UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
SCHEDULE 13D
UNDER THE SECURITIES EXCHANGE ACT OF 1934
(Amendment No. 2)
KAPSON SENIOR QUARTERS CORP.
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(Name of Issuer)
Common Stock, $.01 par value
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(Title of Class of Securities)
485624100
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(CUSIP Number)
Murry N. Gunty
Prometheus Senior Quarters LLC
Lazard Freres Real Estate Investors L.L.C.
30 Rockefeller Plaza, 63rd Floor
New York, NY 10020
(212) 632-6000
with a copy to:
Jonathan L. Mechanic, Esq.
Fried, Frank, Harris, Shriver & Jacobson
One New York Plaza
New York, NY 10004
(212) 859-8000
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(Name, Address and Telephone Number of Person
Authorized to Receive Notices and Communication)
October 29, 1997
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(Date of Event Which Requires Filing of This Statement)
If the filing person has previously filed a statement on
Schedule 13G to report the acquisition which is the subject of this
Schedule 13D, and is filing this Schedule because of Rule 13d-1(b)(3)
or (4), check the following box |_|.
Note. Six copies of this statement, including all exhibits,
should be filed with the Commission. See Rule 13d-1(a) for other parties to
whom copies are to be sent.
The information required in the remainder of this cover
page shall not be deemed to be "filed" for the purpose of Section 18
of the Securities Exchange Act of 1934 ("Act") or otherwise subject to
the liabilities of that section of the Act but shall be subject to all
other provisions of the Act (however, see the Notes).
SCHEDULE 13D
CUSIP No. 485624100 Page 2 of 8 Pages
1 NAME OF REPORTING PERSON PROMETHEUS SENIOR QUARTERS LLC
S.S. OR I.R.S. IDENTIFICATION NO. OF ABOVE PERSONS
2 CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP* (a) [ ]
(b) [X]
3 SEC USE ONLY
4 SOURCE OF FUNDS*
AF
5 CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED
PURSUANT TO ITEMS 2(d) or 2(e) [ ]
6 CITIZENSHIP OR PLACE OF ORGANIZATION
DELAWARE
NUMBER OF 7 SOLE VOTING POWER
SHARES 4,150,000
BENEFICIALLY 8 SHARED VOTING POWER
OWNED BY EACH
REPORTING 9 SOLE DISPOSITIVE POWER
PERSON WITH 4,150,000
10 SHARED DISPOSITIVE POWER
11 AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON
4,150,000
12 CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) [ ]
EXCLUDES CERTAIN SHARES*
13 PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11)
53.55%
14 TYPE OF REPORTING PERSON*
OO
*SEE INSTRUCTIONS BEFORE FILLING OUT!
INCLUDE BOTH SIDES OF THE COVER PAGE, RESPONSES TO ITEMS 1-7
(INCLUDING EXHIBITS) OF THE SCHEDULE, AND THE SIGNATURE ATTESTATION.
SCHEDULE 13D
CUSIP No. 485624100 Page 3 of 8 Pages
1 NAME OF REPORTING PERSON LAZARD FRERES REAL ESTATE INVESTORS L.L.C.
S.S. OR I.R.S. IDENTIFICATION NO. OF ABOVE PERSONS
2 CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP* (a) [ ]
(b) [X]
3 SEC USE ONLY
4 SOURCE OF FUNDS*
WC, BK
5 CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED
PURSUANT TO ITEMS 2(d) or 2(e) [ ]
6 CITIZENSHIP OR PLACE OF ORGANIZATION
NEW YORK
NUMBER OF 7 SOLE VOTING POWER
SHARES 4,150,000
BENEFICIALLY 8 SHARED VOTING POWER
OWNED BY EACH
REPORTING 9 SOLE DISPOSITIVE POWER
PERSON WITH 4,150,000
10 SHARED DISPOSITIVE POWER
11 AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON
4,150,000
12 CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) [ ]
EXCLUDES CERTAIN SHARES*
13 PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11)
53.55%
14 TYPE OF REPORTING PERSON*
OO
*SEE INSTRUCTIONS BEFORE FILLING OUT!
INCLUDE BOTH SIDES OF THE COVER PAGE, RESPONSES TO ITEMS 1-7
(INCLUDING EXHIBITS) OF THE SCHEDULE, AND THE SIGNATURE ATTESTATION.
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
SCHEDULE 13D
Under the Securities Exchange Act of 1934
ITEM 1. SECURITY AND ISSUER.
This Amendment No. 2 ("Amendment No. 2") to the statement on Schedule
13D, dated October 10, 1997 (the "Initial Statement"), as amended by
Amendment No. 1 thereto, dated October 14, 1997 ("Amendment No. 1" and
together with the Initial Statement, the "Statement"), of Prometheus Senior
Quarters LLC ("Prometheus") and Lazard Freres Real Estate Investors L.L.C.
("LFREI" and together with Prometheus, the "Reporting Parties") relates to
the common stock, $.01 par value per share (the "Common Stock"), of Kapson
Senior Quarters Corp., a Delaware corporation (the "Company"). This
Amendment No. 2 supplementally amends the Statement. Capitalized terms used
herein but not defined herein have the meanings ascribed to them in the
Statement.
This Amendment No. 2 is being filed by the Reporting Parties to report
an amendment and restatement of the Letter Agreement described in and
attached as Exhibit 2.4 to the Statement.
ITEM 2. IDENTITY AND BACKGROUND.
No change.
ITEM 3. SOURCE AND AMOUNT OF FUNDS OR OTHER CONSIDERATION.
No change.
ITEM 4. PURPOSE OF TRANSACTION.
No change.
ITEM 5. INTEREST IN SECURITIES OF THE ISSUER.
(a) No change.
(b) No change.
(c) No change.
(d) No change.
(e) No change.
ITEM 6. CONTRACTS, ARRANGEMENTS, UNDERSTANDINGS OR RELATIONSHIPS WITH
RESPECT TO SECURITIES OF THE ISSUER.
Item 6 of the Initial Statement is hereby amended to add the
following paragraph at the end thereof.
The terms of the Letter Agreement were amended and restated in a
letter agreement dated October 29, 1997 (the "Amended and Restated
Letter Agreement"), which, among other matters, amended certain
provisions relating to the termination of that agreement. A copy of
the Amended and Restated Letter Agreement is included as Exhibit 2.5
to this Amendment No. 2 and is incorporated herein by this reference.
The foregoing description of the Amended and Restated Letter Agreement
is qualified in its entirety by reference to such exhibit.
ITEM 7. MATERIAL TO BE FILED AS EXHIBITS.
The following exhibits are filed as part of the Statement and this
Amendment No. 2.
Exhibit 2.1 Stockholders Agreement, dated as of
September 30, 1997, by and among
Prometheus Senior Quarters LLC and Glenn
Kaplan, Wayne L. Kaplan and Evan A.
Kaplan (filed as Exhibit 2.1 to the
Initial Statement and incorporated
herein by reference).
Exhibit 2.2 Agreement and Plan of Merger, dated as of
September 30, 1997, by and among Prometheus
Senior Quarters LLC, Prometheus Acquisition
Corp. and Kapson Senior Quarters Corp. (filed
as Exhibit 2.2 to the Initial Statement and
incorporated herein by reference).
Exhibit 2.3 Amended and Restated Stockholders
Agreement, dated as of October 14, 1997,
by and among Prometheus Senior Quarters
LLC and Glenn Kaplan, Wayne L. Kaplan
and Evan A. Kaplan (filed as Exhibit 2.3
to Amendment No. 1 and incorporated
herein by reference).
Exhibit 2.4 Letter from Lazard Freres Real Estate
Investors, L.L.C. ("LFREI") to the Board of
Directors of ARV Assisted Living Inc., dated
September 30, 1997, relating to LFREI's
investment in Kapson Senior Quarters Corp.
(filed as Exhibit 2.4 to Amendment No. 1 and
incorporated herein by reference).
Exhibit 2.5 Letter from Lazard Freres Real
Estate Investors L.L.C. ("LFREI") to the
Board of Directors of ARV Assisted
Living Inc., dated October 29, 1997,
amending and restating the terms of the
letter agreement, dated September 30,
1997, between the same parties.
SIGNATURE
After reasonable inquiry and to the best of my knowledge and belief, I
certify that the information set forth in this statement is true, complete
and correct.
Date: November 4, 1997
PROMETHEUS SENIOR QUARTERS LLC
By: Lazard Freres Real Estate Investors
L.L.C., as sole member,
By: /s/ Robert P. Freeman
------------------------
Name: Robert P. Freeman
Title: President
After reasonable inquiry and to the best of my knowledge and belief, I
certify that the information set forth in this statement is true, complete
and correct.
Date: November 4, 1997
LAZARD FRERES REAL ESTATE INVESTORS L.L.C.
By: /s/ Robert P. Freeman
------------------------
Name: Robert P. Freeman
Title: President
Schedule I
The name, business address, and present principal occupation or
employment of each of the officers of LFREI are set forth below.
Unless otherwise indicated, (i) the business address of each officer
is 30 Rockefeller Plaza, 63rd Floor, New York, New York, 10020.; (ii)
each officer is a citizen of the United States; (iii) such person does
not have any other principal occupation; (iv) in the last five years,
none has been convicted in a criminal proceeding excluding traffic
violations or similar misdemeanor; and (v) in the last five years,
none has been party to a civil proceeding of a judicial or
administrative body of competent jurisdiction and as a result of such
proceeding was or is subject to a judgment, decree or final order
enjoining future violations of, or prohibiting or mandating activities
subject to, federal or state securities laws or finding any violation
with respect to such laws.
Name and Present and Principal Occupation:
Arthur P. Solomon
Chairman and Managing Director of LFREI; Director of
American Apartment Communities II, Inc. and Atlantic
American Properties Trust
Anthony E. Meyer
Senior Vice President and Managing Director of
LFREI; Member of partnership committee of DP
Operating Partnership LP
Robert P. Freeman
President and Managing Director of LFREI; Director of
American Apartment Communities II, Inc., Commonwealth
Atlantic Properties Inc. and Atlantic American Properties
Trust
Klaus P. Kretschmann
Senior Vice President of LFREI; Director of American
Apartment Communities II, Inc.
Murry N. Gunty
Vice President of LFREI; Director of Atlantic
American Properties Trust Communities II, Inc.
Thomas M. Mulroy
Vice President of LFREI
Lorenzo L. Lorenzotti
Secretary of LFREI
LAZARD FRERES REAL ESTATE
INVESTORS, L.L.C.
30 Rockefeller Center, 63rd Floor
New York, N.Y. 10020
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Telephone (212) 632-6017
October 29, 1997
The Board of Directors
ARV Assisted Living, Inc.
245 Fisher Avenue D-1
Costa Mesa, CA 92626
Gentlemen:
Lazard Freres Real Estate Investors, L.L.C. ("LFREI") and Prometheus
Assisted Living LLC ("Prometheus") are parties to a Stockholders
Agreement (the "Stockholders Agreement") with ARV Assisted Living,
Inc. (the "Company") dated as of July 14, 1997, pursuant to which,
among other matters, LFREI agreed not to own any equity interest in
any public or private company, the principal business of which is the
ownership, management, operation and development of assisted living
facilities (the "Non-Compete Covenant"), unless 75% of the members of
the Board of Directors of the Company (other than the Investor
Nominees (as such term is defined in the Stockholder Agreement)) have
consented to such ownership (the "Required Board Approval").
Based on a letter agreement dated September 30, 1997 (the "Original
Letter Agreement"), the Company consented (with the Required Board
Approval) to a one-time waiver to the Non-Compete Covenant to permit
an investment by an affiliate of LFREI (the "Kapson Investment") in
Kapson Senior Quarters, Corp. ("Kapson"). Subsequent to that date and
the announcement of the proposed Kapson Investment, the parties have
agreed, among other things, to amend the Original Letter Agreement as
set forth herein.
The substantive terms of the Original Letter Agreement are hereby
amended and restated as follows:
Subject to the consummation of the Kapson Investment, LFREI and
Prometheus agree to the following (each of which shall terminate at
(i) the time of a Termination Event (as defined in the Stockholders
Agreement as amended and restated on October 29, 1997 (the "Amended
Stockholders Agreement")) or (ii) the time, after the consummation of
the Kapson Investment, LFREI or its affiliates owns less than 10% of
the stock of Kapson);
1) Consent Rights. After the closing of the Kapson Investment, LFREI
will not permit Kapson to and will cause Kapson to enter into an
agreement with ARV under which Kapson will agree not to enter into any
new developments or acquisitions (other than those in its pipeline at
the closing of the Kapson Investment as disclosed in a schedule to be
delivered at that time) without the written consent of a majority of
the independent non-LFREI affiliated or appointed members of the ARV
Board of Directors, which consent may be withheld at the sole
discretion of those directors; provided that upon the funding of that
certain $60,000,000 6 3/4% Convertible Subordinated Note due 2007 by
LFREI or an affiliate this paragraph shall terminate and be of no
further effect.
2) Right of First Offer. After the closing of the Kapson Investment,
ARV will have a first right to negotiate management, lease and/or
purchase arrangements on terms commercially reasonable to both parties
on any new developments or acquisitions by Kapson, each right to be
exercised by ARV, upon commercially reasonably notice, before Kapson
enters into binding site contracts.
3) Existing Facilities and Developments. LFREI and Prometheus will
seek in good faith to negotiate with ARV for the leasing or management
agreements, on commercially reasonable and customary terms, of all
existing or planned facilities of Kapson including those in the
above-described "pipeline." LFREI and Prometheus will agree not to
enter into or permit Kapson or any of their respective affiliates to
enter into leasing or management arrangements on the existing
facilities (excluding sale leasebacks, so long as such sale leasebacks
would permit ARV to sublease or manage such facilities) other than
with ARV or controlled affiliates of Kapson.
ARV will have the option to sell development assets to Kapson at fair
market value with the right to leaseback the assets on commercially
reasonable and customary terms.
4) Option. LFREI hereby grants to ARV (or its shareholders, the
selection to be made at ARV's option provided mutual agreement of ARV
and LFREI that such purchase by ARV directly will not adversely affect
Kapson's tax and accounting status) the right to acquire from LFREI
shares representing up to 19.9% of the stock of Kapson at the pro rata
amount of LFREI's all-in cost (defined at LFREI's total equity
investment in Kapson at the close of the Kapson Investment including
reasonable capital carrying costs relating to the Kapson Investment)
for a period of 30 days after the completion of the Kapson Investment
(or, if ARV elects to have its shareholders exercise this option, 30
days after a registration statement is declared effective with respect
to the option). The term of this option will not extend beyond the
timing described in this paragraph despite LFREI's ongoing ownership
of Kapson.
5) Joint Venture. LFREI will explore a joint venture arrangement, on
commercially reasonable terms, between the Company and Kapson which
would house top corporate management of both firms to achieve
economies of scale. The management company would be jointly owned by
the Company and Kapson. Development personnel and activities would in
all likelihood remain at Kapson. Operating personnel and home health
care would in all likelihood remain at ARV. Savings resulting from
this alliance will be shared by the two companies.
6) Press Releases. The Company and LFREI will have the right to review
and comment on all press releases regarding the foregoing arrangements
for a period from the date hereof through October 29, 1998. No such
press releases regarding the foregoing arrangements shall be made
without the written consent of the Company and LFREI.
7) Public Disclosures. The Company will have the right to review and
comment on all public disclosures (e.g. proxy material, 10-K) of
Kapson regarding the foregoing arrangements for a period from the date
hereof through six months following the close of the Kapson
Investment. No such statement in the public disclosures regarding the
foregoing arrangements shall be made without the written consent of
the Company, such consent not to be unreasonably withheld or delayed.
LFREI hereby represents that, upon completion of the Kapson
Investment, it shall have the authority to cause Kapson to enter into
all of the foregoing arrangements. With respect to the foregoing
arrangements, it is agreed that all negotiations, determinations,
consents and elections by ARV shall be made by a majority of the
Non-Investor Nominee (as defined in the Amended Stockholders
Agreement) directors of ARV.
The parties hereby agree that if mutually agreeable arrangements
regarding the matters set forth in paragraph 3 above are not entered
into by the later of three months following the closing of the Kapson
Investment or May 1, 1998, then this letter agreement shall terminate
without further obligation of any party.
LFREI believes strongly that a strong alignment of interests between
LFREI, Kapson and ARV and the synergies that could be created by a
strategic alliance between these two industry players, will
significantly benefit all shareholders of ARV and Kapson, including
LFREI as their largest shareholder.
Very truly yours,
LAZARD FRERES REAL ESTATE INVESTORS L.L.C.
By: /s/ Robert P. Freeman
---------------------
Robert P. Freeman
President
PROMETHEUS ASSISTED LIVING L.L.C.
By: LAZARD FRERES REAL ESTATE INVESTORS, L.L.C.
By: /s/ Robert P. Freeman
---------------------
Robert P. Freeman
President
ACKNOWLEDGED AND AGREED:
ARV ASSISTED LIVING, INC.
By: /s/ Sheila Muldoon
---------------------
Sheila Muldoon
Authorized Signatory
