SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
____________
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of
the Securities Exchange Act of 1934
Date of report (Date of earliest event reported): December 30, 1999
EMERITUS CORPORATION
(Exact name of registrant as specified in charter)
Washington 1-14012 91-1605464
(State or other jurisdiction of (Commission File Number) (IRS Employer
incorporation) Identification No.)
Kelly J. Price
Vice President, Finance and Chief Financial Officer
Emeritus Corporation
3131 Elliott Avenue, Suite 500
Seattle, Washington 98121
(Address of principal executive offices) (Zip Code)
(206) 298-2909
(Registrant's telephone number, including area code)
Item 5. Other Events
On December 30, 1999, the Company completed the initial sale of $30 million
of Series B Convertible Preferred Stock (the "Series B Stock") to Saratoga
Partners IV, L.P. ("Saratoga") and a related investor pursuant to the terms of a
Series B Preferred Stock Purchase Agreement dated as of December 10, 1999 (the
"Agreement") between Emeritus Corporation and Saratoga. Pursuant to the terms
of the Agreement, the Company agreed to sell to Saratoga or related investors an
aggregate of 40,000 shares of Series B Stock and expects to complete the sale of
the remaining 10,000 shares during the first quarter of 2000.
The Series B Stock was sold in reliance on Section 4(2) for the Securities
Act of 1933, as amended, and Regulation D thereunder. Saratoga is a
sophisticated financial institution and the other investor is an affiliated
entity.
Each share of Series B Stock is convertible into a number of shares of
Common Stock of the Company equal to the liquidation value of $1,000 divided by
the conversion price of $7.22 per share. Currently, the Series B Stock is
convertible into an aggregate of 5,540,166 shares of Common Stock. The
conversion price is subject to adjustment in the event of stock dividends, stock
subdivisions and combinations and extraordinary distributions, as well as the
issuance of additional shares of Common Stock, or securities convertible into or
exercisable for Common Stock, at a price less than the then effective conversion
price.
Saratoga has the right to appoint directors that represent the same
percentage of the Board of Directors, rounded up to the nearest whole director,
as the percentage of the Company's voting securities represented by the Series B
Stock owned by Saratoga and its related parties. The transaction documents also
provide for tag-along rights in the event Mr. Baty transfers more than 30% of
his ownership in the Company, registration rights and standstill obligations.
In connection with the closing on December 30, 1999, the Company paid a fee
of $750,000 to Saratoga Management Company, LLC, a fee of $250,000 to Warburg
Dillon Read, and a fee of $100,000 to Richard Sontgerath. No underwriters were
involved in the offering.
Item 7. Exhibits
4.1 Series B Preferred Stock Purchase Agreement dated as of December 10,
1999 between Emeritus Corporation and Saratoga Partners IV, L.P.
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4.2 Designation of Rights and Preferences of Series B Convertible
Preferred Stock as filed with the Secretary of State of Washington on December
29, 1999.
4.3 Shareholders Agreement dated as of December 30, 1999 among Emeritus
Corporation, Daniel R. Baty, B.F., Limited Partnership and Saratoga Partners IV,
L.P.
4.4 Registration Rights Agreement dated as of December 30, 1999 between
Emeritus Corporation and Saratoga Partners IV, L.P.
4.5 Investment Agreement dated as of December 30, 1999 among Emeritus
Corporation, Daniel R. Baty, B.F., Limited Partnership and Saratoga Partners IV,
L.P., Saratoga Partners IV, L.P. and Saratoga Management Company LLC.
99.1 Press release dated January 5, 2000, announcing the sale of the
Series B Stock.
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SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934, as
amended, the registrant has duly caused this report to be signed on its behalf
by the undersigned, hereunto duly authorized.
EMERITUS CORPORATION
By: /s/ Kelly J. Price
-----------------------------------------
Kelly J. Price
Vice President, Finance and Chief
Financial Officer
Dated: January 14, 2000
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Exhibit Index
Exhibit No. Description
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4.1 Series B Preferred Stock Purchase Agreement dated as of December
10, 1999 between Emeritus Corporation and Saratoga Partners IV,
L.P.
4.2 Designation of Rights and Preferences of Series B Convertible
Preferred Stock as filed with the Secretary of State of
Washington on December 29, 1999
4.3 Shareholders Agreement dated as of December 30, 1999 among
Emeritus Corporation, Daniel R. Baty, B.F., Limited Partnership
and Saratoga Partners IV, L.P.
4.4 Registration Rights Agreement dated as of December 30, 1999
between Emeritus Corporation and Saratoga Partners IV, L.P.
4.5 Investment Agreement dated as of December 30, 1999 among Emeritus
Corporation, Daniel R. Baty, B.F., Limited Partnership and
Saratoga Partners IV, L.P., Saratoga Partners IV, L.P. and
Saratoga Management Company LLC.
99.1 Press release dated January 5, 2000, announcing the sale of the
Series B Stock.
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