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As filed with the Securities and Exchange Commission on January 28, 1999
File No. 0-_____
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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
Form 10-SB
GENERAL FORM FOR REGISTRATION OF SECURITIES OF SMALL BUSINESS ISSUERS
Under Section 12(b) or (g) of the Securities Exchange Act of 1934
AGEMARK CORPORATION
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(Name of Small Business Issuer in Its Charter)
Nevada 94-3270169
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(State or Other Jurisdiction of (I.R.S. Employer
Incorporation or Organization) Identification No.)
2614 Telegraph Avenue
Berkeley, CA 94704
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(Address of Principal (ZIP Code)
Executive Offices)
Issuer's telephone number: (510) 548-6600
Securities to be registered under Section 12(b) of the Act:
Title of each class Name of each exchange on which
to be so registered: each class is to be registered:
Not Applicable Not Applicable
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Securities to be registered under Section 12(g) of the Act:
Common Stock
par value, $.001 per share
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(Title of class)
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Item 1. DESCRIPTION OF BUSINESS.
General
Agemark Corporation (the "Company") owns and operates assisted living
residences, which offer a combination of housing and personalized services for
senior citizens who can no longer live independently but who do not require the
24-hour medical care provided by a skilled nursing facility. The Company
operates 10 properties located in non-urban, secondary markets in seven states.
The Company's primary focus is on "private pay" residents, who generally pay for
the Company's services from their own funds, with the help of other family
members or through private insurance. The Company was incorporated in Nevada in
April 1997 and commenced operations in January 1998 pursuant to the Plan of
Reorganization discussed below.
Background and Formation of the Company; Plan of Reorganization
Between 1987 and 1989, Westor Financial Group, Inc., now, Opus X Inc.
("Opus"), established Historic Housing for Seniors Limited Partnership, Historic
Housing for Seniors II Limited Partnership, Historic Housing for Seniors III
Limited Partnership (collectively, the "HHS Partnerships"), and Housing for
Seniors Participating Mortgage Fund Limited Partnership ("PIF I" and, together
with the HHS Partnerships, the "Partnerships"). The Partnerships were Delaware
limited partnerships, the securities of which were registered under the
Securities Exchange Act of 1934 (the "Exchange Act"). The HHS Partnerships owned
a portfolio of real properties throughout the United States that were operated
as housing facilities for senior citizens. PIF I, together with similar
partnerships sponsored by Opus (collectively, the "PIF Partnerships"), made
mortgage loans to the HHS Partnerships and owners of other such facilities. Opus
served as general partner for each of the Partnerships. Evergreen Management,
Inc. ("Evergreen"), a corporation owned by the principals of Opus, managed the
operations of the housing facilities owned by the Partnerships pursuant to
management agreements with those entities.
The operating performance of the HHS Partnerships did not reach
feasibility standards and pro forma expectations and by the early 1990s,
due to a variety of factors, the HHS Partnerships were unable to meet
the debt service demands of the PIF Partnerships. Factors that affected
the businesses of the housing facilities owned by the HHS Partnerships
included higher resident turnover than had been expected, slower rent
up to full occupancy than anticipated, higher expenses than anticipated
and changes in tenants' needs due to their deteriorating health.
The decline in commercial and residential real estate and the nationwide
economic downturn adversely affected each HHS Partnership's ability to
lease its facilities in the time frame that was originally anticipated
by feasibility studies conducted by third parties on behalf of the HHS
Partnerships. Depressed home sales in many markets made it difficult for
potential residents to sell their homes, which adversely affected their
financial ability to be able to move into a senior citizen housing facility.
An additional factor affecting adversely the overall occupancy rates and net
income stream of the HHS Partnerships' housing facilities was a much higher
than anticipated turnover rate due to the age and frailty of the residents
and lower profit margins resulting from more intensive service required to
retain the frail elderly tenants who moved in. As a result, occupancies and
income available for debt service at the HHS Partnerships' facilities
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were below the level required to fund both the property operating
expenses and full mortgage payments.
In September 1993, the Partnerships filed voluntary petitions for
relief under Chapter 11 of the United States Bankruptcy Code. In May 1994, the
HHS Partnerships proposed a plan of reorganization that was never confirmed; the
court-appointed liquidating trustee for the PIF Partnerships other than PIF I
objected to the plan pending his further investigation of the operations of
Opus, the HHS Partnerships and the PIF Partnerships. In January 1997, the
Partnerships proposed a Second Amended Joint Plan of Reorganization (as amended
and confirmed, the "Plan of Reorganization") that was supported by the
liquidating trustee of the other PIF Partnerships. The Plan of Reorganization
was confirmed by the United States Bankruptcy Court for the Northern District of
California on April 29, 1997. The Plan of Reorganization was declared effective
on September 30, 1998.
In accordance with the Plan of Reorganization, the Company was
incorporated under the laws of Nevada in April 1997. Some of the facilities
owned by the HHS Partnerships were transferred to the Company pursuant to the
Plan of Reorganization. According to a study conducted in connection with the
formulation of the Plan of Reorganization, these facilities were deemed to have
the strongest long-term potential for generating cash flow adequate to support
ongoing debt or were needed to secure certain obligations arising from previous
loans. Additionally, two affiliated limited partnerships of Opus contributed two
facilities to the Company. In consideration for these facilities, and in
satisfaction of certain claims, the Company issued shares of Common Stock to the
Partnerships and the Opus-affiliated limited partnerships. The Partnerships were
dissolved and their equity interests in the Company were distributed to their
respective limited partners. The secured debt on the Company's facilities was
also reduced and modified pursuant to the Plan of Reorganization. In addition,
pursuant to the Plan of Reorganization, the Company entered into amended
management agreements with Evergreen, providing for reduced fees compared to the
agreements with the Partnerships. See Item 7--"Certain Relationships and Related
Transactions" below. The Company also assumed all assets and liabilities of the
Partnerships that were not otherwise disposed of pursuant to the Plan of
Reorganization.
The Senior Care Industry
The senior care industry is characterized by a wide range of living
accommodations and health care services. For those who are able to live in a
home setting, home health care and other limited services can be an appropriate
alternative. Community housing or retirement centers, which are commonly
referred to as independent living facilities, are also available to persons
who need modest assistance, such as with meal preparation, housekeeping and
laundry. Assisted living facilities are typically for those persons whose
physical or cognitive frailties have reached a state where independent
living accommodations can no longer provide the level of care required.
These people do not need the continuous medical attention of a skilled
nursing facility. Generally, assisted living facilities provide a combination
of housing and 24-hour personal support services designed to assist seniors
with activities of daily living ("ADLs"), which include bathing, eating,
personal hygiene, grooming, ambulating and dressing. Certain assisted living
facilities also offer higher levels of personal assistance for residents with
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Alzheimer's disease or other forms of dementia but always in a "residential,"
as compared with a "medical," setting. Skilled nursing facilities provide care
in a comparatively institutional environment. Assisted living residences
provide a "homelike" atmosphere. For example, the Company's facilities feature
carpeted floors compared with the linoleum typically found in nursing home,
and single-occupancy rooms. Additionally, assisted living residences operated
by the Company encourage residents to bring their own, more familiar furniture,
serve meals in dining rooms and provide a wide range of social programs
including outings to shows, museums, movies and the like.
The senior care industry, including assisted living, is highly
fragmented and characterized by numerous providers whose services, experience
and capital resources vary widely. The Company believes that the assisted living
industry is evolving as the preferred alternative to meet the growing demand for
a cost-effective setting for those seniors who cannot live independently due to
physical or cognitive frailties, but who do not require the more intensive
medical attention provided by a skilled nursing facility. According to the
United States Bureau of the Census, approximately 45% of persons aged 85 years
and older, approximately 24% of persons aged 80 to 84 and approximately 20% of
persons aged 75 to 79 need assistance with ADLs.
The Company believes that a number of factors will contribute to the
continued growth of the assisted living industry, including:
Cost Effectiveness. The Company believes that assisted living
facilities provide a cost effective alternative to other types of facilities
that may provide more care than many seniors need. Additionally, the Company
also believes that the cost of assisted living services compares favorably with
home health care, particularly when costs associated with housing, meals and
personal care assistance are taken into consideration.
Changing Income and Family Structures. The Company believes that the
increased affluence of the current elderly population and changing family
structures will feed the demand for assisted living and health care services.
The Company believes that cumulative gains in stock prices and rising real
estate values over the past few decades has contributed to increased affluence
in the elderly population. Accordingly, the Company believes that the number of
seniors who are able to afford high-quality senior residential services such as
those offered by the Company will also increase. Additional factors affecting
the demand for assisted senior living arrangements include the past decade's
increase in the number of two-income households and rise in geographical
separation of senior family members from their adult children caused by
work-related moves. Many families that traditionally would have provided the
care and services offered by the Company to senior family members are less able
to do so now than in the past. The Company believes that assisted living
facilities represent an attractive and independent environment for senior family
members.
Demographics. The target market for the Company's services are persons
75 years and older, one of the fastest growing segments of the United States
population. According to the United States Bureau of the Census, the portion of
the United States population aged 75 and older is expected to increase by
approximately 29%, from approximately 13.0 million in 1990 to approximately 16.8
million by the year 2000. The number of persons aged 85 and older, as a
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segment of the United States population, is expected to increase by
approximately 43%, from approximately 3.0 million in 1990 to over 4.3 million
by the year 2000. The Company believes that increases in human life expectancy
will result in increased demand for services similar to those provided by the
Company.
Services
The Company operates assisted living facilities in the following
locations: Rock Island, Illinois; Fort Madison, Iowa; Chanute, Kansas;
Cumberland, Maryland; Port Huron, Michigan; Beatrice, Nebraska; Hastings,
Nebraska; Dickinson, North Dakota; and Williston, North Dakota. Except for the
facilities in North Dakota, which are modern buildings, the Company's facilities
are located in historic, renovated hotels, most of which are on the National
Register of Historic Places. The Company's facilities range in size from
50 units to 115 units. See Item 3--"Description of Property." In addition,
the Company currently operates a property located in Manitowoc, Wisconsin as an
apartment complex.
Assisted Living Properties. The Company's current portfolio of
properties is aimed at the middle to more affordable price range within the
senior care market. The Company offers a range of assisted living care and
services, which are available 24 hours per day at each of its assisted living
facilities. The services offered by the Company include personal care, support
and certain supplemental services. Personal care services include assistance
with ADLs, such as ambulating, bathing, dressing, eating, grooming, personal
hygiene, monitoring or assistance with medications and confusion management.
Support services include meal preparation, assistance with social and
recreational activities, laundry services, general housekeeping, maintenance
services and transportation services. Supplemental services, which are offered
at an extra charge, include beauty and barber services, extra laundry services
and non-routine care services. The rates for assisted living units at the
Company's facilities range from approximately $1,000 to $2,000 per month,
depending, among other things, on the size of the unit and the location of the
facility.
Adult Day Care. The Company currently provides adult day care services
at its Cumberland, Maryland property. The Company charges approximately $60 per
day for its adult day care services. The Company believes that adult day care is
a natural complement to its existing assisted living facilities because many of
the Company's properties have large ballrooms or activity rooms which are
underutilized. Adult day care services, because they are offered to senior
citizens who do not reside in the Company's properties, have the potential to
generate new residents for the Company's assisted living residences by
introducing them to the Company.
Marketing and Sales
The Company's marketing strategy is intended to create awareness of the
Company and its services among potential residents and their family members and
referral sources, such as physicians, clergy, local area agencies for the
elderly, home health agencies and social workers. A central marketing staff
person located at the Company's facility in Hastings, Nebraska coordinates the
Company's overall strategies for promoting the Company throughout its markets
and monitors the success of the Company's marketing efforts. Additionally, the
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Company has hired an outside marketing and public relations firm to develop
marketing materials for the Company as a whole and for each of the Company's
facilities. The Company also relies on print advertising, yellow pages
advertising, direct mail, signage and special events, such as grand openings for
new facilities and community receptions.
Competition
The health care industry is highly competitive and the Company believes
that the assisted living business will become more competitive in the future.
There are currently few regulatory and other barriers to entry in the assisted
living industry. The Company faces competition for residents and for employees
from numerous local, regional and national providers of facility-based assisted
living and long-term care, including skilled nursing facilities, as well as
medical rehabilitation and home health care providers. Many of the Company's
present and potential competitors are significantly larger or have greater
financial resources than those of the Company. Additionally, some of the
Company's competitors operate on a not-for-profit basis or as charitable
organizations. If the development of new assisted living facilities surpasses
the demand for such facilities in particular markets, such markets could become
saturated. Competition could limit the Company's ability to attract residents
and patients and expand its business and could have a material adverse effect on
the Company's business, results of operations and financial condition.
The Company believes the primary competitive factors in the senior care
industry are: reputation for, and commitment to, high quality care; quality of
support services offered (such as home health care and food services); price of
services; physical appearance and amenities associated with the facilities; and
location. Because seniors tend to choose senior living facilities near their
homes, the Company's principal competitors are other senior living and long-term
care facilities in the same geographic areas as the Company's facilities. The
Company also competes with other health care businesses with respect to
attracting and retaining nurses, technicians, aides, and other high quality
professional and nonprofessional employees and managers.
Government Regulation
The health care industry is subject to extensive federal, state and
local regulation. The various layers of governmental regulation affect the
Company's business by controlling its growth, requiring licensure or
certification of its facilities, regulating the use of its facilities and
controlling reimbursement to the Company for services provided. Licensing,
certification and other applicable governmental regulations vary from
jurisdiction to jurisdiction and are revised periodically. It is not possible to
predict the content or impact of future legislation and regulations affecting
the health care industry.
Assisted Living Facilities. The Company's assisted living facilities
are subject to regulation by various state and local agencies. There are
currently no federal laws or regulations specifically governing assisted living
facilities. State requirements relating to the licensing and operation of
assisted living facilities vary from state to state; however, most states
regulate many aspects of a facility's operations, including physical plant
requirements; resident rights; personnel training and education; requisite
levels of resident independence; administration of medications; safety and
evacuation plans; and the level and nature of services to be provided,
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including dietary and housekeeping. In most states, assisted living facilities
must also comply with state and local building and fire codes and certain other
licenses or certifications, such as a food service license, may be required.
Assisted living facilities are subject to periodic survey by governmental
agencies with licensing authority. In certain circumstances, failure to satisfy
survey standards could result in a loss of licensure and closure of a facility.
Because assisted living facilities historically have not been
considered as traditional health care entities and government and private
insurers have not reimbursed providers for assisted living services, these
facilities have not been subject to the degree of regulation which governs
nursing homes and other health care providers. As assisted living emerges as a
cost-effective alternative to nursing facility care, assisted living facilities
could become subject to more extensive regulation, particularly in the areas of
licensure and reimbursement. The content of such regulations, the extent of any
increased regulation and the impact of any such regulation on the Company cannot
be predicted at this time and there can be no assurance that such regulations
will not adversely affect the Company's business.
The Company believes the structure and composition of government
regulation of health care will continue to change and, as a result, it regularly
monitors developments in the law. The Company expects to modify its agreements
and operations from time to time as the business and regulatory environment
changes. While the Company believes it will be able to structure all its
agreements and operations in accordance with applicable law, there can be no
assurance that its arrangements will not be successfully challenged.
Americans with Disabilities Act. Under the Americans with Disabilities
Act of 1990, all places of public accommodation are required to meet certain
federal requirements related to access and use by disabled persons. A number of
additional federal, state and local laws exist which also may require
modifications to existing and planned properties to create access by disabled
persons. While the Company believes that its properties are substantially in
compliance with present requirements or are exempt therefrom, in part because of
their historic value, if required changes involve a greater expenditure than
anticipated or must be made on a more accelerated basis than anticipated,
additional costs would be incurred by the Company. Further, legislation may
impose additional burdens or restrictions with respect to access by disabled
persons, the costs of compliance with which could be substantial.
Environmental Regulation. The Company is subject to various federal,
state and local environmental laws and regulations. Such laws and regulations
often impose liability whether or not the owner or operator knew of, or was
responsible for, the presence of hazardous or toxic substances. The costs of
any required remediation or removal of these substances could be substantial
and the liability of an owner or operator as to any property is generally not
limited under such laws and regulations and could exceed the property's
value and the aggregate assets of the owner or operator. The presence of these
substances, or failure to remediate such contamination properly, may also
affect adversely the owner's ability to sell or rent the property, or to borrow
using the property as collateral. Under these laws and regulations, an owner,
operator or an entity that arranges for the disposal of hazardous or toxic
substances, such as asbestos-containing materials, at the disposal site,
may also be liable for the costs of any required remediation or removal of the
hazardous or toxic substances at the disposal site. In connection
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with the ownership or operation of its properties, the Company could be liable
for these costs, as well as certain other costs, including governmental fines
and injuries to persons or properties.
Employees
As of January 1, 1999, the Company had approximately 307 employees,
including 136 part-time employees. None of the Company's employees are currently
represented by a union. The Company believes that it has a good relationship
with its employees.
Factors That May Affect Results
The Company's business, financial condition and results of operations
are subject to many risks, including those discussed under "--Competition" and
"--Government Regulation" above and those set forth below.
Limited Operating History. The Company was incorporated in 1997 and
began operations in January 1998 and consequently has a limited operating
history. Accordingly, there can be no assurance that the Company will not incur
losses. Failure to achieve profitability could have a material adverse effect on
the Company's business, results of operations and financial condition.
Formation from Chapter 11 Proceedings. The Company was formed pursuant
to the Plan of Reorganization, which became effective on September 30, 1998. The
Company's operations' experience in and recent emergence from Chapter 11 may
affect the Company's ability to negotiate favorable trade terms with vendors.
The failure to obtain such favorable terms could have a material adverse effect
on the Company's business, results of operations and financial condition.
Need for Additional Capital. The Company's growth is subject to its
ability to maintain or further increase revenues at existing facilities and the
availability of capital. There can be no assurance that the Company will be able
to maintain or further increase revenues at current facilities or that
sufficient capital will be available or, if available, that it will be available
on terms that the Company considers reasonable. Further, owing to the age of the
Company's historic properties, the Company's facilities may require greater
upkeep and capital expenditures than more modern facilities. The Company's
inability or failure to maintain or further increase such revenues or obtain
such sufficient capital on favorable terms could have a material adverse effect
on its business, results of operations and financial condition.
Debt Obligations. As of January 1, 1999, there was an aggregate balance of
approximately $14,775,150 outstanding on mortgages secured by certain of the
Company's properties. See Item 3--"Description of Property." Virtually all of
the Company's long-term debt will come due in three years, subject to an
extension to as much as six years upon the repayment of substantial amounts of
principal. Consequently, a significant portion of the Company's cash flow is
expected to be devoted to debt service, and there is a risk that the Company
will not be able to generate sufficient cash flow from operations to cover
required debt payments. The Company has begun and continues to work
with various sources of long-term financing to refinance the
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existing loans in order to obtain financing with a longer term, reduce the
impact of debt financing on future cash flows, and obtain additional liquidity
for future capital projects. If the Company were unable to generate sufficient
cash flow from operations to cover required debt payments in the future, there
can be no assurance that sufficient financing would be available to cover the
insufficiency or, if available, that the financing would be on terms acceptable
to the Company. In the absence of financing, the Company's ability to make
scheduled principal and interest payments on its indebtedness would be
adversely affected.
Obtaining Residents and Maintaining Rental Rates. As of January 1,
1999, the senior citizen housing facilities owned and operated by the Company
had a combined occupancy rate of approximately 85%. Occupancy may drop in these
facilities primarily due to changes in the health of residents, increased
competition from other providers of assisted living services that may give
residents more choices with respect to the provision of such services, and
changes in state regulations. Turnover among residents is affected by their
health, and higher turnover can adversely affect the Company's results of
operations. There can be no assurance that, at any time, any of the Company's
facilities will be substantially occupied at assumed rents. In addition, full
occupancy may be achievable only at rental rates below those assumed. The
Company's operating expenses could be affected adversely by a variety of
factors, including the level of services required to retain residents, which in
turn is affected by the age and health of residents. If operating expenses
increase, local rental market conditions may limit the extent to which rents may
be increased. To the extent the Company acquires any new properties, rental
increases may lag behind increases in operating expenses since rent increases
generally can only be implemented at the time of expiration of leases. In
addition, the failure of the Company to generate sufficient revenue could result
in an inability to make interest and principal payments on its indebtedness.
General Real Estate Risks. The performance of the Company's senior
citizen housing facilities is influenced by factors affecting real estate
investments, including the general economic climate and local conditions, such
as an oversupply of, or a reduction in demand for, assisted living residences.
Other factors include the attractiveness of properties to residents, zoning,
rent control, environmental quality regulations or other regulatory
restrictions, competition from other forms of housing and the ability of the
Company to provide adequate maintenance and insurance and to control operating
costs, including maintenance, insurance premiums and real estate taxes. Real
estate investments are also affected by such factors as applicable laws,
including tax laws, interest rates and the availability of financing. Real
estate investments are relatively illiquid and, therefore, limit the ability of
the Company to vary its portfolio promptly in response to changes in economic or
other conditions. Any failure by the Company to operate its senior citizen
housing facilities effectively may have a material adverse effect on the
Company's business, financial condition and results from operations.
Liability and Insurance. Providing health care services involves
an inherent risk of liability. Participants in the senior living and
health care industry are subject to lawsuits alleging negligence or
related legal theories, many of which may involve large claims and
significant legal costs. The Company currently maintains liability insurance
intended to cover claims in amounts and with such coverages and deductibles
that it believes are adequate and in keeping with industry practice.
However, claims in excess of the Company's insurance coverage or
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claims not covered by the Company's insurance (e.g., claims for punitive
damages) may arise. A successful claim against the Company not covered
by or in excess of the Company's insurance coverage could have a material
adverse effect on the Company's business, results of operations and financial
condition. Claims against the Company, regardless of their merit or eventual
outcome, may also have a material adverse effect upon the Company's reputation
and its ability to attract residents or expand its business. The Company's
insurance policies generally must be renewed annually, and there can be no
assurance that the Company will be able to obtain liability insurance coverage
in the future on acceptable terms, if at all.
Dependence on Key Personnel. The Company's operations have been
significantly dependent on the contributions of management, and the loss of the
services of certain of the Company's senior officers could have a material
adverse effect on the Company's business, results of operations and financial
condition. The Company's success also depends to a significant extent upon a
number of other key employees of the Company. The loss of the services of one or
more other key employees also could have a material adverse effect on the
Company. In addition, the Company believes that its future success will depend
in part upon its ability to attract and retain additional highly-skilled
professional, managerial, sales and marketing personnel. Competition for such
personnel is intense. There can be no assurance that the Company will be
successful in attracting and retaining the personnel that it requires for its
business and planned growth.
Labor Costs. The Company competes with various health care providers
and other employers for limited qualified and skilled personnel in the markets
that it serves. The Company expects that its labor costs will increase over
time. Currently, none of the Company's employees is represented by a labor
union. If employees of the Company were to unionize, the Company could incur
labor costs higher than those of competitors with nonunion employees. The
Company's business, results of operations and financial condition could be
adversely affected if the Company is unable to control its labor costs.
Conflicts of Interest. Certain of the Company's officers and directors
may, by virtue of their investment in or involvement with entities providing
services or office space to the Company have an actual or potential conflict of
interest with the interests of the Company. See Item 7--"Certain Relationships
and Related Transactions." From time to time, vendors may require personal
guarantees from the executive officers of the Company and such personal
guarantees may create a conflict of interest for such executive officer.
Year 2000 Issues. The Company has not assessed its readiness in regard
to Year 2000 issues. During the next fiscal year the Company will embark upon
and complete an assessment of the Company's critical systems and those of
material third parties to assure that they are Year 2000 compliant and develop
contingency plans in the event of noncompliance. Because the Company cannot be
certain that third parties will be able to supply material goods and services
without material interruption, and because the Company cannot be certain that
execution of its contingency plans will be capable of implementation or result
in a continuous and adequate supply of such goods and services, the Company
cannot give assurance that these matters will not have a material adverse effect
on the Company's future financial position, results of operations or cash flows.
The failure of either the Company's critical systems or those of its
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material third parties to be Year 2000 compliant would result in the
interruption of the Company's business, which could have a material adverse
effect on the Company's business, financial condition and results of operations.
No Public Market for the Common Stock. If shares of the Company's
Common Stock are traded after their original issuance pursuant to the Plan of
Reorganization, they are expected to trade at varying prices, depending upon the
market for similar securities and other factors, including general economic
conditions and the financial condition and performance of, and prospects for,
the Company. The Plan of Reorganization provides that, as soon as practicable
after the effective date of the Plan of Reorganization, the Company shall take
the necessary steps to have the Company's Common Stock publicly traded. However,
there can be no assurance that the Company will be successful in its efforts to
establish a public trading market for the Common Stock or that any market making
activity with respect to the Common Stock will continue in the future, if and
once initiated.
Limitation on Payment of Dividends on Capital Stock. Since the
Company's formation in April 1997, the Company has not paid any dividends on its
common stock and does not anticipate doing so in the foreseeable future.
Moreover, the Plan of Reorganization provides that the Company may not declare
any dividends until certain indebtedness specified in the Plan of Reorganization
is paid in full or otherwise satisfied. There can be no assurance that the
Company will pay out any return on its common stock.
Control by Officers, Directors and Affiliated Entities. The Company's
executive officers, directors and certain entities affiliated with such
directors beneficially own in the aggregate approximately 22.8% of the issued
and outstanding shares of the Company's common stock. See Item 4--"Security
Ownership of Certain Beneficial Owners and Management." Such stockholders may
have sufficient voting power to control the outcome of matters (including the
election of directors and any merger, consolidation or sale of all or
substantially all of the Company's assets) submitted to the stockholders for
approval and may be deemed to have effective control over the affairs and
management of the Company. This controlling interest in the Company may also
have the effect of making certain transactions more difficult or impossible,
absent the support of such stockholders. Such transactions could include a proxy
contest, mergers involving the Company, tender offers and open market purchase
programs involving the Company's common stock that could give stockholders of
the Company the opportunity to realize a premium over the then prevailing market
price for their shares of the Company's common stock.
Anti-Takeover Provisions. Certain provisions of the Company's Bylaws
and Nevada law could have the effect of making it more difficult for a third
party to acquire, or of discouraging a third party from attempting to acquire,
control of the Company. Such provisions could limit the price that certain
investors might be willing to pay in the future for shares of the Company's
Common Stock. See Item 11--"Description of Securities--Nevada Anti-Takeover Law
and Certain Provisions of the Company's By-Laws."
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Item 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS.
Results of Operations
The Company was formed in April 1997 but did not commence operations
until January 1998. The results of operations for period ended September 30,
1998 represents partial year results for varying numbers of operating
properties. The Williston, North Dakota property operated for nine months, the
Beatrice, Nebraska; Chanute, Kansas; Cumberland, Maryland; Manitowoc, Wisconsin
and Port Huron, Michigan properties operated for six months, and the Dickinson,
North Dakota; Fort Madison, Iowa; Hastings, Nebraska and Rock Island, Illinois
properties operated for three months.
The results of operations grouped by the length of time held during
the fiscal year are presented below.
<TABLE>
<CAPTION>
(Numbers in thousands)
One Five Four One
Property Properties Properties Property
Held Held Held Held for Sale
For Nine For Six For Three and
Months Months Months Overhead Total
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<S> <C> <C> <C> <C> <C>
Property gross income $ 963 $ 1,796 $ 996 $ 2 $ 3,757
Other income 4 4
-------------- ---------------- ---------------- ----------------- ----------------
Total revenue 963 1,796 996 $ 6 3,761
Property operating expense 798 1,605 896 5 3,304
Administrative and overhead 3 1 208 212
expenses
Interest expense 258 34 11 303
Depreciation 94 108 66 268
============== ================ ================ ================= ================
Total expense 1,150 1,750 974 213 4,087
============== ================ ================ ================= ================
Net income (loss) (187) 46 22 $ (207) $(326)
before income tax
</TABLE>
This is the initial operating period for the Company; comparisons to prior
periods are not meaningful.
One property located in Williston, North Dakota was owned and operated
for nine months during the year ended September 30, 1998. Average occupancy for
the nine months was 79%, total revenue for the period was $963,000 and operating
expenses were $798,000 for a net income from property operations of $165,000.
Interest expense for the period was $258,000 and depreciation was $94,000 for
total expenses of $1,150,000 and a net loss of $187,000.
Page 12
<PAGE>
Five properties were owned and operated for six months during the year
ended September 30, 1998. Included in this group is the Manitowoc, Wisconsin
property which was operated as an apartment house. The impact of the Manitowoc,
Wisconsin property on all items of income and expense was immaterial. Average
occupancy for the six months, exclusive of the Manitowoc, Wisconsin property was
77.5%. Total revenue from the group was $1,796,000 and operating expenses were
$1,605,000 for a net income from property operations of $191,000. Interest
expense for the period was $34,000, administrative expenses were $3,000 and
depreciation was $108,000 for total expenses of $1,750,000 and net income of
$46,000.
Four properties were owned and operated for three months during the
year ended September 30, 1998. Average occupancy for the three months was 78.5%.
Total revenue from the group was $996,000 and operating expenses were $896,000
for a net income from property operations of $100,000. Interest expense for the
period was $11,000, administrative expenses were $1,000 and depreciation was
$66,000 for total expenses of $974,000 and net income of $22,000.
Administrative and overhead expenses were $208,000 for the period ended
September 30, 1998, representing approximately five months' costs. Expenses
included salaries and other personnel-related expenses of $139,000, office and
occupancy expenses of $41,000, legal and accounting expenses of $19,000 and
other administrative and overhead expenses of $9,000. Other income is interest
earned on the cash reserves. The operations of the Sedalia, Missouri property,
which was held from April 1, 1998 through July 31, 1998, resulted in revenues of
$2,000 and expenses of $5,000.
Liquidity and Capital Resources
Cash and cash equivalents increased from zero at January 1, 1998 to
$1,469 at September 30, 1998. Net cash provided by operations was $58,000
reflecting various holding periods for the 10 properties acquired and a partial
year of overhead and administrative expenses.
Net cash provided by investing activities was $182,000, reflecting the
$375,000 proceeds from the sale of the Sedalia, Missouri property offset by
$193,000 spent on capital projects primarily at the Williston, North Dakota
property and the Cumberland, Maryland property.
The capitalization of the Company resulted in the transfer of
$1,259,000 of cash and cash equivalents in return of the issuance of its stock.
Net cash provided by financing activities, consisting primarily of the cash
received in return for shares issued, was $1,229,000, net of $20,000 in
principal payments on tax notes and $10,000 in new loan costs incurred.
The Company has assumed various liabilities in connection with the
issue of its stock which are either in dispute or subject to other actions in
the U.S. Bankruptcy Court. The outcome of these disputes and legal objections
will determine the actual amount to be paid on such liabilities in 1999 and
future years. In the opinion of Management, the Company has sufficient liquid
assets to pay the estimated amounts coming due in 1999 and future years.
Page 13
<PAGE>
Virtually all of the Company's long-term debt will come due in three
years; however, their term may be extended to as much as six years upon the
repayment of substantial amounts of principal. In addition, the loans provide
for substantial discounts for early repayment. The Company has begun and
continues to work with various sources of long-term financing to refinance the
existing loans in order to obtain financing with a longer term, reduce the
impact of debt financing on future cash flows, and obtain additional liquidity
for future capital projects. In the opinion of Management, the Company will have
sufficient cash from operations for the Company's operating and capital
expenditure needs for at least the next 12 months.
Impact of Inflation
Management believes that the Company's operations have not been
materially adversely affected by inflation. The Company expects that it will be
able to offset the effects of inflation on salaries and other operating expenses
by increases in rental rates, subject to applicable restrictions in North
Dakota, where the Company receives subsidies.
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 as
the year 2000. This recognition could result in a system failure or
miscalculations causing disruptions of operations or the inability of suppliers
of material goods or services to continue supporting the Company's operations.
The Company has not assessed its readiness in regard to Year 2000
issues. During the next fiscal year the Company will embark upon and complete an
assessment of its hardware and software utilized for accounting and billing
purposes to assure that it is Year 2000 compliant. In addition, the Company will
obtain certificates of Year 2000 compliance from all vendors of material
supplies and services as well as vendors of certain emergency call systems
utilized in the company's facilities. Contingency plans will be developed and
executed with respect to vendors who will not be Year 2000 ready in a timely
manner where such lack of readiness is expected to have a material adverse
impact on the Company's operations. However, because the Company cannot be
certain that its vendors will be able to supply material goods and services
without material interruption, and because the Company cannot be certain that
execution of its contingency plans will be capable of implementation or result
in a continuous and adequate supply of such goods and services, the Company
cannot give assurance that these matters will not have a material adverse effect
on the Company's future financial position, results of operations or cash flows.
As these assessments and initiatives are not as yet completed, the
Company cannot say whether the cost of replacing noncompliant hardware,
software and systems will have a material adverse effect upon the Company's
future operations or prospects. The Company intends to develop and
implement, if necessary, appropriate contingency plans to mitigate to the
extent possible the effects of any Year 2000 noncompliance, and expects to
have such plans completed in mid-1999. As part of the development of a
contingency plan, the Company will evaluate its
Page 14
<PAGE>
worst case scenario in the event of Year 2000 noncompliance. Although the full
consequences are unknown, the failure of either the Company's
critical systems or those of its material third parties to be Year 2000
compliant would result in the interruption of the Company's business, which
could have a material adverse effect on the Company's business, financial
position and results of operations.
Item 3. DESCRIPTION OF PROPERTY.
The following table sets forth, as of January 1, 1999, certain
information as to the facilities owned by the Company:
<TABLE>
<CAPTION>
No. of Year Orig. Year
Facility Location (Facility Name) Beds Built Reopened
- - ---------------------------------------------------------------- ------------ ---------- --------
<S> <C> <C> <C>
Rock Island, Illinois (The Fort Armstrong) 110 1926 1990
Fort Madison, Iowa (The Kensington) 75 1954 1988
Chanute, Kansas (The Tioga) 55 1929 1990
Cumberland, Maryland (The Kensington Algonquin) 86 1926 1989
Port Huron, Michigan (The Harrington Inn) 71 1896 1990
Beatrice, Nebraska (The Kensington Paddock) 64 1934 1989
Hastings, Nebraska (The Kensington) 82 1914 1988
Dickinson, North Dakota (The Evergreen Retirement Inn) 78 1980 1990
Williston, North Dakota (The Kensington) 115 1983 1988
Manitowoc, Wisconsin (Hotel Manitowoc) (1) 50 1927 1993
- - ---------------
<FN>
(1) The Company's property in Manitowoc, Wisconsin is operated as an apartment
complex.
</FN>
</TABLE>
Except for the Company's facilities in Chanute, Kansas and Cumberland,
Maryland, which are owned outright by the Company, each of the facilities listed
in the table above is subject to a mortgage. As of January 1, 1999, there was
an aggregate balance of $14,775,150 outstanding under the mortgages, with the
amount owing on a property ranging from approximately $1,277,000 to $4,171,000.
The Company leases its headquarters in Berkeley, California from The
Waterford Company, which is owned by members of Mr. Westin's family, for $24,000
per year and on terms and conditions that the Company's believes are at or more
favorable than prevailing market rates. See Item 7--"Certain Relationships and
Related Transactions."
Page 15
<PAGE>
Item 4. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT.
The following table shows as of January 1, 1999, (1) the beneficial
owners of more than 5% of the outstanding Common Stock of the Company and their
holdings and (2) the number of shares held by each director and each executive
officer listed in the table under the section titled "Executive Compensation"
below and all directors and executive officers as group, as reported by each
person. Except as noted, each person has sole voting and investment power over
shares indicated in the table.
<TABLE>
<CAPTION>
Amount and Nature of Common Stock Beneficially Owned
----------------------------------------------------
Common Stock Holder Number of Shares Percent of Class
- - --------------------------------------------------- ------------------------- ----------------------
<S> <C> <C>
Stockholders
Opus X Inc. 50,349 (1) 5.0%
2614 Telegraph Avenue
Berkeley, California 94704
Directors and Other Executive Officers
Jesse A. Pittore 109,251 (2) 10.9
Richard J. Westin 109,252 (3) 10.9
Robert Herrick, M.D. 298 (4) *
James P. Tolley 9,683 (5) *
Directors and Officers as a Group (4 persons) 228,484 (2)(3)(4)(5) 22.8
<FN>
- - ------------
* Less than 1%
(1) Opus X Inc. ("Opus"), formerly known as Westor Financial Group, Inc., is jointly held by Messrs. Pittore and
Westin.
(2) Includes 25,175 out of 50,349 shares of common stock owned by Opus, of which
Mr. Pittore owns an approximately 50% interest.
(3) Includes 25,174 out of 50,349 shares of common stock owned by Opus, of which
Mr. Westin owns an approximately 50% interest.
(4) Includes 167 shares that Dr. Herrick could acquire by exercising options within 60 days of January 1, 1999.
(5) Includes 833 shares that Mr. Tolley could acquire by exercising options within 60 days of January 1, 1999.
</FN>
</TABLE>
Page 16
<PAGE>
Item 5. DIRECTORS, EXECUTIVE OFFICERS, PROMOTERS AND CONTROL PERSONS.
The directors and executive officers of the Company are as follows:
<TABLE>
<CAPTION>
Name Age Position
- - ------------------------------------------- ------------ -----------------------------------------
<S> <C> <C>
Richard J. Westin 57 Director, Co-Chairman of the Board, Chief
Executive Officer and Secretary
Jesse A. Pittore 58 Director, Co-Chairman of the Board, President
Robert R. Herrick, M.D. 60 Director
James P. Tolley 55 Treasurer and Chief Financial Officer
</TABLE>
The business experience of the Company's directors and executive
officers, including each such person's principal occupations and employment
during the last five years, is summarized below.
Richard J. Westin has been Director, Co-Chairman of the Board of
Directors, Chief Executive Officer and Secretary of the Company since its
incorporation in April 1997. From 1986 until 1998, Mr. Westin served as
President of The Westor Financial Group, Inc., now, Opus X Inc. ("Opus"), a
company specializing in financing the development of assisted living facilities
across the county. Mr. Westin received his B.A. degree from the University of
North Carolina at Chapel Hill and his Juris Doctor degree from the University of
California's Hastings College of the Law.
Jesse A. Pittore has been Director, Co-Chairman of the Board of
Directors, President and Chief Operating Officer of the Company since its
incorporation in April 1997. From 1986 until 1998, Mr. Pittore was Chairman of
the Board of Opus. Mr. Pittore holds a Bachelor of Science degree in Industrial
Engineering and Business Management from the University of California, Berkeley.
Robert R. Herrick, M.D. has been a Director of the Company since January
1998. Dr. Herrick has been in private practice in neurology in Northern
California since 1971. In 1997, he served as Chief of Staff to Doctors'
Medical Center in San Pablo, California and currently serves as President of
the Board of Governors of that hospital. Dr. Herrick received his bachelor's
degree from Oberlin College in Ohio and his medical degree from the University
of Chicago Medical School.
James P. Tolley has been Treasurer and Chief Financial Officer of the
Company since its incorporation in April 1997. From 1988 to present, he has
served as Controller of Opus. Mr. Tolley is a Certified Public Accountant
and hold a Bachelor of Science degree from California State University,
San Francisco.
Item 6. EXECUTIVE COMPENSATION.
Pursuant to the Plan of Reorganization, for two years after the
effective date of the Plan of Reorganization, which period will end on
September 30, 2000, Messrs. Westin and Pittore have agreed not to accept
more than $1,000 per month in salary for their services as officers of
Page 17
<PAGE>
the Company. The Plan also provides that neither of Messrs. Westin nor Pittore
may receive compensation for his services as director of the Company except
for stock options and other perquisites as set forth in each of their
employment agreements. See "--Employment Agreements" below. Dr. Herrick, who is
a nonemployee director, receives options to purchase 1,000 shares of the
Company's common stock per year for his services as director, subject to
adjustment by the Board of Directors.
<TABLE>
<CAPTION>
Summary Compensation Table
Long-Term
Compensation Awards
-------------------
Annual Compensation Securities Underlying All Other
--------------------------
Name and Principal Position Year(1) Salary Bonus Options/SARs Compensation
- - -------------------------------- -------- ------------ ------------ ---------------------- ------------
<S> <C> <C> <C> <C> <C>
Richard J. Westin 1998 -- -- -- --
Co-Chairman of the Board
and Chief Executive Officer
Jesse A. Pittore 1998 -- -- -- --
Co-Chairman of the Board
and President
Robert R. Herrick, M.D. 1998 -- -- -- --
Director
James P. Tolley 1998 $25,500 -- -- --
Chief Financial Officer
<FN>
- - ----------------------
(1) From January 1 through September 30, 1998 (the end of the Company's fiscal year), the Company paid no
compensation to any executive officer or director except to Mr. Tolley.
</FN>
</TABLE>
In the last fiscal year, the Company granted no options to any named
executive officer under the Company's 1997 Employee Stock Incentive Plan and
none of the named executive officers exercised any options to purchase shares of
the Company's Common Stock.
Employment Agreements
Each of Messrs. Pittore and Westin have entered into employment
agreements with the Company dated as of September 30, 1998. The employment
agreements provide that from October 1, 1998 through September 30, 2000, each
shall be paid a salary at the annual rate of $12,000. Thereafter, the salary to
be paid to each shall be at the discretion of the board of directors, but in no
case shall such salary be less than $240,000 per year. The agreements also
provide that each of Messrs. Pittore and Westin is eligible for an annual
incentive bonus to be granted in the discretion of the board of directors with
such bonus to be up to 100% of base salary. The agreements provide further that
the Company shall grant to each of Messrs. Pittore and Westin options to
purchase up to 83,333 shares of the Company's Common Stock, pursuant to the
Company's 1997 Employee Stock Incentive Plan. Pursuant to the agreements, each
of Messrs. Pittore and Westin are eligible for loans from the Company up to
$720,000 subject to certain terms and conditions provided in the employment
agreements.
Page 18
<PAGE>
Item 7. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS.
Evergreen, which is jointly owned by Messrs. Westin and Pittore,
presently manages all of the Company's properties under management agreements
that were substantially amended pursuant to the Plan of Reorganization. The
Company and Evergreen enter into individual contracts for each of the facilities
owned by the Company. Each management contract's initial term is three years,
and Evergreen has the option to extend each management contract for an
additional three year term. The management fee paid pursuant to each management
contract is based on a percentage of gross revenues of the property, with the
average management fee being 4.5%.
The Company leases its headquarters in Berkeley, California from The
Waterford Company, which is owned by members of Mr. Westin's family, for $24,000
per year and on terms and conditions that the Company's believes are at or more
favorable than prevailing market rates. See Item 3--"Description of Property."
For the year ended September 30, 1998, the Company reimbursed Opus for
salaries and administrative expenses of $103,091 incurred by Opus on behalf
of the Company for the period May 1, 1998 through September 30, 1998. Opus
is jointly owned by Messrs. Pittore and Westin.
Item 8. LEGAL PROCEEDINGS.
The Company was formed pursuant to the Plan of Reorganization, which
was proposed by the Partnerships in January 1997 and confirmed by the bankruptcy
court on September 30, 1998. See Item 1--"Business--Formation of the Company and
Plan of Reorganization."
From time to time, the Company is party to litigation arising out in
the ordinary course of business. The Company believes that no pending legal
proceeding will have a material adverse effect on the Company's business,
financial condition or results of operations.
Item 9. MARKET FOR COMMON STOCK AND RELATED STOCKHOLDER MATTERS.
There is currently no public trading market for the Company's Common
Stock. As of January 1, 1999, there were 4,569 stockholders of record.
Item 10. RECENT SALES OF UNREGISTERED SECURITIES.
In October 1998, pursuant to the Plan of Reorganization, the Company
issued an aggregate of 221,850 shares of its Common Stock to the officers and
directors of the Company and a total of 778,150 shares of Common Stock to the
former unit holders of the HHS Partnerships and PIF I. The Company relied on the
exemption from the registration requirements of the Securities Act provided by
section 1145 of the Bankruptcy Code.
Item 11. DESCRIPTION OF SECURITIES.
The following summary description of the capital stock of the Company
is qualified in its entirety by reference to the Articles of Incorporation and
By-Laws of the Company, a copy of each of which is filed as an exhibit to this
Registration Statement.
Page 19
<PAGE>
Generally
The Articles of Incorporation of the Company provide that the Company
may issue up to 20,000,000 shares of Common Stock, par value $.001 per share. As
of January 1, 1999, 1,000,000 shares of Common Stock were issued and
outstanding.
Common Stock
All shares of Common Stock are of a single class and have equal voting
and other rights. Pursuant to Article 3 of the Articles of Incorporation, the
Directors of the Company may fix and determine the price, series and numbers of
each series of the Common Stock as provided in Nevada corporation law.
Holders of the Company's Common Stock are entitled to cast one vote on
all matters submitted to a vote of stockholders including the election of
directors, to receive such dividends as may be declared by the Board of
Directors out of legally available funds and to share pro rata in any
distribution of the Company's assets after payment of all debts and other
liabilities. There is no cumulative voting in the election of directors, which
means that the holders of a plurality of the outstanding Common Stock can elect
all of the directors then standing for election and the holders of the remaining
Common Stock will not be able to elect any directors. The Plan of Reorganization
prohibits the Company from declaring any dividends on its Common Stock until
certain of the notes issued pursuant to the Plan of Reorganization are paid in
full or otherwise satisfied.
The Company's Articles of Incorporation provide further that the
holders of stock of the Company shall have preemptive rights. Nevada law
provides that the stockholders of a corporation with preemptive rights have the
right, granted on uniform terms and conditions prescribed by the board of
directors of such corporation to provide a fair and reasonable opportunity to
exercise such right, to acquire proportional amounts of the corporation's
unissued shares upon the decision of the board of directors to issue such
shares. Under Nevada law, a stockholder may waive his or her preemptive right.
No preemptive right exists under Nevada law with respect to:
- shares issued as compensation to directors, officers, agents or
employees of the corporation, its subsidiaries or affiliates;
- shares issued to satisfy rights of conversion or options created
to provide compensation to directors, officers, agents or employees
of the corporation, its subsidiaries or affiliates;
- shares authorized in the corporation's articles of incorporation
that are issued within six months from the effective date of
incorporation; or
- shares sold otherwise than for money.
Nevada law further provides that any shares subject to preemptive rights that
are not acquired by stockholders may be issued to any person for one year
after being offered to stockholders at a consideration set by the board of
directors that is not lower than the consideration set for the
Page 20
<PAGE>
exercise of preemptive rights. An offer to a person after the expiration of one
year or at a lower consideration is subject to the stockholders' preemptive
rights.
Nevada Anti-Takeover Law and Certain Provisions of the Company's By-Laws
Nevada's "Combinations with Interested Stockholders Statute," which
applies to Nevada corporations that have a class of shares registered under
section 12 of the Exchange Act, prohibits an "interested stockholder" from
entering into a "combination" with the corporation, unless certain conditions
are met. A "combination" includes (a) any merger with an "interested
stockholder," (b) any consolidation, sale, lease, exchange, mortgage, pledge,
transfer or other disposition of assets, in one transaction or a series of
transactions, to an "interested stockholder," having: (i) an aggregate market
value equal to 5% or more of the aggregate market value of the corporation's
assets; (ii) an aggregate market value equal to 5% or more of the aggregate
market value of all outstanding shares of the corporation; or (iii) representing
10% or more of the earning power or net income of the corporation, or (c) any
issuance or transfer of shares of the corporation or its subsidiaries having an
aggregate market value equal to 5% or more of the aggregate market value of all
the outstanding shares of the corporation. An "interested stockholder" is a
person who, together with affiliates and associates, beneficially owns (or
within the prior three years, did beneficially own) 10% or more of the
corporation's voting stock.
A corporation to which the statute applies may not engage in a
"combination" within three years after the interested stockholder acquired its
shares, unless the combination or the interested stockholder's acquisition of
shares was approved by the board of directors before the interested stockholder
acquired the shares. If this approval is not obtained, then after the three-year
period expires, the combination may be consummated with the approval of the
board of directors or a majority of the voting power held by disinterested
stockholders, or if the consideration to be paid by the interested stockholder
is at least equal to the higher of: (i) the highest price per share paid by the
interested stockholder within the three years immediately preceding the date of
the announcement of the combination or in the transaction in which it became an
interested stockholder, whichever is higher; (ii) the market value per common
share on the date of announcement of the combination or the date the interested
stockholder acquired the shares, whichever is higher or (iii) if higher for the
holders of preferred stock, the highest liquidation value of the preferred
stock.
Nevada's "Control Share Acquisition Statute," prohibits an acquirer,
under certain circumstances, from voting shares of a target corporation's stock
after crossing certain threshold ownership percentages, unless the acquirer
obtains the approval of the target corporation's stockholders. The statute
specifies three thresholds: at least one-fifth but less than one-third, at least
one-third but less than a majority, and a majority or more, of the outstanding
voting power. Once an acquirer crosses one of the above thresholds, shares which
it acquired in the transaction taking it over the threshold or within ninety
days become "Control Shares" which are deprived of the right to vote until a
majority of the disinterested stockholders restore that right. If the
stockholders fail to restore voting rights to the acquirer, then the corporation
may, if so provided in its Articles of Incorporation or By-Laws, call certain of
the acquirer's shares for redemption. The Company's Articles of Incorporation
and By-Laws do not currently permit it to call an acquirer's shares for
redemption under these circumstances. The Control Share Acquisition
Page 21
<PAGE>
Statute also provides that in the event the stockholders restore full voting
rights to a holder of Control Shares which owns a majority of the voting stock,
then all other stockholders who do not vote in favor of restoring voting rights
to the Control Shares may demand payment for the "fair value" of their shares
(which is generally equal to the highest price paid in the transaction
subjecting the stockholder to the statute). The Control Share Acquisition
Statute only applies to Nevada corporations with at least 200 stockholders,
including at least 100 record stockholders who are Nevada residents, and which
do business directly or indirectly in Nevada.
The Company's By-Laws provide for a classified board of directors and
eliminate the right of stockholders to call special meetings of stockholders.
These provisions could have the effect of deterring a hostile takeover or
delaying a change in control or management of the Company.
Item 12. INDEMNIFICATION OF DIRECTORS AND OFFICERS.
Nevada corporation law provides for the indemnification of officers,
directors, and other corporate agents in terms sufficiently broad to indemnify
such persons under certain circumstances for liabilities (including
reimbursement for expenses incurred). Article 6 of the Company's Articles of
Incorporation and Article V of the Company's By-Laws provide for indemnification
of the Company's directors, officers, employees and other agents to the extent
and under the circumstances permitted by the Nevada General Corporation Law. The
Company has also entered into agreements with its directors and executive
officers that will require the Company, among other things, to indemnify them
against certain liabilities that may arise by reason of their status or service
as directors or executive officers to the fullest extent not prohibited by law.
Item 13. FINANCIAL STATEMENTS.
The information required by this item is contained in the Financial
Statements of the Company set forth beginning at page F-1 of this Registration
Statement.
Item 14. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
FINANCIAL DISCLOSURE.
Not applicable.
Item 15. FINANCIAL STATEMENTS AND EXHIBITS.
(a) Financial Statements. See Index to Financial Statements beginning
at page F-1 of this Registration Statement.
(b) Exhibit List.
Page 22
<PAGE>
Exhibit Description
------- -----------
3.1 Articles of Incorporation
3.2 By-Laws
10.1 Order Confirming Debtors' Second Amended
Joint Plan of Reorganization dated April 29, 1997
10.2 Amended Modification of Debtors' Second
Amended Joint Plan of Reorganization dated
April 24, 1997
10.3 Debtors' Second Amended Joint Plan of
Reorganization dated January 15, 1997
10.4 Employment Agreement between the Company and
Jesse A. Pittore
10.5 Employment Agreement between the Company and
Richard J. Westin
10.6 1997 Employee Stock Incentive Plan
10.7 Form of management contract between Evergreen
Management, Inc. and the Company
Page 23
<PAGE>
AGEMARK CORPORATION
INDEX TO FINANCIAL STATEMENTS
- - -------------------------------------------------------------------------------
Page
------
REPORT OF INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS F-2
FINANCIAL STATEMENTS
Balance sheet F-3
Statement of operations F-4
Statement of stockholders' equity F-5
Statement of cash flows F-6
Notes to financial statements F-7 - F-14
SCHEDULE XI
Real estate and accumulated depreciation F-15
F-1
<PAGE>
REPORT OF INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS
To the Stockholders and
Board of Directors of
Agemark Corporation
We have audited the accompanying balance sheet of Agemark Corporation (a Nevada
corporation) as of September 30, 1998, and the related statements of operations,
stockholders' equity, and cash flows for the year then ended. We have also
audited the financial statement Schedule XI. These financial statements are the
responsibility of the Company's management. Our responsibility is to express an
opinion on these financial statements based on our audit.
We conducted our audit in accordance with generally accepted auditing standards.
Those standards require that we perform the audit to obtain reasonable assurance
about whether the financial statements are free of material misstatement. An
audit includes examining, on a test basis, evidence supporting the amounts and
disclosures in the financial statements. An audit also includes assessing the
accounting principles used and significant estimates made by management, as well
as evaluating the overall financial statement presentation. We believe that our
audit provides a reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly, in
all material respects, the financial position of Agemark Corporation as of
September 30, 1998, and the results of its operations and its cash flows for the
year then ended in conformity with generally accepted accounting principles.
Also, in our opinion, the related financial statement Schedule XI, when
considered in relation to the basic financial statements taken as a whole,
presents fairly, in all material respects, the information set forth therein.
Timpson Garcia
Oakland, California
January 12, 1999
F-2
<PAGE>
AGEMARK CORPORATION
BALANCE SHEET
September 30, 1998
(In thousands except share data)
A S S E T S
Cash and cash equivalents $ 1,469
Property and equipment, net 21,498
Deferred tax assets 445
Other assets 378
--------------
Total assets $ 23,790
==============
LIABILITIES AND STOCKHOLDERS' EQUITY
LIABILITIES
Accounts payable and accrued liabilities $ 2,243
Notes payable 15,571
--------------
Total liabilities $ 17,814
--------------
STOCKHOLDERS' EQUITY
Commonn stock, stated value $.001,
20,000,000 shares authorized, 1,000,000
shares issued and outstanding $ 1
Additional paid in capital 5,856
Retained earnings 119
--------------
Total stockholders' equity $ 5,976
--------------
Total liabilities and stockholders'
equity $ 23,790
==============
See accompanying notes to financial statements.
F-3
<PAGE>
AGEMARK CORPORATION
STATEMENT OF OPERATIONS
Year Ended September 30, 1998
(In thousands except share data)
Revenue
Property gross revenue $ 3,757
Other income 4
--------------
Total revenue $ 3,761
--------------
Expenses
Property operating expenses $ 3,304
Administrative and overhead expenses 212
Interest expense 303
Depreciation 268
--------------
Total expenses $ 4,087
--------------
(Loss) before income taxes $ (326)
Income tax (benefits) - deferred (445)
--------------
Net income $ 119
==============
Basic earnings per common share $ 40.49
==============
See accompanying notes to financial statements.
F-4
<PAGE>
AGEMARK CORPORATION
STATEMENT OF STOCKHOLDERS' EQUITY
Year Ended September 30, 1998
(In thousands)
<TABLE>
<CAPTION>
Additional
Common Paid-In Retained
Stock Capital Earnings Total
<S> <C> <C> <C> <C>
Balance, October 1, 1997 $ -- $ -- $ -- $ --
Common stock issued for
net assets acquired 1 5,856 5,857
Net income 119 119
------------- ------------- ------------- ------------
Balance, September 30, 1998 $ 1 $ 5,856 $ 119 $ 5,976
============= ============= ============= ============
</TABLE>
See accompanying notes to financial statements.
F-5
<PAGE>
AGEMARK CORPORATION
STATEMENT OF CASH FLOWS
Year Ended September 30, 1998
(In thousands)
<TABLE>
<CAPTION>
<S> <C>
CASH FLOWS FROM OPERATING ACTIVITIES
Net income $ 119
Adjustments to reconcile net income to net cash
provided by operating activities:
Depreciation 268
Deferred income taxes (445)
Change in assets and liabilities:
(Increase) in other assets (9)
Increase in accounts payable and accrued liabilities 125
-------------
Net cash provided by operating activities $ 58
-------------
CASH FLOWS FROM INVESTING ACTIVITIES
Proceeds from sale of property in Sedalia, MO $ 375
Additions to property and equipment (193)
-------------
Net cash provided by investing activities $ 182
-------------
CASH FLOWS FROM FINANCING ACTIVITIES
Cash acquired in connection with issuance of common stock $ 1,259
Principal payments on notes payable (20)
New loan costs paid (10)
-------------
Net cash provided by financing activities $ 1,229
-------------
Net increase in cash and cash equivalents $ 1,469
CASH AND CASH EQUIVALENTS, BEGINNING OF YEAR 0
-------------
Cash and cash equivalents, end of year $ 1,469
=============
SUPPLEMENTAL DISCLOSURES Cash payments for:
Interest $ 242
=============
=============
Taxes $ 0
=============
Noncash investing and financing transaction: Common stock issued for net
assets acquired:
Property and equipment acquired $ 21,948
Other assets acquired 359
Notes payable assumed (15,591)
Other liabilities assumed (2,118)
-------------
Value of noncash assets acquired $ 4,598
Cash and cash equivalents acquired 1,259
-------------
=============
Value of assets acquired $ 5,857
=============
</TABLE>
See accompanying notes to financial statements.
F-6
<PAGE>
AGEMARK CORPORATION
NOTES TO FINANCIAL STATEMENTS
Note 1. Organization and Significant Accounting Policies
Organization:
Agemark Corporation (the "Company") was organized in April, 1997
pursuant to an order of the U.S. Bankruptcy Court dated April
27, 1997 (the "Order") to receive the assets of and continue the
businesses of four reorganized, publicly registered limited
partnerships and two privately held limited partnerships (the
"Partnerships"). The Order confirmed the Second Amended Joint
Plan of Reorganization (the "Plan") of the Partnerships filed in
January, 1997 and amended in April, 1997. The first of the
property transfers to the Company pursuant to the Plan was
accomplished in January, 1998 and the final transfer took place
in July, 1998. A total of 1,000,000 shares of stock were issued
to the Partnerships for these properties as of September 30,
1998 and immediately distributed to their partners.
The property locations and their transfer dates were as follows:
Williston, ND January, 1998
Beatrice, NE April, 1998
Chanute, KS April, 1998
Cumberland, MD April, 1998
Manitowoc, WI April, 1998
Port Huron, MI April, 1998
Fort Madison, IA July, 1998
Hastings, NE July, 1998
Dickinson, ND July, 1998
Rock Island, IL July, 1998
All of the above properties transferred and retained by the
Company are renovated hotels that have been designated as
"Certified Historic Structures," except for the two facilities
in North Dakota, which are modern buildings. All of the
locations are operated as senior residential and assisted living
facilities, except for the Manitowoc, WI property. These
facilities provide an apartment style residence, three meals per
day, housekeeping, transportation, activities and 24-hour
non-medical assistance to elderly residents for a monthly fee.
Revenues are received directly from residents, their family, or
another responsible party. Services are generally not covered by
government or private insurance programs, except in North
Dakota, where the State government provides limited subsidies.
Resident fee revenue is recognized when services are rendered.
(Continued)
F-7
<PAGE>
NOTES TO FINANCIAL STATEMENTS
Note 1. Organization and Significant Accounting Policies (Continued)
Organization: (Continued)
The property located in Manitowoc, WI is operated as an
apartment complex. These units are generally rented on a
month-to-month basis.
A property located in Sedalia, MO was also transferred to the
Company in April, 1998 and sold in July, 1998 at no gain or
loss.
Use of Estimates:
Management uses estimates and assumptions in preparing financial
statements. Those estimates and assumptions affect the reported
amounts of assets and liabilities, and the reported revenues and
expenses. Actual results could differ from those estimates.
Property and Equipment:
Property and equipment transferred to the Company pursuant to
the Plan is carried at amounts stated in the Plan. Additions to
property and equipment are stated at cost. Depreciation of
buildings is computed using the straight-line method over
estimated useful lives of forty years. Personal property is
depreciated using the straight-line method over useful lives of
fifteen years.
Income Taxes:
Income taxes are provided for the tax effects of transactions
reported in the financial statements and consist of taxes
currently due plus deferred taxes. Deferred taxes are recognized
for differences between the basis of assets and liabilities for
financial statement and income tax purposes. The differences
relate primarily to the accrual of compensated absences that are
not deductible for income tax purposes and differences between
the carrying amounts of the property and equipment transferred
to the Company pursuant to the Plan. The deferred tax assets and
liabilities represent the future tax return consequences of
those differences, which will either be deductible or taxable
when the assets and liabilities are recovered or settled.
Deferred taxes are also recognized for operating losses that are
available to offset future taxable income.
(Continued)
F-8
<PAGE>
NOTES TO FINANCIAL STATEMENTS
Note 1. Organization and Significant Accounting Policies (Continued)
Stock-Based Compensation:
The Company has elected to account for its stock option plan
under Accounting Principles Board Opinion No. 25, Accounting for
Stock Issued to Employees. Accordingly, no compensation expense
has been recognized for the stock option grants.
Cash and Cash Equivalents:
For purposes of the statement of cash flows, the Company
considers all money market funds purchased with a maturity of
three months or less to be cash equivalents.
Note 2. Restricted Cash
At September 30, 1998, cash and cash equivalents included
approximately $1,288,000 invested in Vanguard Federal Money Market
Fund, of which approximately $508,000 was restricted for payment of
the Superfirst note (see Note 5) assumed in connection with the
organization of the Company and the Order. This payment was made on
November 10, 1998. Vanguard Federal Money Market Fund invests in
United States Treasury obligations, securities issued or guaranteed
by agencies of the U.S. Government, and repurchase agreements
collateralized by these obligations and securities.
Note 3. Property and Equipment
Property and equipment (in thousands) consists of the following at
September 30, 1998:
<TABLE>
<CAPTION>
Plan
Values Cost Total
<S> <C> <C> <C>
Land $ 1,035 $ - $ 1,035
Buildings 18,345 149 18,494
Personal property 2,193 44 2,237
------------ ------------ -----------
$ 21,573 $ 193 $ 21,766
=========== ===========
Less accumulated depreciation 268
----------
$ 21,498
==========
F-9
</TABLE>
<PAGE>
NOTES TO FINANCIAL STATEMENTS
Note 4. Accounts Payable and Accrued Liabilities
Accounts payable and accrued liabilities (in thousands) consist of
the following at September 30, 1998:
<TABLE>
<CAPTION>
<S> <C>
Current and continuing operating liabilities $ 1,098
Prepetition accounts payable 134
Disputed prepetition accounts payable 181
Prepetition real estate taxes, including interest 32
Disputed real estate taxes and interest 798
-----------
$ 2,243
===========
</TABLE>
The term "prepetition" refers to liabilities arising in periods
prior to the dates on which the Partnerships filed for Chapter 11
protection, generally prior to September 3, 1993.
Disputed amounts will likely be adjudicated in U.S. Bankruptcy
Court. The ultimate result cannot be estimated at this time.
Liabilities are carried at the highest amount judged payable with
interest attributed at statutory rates.
Note 5. Notes Payable
Notes payable (in thousands) consist of the following at September
30, 1998:
<TABLE>
<CAPTION>
<S> <C>
Notes secured by real estate:
Regular mortgage notes $ 9,277
Rock Island mortgage note 4,171
Superfirst note 1,393
Reimbursement notes 392
Other notes 53
------------
Total secured notes $ 15,286
Tax notes 285
-----------
Total notes payable $ 15,571
===========
</TABLE>
(Continued)
F-10
<PAGE>
NOTES TO FINANCIAL STATEMENTS
Note 5. Notes Payable (Continued)
There are four regular mortgage notes, dated September 30, 1998,
that bear interest at 8% per annum. Interest on each of the notes
is payable monthly at a rate of 6% per annum. The notes are due on
September 30, 2001 and can be extended an additional three years
upon the payment of substantial amounts on the principal balance.
On a quarterly basis, any portion of the 8% interest which is
unpaid and 75% of any computed net cash flow from the properties
securing the notes is payable. To the extent that this calculation
results in a payment of principal, that sum is to be retained by
the lender as a reserve for capital improvements. These notes are
secured by first mortgage liens on properties in Dickinson, ND,
Williston, ND, Fort Madison, IA and Hastings, NE.
The Rock Island mortgage note, dated September 30, 1998, bears
interest as follows: from October 1, 1998 through September 30,
1999, the lesser of 3% per annum on the unpaid principal balance or
computed cash flow from the Rock Island property; from October 1,
1999 through September 30, 2000, the greater of 3% per annum on the
unpaid principal balance or computed cash flow from the Rock Island
property; from October 1, 2000 until maturity, the greater of 4%
per annum on the unpaid principal balance or computed cash flow
from the Rock Island property. The note is secured by a first
mortgage lien on the property located in Rock Island, IL and is due
on September 30, 2001and can be extended an additional three years
upon the payment of substantial amounts on the principal balance.
The Superfirst note and two reimbursement notes, dated September
30, 1998, bear interest at 5% per annum. No periodic payments of
interest or principal are required. All of the accrued interest and
unpaid principal is due on September 30, 2001. These notes are
secured by first mortgage liens on properties located in Beatrice,
NE, Manitowoc, WI and Port Huron, MI. Sale proceeds of
approximately $127,000 held by the mortgagee in trust for one of
the Partnerships have been applied to the balance of the Superfirst
note.
The other secured notes consist of a note with a balance of
approximately $3,000 bearing interest at 7.5% per annum payable at
$1,107 per month principal and interest and two notes totaling
approximately $50,000 bearing interest at 8% per annum. The $3,000
note was completely amortized in December, 1998. No periodic
interest or principal payments are required on the two notes
totaling $50,000. All of the accrued interest and unpaid principal
is due on September 30, 2001. These two notes are secured by a
second mortgage lien on the property located in Williston, ND.
The tax notes bear interest at 8% per annum. Payments of interest
and principal are due semi-annually each January and July in the
amount of $5,886 through January, 2004 and each February and August
in the amount of $26,638 through February, 2004.
(Continued)
F-11
<PAGE>
NOTES TO FINANCIAL STATEMENTS
Note 5. Notes Payable (Continued)
Future maturities of notes payable (in thousands) at September 30,
1998 are as follows:
Years ending September 30:
1999 $ 46
2000 46
2001 15,333
2002 55
2003 60
2004 31
------------
$ 15,571
------------
------------
Note 6. Transactions With Affiliates
The Company contracts with Evergreen Management, Inc. ("EMI") for
the management of its owned and operated properties. EMI is
co-owned by Richard J. Westin and Jesse A. Pittore, directors and
officers of the Company. Compensation for these management services
is 4.5% of gross income paid monthly. For the year ended September
30, 1998, management fees of $149,808 are included in the property
operating expenses on the statement of operations for services
provided by EMI. At September 30, 1998, accounts payable includes
$34,138 owed by the Company to EMI.
For the year ended September 30, 1998, the Company reimbursed
Westor Financial Group, Inc. ("WFG") for salaries and
administrative expenses of $103,091 incurred by WFG on behalf of
the Company for the period May 1, 1998 through September 30, 1998.
WFG is co-owned by Richard J. Westin and Jesse A. Pittore,
directors and officers of the Company. Administrative expenses
include rent for the Company's headquarters in Berkeley, CA in the
amount of $7,500 paid, reimbursed, or accrued pursuant to a lease
between WFG and the Waterford Company, which is owned by members of
Richard J. Westin's family.
Effective October 1, 1998, the lease was rewritten in the name of
the Company for a one-year term starting October 1, 1998 at a rent
of $2,000 per month. The lease will automatically renew unless
terminated by either party. The lessee is responsible for limited
maintenance and repair expenses and all utilities. The Waterford
Company is responsible for major repairs, real estate taxes and
debt service.
F-12
<PAGE>
NOTES TO FINANCIAL STATEMENTS
Note 7. 401(k) Savings Plan
The Company has adopted a Savings Plan effective July 1, 1998 (the
"401(k) Plan") that is intended to qualify under Section 401(k) of
the Internal Revenue Code. After completing twelve months of
service, employees that are at least twenty-one years of age are
eligible to participate in the 401(k) Plan by contributing up to
15% of their gross income to the 401(k) Plan subject to Internal
Revenue Service restrictions. The Company may make contributions to
the 401(k) Plan at the discretion of the Board of Directors, but
such contributions are not required. For the year ended September
30, 1998, no contributions to the 401(k) Plan were made by the
Company.
Note 8. Income Taxes
The tax provision consists entirely of deferred tax (benefits)
based upon the statutory U.S. federal tax rate of 34%. A summary
(in thousands) of the deferred tax assets follows:
<TABLE>
<CAPTION>
<S> <C>
Difference in basis of property and equipment $ 890
Accrued compensated absences 19
Net operating loss carryforward 144
---------
$ 1,053
Less valuation allowance 608
---------
$ 445
=========
</TABLE>
The net operating loss carryforward is approximately $410,000 and
expires on September 30, 2018.
Note 9. Earnings per Share
In accordance with Statement of Financial Accounting Standards
No. 128, Earnings per Share, the Company is required to present
both basic and diluted earnings per common share.
For the year ended September 30, 1998, the weighted average common
shares outstanding was 2,939 shares for the calculation of basic
earnings per common share. There were no other common shares that
were issuable that would have a dilutive effect on the calculation
of earnings per share.
F-13
<PAGE>
NOTES TO FINANCIAL STATEMENTS
Note 10. Subsequent Event
In December, 1998 the stockholders approved the adoption of the
1997 Employee Stock Incentive Plan, a stock option plan for certain
employees and directors. The total number of shares that may be
issued upon the exercise of options under this plan is 250,000.
Also under this plan, no participant may be granted more than
100,000 shares and no awards may be granted after November 21,
2007.
Effective January 1, 1999, options to purchase up to a total of
187,666 shares of common stock were granted at exercise prices
ranging from $1.00 to $1.10 per share to the officers and
directors of the Company. The options will vest as follows:
<TABLE>
<CAPTION>
Exercise Date
Shares Price Fully
Granted Per Share Vested
<S> <C> <C>
166,666 $ 1.10 July 1, 1999
1,000 1.00 January 1, 2000
20,000 1.00 January 1, 2003
</TABLE>
F-14
<PAGE>
<TABLE>
<CAPTION>
AGEMARK CORPORATION
SCHEDULE XI
REAL ESTATE AND ACCUMULATED DEPRECIATION
September 30, 1998
Column A Column B Column C Column D Column E
Costs
Capitalized
(Charged Off)
Initial Cost Subsequent to Gross Amount at Which
to Company Acquisition Carried at Close of
Period
Description Encumbrances Land Buildings Improvements Land Buildings Total
----------- ------------ ---------------- ------------ ---- --------- -----
<S> <C> <C> <C> <C> <C> <C>
Assisted Living
Facility
Williston, ND 2,550 74 3,860 97 74 3,957 4.031
Assisted Living
Facility
Beatrice, NE 1,785 14 1,083 10 14 1,093 1,107
Assisted Living
Facility
Port Huron, MI * 98 902 5 98 907 1,005
Apartment House
Manitowoc, WI * 286 491 286 491 777
Assisted Living
Facility
Chanute, KS - 7 868 7 868 875
Assisted Living
Facility
Cumberland, MD 3 187 3,388 22 187 3,410 3,597
Assisted Living
Facility
Rock Island, IL 4,171 189 1,855 4 189 1,859 2,048
Assisted Living
Facility
Fort Madison. IA 2,215 52 1,915 11 52 1,926 1,978
Assisted Living
Facility
Hastings, NE 2,289 92 1,892 92 1,892 1,984
Assisted Living
Facility
Dickinson, ND 2,273 36 2,091 0 36 2,091 2,127
Total 15,286 1,035 18,345 149 1,035 18,494 19,529
F-15
<PAGE>
AGEMARK CORPORATION
SCHEDULE XI
REAL ESTATE AND ACCUMULATED DEPRECIATION
September 30, 1998
(Continued)
Colummn F Column G Column H Column I
Accumulated
Depreciation Date of Date
Description Amortization Construction Acquired Life
----------- ------------ ---------------- ------------ ----
Assisted Living
Facility
Williston, ND 94 1983 1/1/98 40 yr.
Assisted Living
Facility
Beatrice, NE 18 1934 4/1/98 40 yr.
Assisted Living
Facility
Port Huron, MI 17 1896 4/1/98 40 yr.
Apartment House
Manitowoc, WI 7 1927 4/1/98 40 yr.
Assisted Living
Facility
Chanute, KS 13 1929 4/1/98 40 yr.
Assisted Living
Facility
Cumberland, MD 52 1026 4/1/98 40 yr.
Assisted Living
Facility
Rock Island, IL 18 1926 7/1/98 40 yr.
Assisted Living
Facility
Fort Madison. IA 16 1954 7/1/98 40 yr.
Assisted Living
Facility
Hastings, NE 17 1914 7/1/98 40 yr.
Assisted Living
Facility
Dickinson, ND 16 1980 7/1/98 40 yr.
Total 268
* The notes totaling $1,785,000 are secured by a blanket mortgage on the
properties in Beatrice, NE, Port Huron, MI and Manitowoc, WI.
F-15
</TABLE>
<PAGE>
SIGNATURES
In accordance with Section 12 of the Securities Exchange Act of 1934,
the registrant caused this registration statement to be signed on its behalf by
the undersigned, thereunto duly authorized.
AGEMARK CORPORATION
Date: January 28, 1999 By /s/ RICHARD J. WESTIN
------------------------
Richard J. Westin
Chief Executive Officer
<PAGE>
Exhibit Description
------- -----------
3.1 Articles of Incorporation
3.2 By-Laws
10.1 Order Confirming Debtors' Second Amended
Joint Plan of Reorganization dated April 29, 1997
10.2 Amended Modification of Debtors' Second
Amended Joint Plan of Reorganization dated
April 24, 1997
10.3 Debtors' Second Amended Joint Plan of
Reorganization dated January 15, 1997
10.4 Employment Agreement between the Company and
Jesse A. Pittore
10.5 Employment Agreement between the Company and
Richard J. Westin
10.6 1997 Employee Stock Incentive Plan
10.7 Form of management contract between Evergreen
Management, Inc. and the Company
<PAGE>
Articles of Incorporation Filing fee:
(PURSUANT TO NRS 78) Receipt #:
STATE OF NEVADA
Secretary of State
(For filing office use) (For filing office use)
- - --------------------------------------------------------------------------------
- - --------------------------------------------------------------------------------
No C7591-97 IMPORTANT: Read instructions on reverse side before
----------------
completing this form.
TYPE OR PRINT (BLACK INK ONLY)
1. NAME OF CORPORATION: AGEMARK CORPORATION
------------------------------------------------------
2. RESIDENT AGENT: (designed resident agent and his STREET ADDRESS in Nevada
--------------
where process may be served)
Name of Resident Agent: LAUGHLIN ASSOCIATES, INC.
--------------------------------------------------
Street Address: 2533 N. CARSON ST. CARSON CITY, NV 89706
----------------------------------------------------------
Street No. Street Name City Zip
3. SHARES: (number of shares the corporation is authorized to issue)
Number of shares with par value: 20,000,000 Par value: X.001
------------ ------
Number of shares without par value:
--------------------------------------
4. GOVERNING BOARD: shall be styled as (check one):
X Directors Trustees
------------- ---------------- ----------------
The FIRST BOARD OF DIRECTORS shall consist of 3 members and the
--------
names and addresses are as follows (attached additional pages if
necessary):
RICHARD WESTIN 2164 Telegraph Ave., Berkeley, CA 94704
------------------- ---------------------------------------------------
Name Address City/State/Zip
PLEASE SEE ATTACHED
------------------- ---------------------------------------------------
Name Address City/State/Zip
5. PURPOSE (optional-see reverse side): The purpose of the corporation shall
be:
---------------------------------------------------------------------------
6. OTHER MATTERS: This form includes the minimal statutory requirements to
incorporate under NRS 78. You may attach additional information pursuant to
NRS 78.037 or any other information you deem appropriate. If any of the
additional information is contradictory to this form it cannot be filed and
will be returned to you for correction. Number of pages attached ONE .
-----
7. SIGNATURES OF INCORPORATORS: The names and addresses of each of the
incorporators signing the articles: (Signatures must be notarized.) (Attach
additional pages if there are more than two incorporators).
Richard J. Westin
-------------------------------------------------
Name (print)
2614 Telegraph Ave, Berkeley, CA 94704
-------------------------------------------------
Address City/State/Zip
/s/ Richard J. Westin
-------------------------------------------------
Signature
State of California County of Contra Costa
----------------- ------------
This instrument was acknowledged before me on
March 28 , 1997 , by
-------------------------------------- --
Richard J. Westin
-------------------------------------------------
Name of Person
as incorporator
of The Agemark Corporation
----------------------------------------------
(name of party on behalf of whom
instrument was executed)
/s/ Susan W. Wait
-------------------------------------------------
Notary Public Signature
(affix notary stamp or seal)
Jesse A. Pittore
-------------------------------------------------
Name (print)
2614 Telegraph Ave, Berkeley, CA 94704
-------------------------------------------------
Address City/State/Zip
/s/ Jesse A. Pittore
-------------------------------------------------
Signature
State of California County of Contra Costa
------------------ ------------
This instrument was acknowledged before me on
March 28 , 1997 , by
-------------------------------------- --
Jesse A. Pittore
-------------------------------------------------
Name of Person
as incorporator
of The Agemark Corporation
----------------------------------------------
(name of party on behalf of whom
instrument was executed)
/s/ Susan W. Wait
-------------------------------------------------
Notary Public Signature
(affix notary stamp or seal)
8. CERTIFICATE OF ACCEPTANCE OF APPOINTMENT OF RESIDENT AGENT
I, Laughlin Associates Inc. hereby accept my appointment as Resident Agent for
------------------------
the above named corporation.
/s/ Molly Wipocki 4/4/97
- - ----------------------------------- ---------------------------------------
Signature of Resident Agent Date
<PAGE>
ATTACHMENT TO ARTICLES OF INCORPORATION
OF THE AGEMARK CORPORATION
3. SHARES (cont): The total number of shares of all classes of stock which the
corporation shall have authority to issue is twenty million (20,000,000) shares
of common stock. The Board of Directors shall fix and determine in a resolution
the price, series and numbers of each class or series as provided in NRS 78.195.
The corporation shall be prohibited from issuing non-voting securities in
accordance with Section 1123(a)(6) of the Bankruptcy Code.
4. GOVERNING BOARD (cont.): The governing board of this corporation shall be
styled directors, and shall number at least one, but as many as fifteen, as the
stockholders from time to time shall determine. The name and address of the
first Board of Directors, three (3) in number, who shall hold office until their
successor(s) is (are) appointed or elected, is as follows, in addition to
Richard Westin:
NAME ADDRESS
Richard J. Westin (as shown on page one hereof)
Jesse A. Pittore 2614 Telegraph Avenue, Berkeley, CA 94704
Stanley L. Seaman 2614 Telegraph Avenue, Berkeley, CA 94704
6. OTHER MATTERS:
(a) AMENDMENT. This corporation reserves the right to alter, amend,
---------
change or repeal any provision contained in these Articles of Incorporation in
the manner now or hereafter prescribed by statute. All rights conferred on
stockholders herein are granted subject to this reservation; provided, however,
that a vote of two-thirds of all issued and outstanding capital stock shall be
required to effect any such amendment.
(b) DIRECTOR AND OFFICER LIABILITY. A director or officer of the
------------------------------
corporation shall not be personally liable to the corporation or its
stockholders for monetary damages for breach of fiduciary duty as a director or
officer except for liability (1) for acts or omissions which involve intentional
misconduct, fraud, or a knowing violation of law, or (ii) the payment of
dividends in violation of NRS 78.300.
If the Nevada Revised Statutes hereafter is amended to authorize the future
elimination or limitation of the liability of directors or officers, then the
liability of a director or officer of the corporation, in addition to the
limitation on personal liability provided herein, shall be limited to the full
extent permitted by the amended Nevada Revised Statute. Any repeal or
modification of this paragraph by the stockholders of the corporation shall be
prospective only, and shall not adversely affect any limitation on the personal
liability of the corporation existing at the time of such repeal or
modification.
(c) PREEMPTIVE RIGHTS. The corporation elects to have preemptive rights
-----------------
as defined in NRS 78.267.
END OF ATTACHMENT TO ARTICLES OF INCORPORATION
<PAGE>
AGEMARK CORPORATION
BY-LAWS
(as amended August 14, 1998)
Article I
---------
Meetings of Shareholders
------------------------
1. Shareholders' Meetings shall be held in the office of the
corporation, 2614 Telegraph Avenue, Berkeley, California, 94704, or at such
other place or places as the Directors shall, from time to time, determine.
2. The first meeting of the shareholders of this corporation shall take
place on the effective date of the Plan of Reorganization. Thereafter, the first
annual meeting, and each successive annual meeting, shall be held annually at
11:00 a.m., on the first Tuesday in the month of May of each year beginning in
1998, at which time there shall be elected by the shareholders of the
corporation a Board of Directors for the ensuing year, and the shareholders
shall transact such other business as shall properly come before them. If the
day fixed for the annual meeting shall be a legal holiday such meeting shall be
held on the next succeeding business day.
3. A notice signed by any Officer of the corporation or by any person
designated by the Board of Directors, which sets forth the place of the annual
meeting, shall be personally delivered to each of the shareholders of record, or
mailed postage prepaid, at the address as appears on the stock book of the
corporation, or if no such address appears in the stock book of the corporation,
-1-
<PAGE>
to his last known address, at least ten (10) days prior to the
annual meeting.
Whenever any notice whatever is required to be given under any article
of these By-Laws, a waiver thereof in writing, signed by the person or persons
entitled to the notice, whether before or after the time of the meeting of the
shareholders, shall be deemed equivalent to proper notice.
4. A majority of the shares issued and outstanding, either
in person or by proxy, shall constitute a quorum for the
transaction of business at any meeting of the shareholders.
5. If a quorum is not present at the annual meeting, the shareholders
present, in person or by proxy, may adjourn to such future time as shall be
agreed upon by them, and notice of such adjournment need be given.
6. Special meetings of the shareholders may be called only by the
President or Chief Executive Officer, and shall be called by the President or
Chief Executive Officer or the Secretary at the written request of a majority of
the Board of Directors. Special meetings may not be called by the shareholders.
The Secretary shall send a notice of such called meeting to each shareholder of
record at least ten (10) days before such meeting, and such notice shall state
the time and place of the meeting, and the object thereof. No business shall be
transacted at a special meeting except as stated in the notice to the
shareholders, unless by unanimous consent of all shareholders present, either in
person or by proxy, all such shares being represented at the meeting.
-2-
<PAGE>
7. Each shareholder shall be entitled to one vote for each
share of stock in his own name on the books of the corporation,
whether represented in person or by proxy.
8. At all meetings of shareholders, a shareholder may vote by proxy
executed in writing by the shareholder or by his duly authorized
attorney-in-fact. Such proxy shall be filed with the Secretary of the
corporation or at the time of the meeting.
9. The following order of business shall be observed at
all meetings of the shareholders so far as is practicable:
a. Call the roll;
b. Reading, correcting, and approving of the minutes of
the previous meeting;
c. Reports of Officers;
d. Reports of Committees;
e. Election of Directors;
f. Unfinished business; and
g. New business.
10. Unless otherwise provided by law, no action required or permitted
to be taken at any annual or special meeting of the shareholders of the Company
may be taken without a meeting of the shareholders, and no action may be taken
by the shareholders by written consent.
-3-
<PAGE>
Article II
----------
Stock
-----
1. Certificates of stock shall be in a form adopted by the
Board of Directors and shall be signed by the President and
Secretary of the corporation.
2. All certificates shall be consecutively numbered; the name of the
person owning the shares represented thereby, with the number of such shares and
the date of issue shall be entered on the company's books.
3. All certificates of stock transferred by endorsement
thereon shall be surrendered by cancellation and new certificates
issued to the purchaser or assignee.
4. Upon surrender to the corporation or the transfer agent of the
corporation of a certificate for shares duly endorsed or accompanied by proper
evidence of succession, assignment or authority to transfer, it shall be the
duty of the corporation to issue a new certificate to the person entitled
thereto, and cancel the old certificate; every such transfer shall be entered on
the transfer book of the corporation.
5. The corporation shall be entitled to treat the holder of record of
any share as the holder in fact thereof, and, accordingly, shall not be bound to
recognize any equitable or other claim to or interest in such share on the part
of any other person whether or not it shall have express or other notice
thereof, except as expressly provided by the laws of Nevada.
-4-
<PAGE>
Article III
-----------
Directors
---------
1. Unless enlarged by the unanimous vote of the then existing members,
the Board of Directors shall consist of no more than seven (7) members, each of
whom shall be chosen annually by the Shareholders at their meeting to manage the
affairs of the corporation. All directors shall hold office until the next
annual meeting of shareholders or until their successors are duly elected and
qualified. On the effective date of the Plan of Reorganization, the Board of
Directors shall be divided into three (3) classes of Directors. The Directors
shall serve for three (3) year terms. Class I shall be elected at every third
annual meeting, beginning with the first annual meeting. Class II shall be
elected at every third annual meeting, beginning with the second annual meeting.
Class III shall be elected at every third meeting, beginning with the third
annual meeting. Each Director, including a Director elected to fill a vacancy,
shall hold office until the expiration of the term for which elected and until a
successor has been elected and qualified. No reduction of the authorized number
of Directors shall have the effect of removing any Director before that
Director's term of office expires.
2. Vacancies on the Board of Directors between annual meetings and any
newly created seats shall be filled only by the Board of Directors and not by
the shareholders. Vacancies on the Board of Directors by reason of death,
resignation or other causes shall be filled by the remaining Director or
Directors
-5-
<PAGE>
choosing a Director or Directors to fill the unexpired term, and
not by the shareholders. Shareholders may not call special
meetings of shareholders.
3. Regular quarterly meetings of the Board of Directors shall be held
at 1:00 p.m., on the second Tuesday of the month following the month ending the
Company's fiscal quarter and shall be held at the office of the company at 2614
Telegraph Avenue, Berkeley, California, 94704, or at such other time or place as
the Board of Directors shall by resolution appoint; special meetings may be
called by the President or Chief Executive Officer or any Director giving ten
(10) days' notice to each Director. Special meetings may also be called by
execution of the appropriate waiver of notice and called when executed by a
majority of the Directors of the company. A majority of the Directors shall
constitute a quorum.
4. The Directors shall have the general management and control of the
business and affairs of the corporation and shall exercise all the powers that
may be exercised or performed by the corporation, under the statutes, the
Articles of Incorporation, and the By-Laws. Each Board member shall have an
equal vote. The Board of Directors shall have the right to declare and create
preferred stock, as well as classes thereof, as it may from time to time deem
appropriate.
5. The act of the majority of the Directors present at a
meeting at which a quorum is present shall be the act of the
Directors.
-6-
<PAGE>
6. A resolution, in writing, signed by all or a majority of the members
of the Board of Directors, shall constitute action by the Board of Directors to
effect therein expressed, with the same force and effect as though such
resolution had been passed at a duly convened meeting; and it shall be the duty
of the Secretary to record every such resolution in the Minute Book of the
corporation under its proper date.
7. The corporation's shareholders may remove directors at
any time upon majority vote.
8. A Director may resign at any time by giving written notice to the
Board, the President or the Secretary of the corporation. Unless otherwise
specified in the notice, the resignation shall take effect upon receipt thereof
by the Board or such Officer, and the acceptance of the resignation shall not be
necessary to make it effective.
9. A Director of the corporation who is present at a meeting of the
Directors at which action on any corporate matter is taken shall be presumed to
have assented to the action taken unless his dissent shall be entered in the
minutes of the meeting or unless he shall file his written dissent to such
action with the person acting as Secretary of the meeting before the adjournment
thereof or shall forward such dissent by registered mail to the Secretary of the
corporation within forty-eight (48) hours after the adjournment of the meeting.
Such right to dissent shall not apply to a Director who voted in favor of such
action.
-7-
<PAGE>
Article IV
----------
Officers
--------
1. The Officers of this company shall consist of: a President, Chief
Executive Officer, one or more Vice Presidents, Secretary, Treasurer or Chief
Financial Officer, and such other officers as shall, from time to time, be
elected or appointed by the Board of Directors.
2. The CHIEF EXECUTIVE OFFICER shall preside at all meetings of the
Directors and the shareholders and shall have general charge and control over
the affairs of the corporation subject to the Board of Directors. He shall sign
or countersign all certificates, contracts and other instruments of the
corporation as authorized by the Board of Directors and shall perform all such
other duties as are incident to his office or are required by him by the Board
of Directors.
3. The PRESIDENT shall exercise the functions of the President and he
shall sign or countersign all certificates, contracts and other instruments of
the corporation as authorized by the Board of Directors and shall perform all
such other duties as are incident to his office or are required by him by the
Board of Directors.
4. The SECRETARY shall issue notices for all meetings as required by
the By-Laws, shall keep a record of the minutes of the proceedings of the
meetings of the shareholders and Directors, shall have charge of the corporate
book, and shall make such reports and perform such other duties as are incident
to his office, or properly required of him by the Board of
-8-
<PAGE>
Directors. He shall be responsible that the corporation complies with Section
78.105 of the Nevada Revised Statutes regarding maintenance of the Corporation's
books and records and supplies to the Nevada Resident Agent or Registered Office
in Nevada, any and all amendments to the corporation's Articles of Incorporation
and any and all amendments or changes to the By-Laws of the corporation. In
compliance with Section 78.105, he will also supply to the Nevada Resident Agent
or Registered Office in Nevada, and maintain, a current statement setting out
the name of the custodian of the stock ledger or duplicate stock ledger, and the
present and complete Post Office address, including street and number, if any,
where such stock ledger or duplicate stock ledger is kept.
5. The TREASURER or CHIEF FINANCIAL OFFICER shall have the custody of
all names and securities of the corporation and shall keep regular books of
account. He shall disburse the funds of the corporation in payment of the just
demands against the corporation, or as may be ordered by the Board of Directors,
making proper vouchers for such disbursements and shall render to the Board of
Directors, from time to time, as may be required of him, an account of all his
transactions as Treasurer and of the financial condition of the corporation. He
shall perform all duties incident to his office or which are properly required
of him by the Board of Directors.
6. The RESIDENT AGENT shall he in charge of the
corporation's registered office in the State of Nevada, upon whom
-9-
<PAGE>
process against the corporation may be served and shall perform
all duties required of him statute.
7. The salaries of all Officers shall be fixed by the
Board of Directors and may be changed, from time to time, by a
majority vote of the Board.
8. Each of such Officers shall serve for a term of one (1)
year or until their successors are chosen and qualified.
Officers may be re-elected or appointed for successive annual
terms.
9. The Board of Directors may appoint such other Officers and Agents,
as it shall deem necessary or expedient, who shall hold their offices for such
terms and shall exercise such powers and perform such duties as shall be
determined, from time to time, by the Board of Directors.
10. Any Officer or Agent elected or appointed by the Directors may be
removed by the Directors whenever in their judgment the best interests of the
corporation would be served thereby, but such removal shall be without prejudice
to the contract rights, if any, of the person so removed.
11. A vacancy in any office because of death, resignation,
removal, disqualification or otherwise, may be filled by the
Directors for the unexpired portion of the term.
Article V
---------
Indemnification of Officers and Directors
-----------------------------------------
Section 5.1 Certain Definitions. For purposes of this
----------- -------------------
Article V, (a) "Indemnitee" shall mean each director or officer
-10-
<PAGE>
who was or is a party to, or is threatened to be made a party to, or is
otherwise involved in, any Proceeding (as hereinafter defined), by reason of the
fact that he or she is or was a director or officer of the corporation or is or
was serving in any capacity at the request of the corporation as a director,
officer, employee, agent, partner, or fiduciary of, or in any other capacity
for, another corporation or any partnership, joint venture, trust, or other
enterprise; and (b) "Proceeding" shall mean any threatened, pending or completed
action or suit (including without limitation an action, suit or proceeding by or
in the right of the corporation), whether civil, criminal, administrative or
investigative.
Section 5.2 Indemnification of Directors and Officers.
----------- -----------------------------------------
(a) Each Indemnitee shall be indemnified and held harmless
by the corporation for all actions taken by him or her and for all omissions
(regardless of the date of any such action or omission), to the fullest extent
permitted by Nevada law, against all expense, liability and loss (including
without limitation attorneys' fees, litigation expenses, judgments, fines,
taxes, penalties, sanctions, costs, fees, and amounts paid or to be paid in
settlement) reasonably incurred or suffered by the Indemnitee in connection with
any Proceeding.
(b) Indemnification pursuant to this Section shall continue as to an
Indemnitee who has ceased to be a director or officer and shall inure to the
benefit of his or her heirs, executors and administrators.
-11-
<PAGE>
Section 5.3 Indemnification of Employees and Other Persons. The
----------- ----------------------------------------------
corporation may, by action of its Board of Directors and to the extent provided
in such action, indemnify employees and other persons as though they were
Indemnitees.
Section 5.4 Non-exclusivity of Rights. The rights to indemnification
----------- -------------------------
provided in this Article shall not be exclusive of any other rights that any
person may have or hereafter acquire under any statute, provision of the
corporation's Articles of Incorporation or By-Laws, agreement, vote of
stockholders or directors, or otherwise.
Section 5.5 Insurance. The corporation may purchase and maintain
---------------------
insurance or make other financial arrangements on behalf of any person who is or
was a director, officer, employee or agent of the corporation, or is or was
serving at the request of the corporation as a director, officer, employee or
agent of another corporation, partnership, joint venture, trust or other
enterprise for any liability asserted against him or her and liability and
expenses incurred by him or her in his or her capacity as a director, officer,
employee or agent, or arising out of his or her status as such, whether or not
the corporation has the authority to indemnify him or her against such liability
and expenses.
Section 5.6 Other Financial Arrangements. The other financial
----------- ----------------------------
arrangements which may be made by the corporation may include the following (a)
the creation of a trust fund, (b) the establishment of a program of
self-insurance, (c) the securing of its obligation of indemnification by
granting a security interest
-12-
<PAGE>
or other lien on any assets of the corporation, and (d) the establishment of a
letter of credit, guarantee or surety. No financial arrangement made pursuant to
this subsection may provide protection for a person adjudged by a court of
competent jurisdiction, after exhaustion of all appeals therefrom, to be liable
for intentional misconduct, fraud, or a knowing- violation of law, except with
respect to advancement of expenses or indemnification ordered by a court.
Section 5.7 Other Matters Relating To Insurance Or Financial
----------- ------------------------------------------------
Arrangements. Any insurance or other financial arrangement made on behalf of a
- - ------------
person pursuant to this section may be provided by the corporation or any other
person approved by the Board of Directors, even if all or part of the other
person's stock or other securities is owned by the corporation.
In the absence of fraud (a) the decision of the Board of Directors as
to the propriety of the terms and conditions of any insurance or other financial
arrangement made pursuant to this Article and the choice of the person to
provide the insurance or other financial arrangement is conclusive; and (b) the
insurance or other financial arrangement (i) is not void or voidable; and (ii)
does not subject any director approving it to personal liability for his action,
even if a director approving the insurance or other financial arrangement is a
beneficiary of the insurance or other financial arrangement.
Section 5.8 Amendment. The provisions of this Article
----------- ---------
relating to indemnification shall constitute a contract between
the corporation and each of its directors and officers which may
-13-
<PAGE>
be modified as to any director or officer only with that person's consent or as
specifically provided in this Section. Notwithstanding any other provision of
these By-Laws relating to their amendment generally, any repeal or amendment of
this Article which is adverse to any director or officer shall apply to such
director or officer only on a prospective basis and shall not limit the rights
of an Indemnitee to indemnification with respect to any action or failure to act
occurring prior to the time of such repeal or amendment. Notwithstanding any
other provision of these By-Laws, no repeal or amendment of these ByLaws shall
affect any or all of this Article so as to limit or reduce the indemnification
in any manner unless adopted by (a) the unanimous vote of the directors of the
corporation then serving, or (b) by the stockholders as set forth in Article
VIII hereof; provided that no such amendment shall have retroactive effect
inconsistent with the preceding sentence.
Section 5.9 Changes In Nevada Law. References in this Article to Nevada
----------- ---------------------
law or to any provision thereof shall be to such law as it existed on the date
this Article was adopted or as such law thereafter may be changed; provided that
(a) in the case of any change which expands the liability of directors or
officers or limits the indemnification rights or the rights to advancement of
expenses which the corporation may provide, the rights to limited liability, to
indemnification and to the advancement of expenses provided in the corporation's
Articles of Incorporation and/or these By-Laws shall continue as theretofore to
the extent permitted by law; and (b) if such change permits
-14-
<PAGE>
the corporation, without the requirement of any further action by stockholders
or directors, to limit further the liability of directors (or limit the
liability of officers) or to provide broader indemnification rights or rights to
the advancement of expenses than the corporation was permitted to provide prior
to such change, then liability thereupon shall be so limited and the rights to
indemnification and the advancement of expenses shall be so broadened to the
extent permitted by law.
Article VI
----------
Dividends
---------
The Directors may, from time to time, declare, and the corporation may
pay, dividends on its outstanding shares in the manner and upon the terms and
conditions provided by law.
If a Distribution remains unclaimed for one year following the
Effective Date, then the holder of the respective Allowed Claim or Allowed
Interest will cease to be entitled to such Distribution. Any undeliverable Cash
will be returned to Agemark for deposit in its own accounts. Any Agemark Stock
which is undeliverable will be retired to the treasury of Agemark.
Article VII
-----------
Waiver of Notice
----------------
Unless otherwise provided by law, whenever any notice is required to be
given to any shareholder or Director of the corporation under the provisions of
these By-Laws or under the
-15-
<PAGE>
provisions of the Articles of Incorporation, a waiver thereof in writing, signed
by the person or persons entitled to such notice, whether before or after the
time stated therein, shall be deemed equivalent to the giving of such notice.
Article VIII
------------
Amendments
----------
1. These By-Laws may be amended only upon the vote of at
least 66 and 2/3 percent of the voting power of all outstanding
shares.
Article IX
----------
Shareholder Proposals And Director Nominations
----------------------------------------------
Shareholders seeking to bring business before an annual meeting of
shareholders, or to nominate candidates for election as directors at an annual
or special meeting of shareholders, must provide timely notice thereof in
writing. To be timely, a shareholder's notice must be delivered to or mailed and
received by the Secretary of the corporation no later than (a) with respect to
an annual meeting, 120 calendar days in advance of the corporation's proxy
statement released to shareholders in connection with the previous year's annual
meeting of shareholders, or (b) with respect to a special meeting, sixty (60)
days before the solicitation is made. The notice of
-16-
<PAGE>
stockholder nominations must set forth certain information with respect to each
nominee who is not an incumbent director.
CERTIFIED TO BE THE BY-LAWS OF:
----------------------------------------
BY:
------------------------------------
Secretary
-17-
<PAGE>
TERRENCE V. PONSFORD (State Bar No. 42648)
ELLEN F. McDONALD (State Bar No. 175942)
BRONSON, BRONSON & McKINNON LLP
505 Montgomery Street
San Francisco, California 94111-2514
Telephone: (415) 986-4200
Attorneys for Debtors HISTORIC HOUSING
FOR SENIORS LIMITED PARTNERSHIP, HISTORIC
HOUSING FOR SENIORS II LIMITED PARTNERSHIP,
and HISTORIC HOUSING FOR SENIORS III LIMITED
PARTNERSHIP
EDWARD TREDINNICK (State Bar No. 84033)
PASCOE & RAFTON 1050 Northgate Drive, Suite 356
San Rafael, California 94903
Telephone: (415) 492-1003
Attorneys for Debtor HOUSING FOR SENIORS
PARTICIPATING MORTGAGE FUND LIMITED PARTNERSHIP
UNITED STATES BANKRUPTCY COURT
NORTHERN DISTRICT OF CALIFORNIA
In re HISTORIC HOUSING FOR ) Case No. 93 46247 J
SENIORS LIMITED PARTNERSHIP, ) Case No. 93-46246 J
a Delaware limited partnership, ) Case No. 93-46245 J
) Case No. 95-46713 J
Debtor. )
) Chapter 11
- - --------------------------------------------
In re HISTORIC HOUSING FOR )
SENIORS II LIMITED PARTNERSHIP, a )
Delaware limited partnership, ) ORDER CONFIRMING DEBTORS'
) SECOND AMENDED JOINT PLAN
Debtor. ) OF REORGANIZATION
)
In re HISTORIC HOUSING FOR ) Date: April 24, 1997
SENIORS III LIMITED PARTNERSHIP, ) Time: 10:00 a.m.
a Delaware limited partnership, ) Place: Courtroom 215
)
Debtor. )
)
In re HOUSING FOR SENIORS )
PARTICIPATING MORTGAGE FUND )
LIMITED PARTNERSHIP, )
)
Debtor. )
)
- - --------------------------------------------
ORDER CONFIRMING DEBTORS' SECOND AMENDED
JOINT PLAN OF REORGANIZATION
<PAGE>
Historic Housing for Seniors Limited Partnership ("HHS I"), Historic
Housing for Seniors II Limited Partnership ("HHS II"), Historic Housing for
Seniors III Limited Partnership ("HHS III") and Housing for Seniors
Participating Mortgage Fund Limited Partnership ("PIF I"), the debtors and
debtors in possession in the above-captioned Chapter 11 cases (collectively, the
"Debtors"), having sought confirmation of the Debtors' Second Amended Joint Plan
of Reorganization filed herein on January 27, 1997, and attached hereto as
Exhibit 1, as modified by that certain Amended Modification of Debtors' Second
Amended Joint Plan of Reorganization dated April 25, 1997 and attached hereto as
Exhibit 2 (the "Plan"'); the Court having held a hearing on confirmation of the
Plan on April 24, 1997 at 10:00 a.m., and the Court having reviewed the Plan,
the ballots and the ballot tabulation, any and all modifications to the Plan,
the Confirmation Brief, Supporting Declarations, Request for Judicial Notice and
other evidence submitted by the Debtors in support of the confirmation of the
Plan, appearances having been noted in the record and the Court having
considered the arguments of counsel and evidence presented at the confirmation
hearing; and good cause appearing therefor:
THE COURT HEREBY MAKES AND ENTERS THE FOLLOWING FINDINGS OF FACT AND
CONCLUSIONS OF LAW.
ORDER CONFIRMING DEBTORS' SECOND AMENDED 1.
JOINT PLAN OF REORGANIZATION
<PAGE>
I.
FINDINGS OF FACT AND CONCLUSIONS OF LAW
A. Preliminary and General Findings
1. Debtors have fully complied with the Order Approving Disclosure
Statement for Debtors' Second Amended Joint Plan of Reorganization and Setting
Date for Hearing on Confirmation of Plan, Filing Objections to Plan and Voting
on Plan entered by the Court on January 28, 1997 ("Disclosure Order") and Rules
3017, 3020 and 2002 of the Federal Rules of Bankruptcy Procedure and Rule 3017-1
of the Local Bankruptcy Rules for the Northern District of California.
2. Copies of the Plan Package, as that term is defined in the
Disclosure Order, and the Official Ballot were properly and timely served in
accordance with the Disclosure Order.
3. Proper and adequate notice of the hearing on confirmation
of the Plan ("Confirmation Hearing") and the last day for filing
objections to the Plan was given.
4. All modifications to the Plan made prior to or at the Confirmation
Hearing and incorporated in the Amended Modification of Debtors' Second Amended
Joint Plan of Reorganization ("Modification") are approved in accordance with
Section 1127 of the Bankruptcy Code and Bankruptcy Rule 3019 and the Court
specifically finds that the modifications do not adversely change the treatment
of the Claims or Interests of any creditors or Interest holders who have not
accepted the modifications and such modifications shall be deemed accepted by
all creditors who have previously accepted the Plan.
ORDER CONFIRMING DEBTORS' SECOND AMENDED 2.
JOINT PLAN OF REORGANIZATION
<PAGE>
5. The tabulation of ballots and the Declaration of Ellen F. McDonald
and Certificate of Ballots are hereby accepted and approved as accurately
setting forth the computation of ballots for purposes of determining all
acceptances and rejections of the Plan.
6. Unless expressly stated otherwise, all terms in this Order
shall have the same meanings as set forth in the Plan.
B. Section 1129(a) Requirements
7. The Plan meets the requirements of Section 1129(a)(1) of
the Bankruptcy Code1 as the Plan complies with all applicable
provisions of Title 11.
8. The Plan meets the requirements of Section 1123(a)(1) as the Plan
properly designates and classifies separate classes of Claims and Interests in
accordance with the requirements of Section 1122, and the Court finds that each
class of Claims and Interests set forth in the Plan consists only of Claims or
Interests that are substantially similar to the other Claims or Interests in
such class.
9.The Plan meets the requirements of Section 1123(a)(2) and
(3) as the Plan properly specifies the classes of Claims and
Interests that are impaired and not impaired under the Plan within
the meaning of Section 1124 of the Bankruptcy Code. The Court finds
that the following classes are impaired under the Plan: the
class 2, 5, 8, 9, 10, 11, 12 and 13 subclasses and classes 6Bl, 6C2 and 7Al.
10. The Plan meets the requirements of Section 1123(a)(4) as
- - --------
1 Section" hereinafter refers to Bankruptcy Code Section,
unless otherwise required by the context
ORDER CONFIRMING DEBTORS' SECOND AMENDED 3.
JOINT PLAN OF REORGANIZATION
<PAGE>
the Plan provides the same treatment for each Claim or Interest of a particular
class, except to the extent that holders of a particular Claim or Interest have
agreed to less favorable treatment of their particular Claims or Interests.
11. The Plan meets the requirements of Section 1123(a)(5) as
the Plan provides adequate means for implementation of the Plan.
12. The Plan meets the requirements of Section 1129(a)(2) as
Debtors, the proponents of the Plan, have complied with all
applicable provisions of Title 11.
13. The Plan meets the requirements of Section 1129(a)(3) as
the Plan has been proposed Debtors in good faith by and not by any
means forbidden by law.
14. The Plan meets the requirements of Section 1129(a)(4) as any and
all payments made or to be made to any person for service or for costs and
expenses in, or in conjunction with, the Plan and incident to the Bankruptcy
Cases have been fully disclosed to the Court and are reasonable and have either
been approved by the Court or will be subject to Court approval.
15. The Plan meets the requirements of Section 1129(a)(5)(A) as Debtors
have disclosed the identity and affiliations of any individuals proposed to
serve, after confirmation of the Plan, as a director, officer or voting trustee
of Debtors, any affiliates of Debtors participating in the Plan and any and all
successors to Debtors under the Plan and the appointment to or continuance in
such office of such individuals is consistent with the interests of creditors
and equity security holders and with public policy.
16. The Plan meets the requirements of Section 1129(a)(5)(B)
ORDER CONFIRMING DEBTORS' SECOND AMENDED 4.
JOINT PLAN OF REORGANIZATION
<PAGE>
as Debtors have disclosed the identify of any insiders that will be employed or
retained by the reorganized Debtors and the nature of any compensation for such
insiders.
17. The requirements of Section 1129(a)(6) pertaining to governmental
regulatory commissions are not applicable to the Plan. 18. The Plan meets the
requirements of Section 1129(a)(7) as each impaired class of Claims or Interests
has accepted the Plan in accordance with the requirements of Section 1126 or
will receive or retain under the Plan on account of such Claim or Interest
property of a value, as of the Effective Date of the Plan, that is not less than
the amount that such holder would so receive or retain if Debtors were
liquidated under Chapter 7 on such date. The Court specifically finds that the
Plan is in the best interest of creditors who have not accepted the Plan and
that, as established in the liquidation analyses presented by Debtors, each
holder of a Claim in impaired classes 2A2, 2Bl, 2B2, 2B3, 2Cl, 2Dl, the Class 11
subclasses and the Class 13 subclasses shall receive distributions under the
Plan which shall have a greater value than projected distributions in a Chapter
7 liquidation. 19. The Plan meets the requirements of Section 1129(a)(9)(A) as
the Plan provides that, except to the extent that the holders of a particular
administrative Claim has agreed to a different treatment of such Claim, holders
of allowed Administrative Expense Claims as defined in the Plan shall receive on
the Effective Date of the Plan cash equal to the Allowed Amount of such Claims
with the following three exceptions which are specifically approved by the
Court:
ORDER CONFIRMING DEBTORS' SECOND AMENDED 5.
JOINT PLAN OF REORGANIZATION
<PAGE>
a) Administrative Expense Claims incurred by Debtors in
the ordinary course of Debtors' business during the bankruptcy
cases shall be paid in the ordinary course of business after
the Effective Date;
b) Administrative Expense Claims for allowance of
professionals' fees and similar fees shall be paid only upon Bankruptcy
Court approval and only in accordance with the terms and conditions of
the Court's order approving such fees.
c) If Debtors have challenged the appraised value of any
Facility, payment of Administrative Expense Claims for post-
petition real property taxes on such Facilities shall not be
paid until completion of the Debtors' challenge to such
appraisal.
20. The Plan meets the requirements of Section 1129(a)(9)(B)
as the Plan provides that with respect to Class 1 priority Claims, including
Claims of a kind specified in Sections 507(a)(3), 507(a)(4), 507(a)(6), or
507(a)(7) holders of such Claims shall receive cash on the Effective Date of the
Plan equal to the Allowed Amount of such Claims.
21. The Plan meets the requirements of Section 1129(a)(10) as at least
one impaired class of Claims, determined without including any acceptances by
insiders, has accepted the Plan. Specifically, classes 2C2, the class 8
subclasses and the class 11 subclasses are impaired and have voted to accept the
Plan in accordance with Section 1126.
ORDER CONFIRMING DEBTORS' SECOND AMENDED 6.
JOINT PLAN OF REORGANIZATION
<PAGE>
22. As further set forth in the specific findings regarding
feasibility,, the Plan meets the requirements of Section 1129(a)(11) as the
Court finds that the Plan is feasible and that confirmation of the Plan is not
likely to be followed by the liquidation or need for further financial
reorganization of Debtors.
23. The Plan meets the requirements of Section 1129(a)(12) with respect
to fees payable under 28 U.S.C. ss. 1930 as all such fees which are due and
owing have been paid or will be paid on the Effective Date, and all fees which
become due after the Effective Date will be paid by the Debtors.
24. The Plan meets the requirements of Section 1129(a)(13) as
Debtors do not have any employee retirement plans and therefore are
not obligated to make any payment for retiree benefits.
C. Feasibility
25. As demonstrated by the Financial Projections attached to the
Disclosure Statement for Debtors' Second Amended Joint Plan of Reorganization
("Disclosure Statement"), the Declaration of Paul Weber, and the historical and
projected occupancy rates of each Agemark Facility as set forth in the
Disclosure Statement, Debtors shall have sufficient working capital to meet
their needs.
26. The conditions to the effectiveness of the Plan set forth in
Article 11 of the Plan have been satisfied or waived, or will be satisfied or
waived, within 120 days after the entry of this order.
27. Debtors have sufficient cash to make all payments for
post-petition real property taxes required by the Plan on the
Effective Date.
ORDER CONFIRMING DEBTORS' SECOND AMENDED 7.
JOINT PLAN OF REORGANIZATION
<PAGE>
28. Debtors' assumption of the unexpired leases and executory contracts
set forth in Exhibit A to the Modification ("Assumed Leases and Contracts"), is
in the best interest of the estate and authorized under Section 365 of
Bankruptcy Code. The Court specifically finds that there are no defaults under
the Assumed Leases and Contracts. The Court further finds that Debtors have
established that they are entitled to assume the Assumed Leases and Contracts in
accordance with Section 365 and that the Plan (i) cures or provides adequate
assurance of prompt cure of any and all defaults; (ii) compensates or provides
adequate assurance of prompt compensation for any actual pecuniary loss to the
parties resulting from such defaults; and (iii) demonstrates adequate assurance
of future performances under the contracts and leases to be assumed. D. Section
1129(b) Requirements
29. The Plan does not discriminate unfairly with respect to
any class of Claims or Interests that is impaired and has rejected
the Plan.
30. The Plan provides fair and equitable treatment with respect to each
rejecting class of Claims or Interests that is impaired under the Plan.
31. The Plan does not discriminate against Classes 2A2, 2Bl, 2B2, 2B3,
2Cl and 2Dl (collectively, the "Nonvoting Tax Classes"), as the Claims in such
classes are not similar to the Claims in any other class. Pursuant to Section
1129(b)(2)(A)(i), the Plan provides fair and equitable treatment of the Claims
in the Nonvoting Tax Classes since the holders of Claims in such classes will
retain the lien securing such Claims and receive deferred cash payments
ORDER CONFIRMING DEBTORS' SECOND AMENDED 8.
JOINT PLAN OF REORGANIZATION
<PAGE>
totaling at least the allowed amount of such Claim, as of the Effective Date of
the Plan, of at least the value of such holder's interest in the estate's
interest in such property.
32. As to the Class 13 subclasses, the Plan provides that the holders
of such Claims shall receive no distributions The Plan does not discriminate
against the Class 13 subclasses as the Claims in such classes are not similar to
the Claims in any other class.
33. Pursuant to Section 1129(b)(2)(B)(ii), the Plan provides
fair and equitable treatment for the Class 13 subclasses as there are
no possible holders of Claims in such classes.
BASED UPON THE FOREGOING, IT IS HEREBY ORDERED AS FOLLOWS:
1. All modifications to the Plan set forth in the Amended
Modification to Debtors' Second Amended Joint Plan of Reorganization
are hereby approved.
2. The Plan, as modified, is hereby confirmed.
3. Debtors and Agemark are hereby authorized to make any and
all distributions contemplated or required under the Plan, as
modified.
4. On or before the Effective Date, Agemark will be incorporated under
the laws of Nevada. The Certificate of Incorporation of Agemark will include
provisions authorizing 20 million shares of common stock and eliminating the
personal liability of the directors for breaches of fiduciary duty in accordance
with the Nevada Code. The Certificate of Incorporation will prohibit the
issuance of nonvoting securities in accordance with Section 1123(a)(6).
ORDER CONFIRMING DEBTORS' SECOND AMENDED 9.
JOINT PLAN OF REORGANIZATION
<PAGE>
5. On the Effective Date, the following actions will deem to
have been taken to complete the organization of Agemark as a Nevada
corporation:
a) The incorporator will appoint Richard Westin, Jesse
Pittore and Stanley Seaman as the three initial directors of
Agemark;
b) The appointed directors of Agemark will (i) adopt
bylaws for Agemark, (ii) appoint Richard Westin, Jesse Pittore
and Stanley Seaman to serve as Agemark's Chief Executive
Officer, Chief Financial Officer and Treasurer, and Secretary,
respectively, (iii) authorize the issuance of one million
shares of Agemark stock pursuant to the terms of the Plan; (iv)
such other resolutions as are customarily taken at the first
meeting of the Board of Directors (or taken by unanimous
written consent in lieu of a meeting), and (v) prepare,
execute, file and deliver such other documents, and take such
other action, as may be necessary or advisable to carry out the
terms of the Plan applicable to Agemark and to organize and
manage the affairs and business of Agemark as contemplated by
the Plan.
6. For two years after the Effective Date, each of the
officers of Agemark referred to in paragraph 8.1.2 of the Plan shall receive
salary for services as an officer and/or director in an amount of no greater
than $1000 per month plus benefits comparable to that which historically has
been received by officers and directors at Westor since the filing of these
cases including, but not limited to, health insurance, life insurance and stock
options.
ORDER CONFIRMING DEBTORS' SECOND AMENDED 10.
JOINT PLAN OF REORGANIZATION
<PAGE>
7. On the Confirmation Date, except as otherwise provided in the Plan,
all property comprising each of the estates of the Debtors will vest initially
in the Debtors, free and clear of all Claims (including Claims between and among
the Debtors), liens, charges, encumbrances and Interests. On the Effective Date,
the Debtors shall transfer all such property pursuant to Paragraphs 8.4 through
8.6 of the Plan.
8. As of the Confirmation Date, the Debtors, and later their successor,
Agemark may operate their businesses and use, acquire and dispose of property
and settle and compromise Claims or Interests without supervision of the Court
and free of any restrictions of the Bankruptcy Code or Bankruptcy Rules
respecting settlement and compromise, other than those restrictions expressly
imposed by the Plan, this Order and any documents entered into in connection
therewith.
9. As of the Effective Date, all assets and liabilities of the Debtors
not otherwise disposed of in the Plan will be transferred to and assumed by
Agemark. Agemark will possess all rights, privileges, remedies, powers and
purposes formerly possessed by the Debtors or any of them. All property of the
Debtors and all debts due on whatever account to the Debtors will vest in
Agemark without further act or deed; and all such property, rights, privileges,
immunities, powers and purposes and all and every other interest of the Debtors
or any of them will thereafter be the property of Agemark as they were for the
Debtors.
10. As of the Effective Date, the Debtors will be dissolved
ORDER CONFIRMING DEBTORS' SECOND AMENDED 11.
JOINT PLAN OF REORGANIZATION
<PAGE>
and wound up. The Debtors shall cease carrying on any business, except
as necessary to satisfy conditions of the Plan.
11. In accordance with Section 1123(b), except as otherwise provided in
the Plan, in any contract, instrument, release or other agreement entered into
in connection with the Plan, or by order of the Bankruptcy Court, Agemark shall
retain and may enforce any Claims, rights and causes of action that the Debtors,
their Estates, or any of them, may have against any entity including, without
limitation, any rights of set-off and recoupment, and any Claims, rights or
causes of action under Sections 505 and 544 through and including 550 of the
Bankruptcy Code or any other applicable law.
12. Agemark may pursue such retained Claims, rights or causes
of action, as appropriate, in accordance with the business judgment
of the board of directors of Agemark.
13. The Debtors and Agemark shall have the authority to make
Claim and Interest Objections. Claim and Interest Objections must
be filed within 90 days of the Effective Date, except that if any holder of a
Claim or Interest files a proof of Claim or Interest subsequent to the Bar Date
or is subsequently allowed by the Court to file a late proof of Claim or
Interest, then Agemark will be allowed to object to such Claim or Interest
within 90 days of the filing thereof.
14. Pursuant to Section 505 of the Bankruptcy Code, the
Debtors and Agemark shall seek the Court's determination of certain
real property secured tax liabilities which the Debtors believe are
currently overstated. If the Debtors are successful in reducing
ORDER CONFIRMING DEBTORS' SECOND AMENDED 12.
JOINT PLAN OF REORGANIZATION
<PAGE>
real property tax liabilities which are secured by Rejected Facilities, the
Liquidating Trustee shall pay 30% of the reduced amount to Agemark.
15. Fees and expenses of professionals incurred through and including
the Confirmation Date, shall be paid by Agemark in accordance with paragraph
5.1.3 of the Plan and only pursuant to orders of the Bankruptcy Court. From and
after the Confirmation Date, the Debtors and Agemark may employ and pay any
professionals without the necessity of a Bankruptcy Court Order, including the
retention and payment of professionals to implement the terms and conditions of
the Plan.
16. Debtors and Agemark are authorized to execute and enter into all
agreements, contracts, releases, waivers, assignments or other documents either
contemplated in or in furtherance of the Plan.
17. Pursuant to Section 365, Debtors are hereby authorized to assume
all executory contracts and unexpired leases set forth in Exhibit A to the
Modification. Debtors are authorized to reject all other executory contracts and
unexpired leases.
18. Any Claim arising from the rejection of any unexpired lease or
executory contract, if allowed, will be a Class 8 general unsecured Claim. The
holders of any Class 8 Claims arising from such rejection must file a proof of
Claim in respect thereof no later than 45 days after the entry of this Order, or
the holder will be barred forever from asserting it. Agemark will serve notice
of the last day to file such Claims within 15 days of the entry of this order.
ORDER CONFIRMING DEBTORS' SECOND AMENDED 13.
JOINT PLAN OF REORGANIZATION
<PAGE>
19. The Debtors, Westor, PIF II, PIF III, the Liquidating Trustee,
Agemark, and any of the respective officers, directors, partners, employees,
members or agents, or any professional person employed by any of them, will not
have or incur any liability to any entity for any act taken or omission made in
good faith in connection with or related to formulating, implementing,
confirming or consummating the Plan, the Disclosure Statement or any contract,
instrument, release or other agreement or document created in connection with
the Plan. The protection afforded by Section 1125 shall apply to the full extent
provided by law with regard to the solicitation of acceptances or rejections of
the Plan. This Confirmation Order shall constitute a determination by the Court
that the Debtors, Agemark, Westor, PIF II, PIF III and the Liquidating Trustee
and their officers, directors, partners, employees, members or agents, and each
attorney, accountant or other professional employed by any of them, have acted
in good faith and in compliance with the applicable provisions of the Bankruptcy
Code.
20. Except as otherwise provided in the Plan, as of the Effective Date,
the Debtors, the Debtors Limited Partners and PIF II and PIF III will be deemed
to have waived all Claims against Westor and released Westor and its principals
from any and all claims or causes of action (including claims which Debtors
otherwise have legal power to assert, compromise or settle in connection with
the Bankruptcy Cases) arising on or prior to the Effective Date except those
claims which may arise out of the Plan and those claims which are asserted in
the Securities Action.
ORDER CONFIRMING DEBTORS' SECOND AMENDED 14.
JOINT PLAN OF REORGANIZATION
<PAGE>
21. Except as otherwise provided in Section 1141(d) of the Bankruptcy
Code, the Plan or this Order, the rights afforded in the Plan and the treatment
of Claims and Interests in the Plan will be in exchange for and in complete
satisfaction, discharge and release of all Claims and Interests, whatsoever,
that arose from any agreement of the Debtors, or any of them, entered into
before Confirmation, or from any conduct of the Debtors, or any of them, prior
to the Confirmation, or that otherwise arose before the Confirmation including,
without limitation, any debt of any kind specified in Section 502(g), (h) or (i)
of the Bankruptcy Code, whether or not (a) a proof of Claim based on such debt
is filed or is deemed filed under Section 501 of the Bankruptcy Code; (b) such
Claim is allowed under Section 502 of the Bankruptcy Code or (c) the holder of
such Claim has accepted the Plan.
22. All Claimants and Interest holders will be precluded from asserting
against the Debtors, or any of them, or Agemark, their successors in interest or
their assets or properties, any other or further Claim or Interests based upon
any act or omission, transaction or other activity of any kind or nature that
occurred prior to the Confirmation Date. The Confirmation Order will act as a
continuing injunction against any Claim or Interest holder from taking any
action against the Debtors, or any of them, Agemark, or their property, except
as otherwise provided in the Plan or to enforce the terms of the Plan.
23. The protection afforded by Section 1145 of the Bankruptcy
Code will apply to the full extent provided by law with regard to
the offer, issuance, sale or purchase of the Agemark Stock, issued
ORDER CONFIRMING DEBTORS' SECOND AMENDED 15.
JOINT PLAN OF REORGANIZATION
<PAGE>
and distributed pursuant to this Plan.
24. In addition, the entry of the Confirmation Order will provide that
the exemption from the requirements of Section 5 of the Securities Act of 1933,
15 U.S.C. ss. 77e, and any state or local law requiring registration for the
offer or sale of a security (including the qualification requirements of Section
25110 of the California Corporate Securities Law of 1968) provided for in
Section 1145,of the Bankruptcy Code and Section 25102(k) of the California
Corporations Code will apply to the Agemark Stock issued under this Plan.
25. Agemark shall file Quarterly Post-Confirmation Reports in
substantially the form of Exhibit 3 hereto with the Court at the expiration of
each calendar quarter, and serve such reports upon the Office of the United
States Trustee not later than twenty (20) days after expiration of the reported
period, beginning with the calendar quarter in which this order is entered and
continuing until the dismissal, conversion, or entry of a final decree closing
these cases.
26. The issuance, transfer or exchange of a security, or the making or
delivery of an instrument of transfer under the Plan will be entitled to the tax
exemption provided by Section 1146(c) of the Bankruptcy Code, and each recording
or other agent of any governmental office will record any such documents of
issuance, transfer or exchange without further direction or order of-the Court.
ORDER CONFIRMING DEBTORS' SECOND AMENDED 16.
JOINT PLAN OF REORGANIZATION
^DOCNUM^
<PAGE>
27. Notwithstanding confirmation of the Plan or occurrence of
the Effective Date, the Court shall retain jurisdiction for the
following purposes:
(1) To hear and determine any and all objections to the
allowance of a Claim or Interest.
(2) To hear and determine any and all adversary proceedings,
applications or litigated matters, including all questions in dispute
regarding title to and value of the assets of the Debtors' estates.
(3) The correction of any defect, the curing of any omission,
or the reconciliation of any inconsistency in this Plan or the
Confirmation Order as may be necessary to carry out the purposes and
intents of the Plan.
(4) Entry of any order, including injunctions, necessary to
enforce the title, rights and powers of Agemark and to impose such
limitations, restrictions, terms and conditions of such title, rights
or powers as the Court may deem necessary.
(5) To hear and determine any and all applications by
professional for compensation and reimbursement of expenses.
(6) To hear and determine Claims arising from rejection
of any executory contracts and unexpired leases.
(7) To enable Agemark to commence and prosecute any and all
proceedings which may be brought after the Confirmation Date related to
Claims, or causes of action which arose prior to the Confirmation Date
or to recover any transfers, assets, property or damages to which
Agemark may be entitled under applicable provisions of the Bankruptcy
Code or other
ORDER CONFIRMING DEBTORS' SECOND AMENDED 17.
JOINT PLAN OF REORGANIZATION
<PAGE>
applicable law, including without limitation under Sections 542 through
553.
(8) To liquidate any disputed contingent or unliquidated
Claims or Interests.
(9) To enter such orders as may be necessary or
appropriate in furtherance of confirmation and implementation
of the Plan.
(10) To enter and implement such orders as may be appropriate
in the event that confirmation is for any reason stayed, reversed,
revoked, modified or vacated.
(11) Modification of the Plan pursuant to Section 1127 of
the Bankruptcy Code.
(12) Adjudication of any motions pursuant to Section 505(b)
regarding the amount of real property tax liabilities.
(13) To enter a final decree closing the Bankruptcy Cases.
Dated: April 29, 1997
/s/ Edward D. Jellen
------------------------------
United States Bankruptcy Judge
ORDER CONFIRMING DEBTORS' SECOND AMENDED 18.
JOINT PLAN OF REORGANIZATION
<PAGE>
TERRENCE V. PONSFORD (State Bar No. 42648)
ELLEN F. McDONALD (State Bar No. 175942)
BRONSON, BRONSON & McKINNON LLP
505 Montgomery Street
San Francisco, California 94111-2514
Telephone: (415) 986-4200
Attorneys for Debtors HISTORIC HOUSING
FOR SENIORS LIMITED PARTNERSHIP, HISTORIC
HOUSING FOR SENIORS II LIMITED PARTNERSHIP,
and HISTORIC HOUSING FOR SENIORS III LIMITED
PARTNERSHIP
EDWARD TREDINNICK (State Bar No. 84033)
PASCOE & RAFTON
1050 Northgate Drive, Suite 356
San Rafael, California 94903
Telephone: (415) 492-1003
Attorneys for Debtor HOUSING FOR SENIORS
PARTICIPATING MORTGAGE FUND LIMITED PARTNERSHIP
UNITED STATES BANKRUPTCY COURT
NORTHERN DISTRICT OF CALIFORNIA
- - ---------------------------------------------
) Case No. 93 46247 J
In re HISTORIC HOUSING FOR ) Case No. 93-46246 J
SENIORS LIMITED PARTNERSHIP, a ) Case No. 93-46245 J
Delaware limited partnership, ) Case No. 95-46713 J
)
Debtor. ) Chapter 11
- - ---------------------------------------------
In re HISTORIC HOUSING FOR )
SENIORS II LIMITED PARTNERSHIP, a )
Delaware limited partnership, )
)
Debtor. )
)
- - ---------------------------------------------
In re HISTORIC HOUSING FOR ) AMENDED MODIFICATION OF
SENIORS III LIMITED PARTNERSHIP, ) DEBTORS' SECOND AMENDED
a Delaware limited partnership, ) JOINT PLAN OF
) REORGANIZATION
Debtor. ) ----------------------------
)
In re HOUSING FOR SENIORS )
PARTICIPATING MORTGAGE FUND ) Date: April 24, 1997
LIMITED PARTNERSHIP, ) Time: 11:30 a.m.
Debtor. ) Place: Courtroom 215
)
- - ---------------------------------------------
-1-
AMENDED MODIFICATION OF DEBTORS' SECOND AMENDED JOINT
PLAN OF REORGANIZATION
<PAGE>
Pursuant to Bankruptcy Code ss. 1127, the Debtors and Debtors in
Possession in the above-captioned cases hereby modify Debtors' Second Amended
Joint Plan of Reorganization ("Plan") as follows:
1. The first paragraph of Article 4 is amended to add the sentence:
"Each 'subclass' in the Plan is a 'class' for all purposes, and the terms
'subclass' and 'class' shall be interchangeable in this Plan."
2. Article 7.2.1 of the Plan is modified to add the sentence:
"Nothwithstanding the above, Claims in Classes 2A1, 2A2, 2B1, 2B2, 2B3, 2C1, 2C2
and 2D1 may receive on account of their claim payment of their allowed claim as
otherwise agreed between the Debtors and the holder of such claim."
3. Article 8.12.2 is modified to add the sentence: "As agreed between the
parties, the Tax Notes issued on account of the Claims in Classes 2A1 and 2C2
shall bear interest at eight percent (8%) per annum from and after the
Effective Date."
4. Article 11.3 of the Plan is modified to change "30 days" to "120
days" such that if each of the conditions to the occurrence of the effective
date has not be.en satisfied or duly waived on or before 120 days after the
Confirmation Date upon motion by any party in interest the Confirmation Order
may be vacated by the Court.
5. Article 8.1.3 is modified to provide as follows:
"For two years after the Effective Date, each of the officers
of Agemark referred to in paragraph 8.1.2 of the Plan shall receive salary for
services as an officer and/or director in an amount of no greater than $1000 per
month plus benefits comparable to that which historically has been received by
-2-
AMENDED MODIFICATION OF DEBTORS' SECOND AMENDED JOINT
PLAN OF REORGANIZATION
<PAGE>
officers and directors at Westor since the filing of these cases including, but
not limited to, health insurance, life insurance and stock options."
6. The first paragraph of Article 14.2 is modified to provide as follows:
"14.2 Applicability of Sections 1125 and 1145 of the Bankruptcy Code.
--------------------------------------------------------------
The protection afforded by Section 1145 of the Bankruptcy Code will
apply to the full extent provided by law with regard to the offer, issuance,
sale or purchase of. the Agemark Stock, issued and distributed pursuant to this
Plan. The protection afforded by Section 1125 of the Bankruptcy Code will apply
to the full extent provided by law with regard to the solicitation of
acceptances or rejections of this Plan. The entry of the Confirmation order will
constitute the determination by the Bankruptcy Court that the Debtors and their,
officers, directors, partners, employees, members or agents, and each attorney,
accountant, or other professional employed by any of them, will have acted in
good faith and in compliance with the applicable provisions of the Bankruptcy
Code."
7. A final list of executory contracts and unexpired leases to be assumed
pursuant to the Plan is attached hereto as Exhibit A.
-3-
AMENDED MODIFICATION OF DEBTORS' SECOND AMENDED JOINT
PLAN OF REORGANIZATION
<PAGE>
8. All other terms of the Plan, not inconsistent herewith, shall remain
in full force and effect.
Dated: April __, 1997 BRONSON, BRONSON & McKINNON LLP
By: ----------------------------------
Ellen F. McDonald
Attorneys for HISTORIC HOUSING
FOR SENIORS LIMITED PARTNERSHIP,
HISTORIC HOUSING FOR SENIORS II
LIMITED PARTNERSHIP, and HISTORIC
HOUSING FOR SENIORS III LIMITED
PARTNERSHIP
APPROVED AS TO FORM AND CONTENT:
Dated: April __, 1997 JAMES K. CAMERON & ASSOCIATES
By: ----------------------------------
James K. Cameron
Attorneys for SHELDON SOLOW,
LIQUIDATING TRUSTEE OF PREFERRED
INCOME FUND II LIMITED PARTNERSHIP
and PREFERRED INCOME FUND III
LIMITED PARTNERSHIP
-4-
AMENDED MODIFICATION OF DEBTORS' SECOND AMENDED JOINT
PLAN OF REORGANIZATION
<PAGE>
8. All other terms of the Plan, not inconsistent herewith,
shall remain in full force and effect.
Dated: April __, 1997 BRONSON, BRONSON & McKINNON LLP
By: ----------------------------------
Ellen F. McDonald
Attorneys for HISTORIC HOUSING
FOR SENIORS LIMITED PARTNERSHIP,
HISTORIC HOUSING FOR SENIORS II
LIMITED PARTNERSHIP, and HISTORIC
HOUSING FOR SENIORS III LIMITED
PARTNERSHIP
APPROVED AS TO FORM AND CONTENT:
Dated: April __, 1997 JAMES K. CAMERON & ASSOCIATES
By: ----------------------------------
James K. Cameron
Attorneys for SHELDON SOLOW,
LIQUIDATING TRUSTEE OF PREFERRED
INCOME FUND II LIMITED PARTNERSHIP
and PREFERRED INCOME FUND III
LIMITED PARTNERSHIP
-4-
AMENDED MODIFICATION OF DEBTORS' SECOND AMENDED JOINT
PLAN OF REORGANIZATION
<PAGE>
FORT MADISON CONTRACTS
Parties on Contract: Rappaport Co, Inc. and Mid-America Alarm Services, Inc.
Description: Alarm system maintenance
Nature of Interest: Subscriber
Payments: Quarterly payments of $30.05
Term: Month-to-month
Expiration:
CONTACT ADDRESS:
P.O. Box 431
Marion, IA 52302
Parties on Contract: The Kensington and HoneywelL Inc.
Description: Fire Alarm and Security System Testing and Inspection
Nature of Interest: Client
Payments: $182.25 per month
Term: Month-to-month
Expiration:
CONTACT ADDRESS:
3705 Utica Ridge Road
Bettendorf, IA 52722
Parties on Contract: Kensington Group and Wagner Elevator Service, Inc.
Description: Provide monthly maintenance
for Otis Traction Duplex Elevator Nature of Interest: Owner
Payments: $326.72 per month
Term: Month-to-month
Expiration:
CONTACT ADDRESS:
P.O. Box 902
Burlington, IA 52601
Parties on Contract: The Kensington and Lee County Health Dept and Wagner
Elevator Service, Inc.
Description: Provide monthly maintenance for Montgomery Elevator in
1912 Building
Nature of Interest: Owner
Payments: $91.93 per month
Term: Month-to-month
Expiration:
CONTACT ADDRESS:
P.O. Box 902
Burlington, IA 52601
Parties on Contract: Kensington and Diversy Water Technologies
Description: Contract for water management services and equipment
Nature of Interest: Customer
Payments: $507.90 quarterly
Term: Two years
Expiration: February 28, 1999
CONTACT ADDRESS:
7145 Pine Street
Chagrin Falls OH 44022
EXHIBIT "A"
-----------
<PAGE>
Parties on Contract: The Kensington and J & S Electronic Business Systems, Inc.
Description: Panasonic Copier Maintenance Agreement
Nature of Interest: Customer
Payments: $549.00 per year
Term: One year
Expiration: January 4, 1998
CONTACT ADDRESS:
878 Jefferson Street
Burlington, IA 52601
Parties on Contract: Historic Housing for Seniors III and Cablevision VII, Inc.
Description: Provide basic cable services
Nature of Interest: Owner
Payments: $825.15 per month
Term: One Year
Expiration: December 31, 1997
CONTACT ADDRESS:
617 Avenue G
Fort Madison, IA 52627
Parties on Contract: The Kensington and ABC Fire Extinguisher Sales and Service
Description: Perform inspections, testing and maintenance on Safety First system
Nature of Interest: Customer
Payments: $80.00 per year
Term: Month-to-mouth
Expiration:
CONTACT ADDRESS:
418 East Wheeler Street
West Burlington, IA 52655
Parties on Contract: The Kensington and Fort Madison Rodeo Corporation
Description: Fence advertising space
Nature of Interest: Advertiser
Payments: $350.00 per year
Term: Five years
Expiration: March 1, 1998
CONTACT ADDRESS:
P.O. Box 80
Ft. Madison, IA 52627
Parties on Contract: The Kensington and Orkin Exterminating Company, Inc.
Description: Pest Control Service
Nature of Interest: Customer
Payments: $90.00 per month
Term: Month-to-month
Expiration: 60 days written notice
CONTACT ADDRESS:
<PAGE>
ROCK ISLAND CONTRACTS
Parties on Contract: The Fort Armstrong and Iowa Illiois Termite and Pest
Control, Inc.
Description: Pest Control as scheduled
Nature of Interest: Customer
Payments: 138.00 per month
Term: Month-to-month
Expiration:
CONTACT ADDRESS:
3909 Marquette Street
Davenport, IA 52806
Parties on Contract: Fr. Armstrong Hotel and Montgomery Kone Elevator Company
Description: Elevator maintenance for two elevators
Nature of Interest: Purchaser
Payments: $421.53 per month
Term: Five Years
Expiration: December 31, 2000
CONTACT ADDRESS:
1801 Third Avenue
Moline, IL 61265
Parties on Contract: The Fort Armstrong and Dr. Robert Flowers
Description: Medical advisor for benefit of its residents
Nature of Interest:
Payments: $300.00 per month
Term: One year automatic renewal - 30 day notification termination clause
Expiration: August 5, 1997
CONTACT ADDRESS:
2508 25th Street, Suite F
Rock Island, IL 61201
Parties on Contract: Fort Armstrong and R.K. Dixon Company
Description: Copier Maintenance
Nature of Interest: Owner
Payments: $320.59 per year
Term: One Year
Expiration: February 13, 1998
CONTACT ADDRESS:
5111 Tremont, Suite C
Davenport, IA 52807
Parties on Contract: The Fort Armstrong/Evergreen Management Inc. and
TCI of Illinois, Inc.
Description: Provide basic and premium pay cable service
Nature of Interest: Cable Company
Payments: $948.29 per month
Term: Seven Year Term
Expiration: January 1, 1998
CONTACT ADDRESS:
2750 11st Street
Rock Island, IL 61201
<PAGE>
Parties on Contract: The Fort Armstrong and Catholic Social Services
Description: Commercial lease for business retail space
Nature of Interest: Lessor
Payments: 1,475.00 per month
Term: Three years
Expiration: March 31, 1998
CONTACT ADDRESS:
1900 3rd Avenue
Rock Island, IL 61201
Parties on Contract: Ft. Armstrong and Watts Disposal Systems Inc
Description: One - three cubic yard container picked up 3 times per week
Nature of Interest: Customer
Payments: $170.00 per month
Term: One year
Expiration: October 16,1998
CONTACT ADDRESS:
43 8 4th Street
Rock Island, IL 61201
Parties on Contract: Ft. Armstrong and PerMar Security Services
Description: Fire Alarm Monitoring Services
Nature of Interest: Customer
Payments: $942 per year
Term: One Year
Expiration: October 11, 1997
CONTACT ADDRESS:
425 West 2nd St
Moline, IL 52808
<PAGE>
SEDALIA CONTRACTS
Parties on Contract: The Kensington and Check Office Equipment Co.
Description: Furnish service for Konica 1503 copy machine
Nature of Interest: Equipment Holder
Payments: $300.44 per year. Vaughn will change to his name in July 8, 1997
Term: One Year
Expiration: July 8,1997
CONTACT ADDRESS:
Parties on Contract: The Kensington Bothwell and Otis Elevator Company
Description: Furnish extended elevator maintenance coverage
Nature of Interest: Customer
Payments: $711.59 per mouth
Term: Five Years
Expiration: April 30, 2000
CONTACT ADDRESS:
7048 Universal Avenue
Kansas City, MO 64120
<PAGE>
MANITOWOC CONTRACTS
Parties on Contract: Historic Housing for Seniors III and Northwestern Elevator
Co., Inc.
Description: Semimonthly examination and inspection of elevator
Nature of Interest: Purchaser
Payments: $160.85 per month
Term: Five years
Expiration: December 31, 1997
CONTACT ADDRESS:
6070 North Flint Road
Milwaukee, WI 5320-0976
Parties on Contract: Evergreen Inn and Orkin Exterminating Company Inc.
Description: Pest Control Service
Nature of Interest: Customer
Payments: $62.00 per month
Term: Mouth to Month
Expiration: 60 days written notice
CONTACT ADDRESS:
Parties on Contract: Evergreen Inn arid A & A Time and Security, Inc.
Description: Alarm monitoring service agreement
Nature of Interest: Subscriber Payments: $49.35 per quarter
Term: Month to month
Expiration:
CONTACT ADDRESS:
2260 Salscheider Ct.
Green Bay, WI 54313
Parties on Contract: The Evergreen Inn and Silver Lake College
Description: Provide apartments for rental
Nature of Interest: Lessor
Payments: $285 per double/$185 per single - July 31, 1996. $300 per double/$200
per single through July 31, 1997
Term: Three years
Expiration: July 31, 1997
CONTACT ADDRESS:
2406 South Alverno Road
Manitowoc, WI 54220
<PAGE>
CHAMPAIGN CONTRACTS
Parties on Contract: The Inman and United Waste Systems, Inc.
Description: Trash pick up two days per week
Nature of Interest: Customer
Payments: $63.00 per month
Term: One year
Expiration: June 30, 1997
CONTACT ADDRESS:
P.O. Box 1006
Champaign, IL 61824-1006
Parties on Contract: The Inman and Alarm Service Inc.
Description: Provide equipment direct wire and monitoring service
Nature of Interest: Subscriber
Payments: $20.00 per month
Term: One Year
Expiration: May 31, 1997
CONTACT ADDRESS:
208 South Chestnut
Champaign, IL
Parties on Contract: The Westor Financial Group and Otis Elevator Company
Description: Maintenance, performance, safety tests, parts inventory and wiring
diagrams
Nature of Interest: Owner
Payments: $877.90 per quarter
Term: Five years
Expiration: July 14, 2001
CONTACT ADDRESS:
Minneapolis, MN
Parties on Contract: The Inman and Orkin Exterminating Company, Inc.
Description: Pest control service
Nature of Interest: Customer
Payments: $77.00 per month
Term: Month to month
Expiration: 60 days written notice
CONTACT ADDRESS:
Parties on Contract: The Inman and Addus Health Care
Description: Provide housekeeping services for the building
Nature of Interest: Customer
Payments: $ 1000.00 per month
Term: Month to month
Expiration: 30 day written notice
CONTACT ADDRESS:
515 Edgebrook, #46
Champaign, IL
<PAGE>
PORT HURON CONTRACTS
Danka Industries Inc. Description: Copier maintenance
P.O. Box 152146 Nature of Interest: Operator
Irving, TX 75015-2146 Monthly Charge: Annual $620.10
Term: One year
Expiration: July 28, 1997
Dyck Security Service, Inc. Description: Monitor alarms
2425 Minnie Street Nature of Interest: Operator
Port Huron, NU 48060 Monthly Charge: Quarterly $75.00
Term: Month to month
Expiration:
First American Healthcare Description: Home Health Contract
P.O. Box 930824 Nature of Interest: Owner
Atlanta, GA 31193 Monthly Charge: $28.00 per hour LPN Charge
Term: One Year
Expiration: September 1, 1997
Foster Grandparents Description: Office Lease
1026 Military Street Nature of Interest: Leasee
Port Huron, W 48060 Monthly Charge: $400.00
Term:
Expiration: June 1, 1997
Harron Cable TV Description: Cable TV Contract
2780 Beach Road Nature of Interest: Operator
Port Huron, NU 48061-1008 Monthly Charge: $8 per month per unit
Term: One year
Expiration:
Joann Kahnt Description: Beauty Shop Lease
1026 Military Street Nature of Interest: Leasee
Port Huron, MI 48060 Monthly Charge: $225.00
Term: 12 months
Expiration: March 31, 1997
Detroit Edison Description: Elevator Maintenance Agreement
Facilities Management and Service Nature of Interest: Owner
4901 Pointe Drive Monthly Charge: $648.98 per quarter
East China Twp, MI 48054 Term: Five Years
Expiration: December 1, 2000
Simplex Time Recorder Company Description: Monitor & maintain fire alarm
31572 Industrial Road, Suite 200 Nature of Interest: Operator
Livionia, MI 48150 Monthly Charge: $2,649 annually
Term: One year
Expiration: April 30,1998
St. Clair County Council Description: Office Lease
on Aging Inc. Nature of Interest: Leasee
1321 8th Street Monthly Charge: $500.00
Port Huron, MI 48060 Term: One year
Expiration: February 1, 1998
<PAGE>
CUMBERLAND CONTRACTS
Parties on Contract: Evergreen Management, Inc. and The Memorial Hospital and
Medical Center of Cumberland Inc.
Description: Provide nursing services for the residents
Nature of Interest:
Payments: $20.00 per hour for nursing hours and $13.00 per hour for personal
care
Term: One year
Expiration: November 30,1997
CONTACT ADDRESS:
600 Memorial Avenue
Cumberland, MD 21502
Parties on Contract: Kensington Cumberland and Rental Uniform Service of
Cumberland, Inc.
Description: Provide door mats
Nature of Interest: Customer
Payments: $5.37 per week per mat
Term:
Expiration: Month-to-month
CONTACT ADDRESS:
P.O. Box 2423
Cumberland, MD 21502
Parties on Contract: Kensington - Algonquin and Grinnell Fire Protection
Systems Company, Inc.
Description: Inspect and/or test fire equipment
Nature of Interest: Subscriber
Payments: $985.00 per year
Term: One Year
Expiration: May 31, 1997
CONTACT ADDRESS:
9640 Gerwig lane
Columbia, MD 21046
Parties on Contract: Kensington Algonquin and HPSI
Description: Right to purchase supplies at group discount prices
Nature of Interest: Member
Payments: $500 per year payable monthly
Term: One year
Expiration: May 17,1997
CONTACT ADDRESS:
229 Hanover Street
Annapolis, MD 21401
Parties on Contract: Kensington and Otis Elevator Company
Description: Provide monthly maintenance service for passenger elevator
Nature of Interest:
Payments: $462.25 per month
Term: Five years
Expiration: July 25, 1999
CONTACT ADDRESS:
P.O. Box 13716
Newark, NJ 07188
<PAGE>
Parties on Contract: Kensington and Otis Elevator Company
Description: Provide monthly maintenance service for service elevator
Nature of Interest:
Payments: $169.61 per quarter
Term: Month to month
Expiration: 30 days written notice
CONTACT ADDRESS:
P.O. Box 13716
Newark, NJ 07188
Parties on Contract: Kensington and Home Paramount Pest Control Company
Description: Provide pest control monthly
Nature of Interest: Company
Payments: $110 per month
Term: 12 Months
Expiration: October 13,1997
CONTACT ADDRESS:
Parties on Contract: Kensington Algonquin and Howell Trucking, Inc.
Description: Provide containers for solid waste disposal
Nature of Interest: Customer
Payments: $252.00 per month
Term: One Year
Expiration: April 23, 1998
CONTACT ADDRESS:
14108 Canal Road SE
Cumberland, MD 21503-2421
<PAGE>
BEATRICE CONTRACTS
Parties on Contract: Paddock-Kensington and Beatrice Community Hospital and
Health Center
Description: Provide assistance with medication for the residents
Nature of Interest: Customer
Payments: $12,000 per year, prorated and paid monthly
Term: One Year
Expiration: April 30, 1997
CONTACT ADDRESS:
1110 N. 10th
Beatrice, NE 68310
Parties on Contract: Paddock-Kensington and Beatrice Community Hospital and
Health Center
Description: Provide license, staffing, care management of the residents
Nature of Interest: Customer
Payments: $25,500 per year, prorated and paid monthly
Term: One Year
Expiration: April 30,1997
CONTACT ADDRESS:
1110 North 10th
Beatrice, NE 68310
Parties on Contract: Paddock Kensington and Culligan of Friend, NE.
Description: Provide Culligan Salt Delivery Service
Nature of Interest: Customer
Payments: $106.50 per month
Term: 36 months
Expiration: September 8, 1999
CONTACT ADDRESS:
P.O. Box 242
Crete, NE 68333
Parties on Contract: The Kensington and Peoples Natural Gas
Description: Perform described kitchen equipment preventative maintenance
Nature of Interest: Owner/Customer
Payments: 12 monthly payments of $36.00 each
Term: One Year
Expiration: November 23, 1997
CONTACT ADDRESS:
Indian Creek Mall
Beatrice, NE 68310
Parties on Contract: The Kensington Apts and Montgomery Kone
Description: Elevator maintenance contract
Nature of Interest: Customer
Payments: $108.53
Term: One Year
Expiration: April 1, 1998
CONTACT ADDRESS:
5710 South 77th Street
Ralston, NE 68127
<PAGE>
Parties on Contract: Paddock Kensington and A.R.E. Pest Control
Description: Pest control
Nature of Interest: Customer
Payments $280.00 per month
Term: Month-to-month
Expiration:
CONTACT ADDRESS:
571 West Mary
Beatrice, NE 68310
Parties on Contract: Paddock Kensington and McLeod USA for Telecom USA Directory
Description: Advertising agreement for Lincoln, Beatrice, Nebraska City, York
and surrounding areas Phonebook
Nature of Interest: Customer
Payments: $38.75 per month
Term: 12 months
Expiration: October 1997
CONTACT ADDRESS:
11218 John Galt Blvd, Suite 201
Omaha, NE 68137
Parties on Contract: Historic Housing for Seniors Limited Partnership and
Emmett L. James
Description: Commercial lease
Nature of Interest: Lessor
Payments: $809.00
Term: Three years
Expiration: October 31, 1998
CONTACT ADDRESS:
2123 High
Beatrice, NE 68310
Parties on Contract: Kensington and Solutions
Description: Maintenance service for Minolta Photocopier
Nature of Interest: Customer
Payments: $26.45 per month
Term: One year
Expiration: August 28, 1997
CONTACT ADDRESS:
2535 O Street
Lincoln, NE 68510
<PAGE>
NORFOLK CONTRACTS
Parties on Contract: Kensington Evergreen and Ecolab Pest Elimination
Description: Pest control
Nature of Interest: Customer
Payments $105.00 per month
Term:
Expiration:
CONTACT ADDRESS: P.O. Box 6007
Grand Forks, NE 58206-6007
Parties on Contract: Kensington -Norfolk and Presto X-Company
Description: Pigeon control
Nature of Interest: Customer
Payments S45.00 per month
Term:
Expiration:
CONTACT ADDRESS:
P.O. Box 2578
Omaha, NE 68103-2578
Parties on Contract: The Kensington - Norfolk and Affiliated Waste Services, LLC
Description: Provide daily trash service Monday through Saturday
Nature of Interest: Customer
Payments: $150.00 per month
Term: Month-to-month
Expiration: 30 day written notice
CONTACT ADDRESS:
P.O. Box 1566
Norfolk, NE 68702-1566
Parties on Contract: The Kensington Norfolk and The Uptown, Inc.
Description: Commercial lease
Nature of Interest: Lessor
Payments: $975.00 per month
Term: Three Years
Expiration: June 30, 1997
CONTACT ADDRESS:
326 Norfolk Ave
Norfolk, NE 68701
<PAGE>
CHANUTE CONTRACTS
Parties on Contract: The Tioga and Southwestern Bell Yellow Pages, Inc.
Description: Advertising in white and yellow pages
Nature of Interest: Contracting party
Payments: $46.75 per month
Term: One year
Expiration: May 31, 1997
CONTACT ADDRESS:
10159 East 11th, Suite 500
Tulsa, OK 74128
Parties on Contract: Westin Financial Group and Otis Elevator Company
Description: Provide elevator maintenance
Nature of Interest: Owner
Payments: $832.13 per month
Term: Five years
Expiration: May 31, 2000
CONTACT ADDRESS:
4065 North Woodlawn, Suite 3
Wichita, KS 67220
Parties on Contract: The Tioga and Galt Pest Control, Inc.
Description: Provide pest control
Nature of Interest: Customer
Payments: $87.00 per month + $3.00 for one room units and $3.50 for two room
units
Term: Month to month
Expiration:
CONTACT ADDRESS:
14 South Highland
Chanute, KS 66720
Parties on Contract: The Tioga and Cable Vision
Description: Provide cable service
Nature of Interest: Subscriber
Payments $547.99 per month
Term: Month to month
Expiration:
CONTACT ADDRESS:
208 North Lincoln
Chanute, KS 66720
Parties on Contract: The Tioga and Copy Products, Inc.
Description: Provide copier service
Nature of Interest: Customer
Payments: $510.00 per year
Term: One Year
Expiration: September 14, 1997
CONTACT ADDRESS:
207 South Jefferson
Iola, KS 66749
<PAGE>
HASTINGS CONTRACTS
Parties on Contract: The Kensington and Culligan
Description: Rental of water softener
Nature of Interest: Lessee
Payments: $45.58 per month
Term: Month-to-month
Expiration: 30 days notice
CONTACT ADDRESS:
P.O. Box 883
Hastings, NE 68902
Parties on Contract: Kensington and Ecolab, Inc.
Description: Rental of single rack Hobart dishwasher
Nature of Interest: Lessee
Payments: $67.79 per month plus $150.00 per month of Chemical products
Term: One Year
Expiration: October 1997
CONTACT ADDRESS:
Ecolab Center
St. Paul, MN 55102
Parties on Contract: Kensington Apartments and Montgomery Elevator Company
Description: Monthly elevator maintenance
Nature of Interest: Purchaser
Payments: $128.87 per month
Term: One Year
Expiration: March 31, 1998
CONTACT ADDRESS:
5710 South 77th Street
Ralston, NE 68127
Parties on Contract: The Kensington and Home Care Unlimited
Description: Provide home health services for the Kensington residents
Nature of Interest: Customer
Payments: $3,000 per month
Term: Can be terminated with 60 days written notice
Expiration: Month to month
CONTACT ADDRESS:
233 North Hastings, Suite 103
Hastings, NE 68901
Parties on Contract: The Kensington and McQuillan Fire Control Company
Description: Semi-annual Inspection and maintenance service
Nature of Interest: Customer
Payments: $40.00 per inspection
Term: Can be terminated with 30 days written notice
Expiration: Month-to-month
CONTACT ADDRESS:
P.O. Box 192
Hastings, NE 68902-0192
<PAGE>
Parties on Contract: The Kensington and Woodward's Disposal Service, Inc.
Description: Provide trash service
Nature of Interest: Customer
Payments: $189.77 per month
Term: One year
Expiration: October 1997
CONTACT ADDRESS:
1039 South Burlington
Hastings, NE 68901
Parties on Contract: The Kensington and American Telecasting
Description: Provide cable service
Nature of Interest: Customer
Payments: $643.96 per month
Term: 5 Year Term
Expiration: December 2001
CONTACT ADDRESS:
2441 North 9th Street
Lincoln, NE 68521
Parties on Contract: The Kensington and Electronic Systems
Description: Semi-annual inspection of fire alarm system
Nature of Interest: Customer
Payments: $120 per year
Term: One Year
Expiration: January 1998
CONTACT ADDRESS:
P.O. Box 1260
Hastings, NE 68901
Parties on Contract: The Kensington and Williams Exterminating Inc.
Description: Provide monthly pest control service
Nature of Interest: Customer
Payments: $200.00 per month
Term: Month-to-month
Expiration: 30 days notice
CONTACT ADDRESS:
301 Keystone
Hastings, NE 68901
Parties on Contract: The Kensington and Nebraska Fire Sprinkler
Description: Periodic, annual inspection of sprinkler system
Nature of Interest: Customer
Payments: $105.00
Term: One Year
Expiration: January 1998
CONTACT ADDRESS:
118 Apollo Avenue
Alda, NE 68810
<PAGE>
Parties on Contract: The Kensington and US West Direct
Description: Yellow page ads
Nature of Interest: Customer
Payments: $25.10 per month
Term: One Year
Expiration: May 23, 1997
CONTACT ADDRESS:
6300 Shingle Creek Parkway
Brooklyn Center, MN 55430-2156
Parties on Contract: The Kensington and Frontier Directory Co. of Nebraska Inc.
Description: Yellow page ads
Nature of Interest: Customer
Payments: $69.20 per month
Term: One year
Expiration: July 1997
CONTACT ADDRESS:
Box 607
Columbus, NE 68602
Parties on Contract: Kensington and US West Communication
Description: Provide yellow page advertising
Nature of Interest: Customer
Payments: $50.10 per month
Term: One Year
Expiration: May 1997
CONTACT ADDRESS:
P.O. Box 737
Des Moines, IA 50338-0001
Parties on Contract: Kensington and Aliant Communications
Description: Yellow page advertising
Nature of Interest: Customer
Payments: $88.51 per month
Term: One Year
Expiration: August 1997
CONTACT ADDRESS:
Box 81249
Lincoln, NE 68501-1249
<PAGE>
TERRANCE V. PONSFORD (State Bar No. 42648)
JENNIFER R. WOODS (State Bar No. 161150)
BRONSON, BRONSON & McKINNON LLP
505 Montgomery Street
San Francisco, California 94111-2514
Telephone: (415) 986-4200
Attorneys for Debtors HISTORIC HOUSING
FOR SENIORS LIMITED PARTNERSHIP, HISTORIC
HOUSING FOR SENIORS II LIMITED PARTNERSHIP,
and HISTORIC HOUSING FOR SENIORS III LIMITED
PARTNERSHIP
EDWARD TREDINNICK (State Bar No. 84033)
PASCO & RAFTON
1050 Northgate Drive, Suite 356
San Rafael, California 94903
Telephone: (415) 492-1003
Attorneys for Debtor HOUSING FOR SENIORS
PARTICIPATING MORTGAGE FUND LIMITED PARTNERSHIP
UNITED STATES BANKRUPTCY COURT
NORTHERN DISTRICT OF CALIFORNIA
___________________________________
)
In re HISTORIC HOUSING FOR SENIORS ) Case No. 93-46247 J
LIMITED PARTNERSHIP, a Delaware )
limited Partnership, ) Chapter 11
)
Debtor. )
___________________________________)
)
In re HISTORIC HOUSING FOR ) Case No. 93-46246 J
SENIORS II LIMITED PARTNERSHIP, )
a Delaware limited partnership, ) Chapter 11
)
Debtor. )
___________________________________)
)
In re HISTORIC HOUSING FOR ) Case No. 93-46245 J
SENIORS III LIMITED PARTNERSHIP, )
a Delaware limited partnership, ) Chapter 11
)
Debtor. )
___________________________________)
)
In re HOUSING FOR SENIORS ) Case No. 95-46713 J
PARTICIPATING MORTGAGE FUND )
LIMITED PARTNERSHIP, ) Chapter 11
)
Debtor. ) DEBTOR'S SECOND AMENDED
___________________________________) -----------------------
JOINT PLAN OF REORGANIZATION
----------------------------
DEBTOR'S SECOND AMENDED JOINT Exhibit A-1
PLAN OF REORGANIZATION
<PAGE>
TABLE OF CONTENTS
Page
ARTICLE 1 INTRODUCTORY STATEMENT...............................................1
ARTICLE 2 DEFINITIONS..........................................................2
2.1 Definitions..........................................................2
ARTICLE 3 DESIGNATION OF UNCLASSIFIED CLAIMS..................................16
ARTICLE 4 CLASSIFICATION OF CLAIMS AND INTERESTS..............................17
4.1 Class 1: Priority Claims...........................................17
4.1.1 Class 1A: Priority Claims Against HHS I...................17
4.1.2 Class 1B: Priority Claims Against
HHS II....................................................17
4.1.3 Class 1C: Priority Claims Against HHS
III.......................................................17
4.1.4 Class 1D: Priority Claims Against PIF I...................17
4.2 Class 2: Real Property Secured Tax Claims..........................17
4.2.1 Class 2A: Real-Property Secured Tax
Claims Against HHS I.............................18
4.2.1.1 Class 2A1: Real Property Secured
Tax Claim by the Gage County
Treasurer........................................18
4.2.1.2 Class 2A2: Real Property Secured
Tax Claim by the Allegheny County
Tax and Utility Office...........................18
4.2.2 Class 2B: Real Property Secured Tax
Claims Against HHS II.....................................18
4.2.2.1 Class 2B1: Real Property Secured
Tax Claim by the Office of Neosho
County Treasurer.................................18
4.2.2.2 Class 2B2: Real Property Secured
Tax Claim by Schneider investment................18
4.2.2.3 Class 2B3: Real Property Secured
Tax Claim by the Pettis County
Collector........................................18
4.2.3 Class 2C: Real Property Secured Tax
Claims Against HHS III....................................19
4.2.3.1 Class 2C1: Real Property Secured
Tax Claim by the Manitowoc County
Treasurer........................................19
4.2.3.2 Class 2C2: Real Property Secured
Claim b Richard Bump.............................19
4.2.3.3 Class 2D: Real Property Secured Tax
Claims Against PIF 1.............................19
4.2.3.4 Class 2DI: Real Property Secured
Tax Claim by the City of Port
Huron............................................19
4.3 Class 3: Mechanics Lien Claims.....................................19
4.3.1 Class 3B: Mechanics Lien Claims Against
HHS II....................................................19
4.3.1.1 Class 3B1: Mechanics Lien on the
Rock Island HHS II Facility......................19
DEBTOR'S SECOND AMENDED JOINT Exhibit A-i
PLAN OF REORGANIZATION
<PAGE>
4.4 Class 4Al:-Secured Claim of United First National
Bank Against HHS I.................................................20
4.5 Class 5: Allowed Secured Claims of PIF I Against
the HHS Debtors....................................................20
4.5.1 Class 5A: Allowed Secured Claims of
PIF I Against HHS I.......................................20
4.5.1.1 Class 5AI: PIF I Secured Claim
Secured by the Cumberland/HHS I
Facility.........................................20
4.5.1.2 Class 5A2: PIF I Secured Claim
Secured by the Beatrice/HHS I
Facility.........................................20
4.5.2 Class 5B: Allowed Secured Claims of
PIF I Against HHS II......................................20
4.5.2.1 Class 5B1: PIF I Secured Claim
Secured b the Sedalia/HHS II
Facility.........................................20
4.5.2.2 Class 5B2: PIF I Secured Claim
Secured by the Chanute/HHS II
Facility.........................................21
4.6 Class 6: Allowed Secured Claims of PIP II Against
the HHS Debtors....................................................21
4.6.1 Class 6A: Allowed Secured Claims of
PIF II Against HHS I......................................21
4.6.2 Class 6B: Allowed Secured Claims of
PIF II Against HHS II.....................................21
4.6.2.1 Class 6B1: PIF II Secured Claim
Secured b the Rock Island/HHS II
Facility.........................................21
4.6.2.2 Class 6B2: PIF II Secured Claim
Secured b the Joliet/HHS II
Facility.........................................21
4.6.2.3 Class 6B3: PIP II Secured Claim
Secured b the Norfolk/HHS II
Facility.........................................21
4.6.3 Class 6C: Allowed Secured Claims of
PIF II Against HHS III....................................22
4.6.3.1 Class 6C1: PIP II Secured Claim
Secured by the Champaign/HHS III
Facility.........................................22
4.6.3.2 Class 6C2: PIP II Secured Claim
Secured by the Fort Madison/HHS III
Facility.........................................22
4.7 Class 7: Allowed Secured Claims of PIP III Against
the HHS Debtors....................................................22
4.7.1 Class 7A: Allowed Secured Claims of
PIF III Against HHS I.....................................22
4.7.1.1 Class 7Al: PIF III Secured Claim
Secured by the Hastings/HHS I
Facility.........................................22
4.7.2 Class 7B: Allowed Secured Claims of PIP
III Against HHS II...............................22
4.7.2.1 Class 7BI: PIF III Secured Claim
Secured by the Joliet/HHS II
Facility.........................................23
4.8 Class 8: General Unsecured Claims..................................23
DEBTOR'S SECOND AMENDED JOINT Exhibit A-ii
PLAN OF REORGANIZATION
<PAGE>
4.8.1 Class 8A: General Unsecured Claims
Against HHS I.............................................23
4.8.2 Class 8B: General Unsecured Claims
Against HHS II............................................23
4.8.3 Class 8C: General Unsecured Claims
Against HHS III...........................................23
4.8.4 Class 8D: General Unsecured Claims
Against PIF I.............................................23
4.9 Class 9: PIF II's Unsecured Claims.................................23
4.9.1 Class 9A: PIF II's Unsecured Claims
Against HHS I.............................................23
4.9.2 Class 9B: PIP II's Unsecured Claims
Against HHS II............................................23
4.9.3 Class 9C: PIF II's Unsecured Claims
Against HHS III...........................................23
4.9.4 Class 9D: PIF Il's Unsecured Claims
Against PIF I.............................................23
4.10 Class 10: PIF III's Unsecured Claims..............................24
4.10.1 Class 10A: PIF III's Unsecured Claims
Against HHS I.............................................24
4.10.2 Class 10B: PIF III's Unsecured Claims
Against HHS II............................................24
4.10.3 Class 103: PIF III's Unsecured Claims
Against HHS III...........................................24
4.10.4 Class 10D: Elf III's Unsecured Claims
Against PIF-1.............................................24
4.11 Class II: Limited Partners' Interests..............................25
4.11.1 Class IIA: HHS I Limited Partners'
Interests Class IIA consists of the
Class II Interests of the HHS I Limited
Partners in HHS I.........................................25
4.11.2 Class IIB: HHS II Limited Partners'
Interests.................................................25
4.11.3 Class IIC: HHS III Limited Partners'
Interests.................................................25
4.11.4 Class IID: PIF I Limited Partners'
Interests.................................................25
4.12 Class 12: General Partner's Interest...............................25
4.12.1 Class 12A: HHS I General Partner's
Interests................................................25
4.12.2 Class 12B: HHS Il General Partner's
Interests................................................25
4.12.3 Class 12C: HHS III General Partner's
Interests................................................25
4.12.4 Class 12D: PIP I General Partner's
Interests................................................25
4.13 Class 13: Subordinated Claims......................................25
4.13.1 Class 13A: Securities Related Claims
Against HHS I............................................26
4.13.2 Class 13B: Securities Related Claims
Against HHS II...........................................26
4.13.3 Class 13C: Securities Related Claims
Against HHS III..........................................26
4.13.4 Class 13D: Securities Related Claims
Against PIF I............................................26
DEBTOR'S SECOND AMENDED JOINT Exhibit A-iii
PLAN OF REORGANIZATION
<PAGE>
ARTICLE 5 TREATMENT OF UNCLASSIFIED CLAIMS....................................26
5.1 Administrative Expense Claims......................................26
5.1.1 Generally................................................26
5.1.2 Administrative Expense Claims for Cure
Amounts..................................................26
5.1.3 Professionals, Claims....................................27
5.1.4 Post-petition Property Tax Claims........................27
5.2 Priority Tax Claims................................................27
ARTICLE 6 DESIGNATION OF IMPAIRED AND UNIMPAIRED CLASSES......................28
6.1 Class 1: Priority Claims...........................................28
6.2 Class 2: Real Property Secured Tax Claims..........................28
6.3 Class 3: Mechanics Lien Claims.....................................28
6.4 Class 4AI: Secured Claim of United First National
Bank Against HHS I.................................................28
6.5 Class 5: PIF I's Secured Claims....................................28
6.6 Class 6: PIF II's Secured Claims...................................28
6.7 Class 7: PIF III's Secured Claims.................................29
6.8 Class 8: General Unsecured Claims.................................29
6.9 Class 9: PIF II's Unsecured Claims................................29
6.10 Class 10: PIF III's Unsecured Claims..............................29
6.11 Class 11: Limited Partners' Interests.............................29
6.12 Class 12: General Partner's Interests.............................29
6.13 Class 13: Subordinated Claims.....................................29
ARTICLE 7 TREATMENT OF CLASSIFIED CLAIMS AND INTERESTS........................29
7.1 Class 1: Priority Claims..........................................29
7.2 Class 2: Real Property Secured Tax Claims.........................30
7.2.1 Treatment of Class 2 Claims Related to
Agemark Facilities.......................................30
7.3 Class 3: Mechanics Lien...........................................30
7.4 Class 4A1: Secured Claim of United First National
Bank Against HHS I.................................................30
7.5 Class 5: PIF I's Secured Claims....................................30
7.5.1 Treatment of Class 5 Claims Related to
Agemark Facilities in Which the
Owner-Debtor Has Equity..................................30
7.5.2 Treatment of Class 5 Claims Related to
Agemark Facilities in Which the Owner-
Debtor Has No Equity.....................................31
7.6 Class 6: PIF 11's Secured Claims..................................31
7.6.1 Treatment of Class 6 Claims Related to
Agemark Facilities.......................................32
7.6.2 Treatment of Class 6 Claims Related to
Rejected Facilities......................................32
7.7 Class 7: PIF III's Secured Claims.................................32
7.7.1 Treatment of Class 7 Claims Related to
Agemark Facilities.......................................32
7.7.2 Treatment of Class 7 Claims Related to
Rejected Facilities......................................33
7.8 Class 8: General Unsecured Claims.................................33
7.9 Class 9: PIF II's Unsecured Claims................................33
7.10 Class 10: PIF III's Unsecured Claims..............................33
7.11 Class 11: Limited Partners' Interests.............................34
7.11.1 Class IIA: HHS I Limited Partners'
Interests................................................34
DEBTOR'S SECOND AMENDED JOINT Exhibit A-iv
PLAN OF REORGANIZATION
<PAGE>
7.11.2 Class 11B: HHS II Limited Partners'
Interests................................................34
7.11.3 Class 11C: HES III Limited Partners'
Interests................................................34
7.11.4 Class 11D: PIF I Limited Partners'
Interests....................................35
7.12 Class 12: General Partner's Interests.............................35
7.13 Class 13: Subordinated Claims.....................................36
ARTICLE 8 MEANS OF EXECUTION OF THE PLAN......................................36
8.1 Formation and Organization of Acremark.............................36
8.2 Vesting of Property of the Estates Upon
Confirmation.......................................................37
8.3 Operation of Business..............................................37
8.4 Transfer of Rejected Facilities....................................38
8.5 Transfer of Acremark Facilities....................................38
8.6 Transfer of Debtors' Assets and Liabilities Into
Agemark............................................................39
8.7 Assignment of Executory Contracts and Unexpired
Leases.............................................................40
8.8 Assumption of Reimbursement Liability..............................40
8.9 Cancellation of PIF I Notes and Mortgages..........................40
8.10 Modification of Agemark Notes......................................40
8.10.1 Principal................................................41
8.10.2 Interest on Regular Acremark Notes.......................41
8.10.2.1 Interest Rate on Regular Agemark
Notes...........................................41
8.10.2.2 Payment of Interest on Regular
Agemark Notes...................................41
8.10.2.2.1 Minimum Interest
Payments............................41
8.10.2.2.2 Additional Interest
Payments............................41
8.10.3 Interest on Rock Island/Agemark Note.....................43
8.10.3.1 First Year After Effective Date.................43
8.10.3.2 Second Year After Effective Date................44
8.10.3.3 Subsequent Years................................44
8.10.4 Principal Payments.......................................44
8.10.4.1 Principal Reserve Accounts......................45
8.10.5 Term.....................................................45
8.10.6 Prepayment Incentive.....................................47
8.10.7 Additional Interest......................................47
8.10.8 Salability of Notes......................................47
8.10.9 Periodic Reporting.......................................47
8.10.10 Prohibition on Agemark Dividends.........................47
8.10.11 Miscellaneous Default Provisions.........................48
8.10.11.1 Transfer Not Default...........................48
8.10.11.2 Abandonment of Rock Island/Agemark
Facility.......................................48
8.10.11.3 Allowed Indebtedness...........................48
8.10.11.4 Notice Requirements............................48
8.11 Super First and Reimbursement Notes, Mortgages and
Guarantees.........................................................49
8.11.1 Terms of Notes...........................................49
8.11.1.1 Principal.......................................49
8.11.1.2 Interest Rate...................................49
DEBTOR'S SECOND AMENDED JOINT Exhibit A-v
PLAN OF REORGANIZATION
<PAGE>
8.11.1.3 Term............................................49
8.11.1.4 Payment of Principal From Sale of
Rejected Facilities.............................50
8.11.1.5 Payment of Proceeds Upon Sale of
Collateral......................................50
8.11.1.6 Salability of Notes.............................51
8.11.1.7 Periodic Reporting..............................51
8.11.1.8 Notice Requirements.............................51
8.11.2 Guarantee................................................51
8.11.3 Mortgages................................................52
8.11.3.1 Right of First Refusal..........................52
8.11.3.2 Marshalling Agreement...........................52
8.12 Execution of Tax Notes.............................................52
8.12.1 Principal................................................53
8.12.2 Interest.................................................53
8.12.3 Payments.................................................53
8.12.4 Term.....................................................53
8.12.5 Default..................................................53
8.13 Modification of Management Agreement...............................53
8.14 Issuance of Agemark Stock..........................................54
8.14.1 Shift of Agemark Stock from HHS I to PIF
I........................................................54
8.14.2 Shift of Agemark Stock from Westor and
Williston Associates to Certain Debtors..................54
8.14.3 Distribution of Agemark Stock to Limited
Partners.................................................54
8.15 Distribution of Cash...............................................55
8.16 Sale of Certain Agemark Facilities.................................55
8.17 Set-Offs...........................................................55
8.18 Retention and Enforcement of Claims................................56
8.19 Determination of Tax Liability.....................................56
8.20 Objections to Claims...............................................56
8.21 Post-Confirmation Retention of Professionals.......................57
8.22 Securities Registration............................................57
ARTICLE 9 DISTRIBUTION PROVISIONS.............................................57
9.1 Bar Date for Claims/Record Date for Interests......................57
9.2 Cash Distributions on Account of Disputed Claims...................58
9.3 Agemark Stock Distributions on Account of Dispute
Claims and Interests...............................................59
9.4 Distribution of Fractional Shares of Agemark
Stock..............................................................59
9.5 Delivery of Distributions..........................................60
9.5.1 Delivery in General......................................60
9.5.2 Holding of Undeliverable Property........................60
9.5.3 Unclaimed Property.......................................61
9.6 No Distribution in Excess of Allowed Amount of
Claim..............................................................61
ARTICLE 10
EXECUTORY CONTRACTS AND UNEXPIRED LEASES......................................61
10.1 Assumption.........................................................61
10.1.1 Executory Contracts and Unexpired Leases
Assumed..................................................61
10.1.2 Method of Cure...........................................62
10.1.3 Deadline to Object to Cure Amounts.......................62
DEBTOR'S SECOND AMENDED JOINT Exhibit A-vi
PLAN OF REORGANIZATION
<PAGE>
10.2 Rejection..........................................................62
10.2.1 Executory Contracts and Unexpired Leases
Rejected.................................................62
10.2.1.1 Rejection Claims...............................63
10.3 Reservation of Rights to Assume or Reject..........................63
ARTICLE 11
CONDITIONS TO THE EFFECTIVE DATE..............................................63
11.1 Conditions.........................................................63
11.1.1 Plan Confirmation........................................63
11.1.2 Fees Paid................................................64
11.1.3 Amendment to Transfer Dickinson/Non-
Debtor Facility..........................................64
11.1.4 Agreement to Modify Dickinson Note.......................64
11.1.5 Agreement to Transfer Williston/Non-
Debtor Facility..........................................64
11.1.6 Agreement to Modify Williston Note.......................64
11.1.7 Agreement to Permit Transfer of
Williston/Non-Debtor Facility............................64
11.1.8 Agreement to Modify Management
Agreement................................................65
11.1.9 Execution of Plan Documents..............................65
11.2 Waiver of Conditions to Effective Date.............................65
11.3 Effect of Nonoccurrence of the Conditions to the
Effective Date.....................................................65
ARTICLE 12
DISCHARGE, RELEASES, INJUNCTIONS, ETC.........................................66
12.1 Discharge..........................................................66
12.2 Injunction.........................................................66
12.3 Limitation of Liability............................................67
12.4 Release of General Partner.........................................67
ARTICLE 13 RETENTION OF JURISDICTION..........................................68
13.1 ...................................................................68
13.2 ...................................................................68
13.3 ...................................................................68
13.4 ...................................................................68
13.8 ...................................................................69
13.9 ...................................................................69
13.10 ...................................................................69
13.11 ...................................................................69
13.12 ...................................................................69
13.13 ...................................................................69
13.14 ...................................................................69
ARTICLE 14
ADMINISTRATIVE PROVISIONS.....................................................70
14.1 Plan Amendments and Revocation.....................................70
14.1.1 Amendments to the Plan...................................70
14.1.2 Revocation of the Plan...................................70
14.2 Applicability of Section 1145 of the Bankruptcy
Code...............................................................70
14.3 Application of Bankruptcy Code Section 1146(c).....................71
14.4 Successors and Assigns.............................................71
DEBTOR'S SECOND AMENDED JOINT Exhibit A-vii
PLAN OF REORGANIZATION
<PAGE>
14.5 Severability.......................................................71
14.6 Readings...........................................................72
14.7 Notices............................................................72
14.8 Integration........................................................72
ARTICLE 15
CONFIRMATION REQUEST..........................................................73
DEBTOR'S SECOND AMENDED JOINT Exhibit A-viii
PLAN OF REORGANIZATION
<PAGE>
Housing for Seniors Participating Mortgage Fund Limited
Partnership ("PIF I"), Historic Housing for Seniors Limited
Partnership ("HHS I"), Historic Housing for Seniors II Limited
Partnership ("HHS II") and Historic Housing for Seniors III Limited
Partnership ("HHS III"), the debtors and debtors-in-possession in
the above-captioned Chapter II cases (hereinafter collectively
referred to as the "Debtors"), hereby submit the Debtors' Second
Amended Joint Plan of Reorganization (the "Plan") pursuant to
Section 1121 of the United States Bankruptcy Code.
ALL CREDITORS AND PARTNERS ARE ENCOURAGED TO CONSULT THE
DISCLOSURE STATEMENT FILED HEREWITH BEFORE VOTING TO ACCEPT OR
REJECT THIS PLAN. THE DISCLOSURE STATEMENT CONTAINS A DISCUSSION
OF THE DEBTORS' HISTORY, A DESCRIPTION OF THE DEBTORS' PROPERTIES
AND OTHER RELEVANT PROPERTIES AND A SUMMARY AND ANALYSIS OF THIS
PLAN.
ARTICLE 1
---------
INTRODUCTORY STATEMENT
----------------------
The Debtors are Delaware limited partnerships. Their sole
general partner is Westor Financial Group, Inc., a Delaware
corporation. HHS I, HHS II and HHS III (hereinafter collectively
referred to as the "HHS Debtors") have been, and continue to be,
engaged in the ownership, development, operation and management of
living facilities for senior citizens (the "HHS Facilities")
throughout the United States. Similarly, PIF I owns and operates a
living facility for senior citizens (the "PIF I Facility"). The
HHS Debtors, primary secured lenders are PIF 1, Preferred Income
Fund II ("PIF II") and Preferred Income Fund III ("PIF III")
(hereinafter collectively referred to as the "PIF Partnerships").
DEBTOR'S SECOND AMENDED JOINT Exhibit A-1
PLAN OF REORGANIZATION
<PAGE>
The PIF Partnerships made secured loans to the HHS Debtors which
are secured by certain HHS Facilities. Westor is also the general
partner of [APIF 17 and PIF III, though those limited partnerships
are now controlled by a Liquidating Trustee.
ARTICLE 2
---------
DEFINITIONS
-----------
2.1 Definitions. The following definitions apply to this
-----------
Plan:
2.1.1 "Adjusted Equity Portion" means an Equity Portion
plus or minus the adjustments required in Paragraphs 8.14.1 and
8.14.2 herein.
2.1.2 "Administrative Expense Claim" means a Claim
arising from those expenses incurred by a Debtor after the
commencement of its Bankruptcy Case which form the basis of a claim
for administrative expenses under Section 503(b) of the Bankruptcy
Code. In these Bankruptcy Cases, Administrative Claims include
Claims for Cure Amounts, Professionals' Claims and Post petition
Property Tax Claims.
2.1.3 "Agemark" means Agemark, Inc., that Nevada
corporation to be formed pursuant to paragraph 8.1 et sea. of the
Plan.
2.1.4 "Agemark Facilities" means the following
Facilities which will be transferred to Agemark on the Effective
Date:
Beatrice/HHS I Facility
Chanute/HHS II Facility
Cumberland/HHS I Facility
Fort Madison/HHS III Facility
DEBTOR'S SECOND AMENDED JOINT Exhibit A-2
PLAN OF REORGANIZATION
<PAGE>
Hastings/HHS I Facility
Manitowoc/HHS III Facility
Rock Island/HHS II Facility
Sedalia/HHS II Facility
Port Huron/PIF I Facility
Dickinson/Non-Debtor Facility
Williston/Non-Debtor Facility
2.1.5 "Agemark Notes" means the PIF II Notes secured by
the Fort Madison/HHS III Facility, the Rock Island/HHS II Facility,
the Dickinson/Non-Debtor Facility and the Williston/NonDebtor
Facility and the PIF III Note secured by a mortgage on the
Hastings/HHS I Facility.
2.1.6 "Agemark Stock" means the authorized shares of
common stock of Agemark which will be issued pursuant to paragraph
8.14 of the Plan.
2.1.7 "Allowed Claim" or "Allowed Interest" means a
Claim against a Debtor or an Interest in a Debtor to the extent
that: (a) a proof of such Claim or Interest was timely filed, is
deemed filed pursuant to Section 1111(a) of the Bankruptcy Code, or
is filed late with leave of the Court; and (b) such Claim or
Interest is not a Disputed Claim or Disputed Interest.
2.1.8 "Bankruptcy Cases" means a case filed under
Chapter II of the Bankruptcy Code by one of the HHS Debtors on the
HA'S Petition Date or the case filed under Chapter II of the
Bankruptcy Code by PIF I on the PIF I Petition Date.
2.1.9 "Bankruptcy Code" means Title II of the United
States Code, II U.S.C. s. 101, et seq., as enacted in 1978 and
thereafter amended.
DEBTOR'S SECOND AMENDED JOINT Exhibit A-3
PLAN OF REORGANIZATION
<PAGE>
2.1.10 "Bankruptcy Rules" means the Federal Rules of
Bankruptcy Procedure, as amended from time to time, prescribed
pursuant to 28 U.S.C. s. 2075.
2.1.11 "Cash" means cash and cash equivalents including,
but not limited to, checks and other similar forms of payment or
exchange.
2.1.12 "Claim" means any right to payment from or an
equitable remedy against one of the Debtors or its Estate, whether
or not such right is reduced to judgment, fixed, contingent,
matured, unmatured, disputed, undisputed, secured or unsecured.
2.1.13 "Claim Objection" or "Interest Objection" means
an objection to the allowance of a Claim or Interest made pursuant
to Section 502 of the Bankruptcy Code.
2.1.14 "Confirmation Date" means the date on which the
Court enters the Confirmation Order on its docket.
2.1.15 "Confirmation Order" means the order entered by
the Court confirming this Plan pursuant to Section 1129 of the
Bankruptcy Code.
2.1.16 "Court" means the United States Bankruptcy Court
for the Northern District of California, Oakland Division, or in
the event such court ceases to exercise jurisdiction over these
Bankruptcy Cases, such court or adjunct thereof which exercises
jurisdiction over the Bankruptcy Cases.
2.1.17 "Cure Amounts" means the amounts necessary to
cure any monetary defaults on executory contracts or unexpired
leases which are assumed pursuant to the Plan.
DEBTOR'S SECOND AMENDED JOINT Exhibit A-4
PLAN OF REORGANIZATION
<PAGE>
2.1.18 "Debtor" means HHS I, HHS II, HHS III or PIF I in
its capacity as a debtor, a debtor-in-possession or a reorganized
debtor under the Bankruptcy Code.
2.1.19 "Deficiency Claim" means an Allowed Unsecured
Claim of a PIF partnership against an HHS Debtor for deficiencies
arising out of the amounts due under a PIF Note in excess of the
Allowed Secured Claim arising out of the respective PIF Note.
2.1.20 "Dickinson Associates" means Dickinson Associates
Limited Partnership, a North Dakota Limited Partnership.
2.1.21 "Dickinson/Non-Debtor Facility" means a facility
located in Dickinson, North Dakota, the limited partners interests
of which are owned in part by insiders of Westor.
2.1.22 "Disallowed Claim" or "Disallowed Interest" means
a Claim against, or Interest in, a Debtor or its Estate which is
disallowed by a Final Order.
2.1.23 "Disclosure Statement" means the Disclosure
Statement For Debtors' First Amended Joint Plan of Reorganization,
which has been approved by the Court pursuant to Section 1125 of
the Bankruptcy Code.
2.1.24 "Disputed Claim" or "Disputed Interest" means any
Claim or Interest (a) which has been included in a Debtor's
Schedules as disputed, contingent or unliquidated, or (b) as to
which a Claim Objection or Interest Objection has been timely filed
and which such Claim or Interest Objection is not the subject of a
Final Order and has not been withdrawn.
DEBTOR'S SECOND AMENDED JOINT Exhibit A-5
PLAN OF REORGANIZATION
<PAGE>
2.1.25 "Distribution" means the Cash or Agemark Stock to
be distributed under the Plan to holders of certain Allowed Claims
or Allowed Interests.
2.1.26 "Effective Date" means (a) if no stay of the
Confirmation Order is in effect, the first business day after each
of the conditions set forth in Article II herein is satisfied or
waived; or (b) if a stay of the Confirmation Order is in effect,
the first business day after (i) such stay is vacated or any
appeal, rehearing, remand or petition of certiorari is resolved by
a Final Order in a manner that does not reverse or materially
modify the Confirmation Order and (ii) each of the conditions set
forth in Article II of the Plan are satisfied or waived.
2.1.27 "Estate" means a bankruptcy estate created in an
HHS Bankruptcy Case or in the PIF I Bankruptcy Case pursuant to
Section 541 of the Bankruptcy Code.
2.1.28 "Equity Portion" means that portion of Agemark
Stock equal to the ratio of (a) the value to Agemark, if any, of
the equity contributed and debts canceled by a particular entity to
(b) the value of the total equity of Agemark on the Effective Date.
2.1.29 "Evergreen" means Evergreen Management, Inc.1 the
management company owned by the principals of Westor which manages
the Facilities.
2.1.30 "Facility" means a living facility for senior
citizens and all of the personal property of the owner of such
facility located therein.
2.1.31 "Final Order" means an order or judgment of the
Court, or other court of competent jurisdiction, as entered on the
DEBTOR'S SECOND AMENDED JOINT Exhibit A-6
PLAN OF REORGANIZATION
<PAGE>
docket of such Court, which order has not been reversed, stayed,
materially modified or amended, and as to which (a) the time to
appeal, seek review or rehearing, or petition of certiorari has
expired and no timely filed appeal or petition for review,
rehearing, remand or certiorari has been filed; or any motion for
review or rehearing filed, appeal taken or a petition for
certiorari filed has been resolved by the highest court to which
the order or judgment was or may be appealed or from which
certiorari was or may be sought.
2.1.32 "HHS I" means Historic Housing for Seniors
Limited Partnership, a Delaware limited partnership.
2.1.33 "HHS II" means Historic Housing for Seniors II
Limited Partnership, a Delaware limited partnership.
2.1.34 "HHS III" means Historic Housing for Seniors III
Limited Partnership, a Delaware limited partnership.
2.1.35 "HHS Bar Date" means March 21, 1994, the date
that the Court set as the last day for filing of proofs of Claim in
the HHS Debtors' Bankruptcy Cases.
2.1.36 "HHS Debtor" means HHS I, HHS II or HHS III.
2.1.37 "HHS I Facilities" means the following Facilities
which are or were owned by HHS I as of the HHS Petition Date,
which, when referred to individually in the Plan or Disclosure
Statement are also identified by the city in which each is located:
FACILITY NAME LOCATION
- - ------------- --------
The Kensington Paddock Beatrice, NE
The Tiger Kensington Columbia, MO
Cumberland, MD
DEBTOR'S SECOND AMENDED JOINT Exhibit A-7
PLAN OF REORGANIZATION
<PAGE>
FACILITY NAME LOCATION
- - ------------- --------
The Ware Waycross, GA
The Kensington Hastings Hastings, NE
2.1.38 "HHS II Facilities" means the following
Facilities which are or were owned by HHS II as of the HHS Petition
Date, which, when referred to individually in the Plan or
Disclosure Statement are identified by the city-in which each is
located:
FACILITY NAME LOCATION
- - ------------- --------
The Tioga Chanute, KS
Janesville Janesville, WI
Joliet Joliet, IL
The Fort Armstrong Rock Island, IL
The Bothwell Kensington Sedalia, MO
The Madison Hotel Norfolk, NE
2.1.39 "HHS III Facilities" means the following
Facilities which are or were owned by HHS III as of the HHS
Petition Date, which, when referred to individually in the Plan or
Disclosure Statement are identified by the city in which each is
located:
FACILITY NAME LOCATION
- - ------------- --------
The Inman Champaign, IL
The Roosevelt Hotel Cedar Rapids, IA
The Hotel Manitowoc Manitowoc, WI
The Kensington Fort Madison, IA
Quincy Quincy, IL
2.1.40 "HHS Petition Date" means September 2, 1993, the
date on which the HHS Debtors filed their respective HHS Bankruptcy
Cases.
DEBTOR'S SECOND AMENDED JOINT Exhibit A-8
PLAN OF REORGANIZATION
<PAGE>
2.1.41 "Interest" means the equity security interest of
an HHS Limited Partner, a PIF Limited Partner or Westor in one of
the Debtors.
2.1.42 "Limited Partner" means a limited partner of one
of the Debtors.
2.1.43 "Liquidating Trustee" means Sheldon Solow, or any
successor of Mr. Solow, as the liquidating trustee for the PIF II
and PIF III appointed on August 30, 1993, pursuant to an or er
entered in the Securities Actions.
2.1.44 "Patterson Bank" means that certain bank in
Waycross, Georgia which was the holder of that certain nonrecourse
promissory note executed by HHS I in August, 1995 in favor of
Patterson Bank in the principal amount of $305,216.65, secured by a
first priority mortgage against the Waycross/HHS I Facility and
which foreclosed on such mortgage.
2.1.45 "PIP Holding Company" means one of the Delaware
corporations formed by the Liquidating Trustee on or about October
19, 1995, for the purpose of receiving and holding the Rejected
Facilities.
2.1.46 "PIF I" means Housing for Seniors Participating
Mortgage Fund Limited Partnership, a Delaware limited partnership.
2.1.47 "PIF II" means Preferred Income Fund II, a
Delaware limited partnership.
2.1.48 "PIP III" means Preferred Income Fund III, a
Delaware limited partnership.
2.1.49 "PIP I Bar Date" means February II, 1996 the date
that the Court set as the last day for filing proofs of claim in
PIF I's Bankruptcy Case.
DEBTOR'S SECOND AMENDED JOINT Exhibit A-9
PLAN OF REORGANIZATION
<PAGE>
2.1.50 "PIP I Facilities" means the following Facilities
which are or were owned by PIF I as of the PIF I Petition Date,
which, when referred to individually in the Plan or Disclosure
Statement are identified by the city in which each is located:
FACILITY NAME LOCATION
- - ------------- --------
The Loretto Kansas City, MO"
The Harrington Inn Port Huron, MI1
2.1.51 "PIF I Notes" means those certain notes issued by
the HHS Debtors in favor of PIF I, each of which is or was
separately secured by a Debtor Facility as of the HHS Petition Date
and as described below:
ESTIMATED
DATE BORROWER AMOUNT BALANCE AS OF LOCATION
BORROWED CONFIRMATION OF SECURITY
DATE
- - --------------------------------------------------------------------------------
1/31/89 HHS 1 $1,800,000 $2,439,000 Cumberland
1/26/89 HHS 1 $1,350,000 $1,805,000 Beatrice
1/26/89 HHS II $1,500,000 $2,055,000 Sedalia
8/23/89 HHS II $1,300,000 $1,970,000 Chanute
8/23/89 HHSS III $1,050,000 $0[2] Quincy[3]
2.1.52 "PIF I Petition Date" means October 2, 1995,
the date on which PIF I filed the PIF I Bankruptcy Case.
- - --------
1 The Kansas City/PIF I Facility was sold during the
pendency of the PIF Bankruptcy Case and the available
proceeds were distributed to PIF I in full satisfaction of
the PIF I Note related thereto.
2 The Quincy/HHS III Facility was sold during the
pendency of the HHS Bankruptcy Cases. The available
proceeds were distributed pro rata to PIF I and PIF II in
full satisfaction of the PIF I and PIF II Notes related to
the Quincy/HHS III Facility.
3 The Quincy/HHS III Facility was also subject to
the concurrent first priority mortgage held by PIF II.
DEBTOR'S SECOND AMENDED JOINT Exhibit A-10
PLAN OF REORGANIZATION
<PAGE>
2.1.53 "PIF II Notes" means those certain notes issued
by the HHS Debtors and certain non-debtors in favor of PIP II,
each of which is or was separately secured by a Debtor Facility
or Non-Debtor Facility as of the HHS Petition Date and as
described below:
ESTIMATED
BALANCE AS OF
AMOUNT CONFIRMATION LOCATION
DATE BORROWER BORROWED DATE OF SECURITY
4/18/89 HHS 1 $1,900,000 $ 0 Columbia[4]
4/24/89 HHS II $3,200,000 $4,692,000 Rock Island
11/30/89 HHS II $1,800,000 $2,485,000 Joliet[5]
8/23/89 HHS II $1,400,000 $1,787,000 Norfolk
8/23/89 HHS III $2,200,000 $2,839,000 Ft. Madison
10/24/89 HHS III $2,400,000 $2,953,000 Champaign
8/23/89 HHS III $1,850,000 $0[6] Quincy[7]
11/30/89 Dickinson $1,950,000 $2,784,000 Dickinson
Associates
8/23/89 Williston $2,300,000 $2,500,000 Williston
Associates
2.1.54 "PIP III Notes" means those certain notes
issued by the HHS Debtors and certain non-debtors in favor of
PIF III, each of which is or was separately secured by a Debtor
Facility as of the HHS Petition Date and as described below:
- - --------
4 The Colombia/HHSI Facility was sold during the
pendency of the HHS Bankruptcy Cases and the available
proceeds were distributed to PIF II in full satisfaction of
the PIF II Note related thereto.
5 The Joliet/HHS II Facility is also subject to the
second priority mortgage held by PIF III.
6 The Quincy/HHS III Facility was sold during the
pendency of the HHS Bankruptcy Cases. The available
proceeds were distributed pro rata to PIF I and PIF II in
full satisfaction of the PIF I Note and the PIF II Note
related to the Quincy/HHS III Facility.
7 The Quincy/HHS III Facility was also subject to
the concurrent first priority mortgage held by PIF I.
DEBTOR'S SECOND AMENDED JOINT Exhibit A-11
PLAN OF REORGANIZATION
<PAGE>
ESTIMATED
BALANCE AS OF
AMOUNT CONFIRMATION LOCATION
DATE BORROWER BORROWED DATE OF SECURITY
6/8/90 HHS I $2,500,000 $ 0 Waycross[8]
8/20/90 HHS II $2,200,000 $2,666,000 Joliet[9]
10/5/90 HHS III $3,600,000 $ 0[10] Cedar Rapids
12/10/90 HHS 1 $3,100,000 $3,014,000 Hastings
6/22/90 HHS II $2,300,000 $ 0[11] Janesville
2.1.55 "Plan" means this Debtors' Second Amended Joint
Plan of Reorganization, together with any amendments or
modifications hereto (such amendments or modifications only being
effective if approved by order of the Court).
2.1.56 "Post-petition Property Tax Claims" means the
Administrative Claims of various state or county taxing
authorities, or their assignees, for unpaid real property taxes
incurred after the Petition Date.
2.1.57 "Priority Claim" means any Claim against a
Debtor which, if allowed, is entitled to priority pursuant to
Section 507(a)(3), (4) or (6) of the Bankruptcy Code.
- - --------
8 The Waycross/HHS I Facility was subject to a first
priority mortgage held by Patterson Bank. During the
pendency of the HHS Bankruptcy Cases, Patterson Bank
foreclosed upon its interest in the Waycross/HHS I Facility.
9 The Joliet/HHS III Facility is also subject to the
first priority mortgage held by PIF II.
10 The Cedar Rapids/HHS III Facility was sold during the
pendency of the HHS Bankruptcy Cases, and the available
proceeds were distributed to PIF III in full satisfaction of
the PIF III Note related thereto.
11 The Janesville/HHS II Facility was sold during the
pendency of the HHS Bankruptcy Cases, and the available
proceeds were distributed to PIF III in full satisfaction of
the PIF III Note related thereto.
DEBTOR'S SECOND AMENDED JOINT Exhibit A-12
PLAN OF REORGANIZATION
<PAGE>
2.1.58 "Priority Tax Claim" means any Claim against a
Debtor entitled to priority under Section 507(a)(7) of the
Bankruptcy Code.
2.1.59 "Professionals' Claims" means the
Administrative Claims of professionals whose employment by the
Debtors during the pendency of the Bankruptcy Cases was approved
by the Court arising out of Section 503(b)(2)-(6) of the
Bankruptcy Code.
2.1.60 "Record Date" means January 1, 1997, the date
the Court set as the record date for the purposes of determining
the holders of record of Interests for purposes of voting and
Distributions under the Plan.
2.1.61 "Reimbursement Notes" means those certain
secured promissory notes to be executed by Agemark in favor of
PIF II and III which have the terms set forth in paragraph 8.11
et seq. of the Plan.
2.1.62 "Rejected Facilities" means the following
Facilities which have been or will be sold prior to the
Confirmation Date or transferred to a PIF Holding Company on the
Effective Date:
Cedar Rapids/HHS III Facility
Champaign/HHS III Facility
Columbia/HHS I Facility
Janesville/HHS II Facility
Joliet/HHS II Facility
Kansas City/PIF I Facility
Norfolk/HHS II Facility
Quincy/HHS III Facility
Waycross/HHS II Facility
DEBTOR'S SECOND AMENDED JOINT Exhibit A-13
PLAN OF REORGANIZATION
<PAGE>
2.1.63 "Schedules" means the schedules of assets and
liabilities prepared by a Debtor and filed with the Court
pursuant to Bankruptcy Rule 1007(b), as the same has been, or may
be, amended from time to time on or prior to the Effective Date.
2.1.64 "Secured Claim" means any Claim that is secured
by a lien on property of an Estate which lien is valid, perfected
and enforceable under applicable law, and is not subject to
avoidance under the Bankruptcy Code or other applicable
nonbankruptcy law or is a Claim for which a holder asserts a
set-off under Section 553 of the Bankruptcy Code. A Claim is a
Secured Claim only to the extent of the value of the Claim
holder's interest in the property pursuant to Section 506(b) of
the Bankruptcy Code, unless the Secured Claim arises under
Section s. 53 of the Bankruptcy Code, and then such Claim is a
Secured Claim only to the extent provided therein.
2.1.65 "Securities Actions" means those class action
lawsuits pending in the United States District Court for the
Southern District of New York, which are known as Jolly v.
Pittore, Case No. 92 Civ 3593 and Sriram v. Pittore, Case No. 92
Civ 5244.
2.1.66 "Senior Williston Notes" means those certain
promissory notes executed by Williston Associates on or about May
26, 1995, in favor of PIF II and PIF III in the total principal
amount of $49,704.43, secured by mortgages against the
Williston/Non-Debtor Facility, which mortgages are senior to the
mortgage securing the PIF II Note secured by the Williston/
Non-Debtor Facility.
DEBTOR'S SECOND AMENDED JOINT Exhibit A-14
PLAN OF REORGANIZATION
<PAGE>
2.1.67 "Subordinated Claim" means any Claim against a
Debtor for damages or for reimbursement on account of such Claim
arising from the purchase or sale of an interest in the Debtor or
an affiliate of the Debtor or from a violation of any securities
law.
2.1.68 "Super First Claims" means the Allowed
Unsecured Claims of PIF III arising out of the Debtor's
obligations under the agreements which gave the Super First
Loans.
2.1.69 "Super First Loans" means those loans made b
PIF III for the benefit of the Debtors which were related to
certain Debtor-owned Facilities, each of which is described
below:
APPROXIMATE LOCATION
BALANCE AS OF OF RELATED
DATE BENEFICIARIES CONFIRMATION DATE FACILITY
7/5/91 HHS I/PIF I $147,000 Beatrice
7/5/91 HHS II/PIF 1 $206,000 Sedalia
7/5/91 HHS III $342,000 Manitowoc
7/5/91 PIF I $300,000 Kansas City
7/5/91 PIF I $525,000 Port Huron
2.1.70 "Super First Note" means that certain secured
promissory note to be executed by Agemark in favor of PIF III and
having the terms set forth in paragraph 8.11 et sea. herein.
2.1.71 "Tax Notes" means those certain promissory
notes to be executed by Agemark in favor of the holders of
certain Class 2 Claims having the terms set forth in paragraph
8.12 et seq. herein.
2.1.72 "Unsecured Claim" means any Claim that is not
an Administrative Claim, Priority Claim, Priority Tax Claim,
Secured Claim or Subordinated Claim.
DEBTOR'S SECOND AMENDED JOINT Exhibit A-15
PLAN OF REORGANIZATION
<PAGE>
2.1.73 "Westor" means Westor Financial Group, Inc., a
Delaware corporation, the general partner of the Debtors and
PIF II and PIF III.
2.1.74 "Williston Associates" means Williston
Associates Limited Partnership, the limited partners' interests
of which are owned in part by insiders of Westor.
2.1.75 "Williston/Non-Debtor Facility" means a
Facility located in Williston, North Dakota, which is owned by
Williston Associates.
2.2 General Rules About Definition of Terms. The following
general rules apply to the terms used herein:
2.2.1 For purposes of this Plan, capitalized terms
will have meanings defined above unless the context requires
otherwise.
2.2.2 Terms defined in Section 101 of the Bankruptcy
Code will have the same meaning when used in the Plan, unless a
different definition is given in the Plan.
2.2.3 The rules of construction used in Section 102 of
the Bankruptcy Code will apply to construction of the Plan.
2.2.4 The singular of any of the foregoing terms
includes the plural and vice-versa where the context requires.
2.2.5 A term used in the Plan, whether or not
capitalized, that is not defined in the Plan, but is used in the
Code, has the meaning assigned to the term in the Code.
ARTICLE 3
---------
DESIGNATION OF UNCLASSIFIED CLAIMS
----------------------------------
Administrative Claims and Priority Tax Claims will not be
classified.
DEBTOR'S SECOND AMENDED JOINT Exhibit A-16
PLAN OF REORGANIZATION
<PAGE>
ARTICLE 4
---------
CLASSIFICATION OF CLAIMS AND INTERESTS
--------------------------------------
An Allowed Claim or Allowed Interest will be classified in
one of the particular subclasses set forth below only to the
extent that such Allowed Claim or Allowed Interest fits the
description of that particular class and will be deemed
classified in a different class to the extent that the remainder
of any such Claim or Interest fits the description of such
different class. Though Claims have been grouped together for
convenience into similarly numbered and lettered classes, only
the smallest subclasses herein will be considered a "class" for
the purposes of separate classification of different claims as
required under Section 1122(a) of the Bankruptcy Code.
4.1 Class 1: Priority Claims. The Class 1 subclasses
------------------------
consist of all Allowed Priority Claims against the Debtors.
4.1.1 Class 1A: Priority Claims Against HHS I. Class
---------------------------------------
1A consists of the Allowed Priority Claims against HHS I.
4.1.2 Class 1B: Priority Claims Against HHS II. Class
----------------------------------------
1B consists of the Allowed Priority Claims against HHS II.
4.1.3 Class 1C: Priority Claims Against HHS III.
-----------------------------------------
Class 1C consists of the Allowed Priority Claims against HHS III.
4.1.4 Class 1D: Priority Claims Against PIF I. Class
---------------------------------------
1D consists of the Allowed Priority Claims against PIF I.
4.2 Class 2: Real Property Secured Tax Claims. The Class 2
-----------------------------------------
subclasses consist of Allowed Secured Claims of various state or
county taxing authorities, or their assignees, for unpaid
prepetition property taxes which are secured by liens against
specific Debtor-owned Facilities.
DEBTOR'S SECOND AMENDED JOINT Exhibit A-17
PLAN OF REORGANIZATION
<PAGE>
4.2.1 Class 2A: Real-Property Secured Tax Claims Against
--------------------------------------------------
HHS I. The Class 2A subclasses consist of the Class 2 Claims which
- - -----
are secured by HHS I Facilities.
4.2.1.1 Class 2A1: Real Property Secured Tax Claim
------------------------------------------
by the Gage County Treasurer. Class 2A1 consists of the Allowed
- - ----------------------------
Secured Claim of the Gage County Treasurer. The Class 2A1 Claim is
secured by a lien against the Beatrice/HHS I Facility.
4.2.1.2 Class 2A2: Real Property Secured Tax Claim
------------------------------------------
by the Allegheny County Tax and Utility Office. Class 2A2 consists
- - ----------------------------------------------
of the Allowed Secured Claim of the Allegheny County Tax and Utility
Office. The Class 2A2 Claim is secured by a lien against the
Cumberland/HHS I Facility.
4.2.2 Class 2B: Real Property Secured Tax Claims Against
--------------------------------------------------
HHS II. The Class 2B subclasses consist of the Class 2 Claims which
- - ------
are secured by HHS II Facilities.
4.2.2.1 Class 2B1: Real Property Secured Tax Claim
------------------------------------------
by the Office of Neosho County Treasurer. Class 2B1 consists of the
- - ----------------------------------------
Allowed Secured Claim of the Office of Neosho County Treasurer. The
Class 2P1 Claim is secured by a lien against the Chanute/HHS II
Facility.
4.2.2.2 Class 2B2: Real Property Secured Tax Claim
------------------------------------------
by Schneider investment. Class 2B2 consists of the Allowed Secured
- - -----------------------
Claim of Schneider Investment. The Class 2B2 Claim is secured by a
lien against the Rock Island/HHS II Facility.
4.2.2.3 Class 2B3: Real Property Secured Tax Claim
------------------------------------------
by the Pettis County Collector. Class 2B3 consists of the Allowed
- - ------------------------------
Secured Claim of the Pettis County Collector. The Class 2B3 Claim
is secured by a lien against the Sedalia/HHS II Facility.
DEBTOR'S SECOND AMENDED JOINT Exhibit A-18
PLAN OF REORGANIZATION
<PAGE>
4.2.3 Class 2C: Real Property Secured Tax Claims Against
--------------------------------------------------
HHS III. The Class 2C subclasses consist of the Class 2 Claims
- - -------
which are secured by HHS III Facilities.
4.2.3.1 Class 2C1: Real Property Secured Tax Claim
------------------------------------------
by the Manitowoc County Treasurer. Class 2C1 consists of the
- - ---------------------------------
Allowed Secured Claim of the Manitowoc County Treasurer. The Class
2CI Claim is secured by a lien against the Manitowoc/HHS III
Facility.
4.2.3.2 Class 2C2: Real Property Secured Claim b
----------------------------------------
Richard Bump. Class 2C2 consists of the Allowed Secured Claim of
- - ------------
Richard Bump. The Class 2C2 Claim is secured by a lien against the
Fort Madison/HHS III Facility.
4.2.3.3 Class 2D: Real Property Secured Tax Claims
------------------------------------------
Against PIF 1. The Class 2D subclasses consist of the Class 2
- - -------------
Claims which are secured by the PIF I Facilities.
4.2.3.4 Class 2DI: Real Property Secured Tax Claim
------------------------------------------
by the City of Port Huron. Class 2D1 consists of the Allowed
- - -------------------------
Secured Claim of the City of Port Huron. The Class 2D1 Claim is
secured by a lien against the Port Huron/PIF I Facility.
4.3 Class 3: Mechanics Lien Claims. The Class 3 subclasses
------------------------------
consist of the Allowed Secured Claims against the Debtors which
arise out of mechanics liens.
4.3.1 Class 3B: Mechanics Lien Claims Against HHS II.
----------------------------------------------
The Class 3B subclass consists of the Class 3 Claims which are
Allowed Secured Claims arising out of mechanics liens against HHS II
Facilities.
4.3.1.1 Class 3B1: Mechanics Lien on the Rock Island
--------------------------------------------
HHS II Facility. Class 3B1 consists of the Allowed Claim
- - ---------------
DEBTOR'S SECOND AMENDED JOINT Exhibit A-19
PLAN OF REORGANIZATION
<PAGE>
of Air Control against HHS II which is secured by a mechanics lien
against the Rock Island/HHS II Facility.
4.4 Class 4Al:-Secured Claim of United First National Bank
------------------------------------------------------
Against HHS I. Class 4A1 consists of the Allowed Secured Claim of
- - -------------
United First National Bank against HHS I which is secured by a
mortgage on the Cumberland/HHS I Facility.
4.5 Class 5: Allowed Secured Claims of PIF I Against the HHS
-----------------------------------------------
Debtors. The Class 5 subclasses consist of the Allowed Secured
- - -------
Claims of PIF I against the HHS Debtors arising out of the PIF I
Notes.
4.5.1 Class 5A: Allowed Secured Claims of PIF I Against
-------------------------------------------------
HHS I. The Class 5A subclasses consist of the Class 5 Claims
- - -----
against HHS I.
4.5.1.1 Class 5AI: PIF I Secured Claim Secured by
-----------------------------------------
the Cumberland/HHS I Facility. Class 5A1 consists of the Allowed
- - -----------------------------
Secured Claim of PIF I against HHS I which arises out of the PIF I
Note secured by a mortgage on the Cumberland/HHS I Facility.
4.5.1.2 Class 5A2: PIF I Secured Claim Secured by
-----------------------------------------
the Beatrice/HHS I Facility. Class 5A2 consists of the Allowed
- - ---------------------------
Secured Claim of PIF I against HHS I which arises out of the PIF I
Note secured by a mortgage on the Beatrice/HHS I Facility.
4.5.2 Class 5B: Allowed Secured Claims of PIF I Against
-------------------------------------------------
HHS II. The Class 5B subclasses consist of the Class 5 Claims
- - ------
against HHS II.
4.5.2.1 Class 5B1: PIF I Secured Claim Secured b the
--------------------------------------------
Sedalia/HHS II Facility. Class 5B1 consists of the Allowed Secured
- - -----------------------
Claim of PIF I against HHS II which arises out of the PIF I Note
secured by a mortgage on the Sedalia/HHS II Facility.
DEBTOR'S SECOND AMENDED JOINT Exhibit A-20
PLAN OF REORGANIZATION
<PAGE>
4.5.2.2 Class 5B2: PIF I Secured Claim Secured by
-----------------------------------------
the Chanute/HHS II Facility. Class 522 consists of the Allowed
- - ---------------------------
Secured Claim of PIF I against HHS II which arises out of the PIF I
Note secured by a mortgage on the Chanute/HHS II Facility.
4.6 Class 6: Allowed Secured Claims of PIP II Against the HHS
---------------------------------------------------------
Debtors. The Class 6 subclasses consist of the Allowed Secured
- - -------
Claims of PIF II against the HHS Debtors arising out of the PIF II
Notes.
4.6.1 Class 6A: Allowed Secured Claims of PIF II Against
--------------------------------------------------
HHS I. The Class 6A subclass consists of the Class 6 Claims against
- - -----
HHS I. There are no Class 6A subclasses.
4.6.2 Class 6B: Allowed Secured Claims of PIF II Against
--------------------------------------------------
HHS II. The Class 6B subclasses consist of the Class 6 Claims
- - ------
against HHS II.
4.6.2.1 Class 6B1: PIF II Secured Claim Secured b
-----------------------------------------
the Rock Island/HHS II Facility. Class 6BI consists of the Allowed
- - -------------------------------
Secured Claim of PIF II against HHS II which arises out of the
PIF II Note secured by a mortgage on the Rock Island/HHS II
Facility.
4.6.2.2 Class 6B2: PIF II Secured Claim Secured b
-----------------------------------------
the Joliet/HHS II Facility. Class 6B2 consists of the Allowed
- - --------------------------
Secured Claim of PIF II against HHS II which arises out of the
PIF II Note secured by a mortgage on the Joliet/HHS II Facility.
4.6.2.3 Class 6B3: PIP II Secured Claim Secured b
-----------------------------------------
the Norfolk/HHS II Facility. Class 6B3 consists of the Allowed
- - ---------------------------
Secured Claim of PIF II against HHS II which arises out of the
PIF II Note secured by a mortgage on the Norfolk/HHS II Facility.
DEBTOR'S SECOND AMENDED JOINT Exhibit A-21
PLAN OF REORGANIZATION
<PAGE>
4.6.3 Class 6C: Allowed Secured Claims of PIF II Against
--------------------------------------------------
HHS III. The Class 6C subclasses consist of the Class 6 Claims
- - -------
against HHS III.
4.6.3.1 Class 6C1: PIP II Secured Claim Secured by
------------------------------------------
the Champaign/HHS III Facility. Class 6C1 consists of the Allowed
- - ------------------------------
Secured Claim of PIP II against HHS III which arises out of the
PIF II Note secured by a mortgage on the Champaign/HHS III Facility.
4.6.3.2 Class 6C2: PIP II Secured Claim Secured by
------------------------------------------
the Fort Madison/HHS III Facility. Class 6C2 consists of the
- - ---------------------------------
Allowed Secured Claim of PIP II against HHS III which arises out of
the PIP II Note secured b a mortgage on the Fort Madison/HHS III
Facility.
4.7 Class 7: Allowed Secured Claims of PIP III Against the HHS
----------------------------------------------------------
Debtors. The Class 7 subclasses consist of the Allowed Secured
- - -------
Claims of PIP III against the HHS Debtors arising out of the PIP III
Notes.
4.7.1 Class 7A: Allowed Secured Claims of PIF III Against
---------------------------------------------------
HHS I. The Class 7A subclasses consist of the Class 7 Claims
- - -----
against HHS I.
4.7.1.1 Class 7Al: PIF III Secured Claim Secured by
-------------------------------------------
the Hastings/HHS I Facility. Class 7A2 consists of the Allowed
- - ---------------------------
Secured Claim of PIP III against HHS I which arises out of the PIP
III Note secured by a mortgage on the Hastings/HHS I Facility.
4.7.2 Class 7B: Allowed Secured Claims of PIP III Against
---------------------------------------------------
HHS II. The Class 7B subclasses consist of the Class 7 Claims
- - ------
against HHS II.
DEBTOR'S SECOND AMENDED JOINT Exhibit A-22
PLAN OF REORGANIZATION
<PAGE>
4.7.2.1 Class 7BI: PIF III Secured Claim Secured by
-------------------------------------------
the Joliet/HHS II Facility. Class 7B1 consists of the Allowed
- - --------------------------
Secured Claim of PIF III against HHS IT which arises out of the
PIF III Note secured by a mortgage on the Joliet/HHS IT Facility.
4.8 Class 8: General Unsecured Claims. The Class 8 subclasses
---------------------------------
consist of the Allowed Unsecured Claims against the Debtors which
are not otherwise included in another class of Claims.
4.8.1 Class 8A: General Unsecured Claims Against HHS I.
------------------------------------------------
Class 5A consists of the Class 8 Claims against HHS I.
4.8.2 Class 8B: General Unsecured Claims Against HHS II.
-------------------------------------------------
Class 8B consists of the Class 8 Claims against HHS IT.
4.8.3 Class 8C: General Unsecured Claims Against HHS III.
--------------------------------------------------
Class 8C consists of the Class 8 Claims against HHS III.
4.8.4 Class 8D: General Unsecured Claims Against PIF I.
------------------------------------------------
Class 8D consists of the Class 8 Claims against PIF I.
4.9 Class 9: PIF II's Unsecured Claims. The Class 9
----------------------------------
subclasses consist of PIF IT's Allowed Unsecured Claims against the
Debtors. The Class 9 subclasses include Deficiency Claims.
4.9.1 Class 9A: PIF II's Unsecured Claims Against HHS I.
-------------------------------------------------
Class 9A consists of the Class 9 Claims against HHS I.
4.9.2 Class 9B: PIP II's Unsecured Claims Against HHS II.
--------------------------------------------------
Class 10B consists of the Class 9 Claims against HHS II.
4.9.3 Class 9C: PIF II's Unsecured Claims Against HHS
-----------------------------------------------
III. Class 9C consists of the Class 9 Claims against HHS III.
- - ---
4.9.4 Class 9D: PIF Il's Unsecured Claims Against PIF I.
-------------------------------------------------
Class 9D consists of the Class 9 Claims against PIF I.
DEBTOR'S SECOND AMENDED JOINT Exhibit A-23
PLAN OF REORGANIZATION
<PAGE>
4.10 Class 10: PIF III's Unsecured Claims. The Class 10
-------------------------------------
subclasses consist of PIF III's Allowed Unsecured Claims against the
Debtors. The Class 10 subclasses include Deficiency Claims and
Super First Claims.
4.10.1 Class 10A: PIF III's Unsecured Claims Against HHS
--------------------------------------------------
I. Class 10A consists of the Class 10 Claims against MRS 1,
- - -
including the Allowed Unsecured Claim arising out of the Super First
Loan made for the benefit of HHS I and PIF I which is related to the
Beatrice/HHS I Facility.
4.10.2 Class 10B: PIF III's Unsecured Claims Against HHS
--------------------------------------------------
II. Class 10B consists of the Class 10 Claims against HHS II,
- - --
including the Allowed Unsecured Claim arising out of the Super First
Loan made for the benefit of HHS II and PIF I which is related to
the Sedalia/HHS II Facility.
4.10.3 Class 103: PIF III's Unsecured Claims Against HHS
--------------------------------------------------
III. Class 10C consists of the Class 10 Claims against HHS III,
- - ---
including the Allowed Unsecured Claim arising out of the Super First
Loan made for the benefit of HHS III which is related to the
Manitowoc/HHS III Facility.
4.10.4 Class 10D: Elf III's Unsecured Claims Against
---------------------------------------------
PIF-1. Class 10D consists of the Class 10 Claims against PIF I,
- - -----
including the Allowed Unsecured Claims arising out of the Super
First Loan made for the benefit of PIF I and HHS I which is related
to the Beatrice/HHS I Facility, the Super First Loan made for the
benefit of PIF I and HHS II which is related to the Sedalia/HHS Il
Facility, and the Super First Loans made for the benefit of PIF I
which are related to the Kansas City/PIF I Facility and the Port
Huron/PIF I Facility.
DEBTOR'S SECOND AMENDED JOINT Exhibit A-24
PLAN OF REORGANIZATION
<PAGE>
4.11 Class II: Limited Partners' Interests. The Class II
-------------------------------------
subclasses consist of the Interests of the Limited Partners as of
the Record Date.
4.11.1 Class IIA: HHS I Limited Partners' Interests
--------------------------------------------
Class IIA consists of the Class II Interests of the HHS I Limited
- - -----------------------------------------------------------------
Partners in HHS I.
- - -----------------
4.11.2 Class IIB: HHS II Limited Partners' Interests.
---------------------------------------------
Class IIB consists of the Class II Interests of the HHS II Limited
Partners in HHS II.
4.11.3 Class IIC: HHS III Limited Partners' Interests.
----------------------------------------------
Class IIC consists of the Class II Interests of the HHS III Limited
Partners in HHS III.
4.11.4 Class IID: PIF I Limited Partners' Interests.
--------------------------------------------
Class IID consists of the Class II Interests of the PIF I Limited
Partners in PIF I.
4.12 Class 12: General Partner's Interest. The Class 13
------------------------------------
subclasses consist of the Interests of Westor in the Debtors.
4.12.1 Class 12A: HHS I General Partner's Interests.
--------------------------------------------
Class 12A consists of Westor's Class 12 Interests in HHS I.
4.12.2 Class 12B: HHS Il General Partner's Interests.
---------------------------------------------
Class 12B consists of Westor's Class 12 Interests in HHS II.
4.12.3 Class 12C: HHS III General Partner's Interests.
----------------------------------------------
Class 12C consists of Westor's Class 12 Interests in HHS III.
4.12.4 Class 12D: PIP I General Partner's Interests.
--------------------------------------------
Class 12D consists of Westor's Class 12 Interests in PIF I.
4.13 Class 13: Subordinated Claims. The Class 13 subclass E
-----------------------------
consist of the Allowed Subordinated Claims, if any, against the
Debtors.
DEBTOR'S SECOND AMENDED JOINT Exhibit A-25
PLAN OF REORGANIZATION
<PAGE>
4.13.1 Class 13A: Securities Related Claims Against HHS
------------------------------------------------
I. Class 13A consists of the Class 13 Claims against HHS I.
- - -
4.13.2 Class 13B: Securities Related Claims Against HHS
------------------------------------------------
II. Class 13B consists of the Class 13 Claims against HHS II.
- - --
4.13.3 Class 13C: Securities Related Claims Against
--------------------------------------------
HHS III. Class 13C consists of the Class 13 Claims against HHS III.
- - -------
4.13.4 class 13D: Securities Related Claims Against PIF
I. Class 13D consists of the Class 13 Claims against PIF I.
ARTICLE 5
---------
TREATMENT OF UNCLASSIFIED CLAIMS
--------------------------------
The holders of Allowed Claims which are unclassified will
receive the treatment specified below in full satisfaction of their
respective Claims; provided, however, that a holder of any such
unclassified Claim may agree to and receive less favorable treatment
than the treatment provided below.
5.1 Administrative Expense Claims.
-----------------------------
5.1.1 Generally. On the Effective Date, holders of
---------
Administrative Expense Claims will be paid in full in Cash, the
amount of their respective Allowed Administrative Expense Claim, as
required under Section 1129(a)(9)(A) of the Bankruptcy Code, except
that Administrative Expense Claims incurred by the Debtors in the
ordinary course of business during the pendency of their respective
Bankruptcy Cases will be assumed by Agemark and paid in the ordinary
course of business in accordance with the terms and conditions of
any agreements relating thereto.
5.1.2 Administrative Expense Claims for Cure Amounts.
----------------------------------------------
Administrative Expense Claims for Cure Amounts will be, paid in
DEBTOR'S SECOND AMENDED JOINT Exhibit A-26
PLAN OF REORGANIZATION
<PAGE>
full in Cash on the Effective Date by the entity to which each
related assumed executory contract or unexpired lease is assigned or
as agreed between the patties to the assumed executory contract or
unexpired lease.
5.1.3 Professionals, Claims. Notwithstanding the
---------------------
foregoing, Professionals, Claims will be paid only in accordance
with an order of the Court. Professionals employed by the Debtors
and approved by the Court on a contingency fee basis or on a
commission basis shall be paid accordingly. All other professionals
shall be paid as follows: Agemark shall make 24 equal monthly
payments from its operating income such that each Allowed
Professionals' Claim plus accrued interest will be paid by Agemark
within two years of the Effective Date. Interest on the
Professionals, Claims will accrue at a rate of five percent from and
after the Effective Date or such later time as their Claims are
allowed by order of the Court.
5.1.4 Post-petition Property Tax Claims. The Debtors
---------------------------------
believe that many of the Post-petition Property Tax Claims have been
overstated. The Debtors will object to the amount of the
Post-petition Property Tax Claims as appropriate. The Post-petition
taxes will be paid in full in Cash on the Effective Date or when
such claims are allowed.
5.2 Priority Tax Claims. Priority Tax Claims will be
-------------------
satisfied by deferred Cash payments over a period not exceeding six
years from the date of assessment of such Priority Tax Claim, in an
aggregate amount equal to the allowed amount of the Priority Tax
Claim, as required by Section 1129(a)(9)(C) of the Bankruptcy Code.
Interest will accrue from the Effective Date at a rate of
DEBTOR'S SECOND AMENDED JOINT Exhibit A-27
PLAN OF REORGANIZATION
<PAGE>
six and a half percent (6%%) per annum on the unpaid portion. The
deferred payments will be made in equal semi-annual installment with
the first installment due 30 days after the latest of the Effective
Date or the date on which an order determining the allowed amount of
the Priority Tax Claim becomes a Final Order. Agemark will have the
option to pay the entire unpaid portion of a Priority Tax Claim,
plus any accrued interest thereon, at any time prior to six years
from the date of assessment of the Priority Tax Claim, without
premium or penalty.
ARTICLE 6
---------
DESIGNATION OF IMPAIRED AND UNIMPAIRED CLASSES
----------------------------------------------
6.1 Class 1: Priority Claims. The Claims in the Class 1
------------------------
subclasses Class 1A, Class IB, Class 1C and Class 1D, are unimpaired
under the Plan.
6.2 Class 2: Real Property Secured Tax Claims.
-----------------------------------------
6.2.1 The Claims in the Class 2 subclasses 2A1, 2A2, 2BI,
2B2, 2B3, 2CI, 2C2 and 2D1 are impaired under the Plan.
6.3 Class 3: Mechanics Lien Claims. The Claim in Class 3B1 is
------------------------------
unimpaired under the Plan.
6.4 Class 4AI: Secured Claim of United First National Bank
------------------------------------------------------
Against HHS I. The Class 4A1 Claim is unimpaired under the Plan.
- - -------------
6.5 Class 5: PIF I's Secured Claims. The C s in Class 5
-------------------------------
subclasses 5A1, 5A2, 5B1 and 5B2 are impaired under the Plan.
6.6 Class 6: PIF II's Secured Claims.
--------------------------------
6.6.1 The Claims in the Class 6 subclasses 6B1 and 6C2
are impaired under the Plan.
6.6.2 The Claims in the Class 6 subclasses 6A1, 6B2, 6B3
and 6C1 are unimpaired under the Plan.
DEBTOR'S SECOND AMENDED JOINT Exhibit A-28
PLAN OF REORGANIZATION
<PAGE>
6.7 Class 7: PIF III's Secured Claims.
----------------------------------
6.7.1 The Claim in the Class 7A1 subclass is impaired
under the Plan.
6.7.2 The Claim in the Class 7 subclass 7B1 is unimpaired
under the Plan.
6.8 Class 8: General Unsecured Claims. The Class 8 Claims
----------------------------------
are impaired under the Plan.
6.9 Class 9: PIF II's Unsecured Claims. The Class 9 Claims
-----------------------------------
are impaired under the Plan.
6.10 Class 10: PIF III's Unsecured Claims. The Class 10
-------------------------------------
Claims are impaired under the Plan.
6.11 Class 11: Limited Partners' Interests. The Class 11
--------------------------------------
Interests are impaired under the Plan.
6.12 Class 12: General Partner's Interests. The Class 12
--------------------------------------
Interests are impaired under the Plan.
6.13 Class 13: Subordinated Claims. The Class 13 Claims are
------------------------------
impaired under the Plan.
ARTICLE 7
---------
TREATMENT OF CLASSIFIED CLAIMS AND INTERESTS
--------------------------------------------
In full satisfaction of their Allowed Claims and Allowed
Interests, the holders of classified Claims and Interests will
receive the treatment specified below in full satisfaction of their
respective Claims and Interests; provided, however, that a holder of
a Claim or Interest may agree to and receive less favorable
treatment.
7.1 Class 1: Priority Claims. On the Effective Date, each
-------------------------
holder of a Class 1 Claim will be paid the full amount of its
Class 1 Claim in Cash.
DEBTOR'S SECOND AMENDED JOINT Exhibit A-29
PLAN OF REORGANIZATION
<PAGE>
7.2 Class 2: Real Property Secured Tax Claims.
------------------------------------------
7.2.1 Treatment of Class 2 Claims Related to Agemark
----------------------------------------------
Facilities. Claims in Classes 2A1, 2A2, 2B1, 2B2, 2B3, 2C1, 2C2 and
- - ----------
2D1 are secured by tax liens against Facilities which will be
transferred to Agemark on the Effective Date; the holders of such
Claims will retain their liens in the same priority against the
respective Agemark Facility; and Agemark will tender Tax Notes in
the principal amount of each holder's respective Allowed Class 2
Claim to the holders of such Claims. The terms and conditions of
the Tax Notes are set out in paragraphs 8.12 et seq. of the Plan.
7.3 Class 3: Mechanics Lien. The Class 3B1 Claim is secured
------------------------
by a mechanics lien against the Rock Island/HHS II Facility which
will be transferred to Agemark on the Effective Date. On the
Effective Date, the holder of the Class 3B1 Claim will be paid in
full and the liens against the Rock Island/HHS II Facility will be
terminated.
7.4 Class 4A1: Secured Claim of United First National Bank
-------------------------------------------------------
Against HHS I. The Class 4A1 Claim is secured by the
- - -------------
Cumberland/HHS I Facility, which will be an Agemark Facility after
the Effective Date; United First National Bank will retain its lien
in the same priority against the Cumberland/HHS I Facility; and
Agemark will pay the Class 4A1 Claim in accordance with the terms of
its note and mortgage.
7.5 Class 5: PIF I's Secured Claims. The treatment of a
-------------------------------
particular subclass of Class 5 Claims is dependent upon whether the
Debtor has equity in the Facility.
7.5.1 Treatment of Class 5 Claims Related to Agemark
----------------------------------------------
Facilities in Which the Owner-Debtor Has Equity. The Claim in
- - -----------------------------------------------
DEBTOR'S SECOND AMENDED JOINT Exhibit A-30
PLAN OF REORGANIZATION
<PAGE>
subclass 5A1 is secured by a mortgage lien on the Cumberland/HHS I
Facility. HHS I has equity in the Cumberland/HHS I Facility. On
the Effective Date, the PIF I Note related to the Cumberland/HHS I
Facility will be canceled and the mortgage related thereto will be
terminated. PIF I will receive a portion of Agemark Stock equal to
the ratio of (a) the value of the canceled PIF I Note related to the
Cumberland/HHS I Facility, to (b) the value of the total equity of
Agemark on the Effective Date.
7.5.2 Treatment of Class 5 Claims Related to Agemark
----------------------------------------------
Facilities in Which the Owner-Debtor Has No Equity. The Claims in
- - --------------------------------------------------
subclasses 5A2, 5B1 and 5B2 are secured by mortgage liens on
Facilities in which the respective owner-Debtors have no equity. On
the Effective Date, those Facilities will be transferred to PIF I in
full satisfaction of the PIF I Notes secured by the mortgage liens
on those Facilities. The PIF I Notes will be cancelled and the
mortgage liens related to each such Note will be terminated.
Thereafter, PIF I shall transfer those Facilities to Agemark and
receive a portion of Agemark Stock equal to the ratio of (a) the
value of the Facilities transferred to (b) the value of the total
equity of Agemark of the Effective Date. Furthermore, as part of
the concessions by HHS I for PIF I to accept these abandoned
Facilities and agree to thereafter transfer the Facilities to
Agemark on the Effective Date free of the mortgage liens, HHS I will
transfer two percent of its Equity Portion to PIF I.
7.6 Class 6: PIF 11's Secured Claims. The treatment of a
---------------------------------
particular subclass of Class 6 Claims is dependant upon whether
DEBTOR'S SECOND AMENDED JOINT Exhibit A-31
PLAN OF REORGANIZATION
<PAGE>
the Class 6 Claim is secured by a mortgage against an Agemark
Facility or a Rejected Facility.
7.6.1 Treatment of Class 6 Claims Related to Agemark
----------------------------------------------
Facilities. Claims in subclasses 6B1 and 6C2 are secured by
- - ----------
mortgage liens on Facilities which will be transferred to Agemark;
PIF II, the holder of such Class 6 Claims, will retain its mortgage
liens in the same priority against the respective Agemark Facility;
and the PIF II Notes secured by the Rock Island/HHS II Facility and
the Fort Madison/HHS III Facility will remain in full force and
effect except as modified herein. The modified terms of these
PIF II Notes are set forth in paragraph 8.10 et seq. of the Plan.
7.6.2 Treatment of Class 6 Claims Related to Rejected
-----------------------------------------------
Facilities. Claims in Classes 6B2, 6B3 and 6C1 are secured by
- - ----------
Facilities which will be transferred to a PIF Holding Company on or
before the Effective Date; PIF II, the holder of such Class 6
Claims, will retain its mortgage liens in the same priority against
the respective Rejected Facilities and may exercise its rights and
remedies under applicable state law.
7.7 Class 7: PIF III's Secured Claims. The treatment of a
----------------------------------
particular subclass of Class 7 Claims is dependent upon whether the
Class 7 Claim is secured by a mortgage against an Agemark Facility
or a Rejected Facility.
7.7.1 Treatment of Class 7 Claims Related to Agemark
----------------------------------------------
Facilities. The Class 7A2 Claim is secured by a mortgage lien on
- - ----------
the Hastings/HHS I Facility which will be transferred to Agemark;
PIP III, the holder of the Class 7A2 Claim, will retain its mortgage
lien in the same priority against the Hastings/Agemark
DEBTOR'S SECOND AMENDED JOINT Exhibit A-32
PLAN OF REORGANIZATION
<PAGE>
Facility; and the PIF III Note secured by the Hastings Facility will
remain in full force and effect except as modified herein. The
terms of this PIF III Note are set forth in paragraph 8.10 et seq.
of the Plan.
7.7.2 Treatment of Class 7 Claims Related to Rejected
-----------------------------------------------
Facilities. Claims in subclasses 7A1 and 7B1 are secured by
- - ----------
Facilities which will be transferred to a PIF Holding Company after
the Effective Date; PIF III, the holder of the Class 7 Claims, will
retain its mortgage liens in the same priority against the
respective Rejected Facilities and may exercise its rights and
remedies under applicable state law.
7.8 Class 8: General Unsecured Claims. Agemark will make
----------------------------------
deferred Cash payments to holders of Class 8 Unsecured Claims equal
to the full amount of their Class 8 Claims plus interest at the rate
of six percent per annum. The deferred payments will be made in
four equal semiannual installments, with the first installment due
not later than six months after the Effective Date.
7.9 Class 9: PIF II's Unsecured Claims. PIF II will receive
-----------------------------------
no Distributions and retain no property under the Plan on account of
its Deficiency Claims.
7.10 Class 10: PIF III's Unsecured Claims. PIF III will
-------------------------------------
receive no Distributions and retain no property under the Plan on
account of its Deficiency Claims; however, on the Effective Date,
Agemark will tender the Super First Note in the principal amount
equal to the total of the Super First Loans to PIF III. The Supe
First Note will have the terms provided in paragraph 8.11 et seq. of
the Plan.
DEBTOR'S SECOND AMENDED JOINT Exhibit A-33
PLAN OF REORGANIZATION
<PAGE>
7.11 Class 11: Limited Partners' Interests.
--------------------------------------
7.11.1 Class IIA: HHS I Limited Partners' Interests.
---------------------------------------------
Within 60 days of the Effective Date each HHS I Limited Partner will
receive a stock certificate for a pro rata portion of the HHS I
Adjusted Equity Portion of the Agemark Stock, such that the ratio of
the Agemark Stock to be issued to a particular HHS I Limited Partner
to the HHS I Adjusted Equity Portion of the Agemark Stock to be
issued to all HHS I Limited Partners is equal to the number of
Interests owned by such HHS I Limited Partner to the total number of
Interests owned by all HHS I Limited Partners. The HHS I Limited
Partners' Interests will be cancelled.
7.11.2 Class 11B: HHS II Limited Partners' Interests.
----------------------------------------------
Within 60 days of the Effective Date each HHS II Limited Partner
will receive a stock certificate for a pro rata portion of the
HHS II Adjusted Equity Portion of the Agemark Stock, such that the
ratio of the Agemark Stock to be issued to a particular HHS II
Limited Partner to the HHS II Adjusted Equity Portion of the Agemark
Stock to be issued to all HHS II Limited Partners is equal to the
number of Interests owned by such HHS II Limited Partner to the
total number of Interests owned by all HHS Il Limited Partners. The
HHS II Limited Partners, Interests will be cancelled.
7.11.3 Class 11C: HES III Limited Partners' Interests.
-----------------------------------------------
Within 60 days of the Effective Date each HHS III Limited Partner
will receive a stock certificate for a pro rata portion of the
HHS III Adjusted Equity Portion of the Agemark Stock, such that the
ratio of the Agemark Stock to be issued to a particular HHS III
Limited Partner to the HHS III Adjusted Equity Portion of
DEBTOR'S SECOND AMENDED JOINT Exhibit A-34
PLAN OF REORGANIZATION
<PAGE>
the Agemark Stock to be issued to all HHS III Limited Partners is
equal to the number of Interests owned by such HHS III Limited
Partner to the total number of Interests owned by HHS III Limited
Partners. The HHS III Limited Partners' Interests will be
cancelled.
7.11.4 Class 11D: PIF I Limited Partners' Interests.
---------------------------------------------
Within 60 days of the Effective Date each PIF I Limited Partner will
receive a stock certificate for a pro rata portion of the PIF I
Adjusted Equity Portion of the Agemark Stock such that the ratio of
the Agemark Stock to be issued to a particular PIF I Limited Partner
to the PIF I Adjusted Equity Portion of the Agemark Stock to be
issued to all PIF I Limited Partners is equal to the number of
interests owned by such PIF I Limited Partner to the total number of
Interests owned by PIF I Limited Partners. The PIF I Limited
Partners' Interests will be cancelled.
7.12 Class 12: General Partner's Interests.
--------------------------------------
7.12.1 Westor, as the holder of the Class 12A, 12B and
12C Interests will receive no Distributions and retain no property
under the Plan. Westor's Interests in each of the Debtors will be
cancelled.
7.12.2 Westor, as the holder of the Class 12D Interests
will receive one percent of the Equity Portion of the Agemark Stock.
However, Westor shall transfer its portion of the Agemark Stock to
the Debtors as necessary to assure that there is a minimum of three
percent of the total Agemark Stock available to each Debtor for
distribution among its Limited Partners.
DEBTOR'S SECOND AMENDED JOINT Exhibit A-35
PLAN OF REORGANIZATION
<PAGE>
7.13 Class 13: Subordinated Claims. Holders of Class 13A,
------------------------------
13B, 13C and 13D Claims will receive no Distributions and will
retain no property under the Plan.
ARTICLE 8
---------
MEANS OF EXECUTION OF THE PLAN
------------------------------
8.1 Formation and Organization of Acremark.
--------------------------------------
8.1.1 On or before the Effective Date, Agemark will be
incorporated under the laws of Nevada. The certificate of
incorporation of Agemark will include provisions authorizing twenty
million shares of common stock, and eliminating the personal
liability of the directors for breaches of fiduciary duty in
accordance with the Nevada Code. The certificate of incorporation
will prohibit the issuance of non-voting securities in accordance
with Section 1123(a)(6) of the Bankruptcy Code.
8.1.2 On the Effective Date, the following actions will
be deemed to have been taken to complete the organization of Agemark
as a Nevada corporation: (a) the incorporator will appoint Richard
Westin, Jesse Pittore and Stan Seaman as the three initial directors
of Agemark, (b) the appointed directors of Agemark will (i) adopt
bylaws for Agemark, (ii) appoint Richard Westin, Jesse Pittore and
Stan Seaman to serve as Agemark's Chief Executive Officer, Chief
Financial Officer and Treasurer, and Secretary, respectively,
(iii) authorize the issuance of one million shares of Agemark Stock
pursuant to the terms of the Plan, (iv) adopt such other resolutions
as are customarily taken at the first meeting of directors (or taken
by unanimous written consent in lieu of a meeting), and (v) prepare,
execute, file and deliver such other documents, and take such other
action, as may be
DEBTOR'S SECOND AMENDED JOINT Exhibit A-36
PLAN OF REORGANIZATION
<PAGE>
necessary or advisable to carry out the terms of the Plan applicable
to Agemark and to organize and manage the affairs and business of
Agemark as contemplated by the Plan.
8.1.3 For two years after the Effective Date, none of the
officers of Agemark referred to in paragraph 8.1.2 of the Plan shall
receive compensation for his service as an officer in an amount
greater than $1,000 per month and none of such persons shall receive
any compensation for his service as a director of Agemark.
8.2 Vesting of Property of the Estates Upon Confirmation. On
----------------------------------------------------
the Confirmation Date, except as otherwise provided in the Plan, all
property comprising each of the Estates will vest initially in the
Debtors, free and clear of all Claims (including Claims between and
among the Debtors), liens, charges, encumbrances, and Interests. On
the Effective Date, the Debtors shall transfer all such property
pursuant to paragraphs 8.4 through 8.6 of the Plan.
8.3 Operation of Business. As of the Confirmation Date, the
---------------------
Debtors, and later, their successor, Agemark, may operate their
businesses and use, acquire and dispose of property and settle and
compromise Claims or Interests without supervision of the Court and
free of any restrictions of the Bankruptcy Code or Bankruptcy Rules
respecting settlement and compromise, other than those restrictions
expressly imposed by the Plan, Confirmation Order, and any documents
entered into in connection therewith.
DEBTOR'S SECOND AMENDED JOINT Exhibit A-37
PLAN OF REORGANIZATION
<PAGE>
8.4 Transfer of Rejected Facilities. On the Effective Date,
-------------------------------
the Rejected Facilities that have not been sold previously12 will
be transferred as follows:
8.4.1 Reorganized HHS Il will transfer title of the
Joliet/HHS III Facility and the Norfolk/HHS II Facility to a PIF
Holding Company.
8.4.2 Reorganized HHS III will transfer title of the
Champaign/HHS III Facility to a PIF Holding Company.
8.5 Transfer of Acremark Facilities. On the Effective Date,
-------------------------------
the Facilities which are to become Agemark Facilities will be
transferred, subject to all security interests therein, as follows:
8.5.1 Reorganized HHS I will transfer the Beatrice/HHS I
Facility to PIF I, which will immediately transfer such Facility to
Agemark.
8.5.2 Reorganized HHS II will transfer the Chanute/
HHS II Facility and the Sedalia/HHS II Facility to PIF I, which will
immediately transfer such Facility to Agemark.
8.5.3 Reorganized HHS I will transfer title of the
Cumberland/HHS I Facility and the Hastings/HHS I Facility to
Agemark.
8.5.4 Reorganized HHS II will transfer title of the Rock
Island/HHS II Facility to Agemark.
- - --------
12 The following Facilities have been sold: The
Columbia/HHS I Facility, the Janesville/HHS II Facility, the
Cedar Rapids/HHS III Facility, the Quincy/HHS III Facility
and the Kansas City/PIF I Facility. The Waycross/HHS I
Facility was foreclosed upon by Patterson Bank.
DEBTOR'S SECOND AMENDED JOINT Exhibit A-38
PLAN OF REORGANIZATION
<PAGE>
8.5.5 Reorganized HHS III will transfer title of the Fort
Madison/HHS III Facility and the Manitowoc/HHS III Facility to
Agemark.
8.5.6 Reorganized PIF I will transfer title of the Port
Huron/PIF I Facility to Agemark.
8.5.7 Subject to satisfaction on the conditions set forth
in paragraphs 11.1.3 and 11.1.4 of the Plan, Dickinson Associates
will transfer title of the Dickinson/Non-Debtor Facility to Agemark.
8.5.8 Subject to satisfaction on the conditions set forth
in paragraphs 11.1.5, 11.1.6 and 11.1.7 of the Plan, the Williston
Associates will transfer title of the Williston/Non-Debtor Facility
to Agemark.
8.6 Transfer of Debtors' Assets and Liabilities Into Agemark.
--------------------------------------------------------
8.6.1 As of the Effective Date, all assets and
liabilities of the Debtors not otherwise disposed of in this Plan
will be transferred to and assumed by Agemark. Agemark will possess
all rights, privileges, remedies, powers and purposes formerly
possessed by the Debtors or any of them. All property of the
Debtors and all debts due on whatever account to the Debtors will
vest in Agemark without further act or deed; and all such property,
rights, privileges, immunities, powers and purposes, and all and
every other interest of the Debtors or any of them will thereafter
be the property of Agemark as they were of the Debtors.
8.6.2 As of the Effective Date, the Debtors will be
dissolved and wound up. The Debtors shall cease carrying on any
business, except as necessary to satisfy conditions of the Plan.
DEBTOR'S SECOND AMENDED JOINT Exhibit A-39
PLAN OF REORGANIZATION
<PAGE>
8.7 Assignment of Executory Contracts and Unexpired Leases.
------------------------------------------------------
On the Effective Date the executory contracts and unexpired leases
will be assumed by the Debtors pursuant to Article 10 of the Plan.
The contracts and leases related to the Agemark Facilities will be
assigned to Agemark, and the contracts and leases related to the
Rejected Facilities will be assigned to the transferee of each such
Facility.
8.8 Assumption of Reimbursement Liability. Agemark shall
-------------------------------------
assume liability for Westor's obligations for reimbursement of
amounts advanced to Westor by PIF II and PIF III for its overhead
expenses by executing Reimbursement Notes in favor of PIF Il and
PIF III with the terms provided in paragraph 8.11 et seq. of the
Plan. Agemark's assumption of these obligations shall not relieve
Westor of its obligations for such reimbursement.
8.9 Cancellation of PIF I Notes and Mortgages. On the
-----------------------------------------
Effective Date, the PIF I Notes and the mortgage liens securing the
PIF I Notes shall be deemed cancelled and extinguished.
8.10 Modification of Agemark Notes. On the Effective Date,
-----------------------------
the Agemark Notes, which are the PIF II Notes secured by the Fort
Madison/Facility, the Rock Island/Facility, the Dickinson/Non-Debtor
Facility and the Williston/Non-Debtor Facility and the PIF III Note
secured by a mortgage on the Hastings/HHS I Facility, will remain in
full force and effect, except as provided in this paragraph 8.10 et
seq. of the Plan. For clarity, the Agemark Notes related to the
Fort Madison/Agemark Facility, the Hastings/Agemark Facility, the
Dickinson/Agemark Facility and the Williston/Agemark Facility will
be referred to in this section as the "Regular Agemark Notes."
Agemark and the relevant lenders
DEBTOR'S SECOND AMENDED JOINT Exhibit A-40
PLAN OF REORGANIZATION
<PAGE>
will execute, deliver, file and record all documents, contracts,
instruments, releases and other agreements and take such other
actions as may be necessary to modify the Agemark Notes as follows:
8.10.1 Principal. The principal balance of each Agemark
---------
Note on the Effective Date will be as follows:
Fort Madison/Agemark Note $2,215,000
Rock Island/Agemark Note $4,171,000
Dickinson/Agemark Note $2,273,000
Hastings/Agemark Note $2,289,000
Williston/Agemark Note $2,500,000
8.10.2 Interest on Regular Acremark Notes.
----------------------------------
8.10.2.1 Interest Rate on Regular Agemark Notes.
--------------------------------------
Each of the Regular Agemark Notes will bear interest at the rate of
eight percent per annum from and after the Effective Date.
8.10.2.2 Payment of Interest on Regular Agemark
Notes.
8.10.2.2.1 Minimum Interest Payments. Interest
-------------------------
on each of the Regular Agemark Notes will be payable at a rate of at
least six percent per annum commencing on the tenth day of the month
after the Effective Date and continuing on the tenth day of each
month thereafter until the Regular Agemark Notes are paid in full.
The unpaid interest ("Unpaid Interest") will accrue.
8.10.2.2.2 Additional Interest Payments.
----------------------------
Commencing on the tenth day of the third month following the
Effective Date and continuing quarterly thereafter, in order to
DEBTOR'S SECOND AMENDED JOINT Exhibit A-41
PLAN OF REORGANIZATION
<PAGE>
reduce the Unpaid Interest, Agemark will make an additional interest
payment ("Additional Interest Payment") to the holder of each
Regular Agemark Note. The Additional Interest Payment will be equal
to the lesser of (a) the Regular Agemark Note holder's pro rata
portion of Agemark's Net Operating Cash Flow, as defined below, such
that the ratio of the amount to be paid to such holder on account of
additional interest to the total amounts to be paid to all Regular
Agemark Note holders on account of additional interest is equal to
the ratio of the principal amount due under such Regular Agemark
Note as to the principal amount of all outstanding Regular Agemark
Notes, or (b) the Unpaid Interest on the Regular Agemark Note. Net
operating Cash Flow means Agemark's cumulative calendar year-to-date
operating income figured monthly after deducting: (a) The Rock
Island Net operating Cash Flow; (b) usual and customary operating
expenses and overhead consistent with historical operation practices
of prior owner, not including depreciation and amortization;
(c) income tax; (d) interest paid on all of the Agemark Notes;
(e) any debt service on the Super First Note, the Reimbursement
Notes, the Tax Notes, the Senior Williston Note, the United First
National Note against the Cumberland/Agemark Facility and any
subsequently incurred secured debt excluding any debt service on
account of proceeds from the sale of real property or refinancing of
real property; (f) payments to Class 8 General Unsecured Creditors;
(g) capital expenses not paid out of the Reserve Account defined
below; and (h) payments on account of the Professionals, Claims.
DEBTOR'S SECOND AMENDED JOINT Exhibit A-42
PLAN OF REORGANIZATION
<PAGE>
8.10.3 Interest on Rock Island/Agemark Note.
------------------------------------
8.10.3.1 First Year After Effective Date.
-------------------------------
Commencing on the tenth day of the month after the Effective Date
and continuing during the first year following the Effective Date,
the minimum monthly interest payable on the Rock Island/Agemark Note
will be the lesser of (a) 100% of the Rock Island Net Operating Cash
Flow (as herein defined), or (b) three percent per annum of the
unpaid principal due on the Rock Island/Agemark Note. Rock Island
Net Operating Cash Flow means the cumulative calendar year-to-date
operating income figured monthly after deducting: (a) usual and
customary operating expenses; (b) capital expenses not paid out of
the Reserve Account defined below; (c) interest and principal paid
on any Tax Notes on the Rock Island/Agemark Facility; and (d) the
Rock Island/Agemark Facility's pro rata portion on the following
expenses of Agemark such that the ratio of the amount to be
attributed to the Rock Island/Agemark Facility is equal to the ratio
of the total gross operating cash flow from the Rock Island/Agemark
Facility as to the total gross operating cash flow on all Agemark
Facilities: (i) payments to Class 8 General Unsecured Creditors,
(ii) payments on account of the Professionals, Claims,
(iii) Agemark's overhead consistent with historical operation
practices of prior owner, not including depreciation and
amortization and (iv) Agemark's income taxes. If the Rock Island
Net Operating Cash Flow in the first year following the Effective
Date is in excess of three percent of the principal amount due under
the Rock Island/Agemark Note, such funds will be held in a separate
interest bearing account
DEBTOR'S SECOND AMENDED JOINT Exhibit A-43
PLAN OF REORGANIZATION
<PAGE>
("Interest Reserve Account") for application to subsequent interest
payments due under the Rock Island/Agemark Note.
8.10.3.2 Second Year After Effective Date. On the
--------------------------------
tenth day of each month during the second year following the
Effective Date, the minimum monthly interest payable on the Rock
Island/Agemark Note will be the greater of (a) 100% of the Rock
Island Net Operating Cash Flow or (b) three percent per annum of the
unpaid principal due on the Rock Island/Agemark Note.
8.10.3.3 Subsequent Years. On the tenth day of each
----------------
month during the third year following the Effective Date and
continuing thereafter until the Rock Island/Agemark Note is paid in
full, the minimum monthly interest payable on the Rock
Island/Agemark Note will be the greater of (a) 100% of the Rock
Island Net Operating Cash Flow or (b) four percent per annum of the
unpaid principal due on the Rock Island/Agemark Note.
8.10.4 Principal Payments. Beginning on the tenth day of
------------------
the third month after the Effective Date, and continuing quarterly
thereafter, if there is no Unpaid Interest on the Regular Agemark
Notes, then Agemark will make a principal payment ("Principal
Payment") to the holder of each Agemark Note in an amount equal to
each Agemark Note holder's pro rata portion of 75% of Agemark's Net
Operating Cash Flow, such that the ratio of the amount to be paid to
such holder on account of principal owed to the total amounts to be
paid to all Agemark Note holders on account of principal owed is
equal to the ratio of the principal amount due under the Agemark
Note to the principal amount of all outstanding Agemark Notes. The
Principal Payments will be
DEBTOR'S SECOND AMENDED JOINT Exhibit A-44
PLAN OF REORGANIZATION
<PAGE>
Deposited by the holder of the Agemark Notes into a separate
interest bearing deposit account ("Principal Reserve Account").
8.10.4.1 Principal Reserve Accounts. Each holder of
--------------------------
the Agemark Notes will deposit and hold all Principal Payments in a
Principal Reserve Account until such time as the funds in the
Principal Reserve Account would reduce the balance on the Agemark
Notes held by that holder to zero. At that time, the funds in the
Principal Reserve Accounts will be credited toward the principal of
each Agemark Note on a pro rata basis according to the total amount
of the unpaid principal on all of the Agemark Notes held by that
holder and adjusting for excess interest as though the principal
amount had been credited at the time of the deposit of the funds
into the Principal Reserve Account. During the term of the Agemark
Notes, the funds in the Principal Reserve Account will be used to
fund capital expenditures as may be necessary. Agemark will submit
annual budgets to the holder of the Agemark Notes; and the holders
of the Agemark Notes will have the opportunity to review and approve
such budgets. Agemark will not spend more than $15,000 annually per
Agemark Facility from the Principal Reserve Account without the
written consent of the holder of the Agemark Notes, which will not
be unreasonably withheld. Any dispute regarding the use of the
funds in the Principal Reserve Accounts will be subject to
arbitration pursuant to the Alternative Dispute Resolution program
set up by the Bankruptcy Court for the Northern District of
California.
8.10.5 Term. The Agemark Notes will mature and be due
----
and payable three years after the Effective Date, unless such term
is extended as provided herein. If, prior to the Effective Date,
DEBTOR'S SECOND AMENDED JOINT Exhibit A-45
PLAN OF REORGANIZATION
<PAGE>
or within three years of the Effective Date, Agemark has made one
million dollars in total Principal Payments, the term of the Agemark
Notes will be extended for one year. If Agemark makes additional
Principal Payments of $1,250,000 for total Principal Payments of
$2,250,000 before the then maturity date of the Agemark Notes, the
term of the Agemark Notes will be extended for an additional year,
five years from the Effective Date. Further, if Agemark makes
additional Principal Payments of $1,500,000 for total Principal
Payments of $3,750,000 before the then maturity date of the Agemark
Notes, the term of the Agemark Notes will be extended for an
additional year, six years from the Effective Date. In no event
will the term of the Agemark Notes exceed six years. The total
Principal Payments provided in this paragraph shall not include any
funds that are paid on the Agemark Notes which funds were derived
from the refinancing of the Agemark Facility securing that Agemark
Note unless all of the net proceeds of such refinancing are paid as
set forth herein and Agemark has, to that date, applied at least 75%
of the net proceeds of any financing or refinancing of any of the
Agemark Facilities that do not secure payment of the Agemark Notes
against the Agemark, the Super First and/or Reimbursement Notes.
After payment in full of any Agemark Note secured by the Agemark
Facility refinanced, Agemark shall have the right to apply up to
fifty percent of the remaining funds from such refinancing to the
Super First Note and/or the Reimbursement Notes provided it applies
the remainder of such funds to the Agemark Notes to the extent there
are any amounts unpaid on such Note(s). Upon the payment in full of
the Agemark Notes, there will be no percentage restriction on the
DEBTOR'S SECOND AMENDED JOINT Exhibit A-46
PLAN OF REORGANIZATION
<PAGE>
application of the remainder of such refinancing funds on the Super
First and/or Reimbursement Notes. Agemark shall have the sole right
to designate the application of those funds against any or all of
those Notes in whatever amounts that Agemark chooses as long as
Agemark complies with the percentages set forth in the preceding
sentence.
8.10.6 Prepayment Incentive. In the event there is no
--------------------
default at any time during the three years following the Effective
Date, any of the Agemark Notes may be satisfied by Agemark by paying
the following principal amounts less the Principal Payments
previously made on account of such Agemark Note:
Fort Madison Note $2,100,000
Rock Island Note $4,000,000
Dickinson Note $2,150,000
Hastings Note $2,175,000
Williston Note $2,300,000
8.10.7 Additional Interest. The "Additional Interest"
-------------------
section of the Agemark Notes will be deleted. The holders of the
Agemark Notes will not be entitled to "Additional Interest" as
provided in the original mortgage notes.
8.10.8 Salability of Notes. The Agemark Notes, as
-------------------
modified, will be freely transferable by the holder of such notes.
8.10.9 Periodic Reporting. A holder of the Agemark Notes
------------------
will have the right to receive monthly operating reports and all
publicly filed documents from Agemark and will have reasonable
access to Agemark's books and records.
8.10.10 Prohibition on Agemark Dividends. Agemark shall
--------------------------------
not declare any dividends unless and until the Agemark Notes, the
Super First Note and the Reimbursement Notes are all paid in full or
otherwise satisfied.
DEBTOR'S SECOND AMENDED JOINT Exhibit A-47
PLAN OF REORGANIZATION
<PAGE>
8.10.11 Miscellaneous Default Provisions.
--------------------------------
8.10.11.1 Transfer Not Default. The transfer of the
--------------------
Agemark Facilities to Agemark will not be a default under the
Agemark Notes.
8.10.11.2 Abandonment of Rock Island/Agemark
----------------------------------
Facility. In the event that Agemark proposes to abandon its
- - --------
interest in the Rock Island/Agemark Facility, Agemark shall be
required to pay in full all of the taxes and other debts secured by
the Rock Island/Agemark Facility as well as unsecured trade which is
consistent with the trade practices of prior owner, exclusive of the
Rock Island/Agemark Note before delivering a quitclaim deed to the
holder of the Rock Island/Agemark Note.
8.10.11.3 Allowed Indebtedness. The existence of
--------------------
and payment of the other Agemark Notes, the Tax Notes, the Super
First Note, the Reimbursement Notes and any other indebtedness
provided under the Plan will be Permitted Liens and will not
constitute a default exercisable by the Agemark Note holders.
8.10.11.4 Notice Requirements. Upon the occurrence
-------------------
of any default in the payment or performance by Agemark of its
obligation to the holder of an Agemark Note under the Plan, and
after 15 days, notice and grace period, the holder of the Agemark
Note will be free to exercise any remedy, including foreclosure of
the related Agemark Facility, take all actions necessary to collect
on the Agemark Note and exercise any and all rights it has under the
security documents and applicable state and federal law, including
removal of management. The term "notice and grace period" means
written notice from the holder of the Agemark Note by first-class
mail, Federal Express or overnight
DEBTOR'S SECOND AMENDED JOINT Exhibit A-48
PLAN OF REORGANIZATION
<PAGE>
delivery mail, or facsimile delivery to Agemark of any default in
the payment or performance by Agemark of its obligation to the
holder of the Agemark Note under the Plan. Notice will be deemed
given and service will be deemed effective upon delivery. Agemark is
obligated to advise the Agemark Note holders of any change of
address.
8.11 Super First and Reimbursement Notes, Mortgages and
--------------------------------------------------
Guarantees.
- - ----------
8.11.1 Terms of Notes. On the Effective Date, Agemark
--------------
and the relevant lenders will execute and deliver the Super First
Note and Reimbursement Notes and the mortgages securing them to the
Liquidating Trustee. The Super First Note and the Reimbursement
Notes will have the following terms:
8.11.1.1 Principal.
---------
8.11.1.1.1 The Super First Note will have a
principal equal to $1,520,000.
8.11.1.1.2 The Reimbursement Note in favor
of PIF II will be in the principal amount of $237,500.
8.11.1.1.3 The Reimbursement Note in favor
of PIF III will be in the principal amount of $154,500.
8.11.1.2 Interest Rate. Interest will accrue on the
-------------
Super First Note and the Reimbursement Notes from and after the
Effective Date at the rate of five percent per annum.
8.11.1.3 Term. The Super First Note and the
----
Reimbursement Notes will mature and be due and payable three years
after the Effective Date; no payments shall be made until maturity
except upon sale of the collateral. Agemark will have the option to
prepay the Super First Note and the Reimbursement Notes at any
DEBTOR'S SECOND AMENDED JOINT Exhibit A-49
PLAN OF REORGANIZATION
<PAGE>
time prior to maturity without premium or penalty. Any payments on
the Super First Note and the Reimbursement Notes will be credited
first against accrued but unpaid(I interest and then against the
principal.
8.11.1.4 Payment of Principal From Sale of Rejected
------------------------------------------
Facilities. Pursuant to paragraph 8.6 of the Plan, on the Effective
- - ----------
Date, as partial payment of the principal of the Super First Note,
PIF I will transfer to Agemark (i) the net cash proceeds from the
sale of the Kansas City/PIF I Facility, less the approximately
$115,000 authorized by the Court to be used to redeem the Port
Huron/PIF I Facility from a pre-petition tax sale, and (ii) PIF I's
portion of the net cash proceeds from the sale of the Quincy/HHS III
Facility. Similarly, on the Effective Date, the Liquidating Trustee,
on behalf of PIF III, will transfer the net cash proceeds it is
holding from the sale of the Quincy/HHS III Facility to Agemark,
which will transfer such proceeds back to PIF III as partial payment
of the principal of the Super First Note.
8.11.1.5 Payment of Proceeds Upon Sale of
--------------------------------
Collateral. If any of the Agemark Facilities which are security for
- - ----------
the Super First Note or the Reimbursement Notes are sold, the net
proceeds from such sale will be paid to the holder of the Super
First Note until the Super First Note is paid in full; and then to
the holders of the Reimbursement Notes on a pro rata basis equal to
the ratio of the unpaid principal of each Reimbursement Note to the
total unpaid principal on both Reimbursement Notes until the
Reimbursement Notes are paid in full.
DEBTOR'S SECOND AMENDED JOINT Exhibit A-50
PLAN OF REORGANIZATION
<PAGE>
8.11.1.6 Salability of Notes. The Super First and
-------------------
the Reimbursement Notes will be freely transferable by the holder of
such notes.
8.11.1.7 Periodic Reporting. A holder of the Super
------------------
First and Reimbursement Notes will have the right to receive
periodic financial reports from Agemark and will have reasonable
access to books and records.
8.11.1.8 Notice Requirements. Upon the occurrence
-------------------
of any default in the payment or performance by Agemark of its
obligation to the holder of a Super First or Reimbursement Note
under the Plan, and after 15 days' notice and grace period, the
holder of the respective Super First or Reimbursement Note will be
free to exercise any remedy, including foreclosure of the secured
Agemark Facilities, take all actions necessary to collect on the
Super First or Reimbursement Note and exercise any and all rights it
has under the security documents and applicable state and federal
law, including removal of management. The term "notice and grace
period" means written notice from the holder of the Super First and
Reimbursement Notes by first-class mail, Federal Express or
overnight delivery mail, or facsimile delivery to Agemark of any
default in the payment or performance by Agemark of its obligation
to the holder of the Super First and Reimbursement Notes under the
Plan. Service will be effective upon delivery. Agemark is obligated
to advise the holders of the Super First and Reimbursement Notes of
any change of address.
8.11.2 Guarantee. Upon the Effective Date, Richard
---------
Westin, Jesse Pittore and Stan Seaman, the principals of Westor,
DEBTOR'S SECOND AMENDED JOINT Exhibit A-51
PLAN OF REORGANIZATION
<PAGE>
will execute and deliver guarantees of payment on the Super First
Note and the Reimbursement Notes.
8.11.3 Mortgages. On the Effective Date, Agemark will
---------
execute and deliver first priority mortgages to PIF II and PIF III
on the following Agemark Facilities: the Manitowoc/HHS III Facility,
the Beatrice/HHS I Facility and the Port Huron/PIF I Facility in
order to secure payment of the Super First Note and the
Reimbursement Notes.
8.11.3.1 Right of First Refusal. Agemark will have
----------------------
the right to match any bid in price and terms at any foreclosure
sale due to default on the Super First Note and/or the Reimbursement
Notes. Agemark shall exercise its right of first refusal within one
week of the original bid.
8.11.3.2 Marshalling Agreement. The Liquidating
---------------------
Trustee shall execute and deliver a marshalling agreement which will
require the holder of the Super First Note and the Reimbursement
Notes to foreclose on the mortgages securing the notes in the
following order: first, the Manitowoc/Agemark Facility; second, the
Port Huron/Agemark Facility; and third, the Beatrice/Agemark
Facility. Only after all mortgages have been foreclosed will the
holders of the Super First Note and/or the Reimbursement Notes have
recourse against the Westor principals pursuant to their guarantees.
8.12 Execution of Tax Notes. On the Effective Date, Agemark
----------------------
and the relevant holders of Class 2 Claims, will execute, deliver,
file and record all documents necessary to cause the Tax Notes to be
effectuated. The Tax Notes will have the following terms:
DEBTOR'S SECOND AMENDED JOINT Exhibit A-52
PLAN OF REORGANIZATION
<PAGE>
8.12.1 Principal. Each Tax Note will be in the principal
---------
amount equal to the allowed amount of the Tax Note holder's
respective Claim 2 Claim.
8.12.2 Interest. The Tax Notes will bear interest at six
--------
and a half percent (6%%-) per annum from and after the Effective
Date.
8.12.3 Payments. Agemark will make semiannual payments
--------
to the holders of the Tax Notes based on a six-year straight
line amortization schedule.
8.12.4 Term. The Tax Notes will be due and payable in
----
full no later than the sixth anniversary of the Effective Date.
Upon full payment of a Tax Note, the respective tax lien will to
released and the Tax Note will be returned to Agemark as paid in
full.
8.12.5 Default. The holders of Class 2A1, 2A2, 2B1, 2B2,
-------
2B3, 2C1, 2C2 and 2D1 Claims will have no right to enforce their
respective liens unless Agemark defaults under the respective Tax
Note.
8.13 Modification of Management Agreement. On the Effective
------------------------------------
Date, subject to the conditions set forth in paragraph 11.1.8 of the
Plan, the management agreements between the Debtors and Evergreen
Management shall be deemed revised such that the management fees
will be reduced from five percent of the gross revenues to four and
a half percent of the gross revenues. The agreements will be
amended to provide that during the terms of the Agemark Notes the
senior management of Evergreen shall not be changed without the
consent of the Liquidating Trustee, if he is a holder of the Agemark
Notes. Furthermore, the management
DEBTOR'S SECOND AMENDED JOINT Exhibit A-53
PLAN OF REORGANIZATION
<PAGE>
Agreements will be amended to relieve Agemark of the requirement to
deposit $10,000 in Evergreen's account on the first day of each
month. Evergreen shall waive any and all Claims it may have against
the Debtors for cure of the assumed agreements.
8.14 Issuance of Agemark Stock. Within 60 days of the
-------------------------
Effective Date, Agemark will issue one million shares of the Agemark
Stock to the Debtors and other entities contributing valuable assets
to Agemark. Each entity contributing value to Agemark will receive
its Equity Portion, which will be adjusted as follows:
8.14.1 Shift of Agemark Stock from HHS I to PIF I. On
------------------------------------------
account of PIF I agreeing to concessions relating to treatment of
its Class 5A1, 5B1 and SB2 Claims, HHS I will transfer to PIF I two
percent of the HHS I Equity Portion to PIF I.
8.14.2 Shift of Agemark Stock from Westor and Williston
------------------------------------------------
Associates to Certain Debtors. In order to assure that each of the
- - -----------------------------
Debtors receives at least three percent of the equity of Agemark for
distribution to its Limited Partners, Westor will contribute all of
the Agemark Stock it receives on account of its interest in the
PIF I Equity Portion and Williston Associates will contribute
sufficient additional shares of Agemark Stock from its Equity
Portion to any Debtor that has an Equity Portion equal to less than
three percent of all the Agemark Stock.
8.14.3 Distribution of Agemark Stock to Limited Partners.
-------------------------------------------------
Within 60 days of the Effective Date and after the adjustments to
the Equity Portions are made, the Debtors shall distribute the
Adjusted Equity Portions of the Agemark Stock to their Limited
Partners on a pro rata basis equal to the ratio of
DEBTOR'S SECOND AMENDED JOINT Exhibit A-54
PLAN OF REORGANIZATION
<PAGE>
Each Debtor's Limited Partner's interest to the outstanding Interest
in the Debtor. Specific provisions governing the mechanics of the
Distributions of Agemark Stock are set forth in Article 9 of the
Plan.
8.15 Distribution of Cash. On the Effective Date and at such
--------------------
other times as required under the Plan, Agemark will distribute Cash
to holders of Administrative Expense Claims, Class 1 Claims, and
Class 8 Claims as provided under the Plan. Specific provisions
governing the mechanics of the Distributions of Agemark Stock are
set forth in Article 9 of the Plan.
8.16 Sale of Certain Agemark Facilities. Agemark will
----------------------------------
immediately take steps to sell certain of the Agemark Facilities.
The proceeds from the sale of those Agemark Facilities which secure
the Super First Note and the Reimbursement Notes will be applied
against Agemark's obligations under the Super First Note and then
the Reimbursement Notes.
8.17 Set-Offs. Agemark may, but will not be required to, set-
--------
off against any Allowed Claim and the Distributions to be made
pursuant to the Plan on account of such Allowed Claim, claims of any
nature that the Debtors, or Agemark may have against the holder of
such Allowed Claim; provided, however, that neither a failure to
effect such a set-off nor the allowance of any Claim against the
Debtors, or Agemark will constitute a waiver or release by the
Debtors, or Agemark of any Claim that the Debtors, or Agemark may
possess against such Claim holder. The Debtors and Agemark waive
their set-off rights, if any, against the PIF partnerships.
DEBTOR'S SECOND AMENDED JOINT Exhibit A-55
PLAN OF REORGANIZATION
<PAGE>
8.18 Retention and Enforcement of Claims. In accordance with
-----------------------------------
Section 1123(b) of the Bankruptcy Code, except as otherwise provided
in the Plan, in any contract, instrument, release, or other
agreement entered into in connection with the Plan, or by order of
the Bankruptcy Court, the Debtors and Agemark will retain and may
enforce any claims, rights, and causes of action that the Debtors,
their Estates or any of them, may have against any entity,
including, without limitation, any rights of setoff and recoupment,
and any claims, rights or causes of action under Sections 505 and
544 through and including 550 of the Bankruptcy Code or any other
applicable law.
8.19 Determination of Tax Liability. Pursuant to Section 505
------------------------------
of the Bankruptcy Code, the Debtors and Agemark shall seek the
Court's determination of certain real property secured tax
liabilities which the Debtors believe are currently overstated. If
the Debtors are successful in reducing real property tax liabilities
which are secured by Rejected Facilities, the Liquidating Trustee
has agreed to share the benefit of any such reductions by paying 30%
of the reduced amount to Agemark.
8.20 Objections to Claims. The Debtors and Agemark will have
--------------------
the authority to make Claim and Interest Objections. Claim and
Interest Objections must be filed within 90 days of the Effective
Date, except that if any holder of a Claim or Interest files a proof
of Claim or Interest subsequent to the Bar Date or is subsequently
allowed by the Court to file a late proof of Claim or Interest, then
Agemark will be allowed to object to such Claim or Interest with 90
days of the filing or allowance thereof. The Debtors and Agemark
admit the validity and amount of the Claims of
DEBTOR'S SECOND AMENDED JOINT Exhibit A-56
PLAN OF REORGANIZATION
<PAGE>
PIF II and PIF III as set forth herein and in the Disclosure
Statement. The Debtors and Agemark shall not object to the Claims
of PIF II and PIF III and those Claims shall be allowed in the
amounts set forth.
8.21 Post-Confirmation Retention of Professionals. Fees and
--------------------------------------------
expenses of professionals incurred through and including the
Confirmation Date will be paid by Agemark in accordance with
paragraph 5.1.3 of the Plan and only pursuant to orders of the
Court. From and after the Confirmation Date, the Debtors and
Agemark may employ and pay professionals without the necessity of a
Court order. This includes, but is not limited to, retention and
payment of professionals to implement the terms and conditions of
the Plan.
8.22 Securities Registration.
-----------------------
8.22.1 Within 120 days of the end of the fiscal year
ending after the Effective Date, Agemark will register under the
Securities and Exchange Act of 1934, as amended, and thereafter file
quarterly and annual financial and other information in accordance
with such Act.
8.22.2 Additionally, as soon as practicable after the
Effective Date, Agemark will take the steps necessary to register
the Agemark Stock so that it may be traded publicly.
ARTICLE 9
---------
DISTRIBUTION PROVISIONS
-----------------------
9.1 Bar Date for Claims/Record Date for Interests.
---------------------------------------------
9.1.1 The HHS Bar Date, March 21, 1994, is the last day
on which holders of Claims against and Interests in the HHS Debtors
could timely file proofs of Claims and Interests.
DEBTOR'S SECOND AMENDED JOINT Exhibit A-57
PLAN OF REORGANIZATION
<PAGE>
9.1.2 The PIF I Bar Date, February 11, 1996, is the last
day on which holders of Claims against or Interests in PIF I could
timely file proofs of Claims or Interests.
9.1.3 The Court has set January 1, 1997 as the Record
Date for the purpose of determining the holders of Claims and
Interests in the Debtors for the purpose of voting and Distributions
under the Plan.
9.1.4 Agemark will be entitled to recognize and deal for
all purposes of the Plan with only: (a) those entities indicated as
the holders of Claims in the proofs of Claims, or if no proof of
Claim was filed, in the Debtors, Schedules, unless a notice of
transfer of Claim or Interest is or was filed in accordance with
Bankruptcy Rule 3001(e)(1) or 3001(e)(2) prior to the Record Date,
and (b) those holders of Interests as of the Record Date.
9.2 Cash Distributions on Account of Disputed Claims.
------------------------------------------------
9.2.1 If, as of the Effective Date, or other date a Cash
Distribution is provided for in the Plan, a Claim for which the
holder is otherwise entitled to a Distribution of Cash is a Disputed
Claim, the holder of such Disputed Claim will not receive any
Distribution on account of the Disputed Claim until such time as the
Claim is determined to be an Allowed Claim.
9.2.2 On the Effective Date, Agemark will reserve Cash
sufficient to satisfy all such Disputed Claims, for which the holder
would otherwise be entitled to a Distribution of Cash in an
interest-bearing account to be held until the disposition of the
Claim. If such a previously Disputed Claim subsequently becomes an
Allowed Claim, Agemark will distribute Cash to the Claim holder
DEBTOR'S SECOND AMENDED JOINT Exhibit A-58
PLAN OF REORGANIZATION
<PAGE>
sufficient to satisfy the Allowed Claim. If such Disputed Claim
subsequently becomes a Disallowed Claim, Agemark will return the
Cash reserved on account of such Claim to its own accounts.
9.3 Agemark Stock Distributions on Account of Dispute Claims
--------------------------------------------------------
and Interests.
- - -------------
9.3.1 Within 60 days of the Effective Date, Agemark will
reserve Agemark Stock sufficient to satisfy all Disputed Interests,
for which the holder would otherwise be entitled to a Distribution
of Agemark Stock, in trust in an escrow account until the
disposition of the Disputed Interest. If a previously Disputed
Claim or Disputed Interest subsequently becomes an Allowed Claim or
Allowed Interest, Agemark will distribute shares of Agemark Stock to
the Claim or Interest holder sufficient to satisfy the Allowed Claim
or Interest. If a previously Disputed Claim or Interest
subsequently becomes a Disallowed Claim or Interest, Agemark will
hold the Agemark Stock reserved on account of such Claim or interest
for subsequent pro rata Distribution as appropriate among the other
holders of Claims or Interests in the same class as the Claim or
Interest would have been had it otherwise been allowed.
9.3.2 When all of the Disputed Claim or Interests of a
particular class have become Allowed Claims or Interests or
Disallowed Claims or Interests, Agemark will make a subsequent
Distribution of any reserved Agemark Stock to the Allowed Claim or
Interest holders in that class as appropriate.
9.4 Distribution of Fractional Shares of Agemark Stock. The
--------------------------------------------------
Distribution of shares of Agemark Stock provided under the Plan may
mathematically entitle a Claim or Interest holder to a
DEBTOR'S SECOND AMENDED JOINT Exhibit A-59
PLAN OF REORGANIZATION
<PAGE>
fractional share of New Common Stock. Notwithstanding the
foregoing, only whole numbers of shares of Agemark Stock will be
issued and distributed. When a Distribution on account of an
Allowed Claim or Allowed Interest would otherwise result in a number
of shares to be issued that is not a whole number, the shares to be
so distributed will be rounded to the nearest whole number such that
any fractional share less than one half will be rounded down to the
previous whole number and any fractional share equal to or greater
than one half will be rounded up to the next highest whole number.
9.5 Delivery of Distributions.
-------------------------
9.5.1 Delivery in General. Distributions to Claim and
-------------------
Interest holders will be made by mail as follows: (a) at the
addresses set forth on the respective proofs of Claim or Interest or
notices of transfer of Claim or Interest filed by such holders; (b)
at the addresses set forth in any written notices of address changes
delivered to the Debtors prior to the Confirmation Date or to
Agemark; or (c) at the addresses reflected on the Schedules filed by
the Debtors if no proof of Claim or Interest is filed and no written
notice of a change of address has been received. Nothing contained
in the Plan will require the Debtors or Agemark to attempt to locate
any holder of an Allowed Claim or Interest.
9.5.2 Holding of Undeliverable Property. If a
---------------------------------
Distribution to the holder of any Claim or Interest is returned to
Agemark as undeliverable, no further Distribution will be made to
such Claim or Interest holder unless and until Agemark is notified
in writing of such Claim or Interest holder's then-current address.
Undeliverable Cash will be deposited by Agemark in an
DEBTOR'S SECOND AMENDED JOINT Exhibit A-60
PLAN OF REORGANIZATION
<PAGE>
interest-bearing account to be held until such time as the Cash
becomes deliverable. Similarly, undeliverable Agemark Stock will be
held in trust by Agemark until such time as it becomes deliverable.
9.5.3 Unclaimed Property. If a Distribution remains
------------------
unclaimed one year following the Effective Date, then the holder of
the respective Allowed Claim or Allowed interest will cease to be
entitled to such Distribution. Any undeliverable Cash will be
returned to Agemark for deposit in its own accounts. Any Agemark
Stock which is undeliverable will be retired to the treasury of
Agemark.
9.6 No Distribution in Excess of Allowed Amount of Claim.
----------------------------------------------------
Notwithstanding anything to the contrary herein, no holder of an
Allowed Claim will receive any Distributions respecting such Claim
in excess of the amount of such Allowed Claim. Except as provided
herein, no Claim will be allowed for post-petition interest, costs
or fees.
ARTICLE 10
----------
EXECUTORY CONTRACTS AND UNEXPIRED LEASES
----------------------------------------
The Confirmation Order will constitute an order of the Court
approving all assumptions and rejections pursuant to Bankruptcy Code
Section 365 as of the Confirmation Date.
10.1 Assumption.
----------
10.1.1 Executory Contracts and Unexpired Leases Assumed.
------------------------------------------------
In addition to the executory contracts and unexpired leases
previously assumed pursuant to Sections 365 and 1123 of the
Bankruptcy Code, on the Effective Date, the Debtors will assume
those executory contracts and unexpired leases listed in
DEBTOR'S SECOND AMENDED JOINT Exhibit A-61
PLAN OF REORGANIZATION
<PAGE>
Exhibit A, attached hereto and incorporated by this reference
("Schedule A").
10.1.2 Method of Cure. Any monetary defaults under each
--------------
executory contract and unexpired lease to be assumed under this Plan
will be satisfied pursuant to Section 365(b)(1) of the Bankruptcy
Code, in one of the following ways: (a) by payment of the Cure
Amount listed in Schedule A in Cash on the Effective Date, or (b) on
such other terms as may be agreed to by the parties to such
executory contract or unexpired lease, which shall in no event be
greater than the cure amount listed on Schedule A. If a dispute
occurs regarding (i) the Cure Amount; (ii) the ability of Agemark to
provide adequate assurance of future performance under the contract
or lease to be assumed; or (iii) any other matter pertaining to
assumption, then the cure payments required by Section 365(b)(1) of
the Bankruptcy Code will be made following the entry of a Final
Order resolving the dispute and approving assumption.
10.1.3 Deadline to Object to Cure Amounts. If prior to
----------------------------------
the Confirmation Date, a party to an executory contract or unexpired
lease listed in Schedule A fails to file with the Court and serve
upon the attorneys for the Debtors an objection to the applicable
Cure Amount listed on Schedule A, then such party will be forever
barred from asserting any additional or other amounts against the
Debtors or Agemark respecting such Cure Amount.
10.2 Rejection.
---------
10.2.1 Executory Contracts and Unexpired Leases Rejected.
-------------------------------------------------
As of the Effective Date, each executory contract and
DEBTOR'S SECOND AMENDED JOINT Exhibit A-62
PLAN OF REORGANIZATION
<PAGE>
unexpired lease that has not been assumed herein or has not been
assumed previously is rejected.
10.2.1.1 Rejection Claims. Any Claim arising from
----------------
such rejection or termination, if allowed, will be a Class 8 General
Unsecured Claim. The holder of any Class 8 Claim arising from such
rejection must file a proof of Claim in respect thereof no later
than 45 days after Confirmation of the Plan, or the holder will be
forever barred from asserting it. Agemark will serve notice of the
last day to file such rejection Claims within 15 days of the
Confirmation Date.
10.3 Reservation of Rights to Assume or Reject. Listing a
-----------------------------------------
contract or lease on Schedule A will not constitute an admission by
the Debtors that such contract or lease is an executory contract or
unexpired lease or that Debtors, or any of them, have any liability
thereunder. The Debtors reserve the right to amend Schedule A at
any time prior to the Confirmation Date. The Debtors will provide
notice of any amendment of Schedule A to the parties affected
thereby.
ARTICLE 11
----------
CONDITIONS TO THE EFFECTIVE DATE
--------------------------------
11.1 Conditions. The Plan may not become effective unless and
----------
until each of the conditions set forth below has been satisfied or
waived in accordance with the provisions specified:
11.1.1 Plan Confirmation. The Confirmation Order is
-----------------
entered and becomes a Final Order approving the Plan in all
respects, including, without limitation, a determination that
Bankruptcy Code Section 1145 applies to the issuance of the Agemark
Stock.
DEBTOR'S SECOND AMENDED JOINT Exhibit A-63
PLAN OF REORGANIZATION
<PAGE>
11.1.2 Fees Paid. All fees payable under Section 1930 of
---------
title 28 of the United States Code have been paid in full.
11.1.3 Amendment to Transfer Dickinson/Non-Debtor
------------------------------------------
Facility. Dickinson Associates agrees to transfer all of its
- - --------
rights, title and interest in the Dickinson/Non-Debtor Facility to
Agemark in exchange for (a) Agemark's assumption of its obligations
under the Dickinson/PIF II Note, as modified herein, and (b) the
Dickinson Associates Equity Portion, if any, of the Agemark Stock.
11.1.4 Agreement to Modify Dickinson Note. PIF II agrees
----------------------------------
to modify the PIF II Note secured by a mortgage on the Dickinson/Non-Debtor
Facility as set forth in paragraphs 8.10 et seq. of the Plan.
11.1.5 Agreement to Transfer Williston/Non-Debtor
------------------------------------------
Facility. Williston Partners agrees to transfer all of its rights,
- - --------
title and interest in the Williston/Non-Debtor Facility to Agemark
in exchange for (a) Agemark's assumption of its obligations under
the Williston/PIF II Note, as modified, and the Senior Williston
Notes and (b) the Williston Associates Equity Portion of the Agemark
Stock.
11.1.6 Agreement to Modify Williston Note. PIF II agrees
----------------------------------
to modify the PIF II Note secured by a mortgage on the Williston
Non-Debtor Facility as set forth in paragraphs 8.10 et seq. of the
Plan.
11.1.7 Agreement to Permit Transfer of Williston/Non-
----------------------------------------------
Debtor Facility. The holder of the Senior Williston Notes agrees to
- - ---------------
the transfer of the Williston/Non-Debtor Facility and the assumption
of the Senior Williston Notes by Agemark.
DEBTOR'S SECOND AMENDED JOINT Exhibit A-64
PLAN OF REORGANIZATION
<PAGE>
11.1.8 Agreement to Modify Management Agreement.
----------------------------------------
Evergreen agrees to modify each of the management agreements
regarding the Williston/Non-Debtor Facility and the Dickinson/Non-
Debtor Facility as set forth in paragraph 8.13 of the Plan.
11.1.9 Execution of Plan Documents. Any documents
---------------------------
necessary for consummation of the Plan are duly executed and are in
a form and substance reasonably satisfactory to Agemark.
11.2 Waiver of Conditions to Effective Date. Except for the
condition in paragraphs 11.1.1 and 11.1.2 above, each of the
conditions may be waived in whole or in part by an agreement between
Agemark and the PIF Liquidating Trustee in their sole discretion,
without notice or hearing.
11.3 Effect of Nonoccurrence of the Conditions to the
------------------------------------------------
Effective Date. If each of the conditions to the occurrence of the
- - --------------
Effective Date has not been satisfied or duly waived on or before 30
days after the Confirmation Date, upon motion by any party in
interest, the Confirmation Order may be vacated by the Court;
provided, however, that notwithstanding the filing of such a motion,
the Confirmation Order will not be vacated if each of the conditions
to the Effective Date is either satisfied or duly waived before the
Court enters an order granting the relief requested in such motion.
If the Confirmation order is vacated pursuant to this section, the
Plan will be hull and void in all respects, nothing contained in the
Plan will constitute a waiver or release of any Claims against,
liens on the property of, or interest in, the Debtors; or prejudice
in any manner the rights of any of the Debtors, including (without
limitation) the right to
DEBTOR'S SECOND AMENDED JOINT Exhibit A-65
PLAN OF REORGANIZATION
<PAGE>
seek further extensions of the exclusivities under Section 1121(d)
of the Bankruptcy Code, which exclusivity will be deemed to have
been extended to the date 60 days after the date of entry of any
order vacating the Confirmation Order, subject to the rights of any
party to seek to shorten the exclusivity periods after notice and a
hearing.
ARTICLE 12
----------
DISCHARGE, RELEASES, INJUNCTIONS, ETC.
--------------------------------------
12.1 Discharge. Except as otherwise provided in Section
---------
1141(d) of the Bankruptcy Code, the Plan or the Confirmation order,
the rights afforded in the Plan and the treatment of all Claims and
Interests herein will be in exchange for and in complete
satisfaction, discharge and release of all Claims and Interests,
whatsoever, that arose from any agreement of the Debtors, or any of
them, entered into before Confirmation, or from any conduct of the
Debtors, or any of them, prior to the Confirmation, or that
otherwise arose before the Confirmation including, without
limitation, any debt of any kind specified in Section 502(g), (h) or
(i) of the Bankruptcy Code, whether or not (a) a proof of Claim
based on such debt is filed or is deemed filed under Section 501 of
the Bankruptcy Code; (b) such Claim is allowed under Section 502 of
the Bankruptcy Code or (c) the holder of such Claim has accepted the
Plan.
12.2 Injunction. All Claimants and Interest holders will be
----------
precluded from asserting against the Debtors, or any of them, or
Agemark, their successors in interest or their assets or properties,
any other or further Claims or Interests based upon any act or
omission, transaction or other activity of any kind or
DEBTOR'S SECOND AMENDED JOINT Exhibit A-66
PLAN OF REORGANIZATION
<PAGE>
nature that occurred prior to the Confirmation. The Confirmation
Order will act as a continuing injunction against any Claim or
Interest holder from taking any action against the Debtors, any of
them, Agemark, or their property, except as otherwise provided in
the Plan or to enforce the terms of the Plan.
12.3 Limitation of Liability. The Debtors, Agemark, Westor,
-----------------------
PIF II, PIF III, the Liquidating Trustee and any of their respective
officers, directors, partners, employees, members or agents, or any
professional persons employed by any of them, will not have or incur
any liability to any entity for any act taken or omission made in
good faith in connection with or related to formulating,
implementing, confirming or consummating this Plan, the Disclosure
Statement or any contract, instrument, release or other agreement or
document created in connection with this Plan.
12.4 Release of General Partner. Except as otherwise provided
--------------------------
in this Plan, as of the Effective Date, the Debtors, the Debtors'
Limited Partners and PIF II and PIP III will be deemed to have
waived all claims against Westor and released Westor and its
principals from any and all claims or causes of action (including
claims which the Debtors otherwise have legal power to assert,
compromise or settle in connection with the Bankruptcy Cases)
arising on or prior to the Effective Date except those claims which
may arise out of the Plan and those claims which are asserted in the
Securities Actions.
DEBTOR'S SECOND AMENDED JOINT Exhibit A-67
PLAN OF REORGANIZATION
<PAGE>
ARTICLE 13
----------
RETENTION OF JURISDICTION
-------------------------
Notwithstanding Confirmation of the Plan or occurrence of the
Effective Date, the Court will retain jurisdiction for the following
purposes:
13.1 To hear and determine any and all objections to the
allowance of a Claim or Interest, or any controversy with respect to
the classification of Claims or Interests, including reexamination
of Claims or Interests which may have been allowed for purposes of
voting. The failure by the Debtors or Agemark to object to or to
examine any Claim or Interest for the purpose of voting will not be
deemed to be a waiver of the Debtors' or Agemark's right to object
to or reexamine a Claim or Interest in whole or in part;
13.2 To hear and determine any and all adversary proceedings,
applications or litigated matters, including all questions and
disputes regarding title to and value of the assets of the Estates;
13.3 The correction of any defect, the curing of any omission,
or the reconciliation of any inconsistency in this Plan or the
Confirmation Order as may be necessary to carry our the purposes and
intent of the Plan;
13.4 Entry of any order, including injunctions, necessary to
enforce the title, rights and powers of the Debtors or Agemark, and
to impose such limitations, restrictions, terms and conditions of
such title, rights or powers as this Court may deem necessary;
DEBTOR'S SECOND AMENDED JOINT Exhibit A-68
PLAN OF REORGANIZATION
<PAGE>
13.5 To hear and determine any and all applications by
professionals for compensation and reimbursement of expenses
incurred prior to the Confirmation Date;
13.6 To hear and determine Claims arising from rejection of
any executory contracts and unexpired leases;
13.7 To enable the Debtors or Agemark to commence and
prosecute any and proceedings which may be brought after the
Confirmation Date related to Claims or causes of action which arose
prior to the Confirmation Date or to recover any transfers, assets,
property or damages to which the Debtors or Agemark may be entitled
under applicable provisions of the Bankruptcy Code or other
applicable law, including without limitation under Sections 505 and
542 through 553 of the Bankruptcy Code;
13.8 To liquidate any disputed, contingent or unliquidated
claims or Interests;
13.9 To enter such orders as may be necessary or appropriate
in furtherance of Confirmation and implementation of the Plan;
13.10 To enter and implement such orders as may be appropriate
in the event Confirmation is for any reason stayed, reversed,
revoked, modified or vacated;
13.11 The approval of any compromise;
13.12 The entry of any order concluding and terminating these
Bankruptcy Cases;
13.13 Modification of the Plan pursuant to Section 1127 of the
Bankruptcy Code; and
13.14 To enter a final decree closing the Bankruptcy Cases.
DEBTOR'S SECOND AMENDED JOINT Exhibit A-69
PLAN OF REORGANIZATION
<PAGE>
ARTICLE 14
----------
ADMINISTRATIVE PROVISIONS
-------------------------
14.1 Plan Amendments and Revocation.
------------------------------
14.1.1 Amendments to the Plan. Pursuant to Section 1127
----------------------
of the Bankruptcy Code, the Debtors may modify the Plan at any time
prior to the entry of the Confirmation order provided that the Plan,
as modified, and the Disclosure Statement pertaining thereto meet
applicable Bankruptcy Code requirements. Similarly, the Debtors may
modify the Plan after the Confirmation Date and before the Effective
Date, if the Court approves.
14.1.2 Revocation of the Plan. The Debtors reserve the
----------------------
right to revoke or withdraw the Plan prior to the date of the
Confirmation Order. If the Debtors revoke or withdraw the Plan, or
if confirmation of the Plan does not occur, then the Plan will be
null and void, and nothing contained in the Plan will: (i)
constitute a waiver or release of any Claims by or against, liens
and property of, or interest in, the Debtors; or (ii) prejudice in
any manner the rights of the Debtors in any further proceedings
involving the Debtors.
14.2 Applicability of Section 1145 of the Bankruptcy Code.
----------------------------------------------------
The protection afforded by Section 1145 of the Bankruptcy Code will
apply to the full extent provided by law with regard to the
solicitation of acceptances or rejections of this Plan and with
regard to the offer, issuance, sale or purchase of the Agemark
Stock, issued and distributed pursuant to this Plan. The entry of
the Confirmation Order will constitute the determination by the
Bankruptcy Court that the Debtors and their officers, directors,
partners, employees, members or agents, and each attorney,
DEBTOR'S SECOND AMENDED JOINT Exhibit A-70
PLAN OF REORGANIZATION
<PAGE>
accountant, or other professional employed by any of them, will
have acted in good faith and in compliance with the applicable
provisions of the Bankruptcy Code pursuant to Section 1145 of the
Bankruptcy Code.
In addition, the entry of the Confirmation Order will provide
that the exemption from the requirements of Section 5 of the
Securities Act of 1933, 15 U.S.C. s. 77e, and any state or local law
requiring registration for the offer or sale of a security
(including the qualification requirements of Section 25110 of the
California Corporate Securities Law of 1968) provided for in
Section 1145 of the Bankruptcy Code and Section 25102(k) of the
California Corporations Code will apply to the Agemark Stock issued
under this Plan.
14.3 Application of Bankruptcy Code Section 1146(c). The
----------------------------------------------
issuance, transfer or exchange of a security, or the making or
delivery of an instrument of transfer under the Plan will be
entitled to the tax treatment provided by Section 1146(c) of the
Bankruptcy Code, and each recording or other agent of any
governmental office will record any such documents of issuance,
transfer or exchange without any further direction or order of the
Court.
14.4 Successors and Assigns. The rights, benefits, and
----------------------
obligations of any person named or referred to in the Plan will be
binding upon, and will inure to the benefit of, the heir, executor,
administrator, successor or assign of such person.
14.5 Severability. Should any provision in the Plan be
------------
determined to be unenforceable following the Confirmation Date, such
determination will in no way limit or affect the
DEBTOR'S SECOND AMENDED JOINT Exhibit A-71
PLAN OF REORGANIZATION
<PAGE>
enforceability or operative effect of any and all other provisions
of the Plan; provided that the Plan, as modified, meets the
requirements of the Bankruptcy Code, including without limitation,
Section 1127 of the Bankruptcy Code.
14.6 Readings. The headings in this Plan are for convenience
--------
and reference only, and will not limit or otherwise affect the
meaning of the Plan.
14.7 Notices. All notices required or permitted to be made in
-------
accordance with the Plan will be in writing and will be delivered by
Federal Express or overnight delivery, facsimile or first class
mail, postage prepaid as follows:
If to the Debtors or Agemark:
Richard Westin
Westor Financial Services
2614 Telegraph Avenue
Berkeley, California 94704
Terrence V. Ponsford, Esq.
Bronson, Bronson & McKinnon LLP
505 Montgomery Street
San Francisco, California 94111-2514
Edward Tredinnick, Esq.
Pascoe & Rafton
1050 Northgate Drive, Suite 356
San Rafael, California 94903
Notices to be made to a holder of an Allowed Claim or Allowed
Interest shall be sent to the address set forth in the holder's
proof of Claim or proof of Interest or, if none, at the address set
forth in the Schedules prepared and filed with the Court pursuant to
Bankruptcy Rule 1007(b).
14.8 Integration. The provisions of this Plan and the
-----------
Confirmation Order supersede any and all prior agreements,
documents, understandings, written or otherwise, in respect to any
DEBTOR'S SECOND AMENDED JOINT Exhibit A-72
PLAN OF REORGANIZATION
<PAGE>
Claim against, or Interest in, the Debtors, and the treatment or
satisfaction thereof. All such prior agreements, documents or
understandings are merged herein.
ARTICLE 15
----------
CONFIRMATION REQUEST
--------------------
If holders of impaired Claims and Interests do not accept this
Plan in accordance with Section 1126 of the Bankruptcy Code, the
Debtors will, and hereby do, request a Confirmation Order to be
entered pursuant to Section 1129(b) of the Bankruptcy Code on the
basis that the Plan is fair and equitable to all Claim and Interest
holders.
DATED: January 15, 1997 HISTORIC HOUSING FOR SENIORS
LIMITED PARTNERSHIP
By: ---------------------------------
Richard J. Westin, President
of Westor Financial Group,
General Partner
HISTORIC HOUSING FOR SENIORS
II LIMITED PARTNERSHIP
By: ---------------------------------
Richard J. Westin, President
of Westor Financial Group,
General Partner
HISTORIC HOUSING FOR SENIORS
III LIMITED PARTNERSHIP
By: ---------------------------------
Richard J. Westin, President
of Westor Financial Group,
General Partner
DEBTOR'S SECOND AMENDED JOINT Exhibit A-73
PLAN OF REORGANIZATION
<PAGE>
HOUSING FOR SENIORS
PARTICIPATING MORTGAGE FUND
LIMITED PARTNERSHIP
By: ---------------------------------
Richard J. Westin, President
of Westor Financial Group,
General Partner
PRESENTED By::
DATED: January 10, 1997 BRONSON, BRONSON & MCKINNON
LLP
By: ---------------------------------
Terrence V. Posford
Attorneys for Debtors HISTORIC
HOUSING FOR SENIORS LIMITED
PARTNERSHIP, HISTORIC HOUSING
FOR SENIORS II LIMITED
PARTNERSHIP, and HISTORIC
HOUSING FOR SENIORS III
LIMITED PARTNERSHIP
PASCOE & RAFTON
By: ---------------------------------
Edward Tredinnick
Attorneys for Debtor HOUSING
FOR SENIORS PARTICIPATING
MORTGAGE FUND LIMITED
PARTNERSHIP
DEBTOR'S SECOND AMENDED JOINT Exhibit A-74
PLAN OF REORGANIZATION
<PAGE>
EMPLOYMENT AGREEMENT
--------------------
THIS EMPLOYMENT AGREEMENT ("Agreement") is made and entered into this 30th
day of September, 1998, by and between Jesse A. Pittore, ("Employee"), and
AGEMARK CORPORATION, a Nevada Corporation ("Agemark or "Company").
W I T N E S S E T H:
WHEREAS, Employee has been the founder, an officer, director and
shareholder of the Company;
WHEREAS, the Company and Employee each desire to enter into this Agreement
pursuant to which Employee will be employed by the Company; and
NOW THEREFORE, in consideration of the premises and of the promises and
agreements hereinafter set forth, the parties hereto, intending to be legally
bound, do hereby agree as follows:
SECTION 1. Employment; Effective Date.
--------------------------
Subject to the terms and conditions hereof, the Company hereby agrees to
employ Employee, and Employee hereby accepts such employments, commencing
immediately following its execution ("Effective Date").
SECTION 2. Position.
--------
2.1 Title. Employee shall serve as the President of the Company, as well as
-----
Co-Chairman of the Board of Directors. Employee also consents to serve as a
director and officer of directly and indirectly owned subsidiaries (wholly-owned
and partially owned) of the Company.
2.2 Location. Employee's location of employment shall be at the Company's
--------
principal executive offices in Berkeley, California. In the event of a
relocation of Employee, the Company will pay Employee's reasonable and approved
moving expenses.
2.3 Responsibilities. Employee's responsibilities shall be as directed by
----------------
the Board of Directors of the Company. Employee shall devote his best efforts to
rendering services on behalf of the Company.
SECTION 3. Term.
----
3.1 Term. The employment of Employee hereunder shall commence on the
----
Effective Date and shall continue until the earlier of (a) the fifth anniversary
date of the Effective Date
-1-
<PAGE>
(the "Original Term"), or (b) the occurrence of any of the
following events:
(i) the death or disability of Employee (disability meaning a physical
illness or incapacity that prevents Employee totally and permanently from
performing all of the substantial and material duties of his then current
position of employment with the Company; provided, however, that a disability
shall be considered to exist only if Employee is prevented for a period of three
(3) consecutive months following the date such condition commenced and at the
end of such three (3) month period he remained so prevent, or if, prior to the
expiration of such three (3) month period, Employee's attending physician
provides the Company with a written prognosis that the illness, injury or other
incapacity that results in Employee's current disabled condition may be
reasonably expected to prevent Employee from performing all of the substantial
and material duties of his then current position of employment with the Company
for a period of at least six (6) consecutive months);
(ii) the mutual written agreement of the parties hereto to terminate
Employee's employment hereunder;
(iii) the Company's termination of Employee's employment hereunder for
"cause." For the purposes of this Agreement, "cause" for termination of
Employee's employment shall exist (x) if Employee is convicted of, or pleads
guilty to, any act of fraud, misappropriation or embezzlement, or any felony,
(y) if Employee has engaged in conduct or activities materially damaging to the
Company, monetarily or otherwise (it being understood, however, that neither
conduct nor activities pursuant to Employee's exercise of his good faith
business judgment nor unintentional physical damage to any property of the
Company by Employee shall be a ground for such a determination by the Company),
or (z) if Employee has willfully and continuously failed to substantially
perform his duties hereunder (other than any such failure resulting from
incapacity due to physical or mental illness), after a written demand for
substantial performance is delivered to Employ that specifically identifies the
manner in which the Company believes that Employee has not substantially
performed those duties, and Employee has failed to resume substantial
performance of such duties on a continuous basis within fourteen (14) days after
receiving such demand. Termination for cause shall be made only upon vote of not
less than the majority vote of the directors of the Company then in office,
after reasonable notice to Employee and an opportunity for Employee to be heard
before a meeting of the Board held upon reasonable notice to all directors; or
(iv) the Employee's termination of his employment with the Company for
"good reason" upon reasonable notice to the Company. For purposes of this
Agreement, "good reason" shall exist if the Company materially fails to comply
with any of the provisions of this Agreement, other than isolated, insubstantial
or inadvertent
-2-
<PAGE>
failures not occurring in bad faith and which are remedied by the Company
promptly after receipt of notice thereof given by the Employee.
The failure to set forth any fact or circumstance in a notice of termination
hereunder shall not constitute a waiver of the right to assert such fact or
circumstance by the party giving notice. The Original Term hereof, and any
renewal terms, shall be automatically renewed for an additional one (1) year
period unless either Employee or the Company gives notice to the other party
that it does not wish to renew this Agreement at least thirty (30) days prior to
the expiration of such Original Term or renewal term, as the case may be.
3.2 Payments Upon Termination. If Employee's employment is terminated by
-------------------------
the Company for cause or by Employee for any reason other than "good reason",
the Company shall pay Employee the Base Salary (as hereinafter defined) through
the effective date of termination at the rate in effect at the time notice of
termination is given, and the Company shall have no further obligations to
Employee under this Agreement subject to the rights and benefits the Employee
may have under employee benefits plans and programs of the Company in existence
as of the effective date of such termination, if any, which shall be determined
in accordance therewith. If Employee's employment is terminated by the Company
for any reason other than for cause or by Employee for "good reason", the
Company shall continue to pay employee the Base Salary at the rate in effect at
the time notice of termination is given, together with any applicable bonuses
and rights and benefits the Employee may have under employee benefits plans and
programs of the Company in existence as of the date of such termination, all for
a 36 month period (at the rate of $20,000.00 per month) following such
termination (the "Extended Period").
SECTION 4. Compensation.
------------
4.1 Base Salary. For the Initial Term of his employment hereunder (the
-----------
"Initial Term" shall be from October 1, 1998 until September 30, 2000), Employee
shall be paid a salary at the annual rate of twelve thousand dollars
($12,000.00), payable in installments of one thousand dollars ($1,000.00) per
month. Thereafter, the salary to be paid to the Employee shall be determined in
accordance with the discretion of the Board of Directors, but shall be no less
than $240,000.00 per year, with $20,000.00 being paid per month. The annual
salary to be paid to Employee under this Agreement is hereinafter referred to as
the "Base Salary".
4.2 Incentive Bonus. As additional compensation hereunder, the Company may,
---------------
in the discretion of the Board of Directors, pay Employee an annual bonus (the
"Annual Bonus") for each fiscal year during the term of Employee's employment
hereunder. If Employee's employment hereunder is terminated pursuant to the
terms of this Agreement prior to the end of a calendar year, his
-3-
<PAGE>
Annual Bonus with respect to that year shall be prorated for such portion of
that year as he was employed by the Company. The Employee shall be eligible to
receive an Annual Bonus of up to one hundred percent (100%) of the Base Salary,
as determined by the Board of Directors.
4.3 Stock Options. The Board of Directors of the Company shall grant to
-------------
Employee, effective as of the Effective Date, options to purchase 83,333 shares
of common stock, par value $0.001, of the Company (the "Common Stock") pursuant
to the terms of the 1997 Employee Stock Incentive Plan of the Company ("Plan"),
which options shall vest six (6) months after the Effective Date, and shall
become exercisable immediately as of the vesting date, subject to adoption and
approval of the Plan by the Board of Directors and holders of the majority of
the securities of the Company, if such adoption as not already taken place
before the execution of this Agreement. The exercise price for the options shall
be $1.00 per share. Such options that have not previously been exercised shall
no longer be exercisable as of and following the tenth (10th) anniversary of the
date of grant of such options. All other terms and conditions of the grant
hereof to Employee shall be consistent with those set forth in the 1997 Employee
Stock Incentive Plan Stock Option Agreement ("Option Agreement") of even date
herewith, a copy of which is attached hereto.
4.4 Insurance.
---------
(a) Life and Other Insurance. The Company shall provide to Employee such
------------------------
term life and group travel, accident, accidental death and dismemberment
insurance and long and short term disability insurance, or their equivalents, as
is provided from time to time for senior executives of the Company. The Company
shall be entitled, at its sole options and expense, to arrange for and keep in
effect, during the term of Employee's employment hereunder, so long as he is
insurable, key man insurance on Employee in an amount determined by the Board of
Directors, such policy or policies to name the Company or its designee as the
beneficiary. Employee shall reasonably cooperate with the Company in procuring
such key man insurance as the Company shall elect to purchase.
(b) Medical Insurance. During the term of Employee's employment hereunder,
-----------------
the Company shall, at its expense, provide or arrange for and keep in effect,
hospitalization, major medical and similar medical and health insurance for
Employee and his family, to the same extent as is provided from time to time for
senior executives of the Company.
4.5 Retirement Benefits. During the term of his employment hereunder,
-------------------
Employee shall have the same rights as senior executive officers of the Company
to participate in all profit-sharing, pension and other retirement plans as are
now, or as may hereafter be, established by the Company.
-4-
<PAGE>
4.6 Out-of-Pocket Expenses. The Company shall reimburse for all reasonable
----------------------
out-of-pocket expenses incurred by Employee in connection with the performance
of his duties hereunder upon presentation of appropriate vouchers therefor.
4.7 Automobile Expense Allowance. During the term of Employee's employment
----------------------------
hereunder, the Company shall pay to Employee an automobile allowance of
$1,000.00 per month.
4.8 Loan to Employee. Upon request by the Employee at any time or times
----------------
during the Original Term, the Company shall loan to Employee up to $720,000.00,
three (3) times Employee's annual salary, such loan to be repayable, in full, on
the third anniversary of the date of the loan ("Repayment Date"), with interest
accruing on such loan at the rate of 6.0% per annum, with accrued and unpaid
interest due and payable on each anniversary of the date of the loan and all
then accrued and unpaid interest due and payable on the Repayment Date. Employee
may repay the loan in whole or in part prior to the Repayment Date without
penalty. Employee may tender shares of the common stock of the Company in
payment of any outstanding principal or accrued interest. In the event the
Employee's employment is terminated by the Company for "cause" (as defined in
Section 3.1 hereof) or by the Employee otherwise than for "good reason" (as
defined in Section 3.1 hereof), all amounts remaining outstanding on such loan
shall be due and payable on the effective date of such termination. The Company
shall be entitled to set-off any amounts due the Employee (including, without
limitation, any amounts due pursuant to Section 3.2 hereof) against any
remaining amounts due to the Company under such loan. The repayment of such loan
shall be secured by a pledge by Employee of all Common Stock held by Employee as
of the date of such loan (excluding the Option Shares as hereinafter defined).
The Employee agrees to execute a promissory note and stock pledge agreement in
such form as the Company may reasonably request to evidence such loan and pledge
contemplated hereby. If this Agreement is extended beyond the Original Term, the
Company shall allow Employee to continue to borrow upon the same terms as are
set forth in this Section 4.8 upon request of Employee during the twelve months
following the end of the Original Term provided that Employee is an employee of
the Company at the time of such request; provided, however, that such loan (and
its terms) is subject to the approval by such loan (and its terms) by the
Company's Board of Directors.
SECTION 5. Miscellaneous.
-------------
5.1 Binding Effect. This Agreement shall inure to the benefit of and shall
--------------
be binding upon Employee, his executor, administrator, heirs, personal
representatives and assigns, and upon the Company and its successors and
assigns; provided, however, that the obligations and duties of Employee may not
be assigned or delegated.
-5-
<PAGE>
5.2 Governing Law. This Agreement shall be deemed to be made in, and in all
-------------
respects shall be interpreted, construed and governed by and in accordance with,
the laws of the State of California, without giving effect to principles of
conflicts of laws.
5.3 Invalid Provisions. The parties herein hereby agree that the
------------------
agreements, provisions and covenants contained in this Agreement are severable
and divisible, that none of such agreements, provisions or covenants depends
upon any other provision, agreement or covenant for its enforceability, and that
each such agreement, provision and covenant constitutes an enforceable
obligation between the Company and Employee. Consequently, the parties hereto
agree that neither the invalidity nor the unenforceability of any agreement,
provision or covenant of this Agreement shall affect the other agreements,
provisions or covenants hereof, and this Agreement shall remain in full force
and effect and be construed in all respects as if such invalid or unenforceable
agreement, provision or covenant were omitted.
5.4 Headings. The section and paragraph heading contained in this Agreement
--------
are for reference purposes only and shall not affect in any way the meaning or
interpretation of this Agreement.
5.5 Notices. All communications provided for hereunder shall be in writing
-------
and shall be deemed to be given when delivered in person or deposited in the
United States mail, first class, registered mail, return receipt requested, with
proper postage prepaid, and
(a) If to Employee, addressed to:
Mr. Richard J. Westin
Chief Executive Officer and Secretary
Agemark Corporation
2614 Telegraph Avenue
Berkeley, California 94704
(b) If to the Company, addressed to:
Mr. Jesse A. Pittore
President and Chief Operating Officer
Agemark Corporation
2614 Telegraph Avenue
Berkeley, CA 94704
or at such other place or places or to such other person or persons as shall be
designated in writing by the parties hereto in the manner provided above for
notices.
5.6 Counterparts. This Agreement may be executed in one or
------------
more counterparts, each of which shall be deemed to be an
-6-
<PAGE>
original but all of which together shall constitute one and the
same instrument.
5.7 Waiver of Breach. The waiver by the Company or by the Employee of a
----------------
breach of any provision, agreement or covenant of this Agreement by Employee or
by the Company, respectively, shall not operate or be construed as a waiver of
any prior or subsequent breach of the same or any other provision agreement or
covenant.
5.8 Entire Agreement. This Agreement is intended by the parties hereto to
----------------
be the final expression of their agreement and is the complete and exclusive
statement thereof notwithstanding any representation or statements to the
contrary heretofore made. This Agreement may be modified only by written
instrument signed by each of the parties hereto.
5.9 Arbitration. In the event of a dispute regarding this Agreement,
-----------
including its interpretation, the parties agree to submit such dispute to a
binding arbitration before the American Arbitration Association ("AAA"), and
pursuant to its rules, as the exclusive means of resolution of such dispute.
Notwithstanding any rules of the AAA, the parties shall be permitted to engage
in discovery to the same extent as may be permitted under California law, had
the matter been submitted to the jurisdiction of the California Superior Court.
Judgment may be entered in any court of competent jurisdiction. The prevailing
party in any such action shall be entitled to the recovery of attorneys' fees
and costs reasonably incurred in such enforcement action.
5.10 Severability. Should any provision of this Agreement be declared or be
------------
determined by any court of competent jurisdiction to be wholly or partially
illegal, invalid or unenforceable, the legality, validity and enforceability of
the remaining parts, terms or provisions shall not be affected thereby, and such
illegal, unenforceable or invalid part, term, or provision shall be deemed not
be a part of this Agreement.
-7-
<PAGE>
5.11 Facsimile signatures. The parties' signatures to this Agreement may be
--------------------
transmitted and received via facsimile, and will be equally binding and
effective as original signatures.
IN WITNESS WHEREOF, Employee has duly executed, and the Company has caused
this Agreement to be duly executed by its duly authorized officers, and the
parties have caused this Agreement to be delivered, all on the day and year
first written above.
/s/ Jesse A. Pittore
----------------------------
Jesse A. Pittore
AGEMARK CORPORATION
By: /s/ Richard J. Westin
------------------------------------
Richard J. Westin
Its: Chief Executive Officer &
Secretary
-8-
<PAGE>
EMPLOYMENT AGREEMENT
THIS EMPLOYMENT AGREEMENT ("Agreement") is made and entered into this 30th day
of September, 1998, by and between Richard J. Westin, ("Employee"), and AGEMARK
CORPORATION, a Nevada Corporation ("Agemark or "Company").
W I T N E S S E T H:
WHEREAS, Employee has been the founder, an officer, director and shareholder of
the Company;
WHEREAS, the Company and Employee each desire to enter into this Agreement
pursuant to which Employee will be employed by the Company; and
NOW THEREFORE, in consideration of the premises and of the promises and
agreements hereinafter set forth, the parties hereto, intending to be legally
bound, do hereby agree as follows:
SECTION 1. EMPLOYMENT; EFFECTIVE DATE.
Subject to the terms and conditions hereof, the Company hereby agrees to employ
Employee, and Employee hereby accepts such employments, commencing immediately
following its execution ("Effective Date").
SECTION 2. POSITION.
2.1 Title. Employee shall serve as Chief Executive Officer and Secretary of the
Company, as well as Co-Chairman of the Board of Directors. Employee also
consents to serve as a director and officer of directly and indirectly owned
subsidiaries (wholly-owned and partially owned) of the Company.
2.2 Location. Employee's location of employment shall be at the Company's
principal executive offices in Berkeley, California. In the event of a
relocation of Employee, the Company will pay Employee's reasonable and approved
moving expenses.
2.3 Responsibilities. Employee's responsibilities shall be as directed by the
Board of Directors of the Company. Employee shall devote his best efforts to
rendering services on behalf of the Company.
SECTION 3. TERM.
3.1 Term. The employment of Employee hereunder shall commence on the Effective
Date and shall continue until the earlier of (a) the fifth anniversary date of
the Effective Date (the "Original Term"), or (b) the occurrence of any of the
following events:
-1-
<PAGE>
(i) the death or disability of Employee (disability meaning a physical
illness or incapacity that prevents Employee totally and permanently from
performing all of the substantial and material duties of his then current
position of employment with the Company; provided, however, that a disability
shall be considered to exist only if Employee is prevented for a period of three
(3) consecutive months following the date such condition commenced and at the
end of such three (3) month period he remained so prevent, or if, prior to the
expiration of such three (3) month period, Employee's attending physician
provides the Company with a written prognosis that the illness, injury or other
incapacity that results in Employee's current disabled condition may be
reasonably expected to prevent Employee from performing all of the substantial
and material duties of his then current position of employment with the Company
for a period of at least six (6) consecutive months);
(ii) the mutual written agreement of the parties hereto to terminate
Employee's employment hereunder;
(iii) the Company's termination of Employee's employment hereunder for
"cause." For the purposes of this Agreement, "cause" for termination of
Employee's employment shall exist (x) if Employee is convicted of, or pleads
guilty to, any act of fraud, misappropriation or embezzlement, or any felony,
(y) if Employee has engaged in conduct or activities materially damaging to the
Company, monetarily or otherwise (it being understood, however, that neither
conduct nor activities pursuant to Employee's exercise of his good faith
business judgment nor unintentional physical damage to any property of the
Company by Employee shall be a ground for such a determination by the Company),
or (z) if Employee has willfully and continuously failed to substantially
perform his duties hereunder (other than any such failure resulting from
incapacity due to physical or mental illness), after a written demand for
substantial performance is delivered to Employ that specifically identifies the
manner in which the Company believes that Employee has not substantially
performed those duties, and Employee has failed to resume substantial
performance of such duties on a continuous basis within fourteen (14) days after
receiving such demand. Termination for cause shall be made only upon vote of not
less than the majority vote of the directors of the Company then in office,
after reasonable notice to Employee and an opportunity for Employee to be heard
before a meeting of the Board held upon reasonable notice to all directors; or
(iv) the Employee's termination of his employment with the Company for
"good reason" upon reasonable notice to the Company. For purposes of this
Agreement, "good reason" shall exist if the Company materially fails to comply
with any of the provisions of this Agreement, other than isolated, insubstantial
or inadvertent failures not occurring in bad faith and which are remedied by the
Company promptly after receipt of notice thereof given by the Employee.
The failure to set forth any fact or circumstance in a notice of termination
hereunder shall not constitute a waiver of the right to assert such fact or
circumstance by the party giving notice. The Original Term hereof, and any
renewal terms, shall be automatically renewed for an additional one (1) year
period unless either Employee or the Company gives notice to the other party
that it does not wish to renew this Agreement at least thirty (30) days prior to
the expiration of such Original Term or renewal term, as the case may be.
-2-
<PAGE>
3.2 Payments Upon Termination. If Employee's employment is terminated by the
Company for cause or by Employee for any reason other than "good reason", the
Company shall pay Employee the Base Salary (as hereinafter defined) through the
effective date of termination at the rate in effect at the time notice of
termination is given, and the Company shall have no further obligations to
Employee under this Agreement subject to the rights and benefits the Employee
may have under employee benefits plans and programs of the Company in existence
as of the effective date of such termination, if any, which shall be determined
in accordance therewith. If Employee's employment is terminated by the Company
for any reason other than for cause or by Employee for "good reason", the
Company shall continue to pay employee the Base Salary at the rate in effect at
the time notice of termination is given, together with any applicable bonuses
and rights and benefits the Employee may have under employee benefits plans and
programs of the Company in existence as of the date of such termination, all for
a 36 month period (at the rate of $20,000.00 per month) following such
termination (the "Extended Period").
SECTION 4. COMPENSATION.
4.1 Base Salary. For the Initial Term of his employment hereunder (the "Initial
Term" shall be from October 1, 1998 until September 30, 2000), Employee shall be
paid a salary at the annual rate of twelve thousand dollars ($12,000.00),
payable in installments of one thousand dollars ($1,000.00) per month.
Thereafter, the salary to be paid to the Employee shall be determined in
accordance with the discretion of the Board of Directors, but shall be no less
than $240,000.00 per year, with $20,000.00 being paid per month. The annual
salary to be paid to Employee under this Agreement is hereinafter referred to as
the "Base Salary".
4.2 Incentive Bonus. As additional compensation hereunder, the Company may, in
the discretion of the Board of Directors, pay Employee an annual bonus (the
"Annual Bonus") for each fiscal year during the term of Employee's employment
hereunder. If Employee's employment hereunder is terminated pursuant to the
terms of this Agreement prior to the end of a calendar year, his Annual Bonus
with respect to that year shall be prorated for such portion of that year as he
was employed by the Company. The Employee shall be eligible to receive an Annual
Bonus of up to one hundred percent (100%) of the Base Salary, as determined by
the Board of Directors.
4.3 Stock Options. The Board of Directors of the Company shall grant to
Employee, effective as of the Effective Date, options to purchase 83,333 shares
of common stock, par value $0.001, of the Company (the "Common Stock") pursuant
to the terms of the 1997 Employee Stock Incentive Plan of the Company ("Plan"),
which options shall vest six (6) months after the Effective Date, and shall
become exercisable immediately as of the vesting date, subject to adoption and
approval of the Plan by the Board of Directors and holders of the majority of
the securities of the Company, if such adoption as not already taken place
before the execution of this Agreement. The exercise price for the options shall
be $1.00 per share. Such options that have not previously been exercised shall
no longer be exercisable as of and following the tenth (10th) anniversary of the
date of grant of such options. All other terms and conditions of the grant
hereof to Employee shall be consistent with those set forth in the 1997 Employee
Stock Incentive Plan Stock Option Agreement ("Option Agreement") of even date
herewith, a copy of which is attached hereto.
-3-
<PAGE>
4.4 Insurance.
(a) Life and Other Insurance. The Company shall provide to Employee such
term life and group travel, accident, accidental death and dismemberment
insurance and long and short term disability insurance, or their equivalents, as
is provided from time to time for senior executives of the Company. The Company
shall be entitled, at its sole options and expense, to arrange for and keep in
effect, during the term of Employee's employment hereunder, so long as he is
insurable, key man insurance on Employee in an amount determined by the Board of
Directors, such policy or policies to name the Company or its designee as the
beneficiary. Employee shall reasonably cooperate with the Company in procuring
such key man insurance as the Company shall elect to purchase.
(b) Medical Insurance. During the term of Employee's employment hereunder,
the Company shall, at its expense, provide or arrange for and keep in effect,
hospitalization, major medical and similar medical and health insurance for
Employee and his family, to the same extent as is provided from time to time for
senior executives of the Company.
4.5 Retirement Benefits. During the term of his employment hereunder, Employee
shall have the same rights as senior executive officers of the Company to
participate in all profit-sharing, pension and other retirement plans as are
now, or as may hereafter be, established by the Company.
4.6 Out-of-Pocket Expenses. The Company shall reimburse for all reasonable
out-of-pocket expenses incurred by Employee in connection with the performance
of his duties hereunder upon presentation of appropriate vouchers therefor.
4.7 Automobile Expense Allowance. During the term of Employee's employment
hereunder, the Company shall pay to Employee an automobile allowance of
$1,000.00 per month.
4.8 Loan to Employee. Upon request by the Employee at any time or times during
the Original Term, the Company shall loan to Employee up to $720,000.00, three
(3) times Employee's annual salary, such loan to be repayable, in full, on the
third anniversary of the date of the loan ("Repayment Date"), with interest
accruing on such loan at the rate of 6.0% per annum, with accrued and unpaid
interest due and payable on each anniversary of the date of the loan and all
then accrued and unpaid interest due and payable on the Repayment Date. Employee
may repay the loan in whole or in part prior to the Repayment Date without
penalty. Employee may tender shares of the common stock of the Company in
payment of any outstanding principal or accrued interest. In the event the
Employee's employment is terminated by the Company for "cause" (as defined in
Section 3.1 hereof) or by the Employee otherwise than for "good reason" (as
defined in Section 3.1 hereof), all amounts remaining outstanding on such loan
shall be due and payable on the effective date of such termination. The Company
shall be entitled to set-off any amounts due the Employee (including, without
limitation, any amounts due pursuant to Section 3.2 hereof) against any
remaining amounts due to the Company under such loan. The repayment of such loan
shall be secured by a pledge by Employee of all Common Stock held by Employee as
of the date of such loan (excluding the Option Shares as hereinafter defined).
The Employee agrees to execute a promissory note and stock pledge agreement in
such form as the
-4-
<PAGE>
Company may reasonably request to evidence such loan and pledge contemplated
hereby. If this Agreement is extended beyond the Original Term, the Company
shall allow Employee to continue to borrow upon the same terms as are set forth
in this Section 4.8 upon request of Employee during the twelve months following
the end of the Original Term provided that Employee is an employee of the
Company at the time of such request; provided, however, that such loan (and its
terms) is subject to the approval by such loan (and its terms) by the Company's
Board of Directors.
SECTION 5. MISCELLANEOUS.
5.1 Binding Effect. This Agreement shall inure to the benefit of and shall be
binding upon Employee, his executor, administrator, heirs, personal
representatives and assigns, and upon the Company and its successors and
assigns; provided, however, that the obligations and duties of Employee may not
be assigned or delegated.
5.2 Governing Law. This Agreement shall be deemed to be made in, and in all
respects shall be interpreted, construed and governed by and in accordance with,
the laws of the State of California, without giving effect to principles of
conflicts of laws.
5.3 Invalid Provisions. The parties herein hereby agree that the agreements,
provisions and covenants contained in this Agreement are severable and
divisible, that none of such agreements, provisions or covenants depends upon
any other provision, agreement or covenant for its enforceability, and that each
such agreement, provision and covenant constitutes an enforceable obligation
between the Company and Employee. Consequently, the parties hereto agree that
neither the invalidity nor the unenforceability of any agreement, provision or
covenant of this Agreement shall affect the other agreements, provisions or
covenants hereof, and this Agreement shall remain in full force and effect and
be construed in all respects as if such invalid or unenforceable agreement,
provision or covenant were omitted.
5.4 Headings. The section and paragraph heading contained in this Agreement are
for reference purposes only and shall not affect in any way the meaning or
interpretation of this Agreement.
5.5 Notices. All communications provided for hereunder shall be in writing and
shall be deemed to be given when delivered in person or deposited in the United
States mail, first class, registered mail, return receipt requested, with proper
postage prepaid, and
(a) If to Employee, addressed to:
Mr. Richard J. Westin
Chief Executive Officer and Secretary
Agemark Corporation
2614 Telegraph Avenue
Berkeley, California 94704
-5-
<PAGE>
(b) If to the Company, addressed to:
Mr. Jesse A. Pittore
President and Chief Operating Officer
Agemark Corporation
2614 Telegraph Avenue
Berkeley, CA 94704
or at such other place or places or to such other person or persons as shall be
designated in writing by the parties hereto in the manner provided above for
notices.
5.6 Counterparts. This Agreement may be executed in one or more counterparts,
each of which shall be deemed to be an original but all of which together shall
constitute one and the same instrument.
5.7 Waiver of Breach. The waiver by the Company or by the Employee of a breach
of any provision, agreement or covenant of this Agreement by Employee or by the
Company, respectively, shall not operate or be construed as a waiver of any
prior or subsequent breach of the same or any other provision agreement or
covenant.
5.8 Entire Agreement. This Agreement is intended by the parties hereto to be the
final expression of their agreement and is the complete and exclusive statement
thereof notwithstanding any representation or statements to the contrary
heretofore made. This Agreement may be modified only by written instrument
signed by each of the parties hereto.
5.9 Arbitration. In the event of a dispute regarding this Agreement, including
its interpretation, the parties agree to submit such dispute to a binding
arbitration before the American Arbitration Association ("AAA"), and pursuant to
its rules, as the exclusive means of resolution of such dispute. Notwithstanding
any rules of the AAA, the parties shall be permitted to engage in discovery to
the same extent as may be permitted under California law, had the matter been
submitted to the jurisdiction of the California Superior Court. Judgment may be
entered in any court of competent jurisdiction. The prevailing party in any such
action shall be entitled to the recovery of attorneys' fees and costs reasonably
incurred in such enforcement action.
5.10 Severability. Should any provision of this Agreement be declared or be
determined by any court of competent jurisdiction to be wholly or partially
illegal, invalid or unenforceable, the legality, validity and enforceability of
the remaining parts, terms or provisions shall not be affected thereby, and such
illegal, unenforceable or invalid part, term, or provision shall be deemed not
be a part of this Agreement.
-6-
<PAGE>
5.11 Facsimile signatures. The parties' signatures to this Agreement may be
transmitted and received via facsimile, and will be equally binding and
effective as original signatures.
IN WITNESS WHEREOF, Employee has duly executed, and the Company has caused this
Agreement to be duly executed by its duly authorized officers, and the parties
have caused this Agreement to be delivered, all on the day and year first
written above.
/s/ Richard J. Westin
- - ----------------------------
Richard J. Westin
AGEMARK CORPORATION
By: /s/ Jesse A. Pittore
---------------------------------------------
Jesse A. Pittore
Its: President and Chief Operating Officer
-7-
<PAGE>
THE AGEMARK CORPORATION
------------------------
1997 EMPLOYEE STOCK INCENTIVE PLAN
----------------------------------
Section 1. PURPOSE OF PLAN
The purpose of this 1997 Employee Stock Incentive Plan ("Plan") of
The Agemark Corporation a California corporation (the "Company"), is
to enable the Company and its subsidiaries to attract, retain and motivate their
employees by providing for or increasing the proprietary interests of such
employees in the Company.
Section 2. PERSONS ELIGIBLE UNDER PLAN
Any person, including any director of the Company, who is an
employee of the Company or any of its subsidiaries (an "Employee") shall be
eligible to be considered for the grant of Awards (as hereinafter defined)
hereunder.
Section 3. AWARDS
(a) The Committee (as hereinafter defined), on behalf of the
Company, is authorized under this Plan to enter into any type of arrangement
with an Employee that is not inconsistent with the provisions of this Plan and
that, by its terms, involves or might involve the issuance of (i) shares of
common stock, par value, .001 per share, of the Company ("Common Shares") or
(ii) a Derivative Security (as such term is defined in Rule 16a-1 promulgated
under the Securities Exchange Act of 1934, as amended (the "Exchange Act"), as
such Rule may be amended from time to time) with an exercise or conversion
privilege at a price related to the Common Shares or with a value derived from
the value of the Common Shares. The entering into of any such arrangement is
referred to herein as the "grant" of an "Award."
(b) Awards are not restricted to any specified form or
structure and may include, without limitation, sales or bonuses of stock,
restricted stock, stock options, reload stock options, stock purchase warrants,
other rights to acquire stock, securities convertible into or redeemable for
stock, stock appreciation rights, limited stock appreciation rights, phantom
stock, dividend equivalents, performance units or performance shares, and an
Award may consist of one such security or benefit, or two or more of them in
tandem or in the alternative.
(c) Common Shares may be issued pursuant to an Award for any
lawful consideration as determined by the Committee, including, without
limitation, services rendered by the recipient of such Award.
(d) Subject to the provisions of this Plan, the Committee, in
its sole and absolute discretion, shall determine all of the terms and
conditions of each Award granted under this Plan, which terms and conditions may
include, among other things:
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<PAGE>
(i) a provision permitting the recipient of such Award,
including any recipient who is a director or officer of the Company, to
pay the purchase price of the Common Shares or other property issuable
pursuant to such Award, or such recipient's tax withholding obligation
with respect to such issuance, in whole or in part, by any one or more
of the following:
(A) the delivery of cash
(B) the delivery of previously owned shares of
capital stock of the Company (including "pyramiding") or other
property,
(C) a reduction in the amount of Common Shares or
other property otherwise issuable pursuant to such Award, or
(D) the delivery of a promissory note, the terms and
conditions of which shall be determined by the Committee;
(ii) a provision conditioning or accelerating the receipt of
benefits pursuant to such Award, either automatically or in the
discretion of the Committee, upon the occurrence of specified events,
including, without limitation, a change of control of the Company, an
acquisition of a specified percentage of the voting power of the
Company, the dissolution or liquidation of the Company, a sale of
substantially all of the property and assets of the Company, the
achievement of specified performance criteria or an event of the type
described in Section 7 hereof, or
(iii) a provision required in order for such Award to qualify
as an incentive stock option under Section 422 of the Internal Revenue
Code (an "Incentive Stock Option").
Section 4. STOCK SUBJECT TO PLAN
(a) The aggregate number of Common Shares that may be issued
pursuant to all Incentive Stock Options granted under this Plan shall not exceed
250,000, subject to adjustment as provided in Section 7 hereof.
(b) At any time, the aggregate number of Common Shares issued
and issuable pursuant to all Awards (including all Incentive Stock Options)
granted under this Plan shall not exceed 250,000, subject to adjustment as
provided in Section 7 hereof.
(c) For purposes of Section 4(b) hereof, the aggregate number
of Common Shares issued and issuable pursuant to Awards granted under this Plan
shall at any time be deemed to be equal to the sum of the following:
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<PAGE>
(i) the number of Common Shares which were issued prior to
such time pursuant to Awards granted under this Plan, other than Common
Shares which were subsequently reacquired by the Company pursuant to
the terms and conditions of such Awards and with respect to which the
holder thereof received no benefits of ownership such as dividends;
plus
(ii) the number of Common Shares which were otherwise issuable
prior to such time pursuant to Awards granted under this Plan, but
which were withheld by the Company as payment of the purchase price of
the Common Shares issued pursuant to such Awards or as payment of the
recipient's tax withholding obligation with respect to such issuance;
plus
(iii) the maximum number of Common Shares which are or may be
issuable at or after such time pursuant to Awards granted under this
Plan prior to such time.
(d) No participant may be granted more than 100,000 shares under this
plan.
Section 5. DURATION OF PLAN
No awards shall be granted under this Plan after ten years
after adoption of this plan by the Board. Common Shares may be issued up to ten
years after adoption of this plan by the Board pursuant to Awards granted prior
to such date. However, no Common Shares shall be issued under this Plan after
twenty years after adoption of this plan by the Board.
Section 6. ADMINISTRATION OF PLAN
(a) This Plan shall be administered by a committee (the
"Committee") of the Board of Directors of the Company (the "Board") consisting
of any two or more directors; provided, however, from and after the date any
class of the Company's capital stock is registered pursuant to the Exchange Act,
each member of the Committee shall also be a "disinterested person" (as such
term is defined in Rule 16b-3 promulgated under the Exchange Act, as such Rule
may be amended from time to time).
(b) Subject to the provisions of this Plan, the Committee
shall be authorized and empowered to do all things necessary or desirable in
connection with the administration of this Plan, including, without limitation,
the following:
(i) adopt, amend and rescind rules and regulations relating to this
Plan;
(ii) determine which persons meet the requirements of Section 2
hereof for eligibility under this Plan and to which of such eligible
persons, if any, Awards shall be granted hereunder;
-3-
<PAGE>
(iii) grant Awards to eligible persons and determine the terms
and conditions thereof, including the number of Common Shares issuable
pursuant thereto;
(iv) determine whether, and the extent to which adjustments are
required pursuant to Section 7 hereof; and
(v) interpret and construe this Plan and the terms and conditions
of any Award granted hereunder.
Section 7. ADJUSTMENTS
If the outstanding securities of the class then subject to
this Plan are increased, decreased or exchanged for or converted into cash,
property or a different number or kind of securities, or if cash, property or
securities are distributed in respect of such outstanding securities, in either
case as a result of a reorganization, merger, consolidation, recapitalization,
restructuring, reclassification, dividend (other than a regular, quarterly cash
dividend) or other distribution, stock split, reverse stock split or the like,
or if substantially all of the property and assets of the Company are sold,
then, unless the terms of such transaction shall provide otherwise, the
Committee shall make appropriate and proportionate adjustments in (a) the number
and type of shares or other securities or cash or other property that may be
acquired pursuant to Incentive Stock Options and other Awards theretofore
granted under this Plan and (b) the maximum number and type of shares or other
securities that may be issued pursuant to Incentive Stock Options and other
Awards thereafter granted under this Plan.
Section 8. AMENDMENT AND TERMINATION OF PLAN
The Board may amend or terminate this Plan at any time and in
any manner; provided, however, that no such amendment or termination shall
deprive the recipient of any Award theretofore granted under this Plan, without
the consent of such recipient, of any of his or her rights thereunder or with
respect thereto.
Section 9. EFFECTIVE DATE OF PLAN
This Plan shall be effective as of the date of adoption of
this plan by the board, the date upon which it was approved by the Board;
provided, however, that no Common Shares may be issued under this Plan until it
has been approved, directly or indirectly, by (a) the affirmative votes of the
holders of a majority of the securities of the Company present, or represented,
and entitled to vote at a meeting duly held in accordance with the laws of the
State of California or (b) the written consent of the holders of a majority of
the securities of the Company entitled to vote.
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<PAGE>
MANAGEMENT AGREEMENT
--------------------
THIS MANAGEMENT AGREEMENT is made and entered into as of the ___ day of
__________, 1998 by and between The AGEMARK CORPORATION, A Nevada Corporation,
("Owner") and EVERGREEN MANAGEMENT, INC., a Delaware corporation ("Manager").
RECITALS:
A. owner is the owner of certain real property (the "Project") more
particularly described on Exhibit "All attached hereto;
B . Manager is well qualified to supervise, operate, and manage real
property operated in the manner in which the Project will be operated;
C. Owner desires to employ Manager to act as its agent and manager in
supervising, directing and managing the operation-of the Project; and
D. Manager is willing to furnish such services, all subject to the terms
and conditions set forth in this Agreement.
AGREEMENTS:
NOW, THEREFORE, in consideration of the foregoing Recitals and the mutual
covenants hereinafter contained, Owner and Manager hereby agree as follows:
ARTICLE I
CERTAIN DEFINITIONS
For purposes of this Agreement:
1.1 "Agency Account" shall mean the segregated account held in Manager's
--------------
name (with reference to Owner's name) at the depository designated by Owner
pursuant to Section 2.2(t).
1.2 "Agreement" shall mean this Management Agreement.
---------
1.3 "Available Space" shall mean the portions of the Project available for
---------------
rent.
1.4 "Budget" shall mean the estimated operating budget established pursuant
------
to Section 4.1.
1.5 "Employees" shall mean additional personnel (other than Management
---------
Personnel) hired by Manager pursuant to Section 2.2(b).
1.6 "Gross Revenues" shall mean the amount of all receipts attributable
--------------
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<PAGE>
to operation of the Project, including rents and proceeds from sale of products
and services, and income of every kind and nature related to the Project;
provided, however, that Gross Revenues shall not include any sales taxes or
other gross receipts taxes collected for transmittal to the appropriate taxing
authority.
1.7 "Management Fee" shall mean four and a half percent (4.5%) of
the Gross Revenues of the Project.
1.8 "Management Personnel" shall mean the on-site personnel hired by the
--------------------
Manager pursuant to Section 2.2(a).
1.9 "Project" shall mean the residential real property legally described on
-------
Exhibit "A" attached hereto.
1.10 "Term" shall mean the Initial Term as define in Schedule 1.10 attached
----
hereto, unless terminated sooner as herein provided, and as may be extended by
the Renewal Term as provided in Schedule 1.10.
ARTICLE II
ENGAGEMENT AND SERVICES
2.1 Appointment and Term. Owner hereby retains and appoints manager,
--------------------
and Manager hereby accepts such appointment, for the purposes and on the terms
and conditions set forth in this Agreement for the Term of this agreement.
2.2 Manager's Obligations. During the Term, Manager shall have the
---------------------
authority and responsibility for the general management and operation of the
Project in accordance with the general business plan developed by the owner and
communicated to the Manager, as the same may be modified by owner from time to
time (with reasonable notice to Manager), including without limitation the
hiring and discharging of all employees, normal purchasing, general pricing and
administrative policies, budgeting, accounting procedures, advertising and
promotion and other operational matters. Specifically, Manager, for and on
behalf of owner, and at the sole cost and expense of Owner, as set forth herein,
shall undertake the duties and perform the following services subject to the
following conditions:
(a) Management Personnel. Manager shall hire the Management
--------------------
Personnel in the name of Owner for the efficient discharge of Manager's duties
hereunder. Manager agrees to hire as Management Personnel those people with such
qualifications and experience as are necessary to perform Manager's obligations
hereunder. Compensation of such Management Personnel shall be the responsibility
of Owner. owner agrees that the foregoing Management Personnel may be assigned
to the Project on less than a full-time basis and may engage in activities in
connection with any other projects managed or undertaken by Manager at any time
during the Term. In the event that such management Personnel devote their time
and energies to other projects managed or undertaken by Manager at any one time
during the Term, such services shall not be as Owner's employees and the cost of
such Management Personnel shall be allocated among those other projects for
which
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such services are utilized.
(b) Employees. manager shall investigate, hire, pay, promote,
---------
supervise and discharge (as necessary), on behalf of owner, such Employees as
may be necessary in order to properly maintain and operate the Project and to
perform its duties hereunder. Manager will negotiate with any labor union
lawfully entitled to represent all or any group of such Employees, provided,
however, that Owner shall have the right to approve any collective bargaining
agreements or labor contracts resulting therefrom, which consent shall not be
unreasonably withheld, and owner, as employer of such Employees, shall execute
any such agreement or contract with respect to such Employees. Such Employees
shall be Employees of owner, not of Manager, and all salaries, wages and other
compensation of Employees shall be paid out of the Agency account. Manager shall
routinely inform owner, but shall not be required to obtain owner's prior
consent, with respect to all terminations, reassignment, promotions and
demotions of Employees.
(c) Custodial, Repair, Maintenance Replacement and Security
-------------------------------------------------------
Services. Manager shall provide for the performance of daily or routine
- - --------
maintenance, repair, replacement, custodial and security-related tasks in the
Project. The services contemplated by this Section shall include all those daily
or routine maintenance, repair, custodial and security-related tasks which must
be performed for the orderly operation of the Project in a first-class manner
and shall also include the services and tasks set forth in Sections 2.2(d)
through (q) hereof.
(d) Pest Control. Manager shall provide pest control services, as
------------
needed, in and to the Project.
(e) Plans; Landscaping. Manager shall provide for the acquisition,
------------------
maintenance and replacement of interior and exterior plants or landscaping for
the Project.
(f) Glass. Manager shall provide cleaning, repair and replacement
-----
services for glass located in the Project.
(h) Trash Removal. Manager shall provide, as and when needed,
-------------
for trash removal services and for maintenance, repair or replacement of trash
compactors and trash chutes, to the extent the same actually exist, in the
Project.
(h) Directory Changes. It is anticipated that one or more
-----------------
directories will be located in the Project for the purpose of identifying
current tenants. Manager shall operate, amend, repair and replace these
directories as and when necessary.
(I) Facade maintenance. Manager shall be responsible for
------------------
cleaning, maintaining and repairing all portions of the exterior facade of the
Project and, where applicable, in accordance with the specifications promulgated
by the Department of the Interior for certified historic structures.
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(j) Parking Area. Manager shall be responsible for the operation,
------------
maintenance (including sweeping and striping), and the repair of the parking
lot, if any, located in the Project.
(k) Promotional Activities. Manager shall be responsible for
----------------------
conducting promotional activities on behalf of the Project. Promotional
activities contemplated by this Section include media advertising and related
marketing efforts, together with occasional on-site seasonal or promotional
decorations.
(l) Snow Removal. Manager shall be responsible for the provision
------------
of snow removal services, as and when necessary, throughout the Project.
(m) Utilities. Manager shall be responsible for the delivery
---------
of electrical, water, sewer, energy and related utility service through the
Project.
(n) Fire Protection. Manager shall be responsible for the
---------------
operation, maintenance and repair of the fire protection system, if any, serving
the Project.
(o) Assessments; Charges. Manager shall issue monthly billing
--------------------
to all tenants of the Project for rents and other charges required by owner;
endeavor to collect all such charges required by and on behalf of owner and
deposit promptly all funds collected into the Agency Account as set forth in
Section 2.2(t) hereof; periodically notify owner of any and all defaults in
payment, institute upon the reasonable request of Owner and in the name of
Owner, any and all legal actions or proceedings reasonable to necessary to
collect such assessments and charges; and, at the direction of Owner, exercise
any and all remedies available to Owner to enforce such payment.
(p) Compliance with Official Orders. Manager shall take such
-------------------------------
action as may be necessary to comply promptly with any and all orders or
requirements of which Manager has been notified affecting the Project placed
thereon by any federal, state, regional, county, or municipal authority having
jurisdiction thereof, and said orders of the Board of Fire Underwriters or other
similar bodies subject to the same limitation contained in Section 2.2(r) hereof
in connection with the making of repairs and alterations. Manager, however,
shall not take any action under this Section so long as Manager has been
informed that Owner is contesting, or has affirmed its intention to consent any
such order or requirement. Manager shall, as is reasonably practicable, notify
Owner of all such orders and notices of requirement, and of any other notices,
summons, or similar documents alleging liability or responsibility of Owner.
Notwithstanding anything apparently to the contrary contained in the foregoing,
Manager shall have no responsibility for compliance of the affairs of Owner, the
Project or any of its equipment, with the requirements of any ordinances, laws,
rules, or regulations (including those related to the disposal of solid, liquid
and gaseous wastes) of any local, county, state, or federal body, or any public
authority or official thereof having jurisdiction over it, except to the extent
Manager receives written notice thereof, and is able to remedy such violations
in accordance with the terms hereof. Owner represents that to the best of its
knowledge, the Project complies with all such requirements, authorizes Manager
to disclose the ownership of the Project to any such officials and agrees to
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indemnify and hold harmless Manager, its officers, directors, representatives,
servants and employees, of and from all loss, cost, expense, damage and
liability whatsoever which may be imposed on them or any of them by reason of
any present or future violation or alleged violation of such laws, ordinances,
rules or regulations.
(q) Leasing and Licensing.
---------------------
(1) Manager shall endeavor to lease and otherwise
rent all Available space in accordance with the following
provisions:
(A) Manager shall show Available space to
prospective tenants;
(B) Manager shall engage in such publicity
and advertising, at Owner's cost and expense, as the Manager
may reasonably deem prudent in connection with leasing
Available Space;
(C) Manager shall negotiate all leases and
related documents with respect to the Available Space;
(D) Manager shall maintain records of
leasing activities and provide such periodic reports relating
thereto as may be reasonably required by owner, public
agencies or Owner's lenders;
(E) Compensation and expenses of any
Employees retained in connection with the duties set
forth in this Section shall be paid out of the Agency
Accounts: and
(F) At Owner's request, and provided that
Manager is not obligated to expend additional time or effort
in the fulfillment of its obligations hereunder, Manager shall
use all reasonable efforts to lease the Available Space to
such persons who are eligible to occupy Available Space in
accordance with the provisions of Section 42 of the Internal
Revenue Code and the regulations promulgated thereunder.
(2) Manager shall obtain and grant such concessions end privileges in
connection with the Available Space, including but not limited to an independent
health care service organization, and other concessions as Manager may deem
reasonably necessary or desirable in connection with the operation of the
Project.
(3) All income, rent, or similar charges collected by Manager
from the leasing of Available Space or otherwise attributable to the Project
whether or not collected by Manager shall be held and maintained by Manager in
the Agency Account.
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<PAGE>
(r) Limitation on Expenses. For any one item of repair or
----------------------
replacement which is not delineated in the Budget, the expense incurred shall
not exceed the sum of Five Thousand and No/100 Dollars ($5,000.00) unless
specifically authorized by owner in writing, excepting, however, that emergency
repairs, involving manifest danger to life or property, or immediately necessary
for the preservation and safety of the Project, or for the safety of the
occupants, tenants, guests, invitees or licensees, or required to avoid the
suspension of any necessary service to the Project, may be made by Manager
irrespective of the cost limitation imposed by this Section, with the
understanding that Manager will, if at all possible, confer immediately with
owner regarding such emergency promptly following the occurrence.
(s) Contracts with Affiliates. Manager may contract with its
-------------------------
affiliates with respect to the provision of supplies, material or labor to or
for the benefit of the Project, provided that terms or such arrangements shall
be on the same or similar terms as would such an arrangement be if negotiated
and consummated on an arms'- length basis with an independent third part.
(t) Funds, Payments.
---------------
(I) Manager shall deposit in the Agency Account, as agent for
Owner, all amounts of assessments and other charges received as set forth in
Section 2.2(o) hereof, all other monies received by owner or its agents with
respect to the Project furnished by owner or received by Manager for and on
behalf of Owner, all proceeds from insurance policies, and all condemnation
awards or proceeds from the sale in lieu thereof, and shall disburse and pay the
same on behalf of and in the name of owner in such amounts and at such times as
the same are required to be made in connection with the maintenance and
operation of the Project as set forth herein for the follow items:
(A) All taxes, assessments and charges of every kind,
nature and description, including real estate taxes and
special assessments, of which Manager has received written
notice, levied or assessed against the Project at least five
(5) days before the same become delinquent, unless payment
thereof is being contested by Owner at no cost and expense to
Manager, and Owner has, by notice hereunder, advised manager
not less than ten (10) days prior to the date on which such
taxes, assessments or charges are payable of such contest and
has directed Manager not to make such contested payments; and
(B) All of the following costs and expenses of
maintaining and operating the Project authorized under
the terms of this Agreement
(1) the salaries, wages, other compensation
including, without limitation, withholding taxes, FICA,
unemployment insurance premiums, worker's compensation
premiums, pension fund contributions and other fringe
-6-
<PAGE>
benefits and related expenses of the Management Personnel
and Employees and all other operating and service
personnel of the Project;
(2) the costs and expenses of utilities, services
and concessions of the Project;
(3) the cost of all purchases of materials and
supplies incurred in the day-to-day operation of the
Project;
(4) subject to the provisions set forth herein,
the costs and expenses for the repairs, maintenance and
alterations to the Project set forth herein;
(5) the costs of any reasonable auditing or other
account services, legal, and other professional services
utilized by Manager in accordance with the provisions hereof;
(6) out-of-pocket expenses incurred by Manager, the
Management Personnel, or Employees for or in connection with
the Project, including reasonable and prudent travel and
lodging expenses incurred in connection with other than
ordinary management of the Project;
(7) the cost of all activities undertaken with
respect to billing and collection set forth in Section
2.2(o) hereof;
(8) the cost of insurance maintained pursuant to
this Agreement;
(9) Manager's compensation under Article V hereof
and all other payments due Manager under the terms of
this Agreement; and
(10) the cost of leasing activities undertaken
pursuant to Section 2.2(q) hereof.
(ii) All activities undertaken by Manager in the performance
of the obligations undertaken by it under this Agreement, and all expenses
incurred as provided in its Agreement, are and shall be for and on behalf of
Owner and such expense and costs shall ultimately be chargeable to Owner, except
as specifically set forth otherwise herein. manager shall not be obliged to
advance any of its own funds to or for the account of Owner, nor to incur any
liability (except as specifically set forth herein), unless owner shall have
furnished Manager with funds necessary to discharge the same. Nevertheless, if
Manager at any time advances any funds for the maintenance or operation of the
Project, Owner shall immediately reimburse Manager for such funds upon demand.
Manager shall not
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<PAGE>
commingle any funds in the' Agency Account with other funds collected and
deposited by Manager which are not related to this Agreement or to the Project.
(iii) Notwithstanding anything contained herein which may be
deemed to the contrary, it is understood that no salaries or other expenses of
employees or officers of Manager shall be paid by Owner for the ordinary
operation of the Project and ordinary management services, unless such employees
or officers are actually in an employee status with Owner or perform, with the
permission of Owner (which permission will not be unreasonably withheld)
extraordinary services in the operation and/or management of the Project.
(u) Cooperation by Owner. It is the intent of the parties that
the project be operated as set forth herein and owner hereby agrees to cooperate
fully with Manager to that end and to do all acts necessary for the performance
of this Agreement. Owner, subject to the terms hereof, hereby warrants to
Manager uninterrupted control and operation of the Project for the period
specified in this Agreement and that it will not interfere or involve itself in
any way with the day to day operations of the Project except as specifically set
forth herein.
ARTICLE III
INSURANCE
3.1 Required Insurance. During the Term, Owner shall, at its sole cost
------------------
and expense, take out and maintain in full force and effect the following
insurance:
(a) Insurance against loss or damage by fire, wind, hail,
lightning and other perils insurable under the form of extended coverage
insurance available in the area where the Project is located, on the building
and contents in amounts as reasonably determined by Owner which are sufficient
to prevent any applicable co-insurance provision from becoming effective. For
this purpose "buildings and contents" shall include all buildings and
improvements constituting all or any portion of the Project. There shall be
included in such extended coverage policy riders for loss or damage resulting
from explosion of boilers, heating apparatus or other apparatus containing
fluids under pressure, in amounts reasonably determined by Owner.
(b) Comprehensive public liability, including automobile and
property damage, against loss or liability for damages for personal injury,
death or property damage arising out of or in connection with the operation and
management of the Project (including without limitation liability for assault,
battery, false arrest, false imprisonment, malicious prosecution, libel,
slander, defamation, violation of right of privacy, and wrongful entry or
eviction) with minimum liability limits of $2,500,000.00 combined single limit
for personal injury, death or property damage in any one occurrence.
(c) Standard products liability insurance with minimum
liability limits equivalent to the limits set forth in Section 3.2(b) hereof
insuring owner and Manager.
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<PAGE>
(d) Such worker's compensation and other similar insurance as
may be required by law.
(f) Any other insurance reasonably requested by Manager.
3.2 Nature of Policies. All liability insurance policies required
------------------
under the provisions of this Article shall, to the fullest extent possible:
(a) be carried in the name of Owner, endorsed to provide
Manager as an additional insured and, with respect to the insurance set forth in
Section 3.1(a), have an endorsement attached thereto that such policy shall not
be cancelled or materially altered or amended without at least thirty (30) days,
prior written notice to owner and Manager; and
(b) include an endorsement to the effect that no act or
omission by Owner or Manager shall affect the obligation of the insurer to pay
the full amount of any loss sustained, or defend the insured as required by the
policy provisions.
Upon request by Manager, Owner shall furnish to Manager such evidence
of such insurance coverage as Manager may request from time to time, and if
necessary to comply with the Article III, will obtain such insurance as is
necessary on behalf of the owner.
ARTICLE IV
BUDGET
4.1 Preparation of Budget. Manager shall prepare and submit to owner
---------------------
for Owner's records, as soon as practical after the date hereof, and, to the
extent practical, at least sixty (60) days prior to the commencement of each
calendar year during the Term of this Agreement, the Budget for the ensuing
calendar year setting forth Manager's estimates of (a) operating revenue, (b)
operating expenses, including the costs for repairs and maintenance, (c)
expenditures for capital improvements, including alterations, improvements,
additions and replacements to the Project for which manager is responsible
hereunder, and (d) expenditures for separate advertising, promotion and
personnel training programs to be undertaken with respect to the Project. It is
expressly understood and agreed that the Budget shall be prepared and submitted
only for the purposes of information and for comparison with performance from
time to time and Owner shall have no right to change any such Budget nor shall
any failure by Manager to perform in accordance with any such Budget constitute
any default under this Agreement.
4.2 Book; Reports. Manager shall maintain for an on behalf of Owner,
-------------
complete and accurate books and accounts and such ancillary records of all
material transactions relating to the Project, and its supervision, management
and operating, shall make such records available at reasonable times for
inspection by Owner and shall duplicate and remit copies thereto to Owner upon
Owner's request at Owner's expense. Such books and records shall be maintained
in accordance with generally accepted accounting principles applied on a
consistent basis. From such books, accounts and records, manager shall prepare
and deliver or cause to be delivered to Owner the following financial
statements,
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<PAGE>
at the times indicated below:
(a) Within forty-five (45) days after the end of each calendar
year during the Term hereof, a statement of financial condition and the results
of operation of the project, including support schedules of income and expense
for each operational area for the calendar year ending immediately preceding the
period when such financial statements are due. The cost of preparing such
statement shall be paid out of the Agency Account.
(b) Manager shall provide Owner on or before the 15th day of
each an operating statement for the Project for the preceding month which
statement shall also contain a year to date statement of Project operations.
(c) Manager shall also provide to Owner such additional
reports, records and documents relating to the Project as Owner may reasonably
request from time to time, and shall comply with such reasonable instructions as
may be given to it by owner from time to time concerning the specific form or
content of all such reports, records or documents.
4.3 Fiscal Year. The fiscal year of the Project shall correspond to
-----------
the calendar year.
4.4 Right to Audit. Owner may require that the reports to be completed
--------------
pursuant to Section 4.2 hereof be audited annually. The cost and expense of
conducting such audit shall be paid by Owner out of its own funds and not out of
the Agency Account. If Owner shall request an audit other than the
aforementioned annual audit, Owner shall pay for such audit out of its own
funds, and not out of the Agency Account, if such audit does not reflect more
than a three percent (3%) differential. If the differential exceeds three
percent (3%), Manager shall pay for the costs of such audit.
ARTICLE V
COMPENSATION
5.1 Management Fee. During the term of this Agreement, Owner
--------------
shall pay Manager as compensation for its services hereunder the monthly
Management Fee described in Section 1.7. If the Term of this Agreement expires
or is otherwise terminated, as herein provided, within a calendar month, the
Management Fee shall be payable for such fractional part of a calendar month.
The Management Fee accruing for a calendar month shall be due and payable on the
fifteenth (15th) day of the calendar month immediately following and any payment
not actually received by Manager on or before such date shall be deemed overdue.
If any payment is overdue, owner shall pay to Manager, upon demand, the interest
on such overdue amount from the date due until paid, at the rate of interest
equal to the prime rate announced from time to time by the Bank of America as
its "prime rate" (adjusted daily) plus two (2) percentage points; provided,
however, that if such rate exceeds the rate permitted by applicable law, then
interest shall be assessed at the maximum rate permitted by law. The foregoing
shall be in additional to any other remedies Manager may have under the terms of
this Agreement or in law or in equity.
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<PAGE>
ARTICLE VI
TERMINATION
6.1 Method of Termination. In addition to the expiration of the Term,
---------------------
this Agreement may be terminated upon the occurrence of any event which, under
Sections 6.2 or 6.3 hereof, are considered to be Terminating Events. Such
termination shall be accomplished by giving written notice to the other party of
intent to terminate, setting forth reasons for termination, and stating that
this Agreement shall be deemed terminated thirty (30) days after the giving of
such notice unless the conditions leading to termination, if remediable, are
remedied. If the party receiving such notice does not remedy such conditions
within thirty (30) days from the giving of such notice, this Agreement shall
terminate at the expiration of such thirty (30) days.
6.2 Termination by owner. Owner may terminate this Agreement upon
--------------------
occurrence of any of the following events ("Terminating Events"):
(A) Failure of Manager to keep, observe or perform any
material covenant, agreement, term or provision of this Agreement; and (I) such
default shall continue for a period of thirty (30) days after written notice of
such default is given to Manager by Owner and (ii) such failure has a material
adverse effect in the operation of the Project or the results thereof, unless
such default is reasonably susceptible of cure and curative steps are commenced
within thirty (30) days of the date of giving of such notice and thereafter
diligently pursued to completion.
(B) Application by Manager for or consent to the appointment
of a receiver, trustee, or liquidator for all or a substantial part of Manager's
assets, the filing of a voluntary petition in bankruptcy by Manager, the
admission in writing by Manager of its inability to pay its debts as they become
due, the making by Manager of a general assignment for the benefit of creditors,
the filing by Manager of a petition or answer seeking a reorganization,
composition or arrangement under any bankruptcy or insolvency laws, or the final
adjudication by any court of Manager as a bankrupt or insolvent.
(C) Failure by Manager to comply in any material respect with
any court order or government law, code, order, ruling or regulation with
respect to the Project, to the extent required by the provisions of Section
2.2(p) hereof and (I) such default shall continue for a period of thirty (30)
days after written notice of such default is given to Manager by Owner; and (ii)
such failure has a material adverse effect on the operation of the Project or
the results thereof; or
(D) Fraud, theft, or similar intentional criminal violations
on the part of Manager with respect to the Project.
6.3 Termination by Manager. Manager shall be entitled to terminate
----------------------
this Agreement upon occurrence by any of the following events ("TERMINATING
EVENTS"):
(A) Failure of Owner to keep, observe or perform any covenant,
agreement, term or provision of this Agreement and such default shall continue
for a period of thirty (30) days after written notice of such default is given
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to Owner by Manager;
(B) Condemnation, damage or destruction of a portion of the
Project which interferes with the regular and customary operation of the
Project, unless Owner shall diligently undertake the repair, restoration,
rebuilding or replacement of such damage or destruction (or such injury caused
by such condemnation) within ninety (90) days after such condemnation, damage or
destruction, or failure of the Owner to diligently complete such restoration or
repair;
(C) Application by Owner for or consent to the appointment of
a receiver, trustee, or liquidator of all or substantially all of its assets,
filing by owner of, an involuntary petition in bankruptcy, admission by owner in
writing of its inability to pay its debts as they become due, the making by
owner of a general assignment for the benefit of creditors, the filing by owner
of a petition or answer seeking reorganization, composition or arrangement under
any bankruptcy or insolvency laws, or the final adjudication by any court of
Manager as a bankrupt or insolvent.
(D) Failure by Manager to comply in any material respect with
any court order or government law, code, order, ruling or regulation with
respect to the Project, to the extent required by the provisions of Section
2.2(p) hereof and (I) such default shall continue for a period of ninety (90)
days after written notice of such default is given to Manager by Owner; and (ii)
such failure has a material adverse effect on the operation of the Project or
the results thereof; or
(E) Fraud, theft, or similar intentional criminal violations
on the part of Manager with respect to the project.
6.4 Manager's Duties on Termination. Within sixty (60) days following
-------------------------------
termination of this Agreement or expiration of the Term, Manager shall turn over
to Owner all records, documents or other instruments, and any and all files and
pages in the possession of Manager pertaining to the Manager's performance under
this Agreement. The provisions of this Section shall survive expiration of the
Term of this Agreement or the termination hereof.
6.5 Owner's Duties on Termination. Upon the expiration of the Term of
-----------------------------
this Agreement or the earlier termination, as herein provided, all rights
granted hereunder to owner shall forthwith terminate and owner shall promptly
pay all sums owing to Manager. In the event Owner terminates this Agreement at
any time that is not entitled to do so under Section 6.2 hereof, Owner shall pay
as Liquidated Damages to Manager the amount set forth on Schedule 6.5 attached
hereto (the "LIQUIDATED DAMAGES AMOUNT"). Owner or Manager agree that in such
event Manager will suffer damages in an amount that would be impracticable or
extremely difficult to ascertain. In addition, owner wishes to have a limitation
placed upon the potential liability for wrongful termination of this Agreement
and, after due negotiation, Owner and Manager agree that Liquidated Damages
Amount represents a reasonable estimate of the damages that Manager would
sustain in the event of such occurrence and that such amount shall not be deemed
to be a penalty or forfeiture. In the event of termination by Manager for any
default
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<PAGE>
of Owner, Manager shall be entitled, without limitation, to all damages, costs,
and expenses, including reasonable attorney's fees, incurred by Manager as a
result of the default. Owner shall also pay to Manager all damages, costs and
expenses, including reasonable attorney's fees, incurred by Manager subsequent
to the termination or expiration of this Agreement in obtaining injunctive or
other relief in the enforcement of any provisions of this Section.
ARTICLE VII
NOTICES
7.1 Notices. Except as otherwise explicitly provided in this Agreement,
-------
all notices, demands, requests, consents, approvals and other communications
("Notices") required or permitted to be given hereunder, or which are to be
given with respect to this Agreement, shall be in writing and shall be sent by
registered or certified mail, postage prepaid, return receipt requested and
addressed to the party to be so notified, or shall be delivered to the address
of such party in any other manner which results in obtaining a written receipt
for such notice from a responsible person at such address.
7.2 Manager's Address. The address to be used for Notices to be given
-----------------
to Manager shall be as follows:
Evergreen Management, Inc.
2614 Telegraph Avenue
Berkeley, California 94704
7.3 Owner's Address. The address to be used for Notices to be given
---------------
to Owner shall be as follows:
Agemark Corporation
2614 Telegraph Avenue
Berkeley, CA 94704
7.4 Change of Address. Either party may specify additional or
-----------------
substitute addresses to be used for Notices by giving written notice to the
other party of such additional or substitute addresses.
ARTICLE VIII
GENERAL
8.1 Nature of Relationship. Manager is being hired hereunder as an
----------------------
independent contractor, and nothing contained in this Agreement or elsewhere
shall give rise to nor shall be construed to create any partnership, joint
venture, lease or relationship of employer-employee between Owner, its
successors and assigns on the one hand, and manager, its successors and assigns
on the other hand. Neither Owner nor Manager shall be deemed the agent of the
other, except to the extent Manager is given authority to so act pursuant to the
terms of this Agreement.
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<PAGE>
8.2 Modification and Amendments. This Agreement shall not be altered or
---------------------------
amended except in writing, signed by the party sought to be charged with such
alteration or amendment, or its authorized agent.
8.3 Waivers. No party shall be deemed to have waived any rights
-------
provided to such party under this Agreement without a written statement by such
party indicating that such party was aware of such rights and intended to waive
such rights. No waiver of any right by a party or failure to exercise any right
of a party with respect to any occurrence or event shall be deemed a waiver of
such party's rights with respect to any other occurrence or event shall be
deemed a waiver of such party's rights with respect to any other occurrence or
event with respect to a later happening of the same occurrence or event.
8.4 Complete Agreement. This Agreement constitutes and embodies the
------------------
full and complete understanding of the parties hereto with respect to the
management of the Project, and supersedes all prior understandings whether oral
or written.
8.5 Headings. The Article and Section headings used herein are for
--------
convenience and reference only and are not intended to define, limit or describe
the scope or intent of any provisions of this Agreement.
8.6 Governing Law. The law of the state in which the Project is
-------------
situated shall govern the validity, interpretation and enforcement of this
Agreement, and any action brought with respect to this Agreement, and any action
brought with in such state. Owner hereby consents to jurisdiction under the
courts of such state.
8.7 Cross Indemnity by Manager and Owner.
------------------------------------
(a) Manager hereby indemnifies owner and shall defend and hold
Owner, its partners, and their respective officers and directors harmless, from
and against any and all claims, demands, liability, damages, actions, causes of
action, loss, cost or expense, including, without limitation, reasonable
attorneys' fees and expenses (collectively, "LIABILITIES"), which are the direct
result of any willful acts or gross negligence of Manager to the extent any such
Liabilities are not covered by Owner's indemnification of Manager pursuant to
Section 8.7(b) hereof and to the extent any such Liabilities are not covered by
the insurance required to be maintained by owner in accordance with Article III
hereof. Manager shall have no responsibility for, and shall not indemnify Owner
against the negligence or any actions of any employee or representative of Owner
nor shall Manager be liable or responsible for, or indemnify owner against, any
acts, negligence, bankruptcy or failure of any banking institution designated by
Owner pursuant to Section 2.2(t) hereof. Owner shall have no recourse against
Manager for monetary damages except as expressly provided in this Section
8.7(a).
(b) Owner shall hold and save Manager, and the partners,
shareholders, officers, directors, agent, representatives, and employees of
Manager, free and harmless from (I) any Liabilities arising out of or in any way
connected with this Agreement or the Project; (ii) from any liability of injury
to persons or damage to property arising out of performance of this Agreement by
manager, its agents, employees or independent contractors; and (iii) from any
liability arising out of Owner's negligence or gross misconduct, except to the
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extent such Liabilities are within the scope of Manager's indemnity set forth in
Section 8.7(a) hereof.
8.8 Survival of Remedies. The indemnification provisions of Section 8.7
--------------------
hereof, as well as the provisions of Section 6.4 and 6.5 hereof, shall survive
the termination of this Agreement.
8.9 Assignment. Neither Owner nor Manager may assign any of their
----------
respective interests, rights, duties or obligations under this Agreement without
the prior express written consent of the other, which consent will not be
unreasonably withheld.
IN WITNESS WHEREOF, the parties hereto have hereunto set their
respective hands as of the date first written above
OWNER:
AGEMARK CORPORATION
A Nevada Corporation
By: ____________________
Its: ______________
MANAGER
EVERGREEN MANAGEMENT, INC.
a Delaware Corporation
By: ____________________
Its: ______________
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EXHIBIT "A"
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LEGAL DESCRIPTION
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<PAGE>
SCHEDULE 1.10
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TERM
1. Initial Term. The initial term of this Agreement ("Initial Term") shall
------------
be a three (3) year period commencing ____________, 1998.
2. Renewal Term. Manager shall have an option to extend this Agreement for
------------
an additional three (3) year period (the "Renewal Term") commencing at the
expiration of the Initial Term. Manager may exercise the option to extend this
Agreement for the Renewal Term by delivering the owner written notice of such
election at any time on or before the date ninety (90) days prior to the
expiration of the Initial Term.
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SCHEDULE 6.5
------------
LIQUIDATED DAMAGES AMOUNT
A sum equal to three times the average of the previous six months
management fees calculated form the date of notification of termination.
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