REGISTRATION NO.
------------
UNITED STATES SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM SB-2
Registration Statement Under The Securities Act of 1933
VILLAGE AT OAKWOOD, L.L.C.
(Name of small business issuer in its charter)
Oklahoma 8261 73-1589634
- --------------- --------------- --------------
(State or other (Primary Standard (I.R.S. Employer
jurisdiction of Industrial Identification Number)
incorporation or Classification Code
organization) Number)
10401 N County Line Rd
Yukon, Oklahoma 73099
(405)772-6500
-----------------------
(Address and telephone number
of principal executive offices)
10401 N County Line Rd
Yukon, Oklahoma 73099
(405)772-6500
-----------------------
(Address of principal place of business
or intended principal place of business)
Kendall Aduddell, Sr.
10401 N County Line Rd
Yukon, Oklahoma 73099
(405)772-6500
-----------------------
(Name, address and telephone
number of agent for service)
Copies of communications to:
Michael G. Quinn, Esq.
154 North Topeka Street
Wichita, Kansas 67202
(316) 267-0377
William Martin
MMR Investment Bankers, Inc.
550 North 159th Street East
Suite 300
Wichita, Kansas 67230
(316) 733-5081
-----------------------
Approximate date of commencement of proposed sale to the public: As soon
as practicable after this Registration Statement becomes effective.
If this Form is filed to register additional securities for an offering
pusuant to Rule 462(b) under the Securities Act, please check the following box
and list the Securitis Act registration statement number of the earlier
effective registration statement for the same offering. [_]
If any of the securities being registered on this Form are to be offered
on a delayed or continuous basis pursuant to Rule 415 under the Securities Act
of 1933, check the following box. [x]
If this Form is a post-effective amendment filed purusant to Rule 462(c)
under the Securities Act, check the following box and list the Securities Act
registration statement number of the earlier effective registration statement
for the same offering. [_]
If delivery of the prospectus is expected to be made pursuant to Rule 434,
please check the following box. [_]
CALCULATION OF REGISTRATION FEE
==============================================================================
Proposed Proposed
Title of Dollar maximum maximum
securities amount offering aggregate
being to be price per offering Amount of
registered registered unit price (1) registration fee
- ---------- ---------- --------- ---------- ----------
First $6,000,000 100% $6,000,000 $1800
Mortgage
Bonds
==============================================================================
(1) The securities to be offered may be purchased in amounts of $250 or more.
THE REGISTRANT HEREBY AMENDS THIS REGISTRATION STATEMENT ON SUCH DATE OR DATES
AS MAY BE NECESSARY TO DELAY ITS EFFECTIVE DATE UNTIL THE REGISTRANT SHALL FILE
A FURTHER AMENDMENT WHICH SPECIFICALLY STATES THAT THIS REGISTRATION STATEMENT
SHALL THEREAFTER BECOME EFFECTIVE IN ACCORDANCE WITH SECTION 8(A) OF THE
SECURITIES ACT OF 1933 OR UNTIL THE REGISTRATION STATEMENT SHALL BECOME
EFFECTIVE ON SUCH DATE AS THE COMMISSION, ACTING PURSUANT TO SAID SECTION 8(A),
MAY DETERMINE.
==============================================================================
VILLAGE AT OAKWOOD, L.L.C.
CROSS-REFERENCE SHEET PURSUANT TO PART I OF FORM SB-2
FORM SB-2 ITEM PROSPECTUS CAPTION
--------------- ------------------
1. Front of Registration Statement Front of Registration Statement;
and Outside Front Cover Page of Outside Front Cover Page
Prospectus. . . . . . . . . . . .
2. Inside Front and Outside Back Inside Front and Outside Back Cover
Cover Pages of Prospectus . . . . Pages
3. Summary Information and Risk Prospectus Summary; Risk Factors
Factors . . . . . . . . . . . . .
4. Use of Proceeds . . . . . . . . . Prospectus Summary; Sources and Uses
of Proceeds
5. Determination of Offering Price Not Applicable
6. Dilution. . . . . . . . . . . . . Not Applicable
7. Selling Security Holders. . . . . Not Applicable
8. Plan of Distribution. . . . . . . Prospectus Summary; Underwriting
9. Legal Proceedings . . . . . . . . Legal Proceedings
10. Directors, Executive Officers, Our Management
Promoters and Control Persons . .
11. Security Ownership of Certain Our Principal Owners
Beneficial Owners and Management
12. Description of Securities . . . . Description of Bonds
13. Interest of Named Experts and Legal Matters; Experts
Counsel . . . . . . . . . . . . .
14. Disclosure of Commission Not Applicable
Position on Indemnification for
Securities Act Liabilities. . . .
15. Organization within Last Five Not Applicable
Years . . . . . . . . . . . . . .
16. Description of Business . . . . . Prospectus Summary; Risk Factors;
Sources and Uses of Proceeds;
Our Business; Our Management; Certain
Transactions; Our Principal Owners;
Our Plan of Operation;
Financial Statements
17. Management's Discussion and
Analysis of Plan of Operation . . Our Plan of Operation
18. Description of Property . . . . . Description of Our Property
19. Certain Relationships and Certain Transactions
Related Transactions. . . . . . .
20. Market for Common Equity and Not Applicable
Related Stockholder Matters . . .
21. Executive Compensation. . . . . . Our Management - Managing Member
Compensation
22. Financial Statements. . . . . . . Financial Statements
23. Changes in and Disagreements Not Applicable
with Accountants on Accounting
and Financial Disclosure . .
================================================================================
Preliminary Prospectus Dated ________________
Village at Oakwood L.L.C.
$6,000,000 of First Mortgage Bonds
The bonds will be issued by the Village at Oakwood L.L.C. We refer
to ourselves as the Village at Oakwood. We are offering the following series
of bonds for sale:
Series 2001-I
Principal Amount $6,000,000
Issue Date November 1, 2001
Interest Rates 7.50 - 10.50%
Maturity Dates 05/01/04 to 11/01/21
Price $250
Underwriting Commission $360,000
Net Proceeds to Village at Oakwood $5,640,000
The price per bond of $250, less a per-bond commission of $15, yields
net proceeds per bond to us of $235.
Series 2001-I requires that $2,100,000 be sold as a minimum amount.
Funds received for the subscription of the bonds will be held in escrow
until the minimum amount of bonds are sold.
The proceeds to the Village at Oakwood do not include expenses and fees
payable by and on behalf of the Village at Oakwood, estimated at
$183,375.
We have agreed with MMR Investment Bankers, Inc. that they will offer
the bonds on a best efforts basis as our agent. This offering will terminate
two years from the date of this prospectus.
The bonds involve a great deal of risk. Before you purchase any bonds,
be sure you understand the structure and the risks. See "Risk Factors"
beginning on page 5 of this prospectus for a discussion of those risks.
Neither the Securities and Exchange Commission nor any state securities
commission has approved or disapproved of these securities or determined if
this prospectus is truthful or complete. Any representation to the contrary
is a criminal offense.
MMR Investment Bankers, Inc.
[ARTIST RENDERING OF THE PROSPOSED FACILITY]
Prospectus Summary
Our Company
The Village at Oakwood, L.L.C., is an Oklahoma limited liability
company that was formed on February 17, 2000 by Kendall L. Aduddell, Sr.,
and associates who have experience in the development and operation of
assisted living and retirement facilities. We were formed to construct,
operate and own the Village at Oakwood assisted living facility. We will
maintain our executive offices at 10401 County Line Road, Yukon, Oklahoma,
and our telephone number is (405) 722-6500.
The Offering
Bonds Offered. . . . . . We are offering $6,000,000 of first mortgage
bonds. The maturity schedule is found in
Appendix B. Some of our bonds bear simple
interest with the interest payable quarterly
until maturity, upon meeting the minimum
offering amount. Some of our bonds bear
compound interest with the interest compounded
semiannually and paid at maturity. When you
purchase a bond, you will have a priority
interest as a creditor of the facility and its
revenues for which your bond is applicable. See
"Description of Bonds". The proceeds will be
used as set forth under the heading "Sources
and Uses of Proceeds".
The bonds will be dated November 1, 2001, and
issued in the aggregate amount of $6,000,000,
subject to a minimum sale of $2,100,000 in
principal amount.
Construction . . . . . . . We are planning to construct the entire project
in three phases. This issue will finance only
the first phase of construction that will have
assisted living units. The assisted living
area will have 3 studio units, 40 1-bedroom
units and 24 large 1-bedroom units. This phase
of the facility will contain 73,200 square feet
of area with a total of 67 units, and is
designed to operate on its own, regardless if
phase two and phase three are constructed. This
phase will cost $3,845,000 to build, and all
three phases will cost $7,117,000.
Trust Indenture. . . . . . We have entered into an agreement with the
trustee, Colonial Trust Company of Phoenix,
Arizona, under a trust indenture that defines
all of the rights, conditions and obligations
which effect the issuance of the bonds. This
agreement gives the trustee rights in order to
protect the bondholders and to oversee our
operations to assure our performance of our
obligation under the bonds.
Initial Operating Fund . . We will fund the initial operating fund from
the sale of the bonds. This initial operating
fund will be funded in the amount of $360,000
once escrow has been met, and $720,000 once all
of the bonds offered by us are sold. The
initial operating fund will be used only to
make the initial payments on the bonds. It is
equivalent to approximately the first 24 months
operating fund payments for the bonds assuming
all of the bonds are sold. After the initial
operating fund payments amount have been
expended, the remaining operating fund payments
will be payable from the revenues of our
facility.
Bond Reserve Fund. . . . . We will establish a bond reserve account that
will be funded from the sale of the bonds.
This bond reserve account will be funded in the
total amount of $300,000 once all of the bonds
offered by us are sold. In the event that we
fail to pay any principal or interest due on any
of the bonds, the trustee may apply funds in
this bond reserve account for such payments.
Redemption . . . . . . . . We may redeem your bond at our option, in whole
or in part, at any time before your bond matures.
We will give you notice of our intent to redeem
your bond. However, such
redemption will be without any premium and will
be made at the principal amount of your bond
plus interest that has accrued on your bond.
Financial Summary
Since the Village at Oakwood was formed, as of December 31, 2000 we
have assets of $148,076, liabilities of $93,000 and member's equity of
$55,076. As of December 31, 2000, we have generated no revenues.
(the remainder of this page intentionally left blank)
Risk Factors
The following is a discussion of our material risks, including risks
that could affect our ability to pay back the bonds. You should carefully
consider the risks identified below, in addition to other information
contained in this prospectus, before deciding to invest in the bonds.
We have a limited operating history and have not generated any revenue
to date. We formed the Village at Oakwood on February 17, 2000. Since our
formation, we have been involved in finding suitable land and property, and
have purchased the land for our assisted living facility in Midwest City,
Oklahoma. We have had no significant revenues, and our expenses continue.
Until our assisted living facility is operational, which we generally
believe to be a 12-month construction period, we will receive no revenues.
Even after construction is complete for our facility, our revenues will be
limited until occupancy reaches a stabilized level. If we do not generate
adequate revenue from our facilities, our business, financial condition and
operating results will be materially adversely affected. There is no
assurance that our facility will produce adequate revenues to meet our
obligations under the bonds.
Because we are highly leveraged, we may not be able to pay our debt. In
order for us to construct our facility, we will issue the bonds offered in
this prospectus. This use of borrowed funds will cause us to be highly
obligated for the repayment of the principal and interest of such debt.
Because of the amount of debt we plan to incur, we may not be able to make
the required payments of interest and principal on the debt.
The bonds are not rated and will not provide any governmental guarantee
of repayment. The bonds are not now and will not be:
* guaranteed or assured by any governmental agency; nor
* federally insured by the Federal Deposit Insurance Corporation;
nor
* rated by any recognized rating agency.
The failure to sell all of the bonds could cause us to use other credit
sources at higher costs, if such sources are available. In the event the
bonds are not fully subscribed and sold, then we will have to find alternate
financing to finish the project. If this occurs, then:
* the interest rate on the alternate financing may be based on a
variable rate and may be materially higher than the interest on
bonds sold; and
* the alternate financing may be amortized over a shorter period
than the bonds sold, thus increasing our monthly debt payment
for the facility.
If additional funds are needed to complete the construction of the
facility and for its operations, we can give no assurance that we will be
able to secure any additional funds for such purposes.
You may have difficulty selling your bonds. The underwriter does not
intend to make a market in the bonds, and the bonds will not be listed on
any securities exchange. As a result, if you want to sell your bonds, you
must locate a purchaser that is willing to purchase the bonds. You may
not be able to sell your bonds when you want to do so, or you may not be
able to obtain the price that you wish to receive upon any sale of your bonds.
Currently, there is no secondary market for the bonds. We cannot assure you
that a secondary market will develop.
We have in the past entered into transactions with PrimeLife
Construction, L.L.C. and PrimeLife Management, L.L.C. which were not arms
length transactions and will likely do so in the future. Such arrangements
and amounts include:
* a construction contract in the amount of $7,117,000 for all
three phases with PrimeLife Construction, L.L.C.; and
* a management agreement with PrimeLife Management, L.L.C. which
is a minimum of $1,500 per month, or 3% of gross revenues,
whichever is greater.
None of these arrangements were determined in an arms length bargaining,
nor do we have any policy relating to future transactions to be on a basis
as favorable as we could receive from unaffiliated third parties. We may
enter into other significant transactions with members, possibly on terms
you may consider disadvantageous to us.
Our success is dependent on our key personnel who we may not be able
to retain, and we may not be able to hire enough additional personnel to
meet our staffing needs. We believe that our success will depend upon our
continued employment of our management and technical personnel. If one or
more members of our management were unable or unwilling to continue in their
present positions, our business, financial condition and operating results
could be materially adversely affected. Our management does not have
employment agreements. We do not carry key person life insurance on any
member, or on our management personnel.
Our success also depends on having a highly trained senior care staff.
We will need to hire such personnel as our business grows. A shortage of the
number of these highly trained personnel could limit our ability to
successfully operate our facilities. We have planned to expand our employee
base and manage our anticipated growth. Competition for personnel,
particularly for highly trained senior care personnel, is intense. Our
business, financial condition and operations will also be materially
adversely affected if we cannot hire and retain suitable personnel.
Forward-looking Statements
We have used words such as "anticipate," "believe," "estimate," "may,"
"intend," "expect" and other similar expressions which identify
forward-looking statements. Actual results could differ materially from
those suggested by these forward-looking statements. These forward-looking
statements are based largely on our expectations and are subject to a number
of risks and uncertainties, including:
* our limited sources of funds from which we may meet our
obligations;
* economic factors, both generally and particularly in areas
where we will operate our assisted living facility;
* the highly competitive nature of our business;
* failure to maintain occupancy levels in our facility;
* regulatory limitations imposed on the operations of our
assisted living facility; and
* loss of qualified management and skilled personnel.
Many of these factors are beyond our control.
Sources and Uses of Proceeds
The sources and anticipated uses of proceeds available after the issuance
of the bonds are set forth below. See "Description of Our Property -
Financing of Our Facility," "Certain Transactions," "Underwriting" and
"Description of Bonds - Escrow and Disbursement of Bond Proceeds".
Series 2001-I Bonds
Source of Proceeds: Minimum Maximum
Gross Offering Proceeds $2,100,000 $6,000,000
Less Underwriting Concessions ($126,000) ($360,000)
Less Other Offering Costs ($183,375) ($183,375)
--------- ---------
Net Offering Proceeds $1,790,625 $5,456,625
========= =========
Use of Proceeds:
Fund Initial Operating Fund
Payments $360,000 $720,000
Consulting Fee (1) $10,000 $45,000
Retire Interim Loan (2) $350,000 $350,000
Fund Construction Costs $1,046,000 $3,845,000
Fund Bond Reserve Account $0 $300,000
Working Capital $0 $150,000
Contingency $24,625 $34,625
------ ------
Total Use of Proceeds $1,790,625 $5,456,625
========= =========
(1) The amount of the consulting fee is % of the amount raised, with
a minimum amount due of $10,000.
(2) We have borrowed $350,000 under an interim loan, to purchase the
5.91 acres necessary to build the Village at Oakwood assisted living facility.
See "Description of Our Property." This amount is an estimate, as principal
and all accrued and unpaid interest is due at maturity. The loan is with the
Bank of Oklahoma, Oklahoma City. Our interest rate is 1/2% above the Chase
Manhattan prime rate. The maturity date of the loan is October 1, 2001. The
note provides the requirements under which the lender may consider a renewal
of the note. The guarantors on this loan are Kendall Aduddell Sr., Kendall
Aduddell Jr. and Gary Shavers.
Our other offering expenses payable as shown in this table are estimated
at a total of $183,375. Offering expenses include an investment banking fee
in the amount of $75,000, of which we have already paid to the underwriter
$62,875 for its technical assistance offered in connection with this offering
for phase one, and the remaining $12,125 is to be paid from the first
proceeds of the Series 2001-I escrow account; $49,875 investment banking fee
is to be paid to the underwriter from the first proceeds of the Series 2001-I
escrow account for the preparation of our next issue for phases two and
three; and $58,500 paid by us for legal fees, accounting fees, filing fees,
trustee's fees and other similar fees incurred in connection with this
offering.
Our Business
Our Mission
We organized the Village at Oakwood, L.L.C. in February of 2000. The
concept for the Village at Oakwood began over two years ago and came from a
study of the retirement and assisted living industry in Oklahoma and the
south central area of the United States. This concept of a village
with a continuum of care to take care of the needs of the residents will
include the following: private cottages, one and two bedroom retirement
apartments, assisted living units and an Alzheimer wing. We located a quiet
setting in a nice residential neighborhood in Midwest City, Oklahoma, which
we believe has a need for an assisted living facility to provide this type
of care.
If all bonds offered are sold we will be able to construct and operate
an assisted living facility. We plan to later construct phase two and phase
three, which will provide additional assisted living units, Alzheimer's units
and independent living cottages.
Our Form of Organization
A limited liability company is a form of business organization designed
to allow its owners, known as members, to allocate, participate and account
for the profits, losses, and items of credit and deduction as if the business
were a partnership, but which also provides its owners with the limited
liability protection comparable to that enjoyed by the shareholders of a
corporation. Our members are not personally liable for our debts, absent
their execution of a personal guaranty of those debts, and our members cannot
be held liable for the negligent actions of our company. Our managing member
is responsible for overseeing our operations.
Our Business Concept and Clientele
Our business concept is based on providing elderly residents in Oklahoma
with a broad range of what we believe to be cost-effective health care and
personal support services, including assisted living.
Assisted living care is an emerging segment of the long-term care
industry serving the rapidly growing elderly population who may require
assistance with the activities of daily living, such as dressing, bathing and
eating. Our assisted living facility is intended to provide privacy and
companionship in comfortable, secure, non-institutional living environments
which are also designed to promote friendly relations between the staff of
the facility and the residents, all with the intent of providing a more
positive lifestyle environment than that which has been historically
available from other congregate care providers. Specifically, our assisted
living facility is designed to house elderly persons who do not require
24-hour skilled nursing care. For example, typical residents might include
persons suffering from occasional memory loss, poor diet habits, arthritis or
other infirmities by reason of which they would benefit from daily assistance
and supervision.
Operation of Our Assisted Living Facility
Our Services. The general services provided to residents of our
assisted living facility will include:
* meals;
* laundry;
* housekeeping; and
* physical assistance.
In addition, preventive health care programs, transportation, organized
social activities and 24-hour security will also be provided. Our assisted
living facility will offer medication monitoring. The residents will be
responsible for their own personal purchases such as toothpaste, medical
prescriptions, etc. Unlike nursing homes, however, contemplated services do
not include around-the-clock skilled nursing care. Similar services will be
offered to our retirement living residents, but at an additional cost to
them.
Expenses of operating our facility will be made up of fixed costs and/or
variable costs. Fixed costs will include debt service, management and core
staff, essential utilities, insurance and taxes. Variable costs will include
food costs, staffing, utilities and supplies to a small extent. The facility
will be able to handle emergencies only to the extent of calling a doctor or
hospital on behalf of the resident. Should a resident require health care
beyond that which the facility can reasonably provide or assist, then a
resident may be forced to move from our facility.
Our Pricing Structure. Our facility will have living units priced in
a range of $1,299 to $1,499 per month based on the type of accommodations
and services provided. Residents are billed monthly for the services
rendered. Medicare/Medicaid will not pay for a resident's stay at our
facility. The residents may realize additional costs if they require certain
health supervision/services and meals for visitors. As the cost of living
may increase, charges to the residents may also need to be adjusted.
The residents will be required to pay a one-time entrance fee
of approximately $500 to reserve their unit or apartment. The lease of the
apartments by the residents will be on a month-to-month basis. Residents will
be required to pay only for the months in which they are residents of the
facility.
Our Competition
We will experience competition from other elderly housing and care
providers. We will compete principally on the basis of perceived quality and
service, ambiance and price-value relationship. While we believe that our
facility will be distinctive in design and operating concept, we are aware
of other companies with similar or competitive concepts. The long-term care
industry is highly competitive and we expect that it will become more
competitive in the future. We compete with numerous other companies
providing similar long-term care alternatives, such as home health agencies,
life care at home, community-based service programs, retirement communities
and convalescent centers. Nursing facilities that provide long-term care
services are also a potential source of competition for us. There is no
assurance that we will not encounter increased competition in the future
that could limit our ability to attract residents and could have a material
adverse effect on our financial condition, results of operations and
prospects.
The following table indicates the number of units of existing
competition in assisted living, retirement living and memory disorder for our
facility. We gathered this information through independent market
information and a Market Study prepared by Patrick O. Glenn and Associates of
Oklahoma City, Oklahoma. Specifically, the research consisted of the
following activities:
* we contacted state regulatory agencies governing assisted
living, retirement living, nursing homes and memory disorder
facilities to obtain a list of existing facilities in operation
or those which were applying for licenses in the market area
being studied;
* we contacted local zoning departments, where zoning existed, to
determine if any facilities were under development or expanding;
* we searched the internet for information about facilities in
our market areas;
* we checked telephone books from the area for any projects in
the area;
* we contacted each existing facility to determine the number of
units, occupancy and pricing; and
* we collected population data by gathering information from the
Census Bureau and local chambers of commerce.
All of this information was compiled into a report for the market area.
This report was prepared in order for us to determine the need for assisted
living in the Oklahoma City, Oklahoma metropolitan area. We may face
competition from other businesses not analyzed in the report. The information
in the following table was summarized from the report.
Summary of Our Existing Competition
Facility and Location Number of Range of Rents Occupancy Unit Type
Units
Alterra Sterling House, 40 $1,964 to $2,321 100% Studio, large studio and
Midwest City, OK one bedroom Assisted
Living
Sterling House Assisted 26 $1,415 to $2,515 100% Studio, one bedroom,
Living, Bethany, OK and one bedroom
deluxe Assisted Living
Forest Glade Assisted 106 $1,189 to $1,689 99% One bedroom
Living, Oklahoma City, OK Independent and
Assisted Living
Emerald Square Assisted 60 $1,175 to $1,300 98% Efficiency and one
Living, Oklahoma City, OK bedroom Assisted
Living
Rivermont Assisted Living, 59 $1,495 to $1,995 98% Private and semi-
Norman, OK private Assisted Living
Sterling House Assisted 37 $1,650 to $1,950 100% Studio and one
Living, Oklahoma City, OK bedroom Assisted
Living
Epworth Villa, Oklahoma New- $988 to $2,332 97% Studio, one and two
City, OK unknown (sizeable entrance bedroom units, and two
fee required) bedroom cottages
The Mansion at Waterford, New- $1,895 to $3,395 initial Efficiency and one
Oklahoma City, OK unknown leasing bedroom Independent
phase Living
Midwest City, Oklahoma has a total population of 52,267, of which
5,860 (11.21%) are 65 years or older. Choctaw, Oklahoma, a neighboring city,
has a total population of 8,459, of which 678 (8.02%) are 65 years or older.
We have concluded that with no other competition in Midwest City or Choctaw,
and with the existing competition in the metropolitan area of Oklahoma City,
there is an adequate market potential for independent and assisted living in
Midwest City, Oklahoma.
Management Agreement
On September 11, 2000, we entered into a management agreement with
PrimeLife Management, L.L.C., a company owned equally by our existing
members, which we refer to as the Manager. According to the terms of the
management agreement, the Manager will perform all services incidental to the
operation of our facility, including:
* hiring and supervision of employees;
* collecting of payments;
* payment of expenses;
* obtaining governmental permits and compliance therewith;
* advertising and marketing;
* preparation of budgets; and
* performing all management functions for our facility.
The Manager will account to us as our agent for the services rendered.
It will maintain operating receipts and expense accounts that are approved
by us. Prior to the opening of the facility, the Manager will provide us
with maintenance and operating expense projections, provide policies and
procedure manuals, implement marketing plans, establish bookkeeping and
accounting systems and identify inventory and equipment. The Manager will
participate in final inspections of the facility before occupancy and
will coordinate matters with the architect and contractor for the facility.
The Manager will have no authority to make any disbursement in excess of
$5,000 over budget, unless specifically authorized by us, nor may it incur
any liability, which would require more than one year of payment,
without our consent.
We will pay to the Manager, $1,500 per month or 3% of the gross
collections of the facility, whichever is greater. Prior to the opening
date of a facility, the Manager shall be entitled to receive $1,500 per
month. The management agreement continues for a period of ten (10) years
commencing on the date of the closing and funding of the financing for the
Village at Oakwood, and shall be automatically extended for successive terms
of one (1) year unless terminated by either party at least ninety (90) days
prior to the expiration of the agreement. This agreement may be terminated
by the mutual consent of the parties, for cause if the Manager shall fail to
perform any of its duties according to the management agreement, or in the
event of the Manager's bankruptcy. The management fees of the Manager will
be subordinated to the repayment of the bonds.
Other than matters regarding the operations of our facility, the Manager
has no authority over our conduct of affairs or our management and operation.
We believe that the management agreement and its terms and conditions
are the same or as similar to other management agreements generally made
for the operation of assisted living facilities in the areas where our
facility will be located.
The managing team initially provided by the Manager for our facility is
as follows:
Curtis T. Aduddell
Curtis Aduddell will be the Executive Director, and will be primarily
responsible for overseeing our actual operation and management. He has
served as Executive Director of Mustang Manor, Mustang, Oklahoma from
1999 to the present. He also has served as Administrator at Quail Creek
Nursing Center in Oklahoma City, Oklahoma; Southwest Parkway Nursing Center
in Wichita Falls, Texas; and Quanah Parker Nursing Center in Quanah, Texas.
Mr. Aduddell has a Bachelor of Science in General Studies from Central State
University in Edmond, Oklahoma. He has one year of assisted living
management experience, and seven years of administrative experience in
nursing homes.
Our success as a company will be dependent upon Mr. Aduddell's efforts.
He will delegate most of the daily operational responsibilities of the
Village at Oakwood to an on-site administrator. The administrators will be
selected from a group of candidates who must have a degree in administration
and/or gerontology. Prior to commencement of operations of the facility,
Mr. Aduddell will hire an administrator whose salary and employee benefits
will be part of our expense of operation. He will also recruit all other
employees.
Jamie Saunders
Jamie Saunders, R.N., will be the Director of Nursing. She has 14 years
of experience in skilled nursing care, long term care and assisted living
experience.
Angela M. Lee
Angela Lee will be the Marketing Director. She has 6 years of long term
and assisted living care experience. She has a B.S. Degree in Sociology, and
is certified in Oklahoma as a Social Service or Activity Director.
Employees
Prior to the commencement of operations of the facility, the Manager
intends to hire on behalf of the Village at Oakwood an average of 20
employees at the facility. There is no assurance that the Manager will be
able to hire and maintain an adequate number of competent personnel for the
Village at Oakwood, including entry-level and skilled positions, or that a
shortage of operating personnel will not present a serious problem to us in
the future.
Government Regulation
Currently, retirement and assisted living residences are not specifically
regulated by the federal government. Our facility will be subject to
certain state regulations and licensing requirements. To conform with
Oklahoma's regulations governing residential care for the elderly, our
facility will be required to be licensed by the Oklahoma State Health
Department prior to the commencement of operations of the facility.
The process for applying and obtaining a license with the Oklahoma State
Health Department requires inspection by the following agencies upon the
completion of construction of a facility: the Oklahoma State Health
Department; the state of Oklahoma Fire Marshall; and the city of Midwest City,
Oklahoma. These inspections of the facility examine safety issues and
compliance with the Americans With Disabilities Act. In general, the
Americans With Disabilities Act requires businesses to accommodate the
special needs of persons with certain types of disabilities. When the
facility passes the inspections, then a license is granted.
After the final license is granted, the facility may be subject to
periodic inspections by the Oklahoma State Health Department.
In our opinion, the facility that is being constructed and our Manager's
management practices and operations will meet or exceed all residential care
for the elderly regulations of the State of Oklahoma. Failure on our part to
receive and maintain the required licensing would have a material adverse
effect on our financial condition and our ability to repay our debt.
We are subject to the Fair Labor Standards Act, which governs such
matters as minimum wage, overtime and other working conditions. A portion
of our personnel will be paid at rates related to the federal minimum wage,
and, accordingly, increases in the minimum wage will increase our labor
costs. As regulations are enacted to enforce this law in the future, we may
be required to adapt the design and format of our facility or incur other
costs to comply with the law. Any additional costs could have an adverse
effect on the operation of our facility and our ability to function
successfully.
Description of Our Property
Our Proposed Facility
We have purchased 5.91 acres of land in Midwest City, Oklahoma, where we
will construct our assisted living facility.
This facility will be located east of the intersection of SE 15th Street
and Westminister Road in the eastern portion of Midwest City, Oklahoma.
Selection of this site was based upon a location that was within an affluent
residential neighborhood with what we consider to be limited assisted
living and retirement living services. The first phase of the Village at
Oakwood facility will have assisted living. The assisted living area will
have 3 studio units, 8 dementia units and 70 1-bedroom units. The first
phase of the facility will contain 73,200 square feet of area with a total of
86 units. The units will be located along each side of a primary corridor.
There will be a full service kitchen, dining room, reception room, day room
and laundry as well as administrative offices and nursing facilities. Phase
one that is being financed by these bonds is designed to operate on its own,
regardless if phase two and phase three are constructed.
Phase two and phase three are planned in the future. Phase two will add
30,368 square feet to the facility, and will have 50 additional units of
assisted living and Alzheimer's care. Phase three will add 23,100 square
feet, and will have 20 free standing cottages for independent living. We
plan to offer additional bonds that will rank equal with these bonds.
The bonds will be secured by a first mortgage on the land and
improvements. We will have title insurance on the 5.91 acres of land
insuring good and marketable title to the property. During construction of
this facility, builder's risk, general liability and workers' compensation
insurance will be provided by us. Upon completion of the facility, we will
obtain fire and extended coverage insurance to insure against loss by fire,
windstorm, explosion and various other losses in an amount equal to the
outstanding balance of the Bonds. We will also obtain general liability and
workers' compensation insurance upon completion of this facility. In our
opinion, the facility will be adequately covered by insurance. We have
received the proper zoning for the project.
For additional information, see "Description of Our Property - Financing
of Our Facility" and "Description of Bonds".
Appraisal
Patrick O. Glenn, MAI, Certified Appraiser #10419 of Patrick O. Glenn
and Associates, P.O. Box 13603, Oklahoma City, Oklahoma 73113, estimated
various values for our facility upon the completion of this first phase.
Listed below are the values from his report dated August 13, 2001.
Income Capitalization Approach . . . . . . . . . . . . . . . . $7,490,000
Cost Approach . . . . . . . . . . . . . . . . . . . . . . . . . $7,590,000
Sales Comparison Approach . . . . . . . . . . . . . . . . . . . $8,000,000
Furniture, Fixtures and Equipment . . . . . . . . . . . . . . . $365,500
Land Value. . . . . . . . . . . . . . . . . . . . . . . . . . . $300,000
As Completed Value. . . . . . . . . . . . . . . . . . . . . . . $7,600,000
(Inclusive of personal property (FF&E) of $365,000 required for operation as
an assisted living center)
As Is Value (Land only) . . . . . . . . . . . . . . . . . . . . $300,000
Total Value As Completed inclusive of FF&E and Land . . . . . . $7,900,000
The appraiser, who is independent of the Village at Oakwood, used
various appraisal approaches, but gave weight to the income and cost
approach in his reconciliation and final value estimates.
The income capitalization developed an indication of value based on
forecasted income for the property and capitalized using an underwriting
model which allowed us to structure a typical mortgage-equity relationship
which would maximize the property value and provide adequate security to the
investor. Reflecting available income and
occupancy, the income approach parallels the thinking of investors and
therefore, provides a realistic value indication for the subject to an
investor/buyer.
The cost approach provides an indication of value for a subject
property, "as is" or "as depreciated" based on replacement cost. The
approach also provides an indication of site value and illustrates accrued
depreciation, based on age/life. The cost approach is particularly valid
for new or proposed properties, and provides a reasonable value
indication for the subject.
In contrast to the income approach, the cost approach estimates the
replacement cost of the improvements. The cost approach reflects the value
of the fee simple estate in the real estate; whereas the income approach
reflects the "going concern" value, which would most likely not exist in a
default situation.
The sales comparison approach is recognized as objective in assemblage
of data; however, interpretation of market activity may be subjective given
limitations of the data base or sample.
The appraised value is not, for example, a valuation based upon the
appraiser's estimate of the price that would be arrived at by a willing
buyer and a willing seller in an arms-length sales transaction. Accordingly,
it is questionable that, in the event of default, our facility could be sold,
whether voluntarily or at judicial sale, for the appraised value.
A decision to invest in the bonds should not be made based solely on the
appraisals. Moreover, a purchaser of the bonds should realize and take into
consideration that our facility, if it should have to be sold, may bring
less than is necessary to pay principal and interest due on the bonds. This
could result in the investor losing all or a portion of his original
investment.
Environmental Matters
Federal law imposes liability on a landowner for the presence on the
premises of improperly disposed of hazardous substances. This liability is
without regard to fault for, or knowledge of, the presence of such
substances and may be imposed jointly or severally upon all succeeding
landowners from the date of the first improper disposal. While state law is
less onerous, the practical consequences may be the same. If in the future
it is ever determined that hazardous substances are present, we could be
required to pay all costs of any necessary clean up work, although under
certain circumstances claims against other responsible parties could be made
by us. Phase one environmental assessments were conducted on our property
in April 2000. Research and visual observation undertaken from the
environmental assessments did not reveal any former or current environmental
conditions, problems or situations impacting the sites.
Construction of Our Facility
We intend to start construction on our facility once the minimum
offering is met, and anticipate opening the facility around May, 2003. The
approximate cost of $4,949,000 includes payment for the land, construction,
architectural, engineering and capitalized interest costs.
Financing of Our Facility
Interim Company Financing. In order to finance our activities prior to
the issuance of our bonds, we have obtained a $350,000 interim loan with the
Bank of Oklahoma, Oklahoma City, for the acquisition of land and financing
costs. The interim loan will be secured by a first mortgage on the property.
The interim loan is guaranteed by some of the individual members of the
Village at Oakwood, L.L.C.
Permanent Financing. We have chosen to issue the bonds to provide the
permanent financing for our facility. We have pledged and assigned to the
Trustee our income and revenues. Upon default of our payment to the
operating fund, the Trustee has the irrevocable right to our income and
revenues for any deficiency. See "Sources and Uses of Proceeds" and
"Description of Bonds."
Our Management
Our principal offices are located at 10401 North County Line Road,
Yukon, Oklahoma 73099. The day to day operation of the Village at Oakwood
will be supervised by our managing member, Kendall L. Aduddell, Sr.
According to the terms of our operating agreement, the managing member
will be the officer of our company responsible for the general overall
supervision of the business and affairs of the Village at Oakwood.
Kendall L. Aduddell, Sr. will serve as our managing member until he is
unable to serve, and then he will be succeeded by Kendall L. Aduddell, Jr.
A managing member may be removed with or without cause upon unanimous vote
of the members. Election of the managing member, or increases or decreases
in the number of managing members, requires a unanimous vote of the members.
Kendall L. Aduddell, Sr., age 61, has been our managing member
since the company's inception in February 2000. Mr. Aduddell is the
minister of music at Western Wood Baptist Church in Oklahoma City. He is
certified as a private pilot, and also is a licensed builder in Oklahoma,
Texas, Arizona and Nevada. Mr. Aduddell was a general contractor building
residential homes from 1959 until 1970. He has built and operated two
nursing homes in Oklahoma City and Edmond, Oklahoma. He now is an owner in
three assisted living facilities located in Oklahoma City and Mustang,
Oklahoma.
Kendall L. Aduddell, Jr., age 40, received a Bachelor of Science from
Oklahoma State University in 1982. From 1982 to the present, he has been
involved in construction of apartment complexes, custom homes, duplexes
and assisted living facilities in the metropolitan Oklahoma City area.
He is a Sunday school teacher for the Henderson Hills Baptist Church in
Edmond, Oklahoma.
Kendall L. Aduddell, Sr. is the father of Kendall L. Aduddell, Jr. and
Curtis T. Aduddell.
Managing Member Compensation
Kendall L. Aduddell, Sr., our managing member, does not receive
compensation for day-to-day operations. Mr Aduddell will receive
reimbursements for reasonable costs incurred by him for the Village at
Oakwood business.
Our Principal Owners
As of the date of this prospectus, we had outstanding 1,000 membership
units. Mr. Kendall Aduddell, Sr. is the managing member. The following
table indicates the member and his ownership in the company.
Name & Address of Beneficial Title of Class Units Percent of
Owners Class Owned
Kendall L. Aduddell, Sr. Membership 250 25%
6125 Arrowhead NE Interest
Piedmont, OK 73078
Kendall L. Aduddell, Jr. Membership 250 25%
23160 Running Deer Trail Interest
Edmond, OK 73003
Name & Address of Beneficial Title of Class Units Percent of
Owners Class Owned
Curtis T. Aduddell Membership 250 25%
6125 Arrowhead NE Interest
Edmond, OK 73078
Gary L. Shavers Membership 250 25%
23130 Lauren Lane Interest
Edmond, OK 73003
Our Plan of Operation
Our primary plan of operation is to establish an assisted living
facility that will operate profitably. We intend to complete construction
of this fist phase of out facility ty March 2003. It is our intention to
offer additional bonds to complete phases two and three. We will construct
two additional wings on phase two, that will add an additional 44 units to
the existing facility. We will construct 20 cottages for independent living
in the third phase. Phase one is not dependent upon the completion of phase
two and phase three.
Based upon market research of the assisted living, retirement living and
memory disorder care industries within the Oklahoma City and Midwest City
market areas, we expect to reach stabilized occupancy within 12 months upon
completion of the facility. "Stabilized occupancy" means an occupancy
rate of 90% that is maintained at this level for at least three months. Our
expected occupancy stabilization period is based upon the historical
operating results of Windsor Manor Assisted Living, L.L.C and Mustang Manor
Assisted Living, L.L.C., the two assisted living facilities owned by our
members. However, actual results of the Village at Oakwood's stabilization
time frame may differ from the projected time frame due to changes in local
and national market conditions.
Mustang Manor Assisted Living, L.L.C. is now operating a similar
assisted living facility in Mustang, Oklahoma. The Mustang Manor Assisted
Living facility is the model for our development of the Village at Oakwood.
In order for us to fund all of our objectives of this offering, the
maximum offering amount must be sold by the termination date of this
offering, and we may need to raise additional operating funds during the
first 12 months of operation.
If all the bonds are not sold, we intend to proceed as follows based
upon how many bonds have been sold:
* if the minimum offering amount is not reached, then the
subscribers will receive the return of their subscription
amount plus interest.
* if all of the bonds are not sold but the minimum amount has
been met, then the sold bonds will remain outstanding with a
first mortgage position. Any alternate financing would be
subordinated to the bonds.
If the minimum offering amount is not reached or not all of the bonds
are sold, then we may need to secure additional funds for the completion
and/or operation of the facility. Presently, we do not have other sources of
financing, nor may we be able to secure additional financing if needed in the
future.
The successful operation of our assisted living facility is affected by
several factors applicable to senior care facility, including:
* attracting a sufficient number of residents to achieve high
levels of occupancy;
* competition from presently existing and operating facilities in
our service areas;
* adoption of new legislation or regulation affecting the
operation of our facility and increasing our operating costs;
* establishment of wage, rent or price controls;
* availability and cost of liability, casualty and malpractice
insurance;
* scarcity in personnel required for proper staffing;
* increase in utility costs;
* changes in tax, pension, social security or other laws and
regulations affecting the provision of senior care and other
services; and
* property risks such as fire or other casualty, condemnation,
increase in property taxes, water and sewer rates and operating
costs.
Our product is providing living accommodations for seniors who need
assistance. As the needs of our residents change, we are willing to modify
our operations to accommodate our residents needs. We are committed to
continue researching the trends of senior citizens' living accommodation
needs. There is no assurance that we will be able to accomplish any or all
of these objectives.
Prior Performance of Our Affiliates
We believe our experience in the development and operation of Village at
Oakwood will be similar to the facilities listed in the table below. We do
not receive any benefit or suffer any detriment resulting from the
operations of these facilities. The following table lists the assisted
living facilities owned by our members.
Facility Date Opened Current Occupancy Number of Units
Windsor Manor, L.L.C, October 1999 90% 35
Oklahoma City, OK
Mustang Manor, L.L.C., June 1999 90% 35
Mustang, OK
Heritage Assisted Living January 2001 50% 80
Center, L.L.C., Oklahoma City,
OK
Certain Transactions
Transactions with our Managing Member
Kendall L. Aduddell, Sr., our managing member, has ownership and/or
controls each of our affiliates. He has entered into certain transactions
with us that have not been determined by arms length negotiations. We do
not have any procedures or policies, nor will be putting any in place, which
can assure that transactions with our affiliates will be on terms no less
favorable than those that could be obtained from unaffiliated third parties.
However, should a conflict or other occasion arise between the company and
its affiliates, the members of the company have agreed to resolve such
matters in favor of the company.
Management Agreement
On September 11, 2000, The PrimeLife Management, L.L.C., entered into a
management agreement with the Village at Oakwood for the management of our
facility. The management agreement extends to the year 2010, paying the
Manager $1,500 per month or three percent of the gross collections of the
facility, whichever is greater. The management agreement can be terminated by
mutual consent of the parties, bankruptcy or for cause. Our members are also
the owners of PrimeLife Management, L.L.C. In addition, Curtis Aduddell will
be paid a salary by PrimeLife Management, L.L.C. for providing management
services to the Village at Oakwood.
Construction Contracts
On September 20, 2000, we entered into a contract in the amount of
$7,117,000 with PrimeLife Construction, L.L.C., to construct all three
phases for the Village at Oakwood. The construction costs for phase one is
$3,845,000. The contract calls for draws to be paid monthly upon the
approval of architectural inspection. PrimeLife Construction, L.L.C. is
owned by our members.
Loan Transaction
We have obtained a $350,000 interim loan with the Bank of Oklahoma,
Oklahoma City for the acquisition of 5.91 acres of land east of Westminster
Road and south of SE 15th Street in Oklahoma County, Oklahoma. Our members
have personally guaranteed this loan. From bond proceeds, this loan will be
repaid.
Business Consulting Agreement
In an unrelated transaction, we entered into a business consulting
agreement with Atlas Management Services of Bethany, Oklahoma in
February, 2000. The cost for their consulting services is 1/4% of the amount
raised with a minimum amount due of $10,000. If all the bonds are sold, we
will pay them $45,000.
Other Transactions
Our members purchased their membership units on February 17, 2000 at
a cost of $1.00 per unit.
Description of Bonds
As prescribed by the provisions of the trust indenture between the
Village at Oakwood and Colonial Trust Company of Phoenix, Arizona, the bonds
will be issued in book-entry form, unless the purchaser requests a printed
bond certificate. Colonial Trust Company will serve as trustee, bond
registrar and paying agent. The bonds will be qualified to the extent that
enforcement of their rights and remedies may be affected by other laws such
as bankruptcy, insolvency or re-organization which are applicable to the
rights and remedies of creditors and secured parties, thus affecting the
rights of the trustee and the bondholders and their ability to make recovery
of their investment as a result of such events. Our trust indenture has not
been prepared to qualify under the Trust Indenture Act of 1939. Therefore,
certain provisions such as the qualification of the trustee and its financial
condition, remedies upon default, investments by the trustee and voting and
notice provision contained in our trust indenture may not be the same as
would be required under the Trust Indenture Act of 1939. Copies of the
trust indenture are available from the trustee, the Village at Oakwood and
the underwriter. The following is a summary of the provisions of the trust
indenture.
Security and Source of Payment for the Bonds
All of the bonds will be secured by a first mortgage upon our facility.
When you purchase a bond, you will have a priority interest as a creditor in
the facility, so that, in the event of a default in the payment of your bond,
the trustee may sell or foreclose upon the facility. Furthermore, we have
pledged and assigned to the Trustee our
income and revenues. Upon default of our payment to the operating fund, the
Trustee has the irrevocable right to our income and revenues for any
deficiency.
General
We are offering $6,000,000 of first mortgage bonds, with the proceeds
being used for the construction of our proposed facility.
The bonds will be issued as registered bonds without coupon in
denominations of $250 each or any integral multiple thereof. The bonds will
be issued to mature serially. To "mature serially" means the bonds will
mature according to predetermined maturity dates, beginning 2 1/2 years from
the issue date on the bonds and continuing to mature each six months
thereafter until the final maturity period as indicated in Appendix B-Maturity
Schedules. The purchaser of a bond should understand that in the event
he/she should need to sell the bond, the underwriter does not make a
secondary market for the bonds, nor is there the likelihood a secondary
market will develop. Principal and interest are payable in lawful money of
the United States by the trustee, acting in its capacity as paying agent.
Some bonds pay interest by check quarterly and are called simple interest
bonds. Other bonds pay the interest earned only at the maturity of the bond
and are called compound interest bonds.
The bonds will be dated November 1, 2001, and are subject ot the sale of
a minimum of $2,100,000 in principal amount of bonds. The aggregate
principal amount of the bonds is $6,000,000 and is comprised of bonds in the
principal amount of $3,560,000 that will mature serially and bear simple
interest payable by check mailed to the registered owners each February 1,
May 1, August 1 and November 1 until maturity and bonds in the principal
amount of $2,440,000 that will mature serially and bear interest compounded
semiannually each May 1 and November 1 that is payable at maturity.
Interest on the simple interest bonds will accrue from the date payment
for the bonds is received in the office of the underwriter ("Authentication
Date") or from November 1, 2001, whichever is later, whether or not the
minimum offering amount for this series of bonds has been reached. The issue
date of all the bonds will be the same regardless of when each individual
bond is sold. The first interest payment to the simple interest bondholders
will be paid once the minimum offering amount is met, and then on the
quarterly interest date thereafter until the bond matures.
Interest on the compound interest bonds will begin accruing interest on
November 1, 2001, whether or not they have been purchased. The issue date of
all the bonds will be the same regardless of when each individual bond is
sold.
Tax Consequences
Interest paid on the bonds is includable in gross income for federal and
state income taxation. Interest on simple interest bonds is paid by check
quarterly, once the minimum offering amount is met. Each year the
purchaser of a simple interest bond will receive a form 1099 INT from
the trustee/paying agent showing the interest earned on the bond(s) for that
tax year. While compound interest bonds pay the interest earned only at the
maturity of the bond, a portion of the interest must be reported as income
each year even though no interest will be paid until maturity. The interest
to be reported each year is the amount of interest accruing on the bond that
year. Each year the purchaser of a compound interest bond will receive a
form 1099 OID from the trustee/paying agent showing the interest earned on
the bond(s) for that tax year. For further information concerning the tax
consequences of purchasing or holding the bonds, the investor should consult
his or her tax advisor.
Trust Funds Established Under the Trust Indenture
The trust indenture provides for the creation of a bond proceeds account,
into which the proceeds from the sale of bonds will be deposited. The trust
indenture also creates the bond operating funds, into which payments for the
bonds of the Village at Oakwood are collected prior to payments being
made to the bondholders.
Payment of Bonds
Principal and interest on the bonds is payable at the office of the
trustee in lawful currency of the United States of America. Payment of
interest shall be made to the registered owners of the bonds and paid by
check or draft mailed to the registered owners at the address appearing on
the bond register of the trustee. Each holder who has received a printed
bond certificate must send his/her matured bonds to the paying agent in order
to obtain payment of the aggregate principal amount.
Events of Default
The term "event of default" when used in the trust indenture means the
occurrence of any one of the following events:
* failure or refusal to pay when due the principal and/or
interest on any of the bonds;
* failure or refusal to timely pay into the operating fund accounts
any installment(s) required to pay any of the bonds;
* failure or refusal to pay when due any taxes, assessments,
insurance, claims, liens or encumbrances upon our facility
securing the bonds, or to maintain such facility in good
repair, or to cure the breach of any other covenant set
forth in the trust indenture;
* failure or refusal to pay when due any loan or advance by or
the fees and expenses of trustee or of any depository
or escrow agent;
* failure or refusal, upon written request of the trustee to
furnish trustee with such insurance policies, financial
reports and information concerning the Village at Oakwood as
may be reasonably required by trustee, or to grant unto
trustee, its agents, accountants and attorneys access
during normal business hours to our offices for the purpose
of examining and, within reasonable limits, photocopying
such records;
* making an assignment for the benefit of creditors; or should a
receiver, liquidator, or trustee be appointed to assist in the
payment of our debt; or should any petition for bankruptcy,
reorganization, or arrangement of the Village at Oakwood be
filed; or should we be liquidated or dissolved, or our charter
expire or be revoked.
* failure or refusal to replenish the bond reserve account within
180 days of its use.
In the event that we should default in the payment of any required
operating fund payment and/or payment of principal or interest upon any
outstanding bond(s), then the trustee shall apply any of our revenues and
receipts received by the trustee:
* first, to the payment of the bonds of which the proceeds were
used to construct or obtain the facility from which the revenues
or receipts were received;
* second, to the payment of any other bonds, the payment of which
are then in default; and
* third, as the trustee may determine, in the trustee's sole
discretion.
Remedies of Default
Upon the occurrence and continuation of an event of default for a period
of 30 days, the trustee may accelerate the bonds and declare the principal of
all bonds outstanding in default. Additionally, upon written request of the
holders of not less than 25% of the bonds outstanding in default, the trustee
is obligated to accelerate the maturity of the bonds in an event of default.
Then the trustee may proceed to foreclose the lien against the property
and may declare to be immediately due and payable the principal balance due
and accrued interest of all of the unpaid bonds according to the trust
indenture. If we fail to pay the amount due, the trustee then may proceed
to exercise any remedy provided for in the trust indenture, including a
foreclosure of the lien securing the then accelerated and unpaid bonds. Upon
the foreclosure of the property securing the bonds, the proceeds received
from any such foreclosure, after the payment of all expenses and amounts due
the trustee, shall be applied to the payment of the bonds.
Additional Covenants
In addition to our obligation to remit the principal and interest
payments when due, we have agreed to at our own cost and expense to,
maintain the properties in good repair and condition and pay or discharge
all taxes, assessments and any mechanic's or material men's liens that may
become payable.
Casualty Insurance
With respect to insurance, we have agreed to maintain in full force and
effect at all times fire and extended coverage insurance insuring against
losses in an amount at least equal to the balance then due on the outstanding
bonds. The proceeds of any such insurance are to be applied:
* for the replacement or repair of the property damaged,
* to purchase additional property secured by the trust indenture
as originally acquired with bond proceeds,
* for construction of additional improvements on our facility,
* to redeem outstanding bonds,
* or a combination of the foregoing.
We agree to furnish and maintain or have furnished and maintained in
full force builder's risk insurance during the period of construction. In
addition, we have agreed to maintain in full force and in effect at all
times general liability insurance in such amount and with such insurers as
shall be approved by the trustee. The trustee is authorized to withdraw
funds from the bond operating fund and to apply funds for such obligations as
aforementioned, and we are obligated to immediately restore the proper
balance of the bond operating fund.
Periodic Reporting
In addition to our reporting responsibilities under the Exchange Act of
1934, we have agreed to furnish to the trustee, at least annually, audited
financial statements, including a balance sheet, statement of activity and
statement of changes in financial position and to permit the trustee to
examine our books or records of accounts and our facility at all reasonable
times. Audited annual financial statements will also be supplied to the
investors.
Additional Bond Issues/Additional Indebtedness
We reserve the right to issue additional bonds that rank equal with
these bonds or incur additional debt obligations for any lawful purpose,
including refunding any outstanding bonds. Such additional bonds along with
these bonds that are currently being offered should be deemed "bonds"
for all purposes and as defined in the trust indenture. When issued and
delivered the additional bonds will be secured under the terms of the trust
indenture and shall be on parity with all then outstanding bonds of the
Village at Oakwood as offered in this prospectus. The additional bonds may
be offered in one or more series or issues, in various principal amounts,
bearing interest, maturing, and having such redemption features and other
provisions as may be provided in any supplemental indenture or other
instrument authorizing their issuance. However, no series or issue of
additional bonds shall be issued unless:
* any default or event which would result in default by the
Village at Oakwood under the trust indenture has been first
cured;
* any real property acquired from the proceeds of additional
bonds must be the subject of and become a part of the lien of
the trust indenture and any mortgage or deed of trust upon
our facility;
* the ratio of the total of outstanding bonds plus the additional
bonds shall not exceed 100% of the capitalized cost of the
property, inclusive of any new construction or improvements
to secure the payment of the bonds; and
* we intend to issue additional bonds for the construction of
phase two and phase three of the facility.
Substitution of Collateral
If we are not then in default, the trustee may execute partial releases
or accept substitution of collateral; provided, however, that in every such
instance the trustee must receive from some disinterested person a
certificate stating that the value of the property to be substituted is of
equal or greater value to the original property.
Successor Trustee
If the trustee resigns or is removed or dissolved or if any court or
administrative body takes control over the property or affairs of the trustee
because of insolvency or financial difficulty or for any other reason, then
we must appoint a successor trustee. If we fail to make such an appointment,
the majority in principal amount of bondholders may appoint a successor
trustee. The successor trustee must then mail notice of its appointment to
the registered owners but no other notice is required.
Modification of Trust Indenture
The trust indenture may be amended or supplemented from time to time by
the parties thereto without the consent of or notice to the bondholders for
any of the following purposes:
* to cure any ambiguity, omission, formal defect or inconsistency;
or
* to issue additional bonds within the guidelines described above;
or
* to make any change which, in the judgement of the trustee in
reliance upon any opinion of counsel does not adversely affect
the rights of the holders of any bond.
The trust indenture may be amended or supplemented for purposes
other than those set forth above with the consent of the holders of 66 2/3%
of the bonds then outstanding; provided, however, that no such amendment or
supplement without the consent of the holder of any bond affected shall:
* reduce the percentage of the principal amount of bonds the
holders of which must consent to for any such amendment,
supplement or waiver;
* reduce the rate or extend the time of payment of interest on
any bonds; or
* reduce the principal or premium, if any, on any bond or extend
the time or times of payment thereof whether at maturity, upon
redemption or otherwise.
Prepayment
We have reserved the right to redeem all or a portion of the bonds prior
to their stated maturity. The bonds are subject to redemption without
premium at their stated principal amount plus accrued interest. The
registered owner will be given written notice of such redemption at the
owner's address as it appears on the bond register. It is the owner's
responsibility to notify the paying agent of any change of address. Any bond
not redeemed by its owner within three years after its maturity date is
deemed to have been paid, and the funds will escheat to the benefit of the
appropriate state authority.
Requirements of the Operating Fund Accounts
Under the trust indenture, we must establish operating fund accounts and
make monthly deposits into the operating fund accounts in amounts
predetermined to be sufficient at all times to pay the principal and interest
of the bonds. The required monthly deposit will be as follows:
Series 2001-I ($6,000,000)
* $27,914.17 per month for the first 2 years. Our initial
operating fund will pay to the operating fund for the
first 24 months our required deposits. In the event this
initial operating fund has a shortage, we will make up the
difference.
* $67,601.89 per month for 18 years based on a 20 year
amortization schedule.
* Payments include the paying agent fee of $1,500 per month.
* We will fund the monthly payments from operating revenues, once
the initial operating fund is expended.
The trustee must first draw, from the operating fund accounts, the
charges due for paying agency and trustee services. Thereafter, the amounts
in the operating fund accounts shall be used solely for the payment of
interest coming due or principal coming payable on the bonds or for the
redemption of bonds. However, the trustee may, in the event we fail to
maintain or insure our properties, apply such funds as may be available in
the operating fund accounts to perform our obligations. We are obligated to
immediately replenish such funds so applied.
Initial Operating Fund Payment
The initial operating fund payments of $720,000 will be funded from the
sale of bonds. The initial operating fund will be used only to make the
initial payments on the bonds. It is equivalent to approximately the first
24 months operating fund payments for the bonds assuming all of the bonds
are sold. After the initial operating fund payments amount have been
expended, the remaining operating fund payments will be payable from the
revenues of our facility. If we are unable to make the required operating
fund payments to pay the principal and interest due on the, then an event of
default will occur. See "Description of Bonds - Events of Default" and
"Description of Bonds - Remedies of Default."
Bond Reserve Account
We have agreed to establish a bond reserve account of $300,000 which
will be funded from bond proceeds. If all the bonds are sold, the bond
reserve account will be a total of $300,000. The purpose of the bond reserve
account is that in the event we have not deposited the necessary funds to pay
the principal due on any semiannual payment date and interest due on any
quarterly payment date of the bonds, the trustee may apply available funds to
the principal and interest due on the bonds. In the event that the trustee
uses funds from the bond reserve account to pay the principal and interest on
the bonds due at a particular payment date, then we shall pay to the trustee,
within 180 days from the date of such payment date, an amount necessary to
replenish the bond reserve account. Failure to replenish the bond reserve
account within a 180 day period shall be an event of default and shall
entitle the trustee to continue to apply the bond reserve account, in
addition to its other remedies.
The bond reserve account will remain in place until all the bonds have
matured, then any remaining funds will be released to the Village at Oakwood.
Escrow and Disbursement of Bond Proceeds
All proceeds from the sale of the bonds shall be payable to and
deposited with Colonial Trust Company of Phoenix, Arizona according to an
escrow agreement entered into between the Village at Oakwood and Colonial
Trust Company, as escrow agent. According to the terms of the escrow
agreement, all proceeds from the sale of the bonds will be deposited with
the escrow agent, subject to the sale of the minimum bonds.
The minimum offering amount is $2,100,000 for the Bonds. The funds
shall be used only for the purpose set forth under "Sources and Uses of
Proceeds." During the escrow period, the subscriber will not have access to
funds held in the escrow accounts. The Village at Oakwood, our affiliates,
the underwriter and the underwriter's affiliates may purchase bonds at the
public offering price in order to reach the minimum offering amount of the
bonds. These parties will not be restricted to the amount of bonds that
they may purchase.
If $2,100,000 has not been deposited in the escrow account from the
sale of the bonds by November 1, 2002, the subscribers to the bonds will
receive the return of their subscription amount plus interest. In the event
that the minimum offering amount for the bonds is not met by November 1,
2002, we shall promptly pay to the escrow agent such sum of money as shall be
necessary to pay for accrued interest on the bonds, if any, when added to the
amount of the escrow funds and interest earned thereon to pay to the
subscribers of the bonds the principal amount of such subscriptions together
with the interest from the date payment for the bonds is received in the
office of the underwriter through November 1, 2002 at the rate attributable
to the bonds subscribed.
Subject to the sale of the minimum offering amount for the bonds, the
Village at Oakwood and the trustee will use available funds from the sale of
the bonds in the following order:
1. to pay expenses of the underwriter, attorney, appraiser,
recording fees, mortgage taxes, trustee's fees, paying agent
fees and other similar fees incurred in connection with the
offering of the bonds; then
2. to fund the initial operating fund with an amount
approximately equivalent to the first 12 months payments
for the bonds. This amount will pay to the bondholders any
simple interest due from the date of their purchase until
escrow is met. Interest will then be paid on the quarterly
payment date thereafter; then
3. to retire the interim loan; then
4. to fund the bond reserve account; then
5. to fund construction; and
6. after the above has been accomplished, any remaining funds in
the bond proceeds account related to the bonds will be released
to the Village at Oakwood.
Escrow Agent
We have appointed Colonial Trust Company of Phoenix, Arizona, as escrow
agent. The duties and responsibilities of the escrow agent are set forth in
the escrow agreement between the Village at Oakwood and Colonial Trust
Company, the provisions of which are summarized under "Description of
Bonds - Escrow And Disbursement of Bond Proceeds."
Trustee
Colonial Trust Company of Phoenix, Arizona, has agreed to serve as our
trustee for the bonds pursuant to the trust indenture. The trustee has also
agreed to serve as paying agent, registrar, disbursing agent and escrow agent.
The trustee is not a guarantor or surety, and may not be held liable
under any conditions, except for its own negligence.
The underwriter will receive an annual fee, not to exceed $6,000,
to be paid over the term of the bonds from the trustee for its technical
assistance pertaining to the bond issue. This assistance includes, but is
not limited to:
* helping ensure that all legal documents are recorded; and
* making sure that proper documentation is forwarded to the
trustee, including such documents as the articles of
organization, appraisal, financial statements and annual
reports; and
* documentation of the construction progress of the facility
and bond sales; and
* follow-up with the Village at Oakwood in the event of
delinquent payments.
Registrar
The bonds are being issued as fully registered bonds in book entry form,
unless the purchaser requests a printed bond certificate. The trustee is
also acting as registrar and transfer agent for the bonds. As bond
registrar, the trustee will:
* receive and record all proceeds from the sale of the bonds; and
* maintain a permanent bond register; and
* authenticate and mail all bonds to their registered holders that
have requested a printed bond; and
* cancel and reissue bonds which are transferred by the original
holders; and
* replace lost, stolen and mutilated bond certificates.
All bonds will be registered in the owner's name. Upon registration,
a bond confirmation certificate or, if the purchaser requests, a printed
bond will be mailed directly to it's owner.
Paying Agent
We have also appointed the trustee to act as paying agent for the bonds.
As paying agent, the trustee will receive and hold all payments remitted by
us into the operating fund accounts and will make all payments of principal
or interest on the bonds, trustees fees and such other payments as provided
in the trust indenture. The paying agent holds the funds in trust, which
may be commingled with similar operating funds of other companies,
but it must maintain detailed records to reflect the balances attributable
to us. The paying agent may invest the funds in any form of account or
deposit insured by depository insurance or in interest bearing obligations
issued by the United States Government or any political subdivision thereof,
or any funds comprised of the same.
As paying agent, the trustee is required to furnish periodic statements
to the Village at Oakwood and to the underwriter reflecting all receipts and
disbursements from the operating fund accounts.
Underwriting
Underwriting Agreement
Subject to the terms and conditions of the underwriting agreement, a
copy of which is filed as an exhibit to the registration statement of which
this prospectus is a part, between the Village at Oakwood and MMR Investment
Bankers, Inc., the Village at Oakwood has retained the services of the
underwriter to offer and sell the bonds offered hereby on a "best efforts"
basis at the public offering price of $250 per bond or integral multiples
thereof. See "Description of Bonds - Escrow and Disbursement of Bond
Proceeds."
All proceeds from the sale of the bonds will be transmitted promptly to
an escrow account with Colonial Trust Company as escrow agent. In the event
minimum funds for the bonds is not received within the time set forth in
this prospectus, we will promptly pay to the escrow agent such sum of
money as will be necessary to pay for accrued interest on the bonds, if any,
when added to the sums held in escrow, including interest earned thereon, to
pay to the subscribers the principal amount of their subscription together
with interest through the escrow termination date at the rate attributable to
the bonds subscribed to by the subscriber. We expect that the bonds will
be delivered in book-entry form, subject to the sale of minimum funds
for the bonds, by the trustee within 30 days from the date subscriptions for
the bonds are accepted.
The Village at Oakwood, our affiliates, the underwriter and
the underwriter's affiliates may purchase bonds at the public offering price
in order to reach the minimum offering amount for the bonds. If any of these
parties purchase bonds, the purchases by these parties will be on the same
terms as purchases by public investors and will be with investment intent.
There presently are no plans for any of these parties to purchase bonds.
Contingent upon the sale of the minimum principal amount of the bonds,
we will pay the underwriter a concession as follows:
* the underwriter will receive a concession of 5.0% of the face
amount of each bond sold by the underwriter to clients of the
underwriter; or
* the underwriter will receive 6.0% of the face amount of each
bond sold by another NASD member firm through a selling group
agreement with the underwriter and may re-allow the full 6% to
the NASD member firms participating in this offering; or
* the underwriter will receive a processing fee of 2.0% of the
face amount of each bond sold to a purchaser referred to the
underwriter by the Village at Oakwood, provided such investors
are not currently a client of the underwriter.
The underwriter or its assigns will also receive an annual fee not to
exceed $6,000 to be paid by the trustee over the term of the bond issues for
services rendered to the trustee including the review of our financial and
operating condition on a continuing basis. In addition, we will have paid
to the underwriter an investment banking fee in the amount of $75,000 for the
underwriter's technical assistance in connection with this offering. In the
event the offering is terminated prior to the issuance of bonds, we shall be
liable to the underwriter only for the underwriter's out-of-pocket expenses
for services rendered. We have agreed to pay all expenses in connection with
qualifying the bonds for sale under such jurisdictions as the underwriter
may designate. The underwriting agreement provides for reciprocal agreements
of indemnity between the Village at Oakwood and the underwriter as to certain
civil liabilities, including liabilities under the Securities Act of 1933,
as amended.
The sale of the bonds will be for a period of one year from
the date of this prospectus. All offerings of the
bonds are subject to prior sale. The underwriter has the first right
of refusal on any other of our financing needs
involving our facility for the next three years following the offering.
Additionally, the underwriter has advised us
that it does not intend to make a market in the bonds.
According to terms of the underwriting agreement, we may not contact any
person listed in the records of the underwriter as a customer of the
underwriter for any reason whatsoever without obtaining the prior written
consent of the underwriter. However, this provision is not to be construed
to prohibit us from providing any reports or notifications to bondholders
that may be mandated by any federal or state laws or regulations.
Subscription for Bonds
Each person who wishes to purchase a bond must execute a subscription
agreement for the bond(s) being purchased. The subscription agreement is
generated by the underwriter upon receiving verbal indication from a
subscriber for the bond(s) that the subscriber has selected bonds from
the available maturities. Prior to executing the subscription agreement,
the subscriber will be provided a prospectus by the underwriter.
Checks should be made payable to Colonial Trust Company as escrow agent
and registrar. Completion of the subscription agreement, including a proper
signature is essential prior to any sale of the bonds to potential investors.
However, we and the underwriter reserve the right to reject any subscription
for any reason whatsoever, in which event all monies will then be refunded
to the subscriber without interest, deduction or credit thereon. Subject to
the sale of minimum bonds, the registrar will register and deliver the bonds
in book-entry form or provide those registered owners who request a printed
bond certificate with the bonds within 30 days from the date subscriptions
for the bonds are received.
Determination of Offering Price
Prior to this offering, there has been no public market for our bonds.
Consequently, the initial public offering price for the bonds has been
determined arbitrarily between us and the underwriter.
Legal Matters
Our special counsel, McAfee & Taft A Professional Corporation,
Oklahoma City, Oklahoma, has opined upon certain legal matters pertaining to
the bonds. Certain legal matters have been passed upon for the underwriter
by Michael G. Quinn, Esq., Wichita, Kansas.
To our best knowledge, there are no pending legal proceedings or any
known to be threatened or contemplated to which we are a party or to which
any of our property may be subject.
Experts
The following experts have consented to their names and to references
to their reports appearing in this prospectus: Patrick O. Glenn, MAI, of
Oklahoma City, Oklahoma, has provided an appraisal and market study for
our facility. Rengner & Hebblethwiate, CPA, of Oklahoma City, Oklahoma,
has audited our financial statements dated December 31, 2000.
Additional Information
We have filed with the Securities and Exchange Commission, Washington,
D.C. 20549, a registration statement, including all amendments, exhibits and
schedules, on Form SB-2 under the Securities Act with respect to these bonds.
This prospectus, which constitutes a part of the registration statement,
omits some of the information contained in the registration statement and
the exhibits and financial schedules thereto. Reference is made to the
registration statement and related exhibits and schedules for further
information with respect to the Village at Oakwood and the bonds.
Any statements contained in this prospectus concerning the provisions
of any document are not necessarily complete, and in each instance that
reference is made to a copy of the document filed as an exhibit to the
registration statement. Each such statement is qualified in its entirety by
such reference. For further information with respect to the Village at
Oakwood and the bonds, reference is made to the registration statement and
such exhibits and schedules, copies of which may be examined or copied at
the Public Reference Section of the Securities and Exchange Commission at
Judiciary Plaza, 450 Fifth Street, N.W., Washington, D.C. 20549, and at
the regional offices of the Securities and Exchange Commission located
at 7 World Trade Center, Suite 1300, New York New York 10048 and at
CitiCorp Center, 500 West Madison Street, Suite 1400, Chicago,
Illinois 60661-2511. Also, information about the Village at Oakwood is
available at the Securities and Exchange Commission's Web site at
http://www.sec.gov.
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Appendix A--Index to Financial Statements
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Audited Statement of Financial Condition
Village At Oakwood L.L.C.
As of December 31, 2000
Audited Statement of Financial Condition
VILLAGE AT OAKWOOD L.L.C.
December 31, 2000
Audited Statement of Financial Condition
Independent Auditors' Report 1
Statement of Financial Condition 2
Notes to Statement of Financial Condition 3
Renegar & Hebblethwaite
Certified Pubric Accountants
510 E. Memorial Road, Suite C-4
Oklahoma City, OK 73114-2218
(405) 748-6633 Fax (405) 748-3536
REPORT ON AUDITED STATEMENT OF FINANCIAL CONDITION
INDEPENDENT AUDITORS' REPORT
To the Partners' of
Village at Oakwood L.L.C.
We have audited the accompanying statement of financial condition of
Village at Oakwood L. L. C. (the "Company") as of December 31, 2000.
These financial statements are the responsibility of the Company's management.
Our responsibility is to express an opinion on these fanancial statements
based on our audit.
We conducted our audit in accordance with generally accepted auditing
standards. Those standards require that we plan and 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, such financial statement referred to above presents fairly,
in all material respects, the fumcial position of Village at Oakwood L.L.C.
as of December 31, 2000 in conformity with generally accepted accounting
principles.
/s/Renerag & Hebblethwaite
February 16, 2001
VILLAGE AT OAKWOOD L.L.C.
STATEMENT OF FINANCIAL CONDITION
AS OF DECEMBER 31, 2000
ASSETS
Current assets:
Cash $ 933
Land development costs 20,476
Capitalized offering costs 124,875
--------
146,284
--------
Other assets:
Organization costs 1,792
--------
$148,076
========
LIABILITIES AND MEMBERS' EQUITY
Current liabilities:
Accrued investment banking fees $ 93,000
--------
Total current liabilities 93,000
Commitments and contingencies
Members' equity 55,076
--------
$148,076
========
The accompanying notes are an integral part of this financial statement.
-2-
VILLAGE AT OAKWOOD L.L.C.
VILLAGE AT OAKWOOD L.L.C.
NOTES TO FINANCIAL
STATEMENT AS OF DECEMBER 31, 2000
1) Summary of Significant Accounting Policies
Organization and Business - Village at Oakwood L.L.C. (the "Company")
was established in February 2000 under the laws of the State of Oklahoma
to primarily engage in the business of constructing, operating and owning
an assisted living facility in the state of Oklahoma.
Cash - Cash consists of monies maintained in a checking account maintained
by the Company at a local financial institution.
Land Development Costs - Land development costs include costs incurred
by the Company in conjunction with the purchase, appraisal, design and
engineering of land for a proposed assisted living center in Midwest City,
Oklahoma.
Capitalized Offeting Costs - In May 2000, the Company entered into an
agreement with MMR Investment Bankers, Inc. ("MMR") to provide investment
banking services in conjunction with the proposed sale of $9,990,000 of
first mortgage bonds. In exchange for these services the Company paid
an initial deposit of $31,875 on May 19, 2000. The total fee for MMR's
services will be 1.25% of the total sale of the first mortgage bonds or
$124,875. $31,000 of the remaining balance is to be paid prior to filing
with the regulatory agencies and the remaining fee'of $62,000 due to MMR
is to be paid from the first proceeds of the bond sales of the first shelf
issue. With regards to this arrangement, the Company recorded the total
fee as capitalized offering costs which will be recognized as expense
upon the successful completion of the offering of the first mortgage bonds.
The balance owed MMR of $93,000 has been recorded by the Company as accrued
brokerage fees.
Income Taxes - For federal and state income tax purposes, the Village
at Oakwood L.L.C. is treated as a limited liability company, by which
its income, losses and tax credits from the Company generally pass through
to the members in the proportion specified in the Company's operating
agreement and is included in the personal returns of its members.
Use of estimates - The preparation of financial statements in conformity
with generally accepted accounting principles requires management to make
estimates and assumptions that affect the amounts reported and contingent
assets and liabilities disclosed in the financial statements and accompanying
notes. Actual results inevitably will differ from those estimates and
such differences may be material to the financial statements.
-3-
VILLAGE AT OAKWOOD L.L.C.
NOTES TO FINANCIAL STATEMENT
AS OF DECEMBER 31, 2000 (Concluded)
2) Proposed Bond Offering
As of February 16, 2001, the Company is in the process of filing appropriate
documents with various regulatory agencies in order to offer $9,990,000
of first mortgage bonds to the general public. The funds from this proposed
offering will be used-in the development and construction of an assisted
living center in Midwest City, Oklahoma. Since the formation of the Company
in February 2000, management of the Company has been involved with the
acquisition and development of land for this proposed living center.
The Company has recorded no revenues and future revenues are expected
to be received entirely from the operations of the center. Even after
the facility is operational such revenues are dependent upon the occupancy
of the center. If adequate levels of occupancy are not met the financial
condition and operating results may be adversely affected.
3) Related Party Transaction
On September 11, 2000, the Company entered into a management agreement
with PrimeLife Management, L.L.C. ("PrimeLife"). PrimeLife is owned by
members of the Company with equal percentages of ownership. PrimeLife
will perform all services incidental to the operation of the proposed
assisted living center. Such services include management of all personnel
matters, collection of all revenues, payment of all expenses, receiving
and maintaining all required permits and various other administrative
matters. In exchange for providing these services the Company will pay
PrimeLife $1,500 on a monthly basis or 3 % of gross collections of the
facility, whichever is greater. Payments to Primelife will begin on the
date of the closing and funding of the financing for the development until
the end of the agreement. The term of the management agreement is for
ten years.
-4-
Appendix B Maturity Schedule
The issue date for the Series 2001-I bonds will be November 1, 2001,
and the maturity and interest schedule for these bonds is as follows:
Maturity Interest Interest Principal
Date Type Rates Amount
05/01/04 Simple 7.50% $235,250
11/01/04 Simple 7.50% $244,000
05/01/05 Simple 8.00% $253,250
11/01/05 Simple 8.00% $263,500
05/01/06 Compound 8.50% $188,250
11/01/06 Simple 8.50% $274,000
05/01/07 Simple 9.00% $285,750
11/01/07 Simple 9.00% $298,250
05/01/08 Simple 9.25% $312,000
11/01/08 Compound 9.25% $173,250
05/01/09 Simple 9.50% $326,250
11/01/09 Simple 9.50% $341,750
05/01/10 Simple 9.75% $358,000
11/01/10 Simple 9.75% $375,750
05/01/11 Compound 10.00% $156,000
11/01/11 Compound 10.00% $148,250
05/01/12 Compound 10.00% $141,500
11/01/12 Compound 10.00% $134,500
05/01/13 Compound 10.25% $124,750
11/01/13 Compound 10.25% $118,750
05/01/14 Compound 10.25% $112,750
11/01/14 Compound 10.25% $107,500
05/01/15 Compound 10.25% $102,250
11/01/15 Compound 10.25% $97,000
05/01/16 Compound 10.25% $92,500
11/01/16 Compound 10.25% $88,000
05/01/17 Compound 10.50% $80,500
11/01/17 Compound 10.50% $76,500
05/01/18 Compound 10.50% $72,750
11/01/18 Compound 10.50% $69,250
05/01/19 Compound 10.50% $65,750
11/01/19 Compound 10.50% $62,250
05/01/20 Compound 10.50% $59,500
11/01/20 Compound 10.50% $56,250
05/01/21 Compound 10.50% $53,500
11/01/21 Compound 10.50% $51,000
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TABLE OF CONTENTS
We include cross-references in this prospectus to
captions in these materials where you can find
further related discussions. The following table of
contents provides the pages on which these captions
are located.
Artist Conception. . . . . . . . . . . . . . . . . . . . . . . . 2
Prospectus Summary . . . . . . . . . . . . . . . . . . . . . . . 3
Our Company. . . . . . . . . . . . . . . . . . . . . . 3
Risk Factors . . . . . . . . . . . . . . . . . . . . . . . . . . 5
Forward-looking Statements . . . . . . . . . . . . . . . . . . . 6
Sources and Uses of Proceeds . . . . . . . . . . . . . . . . . . 7
Our Business . . . . . . . . . . . . . . . . . . . . . . . . . . 7
Description of Our Property. . . . . . . . . . . . . . . . . . .12
Our Management . . . . . . . . . . . . . . . . . . . . . . . . .15
Our Principal Owners . . . . . . . . . . . . . . . . . . . . . .15
Our Plan of Operation. . . . . . . . . . . . . . . . . . . . . .16
Prior Performance of Our Affiliates. . . . . . . . . . . . . . .17
Certain Transactions . . . . . . . . . . . . . . . . . . . . . .17
Loan Transaction . . . . . . . . . . . . . . . . . . .18
Business Consulting Agreement. . . . . . . . . . . . .18
Other Transactions . . . . . . . . . . . . . . . . . .18
Description of Bonds . . . . . . . . . . . . . . . . . . . . . .18
Security and Source of Payment . . . . . . . . . . . .18
General. . . . . . . . . . . . . . . . . . . . . . . .19
Tax Consequences . . . . . . . . . . . . . . . . . . .19
Trust Funds Established. . . . . . . . . . . . . . . .19
Payment of Bonds . . . . . . . . . . . . . . . . . . .20
Events of Default. . . . . . . . . . . . . . . . . . .20
Remedies of Default. . . . . . . . . . . . . . . . . .21
Additional Covenants . . . . . . . . . . . . . . . . .21
Casualty Insurance . . . . . . . . . . . . . . . . . .21
Periodic Reporting . . . . . . . . . . . . . . . . . .21
Additional Bond Issues . . . . . . . . . . . . . . . .22
Substitution of Collateral . . . . . . . . . . . . . .22
Successor Trustee. . . . . . . . . . . . . . . . . . .22
Modification of Trust Indenture. . . . . . . . . . . .22
Prepayment . . . . . . . . . . . . . . . . . . . . . .23
Requirements of the Operating Fund . . . . . . . . . .23
Initial Operating Fund . . . . . . . . . . . . . . . .23
Bond Reserve Account . . . . . . . . . . . . . . . . .24
Escrow and Disbursement. . . . . . . . . . . . . . . .24
Escrow Agent . . . . . . . . . . . . . . . . . . . . .25
Trustee. . . . . . . . . . . . . . . . . . . . . . . .25
Registrar. . . . . . . . . . . . . . . . . . . . . . .25
Paying Agent . . . . . . . . . . . . . . . . . . . . .26
Underwriting . . . . . . . . . . . . . . . . . . . . . . . . . .26
Underwriting Agreement . . . . . . . . . . . . . . . .26
Subscription for Bonds . . . . . . . . . . . . . . . .27
Determination of Offering Price. . . . . . . . . . . .27
Legal Matters. . . . . . . . . . . . . . . . . . . . . . . . . .27
Experts. . . . . . . . . . . . . . . . . . . . . . . . . . . . .28
Additional Information . . . . . . . . . . . . . . . . . . . . .28
Appendix A--Index to Financial Statements. . . . . . . . . . . .29
Appendix B Maturity Schedule . . . . . . . . . . . . . . . . . .36
$6,000,000
First Mortgage Bonds
The Village at Oakwood, L.L.C.
PROSPECTUS
MMR, INC.
_______________, 2001
You should rely only on the information contained
in this prospectus. We have not authorized anyone
to provide you with different information. You
should not assume that the information in this
prospectus is accurate as of any date other than the
date appearing on the front page.
Until ______________ 2002 all dealers that effect
transactions in the bonds, whether or not
participating in this offer, may be required to
deliver a prospectus. This requirement is in
addition to the dealers obligation to deliver a
prospectus when acting as underwriters with
respect to their unsold allotments or subscriptions.
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
Item 24. Indemnification of Directors and Officers
The Oklahoma Limited Liability Company law (Title 19 Sec 2000)
confers broad powers upon limited liability companies organized in Oklahoma
with respect to limitations of liability and indemnification of any person
against liabilities incurred by reason of the fact that such person is or was
a member, manager, employee or agent of a limited liability company, or is or
was serving at the request of the company as a manager, employee or agent of
another company or other business entity. The provisions of (Title 19 Sec
2000) are not exclusive of any other rights to which those seeking
indemnification may be entitled under any articles of organization or written
operating agreement as allowed pursuant to Title 19 Sec 2000.
The Operating Agreement of the Company contain a provision regarding the
limits of liability of members and managers of the Company to the fullest
extent allowed by law.
The Underwriting Agreement, filed as Exhibit 1(a) to this Registration
Statement, provides for the indemnification by the Company of the Underwriter
and each person, if any, who controls the Underwriter against certain
liabilities and expenses, as stated therein, which may include liabilities
under the Securities Act of 1933, as amended. The Underwriting Agreement also
provides that the Underwriter similarly indemnify the Company, it directors,
officers and controlling persons, as set forth therein.
Item 25. Other Expenses of Issuance and Distribution
The following is a list of the estimated expenses in connection with the
issuance and distribution of securities being registered, other than
underwriting discounts and commissions, all of which is to be paid by the
Registrant:
SEC Registration Fee. . . . . . . . . . . . . . . . . . . . . . . . . . $1,800
NASD Registration Fee . . . . . . . . . . . . . . . . . . . . . . . . . $1,100
Blue Sky Qualification Fees and Expenses. . . . . . . . . . . . . . . . $5,000
CUSIP Registration Fees . . . . . . . . . . . . . . . . . . . . . . . . $1,000
Legal Fees and Expenses . . . . . . . . . . . . . . . . . . . . . . . .$20,000
Accounting Fees and Expenses. . . . . . . . . . . . . . . . . . . . . .$23,000
Transfer Agent, Escrow Agent, Paying Agent, Registrar & Trustee Fees. . $6,000
Miscellaneous . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $2,760
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Total . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .$60,660
=======
Item 26. Recent Sale of Unregistered Securities
The following table sets forth the Company's sales of unregistered
securities in the last three years. No underwriters were involved in any of
such sales nor were any commissions or similar fees paid by the Registrant
with respect thereto. The Company claims exemption from registration for
these issuances under Section 4(2) of the Securities Act of 1933, as amended.
These securities were sold as a private placement to the original
members, each of which is an accredited investor as defined under the
Securities Act of 1933, as amended.
Date Title Identity
of Sale of Securities Amount Sold of Purchaser Consideration
2/17/2000 Membership Interest 250 Kendall L. Aduddell Sr. $250.00
2/17/2000 Membership Interest 250 Kendall L. Aduddell Jr. $250.00
2/17/2000 Membership Interest 250 Curtis T Aduddell $250.00
2/17/2000 Membership Interest 250 Gary L. Shavers $250.00
Item 27. Exhibits
Exhibit
Number Description
1(a) Form of Underwriting Agreement
1(b) Form of Selling Group Agreement
1(c) Form of Proceeds Escrow Agreement
3(a) Articles of Organization
3(b) Operating Agreement
4(a) Specimen of Bond Certificate
4(b) Form of Trust Indenture
5(a) Opinion of Counsel
10(a) Construction Management Contract
10(b) Construction Loan Agreement
10(c) Form of Management Agreements
23(a) Consent of CPA
23(b) Consent of Counsel
23(c) Consent of Appraiser
99(a) Appraisal
99(b) Environmental Report
Item 28. Undertakings
Insofar as indemnification for liabilities arising under the Securities
Act of 1933, as amended (the "Act"), may be permitted to directors, officers
and controlling persons of the Registrant pursuant to the foregoing
provisions, or otherwise, the Registrant has been advised that in the
opinion of the Securities and Exchange Commission such indemnification is
against public policy as expressed in the Act and is, therefore,
unenforceable. In the event that a claim for indemnification against such
liabilities (other than the payment by the Registrant of expenses incurred
or paid by a director, officer or controlling person of the Registrant in
the successful defense of any action, suit or proceeding) is asserted by
such director, officer or controlling person in connection with the
securities being registered, the Registrant will, unless in the opinion of
its counsel the matter has been settled by controlling precedent, submit to
a court of appropriate jurisdiction the question whether such indemnification
by it is against public policy as expressed in the Act and will be governed
by the final adjudication of such issue.
The undersigned Registrant hereby undertakes that:
(1) For purposes of determining any liability under the Securities
Act of 1933, the information omitted from the form of prospectus filed as
part of this registration statement in reliance upon Rule 430A and contained
in a form of prospectus filed by the Registrant pursuant to Rule 424(b)(1) or
(4) or 497(h) under the Securities Act shall be deemed to be part of this
Registration Statement as of the time it was declared effective.
(2) For the purpose of determining any liability under the Securities
Act of 1933, each post-effective amendment that contains a form of prospectus
shall be deemed to be a new registration statement relating to the securities
offered therein, and the offering of such securities at that time shall be
deemed to be the initial bona fide offering thereof.
(3) It will file, during any period in which it offers or sells
securities, a post-effective amendment to this registration statement to:
(i) Include any prospectus required by section 10(a)(3) of the Act;
(ii) Reflect in the prospectus any facts or events which, individually
or together, represent a fundamental change in the information in the
registration statement;
(iii) Include any additional or changed material information on the plan
of distribution.
(4) File a post-effective amendment to remove from registration any of
the securities that remain unsold at the end of the offering.
SIGNATURES
In accordance with the requirements of the Securities Act of 1933, the
Registrant, The Biltmore Group of Louisiana, Inc., certifies that it has
reasonable grounds to believe that it meets all of the requirements of filing
on Form SB-2 and authorized this Registration Statement to be signed on its
behalf by the undersigned, in the City of Oklahoma City, State of Oklahoma
on this 12th day of July , 2001.
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VILLAGE AT OAKWOOD, L.L.C.
By: /s/Kendall L. Aduddell
-----------------------------------
Managing Member
In accordance with the requirement of the Securities Act of 1933, this
Registration Statement was signed by the following persons in the capacities
indicated on July 12th , 2001.
----------------
Signature Title
/s/Kendall L. Aduddell Managing Member (Chief Executive Officer
- ------------------------------ and Chief Financial Officer)