REGENT ASSISTED LIVING, INC.
Bank of America Financial Center
121 S.W. Morrison Street, Suite 1000
Portland, Oregon 97204
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
TO BE HELD ON May 23, 2000
To Our Shareholders:
The Annual Meeting of Shareholders of Regent Assisted Living, Inc. (the
"Company") will be held at 11:00 a.m. on Tuesday, May 23, 2000, at the U.S.
Bancorp Tower, 111 S.W. Fifth Avenue, 30th Floor, Portland, Oregon, for the
following purposes:
1. Electing two directors of the Company for a term of three years;
2. Amending the Company's 1995 Stock Incentive Plan to increase the
number of shares of the Company's Common Stock that may be issued
pursuant to the Plan from 600,000 to 800,000; and
3. Transacting such other business as may properly come before the
meeting.
Only holders of the Company's Common and Preferred Stock at the close
of business on Friday, March 31, 2000, are entitled to notice of, and to vote
at, the meeting and any adjournments or postponements thereof. Shareholders may
vote in person or by proxy. A list of shareholders entitled to vote at the
meeting will be available for examination by shareholders at the time and place
of the meeting and, on or after May 1, 2000, at the offices of the Secretary of
the Company, Suite 1000, 121 S.W. Morrison Street, Portland, Oregon.
By Order of the Board of Directors,
David R. Gibson
Secretary
YOUR VOTE IS IMPORTANT. WHETHER OR NOT YOU EXPECT TO ATTEND THE ANNUAL MEETING
IN PERSON, PLEASE MARK, SIGN, DATE, AND PROMPTLY RETURN YOUR PROXY IN THE
ENCLOSED ENVELOPE.
Portland, Oregon
April 28, 2000
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REGENT ASSISTED LIVING, INC.
Bank of America Financial Center
121 S.W. Morrison Street, Suite 1000
Portland, Oregon 97204
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PROXY STATEMENT
2000 Annual Meeting of Shareholders
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This Proxy Statement is furnished in connection with the solicitation
by the Board of Directors of Regent Assisted Living, Inc. (the "Company") of
proxies to be voted at the 2000 Annual Meeting of Shareholders of the Company to
be held at 11:00 a.m. on Tuesday, May 23, 2000, at the U.S. Bancorp Tower, 111
S.W. Fifth Avenue, 30th Floor, Portland, Oregon, and at any adjournments or
postponements thereof. If proxies in the accompanying form are properly
executed, dated and returned prior to the voting at the meeting, the shares of
Common Stock represented thereby will be voted as instructed on the proxy. If no
instructions are given on a properly executed and returned proxy, the shares of
Common Stock represented thereby will be voted for election of the directors and
in the discretion of the persons named in the proxy on such other business as
may properly come before the meeting or any adjournments or postponements
thereof.
Any proxy may be revoked by a shareholder prior to its exercise upon
written notice to the Secretary of the Company, by delivering a duly executed
proxy bearing a later date, or by the vote of a shareholder cast in person at
the meeting. The cost of soliciting proxies will be borne by the Company. In
addition to solicitation by mail, proxies may be solicited personally by the
Company's officers and regular employees or by telephone, facsimile transmission
or express mail. The Company will reimburse brokerage houses, banks and other
custodians, nominees and fiduciaries for their reasonable expenses incurred in
forwarding proxies and proxy material to beneficial owners of stock. This Proxy
Statement and the accompanying Notice of Annual Meeting and proxy card are first
being mailed to shareholders on or about May 5, 2000
VOTING
Holders of record of the Company's Common Stock ("Common Stock") and
Series A Preferred Stock ("Series A Preferred Stock") at the close of business
on Friday, March 31, 2000, will be entitled to notice of the Annual Meeting and
to vote at the Annual Meeting or any adjournments or postponements thereof. As
of that date, there were 4,507,600 shares of Common Stock, and 1,283,785 shares
of Series A Preferred Stock, outstanding and entitled to vote. As of that date,
there were also 382,882 shares of the Company's Series B Preferred Stock
("Series B Preferred Stock") outstanding, which shares are not entitled to vote
on the matters expected to be presented at the Annual Meeting and are entitled
to vote only on specific categories of matters as set forth in the Company's
Restated Articles of Incorporation, as amended (the "Restated Articles"). On
those matters on which the holders of Series B Preferred Stock are entitled to
vote, they vote together with the holders of the Common Stock and the Series A
Preferred Stock as a single class. Pursuant to the Restated Articles, the shares
of Common Stock are each entitled to one vote and the shares of Series A
Preferred Stock are each entitled to 1.0909 votes. The Common Stock and Series A
Preferred Stock vote as a single class on the matters expected to be presented
at the Annual Meeting. A majority of the votes entitled to be cast by the
holders of Common Stock and Series A Preferred Stock, or 2,954,041 votes, will
constitute a quorum to act on the matters expected to be presented at the Annual
Meeting.
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Shareholders are not entitled to cumulative voting in the election of
directors or on any other matter submitted to the shareholders for approval.
Abstentions and broker non-votes will be counted in determining whether a quorum
is present, but otherwise will have no effect on the outcome of any proposal
considered at the meeting. Walter C. Bowen, Chairman of the Board, President and
Chief Executive Officer of the Company, owns or controls 3,403,200 shares of the
Company's Common Stock, representing 57.6 percent of the votes entitled to be
cast at the meeting, and he has indicated that he intends to be present at the
meeting and to vote in favor of each of the nominees for director. Accordingly,
the Company believes that approval of each of the two proposals discussed below
is assured.
PROPOSAL 1. Election of two directors of the Company for a term of three years.
The Company's Bylaws provide for a Board of Directors comprised of a
maximum of eight directors. Currently, the Company has seven directors. The
directors are divided into three classes: Class I which is comprised of two
directors; Class II which is comprised of three directors, but currently only
two are serving; and Class III which is comprised of three directors. Two
directors are to be elected at the upcoming Annual Meeting of Shareholders to
fill all of the directorships in Class I. Thereafter, the term of office of
Class I will expire at the 2003 Annual Meeting of Shareholders. The term of
office of Class II will expire at the 2001 Annual Meeting of Shareholders and
the term of office of Class III will expire at the 2002 Annual Meeting of
Shareholders.
Under Oregon law, if a quorum of shareholders is present at the 2000
Annual Meeting, the two nominees for election of directors who receive the
greatest number of votes cast at the meeting will be elected directors.
Abstentions and broker non-votes will have no effect on the results of the vote.
Unless marked otherwise, proxies received will be voted FOR the election of each
of the nominees named below.
If any nominee is unable or unwilling to stand for election, the
proxies may be voted for a substitute nominee, designated by the proxy holders
or by the present Board of Directors to fill such vacancy, or for another
nominee named without nomination of a substitute, or the number of directors may
be reduced accordingly. The Board of Directors has no reason to believe that any
of the nominees will be unwilling or unable to serve if elected as a director.
The Board of Directors recommends a vote FOR each of the nominees named below.
Steven L. Gish has served as Chief Financial Officer, Treasurer,
Secretary, and Assistant Secretary in addition to serving as a Director
of the Company, since August 1995. In 1991 Mr. Gish became the
Controller of the "Bowen Companies," a group of companies and
businesses owned or controlled by Mr. Bowen, including the predecessor
of the Company. Prior to that time, Mr. Gish served as Treasurer and
Controller of McCormick and Baxter Creosoting Company, an industrial
wood preserving company.
Dana J. O'Brien is a Senior Managing Director of Cornerstone Equity
Investors, L.L.C., a New York-based investment firm formed in December
1996 to provide investment management services to several investment
funds. Cornerstone is the investment advisor to Prudential Private
Equity Investors III, L.P., the holder of all of the Company's issued
and outstanding Series A and Series B Preferred Stock. During the five
year period preceding December 1996, Mr. O'Brien served as Executive
Vice President of Prudential Equity Investors, Inc., an investment
management firm. Mr. O'Brien currently serves on the Board of Directors
of several private companies, including Specialty Hospitals of America,
Inc. and Guardian Care, Inc. Mr. O'Brien became a director of the
Company in December 1996.
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Directors whose terms continue:
Class II:
Stephen A. Gregg is a former hospital administrator and began
serving as a director of the Company on December 16, 1996. Mr. Gregg
was the founder and chief executive officer of The Ethix Corporation, a
managed care company serving approximately 5,000,000 members
nationwide, prior to its sale in 1994. Mr. Gregg currently manages
personal investments.
Wayne C. Rembold was elected a director of the Company
effective March 17, 1999. For the past 30 years Mr. Rembold has been
involved in numerous types of real estate development ventures and
business activities. Since 1994 Mr. Rembold has served as the President
and Chief Executive Officer of the Rembold Companies, which are engaged
in the development of retail and warehouse facilities in addition to
manufactured home parks and multi-family housing projects.
Class III:
Walter C. Bowen has served as Chairman of the Board and Chief
Executive Officer and a director of the Company since its formation in
March 1995. Mr. Bowen also served as President of the Company until
October 31, 1999. Mr. Bowen has been involved in the development,
ownership, and management of assisted living facilities since 1986, and
has devoted a majority of his time to the ownership and operation of
those facilities over the past five years. Mr. Bowen continues to serve
as the Chief Executive Officer of the Bowen Companies.
Marvin S. Hausman, M.D. has served as a director of the
Company since March 1996. Dr. Hausman is a founder and is President and
Chief Executive Officer of Axonyx Inc., a biotechnology company engaged
in the development and acquisition of pharmaceutical compounds and
technologies useful for the treatment of cognitive disorders including
Alzheimer's disease. Since 1992, Dr. Hausman has served as a consultant
to the pharmaceutical industry and since 1995 he has also served as
President of Northwest Medical Research Partners, Inc., a company
engaged in evaluating biopharmaceutical technologies and medical
devices.
Gary R. Maffei has served as a director of the Company since
December 1995. Mr. Maffei is currently a Vice President of the Merlo
Corporation, a private investment company, and the Harry Merlo
Foundation, Inc., a charitable organization. From 1973 until joining
these companies in 1996, Mr. Maffei was the Director of Human Resources
for Louisiana Pacific Corporation, a forest products company.
The following table sets forth certain information about each of the
Company's Directors, including the two nominees.
Name Age Class and Term Director Since
- ------------------------------------- --- --------------- --------------
Nominees:
Dana J. O'Brien (1)(2)(3)(4) 44 (Class I, 2000) December 1996
Steven L. Gish 41 (Class I, 2000) August 1995
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Directors whose terms continue:
Wayne C. Rembold (3) 58 (Class II, 2001) March 1999
Stephen A. Gregg (1)(4) 55 (Class II, 2001) December 1996
Walter C. Bowen(1)(2) 57 (Class III, 2002) March 1995
Marvin S. Hausman, MD 58 (Class III, 2002) March 1996
Gary R. Maffei (2)(4) 55 (Class III, 2002) December 1995
(1) Member of Executive Committee
(2) Member of Compensation Committee
(3) Member of Audit Committee
(4) Member of Conflicts Committee
Information on Committees of the Board of Directors and Meetings
During 1999, there were five meetings of the Board of Directors. Mr.
Maffei and Dr. Hausman each attended three of the five meetings and all other
directors attended all meetings. All Board members attended at least 75 percent
of the meetings of each committee of which he or she was a member. The Board of
Directors also took action by unanimous written consent, in accordance with the
Company's Bylaws, on three occasions in 1999.
The Company's Board of Directors has established an Executive
Committee, Audit Committee, Compensation Committee, and Conflicts Committee. The
Company has no Nominating Committee and the full Board of Directors selects
nominees for election as directors.
The Executive Committee acts on all matters requiring consideration by
the Board in the interim period between regular and special Board meetings. The
Executive Committee currently consists of Messrs. Bowen, Gregg and O'Brien.
Martha Robinson, a former independent Director of the Company, served on the
Committee during 1999. In 1999 the Executive Committee met one time and took
action by written consent on three occasions.
The Compensation Committee establishes salaries, incentives and other
forms of compensation for directors, officers and other key employees of the
Company, administers the 1995 Stock Incentive Plan, and recommends policies
relating to benefit plans. The Compensation Committee currently consists of Mr.
Bowen and two independent directors, Messrs. O'Brien and Maffei. In 1999, the
Compensation Committee took action by written consent on three occasions.
The Audit Committee makes recommendations concerning the engagement of
independent public accountants, reviews with the independent public accountants
the scope and results of the audit, reviews management's evaluation of the
Company's system of internal controls, and reviews non-audit professional
services provided by the independent accountants and the range of audit and
non-audit fees. The Audit Committee will also review, at least annually,
reimbursement of costs by the Company and the other Bowen Companies pursuant to
the Administrative Services Agreement. See "Certain Relationships and Related
Party Transactions." The Audit Committee currently consists of two independent
directors, Messrs. Mr. Rembold and O'Brien. Martha Robinson, a former
independent Director of the Company, served on the Committee during 1999. The
Audit Committee met twice in 1999.
The Conflicts Committee, consisting of four independent directors, is
responsible for considering for approval on behalf of the Board of Directors all
transactions between the Company and any officer or director of the Company or
any entity in which such officer or director has an equitable or beneficial
interest. The Conflicts Committee currently consists of Messrs. O'Brien, Gregg,
and Maffei. Martha Robinson, a former independent Director of the Company,
served on
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the Committee during 1999. The Conflicts Committee met twice in 1999 and took
action by written consent on two other occasions.
Compensation of Directors
The Company pays each non-employee director $500 for attendance in
person at each regular meeting of the Board of Directors. In addition, the
Company will reimburse the directors for travel expenses incurred in connection
with their activities on behalf of the Company.
Each non-employee member of the Board of Directors of the Company is
automatically granted an option to purchase 2,000 shares of Common Stock when
that person becomes a director. Each non-employee director is also automatically
granted an option to purchase 2,000 additional shares of Common Stock in each
subsequent calendar year that the director continues to serve in that capacity.
The exercise price for all automatic grants to non-employee directors will be
the closing sales price of the Common Stock on the business day immediately
preceding the date of grant.
PROPOSAL 2: Amendment to the Company's 1995 Stock Incentive Plan to increase the
number of shares of the Company's Common Stock that may be issued pursuant to
the Plan from 600,000 to 800,000.
The purpose of the Company's 1995 Stock Incentive Plan (the "Plan") is
to enable the Company to attract and retain the services of selected employees,
officers and directors of the Company and selected nonemployee agents,
consultants, advisors and independent contractors of the Company. The Plan
provides for the award of incentive stock options to key employees and the award
of non-statutory stock options, stock appreciation rights, bonus rights and
other incentive grants to employees, officers, directors, independent
contractors and consultants. Currently, 600,000 shares of the Company's Common
Stock are authorized to be issued pursuant to the Plan. As of March 31, 2000,
options to purchase 579,000 shares had been granted to officers and employees of
the Company, directors, and one independent consultant pursuant to the Plan.
The Board of Directors believes additional shares must be reserved for
use under the Plan to enable the Company to attract and retain key employees and
to provide appropriate incentives to key employees and others to exert their
best efforts on behalf of the Company. Stock options are currently the principal
long-term compensation element of the Company's officer and key employee
compensation. Accordingly, on March 7, 2000, the Board of Directors approved an
amendment to the Plan, subject to shareholder approval, to reserve an additional
200,000 shares for the Plan, thereby increasing the total number of shares of
the Company's Common Stock reserved for issuance under the Plan from 600,000 to
800,000. In addition, shareholder approval of this Proposal 2 will constitute a
reapproval of the per-employee limits on grants of options and stock
appreciation rights under the Plan of 100,000 shares for new hires and otherwise
50,000 shares annually.
Recommendation by the Board of Directors
The Board of Directors recommends that the proposed amendment to the
Plan be approved. The affirmative vote of the holders of a majority of the
shares of Common Stock and Series A Preferred Stock present and entitled to vote
on the matter at the Annual Meeting is required to approve this Proposal 2.
Accordingly, abstentions have the same effect as "no" votes in determining
whether the amendment is approved. Broker non-votes are counted for purposes of
determining whether a quorum exists at the Annual Meeting but are not counted
and have no effect on the results of the vote on Proposal 2. The proxies will be
voted for or against the
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proposal or as an abstention, in accordance with the instructions specified on
the proxy form. If no instructions are given, proxies will be voted for approval
of the amendment to the Plan.
DESCRIPTION OF 1995 STOCK INCENTIVE PLAN
In August 1995, the Company's Board of Directors adopted and its
shareholders subsequently approved the Company's 1995 Stock Incentive Plan (the
"Plan"), which provides for the award of incentive stock options to key
employees and the award of non-statutory stock options, stock appreciation
rights, bonus rights and other incentive grants to employees, officers,
directors, independent contractors, and consultants.
Eligibility. Awards may be granted under the Plan to those employees,
officers and directors of the Company who the Board of Directors believes have
made or will make an important contribution to the Company. As of December 31,
1996, the Company had approximately 365 employees and six non-employee
directors. Non-employee consultants and advisors to the Company are also
eligible to participate in the Plan.
Administration. The Plan is administered by the Board of Directors,
which has the authority, subject to the terms of the Plan, to determine the
persons to whom awards may be granted, the amount of any such award and the
price and other terms and conditions of any such award. Subject to the
provisions of the Plan, the Board may adopt and amend rules and regulations
relating to the administration of the Plan and may delegate to the Compensation
Committee of the Board of Directors general authority for making option grants.
However, only the Board of Directors may amend, modify or terminate the Plan.
Shares Available. A total of 400,000 shares of Common Stock initially
were reserved for issuance under the Plan. At the 1997 annual meeting of
shareholders, the shareholders approved a proposal to increase to 600,000 the
number of shares available under the Plan. As of March 31, 2000, options to
purchase a total of 579,000 shares had been granted to officers and employees of
the Company, directors, and one independent consultant pursuant to the Plan,
leaving 21,000 shares available for future grants. If an option, stock
appreciation right or performance unit granted under the Plan expires,
terminates or is canceled, or if shares sold or awarded as a bonus are forfeited
to or repurchased by the Company, the shares again become available for issuance
under the Plan.
Term of the Plan. The Plan will continue until all shares available for
issuance under the Plan have been issued and all restrictions on such shares
have lapsed. The Board of Directors may suspend or terminate the Plan at any
time except with respect to options, performance units and shares subject to
restrictions then outstanding under the Plan.
Stock Options. The Board determines the persons to whom options are
granted, the option price, the number of shares subject to each option, the
period of each option, the times at which options may be exercised and whether
the option is an Incentive Stock Option ("ISO"), as defined in Section 422 of
the Internal Revenue Code of 1986, as amended (the "Code"), or an option other
than an ISO (a "Non-Statutory Stock Option" or "NSO"). If the option is an ISO,
the option price may not be less than the fair market value of the Common Stock
subject to the ISO on the date of grant. If an optionee of an ISO at the time of
grant owns more than 10 percent of the outstanding Common Stock of the Company,
the option price may not be less than 110 percent of the fair market value of
the Common Stock subject to the ISO on the date of grant. If the option is an
NSO, the option price may be any price determined by the Board. No ISO may be
granted on or after the tenth anniversary of the date the Plan was adopted by
the Board of Directors. The aggregate fair market value, on the date of the
grant, of the stock for which ISO's are exercisable for the first time by an
employee during any calendar year may not exceed $100,000. No monetary
consideration is paid to the
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Company upon the granting of options. On March 27, 2000, the last sale price of
the Common Stock on the Nasdaq Over-the-Counter Bulletin Board System was $1 per
share.
Options granted under the Plan generally continue in effect for the
period fixed by the Board, except that ISO's are not exercisable after the
expiration of 10 years from the date of grant or five years in the case of
shareholders owning more than 10 percent of the Common Stock. Options are
exercisable in accordance with the terms of an option agreement entered into at
the time of grant and, except as otherwise determined by the Board with respect
to an NSO granted to a person who is neither an officer nor a director of the
Company, are nontransferable except on the death of a holder. Options may be
exercised only while an optionee is employed by or in the service of the Company
or within 12 months following termination of employment by reason of death or
disability or 30 days following termination for any other reason. The Plan
provides that the Board may extend the exercise period for any period up to the
expiration date of the option and may increase the number of shares for which
the option may be exercised up to the total number underlying the option. The
purchase price for each share purchased pursuant to exercise of options must be
paid in cash, including, with the consent of the Board, cash which may be the
proceeds of a loan from the Company or, with the consent of the Board, in whole
or in part, in shares of Common Stock valued at fair market value, in restricted
stock, in performance units or other contingent awards denominated in either
stock or cash, in promissory notes or in other forms of consideration. Upon the
exercise of an option, the number of shares subject to the option and the number
of shares available under the Plan for future option grants are reduced by the
number of shares with respect to which the option is exercised.
Stock Appreciation Rights. Stock appreciation rights ("SAR's") may be
granted under the Plan. SAR's may, but need not, be granted in connection with
an option grant or an outstanding option previously granted under the Plan. An
SAR gives the holder the right to payment from the Company of an amount equal in
value to the excess of the fair market value on the date of exercise of a share
of Common Stock of the Company over its fair market value on the date of grant,
or if granted in connection with an option, the option price per share under the
option to which the SAR relates.
A SAR is exercisable only at the time or times established by the
Board. If a SAR is granted in connection with an option, it is exercisable only
to the extent and on the same conditions that the related option is exercisable.
Unless otherwise determined by the Board, no SAR granted to an officer or
director can be exercised during the first six months after the date of grant.
Payment by the Company upon exercise of an SAR may be made in Common Stock of
the Company valued at its fair market value, in cash, or partly in stock and
partly in cash, as determined by the Board. The Board may withdraw any SAR
granted under the Plan at any time and may impose any condition upon the
exercise of an SAR or adopt rules and regulations from time to time affecting
the rights of holders of SAR's. No SAR's have been granted under the Plan.
The existence of SAR's, as well as certain bonus rights described
below, would require charges to income over the life of the right based upon the
amount of appreciation, if any, in the market value of the Common Stock of the
Company over the exercise price of shares subject to exercisable SAR's or bonus
rights.
Stock Bonus Awards. The Board may award Common Stock of the Company as
a stock bonus under the Plan. The Board may determine the recipients of the
awards, the number of shares to be awarded and the time of the award. Stock
received as a stock bonus is subject to the terms, conditions and restrictions
determined by the Board at the time the stock is awarded.
Restricted Stock. The Plan provides that the Company may issue
restricted stock in amounts, for consideration, subject to restrictions and on
terms that the Board determines.
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Cash Bonus Rights. The Board may grant cash bonus rights under the Plan
in connection with (i) options granted or previously granted, (ii) SAR's granted
or previously granted, (iii) stock bonuses awarded or previously awarded and
(iv) shares sold or previously sold under the Plan. Bonus rights granted in
connection with options entitle the optionee to a cash bonus if and when the
related option is exercised. The amount of the bonus is determined by
multiplying the excess of the total fair market value of the shares acquired
upon the exercise over the total option price for the shares by the applicable
bonus percentage. The bonus percentage applicable to any bonus right is
determined by the Board but may in no event exceed 75 percent. Bonus rights
granted in connection with stock bonuses or restricted stock purchases entitle
the recipient to a cash bonus, in an amount determined by the Board, when the
stock is awarded or purchased or any restrictions to which the stock is subject
lapse. No bonus rights have been granted under the Plan.
Performance Units. The Board may grant performance units consisting of
monetary units which may be earned in whole or in part if the Company achieves
goals established by the Board of Directors over a designated period of time,
but in any event not more than 10 years. Payment of an award earned may be in
cash or Common Stock or both, and may be made when earned, or vested and
deferred, as the Board of Directors determines. No performance units have been
granted under the Plan.
Changes in Capital Structure. The Plan provides that if the outstanding
Common Stock of the Company is increased or decreased or changed into or
exchanged for a different number or kind of shares or other securities of the
Company by reason of any recapitalization, stock split or certain other
transactions, appropriate adjustment will be made by the Board of Directors in
the number and kind of shares available for awards under the Plan. In addition,
the Board of Directors will make appropriate adjustments in outstanding options
and SAR's. In the event of dissolution of the Company or a merger, consolidation
or plan of exchange affecting the Company, in lieu of the foregoing treatment
for options and SAR's, the Board may, in its sole discretion, provide a 30-day
period prior to such event during which optionees shall have the right to
exercise options and SAR's in whole or in part without any limitation on
exercisability and upon the expiration of which 30-day period all unexercised
options and SAR's shall immediately terminate.
Material Federal Income Tax Consequences. Certain options authorized to
be granted under the Plan are intended to qualify as ISO's for federal income
tax purposes. Under federal income tax law currently in effect, the optionee
will recognize no income upon grant or exercise of the ISO. However, the amount
by which the market value exceeds the exercise price generally is included in
the optionee's alternative minimum taxable income and may, under certain
conditions, be taxed under the alternative minimum tax. If an optionee holds
shares acquired upon exercise of an ISO until the later of two years following
the date of grant or one year following the date of exercise (the "holding
period"), and if the optionee has been employed by the Company (or any parent or
subsidiary of the Company) at all times from the date of grant to the date three
months before exercise, then any gain realized upon subsequent disposition of
the shares generally will be long-term capital gain and any loss generally will
be long-term capital loss. If an optionee disposes of shares acquired upon
exercise of an ISO before the expiration of the holding period (an "early
disposition"), any amount realized will be taxable as ordinary compensation
income in the year of such disqualifying disposition to the extent of the lesser
of (1) the excess of the fair market value of the shares on the date of exercise
over the exercise price, or (2) the excess of the amount realized on the
disposition over the optionee's adjusted basis in the shares on the date of
disposition. The Company will not be allowed any deduction for federal income
tax purposes at either the time of the grant or the time of exercise of an ISO.
Upon any disqualifying disposition by an optionee, the Company generally will be
entitled to a deduction to the extent the optionee recognizes ordinary income,
provided the Company reports the disposition as required by the Internal Revenue
Service.
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Certain options authorized to be granted under the Plan will be treated
as NSO's for federal income tax purposes. Under federal income tax law presently
in effect, no income is realized by the optionee of an NSO until the option is
exercised. When the NSO is exercised, the optionee will recognize ordinary
compensation income, and the Company generally will be entitled to a deduction,
in the amount by which the fair market value of the shares subject to the option
at the time of exercise exceeds the exercise price, and for employee grantees,
such income is subject to employment tax and income tax withholding. Upon the
sale of shares acquired upon exercise of an NSO, the excess of the amount
realized from the sale over the adjusted basis of the shares, which generally is
equal to the fair market value of the shares on the date of exercise generally
will be taxable to the optionee as capital gain.
A participant who receives stock (either as a stock bonus or restricted
stock) in connection with the performance of services generally will recognize
ordinary compensation income at the time of receipt, in an amount equal to the
excess of the fair market value of the shares at the time of receipt over the
amount, if any, paid for the shares, if either the shares are substantially
vested for purposes of Section 83 of the Code or a Section 83(b) election is
made. If the shares are not vested at the time of receipt, the participant will
recognize ordinary compensation income in each year in which a portion of the
shares substantially vest, unless the employee elects under Section 83(b) of the
Code within 30 days after the original transfer to include in gross income the
excess of the fair market value of the shares at transfer over the amount, if
any, paid for the shares. The Company generally will be entitled to a tax
deduction in the amount includable as compensation income by the participant at
the same time or times as the participant recognizes income with respect to the
shares. A participant who receives a cash bonus right under the Plan generally
will recognize ordinary compensation income equal to the amount of any cash
bonus at the time of receipt of the bonus, and the Company generally will be
entitled to a deduction equal to the income recognized by the participant. For
employee participants, amounts recognized as compensation income are subject to
employment tax and income tax withholding.
Under federal income tax law currently in effect, no income is realized
by the grantee of a SAR until the SAR is exercised. At the time the SAR is
exercised, the grantee will recognize ordinary compensation income, and the
Company generally will be entitled to a deduction, in the amount equal to the
fair market value of the shares or cash received. For employee grantees, the
amount of compensation income is subject to employment tax and income tax
withholding.
In certain situations stock received by persons who are "insiders"
under Section 16(b) of the Securities Exchange Act of 1934 may not be
"substantially vested" when received. Therefore, the above discussion under
"Material Federal Income Tax Consequences" may not be fully applicable to stock
acquired under the Plan by insiders.
Section 162(m) of the Code limits to $1 million per person the amount
the Company may deduct for compensation paid to the Company's chief executive
officer or the four most highly compensated officers in any year beginning after
1993. Under IRS regulations, compensation received through the exercise of an
option or SAR will not be subject to the $1 million limit if the option or SAR
meet certain requirements. One such requirement is shareholder approval of
per-employee limits on the number of shares as to which options or SARs may be
granted. Approval of this Proposal 2 will constitute reapproval of the
per-employee limits under the Plan previously approved by the shareholders.
Other requirements are that the option or SAR be granted by a committee composed
solely of two or more outside directors and that the exercise price of the
option or the SAR be not less than the fair market value of the Common Stock
subject to the option or SAR on the date of grant. Accordingly, the Company
believes that if this Proposal 2 is approved by shareholders, compensation
received on exercise of options or SARs granted under the Plan in compliance
with the above requirements will continue to be exempt from the $1,000,000
deduction limit.
9
<PAGE>
EXECUTIVE COMPENSATION
Summary Compensation Table. The following table sets forth, for the
fiscal years ended December 31, 1999, 1998, and 1997 compensation information
with respect to the Company's chief executive officer and each of its executive
officers whose compensation from the Company exceeded $100,000 during the
relevant fiscal year.
Summary Compensation Table
Annual Compensation
Other Annual
Name and Principal Position Year Salary Bonus Compensation(1)
- --------------------------- ---- -------- ------- ---------------
Walter C. Bowen 1999 $250,000 $ -0- $1,750
Chairman of the Board 1998(2) $250,000 $ -0- $2,384
Chief Executive Officer 1997(3) $200,000 $25,000 $3,000
Louis Swart 1999(4) $132,901 $ -0- $8,830(5)
President
James W. Ekberg 1999 $150,000 $ -0- $1,750
Senior Vice President 1998 $150,000 $ -0- $2,384
of Finance and 1997(3) $130,000 $ -0- $3,300
Development(6)
Eric W. Jacobsen(7) 1999 $101,250 $ -0- $1,750
Chief Operating Officer 1998 $135,000 $ -0- $2,384
1997 $115,000 $ -0- $3,750
Steven L. Gish 1999 $120,000 $ -0- $1,750
Chief Financial Officer 1998(3) $ 95,000 $ -0- $2,384
1997(3) $ 85,000 $ -0- $3,135
(1) Represents the amount of a contribution by the Company to the officer's
401(k) plan account.
(2) Mr. Bowen also served as President of the Company from its inception
through October 31, 1999.
(3) Certain executive officers of the Company fulfill similar executive
functions for certain of the Bowen Companies. A portion of the salary
expense for these officers is reimbursed to the Company through a
general allocation made pursuant to the Administrative Services
Agreement. The disclosed salary amount represents the net compensation
paid by the Company to the officer for the indicated period after
reimbursement by the Bowen Companies for time spent by the officer on
Bowen Companies business.
(4) Mr. Swart served as Chief Operating Officer of the Company from April
12, 1999, through October 31, 1999, at an annual salary of $175,000 and
became President November 1, 1999, at an annual salary of $225,000. Mr.
Swart's compensation includes $8,000 paid in connection with his
relocation to Portland, Oregon.
10
<PAGE>
(5) Mr. Swart received $16,830 in relocation expenses during 1999.
(6) In 1998 Mr. Ekberg served as Executive Vice President of the Company
and in 1997 served as Executive Vice President of Acquisitions and
Development.
(7) Mr. Jacobsen resigned as an officer of the Company effective April 12,
1999, but remained an employee through June 30, 1999, and served as an
independent contractor to the Company through September 30, 1999. The
salary disclosed includes $67,500 paid to Mr. Jacobsen as an employee
and $33,750 paid to him as an independent contractor.
Employment Agreements. Each officer of the Company has entered into an
employment agreement with the Company. The employment agreements for Messrs.
Bowen, Ekberg and Gish expire in December 2000. Mr. Swart's employment agreement
expires in March 2004. The agreements generally entitle the officer to benefits
customarily provided by the Company and provide for a base salary and
eligibility for a bonus. The Company may terminate any officer without cause by
making to such officer a cash payment equal to one year's base salary at the
rate in effect at the time of termination. Any officer may terminate his
employment upon 60 days' prior written notice. In addition, each officer has
entered into a restrictive covenant agreement containing noncompetition and
nondisclosure provisions.
Stock Option Grants in Fiscal 1999. There were two grants of stock
options made by the Company during fiscal 1999 to the officers of the Company
named in the Summary Compensation Table.
<TABLE>
<CAPTION>
Option Grants in Last Fiscal Year
- ------------------------------------------------------------------------------------------------------------------------------
Potential realizable value at
Individual Grants assumed annual rates of stock
price appreciation for option
term(2)
- ------------------------------------------------------------------------------------------------------------------------------
Name Number of Percent of Exercise Market Expir- 0% 5% 10%
securities total price price on ation ($) ($) ($)
underlying options $/share date of date
options granted to grant
granted employees
in fiscal
year(1)
- ----------------------- --------------- ------------- ----------- ----------- ----------- ----------- ----------- ------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Louis Swart 50,000(3) 18.5% $4.625 $4.625 04/12/09 -0- 145,431 368,543
- ----------------------- --------------- ------------- ----------- ----------- ----------- ----------- ----------- ------------
Eric W. Jacobsen 75,000(4)(5) 27.8% $3.00 $4.25 01/01/04 93,750 181,821 288,347
- ----------------------- --------------- ------------- ----------- ----------- ----------- ----------- ----------- ------------
Eric W. Jacobsen 25,000(4)(6) 9.3% $4.00 $4.25 01/01/04 6,250 33,607 71,116
- ----------------------- --------------- ------------- ----------- ----------- ----------- ----------- ----------- ------------
</TABLE>
- ----------
(1) The Company granted a total of 270,000 options to employees in 1999,
including 100,000 options granted in connection with an exchange
discussed in the table below.
(2) Future value of current year grants assuming appreciation of 0 percent,
5 percent and 10 percent per year over the life of the option. The
actual value realized may be greater or less than the potential
realizable values set forth in the table. The assumed rates of growth
are prescribed by the Securities and Exchange Commission (the
"Commission") for illustrative purposes only and are not intended to
predict or forecast future stock prices.
11
<PAGE>
(3) The options have a term of ten years and vest 20 percent on each
anniversary of the grant. Upon the occurrence of certain corporate
transactions, the exercisability of the options may be accelerated.
(4) These shares were granted on February 16, 1999, in an exchange pursuant
to which the previously issued shares were cancelled. See "Option
Exchanges."
(5) Sixty percent of these options were vested upon issuance, 20 percent
vested on December 12, 1999, and the remaining 20 percent will vest
December 12, 2000.
(6) Forty percent of these options were vested upon issuance, 20 percent
vested on November 18, 1999, and 20 percent will vest on November 18,
2000, and 2001, respectively.
Option Exercises in 1999 and Fiscal Year-End Option Values. The
following table sets forth information (on an aggregated basis) concerning the
fiscal year-end value of unexercised options held by each of the officers of the
Company named in the Summary Compensation Table. None of the officers named
below exercised any stock options during fiscal 1999.
<TABLE>
<CAPTION>
Fiscal Year-End Option Values
Value of Unexercised
Acquired Number of Unexercised In-the-Money
on Value Options at Year-End Options at Year-End(1)
------------------------- -----------------------
Name Exercise Realized Exercisable Unexercisable Exercisable Unexercisable
- ---- -------- -------- ----------- ------------- ----------- -------------
<S> <C> <C> <C> <C> <C> <C>
Walter C. Bowen -- -- -- -- -- --
Louis Swart -- -- -0- 50,000 $ -0- $ -0-
James W. Ekberg -- -- 85,000(2) 40,000 $ -0- $ -0-
Eric W. Jacobsen -- -- 75,000(3) 25,000 $ -0- $ -0-
Steven L. Gish -- -- 43,000(3) 17,000 $ -0- $ -0-
</TABLE>
- --------------------------
(1) Options are "in-the money" if the fair market value of the underlying
securities on that date exceeds the exercise price of the option. The
amount set forth represents the difference between the fair market
value of the securities underlying the options on December 31, 1999,
based on the last sale price of $2.00 per share of Common Stock on the
date (as reported on the Over-the-Counter Market) and the exercise
price of the options, multiplied by the applicable number of options.
(2) Does not include an option to purchase 50,000 shares of Common Stock,
which is immediately exercisable at an exercise price of $6.00 a share,
granted to Mr. Ekberg by Mr. Bowen in 1995.
(3) Does not include an option to purchase 25,000 shares of Common Stock,
which is immediately exercisable at an exercise price of $6.00 a share,
granted to Mr. Gish by Mr. Bowen in 1995.
12
<PAGE>
<TABLE>
<CAPTION>
Ten-Year Option / Repricings
- ----------------- ----------- ----------- ------------ ----------- ---------- --------------
Name Date Securities Market price Exercise New Length of
underlying of stock at price at exercise Original
number of time of time of price option term
Options repricing or repricing ($) remaining at
repriced or amendment or date of
amended ($) amendment repricing or
(no.) ($) amendment
- ----------------- ----------- ----------- ------------ ----------- ---------- --------------
<S> <C> <C> <C> <C> <C> <C>
James W. Ekberg 12/12/97 75,000(1) $4.875 $7.50 $3.00 8 years
Senior Vice
President of
Finance and
Development
- ----------------- ----------- ----------- ------------ ----------- ---------- --------------
Eric W. Jacobsen 12/12/97 75,000(1) $4.875 $7.50 $3.00 8 years
Chief Operating
Officer
- ----------------- ----------- ----------- ------------ ----------- ---------- --------------
Eric W. Jacobsen 02/16/99 75,000(2) $4.25 $3.00 $3.00 7 years
Chief Operating
Officer 02/16/99 25,000(2) $4.25 $4.00 $4.00 8 years
- ----------------- ----------- ----------- ------------ ----------- ---------- --------------
Steven L. Gish 12/12/97 25,000(1) $4.875 $7.50 $3.00 8 years
Chief Financial
Officer
- ----------------- ----------- ----------- ------------ ----------- ---------- --------------
</TABLE>
(1) On December 12, 1997, the Board of Directors approved the reissuance of
certain options issued in connection with the Company's initial public
offering on December 26, 1995. The same general vesting and exercise
periods were maintained in the exchange.
(2) The terms of this grant are more particularly described in footnotes 5
and 6 to the above table identified as "Options Grants in Last Fiscal
Year."
Compensation Committee Report on Option Exchange
In February 1999 the Compensation Committee of the Board of Directors
approved a plan to restructure the employment arrangement with Eric Jacobsen,
the Company's then Chief Operating Officer. A portion of this plan included
exchanging the options previously granted by the Company to Mr. Jacobsen for new
options with the same exercise price and vesting schedule. The principal
differences between the new and old options is that the new options expire
January 1, 2004, instead of December 26, 2005 (75,000 options) and November 18,
2006 (25,000 options) and the new options will continue to vest after Mr.
Jacobsen leaves the employ of the Company and will not expire within 30 days of
that date. In consideration for this exchange, Mr. Jacobsen restructured his
employment agreement with the Company which the Committee deemed to be
sufficient consideration for the exchange described above.
Compensation Committee
Walter C. Bowen, Chair
Dana J. O'Brien
Gary Maffei
13
<PAGE>
Compensation Committee Report on executive compensation
The Compensation Committee of the Board (the "Committee") consists of
Mr. Bowen and two independent directors, Messrs. O'Brien and Maffei. The
Committee is responsible for establishing and administering the Company's
executive compensation programs. The objectives of these programs are to pay
competitively in order to attract qualified executive personnel who best meet
the Company's needs; retain and motivate these executives to achieve
performance; link individual compensation to individual and Company performance;
and align executives' financial interest with those of the Company's
shareholders.
Executive compensation generally consists of two components: base
salary and long-term incentive awards. The Committee has established each
executive's compensation package by considering (a) the salaries of executive
officers in similar positions in companies in the same industry as the Company
and in related industries, (b) the experience and contribution levels of the
individual executive officer, and (c) the Company's financial performance.
Companies used as a reference for considering compensation levels include some
but not all of the companies constituting the peer group in the Stock
Performance Graph. The Company also relies on the recommendations of the Chief
Executive Officer in matters related to the individual performance of the other
executive officers, because the Committee believes that the Chief Executive
Officer is the most qualified to make this assessment. Due to the historic
performance of the Company's common stock price, and the low number of options
available for grant to executives relative to those available at other peer
companies, the Company intends for the base salary to be the primary form of
compensation to its executives.
Base Salaries. In 1999, base salaries were established as described
above.
Stock Options. Stock options are granted to provide a long-term
incentive opportunity that is directly linked to shareholder value. They are
granted with an exercise price equal to the market value of the common stock on
the date of the grant and generally become exercisable in 20 percent annual
increments beginning one year after the date of the grant. To encourage stock
retention, all options are granted as incentive stock options to the maximum
extent possible under the Internal Revenue Code of 1986, as amended (the
"Code"). In 1998, stock options were granted to a total of 18 employees of the
Company in recognition of their position with the Company, dedication, and hard
work. Only two of the named executive officers received options in 1999, one
related to being newly hired and the other pursuant to an exchange program
discussed above.
Annual Incentives. To date, the Committee has not established a regular
annual incentive or bonus plan for the Company's executive officers. None of the
Company's named Executive Officers received a bonus in 1999.
Other. The Company has adopted a 401(k) Plan for all of its employees,
including Executive Officers, age 21 and over with at least one year of service.
The 401(k) Plan provides that each participant may contribute up to 20 percent
of his or her wages not to exceed the annual statutory limit. In general, the
Company makes matching contributions to each participant's account equal to 50
percent of the participant's contribution up to three percent of the
participant's annual compensation.
14
<PAGE>
Chief Executive Officer's Compensation. Mr. Bowen received a salary of
$250,000 in 1999 and 1998 and $200,000 in 1997 and participated in the Company's
401(k) Plan. Mr. Bowen currently beneficially owns 3,403,200 shares of the
Company's common stock, or 75.5 percent of the outstanding total. In view of his
stock ownership, Mr. Bowen has not received grants of stock options. The Company
reserves the right to make future grants of options to Mr. Bowen.
Compensation Deductibility Policy. Under Section 162(m) of the Code,
and applicable Treasury regulations, no deduction is allowed for annual
compensation in excess of $1.0 million paid by a publicly traded corporation to
its chief executive officer and the four other most highly compensated officers.
Under those provisions, however, there is no limitation on the deductibility of
"qualified performance-based compensation." In general, the Company's policy is
to maximize the extent of tax deductibility of executive compensation under the
provisions of Section 162(m) so long as doing so is compatible with its
determinations as to the most appropriate methods and approaches for the design
and delivery of compensation to the Company's executive officers.
Compensation Committee
Walter C. Bowen, Chair
Dana J. O'Brien
Gary Maffei
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
The Compensation Committee is comprised of two non-employee directors,
Messrs. Maffei and O'Brien, and Mr. Bowen, who is the Chief Executive Officer.
Mr. Bowen holds a 99 percent general partnership interest in the
Regency Park Apartments Limited Partnership ("Regency Partnership"), an Oregon
limited partnership from which the Company leases its Regency Park community
located in Portland, Oregon. Mr. Bowen also holds a 99 percent ownership
interest in Sterling Park, L.L.C., a Washington limited liability company from
which the Company leases its Sterling Park community located in Redmond,
Washington. Mr. Bowen's minor children hold the remaining one percent interest
in the Regency Partnership and Sterling Park, L.L.C. As a result, Mr. Bowen may
be deemed to receive the portion of the lease payments remaining after service
of the debt to which the properties are subject. For 1999, these lease payments
were $1,320,536 for Regency Park and $1,486,248 for Sterling Park. For 1998,
these lease payments were $1,312,400 for Regency Park and $1,486,250 for
Sterling Park.
Mr. Bowen holds a 90 percent interest in Desert Flower, LLC, an Oregon
limited liability company that owns the Desert Flower Assisted Living community
in Scottsdale, Arizona. Mr. Bowen's minor children hold the remaining ten
percent interest in Desert Flower, LLC. The Company developed the community and
sold it to Desert Flower, LLC in a transaction through which the Company
received proceeds of $1.2 million and Desert Flower, LLC assumed $8.8 million in
debt. The Company manages the community for Desert Flower, LLC, subject to a net
operating income guaranty provided by the Company. The Company operated the
community for two months during 1999 as an owned property and managed the
community for four months. The Company received $18,300 in management fees
during this four month period.
15
<PAGE>
Bowen Development Company, which is wholly owned by Mr. Bowen,
completed construction of one of the Company's new communities in 1999.
Additionally, Bowen Development Company has contracts to complete two more
communities during 2000. Each of these projects is contracted for a fixed price
that includes "contractor's overhead and profit" which is paid on a percentage
of completion basis. Bowen Development Company earned approximately $526,000 for
contractor's profit and overhead in 1999 on the three projects. The Company's
Conflicts Committee or independent directors approved these three contracts
after solicitation and review of competitive bids from unaffiliated general
contractors.
The Company believes that each of the foregoing transactions was on
terms no less favorable to the Company than could have been obtained from
unaffiliated parties in arm's-length transactions; however, there can be no
assurance that such is the case.
The Company and the Bowen Companies are all controlled by Mr. Bowen.
Certain executive officers of the Company, including Messrs. Bowen and Gish, and
David R. Gibson, the Company's Vice President for Corporate Affairs, General
Counsel and Secretary, fulfill similar executive functions for other Bowen
Companies and spend significant amounts of time on the business of other Bowen
Companies. The Company provides management and administrative services to, and
from time to time may obtain services or the use of certain equipment from,
certain of the Bowen Companies pursuant to an Administrative Services Agreement.
Under that agreement, the Bowen Companies and the Company reimburse each other
for the actual cost of services received under the Administrative Services
Agreement. The Company believes that the sharing of executive management and
other resources (such as data processing, accounting, legal, financial, tax,
treasury, risk management and human resources) provides benefits to the Company
by giving it access to a level of experience and expertise that can only be
supported by a larger organization. The Administrative Services Agreement is
cancelable by any party, including the Company, on 60 days' notice. Pursuant to
the terms of the Administrative Services Agreement, reimbursement of costs will
be reviewed at least annually by the Audit Committee of the Board of Directors.
The Administrative Services Agreement requires the Bowen Companies to
offer first to the Company any opportunities received by or originated with the
Bowen Companies relating to the assisted living business. The Administrative
Services Agreement also requires all transactions between the Company and the
Bowen Companies to be on an arm's length basis containing terms no less
favorable to the Company than could have been obtained from an unrelated third
party and requires any such transaction to be approved by a majority of the
Company's directors unaffiliated with the Bowen Companies. In 1999, Regent
charged the Bowen Companies $78,000 under the Administrative Services Agreement.
In 1998, Regent charged the Bowen Companies $145,000 under the Administrative
Services Agreement.
As of March 31, 2000, the Company has entered into construction loan
agreements in an aggregate amount of $37,746,500 for the construction of its
Kenmore, Vacaville, Kent, Corvallis, South Ogden, Merced and Modesto
communities. Repayment of each of these loans and performance of the covenants
set forth in each loan is personally guaranteed by Mr. Bowen. The Conflicts
Committee or the independent directors of the Company has approved the payment
of fees to Mr. Bowen in the aggregate amount of $140,000 in exchange for his
personal guaranty of the payment and performance relative to these loans.
16
<PAGE>
STOCK PERFORMANCE GRAPH
The following graph compares the cumulative total return on shares of
the Company's Common Stock with the cumulative total return of the Standard and
Poor's Index 500 Stock, and a peer group index as defined below, from the period
beginning on December 26, 1995, the first day of trading for the Company's
Common Stock, and ending on December 31, 1999, the end of the Company's last
fiscal year. The Company's stock began trading on December 26, 1995, at the
price of $7.50 per share. The graph assumes the investment of $100 in the
Company's Common Stock, the S&P500 Index, and the Peer Group on December 26,
1995, and the reinvestment of dividends. The Company has not paid any dividends
on its Common Stock during this period.
COMPARISON OF CUMULATIVE TOTAL RETURN AMONG REGENT ASSISTED LIVING,
INC., THE S&P 500 INDEX, AND A PEER GROUP
[Graph Omitted}
<TABLE>
<CAPTION>
- ---------------------------- --------- --------- --------- --------- --------- ---------
12/26/95 12/31/95 12/31/96 12/31/97 12/31/98 12/31/99
- ---------------------------- --------- --------- --------- --------- --------- ---------
<S> <C> <C> <C> <C> <C> <C>
Regent Assisted Living, Inc. $100.00 $106.67 $ 63.33 $ 76.67 $ 66.67 $ 26.67
- ---------------------------- --------- --------- --------- --------- --------- ---------
S&P 500 100.00 101.93 125.33 167.14 214.91 260.13
- ---------------------------- --------- --------- --------- --------- --------- ---------
Peer Group 100.00 93.64 100.39 142.53 143.72 39.42
- ---------------------------- --------- --------- --------- --------- --------- ---------
</TABLE>
Peer Group. The peer group index is composed of selected assisted
living companies whose core business and size are comparable to the Company's.
As the assisted living industry matures, certain companies included in the peer
group may be removed as they become acquired or as their focus of services shift
away from the Company's core assisted living business.
The peer group consists of the following ten companies: Alterra
Healthcare Corporation; American Retirement; ARV Assisted Living, Inc.; Assisted
Living Concepts; Balanced Care Company; Capital Senior Living; CareMatrix
Corporation; Emeritus Corporation; Greenbriar Corporation; and Sunrise Assisted
Living, Inc.
17
<PAGE>
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The following table sets forth information, as of March 31, 2000, with
respect to the beneficial ownership of the Company's Common Stock by each
director or nominee for director, by each executive officer of the Company named
in the Summary Compensation Table, by all directors and executive officers as a
group, and by each person who is known to the Company to be the beneficial owner
of more than five percent of the Company's outstanding Common Stock. Unless
otherwise indicated in the Table, each person has sole voting power and sole
investment power with respect to all outstanding shares of Common Stock shown as
beneficially owned by them.
Amount and Nature
Name and Address of of Beneficial Percent of
Beneficial Owner(1) Ownership Class(2)
- --------------------- ----------------- ----------
Walter C. Bowen 3,403,200(3) 75.5%
Louis Swart -0- *
James W. Ekberg 136,000(4) 2.9%
Eric W. Jacobsen 75,000 1.6%
Steven L. Gish 68,000(4) 1.5%
Stephen A. Gregg 64,500(5) 1.4%
Marvin S. Hausman, MD 36,000(5)(6) *
Gary R. Maffei 26,000(7) *
Dana J. O'Brien 8,000(5)(8) *
Wayne C. Rembold 2,000(9) *
Prudential Private Equity
Investors III, L.P.
717 Fifth Avenue, Suite 1100
New York, NY 10022 1,400,493(10) 23.7%
LTC Healthcare, Inc.
300 Esplanade Drive, Suite 1860
Oxnard, CA 93030 1,133,333(11) 20.1%
All directors and executive officers
as a group (11 persons) 3,818,700 77.2%
* Less than one percent.
(1) Unless otherwise indicated, the address of each person named is c/o
Regent Assisted Living, Inc., 121 S. W. Morrison Street, Suite 1000,
Portland, Oregon 97204.
(2) Assumes the exercise of solely that individual's options, or conversion
of solely that party's underlying instruments, and issuance by the
Company of the related number of shares of Common Stock.
(3) Includes 80,000 shares held of record by Mr. Bowen that may be
purchased within 60 days by certain officers and one other individual
pursuant to options granted by Mr. Bowen. Mr. Bowen has granted options
to purchase a portion of his shares to Messrs. Ekberg (50,000 shares)
and Gish (25,000 shares).
18
<PAGE>
(4) Includes shares that may be acquired within 60 days pursuant to options
granted by Mr. Bowen to purchase a portion of his shares and those
shares that may be purchased pursuant to options granted under the
Company's 1995 Stock Incentive Plan.
(5) Includes 8,000 shares that may be acquired within 60 days pursuant to
options granted under the Company's 1995 Stock Incentive Plan.
(6) Includes 25,000 shares that may be acquired within 60 days pursuant to
options granted under the Company's 1995 Stock Incentive Plan.
(7) Includes 10,000 shares that may be acquired within 60 days pursuant to
options granted under the Company's 1995 Stock Incentive Plan.
(8) Does not include shares of Series A or Series B Preferred Stock owned
by Prudential Private Equity Investors III, L.P. ("PPEI"), an
investment fund managed by Cornerstone Equity Investors, L.L.C., the
employer of Mr. O'Brien.
(9) Includes 2,000 shares that may be acquired within 60 days pursuant to
options granted under the Company's 1995 Stock Incentive Plan.
(10) Represents the number of shares that may be acquired within 60 days
pursuant to the holder's right to convert its Series A Preferred Stock
into shares of Common Stock. PPEI also owns 382,882 shares of Series B
Preferred stock, each share of which can be converted into one share of
Series A Preferred Stock or into a total of 417,690 shares of Common
Stock upon the occurrence of specified conversion events.
(11) This number comprises the 1,133,333 shares that may be acquired by LTC
Healthcare, Inc. within 60 days pursuant to its right to convert its
currently outstanding subordinated convertible notes into shares of the
Company's Common Stock at a rate of $7.50 per share.
SECTION 16(a) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Section 16(a) of the Securities Exchange Act of 1934 requires the
Company's executive officers, directors, and persons who own more than ten
percent of the outstanding Common Stock of the Company to file reports of
ownership and changes in ownership of the Common Stock with the Commission.
Executive officers, directors and greater than ten percent shareholders are also
required by Commission regulations to furnish the Company with copies of all
forms they file pursuant to Section 16(a). Based solely on review of the copies
of such reports furnished to the Company and written representations from
reporting persons, to the Company's knowledge all of the Section 16(a) filing
requirements applicable to such persons during fiscal year 1999 were complied
with on a timely basis.
DISCRETIONARY AUTHORITY
Although the Notice of Annual Meeting of Shareholders provides for
transaction of any other business that properly comes before the meeting, the
Board of Directors has no knowledge of any matters to be presented at the
meeting other than the matters described in this proxy statement. The enclosed
proxy, however, gives discretionary authority to the proxy holders to vote in
accordance with their judgment if any other matters are presented.
19
<PAGE>
According to the rules of the Commission, for the 2000 Annual Meeting,
if notice of a shareholder proposal to be raised at the Annual Meeting is
received at the principal executive offices of the Company after March 13, 2000,
proxy voting on that proposal when and if raised at the Annual Meeting will be
subject to the discretionary voting authority of the designated proxy holders.
For the 2001 Annual Meeting of Shareholders, if notice of a shareholder proposal
to be raised at the meeting is received at the principal executive offices of
the Company after March 13, 2001, proxy voting on that proposal when and if
raised at that Annual Meeting will be subject to the discretionary voting
authority of the designated proxy holders.
INDEPENDENT ACCOUNTANTS
PricewaterhouseCoopers LLP audited the Company's financial statements
for the year ended December 31, 1999. Representatives of PricewaterhouseCoopers
LLP will be present at the Annual Meeting of Shareholders and will be available
to respond to appropriate questions. They do not expect to make any statement
but will have the opportunity to make a statement if they wish.
SHAREHOLDER PROPOSALS
Any shareholder proposals to be considered for inclusion in proxy
material for the Company's next Annual Meeting in May 2001 must be received at
the principal executive office of the Company no later than December 31, 2000.
A copy of Regent's 1999 Annual Report on Form 10-K will be available to
shareholders without charge upon request to: Chief Financial Officer, Regent
Assisted Living, Inc., 121 S. W. Morrison Street, Suite 1000, Portland, Oregon
97204.
By order of the Board of Directors,
David R. Gibson
Secretary
April 28, 2000
<PAGE>
REGENT ASSISTED LIVING, INC.
Proxy Solicited on Behalf of the Board of Directors of the Company for the
Annual Meeting on May 23, 2000
The undersigned hereby names Walter C. Bowen and Steven L. Gish, or
either of them acting in the absence of the other, with full power of
substitution, my true and lawful attorneys and proxies for me in my place and
stead to attend the Annual Meeting of Shareholders of Regent Assisted Living,
Inc. to be held on May 23, 2000, at 11:00 a.m., and any adjournments thereof,
and to vote all of the shares held in the name of the undersigned on March 31,
2000, with all the powers that the undersigned would possess if personally
present.
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SEE REVERSE SIDE
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FOLD AND DETACH HERE
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[ X ] Please mark your votes
as in this example
THIS PROXY IS SOLICITED BY THE BOARD OF DIRECTORS OF THE COMPANY. THE SHARES
REPRESENTED BY THIS PROXY WILL BE VOTED AS SPECIFIED BELOW, BUT IF NO
SPECIFICATION IS MADE, WILL BE VOTED FOR EACH OF THE NOMINEES NAMED IN PROPOSAL
1.
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The Board of Directors unanimously recommends a vote FOR each
of the nominees listed below.
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FOR [ ] WITHHELD [ ]
1. Election of Directors Nominees:
(Check only one box) Class 3 - Term Expiring in 2003
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For all nominees (except as Dana J. O'Brien
Shareholder may indicate Steven L. Gish
below)
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FOR [ ] AGAINST [ ] ABSTAIN [ ]
2. To amend the Company's 1995 Stock Incentive Plan to increase the number
of shares of the Company's Common Stock that may be issued pursuant to
the plan from 600,000 to 800,000.
3. In their discretion, the Proxies are authorized to consider and act
upon any other matter which may properly come before the meeting or any
adjournment thereof.
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SIGNATURE(S) DATE
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Note: Please sign exactly as name appears above. Joint owners should each
sign. Fiduciaries should add their full title to their signature.
Corporations should sign in full corporate name by an authorized
officer. Partnerships should sign in partnership name by an authorized
person.
