ended March 31, 1999. After deducting preferred stock dividends, net
loss per share available to common shareholders on a diluted basis was $0.46.
Current Communities. The table below sets forth certain information
regarding the Company's communities at March 31, 1999.
<TABLE>
<CAPTION>
Regent
Operations
Community Location Commenced Units(1) Beds(2) Interest
- --------- -------- --------- -------- ------- --------
<S> <C> <C> <C> <C> <C>
Oregon
Park Place Portland 1986 112 112 Lease (3)
Regency Park Portland 1987 122 142 Lease
Sheldon Park Eugene 1998 108 124 Lease
Washington
Northshore House Kenmore 1998 85 98 Manage (4)
Sterling Park Redmond 1990 162 192 Lease
California
Laurel Springs Bakersfield 1998 113 127 Own
Orchard Park Clovis 1998 112 128 Lease
Regent Court Modesto 1999 24 48 Own (5)
Summerfield House Vacaville 1998 109 126 Own
Sun Oak Citrus Heights 1997 40 50 Manage
Sunnyside Court Fremont 1998 40 78 Lease
Sunshine Villa Santa Cruz 1990 106 126 Lease (6)
The Palms Roseville 1998 93 108 Lease
Villa Serra Salinas 1998 150 150 Manage
Willow Creek Folsom 1997 104 119 Lease
Idaho
Willow Park Boise 1997 117 130 Lease
West Wind Boise 1997 48 52 Lease
Nevada
Mira Loma Henderson 1998 115 133 Lease
New Mexico
Sandia Springs Rio Rancho 1998 109 126 Lease
Page 9
<PAGE>
Regent
Operations
Community Location Commenced Units(1) Beds(2) Interest
- --------- -------- --------- -------- ------- --------
<S> <C> <C> <C> <C> <C>
Texas
Parmer Woods Austin 1998 117 137 Lease (7)
Hamilton House San Antonio 1997 116 136 Lease
Arizona
Canyon Crest Tucson 1998 117 137 Lease
Regent Court Scottsdale 1998 24 48 Lease
Wyoming
Aspen Wind Cheyenne 1998 77 77 Lease
Meadow Wind Casper 1998 53 53 Lease
Spring Wind Laramie 1998 53 53 Lease
--------- ------- -------
Totals 2,426 2,810
======= =======
(1) A "unit" is a single- or double-occupancy studio, one or two bedroom
apartment.
(2) "Beds" reflects the actual number of beds used by the Company for census
purposes, which in no event is a number greater than the maximum number of
licensed beds permitted under the community's license.
(3) The Company completed a lease-acquisition of Park Place during the second
quarter of 1998. The Company had managed the community prior to this
transaction.
(4) The Company owns a 50 percent interest in a joint venture which owns this
community.
(5) In April 1999, the Company sold a 45% co-tenancy interest in this
community.
(6) This community was sold in a prior period pursuant to a sale-leaseback
transaction and is accounted for as a capital lease.
(7) The Company completed a sale/leaseback transaction of its Austin community
in February 1999.
</TABLE>
During the second quarter of 1999, the Company commenced operations at its
48-bed Regent Court community in Clackamas, Oregon. As of May 12, 1999, the
Company has commenced construction on the following four new communities:
<TABLE>
<CAPTION>
Scheduled
Community Location Opening Units Beds Interest
- --------- -------- ---------------- -------- ------- --------
<S> <C> <C> <C> <C> <C>
Arizona
Desert Flower Scottsdale 2nd quarter 1999 102 115 Own
Washington
Regent Court Kent 2nd quarter 1999 24 48 Manage
Oregon
Regent Court Corvallis 1st quarter 2000 24 48 Own
California
Villa de Palma West Covina 2nd quarter 2000 130 142 Lease
-------- ------
Totals 280 353
======== ======
</TABLE>
Page 10
<PAGE>
As of May 12, 1999, sixteen additional new communities were in varying stages of
development. If all sixteen communities are developed, total operations of the
Company will increase by approximately 1,500 beds to a total of approximately
4,700 beds. The Company continues to pursue its primary strategy of developing
new communities and is therefore engaged in negotiations to acquire several
additional sites and is pursuing joint venture opportunities with parties who
control parcels of land in strategic markets. All costs associated with the
development of these communities have been capitalized as "Construction in
Progress" as disclosed in Note 2 to the condensed consolidated financial
statements.
Operating results for the three month period ended March 31, 1999, are not
necessarily indicative of future financial performance as the Company intends to
continue expanding its operating base of communities.
Three Months Ended March 31, 1999 Compared to Three Months Ended March 31, 1998
Revenues. For the three month period ended March 31, 1999, revenues totaled
$11.9 million compared to $4.3 million in the three month period ended March 31,
1998, an increase of $7.6 million or 178.1 percent. During the first quarter of
1999, the Company operated 26 communities comprised of five stabilized
communities including one acquired in May 1998, 18 newly developed communities,
and three communities operated pursuant to management contracts, of which one is
owned in a joint venture and accounted for under the equity method. The Company
operated 14 communities during the first quarter of 1998, comprised of four
stabilized communities, eight newly developed communities, and two operated
pursuant to management contracts. A community is considered "stabilized" for
reporting purposes after it first attains occupancy of 95.0 percent and prior to
that time is considered "newly developed."
Revenues from "Same Residences", the six communities that the Company operated
at the beginning of both periods, comprised of four stabilizied and two newly
developed communities, increased by $1.0 million. Of this increase, $0.2 million
was from the four stabilized communities and $0.8 million was from the two newly
developed communities. Revenues from the remaining 16 newly developed
communities in operation during the first quarter of 1999, compared to revenues
from the remaining six newly developed communities in operation during the first
quarter of 1998, increased by $5.8 million. In addition, revenues for the
comparable periods increased $0.8 million from the one stabilized community the
Company acquired in May 1998. Overall average occupancy at the Company's five
stabilized communities was 95.2 percent for the three month period ended March
31, 1999, whereas occupancy was 90.0 percent at the Company's four stabilized
communities for the same period in 1998.
Residence Operating Expenses. Residence operating expenses were $8.6 million for
the three month period ended March 31, 1999, and $4.2 million for the same
period in 1998, an increase of $4.4 million or 104.9 percent. Residence
operating expenses from "Same Residences" during the first quarter of 1999
increased by $0.4 million over the first quarter of 1998. This increase was
primarily attributable to the increased level of operations at the two newly
developed communities operated at the beginning of both periods. In addition,
residence operating expenses for the current period include $5.0 million of
start-up operating expenses and pre-opening costs related to 18 newly developed
communities, whereas, the prior period included $1.5 million of start-up
operating expenses and pre-opening costs related to 11 communities. Also,
operating expenses increased $0.5 million from the stabilized community acquired
in the second quarter of 1998. Residence operating expenses, excluding the
effect of the newly developed communities, totaled 62.5 percent and 64.9 percent
of rental and service revenues for the three month periods ended March 31, 1999
and 1998, respectively.
Page 11
<PAGE>
General and Administrative Expenses. General and administrative expenses were
$1.3 million for the three month period ended March 31, 1999, compared to $1.0
million for the three month period ended March 31, 1998. The increase of $0.3
million is due primarily to the increase in operations related to the
implementation of the Company's plan for growth.
Lease Expense. Lease expense for the Company's leased communities was $3.2
million for the three month period ended March 31, 1999, compared to $1.4
million for the same period in 1998. The increase of $1.8 million relates
primarily to the opening and sale-leaseback of newly developed communities and
the lease-acquisition of several additional communities.
Depreciation and Amortization. Depreciation and amortization expense was $0.3
million for the three month period ended March 31, 1999, compared to $0.1
million for the three month period ended March 31, 1998. The increase of $0.2
million relates primarily to the opening of newly developed communities.
Interest Income. Interest income is earned from the Company's investment of cash
and cash equivalents in high quality, short term securities placed with
institutions with high credit ratings.
Interest Expense. Interest expense increased for the three month period ended
March 31, 1999, to $0.5 million from $0.1 million for the three month period
ended March 31, 1998. Interest expense related to the operation of newly opened
communities increased $0.2 million in the current period as compared to the same
period in the prior year. In addition, the Company incurred $0.2 million of
interest in the three month period ended March 31, 1999 related to convertible
subordinated notes that were issued after the first quarter of 1998. The Company
capitalized $0.4 million and $1.1 million of interest charges incurred during
the three months ended March 31, 1999 and 1998, respectively. Capitalized
interest decreased due to decreased borrowing for construction purposes.
Equity Interest in Joint Venture. Equity in losses of joint venture resulted
from the operations of the Company's 50 percent owned Kenmore, Washington
community which opened in the third quarter of 1998.
Net Income (loss). Net operating results increased by $0.4 million during the
three month period ended March 31, 1999 compared to the same period in 1998. The
Company reported a loss of $2.0 million for the first quarter of 1999, whereas
the Company reported a loss of $2.4 million for the first quarter of 1998. The
increase in net results is primarily due to an increase in residence operating
profits (rental and service revenue less residence operating expenses) of $3.2
million, offset by increases in general and administrative expenses, lease
expense, depreciation, interest expense and equity in losses of joint venture,
all as discussed above.
Liquidity and Capital Resources
At March 31, 1999, the Company had $1.4 million of working capital, compared to
working capital of $1.6 million at December 31, 1998, a decrease of $0.2
million. The Company's growth in operating capacity resulted in an increase in
net current liabilities which reduced working capital. Cash and cash equivalents
decreased by $0.3 million (as described below), however, cash held in working
capital escrow increased by a like amount.
Page 12
<PAGE>
Net cash used in operating activities totaled $1.3 million for the three month
period ended March 31, 1999, which resulted primarily from a net loss of $2.0
million, adjusted for depreciation and amortization of $0.2 million, offset by
an increase in cash held in working capital escrow of $0.3 million and an
increase in net current liabilities of $0.2 million.
Net cash used in investing activities totaled $3.1 million for the three month
period ended March 31, 1999, consisting primarily of land acquisition,
development, and construction costs. At March 31, 1999, the aggregate purchase
price for seven parcels of land for which the Company had purchase options was
approximately $5.8 million. The Company has paid initial deposits relating to
these sites and is in the process of completing the demographic analysis and
other preliminary due diligence for purposes of developing assisted living
communities at these sites.
Net cash provided by financing activities totaled $4.1 million during the three
month period ended March 31, 1999, consisting of property and equipment
financing proceeds totaling $1.8 million, net proceeds from lease-financing
arrangements totaling $9.7 million, offset by repayment of long-term debt of
$7.2 million, and payment of preferred stock dividends of $0.2 million.
During February 1999, the Company completed a $10.4 million sale/leaseback
transaction involving its Austin community. As a result, the Company generated
approximately $3.0 million in net proceeds, repaid approximately $7.2 million of
its mortgage indebtedness and recorded deferred gain of approximately $1.0
million.
The Company has an aggregate of $11.6 million in loans from which to complete
construction of the Scottsdale and the Kent communities. As of March 31, 1999,
approximately $3.5 million remained to be drawn on these loans to fund
construction activities and debt service reserves. The Company has sufficient
financing to complete these communities and to fund their anticipated initial
operating deficits during 1999.
During the remainder of 1999, the Company intends to utilize current working
capital resources primarily for operating requirements. At March 31, 1999, the
Company has capitalized costs totaling approximately $18.6 million related to
communities under construction or development, encumbered by $8.0 million in
outstanding debt. The Company intends to finance substantially all of the
remaining cost of developing each new community through additional
sale-leaseback transactions with real estate investment trusts ("REIT"), joint
venture arrangements, as well as conventional financing with commercial banks
and other financial institutions.
The Company anticipates capital expenditures for 1999 may include certain
additional land acquisition costs, architectural fees, and other development
costs related to at least 16 assisted living communities and construction costs
related to at least two additional assisted living communities. The Company has
obtained commitments to provide up to $13.5 million in financing for the
construction of the two communities. The Company anticipates commencing
construction on as many as ten communities during 1999. The total cost to
develop and construct the ten communities, including the estimated initial
operating deficits, will likely be between $85 million to $95 million. A
substantial portion of these costs may be incurred during 1999.
Page 13
<PAGE>
The Company is currently discussing with commercial banks and REITs the terms of
potential financing with which the Company will construct new communities
currently under development. Each of the pending financing transactions is
subject to a number of conditions, including the negotiation and execution of
definitive documents and the satisfactory completion of due diligence on the
related properties, and there is no assurance that any of these financing
transactions will be completed on the terms proposed, or at all. Provided that
the Company can obtain financing upon acceptable terms, the Company estimates
that it has the necessary equity capital invested in seven of these ten
communities in order to complete construction and to fund the initial operating
deficits. The Company may require additional equity capital to complete the
final three communities.
The Company may enter into additional arrangements with one or more unrelated
parties regarding the joint development and ownership of one or more of the
Company's communities currently under construction or development in order to
further leverage the Company's growth. Furthermore, the Company may utilize
various forms of financing that would permit a community to be sold to or
initially developed by a third party who would incur the initial operating
deficits and permit the Company to manage the community for a customary fee. The
Company, under such financing methods, would likely have the option to either
purchase the community or enter into a long-term lease at such time as the
Company deems appropriate. The Company has not obtained any commitments for this
form of financing.
If the Company was unable to obtain additional required financing, or if such
financing is not available on acceptable terms, the Company expects that its
plan to commence construction of up to ten additional communities by the end of
1999 would likely be delayed or curtailed. Furthermore, if the Company expands
its growth plan, development activities do not result in the construction of a
community on a site, the Company experiences a decline in the operations of its
current communities or the Company does not achieve and sustain anticipated
occupancy levels at its new communities, then the Company may require additional
financing to complete its growth plan.
Certain of the Company's operating lease agreements contain restrictive
covenants. As of March 31, 1999, the Company was in compliance with the
covenants for all lease agreements, except for a financial covenant related to
two lease agreements. To date, the lessor has not asserted its rights under the
two agreements. The Company expects to satisfy the covenant prior to any claim
being asserted.
The Company does not presently intend to pay dividends to holders of its Common
Stock and intends to retain future earnings to finance the development of
assisted living communities and expand its business.
Page 14
<PAGE>
Year 2000 Disclosure
- --------------------
"Year 2000 issues" relate to the result of computer programs having been written
using two digits rather than four to define the applicable year. Computer
programs and electronic devices that utilize date sensitive software or
information may recognize a date using the "00" as the year 1900 rather than the
year 2000. This recognition could result in a system failure or miscalculations
causing disruptions of operations or the inability of suppliers of material
services and products to continue supporting the Company's operations.
The Company has assessed its readiness in regard to Year 2000 issues. The
Company believes that all material hardware and software utilized in its
operations and, specifically, in its accounting systems, is Year 2000 compliant
or that Year 2000 compliant versions are available to the Company for
installation during the normal course of replacing or updating such systems
prior to November 30, 1999. The financial impact of any change is not
anticipated to be material to the financial position or results of the Company's
operations.
The Company believes it has adequate alternatives to counteract potential Year
2000 issues that may arise with its internally utilized software and hardware if
the assurances of relevant vendors are incorrect. The Company believes the
primary risks from Year 2000 issues to its operations and prospects are the
potential inability of the Company's commercial banks to permit access to the
Company's accounts and of utility companies to continue supplying utilities to
the Company's communities. The Company does not have a contingency plan in
effect at this time to guard against such events.
The Company is in the process of obtaining Year 2000 compliance letters and
reports from suppliers of material services and products. To date, no such
supplier has indicated an inability to continue supplying material products and
services to the Company after January 1, 2000, although most are in the process
of evaluating and updating their internal systems and cannot yet assure the
Company that their systems are Year 2000 compliant. Nonetheless, the Company
does not expect that Year 2000 issues will have a material adverse effect upon
the Company's operations or prospects. However, there can be no assurances that
the systems of other companies on which the Company's operations or systems rely
will be timely remediated or that a failure by another company to remediate its
systems in a timely manner would not have a material adverse effect on the
Company.
Page 15
<PAGE>
Forward-Looking Statements
The information set forth in this report in the sections entitled "Overview" and
"Liquidity and Capital Resources" regarding the Company's acquisition of sites
for development, the Company's development, construction, financing and opening
of new assisted living communities, and the Company's plans to develop,
construct and operate new Regent Court communities constitute "forward-looking
statements" within the meaning of Section 27A of the Securities Act of 1933 and
is subject to the safe harbor created by that section. The development of
additional assisted living communities will involve a number of risks including,
without limitation, the risk that the Company will be unable to locate suitable
sites, risks relating to the inability to obtain, or delays in obtaining,
necessary zoning, land use, building, occupancy and other required governmental
permits and authorizations, risks that financing may not be available on
satisfactory terms, environmental risks, risks that construction costs may
exceed original estimates, risks that construction and lease-up may not be
completed on schedule, and risks relating to the competitive environment for
development. The foregoing risks could cause the Company to significantly delay
or curtail its planned growth and could cause one or more of the Company's new
communities to not be profitable. Additional factors that could cause results to
differ materially from those projected in the forward-looking statements
include, without limitation, the ability of the Company to raise additional
financing upon terms acceptable to the Company, increases in the costs
associated with new construction, competition, and acceptance of the Company's
prototype community in new geographic markets. The Company's growth strategy is
subject to the risk that occupancy rates at newly-developed communities may not
be achieved or sustained at expected levels, in which case, the Company will
experience greater than anticipated operating losses in connection with the
opening of new communities and the Company's need for additional financing to
meet its growth plans will likely increase. Furthermore, the Company's growth
will place increasing pressure on the Company's management controls and require
the Company to locate, train, assimilate, and retain additional community
managers and support staff. There is no assurance that the Company will be able
to manage this growth successfully.
Page 16
<PAGE>
PART II - OTHER INFORMATION
Item 6. Exhibits and Reports on Form 8-K.
Exhibits:
10.30 Employment Agreement, effective as of March 16, 1999, between
Eric W. Jacobsen and the Company.
10.31 Restrictive Covenant Agreement, effective March 16, 1999
between Eric W. Jacobsen and the Company.
10.32 Employment Agreement, effective as of April 12, 1999, between
Louis Swart and the Company.
10.33 Restrictive Covenant Agreement, effective as of April 12,
1999, between Louis Swart and the Company.
27 Financial Data Schedule.
Reports on Form 8-K
None
SIGNATURE
In accordance with the requirements of the Exchange Act, the registrant caused
this report to be signed on its behalf by the undersigned, thereunto duly
authorized.
REGENT ASSISTED LIVING, INC.
By: STEVEN L. GISH Date: May 12, 1999
-----------------------------
Steven L. Gish
Chief Financial Officer
Page 17
<PAGE>
EXHIBIT INDEX
Exhibits
No. Description Page
- -------- ----------- ----
10.30 Employment Agreement, effective as of March 16, 1999, between
Eric W. Jacobsen and the Company.
10.31 Restrictive Covenant Agreement, effective March 16, 1999
between Eric W. Jacobsen and the Company.
10.32 Employment Agreement, effective as of April 12, 1999, between
Louis Swart and the Company.
10.33 Restrictive Covenant Agreement, effective as of April 12,
1999, between Louis Swart and the Company.
27 Financial Data Schedule.
REGENT ASSISTED LIVING, INC.
EMPLOYMENT AGREEMENT
THIS EMPLOYMENT AGREEMENT (the "Agreement") is made effective March 16,
1999, by and between REGENT ASSISTED LIVING, INC., an Oregon corporation (the
"Company"), and Eric W. Jacobsen ("Employee").
RECITALS:
A. The Company is engaged in the business of developing and operating
assisted living residences for senior citizens (the "Business").
B. Employee possesses certain skills, expertise and contacts related to the
Business.
C. Because of those skills, expertise and contacts, the Company desires to
employ Employee, and Employee desires to accept employment with the Company, on
the terms and conditions set forth herein to supersede any previous terms of
employment agreed to by and between the parties.
AGREEMENT:
NOW, THEREFORE, in consideration of the covenants and mutual agreements set
forth herein and other good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, the parties agree as follows:
1. Employment; Term. The Company hereby employs Employee to perform the
duties described herein, and Employee hereby accepts employment with the
Company, for a term commencing on the date hereof and expiring at the close of
business on June 30, 1999, unless earlier terminated in accordance with Section
6 below.
2. Position and Duties.
2.1 Position. During the term of his employment Employee shall serve
as Chief Operating Officer of the Company. Employee shall make available all of
his business time, attention, skill and efforts for performing services for the
Company, and shall devote as much of his business time, attention, skill and
efforts to the performance of such services as is required by the Company's
Board of Directors (the "Board of Directors"). Employee shall, at all times, be
subject to the authority of the Board of Directors.
2.2 General Terms of Employment. Employee shall be subject to the
general terms and conditions of employment applicable to employees of the
Company, as established by the Board of Directors from time to time, including,
without limitation, all conditions relating to compliance with federal and/or
state laws and other governmental rules and regulations issued thereunder as the
same may be in effect from time to time.
Page 1 - EMPLOYMENT AGREEMENT
<PAGE>
3. Compensation. As compensation for Employee's services under this
Agreement, the Company shall pay to Employee during the Employee's term of an
annual salary (the "Base Salary") of One Hundred Thirty-Five Thousand Dollars
($135,000), subject to all applicable income tax withholding and other payroll
taxes. The Base Salary shall be payable in accordance with the Company's normal
payroll practices or on such other basis mutually agreed upon by the parties.
The Board of Directors (or the Compensation Committee of the Board of Directors)
may adjust the Base Salary upwards, but not downwards.
4. Benefits. During the term of his employment, Employee shall be entitled
to and shall receive all benefits that are customarily provided by the Company
to its employees generally, subject to any eligibility requirements.
5. Reimbursement of Expenses. The Company shall pay or reimburse Employee
for all reasonable travel and other expenses incurred by Employee in performing
his obligations under this Agreement, provided that:
5.1 Each such expenditure is incurred by Employee in accordance with
such policy guidelines as may be established by the Board of Directors from time
to time; and
5.2 Employee furnishes to the Company adequate records and other
documentary evidence required by federal and state statutes and regulations
issued by the appropriate taxing authorities for the substantiation of each such
expenditure.
6. Termination of Employment.
6.1 Termination of the Company for Cause. The Company may terminate
this Agreement and Employee's employment with the Company hereunder, effective
upon delivery of written notice of termination to Employee setting forth the
basis of such termination, for Cause, which shall be defined as any of the
following:
(a) Any misappropriation of funds or property of the Company by
Employee;
(b) The conviction of or plea of guilty or nolo contendere by
Employee of a felony or of any crime involving moral turpitude;
(c) Elective's engagement in illegal or immoral conduct tending
to place Employee or the Company, by association with Employee, in
disrepute;
(d) Indulgence in alcohol or drugs to an extent that renders
Employee generally unable or unfit to perform his duties hereunder;
(e) Employee's gross dereliction of duty; or
(f) Any act or omission that constitutes a material breach by
Employee of his obligations under this Agreement.
Page 2 - EMPLOYMENT AGREEMENT
<PAGE>
On the effective date of termination, the Company shall pay to
Employee his Base Salary accrued through the date of termination. No annual
bonus for the fiscal year in which termination is effective or for any
subsequent year will be paid. If Employee is terminated for Cause, the Options
will not vest.
6.2 Termination by the Company Without Cause. The Company may
terminate this Agreement and Employee's employment with the Company hereunder,
effective upon delivery of written notice of termination to Employee, at any
time without Cause, as defined above. Upon any such termination without Cause or
upon the expiration of the term hereof, Employee shall be entitled to severance
pay equal to that to which the Employee would otherwise be entitled through June
30, 1999. The Company and Employee agree that Employee shall have the
responsibilities, duties and authority as are reasonably consistent with
Employee's position as the of the Company. Notwithstanding the foregoing,
Employee acknowledges that Company may retain a new Chief Operating Officer
during the term of this Agreement. In such case, Employee agrees to assist the
Company and the new Chief Operating Officer with the transfer of duties,
responsibilities, and information of Employee to the new Chief Operating Officer
and Company may relocate Employee either within or outside of the Company's
principal office without violating the terms of this Agreement.
6.3 Termination for Death or Disability. Employee's obligations and
employment hereunder shall terminate immediately, without further notice or
action, upon either of the following events:
(a) The death of Employee. In such event, the Company shall pay
to Employee's estate his Base Salary and any other rights (including
the annual bonus, if any) accrued to the date of death.
(b) Employee shall be unable to perform the normal duties of his
employment for a period of 90 days as a result of illness or injury.
In such event, the Company shall pay to Employee has Base Salary for
the 90-day period following the date active services cease and any
other rights (including the annual bonus, if any) accrued to that
date. Thereafter, Employee shall receive from the Company only such
disability income as may be received by the Company from policies
covering Employee, if any, and vested benefits under any employee
benefit plan in accordance with the terms of that plan.
6.4 Termination by Employee. Employee may terminate his employment
with the Company hereunder at any time by providing 60 days' prior written
notice to the Company. On the effective date of termination, the Company shall
pay to Employee his Base Salary and any rights accrued through the date of
termination.
7. Restrictive Covenants.
Employee shall not, except on behalf of the Company, either directly
or indirectly, on his own account, or as an employee, consultant, agent,
partner, joint venturer, owner, officer, director or stockholder of any other
person, firm, partnership, corporation or other entity, or in any other
capacity, in any way:
7.1 Except as otherwise specifically permitted in that certain
Restrictive Covenant Agreement dated the date hereof, during the term of his
employment, within the United States of America, including
Page 3 - EMPLOYMENT AGREEMENT
<PAGE>
its possessions and territories, conduct, engage in or aid or assist anyone in
the conduct of a business which is substantially similar to or directly
competitive with the Business;
7.2 During the term of his employment and for a period of one year
thereafter, solicit, divert, take away or accept orders from, or attempt to
solicit, divert, take away or accept orders from, any person, firm, partnership,
corporation or other entity, wherever located, for whom the Company performed
any services or to whom the Company sold any product within the immediately
preceding 12-month period.
7.3 During the term of his employment and for a period of one year
thereafter, solicit, attempt to solicit, hire for employment or engage any
person who was an employee, independent contractor or agent employed by or
engaged by the Company within the immediately preceding 12-month period.
7.4 Use for himself or for any other person, firm, corporation,
partnership, association or other entity, or divulge or disclose in any manner
to any person, firm, corporation, partnership, association or other entity, the
identity of the Company's residents or other customers, methods of operation,
financial data, sources of supply, know-how, pricing information, records,
books, agreements, techniques, forms, procedures, systems, financial information
or other trade secrets or confidential or proprietary information used in or
relating to the Business (hereinafter referred to as the "Confidential
Information"). Notwithstanding anything to the contrary contained in this
Agreement, the restrictions on Employee's disclosure and use of the Confidential
Information shall not apply to (i) information, or techniques which are or
become generally known to the public, other than through disclosure (whether
deliberate or inadvertent) by Employee or (ii) disclosure of Confidential
Information in judicial or administrative proceedings to the extent Employee is
legally compelled to disclose such information, provided Employee shall have
used his best efforts, and shall have afforded the Company the opportunity, to
obtain an appropriate protective order or other assurance satisfactory to the
Company or confidential treatment for the information required to be so
disclosed.
7.5 Employee hereby agrees that the periods of time, geographical
scope and other limitations provided for in this Section 7 above are the minimum
such terms necessary to protect the Company and its successors and assigns in
the use and employment of the goodwill respecting the Business and the Company.
Employee further agrees that damages cannot adequately compensate the Company in
the event of Employee's breach of any of the covenants contained in this Section
7. Accordingly, Employee agrees that in the event of a breach of any of such
covenants, the Company shall be entitled to obtain injunctive relief against
Employee, without bond but upon due notice, in addition to such other relief as
may appertain at law or in equity. Obtainment of any such injunction by the
Company shall not be deemed an election of remedies or a waiver of any right to
assert any other remedies the Company may have at law or in equity. The
existence of any claim or cause of action of Employee against the Company, of
whatever nature, shall not constitute a defense to the Company's enforcement of
such restrictive covenants. To the extent any of such restrictive covenants are
deemed unenforceable by virtue of their scope in terms of geographical area,
length of time or otherwise, but may be made enforceable by limitations hereon,
Employee agrees that the same shall be enforceable to the fullest extent
permissible under the laws and public policies of the jurisdiction in which
enforcement is sought. The parties hereto hereby authorize any court of
competent jurisdiction to modify or reduce the scope of the restrictive
covenants to the extent necessary to make such restrictive covenants
enforceable.
7.6 Employee agrees to indemnify and hold the Company harmless from
and against any and all loss, cost, damages, liability and expense (including,
without limitation, reasonable attorneys' fees,
Page 4 - EMPLOYMENT AGREEMENT
<PAGE>
court costs and reasonable litigation expenses) which the Company shall suffer,
sustain or incur as a result of, arising from or in connection with any failure
of performance or breach of agreement by Employee hereunder after a final
non-appealable order from a court of competent jurisdiction.
8. Miscellaneous Provisions.
8.1 Severability. If any provision of this Agreement is deemed by any
court of competent jurisdiction to be invalid or unenforceable for any reason,
the remaining terms and provisions hereof shall remain binding upon the parties.
8.2 Notices. All notices and other communications required or
permitted hereunder shall be in writing; shall be delivered personally,
including by means of telecopy, or mailed by registered or certified mail,
postage prepaid and return receipt requested; shall be deemed given on the date
of personal delivery or on the date set forth on the return receipt; and shall
be delivered or mailed to the addresses or telecopy numbers set forth below or
to such other address as any party may from time to time direct:
If to the Regent Assisted Living, Inc.
Company, to: 121 SW Morrison Street, Suite 1000
Portland, OR 97204
Telecopy: (503) 274-4685
Attention: President
Copy to: Regent Assisted Living, Inc.
Company, to: 121 SW Morrison Street, Suite 1000
Portland, OR 97204
Telecopy: (503) 274-4685
Attention: Chief Legal Officer
If to Eric W. Jacobsen
Employee, 01350 SW Radcliffe Road
to: Portland, OR 97219
8.3 Benefit and Assignment. This Agreement shall be binding upon and
inure to the benefit of the Company and its successors and assigns. The rights
and obligations of Employee hereunder are personal to him and are not subject to
voluntary or involuntary alienation or transfer by him.
8.4 Waiver; Amendment. The provisions of this Agreement may be waived
or amended only by an instrument in writing signed by the party against which
enforcement of the amendment or waiver is sought. Any waiver of any term or
condition of this Agreement or any breach hereof shall not operate as a waiver
of any other such term, condition or breach, and no failure to enforce any
provision hereof shall operate as a waiver of such provision or of any other
provision hereof.
8.5 Attorneys' Fees. If suit or action is filed by either party to
enforce this Agreement or otherwise with respect to the subject matter of this
Agreement, the prevailing party shall be entitled to recover reasonable
attorneys' fees as fixed by the trial court and, if any appeal is taken from the
decision of the trial court, reasonable attorneys' fees as fixed by the
appellate court.
Page 5 - EMPLOYMENT AGREEMENT
<PAGE>
8.6 Headings. The section headings in this Agreement are for
convenience only and shall not control or affect the meaning or construction of
the provisions of this Agreement.
8.7 Entire Agreement. This Agreement sets for the entire understanding
of the parties with respect to the subject matter hereof and supersedes all
prior discussions, negotiations, understandings or written agreements among the
parties hereto relating to the subject matter contained herein, and merges all
prior and contemporaneous discussions among them. Without limiting the
foregoing, the parties agree that all prior written or oral agreements between
Employee and the Company, or any predecessor or affiliate of the Company,
regarding the terms of Employee's employment are terminated and superseded by
this Agreement.
8.8 Governing Law. This Agreement shall be governed by and construed
and enforced in accordance with the laws of the State of Oregon (except for its
choice-of-law provisions).
IN WITNESS WHEREOF, the parties have executed this Agreement as of the
date first set forth above.
THE COMPANY: REGENT ASSISTED LIVING, INC.
By: WALTER C. BOWEN
--------------------------------
Walter C. Bowen, President
ERIC W. JACOBSEN
EMPLOYEE: -----------------------------------
Eric W. Jacobsen
Page 6 - EMPLOYMENT AGREEMENT
RESTRICTIVE COVENANT AGREEMENT
THIS RESTRICTIVE COVENANT AGREEMENT ("Agreement") is made effective as of
this 16th day of March, 1999, by and between Regent Assisted Living, Inc., an
Oregon corporation (the "Company"), and Eric W. Jacobsen (the "Officer").
A. The Company is principally engaged in the business of owning, operating
and developing assisted living communities (the "Business").
B. This Agreement is being executed in connection with the re-negotiation
and execution of a new Employment Agreement (the "Employment Agreement") by and
between Company and Officer and the issuance of 100,000 shares of options (the
"Options") to Officer under the terms of the Company's 1995 Stock Incentive Plan
adopted August 28, 1995 (the "Plan"), and on the further terms and subject to
the conditions of the two Regent Assisted Living, Inc. Stock Option Agreement
dated as of the date hereof (the "Option Agreements") between the Company and
the Officer.
C. As an employee of the Company pursuant to the Employment Agreement, the
Officer is expected to obtain extensive knowledge of the operations and
financial condition of the Business, as well as strong contacts and
relationships with the Company's suppliers, customers and employees.
F. The Company is unwilling to enter into the Option Agreements or the
Employment Agreement unless the Officer agrees to be bound by the terms of this
Agreement.
G. To induce the Company to enter into the Option Agreements and the
Employment Agreement, the Officer desires to execute this Agreement and to be
bound by the terms hereof.
AGREEMENT:
NOW, THEREFORE, in consideration of the covenants and mutual agreements set
forth herein and other good and valuable consideration, including Purchaser's
execution and delivery of the Option Agreements and the Employment Agreement,
the receipt and sufficiency of which are hereby acknowledged, the parties agree
as follows:
1. Restrictive Covenants. Except for the benefit of the Company, the
Officer shall not, either directly or indirectly, on his own account, or as an
employee, consultant, agent, partner, joint venturer, owner, officer, director
or stockholder (except for holdings of less than two percent (2%) of the stock
of a publicly traded company which are held solely for investment purposes, and
which do not involve the performance of any active services by the Officer for
any other person, firm, partnership, corporation or other entity, or in any
other capacity), in any way:
(a) From the date of this Agreement until September 30, 2000, conduct,
engage in, aid or assist anyone in the conduct of a business which is
competitive with the Business (provided, however, if Officer's employment
by the Company is terminated by the Company without Cause (as defined in
the Employment Agreement) then Officer's obligation under this paragraph
(a) shall be only for one year after the date of termination) of Company
within a 10-mile radius of any assisted living or Alzheimer's care
community that as of September 30, 1999, either was owned, leased, or
managed by the Company or was under planning, development, construction, or
acquisition by or
Page 1 - RESTRICTIVE COVENANT AGREEMENT
<PAGE>
for the Company;
(b) From the date of this Agreement until September 30, 2001, solicit,
divert, take away or accept orders or business from, or attempt to solicit,
divert, take away or accept orders from, any person, firm, partnership,
corporation or other entity, wherever located, for whom the Company
performed any services or to whom the Company sold any product within the
immediately preceding twelve (12) month period, or with whom the Company
was a third-party manager or with whom the Company had a business
relationship to develop or own similar facilities (specifically, Officer
may participate in projects located in La Grande, Oregon and Red Bluff,
California); or
(c) From the date of this Agreement until September 30, 2001, hire
solicit for hire or attempt to solicit for hire for employment, or engage,
any person who is employee or agent of the Company or was an employee or
agent of the Company within the immediately preceding twelve (12) month
period; or
(d) Use for himself or for any other person, firm, corporation,
partnership, association or other entity, or divulge or disclose in any
manner to any person, firm, corporation, partnership, association or other
entity, the identity of the Company's residents or other customers the
methods of operation, financial data, sources of supply, know-how, pricing
information, records, books, agreements, techniques, forms, procedures,
systems, financial information or other trade secrets or confidential or
proprietary information used in or relating to the Business (hereinafter
referred to as the "Confidential Information"). Notwithstanding anything to
the contrary contained in this Agreement, the restrictions on the Officer's
disclosure and use of the Confidential Information shall not apply to (i)
information, or techniques which are or become generally known to the
public, other than through disclosure (whether deliberate or inadvertent)
by the Officer; or (ii) disclosure of Confidential Information in judicial
or administrative proceedings to the extent the Officer is legally
compelled to disclose such information, provided the Officer shall have
used the Officer's best efforts, and shall have afforded the Company the
opportunity, to obtain an appropriate protective order or other assurance
satisfactory to the Company of confidential treatment for the information
required to be so disclosed; or
(e) Notwithstanding anything to the contrary in this Agreement,
Executive may continue to hold his current interest in any of congregate
care or assisted living properties, or in any other congregate care or
assisted living property approved by the Company's Board of Directors
(which approval shall not be unreasonably withheld), provided that
Executive shall hold any such interest for investment purposes only and
shall not take an active role in the management of any such properties.
The Company's rights and Officer's obligation under each of the paragraphs above
is in addition to and not in lieu of the respective rights and obligations of
the Company and Officer under any other paragraph above.
2. Remedies. The Officer hereby agrees that the periods of time,
geographical scope and other restrictions provided for in Section 1 above are
the minimum such terms necessary to protect the Company and its successors and
assigns in the use and enjoyment of the goodwill associated with the Business.
The Officer further agrees that damages cannot adequately compensate the Company
in the event of the Officer's breach of any of the covenants contained in
Section 1 above. Accordingly, the Officer agrees that in the event of a breach
of any of such covenants, the Company shall be entitled to
Page 2 - RESTRICTIVE COVENANT AGREEMENT
<PAGE>
obtain injunctive relief against the Officer, without bond but upon due notice,
in addition to such other relief as may be available at law or in equity.
Obtainment of any such injunction by the Company shall not be deemed an election
of remedies or a waiver of any right to obtain any other remedies the Company
may have at law or in equity. The existence of any claim or cause of action of
the Officer against the Company or the Company of whatever nature shall not
constitute a defense to the Company's enforcement of such restrictive covenants.
To the extent any of such restrictive covenants are deemed unenforceable by
virtue of their scope, in terms of geographical area or length of time or
otherwise, but may be made enforceable by limitations thereon, the Officer
agrees that such covenants shall be enforceable to the fullest extent
permissible under the laws and public policies of the jurisdiction in which
enforcement is sought. The parties hereby authorize any court of competent
jurisdiction to modify or reduce the scope of the restrictive covenants to the
extent necessary to make such restrictive covenants enforceable.
3. Indemnification. The Officer agrees to indemnify and hold the Company
and its affiliates harmless from and against any and all loss, cost, damage,
liability and expense including, without limitation, reasonable attorneys' fees,
court costs and reasonable litigation expenses) which the Company or any such
affiliate shall suffer, sustain or incur as a result of, arising from or in
connection with any failure or breach by the Officer hereunder.
4. Miscellaneous.
(a) Written Agreement to Govern. This Agreement, the Option
Agreements, and the Employment Agreement set forth the entire understanding
of the parties with respect to the subject matter hereof, supersede all
prior discussions, negotiations, understandings or written agreements among
the parties hereto relating to the subject matter contained herein, and
merge all prior and contemporaneous discussions among the parties.
(b) Severability. The parties expressly agree that it is not the
intention of any party hereto to violate any public policy, statutory or
common law rules, regulations, treaties or decisions of any government or
agency thereof. Subject to Section 2 of this Agreement, if any provision of
this Agreement is judicially or administratively interpreted or construed
as being in violation of any such provision, such articles, sections,
sentences, words, clauses or combinations thereof shall be inoperative, and
the remainder of this Agreement shall remain binding upon the parties
hereto.
(c) Law to Govern. The validity, construction and enforceability of
this Agreement shall be governed in all respects by the laws of the State
of Oregon, without regard to its conflict of laws rules. The Officer hereby
consents and submits to the exclusive jurisdiction of the courts of the
State of Oregon and the U.S. District Court for the District of Oregon with
respect to any actions or causes of action arising hereunder. The Officer
further agrees that Portland, Oregon shall be the exclusive venue of any
actions or causes of action arising hereunder.
(d) Successors and Assigns. This Agreement shall be binding upon and
shall inure to the benefit of the parties hereto and their respective
heirs, executors, administrators, personal representatives, successors and
assigns.
(e) Waiver of Provisions. The terms, covenants, representations,
warranties and conditions of this Agreement may be waived only by a written
instrument executed by the party waiving compliance. The failure of any
party at any time to require performance of any provisions hereof shall, in
no manner, affect the right at a later date to enforce the same. No waiver
by any
Page 3 - RESTRICTIVE COVENANT AGREEMENT
<PAGE>
party of any condition, or breach of any provision, term or covenant
contained in this Agreement, whether by conduct or otherwise, in any one or
more instances, shall be deemed to be or construed as a further or
continuing waiver of any such condition or of the breach of any other
provision, term or covenant of this Agreement.
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of
the date first written above.
OFFICER
ERIC W. JACOBSEN
-----------------------------------
Eric W. Jacobsen
REGENT ASSISTED LIVING, INC.
By: WALTER C. BOWEN
--------------------------------
Walter C. Bowen, President
Page 4 - RESTRICTIVE COVENANT AGREEMENT
REGENT ASSISTED LIVING, INC.
EMPLOYMENT AGREEMENT
THIS EMPLOYMENT AGREEMENT (the "Agreement") is made this 12th day of April,
1999, by and between REGENT ASSISTED LIVING, INC., an Oregon corporation (the
"Company"), and LOUIS SWART ("Executive") to be effective the date hereof.
RECITALS:
A. The Company is engaged in the business of developing and operating
assisted living residences for senior citizens (the "Business").
B. Executive possesses certain skills, expertise and contacts related to
the Business.
C. Because of those skills, expertise and contacts, the Company desires to
employ Executive, and Executive desires to accept employment with the Company,
on the terms and conditions set forth herein.
AGREEMENT:
NOW, THEREFORE, in consideration of the covenants and mutual agreements set
forth herein and other good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, the parties agree as follows:
1. Employment; Term. The Company hereby employs Executive to perform the
duties described herein, and Executive hereby accepts employment with the
Company, for a term commencing on the date hereof and expiring at the close of
business on April 11, 2004, unless earlier terminated in accordance with Section
6 below.
2. Position and Duties.
2.1 Position. During the term of his employment Executive shall serve
as Chief Operating Officer of the Company. Executive shall make available all of
his business time, attention, skill and efforts for performing services for the
Company, and shall devote as much of his business time, attention, skill and
efforts to the performance of such services as is required by the Company's
Board of Directors (the "Board of Directors"). Executive shall, at all times, be
subject to the authority of the Board of Directors.
2.2 General Terms of Employment. Executive shall be subject to the
general terms and conditions of employment applicable to employees of the
Company, as established by the Board of Directors from time to time, including,
without limitation, all conditions relating to compliance with federal and/or
state laws and other governmental rules and regulations issued thereunder as the
same may be in effect from time to time.
Page 1 - EMPLOYMENT AGREEMENT
<PAGE>
3. Compensation.
3.1 Base Salary. As compensation for Executive's services under this
Agreement, the Company shall pay to Executive during the term of employment an
annual salary (the "Base Salary") of One Hundred Seventy-Five Thousand Dollars
($175,000), subject to all applicable income tax withholding and other payroll
taxes. The Base Salary shall be payable in accordance with the Company's normal
payroll practices or on such other basis mutually agreed upon by the parties.
The Board of Directors (or the Compensation Committee of the board of Directors)
may adjust the Base Salary upwards, but not downwards, on an annual basis.
3.2 Annual Bonus. Executive shall be eligible to receive an annual
bonus to be determined and paid at the time and in the manner established
annually by the Board of Directors.
4. Benefits. During the term of his employment, Executive shall be entitled
to and shall receive all benefits that are customarily provided by the Company
to it employees generally, subject to any eligibility requirements.
5. Reimbursement of Expenses. The Company shall pay or reimburse Executive
for all reasonable travel and other expenses incurred by Executive in performing
his obligations under this Agreement, provided that:
5.1 Each such expenditure is incurred by Executive in accordance with
such policy guidelines as may be established by the Board of Directors from time
to time; and
5.2 Executive furnishes to the Company adequate records and other
documentary evidence required by federal and state statutes and regulations
issued by the appropriate taxing authorities for the substantiation of each such
expenditure.
6. Termination of Employment.
6.1 Termination of the Company for Cause. The Company may terminate
this Agreement and Executive's employment with the Company hereunder, effective
upon delivery of written notice of termination to Executive setting forth the
basis of such termination, for Cause, which shall be defined as any of the
following:
(a) Any misappropriation of funds or property of the Company by
Executive;
(b) The conviction of or plea of guilty or nolo contendere by
Executive of a felony or of any crime involving moral turpitude;
(c) Elective's engagement in illegal or immoral conduct tending
to place Executive or the Company, by association with Executive, in
disrepute;
(d) Indulgence in alcohol or drugs to an extent that renders
Executive generally unable or unfit to perform his duties hereunder;
(e) Executive's gross dereliction of duty; or
Page 2 - EMPLOYMENT AGREEMENT
<PAGE>
(f) Any act or omission that constitutes a material breach by
Executive of his obligations under this Agreement.
On the effective date of termination, the Company shall pay to
Executive his Base Salary accrued through the date of termination. No annual
bonus for the fiscal year in which termination is effective or for any
subsequent year will be paid.
6.2 Termination by the Company without Cause. The Company may
terminate this Agreement and Executive's employment with the Company hereunder,
effective upon delivery of written notice of termination to Executive, at any
time without Cause, as defined above. Upon any such termination without Cause,
Executive shall be entitled to a cash payment from the Company. If Executive was
employed by the Company for less than one calendar year the cash payment shall
be equal to one-half of the Executive's yearly Base Salary at the rate in effect
on the date of termination. Otherwise, the cash payment shall equal the
Executive's yearly Base Salary at the rate in effect on the date of termination.
The Company and Executive agree that Executive shall have the responsibilities,
duties and authority as are reasonably consistent with Executive's position as
the of the Company, and that the reduction of Executive's responsibilities,
duties and authority materially below such level, a transfer of Executive from
the Company's principal executive office, the physical move of the principal
executive office to a location more than 45 miles from its current location, or
a material breach by the Company of this Agreement or any stock option agreement
with Executive, shall be deemed a termination of Executive without Cause.
6.3 Termination for Death or Disability. Executive's obligations and
employment hereunder shall terminate immediately, without further notice or
action, upon either of the following events:
(a) The death of Executive. In such event, the Company shall pay
to Executive's estate his Base Salary and any other rights (including
the annual bonus, if any) accrued to the date of death.
(b) Executive shall be unable to perform the normal duties of his
employment for a period of 90 days as a result of illness or injury.
In such event, the Company shall pay to Executive has Base Salary for
the 90-day period following the date active services cease and any
other rights (including the annual bonus, if any) accrued to that
date. Thereafter, Executive shall receive from the Company only such
disability income as may be received by the Company from policies
covering Executive, if any, and vested benefits under any employee
benefit plan in accordance with the terms of that plan.
6.4 Termination by Executive. Executive may terminate his employment
with the Company hereunder at any time by providing 60 days' prior written
notice to the Company. On the effective date of termination, the Company shall
pay to Executive his Base Salary and any rights accrued through the date of
termination.
7. Restrictive Covenants.
Executive shall not, except on behalf of the Company, either directly
or indirectly, on his own account, or as an employee, consultant, agent,
partner, joint venturer, owner, officer, director or stockholder of any other
person, firm, partnership, corporation or other entity, or in any other
capacity, in any way:
Page 3 - EMPLOYMENT AGREEMENT
<PAGE>
7.1 During the term of his employment, within the United States of
America, including its possessions and territories, conduct, engage in or aid or
assist anyone in the conduct of a business which is substantially similar to or
directly competitive the Business;
7.2 During the term of his employment, solicit, divert, take away or
accept orders from, or attempt to solicit, divert, take away or accept orders
from, any person, firm, partnership, corporation or other entity, wherever
located, for whom the Company performed any services or to whom the Company sold
any product within the immediately preceding 12-month period.
7.3 During the term of his employment, solicit, attempt to solicit,
hire for employment or engage any person who was an employee, independent
contractor or agent employed by or engaged by the Company within the immediately
preceding 12-month period.
7.4 Use for himself or for any other person, firm, corporation,
partnership, association or other entity, or divulge or disclose in any manner
to any person, firm, corporation, partnership, association or other entity, the
identity of the Company's residents or other customers, methods of operation,
financial data, sources of supply, know-how, pricing information, records,
books, agreements, techniques, forms, procedures, systems, financial information
or other trade secrets or confidential or proprietary information used in or
relating to the Business (hereinafter referred to as the "Confidential
Information"). Notwithstanding anything to the contrary contained in this
Agreement, the restrictions on Executive's disclosure and use of the
Confidential Information shall not apply to (i) information, or techniques which
are or become generally known to the public, other than through disclosure
(whether deliberate or inadvertent) by Executive or (ii) disclosure of
Confidential Information in judicial or administrative proceedings to the extent
Executive is legally compelled to disclose such information, provided Executive
shall have used his best efforts, and shall have afforded the Company the
opportunity, to obtain an appropriate protective order or other assurance
satisfactory to the Company or confidential treatment for the information
required to be so disclosed.
7.5 Executive hereby agrees that the periods of time, geographical
scope and other limitations provided for in this Section 7 above are the minimum
such terms necessary to protect the Company and its successors and assigns in
the use and employment of the goodwill respecting the Business and the Company.
Executive further agrees that damages cannot adequately compensate the Company
in the event of Executive's breach of any of the covenants contained in this
Section 7. Accordingly, Executive agrees that in the event of a breach of any of
such covenants, the Company shall be entitled to obtain injunctive relief
against Executive, without bond but upon due notice, in addition to such other
relief as may appertain at law or in equity. Obtainment of any such injunction
by the Company shall not be deemed an election of remedies or a waiver of any
right to assert any other remedies the Company may have at law or in equity. The
existence of any claim or cause of action of Executive against the Company, of
whatever nature, shall not constitute a defense to the Company's enforcement of
such restrictive covenants. To the extent any of such restrictive covenants are
deemed unenforceable by virtue of their scope in terms of geographical area,
length of time or otherwise, but may be made enforceable by limitations hereon,
Executive agrees that the same shall be enforceable to the fullest extent
permissible under the laws and public policies of the jurisdiction in which
enforcement is sought. The parties hereto hereby authorize any court of
competent jurisdiction to modify or reduce the scope of the restrictive
covenants to the extent necessary to make such restrictive covenants
enforceable.
7.6 Executive agrees to indemnify and hold the Company harmless from
and against any and all loss, cost, damages, liability and expense (including,
without limitation, reasonable attorneys' fees, court costs and reasonable
litigation expenses) which the Company shall suffer, sustain or incur as a
result
Page 4 - EMPLOYMENT AGREEMENT
<PAGE>
of, arising from or in connection with any failure of performance or breach of
agreement by Executive hereunder after a final non-appealable order from a court
of competent jurisdiction.
8. Miscellaneous Provisions.
8.1 Severability. If any provision of this Agreement is deemed by any
court of competent jurisdiction to be invalid or unenforceable for any reason,
the remaining terms and provisions hereof shall remain binding upon the parties.
8.2 Notices. All notices and other communications required or
permitted hereunder shall be in writing; shall be delivered personally,
including by means of telecopy, or mailed by registered or certified mail,
postage prepaid and return receipt requested; shall be deemed given on the date
of personal delivery or on the date set forth on the return receipt; and shall
be delivered or mailed to the addresses or telecopy numbers set forth below or
to such other address as any party may from time to time direct:
If to the Regent Assisted Living, Inc.
Company, to: 121 SW Morrison Street, Suite 1000
Portland, OR 97204
Telecopy: (503) 274-4685
Attention: President
Copy to: Regent Assisted Living, Inc.
Company, to: 121 SW Morrison Street, Suite 1000
Portland, OR 97204
Telecopy: (503) 274-4685
Attention: Chief Legal Officer
If to Louis Swart
Executive, ____________________
to: ____________________
8.3 Benefit and Assignment. This Agreement shall be binding upon and
inure to the benefit of the Company and its successors and assigns. The rights
and obligations of Executive hereunder are personal to him and are not subject
to voluntary or involuntary alienation or transfer by him.
8.4 Waiver; Amendment. The provisions of this Agreement may be waived
or amended only by an instrument in writing signed by the party against which
enforcement of the amendment or waiver is sought. Any waiver of any term or
condition of this Agreement or any breach hereof shall not operate as a waiver
of any other such term, condition or breach, and no failure to enforce any
provision hereof shall operate as a waiver of such provision or of any other
provision hereof.
8.5 Attorneys' Fees. If suit or action is filed by either party to
enforce this Agreement or otherwise with respect to the subject matter of this
Agreement, the prevailing party shall be entitled to recover reasonable
attorneys' fees as fixed by the trial court and, if any appeal is taken from the
decision of the trial court, reasonable attorneys' fees as fixed by the
appellate court.
8.6 Headings. The section headings in this Agreement are for
convenience only and shall not control or affect the meaning or construction of
the provisions of this Agreement.
Page 5 - EMPLOYMENT AGREEMENT
<PAGE>
8.7 Entire Agreement. This Agreement sets for the entire understanding
of the parties with respect to the subject matter hereof and supersedes all
prior discussions, negotiations, understandings or written agreements among the
parties hereto relating to the subject matter contained herein, and merges all
prior and contemporaneous discussions among them. Without limiting the
foregoing, the parties agree that all prior written or oral agreements between
Executive and the Company, or any predecessor or affiliate of the Company,
regarding the terms of Executive's employment are terminated and superseded by
this Agreement.
8.8 Governing Law. This Agreement shall be governed by and construed
and enforced in accordance with the laws of the State of Oregon (except for its
choice-of-law provisions).
IN WITNESS WHEREOF, the parties have executed this Agreement as of the
date first set forth above.
THE COMPANY: REGENT ASSISTED LIVING, INC.
By: WALTER C. BOWEN
--------------------------------
Walter C. Bowen, President
LOUIS SWART
EXECUTIVE: -----------------------------------
Louis Swart
RESTRICTIVE COVENANT AGREEMENT
THIS RESTRICTIVE COVENANT AGREEMENT ("Agreement") is made effective as of
this 12th day of April, 1999, by and between Regent Assisted Living, Inc., an
Oregon corporation (the "Company"), and Louis Swart (the "Officer").
A. The Company is principally engaged in the business of owning, operating
and developing assisted living communities (the "Business").
B. Pursuant to that certain resolution of the Company's Board of Directors
dated to be effective March 31, 1999, Officer has been granted an option to
purchase 50,000 shares of the Company's common stock (the "Option") through the
Regent Assisted Living, Inc. 1995 Stock Incentive Plan adopted August 28, 1995
(the "Plan"), on the terms and subject to the conditions of the Incentive Stock
Option Agreement dated the date hereof (the "Option Agreement") between the
Company and the Officer.
C. As of this date, Officer has commenced employment with the Company
pursuant to the Employment Agreement dated this date (the "Employment
Agreement") between the Company and the Officer. As an employee of the Company
pursuant to the Employment Agreement, the Officer is expected to obtain
extensive knowledge of the operations and financial condition of the Business,
as well as strong contacts and relationships with the Company's suppliers,
customers and employees.
D. The Company is unwilling to enter into the Option Agreement or the
Employment Agreement unless the Officer agrees to be bound by the terms of this
Agreement.
E. To induce the Company to enter into the Option Agreement and the
Employment Agreement, the Officer desires to execute this Agreement and to be
bound by the terms hereof.
AGREEMENT
NOW, THEREFORE, in consideration of the covenants and mutual agreements set
forth herein and other good and valuable consideration, including Purchaser's
execution and delivery of the Option Agreement and the Employment Agreement, the
receipt and sufficiency of which are hereby acknowledged, the parties agree as
follows:
1. Restrictive Covenants. Except for the benefit of the Company, the
Officer shall not, either directly or indirectly, on his own account, or as an
employee, consultant, agent, partner, joint venturer, owner, officer, director
or stockholder (except for holdings of less than two percent (2%) of the stock
of a publicly traded company which are held solely for investment purposes, and
which do not involve the performance of any active services by the Officer for
any other person, firm, partnership, corporation or other entity, or in any
other capacity), in any way:
(a) From the date of this Agreement until the later of four years
after the date of this Agreement or one year after the termination of the
Officer's employment by the Company for any reason pursuant to the
Employment Agreement, within the United States of America, including its
possessions and territories, conduct, engage in, aid or assist anyone in
the conduct of a business which is competitive with the Business (provided,
however, if Officer's employment by the Company is terminated by the
Company without Cause (as defined in the Employment Agreement)
Page 1 - RESTRICTIVE AGREEMENT
<PAGE>
then Officer's obligation under this paragraph (a) shall be only for one
year after the date of termination); or
(b) From the date of this Agreement until the later of four years
after the date of this Agreement or one year after the termination of the
Officer's employment by the Company for any reason pursuant to the
Employment Agreement, with respect to the type of products or services
offered for sale to the Company's residents and other customers, solicit,
divert, take away or accept orders or business from, or attempt to solicit,
divert, take away or accept orders from, any person, firm, partnership,
corporation or other entity, wherever located, for whom the Company
performed any services or to whom the Company sold any product within the
immediately preceding twelve (12) month period; or
(c) From the date of this Agreement until the later of four years
after the date of this Agreement or one year after the termination of the
Officer's employment by the Company for any reason pursuant to the
Employment Agreement, hire solicit for hire or attempt to solicit for hire
for employment, or engage, any person who is employee or agent of the
Company or was an employee or agent of the Company within the immediately
preceding twelve (12) month period; or
(d) Use for himself or for any other person, firm, corporation,
partnership, association or other entity, or divulge or disclose in any
manner to any person, firm, corporation, partnership, association or other
entity, the identity of the Company's residents or other customers, the
methods of operation, financial data, sources of supply, know-how, pricing
information, records, books, agreements, techniques, forms, procedures,
systems, financial information or other trade secrets or confidential or
proprietary information used in or relating to the Business (hereinafter
referred to as the "Confidential Information"). Notwithstanding anything to
the contrary contained in this Agreement, the restrictions on the Officer's
disclosure and use of the Confidential Information shall not apply to (i)
information or techniques which are or become generally known to the
public, other than through disclosure (whether deliberate or inadvertent)
by the Officer; or (ii) disclosure of Confidential Information in judicial
or administrative proceedings to the extent the Officer is legally
compelled to disclose such information, provided the Officer shall have
used the Officer's best efforts, and shall have afforded the Company the
opportunity, to obtain an appropriate protective order or other assurance
satisfactory to the Company of confidential treatment for the information
required to be so disclosed.
(e) Notwithstanding anything to the contrary in this Agreement,
Executive may hold an interest in any congregate care or assisted living
property approved by the Company's Board of Directors (which approval shall
not be unreasonably withheld), provided that Executive shall hold any such
interest for investment purposes only and shall not take an active role in
the management of any such properties.
(f) Executive shall have no obligations under paragraphs (a), (b) or
(c), above, in the event the Officer's employment is terminated on or after
March 31, 2001.
(g) Nothing in this Agreement shall in any manner prohibit Officer
from engaging in the private practice of law so long as Officer does not
divulge Confidential Information in breach of paragraph (d) above.
Page 2 - RESTRICTIVE AGREEMENT
<PAGE>
The Company's rights and Officer's obligation under each of the paragraphs above
is in addition to and not in lieu of the respective rights and obligations of
the Company and Officer under any other paragraph above.
2. Remedies. The Officer hereby agrees that the periods of time,
geographical scope and other restrictions provided for in Section 1 above are
the minimum such terms necessary to protect the Company and its successors and
assigns in the use and enjoyment of the goodwill associated with the Business.
The Officer further agrees that damages cannot adequately compensate the Company
in the event of the Officer's breach of any of the covenants contained in
Section 1 above. Accordingly, the Officer agrees that in the event of a breach
of any of such covenants, the Company shall be entitled to obtain injunctive
relief against the Officer, without bond but upon due notice, in addition to
such other relief as may be available at law or in equity. Obtaining of any such
injunction by the Company shall not be deemed an election of remedies or a
waiver of any right to obtain any other remedies the Company may have at law or
in equity. The existence of any claim or cause of action of the Officer against
the Company or the Company of whatever nature shall not constitute a defense to
the Company's enforcement of such restrictive covenants. To the extent any of
such restrictive covenants are deemed unenforceable by virtue of their scope, in
terms of geographical area or length of time or otherwise, but may be made
enforceable by limitations thereon, the Officer agrees that such covenants shall
be enforceable to the fullest extent permissible under the laws and public
policies of the jurisdiction in which enforcement is sought. The parties hereby
authorize any court of competent jurisdiction to modify or reduce the scope of
the restrictive covenants to the extent necessary to make such restrictive
covenants enforceable.
3. Indemnification. The Officer agrees to indemnify and hold the Company
and its affiliates harmless from and against any and all loss, cost, damage,
liability and expense including, without limitation, reasonable attorneys' fees,
court costs and reasonable litigation expenses) which the Company or any such
affiliate shall suffer, sustain or incur as a result of, arising from or in
connection with any failure or breach by the Officer hereunder.
4. Miscellaneous.
(a) Written Agreement to Govern. This Agreement, the Option Agreement,
and the Employment Agreement set forth the entire understanding of the
parties with respect to the subject matter hereof, supersede all prior
discussions, negotiations, understandings or written agreements among the
parties hereto relating to the subject matter contained herein, and merge
all prior and contemporaneous discussions among the parties.
(b) Severability. The parties expressly agree that it is not the
intention of any party hereto to violate any public policy, statutory or
common law rules, regulations, treaties or decisions of any government or
agency thereof. Subject to Section 2 of this Agreement, if any provision of
this Agreement is judicially or administratively interpreted or construed
as being in violation of any such provision, such articles, sections,
sentences, words, clauses or combinations thereof shall be inoperative, and
the remainder of this Agreement shall remain binding upon the parties
hereto.
(c) Law to Govern. The validity, construction and enforceability of
this Agreement shall be governed in all respects by the laws of the State
of Oregon, without regard to its conflict of laws rules. The Officer hereby
consents and submits to the exclusive jurisdiction of the courts of the
State of Oregon and the U.S. District Court for the District of Oregon with
respect to any actions or causes of action arising hereunder. The Officer
further agrees that Portland, Oregon shall be the exclusive venue of any
actions or causes of action arising hereunder.
Page 3 - RESTRICTIVE AGREEMENT
<PAGE>
(d) Successors and Assigns. This Agreement shall be binding upon and
shall inure to the benefit of the parties hereto and their respective
heirs, executors, administrators, personal representatives, successors and
assigns.
(e) Waiver of Provisions. The terms, covenants, representations,
warranties and conditions of this Agreement may be waived only by a written
instrument executed by the party waiving compliance. The failure of any
party at any time to require performance of any provisions hereof shall, in
no manner, affect the right at a later date to enforce the same. No waiver
by any party of any condition, or breach of any provision, term or covenant
contained in this Agreement, whether by conduct or otherwise, in any one or
more instances, shall be deemed to be or construed as a further or
continuing waiver of any such condition or of the breach of any other
provision, term or covenant of this Agreement.
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of
the date first written above.
OFFICER
LOUIS SWART
-----------------------------------
Louis Swart
REGENT ASSISTED LIVING, INC.
By: WALTER C. BOWEN
--------------------------------
Walter C. Bowen, President
Page 4 - RESTRICTIVE AGREEMENT
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE
CONDENSED CONSOLIDATED BALANCE SHEET OF REGENT ASSISTED LIVING, INC. AS OF MARCH
31, 1999, AND THE RELATED STATEMENT OF OPERATIONS FOR THE THREE MONTHS IN THE
PERIOD ENDED MARCH 31, 1999, AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO
SUCH FINANCIAL STATEMENTS.
</LEGEND>
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-1999
<PERIOD-START> JAN-01-1999
<PERIOD-END> MAR-31-1999
<CASH> 4,202,438
<SECURITIES> 0
<RECEIVABLES> 610,828
<ALLOWANCES> 37,000
<INVENTORY> 0
<CURRENT-ASSETS> 7,346,765
<PP&E> 49,119,530
<DEPRECIATION> 1,660,235
<TOTAL-ASSETS> 60,865,063
<CURRENT-LIABILITIES> 5,960,095
<BONDS> 44,188,849
0
9,349,841
<COMMON> 10,808,703
<OTHER-SE> (18,054,414)
<TOTAL-LIABILITY-AND-EQUITY> 60,865,063
<SALES> 11,846,037
<TOTAL-REVENUES> 11,926,576
<CGS> 8,586,461
<TOTAL-COSTS> 13,394,500
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 524,606
<INCOME-PRETAX> (2,000,995)
<INCOME-TAX> 0
<INCOME-CONTINUING> (2,000,995)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (2,000,995)
<EPS-PRIMARY> (.46)
<EPS-DILUTED> (.46)
</TABLE>
