0001214659-19-001000.txt : 20190211 0001214659-19-001000.hdr.sgml : 20190211 20190211170926 ACCESSION NUMBER: 0001214659-19-001000 CONFORMED SUBMISSION TYPE: 1-A PUBLIC DOCUMENT COUNT: 15 FILED AS OF DATE: 20190211 DATE AS OF CHANGE: 20190211 FILER: COMPANY DATA: COMPANY CONFORMED NAME: TUSCAN GARDENS SENIOR LIVING COMMUNITIES, INC. CENTRAL INDEX KEY: 0001746666 STANDARD INDUSTRIAL CLASSIFICATION: REAL ESTATE [6500] IRS NUMBER: 000000000 STATE OF INCORPORATION: FL FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 1-A SEC ACT: 1933 Act SEC FILE NUMBER: 024-10945 FILM NUMBER: 19586427 BUSINESS ADDRESS: STREET 1: 189 SOUTH ORANGE AVENUE STREET 2: SUITE 1650 CITY: ORLANDO STATE: FL ZIP: 32801 BUSINESS PHONE: 4072066577 MAIL ADDRESS: STREET 1: 189 SOUTH ORANGE AVENUE STREET 2: SUITE 1650 CITY: ORLANDO STATE: FL ZIP: 32801 1-A 1 primary_doc.xml 1-A LIVE 0001746666 XXXXXXXX true TUSCAN GARDENS SENIOR LIVING COMMUNITIES, INC. FL 2018 0001746666 6500 38-4088423 0 5 189 South Orange Ave Suite 1650 Orlando FL 32801 4072066577 William Johnston Other 50000.00 0.00 0.00 0.00 50000.00 0.00 0.00 0.00 50000.00 50000.00 0.00 0.00 0.00 0.00 0.00 0.00 Grennan Fender Hess & Poparad LLP Voting, $1.00 Par Value 50000 000000N/A N/A Class A Non-Voting $1,000 Par 0 000000N/A N/A N/A 0 000000N/A N/A true true Tier2 Audited Equity (common or preferred stock) N N N Y N N 50000 0 1000.0000 50000000.00 0.00 0.00 0.00 50000000.00 TBD 5250000.00 Grennan Fender Hess & Poparad LLP 6500.00 Pino Nicholson PLLC 350000.00 44750000.00 Placement Agents' Commissions have been quantified but Placement Agents have not yet been appointed. true AL AK AZ AR CA CO CT DE DC FL GA HI ID IL IN IA KS KY LA ME MD MA MI MN MS MO MT NE NV NH NJ NM NY NC ND OH OK OR PA PR RI SC SD TN TX UT VT VA WA WV WI WY A0 A1 A2 A3 A4 A5 A6 A7 A8 A9 B0 Z4 AL AK AZ AR CA CO CT DE DC FL GA HI ID IL IN IA KS KY LA ME MD MA MI MN MS MO MT NE NV NH NJ NM NY NC ND OH OK OR PA PR RI SC SD TN TX UT VT VA WA WV WI WY A0 A1 A2 A3 A4 A5 A6 A7 A8 A9 B0 Z4 Tuscan Gardens Senior Living Fund, LLC Preferred Multi-Class Units of Membership Interes 2410000 0 all cash Tuscan Gardens Growth & Income Fund, LLC Preferred Multi-Class Units of Membership Interest 180000 0 all cash Tuscan Gardens Income Fund II, LLC Preferred Multi-Class Units of Membership Interest 50000 0 all cash Rule 506 of Regulation D PART II AND III 2 partiiandiii.htm

 

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

 

FORM 1-A

 

 

OFFERING STATEMENT UNDER THE SECURITIES ACT OF 1933 CURRENT REPORT 

 

TUSCAN GARDENS SENIOR LIVING COMMUNITIES, INC.

Date: December 1, 2018

 

Florida 6500 38-4088423

(State or Other Jurisdiction

of Incorporation)

(Primary Standard Classification Code)

(IRS Employer

Identification No.)

 

Laurence J. Pino

Chief Executive Officer 

189 S. Orange Ave, Suite 1650

Orlando, FL 32801

Telephone: 407-206-6577

 

(Address, including zip code, and telephone number,
including area code, of registrant’s principal executive offices)

 

Please send copies of all correspondence to:

 

Pino Nicholson PLLC

189 S. Orange Ave, Suite 1650

Orlando, FL 32801

Telephone: 407-206-6577

Email: ljp@PinoNicholsonLaw.com

 

(Name, address, including zip code, and telephone number,
including area code, of agent for service)

 

THIS OFFERING STATEMENT SHALL ONLY BE QUALIFIED UPON ORDER OF THE COMMISSION, UNLESS A SUBSEQUENT AMENDMENT IS FILED INDICATING THE INTENTION TO BECOME QUALIFIED BY OPERATION OF THE TERMS OF REGULATION A.

 

PART I - NOTIFICATION

 

Part I should be read in conjunction with the attached XML Document for Items 1-6

 

PART I – END

 

 

 

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PART II – OFFERING CIRCULAR 

 

 

SUBJECT TO COMPLETION, December 1, 2018

 

An offering statement pursuant to Regulation A relating to these securities has been filed with the United States Securities and Exchange Commission (the “SEC”). Information contained in this Preliminary Offering Circular is subject to completion or amendment. These securities may not be sold nor may offers to buy be accepted before the Offering statement filed with the SEC is qualified. This Preliminary Offering Circular shall not constitute an offer to sell or the solicitation of an offer to buy nor may there be any sales of these securities in any state in which such offer, solicitation or sale would be unlawful before registration or qualification under the laws of any such state. The Company may elect to satisfy its obligation to deliver a Final Offering Circular by sending you a notice within two business days after the completion of a sale to you that contains the URL where the Final Offering Circular or the Offering statement in which such Final Offering Circular was filed may be obtained.

 

TUSCAN GARDENS SENIOR LIVING COMMUNITIES, INC.

 

$50,000,000 OF SERIES A PREFERRED SHARES

$1,000 PAR VALUE PER SHARE

 

Tuscan Gardens Senior Living Communities, Inc. (“Company”) is a newly formed Florida corporation, that was organized on July 20, 2018 to invest in wholly-owned subsidiaries that develop (“Development Projects”), acquire (“Acquisition Projects”), or convert other real estate properties including hotels (“Conversion Projects”) into senior living rental communities ranging from $15,000,000 to $100,000,000 per community, consisting of independent living, assisted living and/or memory care for approximately fifty (50) to two-hundred and fifty (250) residents (“Company Properties”). The Company’s primary focus for purposes of Development Projects will be on southeastern markets, and for purposes of Acquisition Projects and Conversion Projects will be on national markets, that it considers to have favorable risk-return characteristics. The Company, operating through wholly-owned special purpose entities (“SPE”) as real estate owner-operators, intends to create, operate and hold a portfolio of Company Properties on a long-term basis, approximating seven years, and ultimately dispose of them to generate revenue for the Company. The Company is not a registered broker-dealer, an investment adviser, or a funding platform.

 

This is an initial offering (“Offering”) being conducted by the Company on a “best efforts” basis for its Series A Preferred Shares (“Preferred Shares”). The Company seeks to raise $50,000,000 from the Offering of Preferred Shares. The Company will seek to pursue Development Projects, Acquisition Projects, and Conversion Projects that have the potential to provide ongoing income to investors in the Preferred Shares, paid or accrued monthly (“Preferred Dividend”), plus potential capital appreciation through additional dividends (“Special Dividends”) based on fifty (50%) percent of the net proceeds generated by the Company from the disposition of Company Properties. However, as the Offering is a blind pool and the Company has no track record, there can be no guarantee that such returns can or will be achieved.

 

The Preferred Shares have no public market and will not be listed on any national securities exchange or on the over-the counter inter-dealer quotation system. For a description of the principal terms, see “The Offering” section on page [FILL IN]. The proposed sale of the Preferred Shares will begin as soon as practicable after the information statement, of which this Offering Circular forms a part, has been qualified by the SEC and will terminate December 31, 2019 (“Offering Period”). The Offering Period may be extended, or the Offering terminated at any time by the Company in its sole discretion. The Preferred Shares are being offered pursuant to Regulation A (“Regulation A”) under the Securities Act of 1933, as amended (“Securities Act”), for Tier 2 offerings. The Preferred Shares will only be issued to purchasers who satisfy the requirements set forth in Regulation A. Funds from this Offering will be made available to the Company once it raises a minimum of $500,000 excluding sales to Company affiliates (“Minimum Offering Amount”). There are no provisions for the return of funds once the Minimum Offering Amount is sold.

 

   Per Share   Minimum
Offering
Amount
  Maximum
Offering Amount
Price to public    $1000.00   $500,000.00   $50,000,000.00 
Underwriting discounts and commissions(1)    $(105.00)  $(52,500.00)  $(5,250,000.00)
Proceeds, before expenses, to the Company    $895.00   $447,500.00   $44,750,000.00 
Proceeds to other persons    $N/A    $N/A   $N/A 

 

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Investors will pay upfront selling commissions in connection with the purchase of Preferred Shares. The Company has entered into, or will enter into arrangements for compensation and fees to its Managing Broker-Dealer (“MBD”), which include a placement fee equal to seven (7.0%) percent of Gross Offering Proceeds (“Placement Fee”) which the MBD in turn may re-allow up to all of the Placement Fee to participating brokers who are not affiliates of the Company, a marketing support fee equal to one and one-half (1.5%) percent of Gross Offering Proceeds (the “Marketing Support Fee”), up to all of which may be reallowed to participating brokers who are not affiliates of the Sponsor, and a dealer manager fee of up to two (2.0%) percent (subject to reduction in certain circumstances) of Gross Offering Proceeds (the “Dealer Manager Fee”), up to all of which may be reallowed to participating brokers. Notwithstanding the foregoing, the Sponsor, Advisor, their employees, officers and directors, registered principals or representatives of the Placement Agent or a participating broker and the immediate friends and family of any of the foregoing persons, as well as clients of an investment adviser registered under the Investment Advisers Act of 1940, as amended, who have been advised by such adviser on an ongoing basis regarding investments other than in the Company, and who are not being charged by such adviser or its affiliates through the payment of commissions or otherwise for the advice rendered by such adviser in connection with the purchase of Preferred Shares through a participating broker, may purchase Preferred Shares at a discounted price equal to One Thousand ($1,000.00) Dollars, less the Seven (7.0%) Percent Placement Fee, for a net discounted price of Nine Hundred Thirty ($930.00) Dollars per Preferred Share. The Preferred Shares are being offered hereby by the Company through its Corporate Equity Officer and Director, Mr. Sean D. Casterline (“Casterline”), who holds Series 7 and Series 65 licenses and is licensed as a registered representative with a registered broker-dealer, Maitland Securities, Inc., appointed by the Company as its Managing Broker-Dealer (“MBD”). Additionally, the Company intends to conduct its operations so that neither the Company, nor any of its subsidiaries, will meet the definition of investment company under Section 3(a)(1) of the Investment Company Act of 1940, as amended (the “Investment Company Act”) and, accordingly, neither the Company nor any of its subsidiaries intend to register as an investment company under the Investment Company Act. 

 

INVESTMENT IN SHARES OF THE COMPANY INVOLVES SIGNIFICANT RISK, AND YOU MAY BE REQUIRED TO HOLD YOUR INVESTMENT FOR AN INDEFINITE PERIOD OF TIME. YOU SHOULD PURCHASE THIS SECURITY ONLY IF YOU CAN AFFORD A COMPLETE LOSS OF YOUR INVESTMENT. SEE “RISK FACTORS” BEGINNING ON PAGE [FILL IN] OF THIS OFFERING CIRCULAR. 

 

THE UNITED STATES SECURITIES AND EXCHANGE COMMISSION DOES NOT PASS UPON THE MERITS OF OR GIVE ITS APPROVAL TO ANY SECURITIES OFFERED OR THE TERMS OF THE OFFERING, NOR DOES IT PASS UPON THE ACCURACY OR COMPLETENESS OF ANY OFFERING CIRCULAR OR OTHER SOLICITATION MATERIALS. THESE SECURITIES ARE OFFERED PURSUANT TO AN EXEMPTION FROM REGISTRATION WITH THE COMMISSION; HOWEVER, THE COMMISSION HAS NOT MADE AN INDEPENDENT DETERMINATION THAT THE SECURITIES OFFERED HEREUNDER ARE EXEMPT FROM REGISTRATION.

 

GENERALLY, NO SALE MAY BE MADE TO YOU IN THIS OFFERING IF THE AGGREGATE PURCHASE PRICE YOU PAY IS MORE THAN 10 PERCENT OF THE GREATER OF YOUR ANNUAL INCOME OR NET WORTH. DIFFERENT RULES APPLY TO ACCREDITED INVESTORS AND NON-NATURAL PERSONS. BEFORE MAKING ANY REPRESENTATION THAT YOUR INVESTMENT DOES NOT EXCEED APPLICABLE THRESHOLDS, THE COMPANY ENCOURAGES YOU TO REVIEW RULE 251(d)(2)(i)(C) OF REGULATION A. FOR GENERAL INFORMATION ON INVESTING, THE COMPANY ENCOURAGES YOU TO REFER TO WWW.INVESTOR.GOV. 

 

The Company is following the “Offering Circular” format of disclosure under Regulation A.

 

The date of this Offering Circular is December 1, 2018.

 

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IMPORTANT NOTICES TO INVESTORS

 

INVESTMENT IN REAL ESTATE INVOLVES A HIGH DEGREE OF RISK, AND INVESTORS SHOULD NOT INVEST ANY FUNDS IN THIS OFFERING UNLESS THEY CAN AFFORD TO LOSE THEIR ENTIRE INVESTMENT. IN MAKING AN INVESTMENT DECISION, INVESTORS MUST RELY ON THEIR OWN EXAMINATION OF THE ISSUER AND THE TERMS OF THE OFFERING, INCLUDING THE MERITS AND RISKS INVOLVED.

 

NO PERSON HAS BEEN AUTHORIZED TO GIVE ANY INFORMATION OR TO MAKE ANY REPRESENTATIONS IN CONNECTION WITH THE OFFER MADE BY THIS OFFERING CIRCULAR, NOR HAS ANY PERSON BEEN AUTHORIZED TO GIVE ANY INFORMATION OR MAKE ANY REPRESENTATION OTHER THAN THOSE CONTAINED IN THIS OFFERING CIRCULAR, AND IF GIVEN OR MADE, SUCH INFORMATION OR REPRESENTATIONS MUST NOT BE RELIED UPON. THIS OFFERING CIRCULAR DOES NOT CONSTITUTE AN OFFER TO SELL OR SOLICITATION OF AN OFFER TO BUY IN ANY JURISDICTION IN WHICH SUCH OFFER OR SOLICITATION WOULD BE UNLAWFUL OR ANY PERSON TO WHO IT IS UNLAWFUL TO MAKE SUCH OFFER OR SOLICITATION. NEITHER THE DELIVERY OF THIS OFFERING CIRCULAR NOR ANY SALE MADE HEREUNDER SHALL, UNDER ANY CIRCUMSTANCES, CREATE AN IMPLICATION THAT THERE HAS BEEN NO CHANGE IN THE AFFAIRS OF THE ISSUER SINCE THE DATE HEREOF.

 

THIS OFFERING CIRCULAR MAY NOT BE REPRODUCED IN WHOLE OR IN PART. THE USE OF THIS OFFERING CIRCULAR FOR ANY PURPOSE OTHER THAN AN INVESTMENT IN SECURITIES DESCRIBED HEREIN IS NOT AUTHORIZED AND IS PROHIBITED.

 

THE OFFERING PRICE OF THE SECURITIES IN WHICH THIS OFFERING CIRCULAR RELATES HAS BEEN DETERMINED BY THE ISSUER AND DOES NOT NECESSARILY BEAR ANY SPECIFIC RELATION TO THE ASSETS, BOOK VALUE OR POTENTIAL EARNINGS OF THE ISSUER OR ANY OTHER RECOGNIZED CRITERIA OF VALUE.

 

IN MAKING AN INVESTMENT DECISION, INVESTORS MUST RELY ON THEIR OWN EXAMINATION OF THE ISSUER AND THE TERMS OF THE OFFERING, INCLUDING THE MERITS AND RISKS INVOLVED. THESE SECURITIES HAVE NOT BEEN RECOMMENDED BY ANY FEDERAL OR STATE SECURITIES COMMISSION OR REGULATORY AUTHORITY. FURTHERMORE, THE FOREGOING AUTHORITIES HAVE NOT CONFIRMED THE ACCURACY OR DETERMINED THE ADEQUACY OF THIS OFFERING CIRCULAR. ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE. THESE SECURITIES ARE SUBJECT TO RESTRICTIONS ON TRANSFERABILITY AND RESALE AND MAY NOT BE TRANSFERRED OR RESOLD EXCEPT AS PERMITTED UNDER THE SECURITIES ACT OF 1933, AS AMENDED, AND THE APPLICABLE STATE SECURITIES LAWS, PURSUANT TO REGISTRATION OR EXEMPTION THEREFROM. INVESTORS SHOULD BE AWARE THAT THEY WILL BE REQUIRED TO BEAR THE FINANCIAL RISKS OF THIS INVESTMENT FOR AN INDEFINITE PERIOD OF TIME.

 

THE SECURITIES OFFERED HEREBY HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR THE SECURITIES LAWS OF CERTAIN STATES AND ARE BEING OFFERED AND SOLD IN RELIANCE ON EXEMPTIONS FROM THE REGISTRATION REQUIREMENTS OF SAID ACT AND SUCH LAWS. THE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND EXCHANGE COMMISSION, ANY STATE SECURITIES COMMISSION OR OTHER REGULATORY AUTHORITY, NOR HAVE ANY OF THE FOREGOING AUTHORITIES PASSED UPON OR ENDORSED THE MERITS OF THIS OFFERING OR THE ACCURACY OR ADEQUACY OF THE OFFERING CIRCULAR. ANY REPRESENTATION TO THE CONTRARY IS UNLAWFUL.

 

THE COMPANY WILL BE PERMITTED TO MAKE A DETERMINATION THAT THE PURCHASERS OF SHARES IN THIS OFFERING ARE “QUALIFIED PURCHASERS” IN RELIANCE ON THE INFORMATION AND REPRESENTATIONS PROVIDED BY THE PURCHASERS REGARDING THE PURCHASERS’ FINANCIAL SITUATION. BEFORE MAKING ANY REPRESENTATION THAT YOUR INVESTMENT DOES NOT EXCEED APPLICABLE THRESHOLDS, THE COMPANY ENCOURAGES YOU TO REVIEW RULE 251(D)(2)(I)(C) OF REGULATION A. FOR GENERAL INFORMATION ON INVESTING, THE COMPANY ENCOURAGES YOU TO REFER TO WWW.INVESTOR.GOV. 

 

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STATE LAW EXEMPTION AND INVESTOR SUITABILITY REQUIREMENTS

 

The Preferred Shares are being offered and sold only to “qualified purchasers” (as defined in Regulation A under the Securities Act). As a Tier 2 offering pursuant to Regulation A under the Securities Act, this Offering will be exempt from state law “blue sky” review, subject to meeting certain state filing requirements and complying with certain anti-fraud provisions, to the extent that the Preferred Shares offered hereby are offered and sold only to “qualified purchasers” or at a time when the Preferred Shares are listed on a national securities exchange. “Qualified purchasers” include: (i) “accredited investors” under Rule 501(a) of Regulation D and (ii) all other investors so long as their investment in the Preferred Shares does not represent more than 10% of the greater of their annual income or net worth (for natural persons), or 10% of the greater of annual revenue or net assets at fiscal year-end (for non-natural persons). Accordingly, the Company reserves the right to reject any investor’s subscription in whole or in part for any reason, including if the Company determines in its sole and absolute discretion such investor is not a “qualified purchaser” for purposes of Regulation A. 

 

To determine whether a potential investor is an “accredited investor” for purposes of satisfying one of the tests in the “qualified purchaser” definition, the investor must be a natural person who has:

 

1.an individual net worth, or joint net worth with the person’s spouse, that exceeds $1,000,000 at the time of the purchase, excluding the value of the primary residence of such person; or

 

2.earned income exceeding $200,000 in each of the two most recent years or joint income with a spouse exceeding $300,000 for those years and a reasonable expectation of the same income level in the current year.

 

 

If the investor is not a natural person, different standards apply. See Rule 501 of Regulation D for more details.

 

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The following table of contents has been designed to help you find important information contained in this Offering Circular.

The Company encourages you to read the entire Offering Circular.

 

TABLE OF CONTENTS

 

IMPORTANT NOTICES TO INVESTORS 4
STATE LAW EXEMPTION AND INVESTOR SUITABILITY REQUIREMENTS 5
TABLE OF CONTENTS 6
CAUTIONARY STATEMENT REGARDING FORWARD-LOOKING STATEMENTS 7
OFFERING CIRCULAR SUMMARY 10
THE OFFERING 17
RISK FACTORS 19
PLAN OF DISTRIBUTION 23
USE OF PROCEEDS 26
DESCRIPTION OF BUSINESS 30
MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS 41
PLAN OF OPERATIONS 42
DIRECTORS, EXECUTIVE OFFICERS AND SIGNIFICANT EMPLOYEES 48
COMPENSATION OF MANAGEMENT AND DIRECTORS 51
PRINCIPAL SHAREHOLDERS 51
CERTAIN RELATIONSHIPS AND RELATED PARTY TRANSACTIONS 52
SHAREHOLDER RIGHTS UNDER THE COMPANY’S ARTICLES OF INCORPORATION AND BYLAWS 58
FEDERAL INCOME TAX CONSEQUENCES OF AN INVESTMENT IN THE COMPANY 64
LEGAL MATTERS 66
EXPERTS 66
ADDITIONAL INFORMATION 67
PART FS - INDEPENDENT AUDITOR'S REPORT 70

PART FS - AUDITED FINANCIAL STATEMENT AS OF AUGUST 10, 2018

72

PART FS - NOTES TO AUDITED FINANCIAL STATEMENT AS OF AUGUST 10, 2018

75
PART III - EXHIBITS 77
SIGNATURES 78
Exhibit A – Articles of Incorporation
Exhibit B – Bylaws
Exhibit C – Form of Subscription Agreement
Exhibit D – Shareholders’ Agreement
Exhibit E – Advisory Agreement
Exhibit F – Asset Management Agreement
Exhibit G – Consent to Use Legal Opinion  
Exhibit H – Consent of Independent Auditor  
Exhibit I – Legal Opinion  

 

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CAUTIONARY STATEMENT REGARDING FORWARD-LOOKING STATEMENTS 

 

Some of the statements under “Offering Circular Summary,” “Risk Factors,” “Description of Business”, “Plan of Operations,” and elsewhere in this Offering Circular constitute forward-looking statements. Forward-looking statements relate to expectations, beliefs, projections, future plans and strategies, anticipated events or trends and similar expressions concerning matters that are not historical facts. In some cases, you can identify forward-looking statements by terms such as “anticipate,” “believe,” “could,” “estimate,” “expect,” “intend,” “may,” “plan,” “potential,” “should,” “will” and “would” or the negatives of these terms or other comparable terminology. In this Offering Circular, unless the context indicates otherwise, references to “we”, “our”, and “the Company” refer to Tuscan Gardens Senior Living Communities, Inc.

 

The forward-looking statements are based on the Company’s beliefs, assumptions and expectations of its future performance, taking into account all information currently available to the Company. These beliefs, assumptions and expectations can change as a result of many possible events or factors, not all of which are known to the Company or are within its control. If a change occurs, its business, financial condition, liquidity and results of operations may vary materially from those expressed in its forward-looking statements. You should carefully consider these risks before you make an investment decision with respect to the Preferred Shares, along with the following factors that could cause actual results to vary from the Company’s forward-looking statements:

 

·This is a Blind Pool Offering as the Company has yet to identify any specific assets to acquire with the Net Proceeds of this Offering.

 

·The Company has no track record, and has yet to commence operations.

 

·While Company Affiliates have ownership interests in a variety of senior living facilities, none of the Company Affiliates’ referenced investments in the “Company Affiliates’ Ownership Interests in Senior Living Facilities” section offer conclusive predictive validation of Management’s ability to realize target returns for the Company as none have been liquidated and are all still in lease-up or transition.

 

·The Company’s activities have been limited to developing its business and financial plans. The Company will not have the necessary capital to develop or execute its business plan until it is able to secure financing. There can be no assurance that such financing will be available on suitable terms. Even if it raises 100% of the Offering, the Company may not have sufficient capital to execute its business plan or begin generating substantial revenues from operations.

 

·The Company’s business plan is untested, and its management team has a limited track record. If the Company is unable to execute its business plan, it will not be able to generate any revenues and its results of operations would be adversely affected.

 

·The Company’s management team has limited experience or track record in real estate financing, development, and acquisition of projects.

 

·The Company’s revenue is based on the successful launch and exit of its projects. If the Company is unable to attract sufficient investor interest in its projects, it will not be able to launch its projects and generate revenue.

  

·You will not have any interest in, and your investment will not be secured by any Company Properties. Any returns on your investment will depend solely on the results of operations of the Company Properties.

 

·Your returns on an investment will depend on the successful development or acquisition, results of operations, and profitable disposition of Company Properties.

 

·The Company’s assessment of the merits of any identified projects under consideration for may be inaccurate, which may negatively affect its results of operations.

 

·The Company will not proceed to release funds unless it is successful in raising the specified Minimum Offering Amount.

 

·Timing of development in real estate-related projects is inherently uncertain and any delays in the development or acquisitions of Company Properties will adversely affect your investment.

 

·There is no current basis for you to evaluate the possible merits or risks of the Company’s business.

 

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·The Company may not successfully implement the exit strategy, in which case investors may not experience any capital appreciation from the sale of their Preferred Shares.

 

·The Company may not generate sufficient income to fund Preferred Dividends and there is a risk that the Company may never pay any dividend. Additionally, the Company may use other sources including borrowings and sales of assets. If it pays Preferred Dividends from sources other than its cash flow from operations, it will have less funds available for investments and your overall return may be reduced.

 

·The Company’s investments in real estate will be subject to the risks typically associated with real estate.

 

·The Company’s future performance is difficult to evaluate as it has not commenced operations.

 

·As the Sponsor will exercise complete control over the Company, it will have the ability to make decisions regarding (i) changes to share classes without shareholder notice or consent, (ii) making changes to the Company’s Articles of Incorporation whether to issue additional common stock and preferred stock, including to itself, (iii) employment decisions, including compensation arrangements; and (iv) whether to enter into material transactions with related parties.

 

·The Company’s Articles of Incorporation, Bylaws, Subscription Agreement, and Shareholder Agreement all provide mandatory binding arbitration provisions that, unlike in judicial proceedings, are subject to determination by an arbitrator, not a judge, who is not necessarily governed by the same standards. In light of that, there is a risk that an arbitrator will not view the contract or the law in the same way a judge would and may grant a remedy or award relief that the arbitrator deems just and equitable and within the scope of the agreement of the parties or based on simple notions of equity, rather than the facts or the relevant law. Furthermore, there is a risk that an arbitrator may interpret the relevant agreements or facts without regard to legal precedent. That risk is exacerbated by the fact that it is more difficult to overturn or vacate an arbitration award, because the law supports confirmation of an arbitration decision which is not otherwise arbitrary or capricious; therefore, investors should consider the difficulty of reversing an arbitration award, once made.

 

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·The Company’s long-term growth depends upon its ability to retain and grow its investor base by successfully identifying and acquiring projects with attractive returns on investment. If the Company is unable to find such projects or if Company Properties do not produce the expected returns, it may be unable to retain or grow its investor base, and its operations and business could be adversely affected.

 

·The amount of capital to be raised by the Company through this Offering comprises approximately ten percent (10%) of the total amount needed to fund the acquisition, development, construction, and operation of Company Properties. The Company does not have a credit facility to finance the acquisition of real estate. It will use best efforts to obtain funds from one or more third parties to finance the acquisition, development, construction, and operation Company Properties. Obtaining funds from third parties requires an increase in the amount of financing the Company will be obligated to repay. In addition, there is no certainty that funds from third parties will be available at a reasonable cost, if available at all.

 

·There has been no public market for the securities of the Company. The Preferred Shares will not be listed on any securities exchange. There will be no active market for the Preferred Shares.

  

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OFFERING CIRCULAR SUMMARY

 

This summary highlights selected information contained elsewhere in this Offering Circular. This summary is not complete and does not contain all the information that you should consider before investing in Preferred Shares. You should carefully read the entire Offering Circular including the risks associated with an investment in the specific securities you are offered, which are discussed under the “Risk Factors” section of this Offering Circular, before making an investment decision. Some of the statements in this Offering Circular are forward-looking statements. See the section entitled “Cautionary Statement Regarding Forward-Looking Statements.” In this Offering Circular, unless the context indicates otherwise, references to “we”, “our”, and “the Company” refer to Tuscan Gardens Senior Living Communities, Inc.

 

Overview

 

Tuscan Gardens Senior Living Communities, Inc. (“Company”) is a newly formed Florida corporation, that was organized on July 20, 2018. The Company expects to commence operations as soon as practicable after the information statement, of which this Offering Circular forms a part, has been qualified by the SEC.

 

The Company intends to invest in wholly-owned subsidiaries that develop (“Development Projects”), acquire (“Acquisition Projects”), or convert other real estate properties including hotels (“Conversion Projects”) into senior living rental communities ranging from $15,000,000 to $100,000,000 per community, consisting of independent living, assisted living and/or memory care for approximately fifty (50) to two-hundred and fifty (250) residents (“Company Properties”). The Company’s primary focus for purposes of Development Projects will be on southeastern markets, and for purposes of Acquisition Projects and Conversion Projects will be on national markets, that it considers to have favorable risk-return characteristics. The Company, operating through wholly-owned special purpose entities (“SPE”) as real estate owner-operators, intends to create, operate and hold a portfolio of Company Properties on a long-term basis, approximating seven years,, intends to create and operate a portfolio of Company Properties on a long-term basis, approximating seven years, and ultimately dispose of them to generate revenue for the Company. The Company is not a registered broker-dealer, an investment adviser, or a funding platform.

 

This is an initial offering by the Company on a “best efforts” basis for its Series A Preferred Shares (“Preferred Shares”). Company management (“Management”) will be making the investment decisions for the Company based on the management and business recommendations of an affiliate entity, Tuscan Gardens Advisor, LLC (“Advisor”). The ongoing operation of Company Properties will be overseen by an affiliate entity, Tuscan Gardens Senior Living Communities Asset Management, LLC (“Asset Manager”). The Asset Manager and Advisor are both Florida limited liability companies. Tuscan Gardens Management Corporation (the “Management Corporation”), an affiliate entity is the manager of the Asset Manager and the manager of the Advisor and will be making the business decisions for the Asset Manager and Advisor.

 

Substantially all of the Company’s assets will be indirectly held by, and substantially all of its operations will be indirectly conducted through, wholly-owned community-specific limited liability subsidiaries (“Holdco”) which will be the beneficial owners of Company Properties through each Holdco’s investment in community-specific limited liability companies that will hold fee simple title to the real property (“Propco”), and community-specific limited liability companies that will operate the Company Property (“Opco”).

 

Under this structure, Tuscan Gardens Capital Partners, LLC (“Sponsor”), an affiliate of the Company, will be the sole common member (“Common Member”) and receive common membership units (“Common Units”) in each Holdco, and the Company will also invest as a preferred member, and receive preferred membership units (“Preferred Units”) in each Holdco. Holdco’s, Propco’s, and Opco’s will all be managed by the Management Corporation. Each of the Company’s investments will be structured similarly.

 

The proceeds from the Offering may be used to (i) pay fees and expenses relating to the organization of the Company and the sale of the Preferred Shares, (ii) invest in community-specific Holdco’s which will invest in the development and acquisition of Company Properties, and pay expenses related to the acquisition of such investments, and (iii) establish working capital reserves for the Company to fund operating and other expenses of the Company. The Company expects to use the Offering proceeds to pay such amounts at such time and in such order as the Management deems, in its sole and absolute discretion, to be in the best interest of the Company.

 

The expenses of this Offering, including the preparation of this Offering Circular and the filing of this Offering Statement, estimated at $350,000, are being paid for by on behalf of the Company by the Sponsor, and will be repaid to Sponsor from the Company’s working capital reserves, the timing of which shall be as Management deems, in its sole and absolute discretion, to be in the best interest of the Company.

 

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Project Selection, Due Diligence and Feasibility Assessment

 

The Company intends to perform due diligence in variety of areas to assess the viability of potential projects. The Company’s diligence includes an evaluation of a potential project’s desirability based on: (1) overall market depth for senior living communities based on the age, need, and income qualified population in the property’s primary market area, (2) current and future market penetration based on current and forecast supply relative to the market depth, (3) household income and average home sale prices as these are the primary sources from which residents of Company Properties fund their living expenses, (4) five year forecast growth rate for senior population, and (5) the market position of the potential project relative to competitor price and quality. Once a project passes the Company’s preliminary due diligence, financial risks and returns are modeled to determine if the project is able to meet its financial projections and achieve Company return targets. This includes stress testing and sensitivity analyses on projected cash flows using financial models to gauge the project’s financial strength, rate sensitivity, occupancy and lease-up sensitivity, and exit capitalization rate sensitivity.

 

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Series A Preferred Shares  

 

The Company has established a preferred non-voting class of shares referred to as Series A Preferred Shares with $1,000 par value per share Preferred Share (“Preferred Shares”) and seeks to raise $50,000,000 through the sale of 50,000 Preferred Shares.  

 

Services Performed by, and Compensation Paid to Affiliates

 

The Asset Manager, Advisor and other Sponsor affiliates (collectively “Company Affiliates”) will be engaged by the Company and its affiliates to perform various value add services for Management’s day to day management of the Company including the investment of its assets, the acquisition, development, financing and disposition of properties, and offering placement services. Company Affiliates will receive fees and compensation for such services as described in this section. None of the agreements for such services are the result of arm’s-length negotiations. The Company believes, however, that the terms of such arrangements are reasonable and are comparable to those that could be obtained from unaffiliated entities. The timing and nature of these fees could create a conflict between and among the interests of the Asset Manager, the Company, and those of the Investors. Services performed by Company Affiliates include the following:

 

Asset Manager Services to the Company. The Asset Manager is responsible for the oversight of day to day Company Property management decisions by the Community Manager, pursuant to an agreement between the Asset Manager and the Company (“Asset Management Agreement”). Under the Asset Management Agreement, the Company will pay the Asset Manager, on a monthly basis, an annual Asset Management Fee (the “Asset Management Fee”) equal to two (2.0%) percent of Gross Assets under management. In the event the Asset Management Fee is paid to the Asset Manager in connection with any community that is not ultimately acquired by the Company, such Asset Management Fee shall be promptly repaid by the Asset Manager to the Company. These amounts are expected to be funded with working capital reserves established with Net Offering Proceeds prior to such time as the Company receives distributions from the Holdcos in amounts sufficient to pay such fees. As used herein, “Breakeven Cash Flow” means the amount of net cash flow from the operations of a Company Property necessary to meet any capital expenditure reserve payments and all principal and interest debt service payments.

 

Placement Agent Services to the Company. The Company relies on non-affiliated entities and individuals (“Placement Agent”) to prepare, issue, market, and distribute the Offering to qualified investors. The Company has entered into, or will enter into arrangements for compensation and fees to its Managing Broker-Dealer (“MBD”), which include a placement fee equal to seven (7.0%) percent of Gross Offering Proceeds (the “Placement Fee”) which the MBD in turn may re-allow up to all of the Placement Fee to Participating Brokers who are not Affiliates of the Company, a marketing support fee equal to one and one-half (1.5%) percent of Gross Offering Proceeds (the “Marketing Support Fee”), up to all of which may be reallowed to Participating Brokers who are not Affiliates of the Advisor, and a dealer manager fee of up to two (2.0%) percent (subject to reduction in certain circumstances) of Gross Offering Proceeds (the “Dealer Manager Fee”), up to all of which may be reallowed to Participating Brokers. Notwithstanding the foregoing, the Advisor, its employees, officers and directors, registered principals or representatives of the Placement Agent or a Participating Broker and the immediate friends and family of any of the foregoing persons, as well as clients of an investment adviser registered under the Investment Advisers Act of 1940, as amended, who have been advised by such adviser on an ongoing basis regarding investments other than in the Company, and who are not being charged by such adviser or its affiliates through the payment of commissions or otherwise for the advice rendered by such adviser in connection with the purchase of Preferred Shares through a Participating Broker, may purchase Preferred Shares at a discounted price equal to One Thousand ($1,000.00) Dollars, less the Seven (7.0%) Percent Placement Fee, for a net discounted price of Nine Hundred Thirty ($930.00) Dollars per Preferred Share.

 

Organizational and Offering Expenses. The Company will reimburse the Asset Manager, the Advisor, or Company Affiliates for Organizational and Offering Expenses up to five (5.0%) percent of Maximum Offering Amount. As used herein, “Organizational and Offering Expenses” means any and all costs and expenses, exclusive of the Placement Fee, the Marketing Support Fee, the Dealer Manager Fee, and the Acquisition Fees incurred by the Company, the Asset Manager, the Advisor or any Company Affiliate in connection with the formation, qualification, organization and registration of the Company and the marketing, distribution and issuance of Preferred Shares, including, without limitation, the following: legal, accounting and escrow fees, costs of printing, amending, supplementing, mailing, and distribution costs; filing, registration, and qualification fees and taxes; personnel costs associated with processing Investor subscriptions, the preparation and dissemination of organizational and Offering documents and sales materials, and the attendance by the Company or Company Affiliates at sales meetings; telecopy and telephone costs, all advertising, promotional and marketing expenses, including the costs related to Investor and broker-dealer sales meetings or events paid or reimbursed by the Company; and bona fide due diligence expenses incurred by the Placement Agent and Participating Brokers. Approximately One Hundred Fifty Thousand ($150,000.00) Dollars of Organizational and Offering Expenses have been incurred by the Asset Manager and will be reimbursed by the Company from Offering Proceeds. The Company’s accounting policy accounting policy in accordance with U.S. GAAP, Financial Accounting Standards Codification 720, is that Organizational and Offering Expenses will be expensed as incurred.

 

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Advisor Services to the Company. In order to achieve its investment objectives, the Company provides for an advisor’s oversight of the Company’s acquisitions, developments, financing, and disposition activities including without limitation the negotiation and execution of all agreements pertaining to development, acquisition, financing, and disposition of the Company’s assets. Tuscan Gardens Advisors, LLC (the “Advisor”) will serve as the management and business advisor to the Company pursuant to an advisory agreement with the Company (the “Advisory Agreement”) to advise on all business matters of the Company pursuant to the Advisory Agreement. The Advisor is a wholly-owned, captive affiliate of Tuscan Gardens Management Group, LLC (“TGMG”), a Florida limited liability company, is not a registered investment advisor under the Investment Advisers Act of 1940, and exclusively provides management and business consulting, rather than investment advisory services, to the Company and its majority-owned affiliates which include Tuscan Gardens Senior Living Fund, LLC and Tuscan Gardens Senior Living Income Fund, LLC. TGMG is a real estate private equity company specializing in senior living community development and acquisitions. TGMG’s leadership has over 100 years of collective experience investing in income producing real estate including senior living communities, hospitality, retail, multifamily, industrial, restaurant and other real estate sectors. TGMG’s strategy is to hire experienced third-party operators (“Company Property Manager”) to operate the senior living communities that it builds or acquires. TGMG, through its affiliates, manages assets for investors through various investment vehicles on behalf of retail investors, high net worth individuals and private equity investors. The Advisor may terminate the Advisory Agreement with or without cause and without penalty, by giving sixty (60) days’ prior written notice to the Company. Under the Advisory Agreement, the Advisor will receive the following compensation for its services:

 

Acquisition Fees. The Company will cause each respective Holdco to pay the Advisor acquisition fees (the “Acquisition Fees”) for the selection, purchase, underwriting, financing, development or construction of the Communities equal to three (3.0%) percent of the Company’s prorata percentage of total Holdco preferred ownership interests multiplied by estimated Total Project Costs, as defined herein, upon the acquisition of each Company Property. In the event the Acquisition Fees are paid to the Advisor in connection with any property that is not ultimately acquired by the Company, such Acquisition Fees shall be promptly repaid by the Advisor to the Company.

 

Financial Guarantee Fee. The Company will cause each respective Holdco to pay the Advisor, on a monthly basis, an annual Guarantee Fee (the “Financial Guarantee Fee”) equal to three quarters of one (0.75%) percent of guaranteed amounts under total aggregate financing (“Guaranteed Amount”) for each Company Property for which Advisor or its affiliates provide financial or carve-out guarantees. The Company will pay the Advisor the Financial Guarantee Fee earned with respect to the Guaranteed Amount upon the execution of guarantees by Advisor or its affiliates at each Company Property. In the event the Financial Guarantee Fee is paid to the Advisor in connection with any Company Property that is not ultimately developed or acquired by the Company, such Financial Guarantee Fee shall be promptly repaid by the Advisor to the Company. These amounts are expected to be funded with working capital reserves established with Net Offering Proceeds prior to such time as the Company receives distributions from the Holdcos in amounts sufficient to pay such fees. As used herein, “Breakeven Cash Flow” means the amount of net cash flow from the operations of a Company Property necessary to meet any capital expenditure reserve payments and all principal and interest debt service payments.

 

Disposition Fees. The Company will cause each respective Holdco to pay the Advisor disposition fees (the “Disposition Fees”) for the disposition, recapitalization, or sale of Communities equal to three (3.0%) percent of the Company’s prorata percentage of total Holdco preferred ownership interests multiplied by the actual selling price or recapitalized amount, as defined herein, upon the sale or recapitalization of each Company Property. In the event the Disposition Fees are paid to the Advisor in connection with any Company Property that is not ultimately sold or recapitalized by the Company, such Disposition Fees shall be promptly repaid by the Advisor to the Company.

 

Reimbursement of Advisor Operating Expenses. The Company will cause each respective Holdco to pay the Advisor and its Affiliates, as applicable, for Advisor’s ongoing operating expenses incurred on behalf of the Company, the Holdcos or their affiliates. These amounts are expected to be funded with working capital reserves established with Offering proceeds prior to such time as the Company receives distributions from the Holdcos in amounts sufficient to pay such operating expenses. These amounts are estimated to be two (2.0%) percent of the Company’s prorata percentage of total Holdco preferred ownership interests multiplied by Total Project Costs.  

 

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Development Services to the Company. The Company relies upon dedicated, affiliate development entities (“Devco”) to achieve on-time, on-budget completion of each Company Property it develops. These Devcos are responsible for the successful engagement with sellers, regulatory officials, and other parties necessary to secure land use entitlements, requisite development approvals and permits, as well as the oversight of general contractors. In consideration for these services, the Company will cause each respective Propco to pay the applicable Devco a site development fee in an amount equal to five (5.0%) to seven (7.0%) percent of Total Project Costs (including financing costs and interest expense, pre-opening operating expenses and working capital reserves) for design and development services. Upon commencement of construction at each site, or sooner as provided for under the applicable development agreement between each respective Propco and the applicable Devco, an amount not to exceed seventy-five (75%) percent of this fee will be due and payable for the respective Company Property, with the balance paid in installments over the projected site construction period, which is typically eighteen (18) to twenty-four (24) months, subject to any additional lender requirements.

 

Conflicts of Interest

 

There are conflicts of interest between and among the Company, the Asset Manager, the Advisor, the Sponsor, the Devco, and other Company Affiliates. Asset Manager and Advisor may provide services to other affiliate companies in addition to the Company. All of the agreements and arrangements between and among Company Affiliates and the Company, including those related to compensation, are not the result of arm’s-length negotiations. The Company will try to balance the interests of Company Affiliates with the interests of the Company. However, to the extent that the Company takes actions that are more favorable to Company Affiliates than the Company, these actions could have a negative impact on the Company’s financial performance and, consequently, on the dividends to holders of Preferred Shares and the value of those securities. The Company has not adopted, and does not intend to adopt in the future, either a conflicts of interest policy or a conflicts resolution policy.

 

The Company relies on key real estate professionals including Laurence J. Pino, William N. Johnston, and Christopher P. Young (collectively “Management”), for the day-to-day operation of its business. As a result of their interests in other Company Affiliates, their obligations to other investors, and the fact that they engage in and will continue to engage in other business activities on behalf of themselves and others, Management will face conflicts of interest in allocating their time among us, the Asset Manager, the Advisor, other Company Affiliates, and other business activities in which they are involved. However, the Company believes that the Asset Manager, Advisor, and their respective affiliates have sufficient real estate professionals to fully discharge their responsibilities to the Company.

  

Demographics of Senior Living

 

The demographic shift in the United States is noteworthy. Over the next twenty years, the 65-or-over age cohort is anticipated to grow some sixty-five percent (65%) from 55 million to 79 million seniors. That will result in over 50 million households headed up by someone in the 65-or-over age category. By 2035, that number will morph to one out of every three American households headed up by somebody who is over the age of 65 (JCHS, 2016). Noteworthy is not only the significance of the projections recently made, but that it is tracking earlier estimates provided by the Administration on Aging (AoA, 2009), suggesting that the 85-and-older age cohort will increase from 4.2 million in 2007 to 5.7 million in 2010 (a 6% increase) (Yokum & Wagner, 2011).

 

To the extent that the leading edge of this tsunami of the senior population is driven by the coming of age of the large baby boom generation (born 1946-1964), more than half of that growth will occur in just the next decade alone (JCHS 2016). As those baby boomers pass the age of 80, between 2025 and 2035, the 80-and-over population will swell one-hundred percent from 12 million to 24 million with 70% of that growth spawned during the last decade. That explosive growth will shift the age distribution in the United States to 1 in 5 – 20% -- of the population aged 65 and over by 2035, a 40% percent increase from the distribution the country currently experiences (JCHS 2016). The following charts provide a graphic portrayal of the above (JCHS, 2016).

 

To put the growth of the senior population in perspective, it is sufficient to simply compare more recent populations against historical ones. For example, the population of the 65-75 age cohort in 2007, was 8.8 times greater than in 1990; the population of the 75-84 age cohort in 2007 was 17 times greater than in 1990; and the population of the 85-and-older age cohort in 2007 was 45 times greater than in 1990 (Yokum & Wagner, 2011).

 

The simple size of the baby boom generation is certainly a critical factor in the graying of America; however, it is not the only factor. Increasing life expectancy precipitated by advances in medical care, more attention to healthier lifestyles, and ongoing successful outcomes in treating chronic and fatal diseases have all had a cumulative effect on increasing life expectancy. Life expectancy for individuals born in 2003 reached an all-time high of 77.3 years. Punctuating the divergence between the two is the life expectancy of an individual who reaches the age of 65 in 2002 who can expect an additional 18.2 years, for a consolidated total of 83.2 (AoA 2005). However, an individual reaching the age of 85 has an additional life expectancy of 6.0 years (AoA 2003), for a consolidated total of 91 (AoA, 2003; Yokum & Wagner, 2011).

 

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Along the same lines as the increases in demographics of an aging population, the incidence of cognitive impairment affecting the elderly will also continue to grow, which is self-evident inasmuch as dementia and other forms of cognitive impairment primarily affect populations above 65 and become pronounced above the age of 85. While it is good news for everyone that the per capita rate of dementia prevalence has declined over the past several decades, that bright light is dimmed by the simple reality of the hypergrowth in the 65-or-over population through 2035.

For instance, if dementia rates continue to climb at half the rate they did from 2000-2012, we would still have some 6 million people over age 65 with dementia and another 14 million having some form of cognitive impairment. In fact, it is estimated that based on current rates, the number of older adults with dementia may reach 7.6 million and the number with cognitive impairment – broad forms of Criteria for Dementia (CIND) – will reach 15.5 million by 2035.

 

According to the Commission on Long-Term Care Report to the Congress (2013) U.S. Census Bureau, Federal Reserve Survey of Consumer Finances, the number of Americans needing long-term care is expected to grow from its 2010 level of twelve million people, to twenty-seven million people by the year 2050. Additionally, this report concluded that sixty-nine percent of Americans aged sixty-five and older will require some degree of Long-Term Care.

 

In the recent book Big Shifts Ahead: Demographic Clarity for Business (Advantage Media Group, Copyright © 2016 by John Burns Real Estate Consulting, LLC) demographic researcher John Burns predicted that by 2025, the number of people aged 65 or older will increase 38% over a ten-year period from 48 million in 2015 to 66 million in 2025. Furthermore, he concluded that the number of people turning 65 each year is trending higher, with 3.5 million people turning 65 compared in 2016 compared to 2.2 million turning 65 in 2006.

 

According to the 2017 National Investment Center Data Service (“NIC”) ASHA 50 report, the market’s ability to absorb senior housing inventory growth (new construction) has remained relatively consistent over the five-year period from Q2 2014 to Q3 2017 as Senior Housing Occupancy has ranged from 89% to 91%, with average assisted living and memory care annual rental growth ranging from 2% to 3%.

 

Given the increasing rate at which Americans are turning 65 years old each year, and the forecast growth to twenty-seven million Americans expected to need long-term care by 2050, the Company believes that the industry demographics are compelling.

 

Competitive Strengths

 

The Company’s competitive strengths stem from the Management’s experience and understanding of the compelling growth trends in the senior housing market, and proven ability to successfully develop and acquire senior living communities that address this growing need based on the aging of Americans, especially the baby boomers who currently represent the country’s largest demographic segment.

 

As of the date of this Offering Circular, total senior living communities developed or acquired by Company Affiliates consist of three Class A luxury communities totaling approximately $150 million developed under the Tuscan Gardens® brand in Venice, Florida (opened November 2016), Palm Coast, Florida (opening December 2018), and Delray Beach, Florida (opening January 2020). Additionally, Company Affiliates hold a 15% interest in a $100 million portfolio of Class A luxury communities known as the Living Well Lodges that were acquired in January 2016 for approximately $100 million.

 

Expansion of Company Focus to include the Mid-Market in Addition to the Class A Luxury Segment 

 

The Company intends to build upon Management’s experience developing, acquiring, and operating Sponsor Affiliate luxury Class A senior living communities, by continuing to focus on the development of luxury, Class A senior living communities in southeastern markets, as well as expanding on a national basis into the underserved mid-market segment that offers greater affordability in response to an emerging social crisis for aging Americans unable to afford $5,000 or more for senior living communities.

 

This growing, underserved mid-market segment known as “the missing middle” represents a demographic segment that can neither afford Class A luxury senior living communities, nor is eligible for government income-based subsidies that are available to residents of low-income senior living communities. By pursuing cost-effective acquisitions, and conversions of other real estate properties including hotels for adaptive reuse into senior living rental communities to serve this market segment on a national basis, Management believes it can provide a compelling, differentiated offering to residents that i) satisfies their need for safety and care, ii) provides a positive resident experience at more affordable levels than the development or acquisition of purpose-built senior living communities, and iii) achieves operating margins that are consistent with Sponsor Affiliate properties through reduced marketing costs due to shorter lease-up periods driven by favorable demand elasticity at lower monthly rates.

 

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Corporate Information

 

The Company’s executive offices are located at 189 S. Orange Ave, Suite 1650, Orlando, FL 32801. The Company’s telephone number is (407) 206-6577. 

 

Reporting Requirements Under Tier 2 of Regulation A

 

Following this Tier 2 Regulation A offering, the Company will be required to comply with certain ongoing disclosure requirements under Regulation A. The Company will be required to file (i) an annual report with the SEC on Form 1-K, (ii) a semi-annual report with the SEC on Form 1-SA, (iii) current reports with the SEC on Form 1-U, and (iv) a notice under cover of Form 1-Z. The necessity to file current reports will be triggered by certain corporate events. Parts I and II of Form 1-Z will be filed by the Company if and when it decides to and is no longer obligated to file and provide annual reports pursuant to the requirements of Regulation A.

 

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THE OFFERING

 

Issuer: Tuscan Gardens Senior Living Communities, Inc.
   
Securities Offered: Series A Preferred Shares (“Preferred Shares”)
   
Par Value: $1,000.00 per share
   
Minimum Purchase: Ten (10) Preferred Shares or Ten Thousand ($10,000.00) Dollars
   
Minimum Offering
Amount:
500 Preferred Shares ($500,000)
   
Maximum Offering
Amount:
50,000 Preferred Shares ($50,000,000)
   
Escrow: Proceeds received from investors will be escrowed by Securities Transfer Corporation, 2901 N. Dallas Parkway, Suite 380, Plano, Texas 75093 (“Escrow Agent”) until a minimum of $500,000 has been received for the Preferred Shares.
   
  In the event that the Minimum Offering Amount is not sold within 180 days, all funds will be refunded by the Escrow Agent to investors without interest or deduction.
   
Offering Price: $1,000 per Preferred Share (“Offering Price”)
   
Offering Period: To begin as soon as practicable after the information statement, of which this Offering Circular forms a part, has been qualified by the SEC, and will terminate December 31, 2019.
   
  The Offering Period may be extended, or the Offering terminated at any time by the Company in its sole discretion.  
   
Dividend Rights: Subject to declaration by the Board of Directors on no less than a quarterly basis, acting in its sole discretion based on the best interests of the Company, the Company will seek to provide ongoing income to investors in the Preferred Shares, paid or accrued monthly (“Preferred Dividend”), plus potential capital appreciation through additional dividends (“Special Dividends”) based on fifty (50%) percent participation in the net proceeds generated by the Company from the Holdco disposition of Company Properties.
   
 

Any unpaid Preferred Dividends will accrue at a non-compounded rate as declared by the Board of Directors, acting in its sole discretion based on the best interests of the Company, and as more specifically set out in THE COMPANY’S ARTICLES OF INCORPORATION and BYLAWS, attached as Exhibits A and B respectively.

 

In addition, Special Dividends may be declared and authorized for payment by the Board of Directors, acting in its sole discretion based on the best interests of the Company, and as more specifically set out in THE COMPANY’S ARTICLES OF INCORPORATION and BYLAWS, attached as Exhibits A and B respectively.

   
Voting Rights:  None
   
Dilution:  Not applicable
   
Liquidation Rights:

As set out in THE COMPANY’S ARTICLES OF INCORPORATION and BYLAWS, attached as Exhibits A and B respectively. 

   
Conversion Rights: None
   
Pre-emptive Rights: None
   
Sinking Fund Provision: None

 

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Liability for Further
Calls:
None
   
Gross Proceeds: The proceeds from this Offering prior to any commission, offering expenses, Advisor operating expenses, legal fees, fund management, supervisory and accounting services, and other working capital reserves (“Gross Proceeds”).
   
Net Proceeds: Gross Proceeds, less selling commission (10.5% of Gross Proceeds), organization and offering expenses (5% of Maximum Offering Amount), Advisor operating expenses (2% of Gross Proceeds) (“Net Proceeds”).
   
Net Proceeds Allocation: Based on raising the Maximum Offering Amount, the Company intends to initially allocate 95% of Net Proceeds to the Acquisition, Development and Construction of Company Properties, and 5% of Net Proceeds to legal fees, fund management, supervisory and accounting services, and other working capital reserves.  Management may change this allocation at any time based on the actual Net Proceeds of the Offering and Management’s sole determination of what is in the best interests of the Company.
   
Risk Factors: Investing in the Preferred Shares involves a high degree of risk.  See “Risk Factors” beginning on page [FILL IN].
   
Transfer Agent: Securities Transfer Corporation will act as the Company’s transfer agent, registrar and paying agent
   
Liquidity: There is no public market for the Preferred Shares.

 

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RISK FACTORS

 

An investment in Preferred Shares of the Company involves a high degree of risk. You should carefully consider the following risk factors, together with the other information contained in this Offering Circular, before purchasing securities offered by the Company. Any of the following factors could harm the Company’s business and future results of operations and could result in a partial or complete loss of your investment. This could cause the value of Preferred Shares to decline significantly, and you could lose part or all of your investment. Some statements in this Offering Circular, including statements in the following risk factors, constitute forward-looking statements. Please refer to the section entitled “Cautionary Statement Regarding Forward-Looking Statements.”

 

RISKS RELATED TO THE OFFERING

 

This Offering is being made pursuant to the rules and regulations under Regulation A of the Securities Act.

 

The legal and compliance requirements of these rules and regulations, including ongoing reporting requirements related thereto, are relatively untested. 

 

Arbitrary Determination of the Offering Price.

 

The Offering Price has been arbitrarily determined by the Company and may not bear any relationship to assets acquired or to be acquired or the book value of the Company or any other established criteria or quantifiable indicia for valuing a business. Neither the Company nor Sponsor represents that the Preferred Shares have or will have a market value equal to their Offering Price or that the Preferred Shares could be resold (if at all) at their original Offering Price.

 

No market currently exists for the Preferred Shares.

 

There is a risk that no market for the Preferred Shares will ever exist and as a result, an investment in the Company would be illiquid in the event investors were to desire to liquidate their Preferred Share interests. While the Company may attempt to effectuate a liquidity event within approximately seven to ten years from the completion of this Offering, it is not required to effectuate a liquidity event by any specific date. If investors were to attempt to sell their Preferred Shares prior to the dissolution of the Company through secondary market sales or otherwise, they might have to sell them at a discount to their fair value as there is no certainty that they can be sold for full market value or that the Preferred Shares may be sold at any price.

 

RISKS RELATED TO THE COMPANY’S BUSINESS PLAN

 

The Company is a Blind Pool Investment without Operation and has no Track Record.

 

The Company has yet to identify any specific assets to acquire with the Net Proceeds of this Offering, has no track record, and has yet to commence operations. While Company Affiliates have ownership interests in a variety of senior living facilities, none of the Company Affiliates’ referenced investments in the “Company Affiliates’ Ownership Interests in Senior Living Facilities” section offer conclusive predictive validation of Management’s ability to realize target returns for the Company as none have been liquidated and are all still in lease-up or transition.

 

Risks of Paying Development Fees Prior to Stabilization of the Company Properties.

 

The Development Agreements provide for payment of a portion of the Development Fees from the Company to the community specific Devco upon commencement of construction or sooner, as provided for under the applicable development agreement between each respective Propco and the applicable Developer Entity, and payment of the balance of the Development Fees from the Company to the community specific Devco evenly over the construction periods. If construction commences, the community specific Devco will receive Development Fees. If the Company is unable to raise enough capital or obtain permanent financing to complete the development of a Company Property, the community specific Devco is not required to repay the Company for Development Fees it has received pursuant to the applicable Development Agreement. In addition, pursuant to the Development Agreements, the Propco’s are obligated to pay such remaining fees. If the Company does not have sufficient capital to fund capital contributions to the Holdcos for such purposes, the Company may be required to liquidate assets to meet the Holdco and Propco obligations.

 

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Investment Risk.

 

There can be no assurance that the Company will be able to achieve its investment objectives or that investors will receive any dividend or any return of their capital. Investment results may vary substantially over time, and as a result, investors should understand that the results of a particular period will not necessarily be indicative of results in future periods.

 

 

 

LEGAL, TAX AND REGULATORY RISKS 

 

Legal, tax and regulatory changes could occur during the lifetime of the Company that may adversely impact the Company’s and Company Affiliates’ taxation status and any distributions from Holdcos to the Company, and Preferred Dividends or Special Dividends to investors.

  

Risk of Obtaining and Maintaining Licensure of Senior Housing Communities

 

State regulations require government approval for the necessary authorizations and permits to open and accept assisted living and memory care residents. Regulators regularly inspect facilities to ensure applicable standards are being maintained for the welfare of residents. Although the Sponsor has been successful in receiving and maintaining licensure for its Sponsor Affiliate facilities, there can be no assurance that such approvals will be obtained in a timely fashion or that regulatory changes which may result in additional costs, would not be occur.

 

Based on their inspections, regulators may revoke or suspend a license for a number of reasons, including: (a) an intentional or negligent act seriously affecting a facility resident’s health, safety or welfare; (b) misappropriation or conversion of resident property; (c) a determination by the regulator that the project owner lacks the financial ability to provide continuing adequate care to residents; or (d) a licensee’s failure during re-licensure to meet minimum licensing standards or applicable rules. Furthermore, regulators may seek an injunction in various circumstances, including to enforce applicable requirements against an assisted living community when a violation has not been corrected by the imposition of administrative fines or when the violation materially affects resident health, safety or welfare.

 

Risk of Arbitration.

 

The Company’s Articles of Incorporation, Bylaws, Subscription Agreement, and Shareholder Agreement all provide mandatory binding arbitration provisions that, unlike in judicial proceedings, are subject to determination by an arbitrator, not a judge, who is not necessarily governed by the same standards. In light of that, there is a risk that an arbitrator will not view the contract or the law in the same way a judge would and may grant a remedy or award relief that the arbitrator deems just and equitable and within the scope of the agreement of the parties or based on simple notions of equity, rather than the facts or the relevant law. Furthermore, there is a risk that an arbitrator may interpret the relevant agreements or facts without regard to legal precedent. That risk is exacerbated by the fact that it is more difficult to overturn or vacate an arbitration award, because the law supports confirmation of an arbitration decision which is not otherwise arbitrary or capricious; therefore, investors should consider the difficulty of reversing an arbitration award, once made.

 

The Company believes that binding arbitration is legally enforceable based on case law provisions as applicable to claims in connection with this offering (including secondary transactions whereunder Preferred Shares are resold by initial investors, and subsequent, secondary investors are governed by the Company’s Articles of Incorporation, Bylaws, and Shareholder Agreement) under federal law, state law, and U.S. federal securities laws. The legal enforceability based on case law as upheld by U.S. Supreme Court rulings, which, for the Commission’s reference, include but are not limited to the following: Arthur Andersen LLP v. Carlisle, 556 U.S. 624 (2009); Gilmer v. Interstate/Johnson Lane Corp., 500 U.S. 20 (1991); Rodriguez de Quijas v. Shearson/American Express, Inc., 490 U.S. 477 (1989); Shearson/American Express v. McMahon, 482 U.S. 220 (1987); and Dean Witter Reynolds Inc. v. Byrd, 470 U.S. 213 (1985).

 

As a result of this mandatory binding arbitration provision, Investors may incur increased costs to bring a claim, have limited access to information, and these provisions can discourage claims or limit investors’ ability to bring a claim in a judicial forum that they find favorable, In the event of arbitration these clauses would limit the legal remedies available to holders of Preferred Shares to arbitration for any claims they may have, however by agreeing to be subject to these arbitration provisions, investors will not be deemed to waive the company’s compliance with the federal securities laws and the rules and regulations promulgated thereunder. Notwithstanding case law supporting the enforceability of arbitration, there does appear to be a split of authority suggesting that arbitration provisions are not always enforceable under federal and state law. Nonetheless, to the extent any arbitration provisions are ruled unenforceable, the Company would abide by such ruling.

 

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Risk that the Company’s Holdcos may fail to qualify as a disregarded entity for U.S. federal income tax purposes. 

 

If any of the Company’s Holdcos fail to qualify as a disregarded entity for U.S. federal income tax purposes and no relief provisions apply, that Holdco would be subject to entity-level federal income tax. As a result, the Holdco cash available for Preferred Dividend payments to the Company, and as a result the Company’s ability to pay Preferred Dividends as well as the value of Preferred Shares could materially decrease.

 

Risk of Tax Liability arising from the Allocation of Holdco Income, Gain, Loss and Deduction.

 

The Holdco operating agreements provide for the allocation of income and gain to both the Common Members and Preferred Members of each Holdco, and 100% of the Holdco losses to the Holdco Common Members. The Company believes that all material allocations to the Members of each Holdco may or may not be respected for U.S. federal income tax purposes. The rules regarding partnership allocations are complex and no assurance can be given that the IRS will not successfully challenge the allocations in each Holdco operating agreement, and reallocate items of income, gain, loss or deduction in a manner which adversely increases the income allocable to the Members of each Holdco.

 

Risk that Holdco Tax liability may exceed cash distribution from dispositions.

 

There is a risk that on the disposition of the Company Properties the Holdco tax liability may exceed the distributable cash available. In the event of a foreclosure, or other involuntary disposition of the Company Properties, there is the possibility that the Company may have a larger tax liability than the amount of cash available at the time of the event, or at any time in the future.

 

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Risk of audit of Individual Investor returns.

 

There is a risk that an audit of the Company's records could trigger an audit of the individual investor’s tax records. 

 

RISK RELATED TO CONFLICTS OF INTEREST

 

Management, Asset Manager or Advisor May be Involved in Similar Investments.

 

Management, the Asset Manager, Advisor, or their affiliates, may act as asset managers or advisors for other companies engaged in making similar investments, and intend to act as the asset managers and advisors of new yet to be formed companies.

 

Management, Asset Manager or Advisor May Have Interests in Similar Properties.

 

Management, the Asset Manager, Advisor, or their affiliates, own or may come to own an interest in properties that may compete with the Company Properties.

 

Management, Asset Manager or Advisor May Act on Behalf of Others.

 

Management, the Asset Manager, Advisor, or their affiliates, who may act as asset managers for the Company, may act in such capacities for other investors, companies, partnerships or entities that may compete with the Properties.

 

Management, Asset Manager or Advisor May Raise Capital for Others.

 

Management, the Asset Manager, Advisor, or their affiliates, who will raise investment funds, may act in the same capacity for other investors, companies, partnerships or entities that may compete with the Company Properties.

 

Management, Asset Manager's or Advisor's Compensation May be a Conflict.

 

The compensation plan for Management, the Asset Manager and Advisor may create a conflict among the interests of Management, the Asset Manager, the Advisor, and the interests of the Company.

 

Management, Asset Manager or Advisor Allocating Time and Resources to Company Affiliates.

 

Management, the Asset Manager, Advisor, and their affiliates may have a conflict in allocating their time and resources between the Company and other business activities they are involved with, including without limitation Company Affiliates. The Company does not require any minimum amount of time or attention that Management, the Asset Manager, or Advisor devote to the Company. 

 

Potential Conflict between Company and its Legal Advisor and Company Attorney.

 

Laurence J. Pino (“Pino”) is the managing partner of Pino Nicholson PLLC (“PNL”), the law firm which represents the Company. As a result there may be conflicts of interest created by Pino’s interests in PNL, Asset Manager, Sponsor, Advisor, and Company Affiliates including time constraints, compensation arrangements, and allocation of investment opportunities among the aforementioned parties.

 

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PLAN OF DISTRIBUTION

 

This Offering Circular will be furnished to prospective investors upon their request via electronic PDF format and will be available for viewing and download from Company’s web platform, as well as on the SEC’s website at www.sec.gov.

 

The Preferred Shares are being offered hereby by the Company through its Corporate Equity Officer and Director, Mr. Sean D. Casterline (“Casterline”), who holds Series 7 and Series 65 licenses and is licensed as a registered representative with a registered broker-dealer, Maitland Securities, Inc., appointed by the Company as its Managing Broker-Dealer (“MBD”).

 

Additionally, the Company intends to conduct its operations so that neither the Company, nor any of its subsidiaries, will meet the definition of investment company under Section 3(a)(1) of the Investment Company Act of 1940, as amended (the “Investment Company Act”) and, accordingly, neither the Company nor any of its subsidiaries intend to register as an investment company under the Investment Company Act.

 

The Company has entered into, or will enter into arrangements for compensation and fees to its Managing Broker-Dealer (“MBD”) which include a placement fee equal to seven (7.0%) percent of Gross Offering Proceeds (the “Placement Fee”) which the MBD in turn may re-allow up to all of the Placement Fee to Participating Brokers who are not Affiliates of the Company, a marketing support fee equal to one and one-half (1.5%) percent of Gross Offering Proceeds (the “Marketing Support Fee”), up to all of which may be reallowed to Participating Brokers who are not Affiliates of the Advisor, and a dealer manager fee of up to two (2.0%) percent (subject to reduction in certain circumstances) of Gross Offering Proceeds (the “Dealer Manager Fee”), up to all of which may be reallowed to Participating Brokers. Notwithstanding the foregoing, the Advisor, its employees, officers and directors, registered principals or representatives of the Placement Agent or a Participating Broker and the immediate friends and family of any of the foregoing persons, as well as clients of an investment adviser registered under the Investment Advisers Act of 1940, as amended, who have been advised by such adviser on an ongoing basis regarding investments other than in the Company, and who are not being charged by such adviser or its affiliates through the payment of commissions or otherwise for the advice rendered by such adviser in connection with the purchase of Preferred Shares through a Participating Broker, may purchase Preferred Shares at a discounted price equal to One Thousand ($1,000.00) Dollars, less the Seven (7.0%) Percent Placement Fee, for a net discounted price of Nine Hundred Thirty ($930.00) Dollars per Preferred Share.

 

In order to subscribe to purchase this Offering, a prospective investor must either electronically or manually complete, sign and deliver an executed purchase agreement for the Preferred Shares (“Subscription Agreement”), and submit payment through i) www.CrowdStreet.com, a funding platform operated by CrowdStreet, Inc., 610 SW Broadway, Suite 600, Portland, OR 97205 (the “Platform”) in accordance with the instructions provided therein, or alternatively ii) by way of check or wire transfer payable to “Tuscan Gardens Senior Living Communities, Inc. Escrow Account” established for the benefit of the investors with Securities Transfer Corporation, 2901 N. Dallas Parkway, Suite 380, Plano, Texas 75093 (“Escrow Agent”) at a national bank or trust company (“Escrow Account”). The Offering will remain open from the date on which the Offering statement is qualified until December 31, 2019. All investor funds will be deposited by the Escrow Agent into the Escrow Account. Investor funds will be released from the Escrow Account only once the Minimum Offering Amount is reached. If the Offering fails to meet the Minimum Offering Amount, investor funds will be returned promptly by the Escrow Agent to investors without interest.

  

There is currently no trading market for the Preferred Shares and no trading market is expected to ever develop. As a result, investors should be prepared to retain this Offering for as long as this Offering remain outstanding and should not expect to benefit from any Preferred Share price appreciation.

 

In compliance with Rule 253(e) of Regulation A, the Company will revise the Offering statement, of which this Offering Circular forms a part, during the course of the Offering whenever information herein has become false or misleading in light of existing circumstances, material developments have occurred, or there has been a fundamental change in the information initially presented. Such updates will not only correct such misleading information but shall also provide update financial statements and shall be filed as an exhibit to the Offering statement, of which this Offering Circular forms a part, and be requalified under Rule 252 of Regulation A.

 

Determination of Offering Price

 

The Offering Price is arbitrary with no relation to the value of the Company. Since the Preferred Shares are not listed or quoted on any exchange or quotation system, the Offering Price of the Preferred Shares were arbitrarily determined. The Offering Price was determined by the Company and is based on its own assessment of its financial condition and prospects, limited offering history and the general condition of the securities market. It does not necessarily bear any relationship to book value, assets, past operating results, financial condition or any other established criteria of value.

  

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Subscription Process

 

Investors seeking to purchase Preferred Shares should proceed as follows:

 

·Read this entire Offering Circular and any supplements accompanying this Offering Circular.

 

·Electronically or manually complete and execute a copy of the Subscription Agreement.

 

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·

Electronically provide the required Subscription Agreement information and any additional information to CrowdStreet, Inc., (the “Platform”) at www.CrowdStreet.com, or manually provide the required Subscription Agreement information and any additional information to Tuscan Gardens Senior Living Communities, Inc., 189 S. Orange Ave, Suite 1650, Orlando, FL 32801, Attention: Subscription Agreement Department. 

 

By executing the Subscription Agreement and paying the total purchase price for the Preferred Shares you are interested in purchasing, which payment is made through the Platform’s system, you will be deemed to (i) agree to all of the provisions of the Subscription Agreement attached hereto as Exhibit C, (ii) agree to all of the provisions of the Company Articles of incorporation attached hereto as Exhibit A, (iii) agree to all of the provisions of the Company Bylaws attached hereto as Exhibit B, (iv) agree to the relevant restrictions outlined herein, and (v) attest that you meet the minimum standards of a “qualified purchaser,” and that, if you are not an “accredited investor,” such subscription for his Offering does not exceed 10% of the greater of your annual income or net worth (for natural persons), or 10% of the greater of annual revenue or net assets at fiscal year-end (for non-natural persons). Subscriptions will be irrevocable, and effective only upon the Company’s acceptance and the Company reserves the right to reject any subscription in whole or in part.

 

The specified Minimum Offering Amount must be reached in order for the Offering to proceed. Following the date on which the Minimum Offering Amount has been achieved, subscriptions will be accepted or rejected within 10 business days of receipt by the Company. The Company has until the date that is twelve months after the date of this Offering Circular to achieve the Minimum Offering Amount. The Company will not draw funds from any subscriber until the date it achieves the Minimum Offering Amount or the date your subscription is accepted, whichever is later. If the Company accepts your subscription, it will email you a confirmation.

 

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USE OF PROCEEDS

 

The estimated use of proceeds from this Offering will be dependent upon the amount and timing of the capital raised in this Offering. Assuming the Maximum Offering Amount is raised, the Company expects to use the proceeds from this Offering of Preferred Shares to (i) pay fees and expenses relating to the organization of the Company and the sale of the Preferred Shares, (ii) invest in community-specific Holdco’s which will invest in the development and acquisition of Company Properties, and pay expenses related to the acquisition of such investments, and (iii) establish working capital reserves for the Company to fund operating and other expenses of the Company. The Company expects to use the Offering proceeds to pay such amounts at such time and in such order as Management deems, in its sole and absolute discretion, to be in the best interest of the Company.

 

The expenses of this Offering, including the preparation of this Offering Circular and the filing of this Offering Statement, estimated at $350,000, are being paid for by on behalf of the Company by the Sponsor, and will be repaid to Sponsor from the Company’s working capital reserves, the timing of which shall be as Management deems, in its sole and absolute discretion, to be in the best interest of the Company.

 

The following table shows a summary of the use of Minimum Offering Amount and Maximum Offering Amount generated through the sale of Preferred Shares:

 

 

Minimum

Offering

Amount

Percent

Maximum

Offering

Amount

Percent
Gross Offering Proceeds $500,000 100.00% $50,000,000 100.00%
Less: Commissions(1): ($52,500) -10.50% ($5,250,000) -10.50%
Available Proceeds $447,500 89.50% $44,750,000 89.50%
Less Offering Expenses:        
Organization and Offering Expenses(2,3) ($350,000) -70.00% ($2,500,000) -5.00%
Advisor Operating Expenses ($10,000) -2.00% ($1,000,000) -2.00%
Net Proceeds to Company from
Offering(4)
$87,500 17.50% $41,250,000 82.50%
Net Proceeds to other persons N/A N/A N/A N/A

  

1)Investors will pay upfront selling commissions in connection with the purchase of Preferred Shares. The Company has entered into, or will enter into arrangements for compensation and fees to its Managing Broker-Dealer (“MBD”) which include a placement fee equal to seven (7.0%) percent of Gross Offering Proceeds (the “Placement Fee”) which the Placement Agent in turn may re-allow up to all of the Placement Fee to Participating Brokers who are not Affiliates of the Company, a marketing support fee equal to one and one-half (1.5%) percent of Gross Offering Proceeds (the “Marketing Support Fee”), up to all of which may be reallowed to Participating Brokers who are not Affiliates of the Advisor, and a dealer manager fee of up to two (2.0%) percent (subject to reduction in certain circumstances) of Gross Offering Proceeds (the “Dealer Manager Fee”), up to all of which may be reallowed to Participating Brokers. Notwithstanding the foregoing, the Advisor, its employees, officers and directors, registered principals or representatives of the Placement Agent or a Participating Broker and the immediate friends and family of any of the foregoing persons, as well as clients of an investment adviser registered under the Investment Advisers Act of 1940, as amended, who have been advised by such adviser on an ongoing basis regarding investments other than in the Company, and who are not being charged by such adviser or its affiliates through the payment of commissions or otherwise for the advice rendered by such adviser in connection with the purchase of Preferred Shares through a Participating Broker, may purchase Preferred Shares at a discounted price equal to One Thousand ($1,000.00) Dollars, less the Seven (7.0%) Percent Placement Fee, for a net discounted price of Nine Hundred Thirty ($930.00) Dollars per Preferred Share.

 

2)The Company will pay or reimburse the Asset Manager for organization and offering expenses in an amount up to 5% of the Maximum Offering Amount (and up to 5% of the Maximum Offering Amount of any future offerings), which, if the Company raises the Maximum Offering Amount, will equal up to $2,500,000.

 

3)Includes all expenses to be paid by the Company in connection with its formation and the qualification of the Offering, and the marketing and distribution of Preferred Shares, including, without limitation, expenses for printing, engraving and amending offering statements or supplementing Offering Circulars, mailing and distributing costs, telephones, internet and other telecommunications costs, all advertising and marketing expenses, charges of experts and fees, expenses and taxes related to the filing, registration and qualification of the sale of Preferred Shares under federal and state laws, including taxes and fees and accountants’ and attorneys’ fees. See “Plan of Distribution.”

 

4)Assuming the Maximum Offering Amount is achieved, the Company expects to allocate (a) 95% ($39,187,500) of the Net Proceeds to the Company to Property Acquisition, Development, and Construction, and (b) 5% ($2,062,500) of the Net Proceeds to the Company to Legal Fees, Fund Management, Supervisory and Accounting Services and Other Working Capital Reserve. Should the Minimum Offering Amount be achieved 100% of the Net Proceeds to the Company ($87,500) would be allocated to Legal Fees, Fund Management, Supervisory and Accounting Services and Other Working Capital Reserve.

 

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INVESTMENTS IN COMPANY PROPERTIES

 

Substantially all of the Company’s assets will be indirectly held by, and substantially all of its operations will be indirectly conducted through, community-specific, wholly-owned limited liability subsidiaries (“Holdco”) which will be the beneficial owners of Company Properties through each Holdco’s investment in wholly-owned, community-specific limited liability companies that will hold fee simple title to the real property (“Propco”), and wholly-owned community-specific limited liability companies that will operate the Company Property (“Opco”).

 

Under this structure, Tuscan Gardens Capital Partners, LLC (“Sponsor”), an affiliate of the Company, will, be the sole common member (“Common Member”) and receive common membership units (“Common Units”) in each Holdco, and the Company will invest as preferred member and receive preferred membership units (“Preferred Units”) in each Holdco. Holdco’s, Propco’s, and Opco’s will all be managed by the Management Corporation. Each of the Company’s investments will be structured similarly.

 

Total project costs including financing costs and interest expense, pre-opening operating expenses and working capital reserves (“Total Project Costs”) for each Company Property will differ materially based on multiple factors including, but not limited to land cost, site conditions, impact fees, government entitlement processes, regional construction wages, size of project, land size, and any number of additional factors.

 

That notwithstanding, the following tables set out Management’s current view of hypothetical capital structures based on its industry experience and publicly available regarding the potential economics of Development Projects, Acquisition Projects, and Conversion Projects.

 

As the table below indicates, the pursuit of Development Projects, Acquisition Projects, and Conversion Projects have significantly different project costs, financing costs, and timelines which have significant impacts on the Company’s intended business operations. 

 

Type of Project Project Cost

%

Development

Project Cost

Financing Cost

%

Development

Financing

Cost

Estimated
Time to

Licensure

(Months)

Estimated

Stabilization

Period

(Months)

Development Project $     50,789,256 100% $     11,507,038 100% 18 24
Acquisition Project $     32,985,995 65% $      4,359,095 38% 3 18
Conversion Project $     19,545,249 38% $      2,781,213 24% 6 12

 

Development Projects and Conversion Projects are notably similar in that both types of require the establishment of startup operations that require the establishment of effective staff and operational practices, and de novo rate structures. The Company believes that Conversion Projects provide greater opportunity to more rapidly capture market share given that total project costs are anticipated to be approximately 38% of Development Projects, licensure and renovation can be accomplished in approximately one-third of the time required to construct and license a Development Project.

 

The time and cost savings that Conversion Projects offer over Development Projects provide the Company with an opportunity to access the growing, underserved mid-market segment known as “the missing middle” that represents a demographic segment that can neither afford Class A luxury senior living communities, nor is eligible for government income-based subsidies that are available to residents of low-income senior living communities. By pursuing cost-effective conversion of other real estate properties including hotels for adaptive reuse into senior living rental communities to serve this market segment on a national basis, Management believes it can provide a compelling, differentiated offering to residents that i) satisfies their need for safety and care, ii) provides a positive resident experience at more affordable levels than the development or acquisition of purpose-built senior living communities, and iii) achieves operating margins that are consistent with Sponsor Affiliate properties through reduced marketing costs due to shorter lease-up periods driven by favorable demand elasticity at lower monthly rates.

 

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Acquisition Projects offer advantages in terms of time to licensure over Development Projects (3 rather than 18 months) and Conversion Projects (3 rather than 6 months), but are typically turnarounds rather than startups and therefore require greater operational resources to identify and eliminate ineffective staff and operational practices prior to the establishment of effective alternatives.

 

Hypothetical Community-Specific Company Property Capital Structure for Development Projects

 

The table below illustrates the indicative uses of invested proceeds for a hypothetical Development Project, recognizing that in actuality each particular Development Project is unique and would vary materially based on the factors mentioned herein above.

 

Development Projects are estimated to take 18 months to build and 24 months to attain stabilized occupancy. The aggregate 42 months timeline and significant ($39.3mm) Pre-Finance Project cost compound to produce a significantly higher ($11.5mm) Financing Cost relative to Acquisition Projects and Conversion Projects.

 

Use of Funds:

Pre-Finance Project Cost      
Building Construction   $ 24,466,300  
Land and Site Improvements Note 1   $ 5,450,000  
Architectural, Engineering, Permits & Impact Fees   $ 3,060,000  
Computers, Furniture Fixtures & Equipment   $ 1,100,000  
Developer Fees   $ 2,500,000  
Project Management Fees   $ 900,000  
Lease-up Marketing Costs   $ 417,000  
Working Capital to fund operations until reaching breakeven   $ 1,388,918  
Contingency   $ -  
Pre-Finance Project Cost   $ 39,282,218  
Capitalized Interest   $ 7,873,132  
Construction Contingency and Operating Expense Reserve   $ 1,422,099  
Capital Sourcing Fees and Lender Origination Fees   $ 2,211,807  
Financing Cost   $ 11,507,038  
Total Project Cost   $ 50,789,256  

 

Source of Funds:

 

Sources of Funds            
Senior Debt   $ 35,552,479       70.0 %
Subordinate Debt   $ 11,173,636       22.0 %
Holdco Equity Note 1   $ 4,063,140       8.0 %
Total Source of Funds   $ 50,789,256       100 %

 

Note 1 – Offering Proceeds will be used to fund Holdco Equity, which typically represents 8% of Total Project Cost. Prior to obtaining debt financing this equity is used by Holdco for land deposits and pre-construction costs for architectural design and any requisite approvals necessary for construction permitting. The remaining Ninety-Two (92.0%) of Total Project Costs would be financed by Senior Debt and Subordinate Debt representing Seventy (70.0%) Percent and Twenty-Two (22.0%) Percent of Total Project Costs respectively.

 

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Hypothetical Community-Specific Company Property Capital Structure for Acquisition Projects

 

The table below illustrates the indicative uses of invested proceeds for a hypothetical Acquisition Project, recognizing that in actuality each particular Acquisition Project is unique and would vary materially based on the factors mentioned herein above.

 

Acquisition Projects are estimated to take 3 months to transition and 18 months to turnaround and attain stabilized occupancy. The aggregate 21 months timeline and lower ($28.6mm) Pre-Finance Project cost compound to produce a significantly lower ($4.4mm) Financing Cost relative to Development Projects.  

 

Use of Funds:

Pre-Finance Project Cost      
Purchase Price Note 2   $ 26,943,566  
Renovation Costs   $ 1,283,333  
Lease-up Startup Marketing Costs   $ 150,000  
Working Capital to fund operations until reaching breakeven   $ 250,000  
Contingency   $  -  
Pre-Finance Project Cost   $ 28,626,900  
Capitalized Interest   $ 2,947,500  
Brokerage and Restructuring Fees   $ 866,667  
Capital Sourcing Fees and Lender Origination Issuance Fees   $ 544,928  
Financing Cost   $ 4,359,095  
Total Project Cost   $ 32,985,995  

 

 

Source of Funds:

 

Sources of Funds            
Senior Debt   $ 23,090,196       70.0 %
Subordinate Debt   $ 7,256,919       22.0 %
Holdco Equity Note 2   $ 2,638,880       8.0 %
Total Source of Funds   $ 32,985,995       100 %

 

Note 2 – Offering Proceeds will be used to fund Holdco Equity, which typically represents 8% of Total Project Cost. Prior to obtaining debt financing this equity is used by Holdco for acquisition deposits and legal costs. The remaining Ninety-Two (92.0%) of Total Project Costs would be financed by Senior Debt and Subordinate Debt representing Seventy (70.0%) Percent and Twenty-Two (22.0%) Percent of Total Project Costs respectively.

 

Hypothetical Community-Specific Company Property Capital Structure for Conversion Projects

 

The table below illustrates the indicative uses of invested proceeds for a hypothetical Conversion Project, recognizing that in actuality each particular Conversion Project is unique and would vary materially based on the factors mentioned herein above.

 

Conversion Projects are estimated to take 6 months to renovate and 12 months to attain stabilized occupancy due to a much lower monthly rental rate that offers access to a much larger need and income qualified population. The aggregate 18 month timeline and much reduced ($16.8mm) Pre-Finance Project cost compound to produce a dramatically lower ($2.8mm) Financing Cost relative to Development Projects and Acquisition Projects.

 

Use of Funds:

Pre-Finance Project Cost      
Hotel Purchase Price Note 3   $  7,500,000  
Renovation and Conversion Costs   $  4,500,000  
Architectural, Engineering, Permits & Impact Fees   $  1,390,000  
Computers, Furniture Fixtures & Equipment   $  450,000  
Developer Fees   $  877,262  
Project Management Fees   $  219,316  
Lease-up Startup Marketing Costs   $  324,000  
Working Capital to fund operations until reaching breakeven   $  1,503,458  
Contingency   $  -  
Pre-Finance Project Cost   $ 16,764,036  
Capitalized Interest   $  1,480,800  
Construction Contingency and Operating Expense Reserve   $  505,303  
Capital Sourcing Fees and Lender Origination Issuance Fees   $  795,110  
Financing Cost   $ 2,781,213  
Total Project Cost   $ 19,545,249  

 

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Source of Funds:

 

Sources of Funds            
Senior Debt   $ 13,681,674       70.0 %
Subordinate Debt   $ 4,299,955       22.0 %
Holdco Equity Note 3   $ 1,563,620       8.0 %
Total Source of Funds   $ 19,545,249       100 %

 

Note 3 – Offering Proceeds will be used to fund Holdco Equity, which typically represents 8% of Total Project Cost. Prior to obtaining debt financing this equity is used by Holdco for acquisition deposits and pre-construction costs for architectural design and any requisite approvals necessary for construction permitting. The remaining Ninety-Two (92.0%) of Total Project Costs would be financed by Senior Debt and Subordinate Debt representing Seventy (70.0%) Percent and Twenty-Two (22.0%) Percent of Total Project Costs respectively.

 

DESCRIPTION OF BUSINESS

 

Company Structure

 

Tuscan Gardens Capital Partners, LLC (the “Sponsor”) a Florida limited liability corporation, is the sole common shareholder (“Common Shareholder”) of Tuscan Gardens Senior Living Communities, Inc. (the “Company”), the issuer of the Preferred Shares offered by this Offering Circular. The Company is a newly formed Florida corporation that was organized on July 20, 2018. The Company currently has two authorized share classes: common voting shares with a $1.00 par value per share (“Common Shares”) and Series A Preferred Non-Voting Preferred Shares with $1,000.00 par value per share (“Preferred Shares”). 

 

The charts below show the typical relationship among the various affiliates and the Company (“Company Affiliates”) as of the date of this Offering Circular. The Company, with two authorized share classes as noted above, will own and control each wholly-owned community specific Holdco, which will in turn own and control each wholly-owned community specific Propco and Opco.

 

 

Company Structure (Chart I of 2) Tuscan Gardens Senior Living Communities, Inc. ("Company") or ("TGSLCI") Tuscan Gardens Capital Partners, LLC ("TGCP") 100% 100% Owned by Tuscan Gardens Management Group, LLC ("TGMG") Common Common (Voting) Shares Shares Tuscan Gardens Capital Partners, LLC ("TGCP") or "Sponsor" Receives all tax benefits and all Profits after Preferred Dividends and Special Dividends Preferred (Non-Voting) Shares Individual Qualified Investors Receive 8% Preferred Divid nds on Par Value +50% of Holdo Net Liquidity proceeds after r turn of capital, less Fund expenses ("Special Dividends") TGSLCI owns 100% of Hakim Preferred Member receives 8% Preferred Distribution Common Membership Units plus 100% Holdco Net Liquidity Proceeds Community Specific Holdco Tuscan Gardens of [Community Name] , LLC ("Holdco") Common Member TGSLCI Receives all profits after Preferred Member Distributio ns Manager of Holdco. Ooco. and Propco Tuscan Gardens Management Corporation ("TGMC") Preferred Member(s) Receive 8% Preferred Distribution + 100% of Net Liquidity Proceeds after return of capital, less Holdco expenses Tenant/Operator ("Opco") Community-Specific Opco Tuscan Gardens of [Community Name] Management Company, LLC 9%, Community Expenses include Commmunity Management fee (5% of revenue) Lessor ("Propco") Community-Specific Propco 1% Tuscan Gardens of [Community Name] Properties, LLC 99%

 

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Company Structure (Chart 2 of 2) Tuscan Gardens Senior Living Communities, Inc. ("Company") or ("TGSLCI") Asset Manager Tuscan Gardens Senior Living Communities Asset Manager, LLC ("Asset Manager") Common (Voting) Shares Owned 99% by TGMG and I% by Tuscan Gardens Management Corporation ("TGMC") Tuscan Gardens Capital Partners, LLC ("TGCP") or "Sponsor" Earns Asset Management Fee on Gross Assets under Management Receives all tax benefits and all Profits after Preferred Dividends and Special Dividends Advisor Tuscan Gardens Advisors, LLC ("Advisor") Earns Origination, Acquisition, and Disposition Fees Preferred (Non-Voting) Shares Owned 99% by TGMG and I% by Tuscan Gardens Management Corporation ("TGMC") Individual Qualified Investors Receive 8% Preferred Divid nds on Par Value Placement Agents +50% ofHoldo Net Liquidity proceeds oiler r turn of capital, less Fund expenses ("Special Dividends"L_, Affiliated and Non-Affiliated Entities and Individuals Earn Placement, Marketing Support, and Dealer Manager Fees TGSLCI owns 100% of Holdco Preferred Member receives 8% Preferred Distributio Common Membership Units plus 100% Holdco Net Liquidity Proceeds Community Developer Entities Tuscan Gardens of [Community Name] Development Company, LLC ("Devco") Community Specif c Holdco 99% Owned by TGMG, 1% by TGDC Tuscan Gardens of [Community Name] , LLC ("Holdco") Earns Development Fee Common Member TGSLCI Receives all profits after Preferred Member Distributions Preferred Member(s) Receive 8% Preferred Distribution + 100% of Net Liquidity Proceeds after return of capital, less Holdco expenses Tenant/Operator ("Opeo") Community-Specific Opco Tuscan Gardens of [Community Name] Management Company, LLC Community Expenses include Commmunity Management fee (5 frevenue) Lessor ("Promo") Community-Specific Propco Tuscan Gardens of [Community Name] Properties, LLC

 

 

Management and Company Affiliates’ Roles in Business Operations

 

Company Management will be making the business and management decisions for the Company based on the recommendations of an affiliate entity, Tuscan Gardens Advisor, LLC (“Advisor”). The ongoing operation of Company Properties will be overseen by an affiliate entity, Tuscan Gardens Senior Living Communities Asset Management, LLC (“Asset Manager”). The Asset Manager and Advisor are both Florida limited liability companies.

 

Tuscan Gardens Management Corporation (the “Management Corporation”), an affiliate entity is the manager of the Asset Manager and the manager of the Advisor and will be making the business decisions for the Asset Manager and Advisor. 

 

Tuscan Gardens Management Group, LLC is the beneficial owner of Tuscan Gardens Capital Partners, LLC (“TGCP”) and Tuscan Gardens of [Community Name] Capital Partners, LLC ("TGCNPC"), which will be the holders of Company and Holdco common equity respectively.

 

Additionally, the Company relies upon dedicated, affiliate community specific development entities (“Devco”) to achieve on-time, on-budget completion of each Company Property it develops.

 

For a more detailed explanation of Company Affiliates’ roles in the Company’s business operations, please refer to “Certain Relationships and Related Party Transactions” section.

 

Company Affiliates’ Current Ownership Interests in Senior Living Facilities

 

Company Affiliates have ownership interests in a variety of senior living facilities that are more fully outlined below. Other than what is disclosed below, individual members of the Company’s Management have no prior involvement with any programs as identified by Item 8 of Industry Guide 5, which defines a program as a three phase investment fund or a syndication involving (i) an offering or organization phase in which “the sponsor (who also serves as promoter and, later, general partner) organizes and registers the offering;” (ii) a second “operational phase of the program which commences with the acquisition of properties;” and (iii) a third phase in which “depending on the investment objectives of the program, the program is ‘completed’ as the partnerships are liquidated and wound down.”

 

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While none of the Company’s officers, directors, or affiliates has sponsored a completed “program” as defined under the Guide, the Company has provided expanded disclosure under CF Disclosure Guidance Topic No. 6. outlining Management’s experience with prior programs with respect to Management’s ability to i) operate, develop, and acquire senior living communities, ii) raise capital, and iii) exercise real estate investment control, along with additional details describing the ownership structures, ownership percentages, and equity Company Management has raised for six senior living community transactions. The only prior program experience that our officers and directors as individuals and as a team have is at an “offering stage” for Tuscan Gardens of Venetia Bay, which is in lease-up, and Tuscan Gardens of Palm Coast, which has yet to commence operations; hence, inclusion of lease-up results would be confusing and potentially misleading to investors as it would not offer any predictive value to investment returns as neither of these properties has achieved stabilized occupancy or been liquidated.

 

The Company, however, has however provided narrative and references to existing reporting under the Municipal Securities Rulemaking Board (“MSRB”) Electronic Municipal Market Access (“EMMA”) website for both wholly-owned affiliates (Tuscan Gardens of Venetia Bay, Tuscan Gardens of Palm Coast, and Tuscan Gardens of Delray Beach) that have third party limited partners that have invested in preferred, non-voting preferred membership interests as well as minority-owned affiliate investment in the Living Well Lodges in order to provide potential investors with an improved understanding of the state of Management’s prior projects. The Company believes this disclosure is both sufficient and relevant, and any additional disclosure would be misleading and confusing to investors due to the inconclusive nature of Tuscan Gardens of Venetia Bay (still in lease-up), Tuscan Gardens of Palm Coast (yet to commence operations), Tuscan Gardens of Delray Beach (yet to commence operations), and Living Well Lodges (minority-owned) as part of a potential investor’s evaluation of an investment in the Company.

 

Summaries of these senior living facilities and prior programs follow below.

 

Tuscan Gardens of Delray Beach.

 

Wholly-owned affiliates of the Sponsor (“Sponsor Affiliates”) control the special purpose entities that own 100% of the voting, common membership interests in, and operate Tuscan Gardens of Delray Beach, LLC (“Delray”), an assisted living and memory care facility that commenced construction November 30, 2018 and is anticipated to open Q1 2020. Delray is a $58,207,545 project that consists of 138 units, including 88 assisted living units and 50 memory care units, and related common areas on property located on an approximately 7.57-acre site at the southwest corner of Frost Lane and Sims Road in Palm Beach County, Florida. The wholly-owned Sponsor Affiliates raised $6,368,828 in the form of non-voting, preferred membership interests from unaffiliated accredited investors which were in turn invested in non-voting, preferred membership interests in Delray. Tuscan Gardens of Delray Beach Capital Partners, LLC, a wholly-owned and controlled affiliate owns and controls 100% of the voting, common membership interests in Delray, the community-specific Holdco. Delray in turn is the sole investor that owns and controls 100% of the community-specific Opco and Propco. Debt financing for Delray in the amount of$51,450,000 was closed on November 30, 2018 in the form of Series 2018 Palm Beach County, Florida Revenue Bonds, and secured by a Master Trust Indenture recorded in the public records. As of November 30, 2018 the wholly-owned Sponsor Affiliates are in compliance with all financing arrangements for the facility. Delray utilizes the same design builder that is associated with other wholly-owned Sponsor Affiliate projects. Delray will be managed by Greenbrier Senior Living, the third-party community manager (“Community Manager”) that is associated with other wholly-owned Sponsor Affiliate projects. Details of this project are available on the Municipal Securities Rulemaking Board (“MSRB”) Electronic Municipal Market Access (“EMMA”) Website https://emma.msrb.org/IssueView/Details/ES391373

 

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Tuscan Gardens of Palm Coast.

 

Wholly-owned Sponsor Affiliates control the special purpose entities that own 100% of the voting, common membership interests in, and operate Tuscan Gardens of Palm Coast, LLC (“Palm Coast”), a $50,425,993 assisted living and memory care facility that was received its certificate of occupancy November 28, 2018 and received its license from AHCA on December 4, 2018, representing an on-time, on-budget construction completion in spite of Hurricane Irma, which made landfall in late August 2017 and delayed completion of Palm Coast by approximately twenty (20) days. Palm Coast consists of 130 units (and 166 beds), including 86 assisted living units comprising 110 licensed beds, 44 memory care units comprising 56 licensed beds, and related common areas on property to be located on an approximately 16-acre site at the southwest corner of Colbert Lane and Blare Drive in Palm Coast, Florida. The wholly-owned Sponsor Affiliates raised $7,700,000 in the form of non-voting, preferred membership interests from unaffiliated accredited investors which were in turn invested in non-voting, preferred membership interests in in Tuscan Gardens of Palm Coast Capital Partners, LLC, a wholly-owned and controlled affiliate which in turn owns and controls 100% of the voting, common membership interests in Palm Coast, the community-specific Holdco. Palm Coast in turn is the sole investor that owns and controls 100% of the community-specific Opco and Propco. Debt financing for Palm Coast in the amount of $43,775,000 was closed on June 1, 2017 in the form of Series 2017 Capital Trust Agency Revenue Bonds , and secured by a Master Trust Indenture recorded in the public records. As of November 30, 2018 the wholly-owned Sponsor Affiliates are in compliance with all financing arrangements for the facility. Palm Coast utilizes the same design builder that is associated with other wholly-owned Sponsor Affiliate projects. Palm Coast will be managed by Greenbrier Senior Living, the third-party community manager (“Community Manager”) that is associated with other wholly-owned Sponsor Affiliate projects. Details of this project are available on the Municipal Securities Rulemaking Board (“MSRB”) Electronic Municipal Market Access (“EMMA”) Website https://emma.msrb.org/IssueView/Details/ER380611

 

Tuscan Gardens of Venetia Bay.

 

Wholly-owned Sponsor Affiliates control the special purpose entities that own 100% of the voting, common membership interests in, and operate Tuscan Gardens of Venetia Bay, LLC (“Venetia Bay”), a $41,049,765 assisted living and memory care facility that opened in October 2016. Venetia Bay consists of 136 units, including 78 assisted living units comprising 90 licensed beds, 58 memory care units, and related common areas on property located at 841 Venetia Bay Boulevard, in the City of Venice, Sarasota County, Florida. The wholly-owned Sponsor Affiliates raised $6,400,000 in the form of non-voting, preferred membership interests from unaffiliated accredited investors which were in turn invested in non-voting, preferred membership interests in Tuscan Gardens of Venetia Bay Capital Partners, LLC, a wholly-owned and controlled affiliate which in turn owns and controls 100% of Venetia Bay, the community-specific Holdco. Venetia Bay in turn is the sole investor that owns and controls 100% of the community-specific Opco and Propco. Debt financing for Venetia Bay in the amount of $35,510,000 was closed on May 1, 2015 in the form of Series 2015 Capital Trust Agency Revenue Bonds, and secured by a Master Trust Indenture recorded in the public records.. As of November 30, 2018 the wholly-owned Sponsor Affiliates are in compliance with all financing arrangements for the facility. Construction for Venetia Bay was completed on schedule in September 2016, materially meeting its construction budget and utilizing the same general contractor that is associated with other wholly-owned Sponsor Affiliate projects. Venetia Bay received its license from the AHCA on October 24, 2016. As of November 30, 2018, 99 of the 136 units (housing 115 residents) at Venetia Bay are occupied. Venetia Bay is currently managed by Greenbrier Senior Living, the third-party community manager (“Community Manager”) that is associated with other wholly-owned Sponsor Affiliate projects. Details of this project are available on the Municipal Securities Rulemaking Board (“MSRB”) Electronic Municipal Market Access (“EMMA”) Website https://emma.msrb.org/IssueView/Details/EA357818

 

Living Well Lodges.

 

In December 2015, Living Well Lodges Capital Partners, LLC, a wholly-owned Sponsor Affiliate acquired a 15% passive investment interest (“LWL Investment”) in three additional senior living facilities as described below from unrelated sellers. The communities were constructed in 2011, 2012, and 2013, respectively. Each community used the proceeds of certain tax-exempt and taxable revenue bonds to provide a portion of the funds to acquire, construct, install, and equip those communities and therefore, each community is subject to affordability restrictions similar to the Project. At the time of purchase by the Company Affiliates, these communities were in financial distress and were in default of certain of their financial and operating covenants. The Company Affiliates led a $96,778,352 recapitalization through the tender and purchase of the outstanding bonds, and invested new capital comprised of a $65,955,000 secured bank loan and $23,124,669 from third party institutional investors in the form of preferred equity. Additionally, wholly-owned Sponsor Affiliates raised $7,698,683 in the form of non-voting, preferred membership interests from unaffiliated accredited investors which were in turn invested in non-voting, preferred membership interests in Living Well Lodges Capital Partners, LLC, the wholly-owned Sponsor Affiliate that holds the LWL Investment. The bondholders for these communities received principal payments in the amount of the original issue price of these revenue bonds plus accrued interest to the date of purchase. As of November 30, 2018 the Sponsor Affiliates are in compliance with all financing arrangements for the facility.

 

Osprey Lodge at Lakeview Crest.

 

Osprey Lodge at Lakeview Crest is a senior living community consisting of 76 assisted living units and related improvements and 48 memory care units and related improvements (the “Osprey Project”), located in Tavares, Lake County, Florida. The Osprey Project was completed and occupancy by residents began in September 2012. As of November 30, 2018, the Osprey Project has 116 total residents. The Osprey Project is currently managed by Allegro Senior Living. The Affiliates own a minority interest in the Osprey Project. The majority owner is a private equity firm and such firm exercises major decision making with respect to the Osprey Project. Details of this project is available on the Municipal Securities Rulemaking Board (“MSRB”) Electronic Municipal Market Access (“EMMA”) Website https://emma.msrb.org//IssueView/Details/ER342542

 

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Crane’s View Lodge.

 

Crane’s View Lodge is a senior living community consisting of 80 assisted living units and related improvements and 48 memory care units and related improvements (the “Crane’s View Project”), located in Clermont, Lake County, Florida. The Crane’s View Project was completed and occupancy by residents began in August 2014. As of November 30, 2018, the Crane’s View Project has 96 total residents. The Crane’s View Project is currently managed by Allegro Senior Living. The Affiliates own a minority interest in the Crane’s View Project. The majority owner is a private equity firm and such firm exercises major decision making with respect to the Crane’s View Project. Details of this project is available on the Municipal Securities Rulemaking Board (“MSRB”) Electronic Municipal Market Access (“EMMA”) Website https://emma.msrb.org/IssueView/Details/EP358747

 

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Stuart Lodge.

 

Stuart Lodge is a senior living community consisting of 95 assisted living units and related improvements located in Stuart, Martin County, Florida (the “Stuart Project”). The Stuart Project was completed and occupancy by residents began in June 2014. As of November 30, 2018, the Stuart Project has 98 total residents.. The Stuart Project is currently managed by American House Senior Living Communities. The Affiliates own a minority interest in the Stuart Project. The majority owner is a private equity firm and such firm exercises major decision making with respect to the Stuart Project. Details of this project is available on the Municipal Securities Rulemaking Board (“MSRB”) Electronic Municipal Market Access (“EMMA”) Website https://emma.msrb.org/IssueView/Details/EP360096

 

The prior performance of the Sponsor, Sponsor Affiliates, and their respective affiliated entities may not predict the future performance of the Company and its affiliated entities or the return on an investment in the Company or the Preferred Shares. Therefore, there is no assurance that the Company will achieve its investment objectives or that the Preferred Dividend and/or cash distributions will be paid to the holders of Preferred Shares.

 

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Typical Services Provided to Residents

 

The proceeds of this Offering are for the purpose of financing all or a portion of the costs of investing in entities that develop (“Development Projects”), acquire (“Acquisition Projects”), or convert other real estate properties including hotels (“Conversion Projects”) into senior living rental communities ranging from $15,000,000 to $100,000,000 per community, consisting of independent living, assisted living and/or memory care for approximately fifty (50) to two-hundred and fifty (250) residents (“Company Properties”). The Company’s primary focus for Development Projects will be on southeastern markets, and for purposes of Acquisition Projects and Conversion Projects will be on national markets, that it considers to have favorable risk-return characteristics. The Company, operating through wholly-owned special purpose entities (“SPE”) as real estate owner-operators, intends to create, operate and hold a portfolio of Company Properties on a long-term basis, approximating seven years, and ultimately dispose of them to generate revenue for the Company. The Company is not a registered broker-dealer, an investment adviser, or a funding platform.

 

The Assisted Living Units typically include a full bathroom and a kitchenette with a microwave, a refrigerator, and a sink. Independent Living Units typically contain the appointments of Assistant Living Units, plus a stove and oven. Memory Care Units typically include a full bathroom and furniture for storing clothing, dry food, and other personal effects. Each Independent Living Unit, Assisted Living Unit and Memory Care Unit typically include contain cable television, individually controlled heating and air conditioning systems and a closet. Washing and drying machines are typically provided on each floor for resident use.

 

Residents typically receive three meals a day in the dining room to resident of the Assisted Living Units, weekly linens and housekeeping service, medical transportation if appointments are scheduled, Wi-Fi service throughout the building, use of resident laundry facilities on each floor, and activity programs including shopping and recreational trips. Opco plans for additional charges for physician services, physical therapy, oxygen, medications, laboratory, medical equipment, and medical supplies and incontinence products. The staff in the Memory Care Units will typically carry smartphones to promptly communicate resident problems with a resident of a Memory Care Unit.

 

Assisted Living Units. The Assisted Living Units provide a level of care between Independent Living Units, which are more like multifamily apartments, and a skilled nursing facility. The Company typically provides residents with three meals a day, activities seven days a week, and individualized service plans as developed by the Community Manager’s staff. The Community Manager’s staff also typically provides assistance to persons who need occasional help with some or all of the following: dressing, self-care, and other activities of daily living, assistance in attending meals, increased assistance in housekeeping, and assistance with monitoring personal status, medication reminding, and cueing. Company Properties typically include licensed nurses on duty to provide limited, periodic nursing services. There is expected to be a nurse call system in each Assisted Living Unit, which alerts the nurse that the resident needs assistance. The following is a more detailed description of services expected to be provided to residents of the Assisted Living Units.

 

1)Personal Care Assistance

a)Bathing, grooming, and dressing
b)Toileting and incontinence care
c)Transferring and ambulation, one person assist. Resident must be capable to propel his or her own wheelchair.
d)Staff/services available 24-hours per day
e)Temporary or intermittent nursing services accessible 24-hours a day
f)Coordination of care with supplementary service providers
g)Supervision of mildly cognitively impaired focusing on abilities and preservation of dignity

 

2)Medication Assistance

a)Monitoring of residents who self-administer medications
b)Medication reminders and supervision
c)Medication administration (if permitted)
d)Disposal of medications
e)Coordination with family to help maintain medication supply

 

3)Meals and Nutrition

a)Three meals prepared and served daily
b)Supplemental snacks/beverages
c)Therapeutic diets (as allowed)
d)Registered dietitian consultation
e)Hydration program

 

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4)Life Enrichment Program

a)Lifestyle programming designed to include daily routines
b)Health maintenance and promotion programs
c)Socialization programs
d)Choice and Empowerment practices
e)Coping strategies
f)Cognitive enhancement programs
g)End of life care strategies
h)Self-actualization interventions
i)Depression Management
j)Therapeutic Recreation
k)Social Services
l)Transportation to Medical Appointments

 

5)Housekeeping/Maintenance

a)Weekly cleaning of apartment
b)Laundering of personal laundry (additional fee)
c)Weekly linen change
d)Apartment and community maintenance

 

6)Security/Safety

a)Fire and smoke detection, notification and containment systems
b)Staff accessible 24-hours a day, trained in emergency response procedures
c)Risk Management program
d)Fall prevention strategies
e)Door alarms, monitoring, and secured access
f)Hazard Management

 

Memory Care Units. The Memory Care portion of the Project typically consists of individual neighborhoods, each with a dining area, a designated activity and recreational space, and a country kitchen where residents may also prepare their own light meals and snacks. The planned Memory Care Units are designed to offer a safe environment as well as an activity focused therapeutic program for residents suffering from dementia, Alzheimer’s disease, and other related disorders.

 

Memory Care residents may exhibit symptoms of mild to severe cognitive impairment caused by Alzheimer’s disease, Parkinson’s Disease, Multi-infarct Dementia, Pick’s Disease, Lewy Body Disease, or other conditions that may cause dementia. Residents in the Memory Care Units will typically exhibit at least two symptoms that include, but are not limited to: memory loss, confusion, disorientation, emotional outbursts, depression, loss of social restraint, wandering, loss of control of intellectual functioning or body movements, and loss of speech or communicative ability. Residents in the Memory Care Units are expected to need periodic assistance with bathing, dressing, grooming, oral care, toileting or incontinence, or reminders to help prevent incontinence, medication supervision/administration, movement/transferring/ambulation, routine skin care, temporary, intermittent, or unscheduled nursing care, meals and/or cueing of eating, behavior management, socialization, participation in purposeful activities, and supervision for maintaining safety.

 

The services provided in the Memory Care Units are typically similar to those that are provided in the Assisted Living Units but offer specific therapeutic interventions to meet the needs of residents with dementia. The goal of the Project will be to maintain the resident’s independence, function ability, and personhood for as long as possible. The following is a more detailed description of services the Company typically provides its Memory Care residents.

 

1)Personal Care Assistance
a)Bathing, dressing, grooming, transfers and mobility, toileting, and incontinence care
b)Temporary or intermittent nursing care and coordination of services
c)Monitoring of residents’ medical condition
d)Staff and services available 24-hours a day
e)Supervision of the cognitively impaired focusing on abilities, preservation of dignity, and natural life flow

 

2)Medication Assistance
a)Medication Administration
b)Observation and monitoring of resident’s conditions
c)Disposal of medications
d)Coordination with family to help maintain medication supply

 

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3)Meals and Nutrition
a)Modified Food to Meet Needs
b)Family Style Dining
c)Therapeutic Nutrition and Hydration
d)Dietitian Counseling

 

4)Life Enrichment Program
a)24-hour daily individualized schedule
b)Health maintenance and promotion
c)Socialization environment
d)Choice and empowerment practices
e)Person-centered care
f)Coping strategies
g)Activity-focused program
h)Validation therapy
i)End of life care strategies
j)Therapeutic recreation designed for dementia residents
k)Social Services
l)Natural life flow environment
m)Outdoor therapeutic/healing gardens
n)Transportation to medical appointments

 

5)Housekeeping/Maintenance
a)Weekly cleaning of apartment
b)Daily bed-making
c)Laundering of personal laundry
d)Weekly linen change
e)Apartment and community maintenance

 

6)Security/Safety
a)Staff available 24-hours a day, trained in emergency response procedures
b)Risk management program
c)Fall prevention strategies
d)Door alarms, monitoring, and secured access
e)Hazard management
f)Exposure control plan
g)Fire and smoke detection, notification, and containment systems

 

The pricing for the Memory Care Units is planned to be all-inclusive with no additional level-of-care expenses even when residents may require more care. 

 

Competition

 

The senior living real estate industry is highly competitive on an international, national and regional level. The Company’s projects face competition from REITs, institutional pension plans, and other public and private real estate companies and private real estate investors for the acquisition of properties, development of properties, and for raising capital to make these acquisitions. Competition may prevent the Company from acquiring desirable properties or increase the price the Company must pay for real estate. If the Company pays higher prices for properties, investors may experience a lower return on investment and be less inclined to invest in the Company’s next project which may decrease its profitability. Increased competition for properties may also preclude the Company from acquiring properties that would generate the most attractive returns to investors or may reduce the number of properties the Company could acquire, which could have an adverse effect on its business.

 

Regulation

 

The Company’s business practices and projects, and those of the Sponsor Affiliates are subject to regulation by numerous federal, state and local authorities including but not limited to the following:

 

U.S. and State Laws Regulating the Licensure of Senior Housing Communities

 

State regulations require government approval for the necessary authorizations and permits to open and accept assisted living and memory care residents. Regulators regularly inspect facilities to ensure applicable standards are being maintained for the welfare of residents. Although the Sponsor has been successful in receiving and maintaining licensure for its Sponsor Affiliate facilities, there can be no assurance that such approvals will be obtained in a timely fashion or that regulatory changes which may result in additional costs, would not be occur.

 

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Based on their inspections, regulators may revoke or suspend a license for a number of reasons, including: (a) an intentional or negligent act seriously affecting a facility resident’s health, safety or welfare; (b) misappropriation or conversion of resident property; (c) a determination by the regulator that the project owner lacks the financial ability to provide continuing adequate care to residents; or (d) a licensee’s failure during re-licensure to meet minimum licensing standards or applicable rules. Furthermore, regulators may seek an injunction in various circumstances, including to enforce applicable requirements against an assisted living community when a violation has not been corrected by the imposition of administrative fines or when the violation materially affects resident health, safety or welfare.

 

U.S. and State Securities Laws

 

The Preferred Shares offered hereby are “securities,” as defined in the Securities Act and under state securities laws. The Securities Act provides, among other things, that no sale of any securities may be made except pursuant to a registration statement that has been filed with the SEC, and has become effective, unless such sale (or the security sold) is specifically exempted from registration. State securities laws have analogous provisions.

 

The Preferred Shares being offered hereby have not been registered under the Securities Act. Neither the SEC nor any state securities commission or regulatory authority approved, passed upon or endorsed the merits of this Offering. The Offering and proposed sale of the Preferred Shares described herein shall be made pursuant to an exemption from registration with the SEC pursuant to Regulation A and shall only be offered in states in which the registration of the offer and sale of the Preferred Shares has been declared effective.

 

Environmental Regulations

 

Federal, state and local laws and regulations impose environmental controls, disclosure rules and zoning restrictions that directly impact the management, development, use, and/or sale of real estate. Such laws and regulations tend to discourage sales and leasing activities with respect to some properties, and may therefore adversely affect the Company specifically, and the real estate industry in general. The Company’s failure to uncover and adequately protect against environmental issues in connection with the target purchase of real estate may subject the Company to liability as buyer of such property or asset. Environmental laws and regulations impose liability on current or previous real property owners or operators for the cost of investigating, cleaning up or removing contamination caused by hazardous or toxic substances at the property. The Company may be held liable for such costs as a subsequent owner of such property. Liability can be imposed even if the original actions were legal and the Company had no knowledge of, or were not responsible for, the presence of the hazardous or toxic substances. Further, the Company may also be held responsible for the entire payment of the liability if it is subject to joint and several liability and the other responsible parties are unable to pay. The Company may also be liable under common law to third parties for damages and injuries resulting from environmental contamination emanating from the site, including the presence of asbestos containing materials. Insurance for such matters may not be available. Additionally, new or modified environmental regulations could develop in a manner that could adversely affect the Company.

 

Certain laws and regulations govern the removal, encapsulation or disturbance of asbestos containing materials (“ACMs”), when those materials are in poor condition or in the event of building renovation or demolition, impose certain worker protection and notification requirements and govern emissions of and exposure to asbestos fibers in the air. These laws may also impose liability for a release of ACMs and may enable third parties to seek recovery against the Company for personal injury associated with ACMs.

 

Americans with Disabilities Act

 

Under the ADA, all places of public accommodation are required to meet certain federal requirements related to access and use by disabled persons. The Company’s projects must comply with the ADA to the extent that they are considered “public accommodations” as defined by the ADA. The ADA may require removal of structural barriers to access by persons with disabilities in public areas of properties where such removal is readily achievable. The Company believes that its projects are or will be in substantial compliance with the ADA and that it will not be required to make substantial capital expenditures to address the requirements of the ADA after completion of the redevelopment. In addition, it will continue to assess compliance with the ADA and to make alterations to the Company’s projects as required.

 

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Other Laws and Regulations

 

The Company is required to operate its projects in compliance with fire and safety regulations, building codes and other land use regulations, as they may be adopted by governmental agencies and bodies and become applicable to the Company’s projects. The Company is also required to comply with labor laws and laws which prohibit unfair and deceptive business practices with consumers. The Company’s projects will also be subject to a variety of local, state and federal statutes, ordinances, rules and regulations concerning fair housing and real estate transactions in general. These laws may result in delays if the Company’s projects are re-developed. Additionally, these laws might cause the Company to incur substantial compliance and other costs. The Company may be required to make substantial capital expenditures to comply with those requirements and these expenditures could have a material adverse effect on its ability to pay dividends to shareholders at historical levels or at all.

 

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MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

 

The Company expects to commence operations as soon as practicable after the information statement, of which this Offering Circular forms a part, has been qualified by the SEC. As the Company has not yet commenced operations, it has no employees that receive compensation, and has no Results from Operations for which it can provide Management Discussion and Analysis or Trend Information.

 

As the Company has insufficient liquidity and capital reserves to commence operations, it will rely entirely on the proceeds from this Offering for the liquidity and capital reserves necessary to commence operations.

 

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PLAN OF OPERATIONS

 

Overview

 

The Company was organized to invest in wholly-owned subsidiaries that develop (“Development Projects”), acquire (“Acquisition Projects”), or convert other real estate properties including hotels (“Conversion Projects”) into senior living rental communities ranging from $15,000,000 to $100,000,000 per community, consisting of independent living, assisted living and/or memory care for approximately fifty (50) to two-hundred and fifty (250) residents (“Company Properties”). The Company’s primary focus for purposes of Development Projects will be on southeastern markets, and for purposes of Acquisition Projects and Conversion Projects will be on national markets, that it considers to have favorable risk-return characteristics. The Company, operating through wholly-owned special purpose entities (“SPE”) as real estate owner-operators, intends to create, operate and hold a portfolio of Company Properties on a long-term basis, approximating seven years, and ultimately dispose of them to generate revenue for the Company. The Company is not a registered broker-dealer, an investment adviser, or a funding platform.

 

In order to achieve this objective, the Company regularly reviews opportunities for the acquisition or development of Company Properties.

 

Project Evaluation Criteria

 

The Company’s development focus on southeastern domestic markets, and acquisition and conversion focus on national markets, where demographics and competitive supply, offer the potential to achieve attractive returns. The Company intends to identify opportunities that financially benefit from the favorable demographic shift associated with the “aging of America”.

 

The Company’s diligence includes an evaluation of a potential project’s desirability based on: (1) overall market depth for senior living communities based on the age, need, and income qualified population in the property’s primary market area, (2) current and future market penetration based on current and forecast supply relative to the market depth, (3) household income and average home sale prices as these are the primary sources from which residents of Company Properties fund their living expenses, (4) five year forecast growth rate for senior population, and (5) the market position of the potential project relative to competitor price and quality. Once a project passes the Company’s preliminary due diligence, financial risks and returns are modeled to determine if the project is able to meet its financial projections and achieve Company return targets. This includes stress testing and sensitivity analyses on projected cash flows using financial models to gauge the project’s financial strength, rate sensitivity, occupancy and lease-up sensitivity, and exit capitalization rate sensitivity.

 

Other project evaluation criteria include the following: 

 

·Geography: Urban and suburban neighborhood throughout i) the southeastern United States for purposes of development, and ii) the United States for purposes of acquisition and conversion.

 

·Investment target size (per project): Senior living rental communities ranging from $15,000,000 to $100,000,000 per community, consisting of independent living, assisted living and/or memory care for approximately fifty (50) to two-hundred and fifty (250) residents.

 

·Maturity: Maturity is flexible and may range between three and seven years, at which point the ownership interest is intended to be liquidated (equity) or the principal is expected to be repaid in full (debt). In some cases, equity products may include contractual mechanisms in order to facilitate an earlier exit for investors.

 

·Returns: The Company will seek to pursue Development Projects, Acquisition Projects, and Conversion Projects that have the potential to provide ongoing income to investors in the Preferred Shares, paid or accrued monthly (“Preferred Dividend”), plus potential capital appreciation through additional dividends (“Special Dividends”) based on fifty (50%) percent participation in the net proceeds generated by the Company from the Holdco disposition of Company Properties. However, as the Offering is a blind pool and the Company has no track record, there can be no guarantee that such returns can or will be achieved.

 

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In order to achieve targeted returns, the Company typically seeks to develop to a stabilized unleveraged yield of 250 basis points greater than underwritten exit capitalization rates, acquire properties with an underwritten stabilized net operating income at anticipated disposition of 200 basis points greater than underwritten exit capitalization rates, and convert other real estate properties including hotels with an underwritten stabilized net operating income at anticipated disposition of 225 basis points greater than underwritten exit capitalization rates.

 

Expansion of Company Focus to include the Mid-Market in Addition to the Class A Luxury Segment

 

The Company intends to build upon Management’s experience developing, acquiring, and operating Sponsor Affiliate luxury Clas A senior living communities, by continuing to focus on the development of luxury, Class A senior living communities in southeastern markets, as well as expanding on a national basis into the underserved mid-market segment that offers greater affordability in response to an emerging social crisis for aging Americans unable to afford $5,000 or more for senior living communities.

 

This growing, underserved mid-market segment known as “the missing middle” represents a demographic segment that can neither afford Class A luxury senior living communities, nor is eligible for government income-based subsidies that are available to residents of low-income senior living communities. By pursuing cost-effective acquisitions, and conversions of other real estate properties including hotels for adaptive reuse into senior living rental communities to serve this market segment on a national basis, Management believes it can provide a compelling, differentiated offering to residents that i) satisfies their need for safety and care, ii) provides a positive resident experience at more affordable levels than the development or acquisition of purpose-built senior living communities, and iii) achieves operating margins that are consistent with Sponsor Affiliate properties through reduced marketing costs due to shorter lease-up periods driven by favorable demand elasticity at lower monthly rates.

 

Leverage of Strategic Relationships

 

The Sponsor, Asset Manager and Advisor have forged numerous strategic relationships with market leaders in the senior living arena that will be engaged by the Company as appropriate on a community specific basis. This group of highly-qualified, key strategic vendors includes but is not limited to, the following:

 

(i)Bessolo Design Group. Bessolo Design Group is the Architect for Tuscan Gardens of Venetia Bay. Its services included architectural design of the memory care and assisted living facilities, as well as the design of the fountains, landscape and irrigation, the low voltage system, Security, Cable Television, Computer Audiovisual system, as well as mechanical, plumbing and structural engineering.

 

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(ii)Baker Barrios Architects. Baker Barrios Architects is among the most innovative commercial architecture and design firms in the Southeast. The company has been in business over two decades and has offices in downtown Orlando. The company provides architecture, interior design, planning, landscape architecture, brand strategy and communications, and structural engineering. The company is currently providing services with respect to Tuscan Gardens of Palm Coast.

 

(iii)5G Studio Collaborative. 5G Studio Collaborative is the architecture firm for Tuscan Gardens of Delray Beach. The company was founded in 2005 to expand the parameters of design beyond traditional architectural practice. With projects in over 10 different countries, the company provides an array of design services.

 

(iv)Mosaic Design Studio. Mosaic Design Studio specializes in design projects related to senior living and independent care communities. Mosaic developed its own line of furniture especially for these types of facilities and designs interiors to suit the needs of the residents and to positively influence all who use the space. Mosaic designed the furniture plans and decorative lighting plans for the Tuscan Gardens of Venetia Bay Welcome Center and the Office.

 

(v)Greenbrier Senior Living. Greenbrier Senior Living, LLC, is a Texas limited liability company that provides management of the operations and marketing of each community pursuant to a management agreement. Greenbrier and its affiliates have been involved for twenty years in the planning, development and marketing of more than $2 billion of senior living communities across the country with project and operating budgets ranging from $10 million to more than $200 million. Greenbrier is based in Dallas, Texas and maintains regional offices throughout the United States. Greenbrier currently serves as the managing operator of the Tuscan Gardens of Venetia Bay and Tuscan Gardens of Palm Coast.

 

(vi)Core Construction Services. Core Construction Services provides the high-quality services of a nationwide leader while using a local workforce to create customized buildings. The company constructed Crane’s View Lodge and is the contractor for Tuscan Gardens of Venetia Bay, Tuscan Gardens of Palm Coast, and Tuscan Gardens of Forest Acres.

 

(vii)SageAge Strategies. SageAge Strategies is a senior living marketing and business consulting firm. Having been in business for 30 years, it has produced results for more than 400 retirement communities and senior service providers. As a result, SageAge has received numerous national and international honors for excellence and achievement from a variety of organizations. Its services include consulting, market research, creative, technology, online marketing, and media and direct marketing. SageAge is currently providing strategic branding, marketing, public relations, online marketing and sales management support services for affiliates of the Company.

 

(viii)

Oracle Healthcare Property Advisers. Oracle Healthcare Property Advisors provides objective and reliable appraisals and market studies to the seniors housing and healthcare real estate industry. Its market feasibility services are used by the Company for market selection, competitive analysis, rate/pricing determination, and appraisals.

 

Operation of Company Properties

 

The Company’s Management will rely on the Advisor’s recommendations for the acquisition and purchase of Company Properties. The Asset Manager will oversee regional third-party community managers (“Community Manager”) such as Greenbrier Senior Living to ensure underwritten operational quality and financial results are achieved.

 

In order to assure the successful operation of Company Properties, the Asset Manager, in its capacity as asset manager for the Company, typically focuses on the following areas on an ongoing basis following licensure of developed properties or acquisition of acquired properties:

 

1.Immediately identify issues and prioritize areas to improve overall performance of the properties

 

2.Deploy three-pronged transformation plan (staff evaluation, resident experience, marketing effectiveness) through full-time Regional Director(s) of Operations working with the third-party community manager

 

3.Ongoing data-driven performance improvement though Key Performance Indicator (“KPI”) management systems to ensure effectiveness of staff, resident satisfaction, and marketing performance.

 

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Specific Improvement Initiatives include:

 

Staffing Reorganization

1.Evaluate Current Staff and Facility Needs
a.evaluate current levels of staffing and augment, reduce, replace as necessary
b.Execution bolstered by a dedicated, full-time Regional Director of Operations reporting to Asset Manager

 

2.Update Staff Processes and Protocols
a.Regular on-site meetings to align and update staff on the needs of the facility
b.Monthly review of menus, proposed activities, community association suggestions, and audit of Roundtable Resident Synopsis
c.Quarterly employee review process
d.Daily Care Incident Reporting Reviews
e.Weekly engagement with TG corporate office including consistent TG management presence ,daily review of Flash Reports and weekly on-site sales and marketing reviews

 

3.Organizational Development
a.Annual market compensation review and annual calibration
b.New associate orientation programming
c.Quarterly associate training programs
d.Performance agreements and evaluations
e.Re-training all senior leadership on clinical acuity assessment, empathy training, and hospitality protocols to ensure an optimum balance of care delivery and resident experience

 

4.Differentiate through Resident Experience
a.Research-Based Memory Care
b.Implement research-based proprietary memory care programming and add a dedicated MC Director and MC Program Manager
c.Ongoing Review of Level of Care
d.Ongoing conversations (vs. periodic evaluations) with residents and their adult children as well as assessments to identify changes in level of care and properly charge for services to eliminate revenue leakage and management risk
e.Improve medication regimens, reduce falls, evaluate acuity levels, and reduce recidivism rate to hospitals and rehabilitation facilities
f.Improve Programming and Dietary Offerings
g.Implement resident satisfaction (and adult children decision makers) assessments to generate leading-indicators in areas that need management attention
h.Increase care service offerings to include hospice and respite
i.Incorporate exceptional programming such as monthly food-based experiences and field trips to dinner, theaters or other venues, all day dining, lifelong learning opportunities, yoga, performing arts etc. (constantly evolving based on each community residents’ preferences)
j.Leverage local community for monthly events such as fine arts exhibit, recitals, piano recitals, car shows
k.Highlight resident stories for community engagement and involvement
l.Incorporate monthly community town hall meetings with local residents, referral network, and key stakeholders (i.e. medical community and caregivers) to enhance market presence and receive feedback on opportunities for improvement

 

5.One-time Capex – typically $200,000 per acquired property will be required to rejuvenate the assets. A more detailed assessment will be made by Mosaic Ltd., a recognized FF&E and interior design leader in the senior living space

 

6.Marketing Strategy
a.Branded Event Marketing
b.Incorporate aggressive branded event marketing
c.Monthly events directed to community referral sources (i.e. medical community and caregivers)
d.Monthly events directed to local residents, prospects, Power of Attorney (POA) and family members
e.Associate and Resident Referral Program
f.Implement associate and resident referral program
g.Monthly associate and resident community referral award event
h.$1,000 cash referral bonus (doubles as a resident activity of interest)
i.Community Networking
j.Realtor Targeting

 

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7.Other Improvements
a.Revenue Enhancement
i.Additional focus on increasing and expanding revenue from the resident and associate population
ii.Accelerate collection of accounts and implement auto-pay with all past-due residents
iii.Suite Configuration
iv.Review pricing strategy based on market demand/occupancy for each suite type (e.g. 1 BDR vs. 2 BDR)
v.Address “Friendship Suite” rate strategy (combining residents into semi-private rooms) immediately to shift these deeply discounted rates (up to 48% off published rates) to 20% premiums
b.Synergies
i.As the Company continues to scale its platform, it will benefit from synergies from management systems, Regional Director(s) of Operations and outside vendors
1.Use of regional vendors to enhance resident experience (e.g. farm to table) and referrals
2.Staff cross training, interim coverage (holidays, turnover) and best practice pollination
3.Retention though a culture of family feel vs. institutional employment
c.Management Systems
i.Additional clinical, CRM, and accounting systems assessment will be provided as part of the detailed due diligence plan to be prepared with Greenbrier, Sage Age, and the Asset Manager prior to closing

 

Financial Performance of Company Properties

 

The Company targets developments and acquisitions that generate a leveraged internal rate of return (“IRR”) of 20% or more based on underwritten occupancy of 93%, annual rate growth (3%), and operating margins (35-36%). Based on market demand and competitiveness of each Company Property, the Company incentives its regional community manager to outperform against underwriting and is bonused on the achievement of stretch goals typically set at 95%+ occupancy, and 4-6% annual rate growth, and target operating margins of 40%.

 

Risk Analysis

 

Prior to proceeding to acquire or develop a potential property, the Company reviews the following potential risks:

 

1.Contingencies: Environmental, Zoning, Title, and Survey contingencies. Full review financial of performance through rent rolls etc.
2.Property Condition Report: A PCR is typically ordered as part of due diligence.
3.FF&E Improvements: assess and recommend improvements to the FF&E.
4.Financing: A financing contingency for each transaction is typically provided.
5.Appraisal: Typically required by lender, provides additional comfort to underwriting.
6.Supply Risk – based on increasing land prices and entitlement challenges in the PMA and vicinity, the risk of a new entrant coming in at a market basis and seeking development returns would result in rates well in excess of those currently forecast for the next five years.
7.Occupancy Risks: Average length of stay, departures per month due to natural causes.
8.Rental Rate Risk: Market occupancy and rates may result in short-term pricing premiums or challenges at any given time.
9.Interest Rate Risk: If there is a significant rise in LIBOR rates the returns could be lower than projected.
10.Execution Risk: project specific concerns, if any.

 

Ongoing Operations

 

Based on the foregoing, the Company intends to operate Company Properties through a Community Manager in a manner which is consistent with Sponsor and Sponsor Affilates’ operation of Tuscan Gardens at Venetia Bay. Details of this project are available on the Municipal Securities Rulemaking Board (“MSRB”) Electronic Municipal Market Access (“EMMA”) Website https://emma.msrb.org/IssueView/Details/EA357818

 

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Notwithstanding this objective, the prior performance of the Sponsor, Sponsor Affiliates, and their respective affiliated entities may not predict the future performance of the Company and its affiliated entities or the return on an investment in the Preferred Shares. Therefore, there is no assurance that the Company will achieve its investment objectives or that the Preferred Dividend and/or cash distributions will be paid to the holders of Preferred Shares.

 

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DIRECTORS, EXECUTIVE OFFICERS AND SIGNIFICANT EMPLOYEES

 

Below the Company provides information regarding the executive officers and significant employees of the Company. The Company does not have any other employees at this time as it relies on Company Affiliates to provide Asset Management under the Asset Management Agreement, Advisory Services under the Advisory Agreement, and other Company Affiliates to provide all administrative and other services to the Company at fair market value.

 

(a)Directors, Executive Officers and Significant Employees of the Company

 

Name   Age   Title   Term of OfficeNote 1 Approximate Hours Per Week
Laurence J. Pino, Esq.   67   Director, President and Chief Executive Officer  

July 2018

20
William N. Johnston   57   Director, Secretary Treasurer, Chief Investment Officer and Chief Financial Officer  

July 2018

20
Christopher P. Young   60   Director, Chief Operating Officer  

July 2018

20
Charles C. Smith   71   Chief Development Officer and Director  

July 2018

20
Sean D. Casterline   46   Corporate Equity Officer and Director  

July 2018

10

 

Note 1 – The Company expects each Executive Officer to continue in the same capacity as their predecessor Company Affiliate roles outlined below, not all Company Executive Officers will be focused on all aspects of the Company’s business initiatives, but will rather focus on specific business initiatives in accordance with their area(s) of expertise.

 

Prior service with a Tuscan Gardens Management Corporation, a Company Affiliate:

 

Name   Age   Title   Term of Office
Laurence J. Pino, Esq.   67   Chief Executive Officer   January 2012
William N. Johnston   57   Chief Investment Officer and Chief Financial Officer   January 2015
Christopher P. Young   60   Chief Operating Officer   January 2015
Charles C. Smith   71   Chief Development Officer   November 2012
Sean D. Casterline   46   Corporate Equity Officer   November 2012

 

(b)Family relationships.

 

None

 

(c)Business experience.

 

The Company’s Management, each of which reside in Orlando, Florida, has experience in the finance, development and acquisition of senior living projects, commercial mixed use projects, shopping centers, office buildings, and single and multi-family residential properties. Management has also been involved in the formation, development, and growth of companies in the healthcare, finance, and insurance industries. The following are Management’s biographies:

 

Laurence J. Pino, Esquire, Chairman and CEO. Prior to founding the company, Mr. Pino was the Founder and CEO of a private equity development and management company focused on starting, developing and growing business enterprises. He has served as Chairman or Board Member for many of those investments. By background, Mr. Pino is a commercial litigation attorney specializing in business and investment law. He graduated with a Bachelor’s Degree from the University of Notre Dame and a J.D. degree from New York University Law School. He has received Certificates of Study from the University of Madrid, L’Alliance Francaise in Paris, and the Centro Linquistico Italiano Dante Alighieri in Rome. Subsequently, he was admitted to practice law and is in good standing as a member of the bars in Florida, New York, and California, as well as in various federal courts across the country. Mr. Pino currently teaches a course as an Adjunct Professor on Rapid Enterprise Development for the Hamilton Holt School at Rollins College in Winter Park, Florida, and he is pursuing a Doctorate in Business Administration at the Warrington College of Business at the University of Florida. In the last thirty years, Mr. Pino has conducted some 5,500 speaking engagements, speaking to over one million people and appearing on 140 radio and television talk shows. Mr. Pino has authored twelve books including among others: Finding Your Niche (Berkley-Putnam Publishing), Finding Your E-Niche, The Desktop Lawyer, Cash In On Cash Flow (Simon & Schuster), and Reinventing Senior Living: The Art of Living With Purpose, Passion & Joy (Impact Publishing). He also co-authored Morphing: Radical Evolution for Revolutionary Times with Dr. Craig McAllaster, retired Acting President Emeritus of Rollins College.

 

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William N. Johnston, Chief Investment Officer and Chief Financial Officer. In his role, Mr. Johnston provides financial oversight of the Company, and is responsible for institutional investor relations and capital allocation. Over the course of his career, Mr. Johnston has raised and invested more than $1.5 billion of capital in various forms ranging from private equity to structured debt and has multi-sector institutional real estate finance, development, and operations experience. Mr. Johnston’s domestic and international leadership background leading high-growth teams as a strategic partner to Fortune 50 companies brings relevant growth expertise to the Sponsor. Prior to joining the Sponsor, Mr. Johnston served as Chief Investment Officer at Unicorp National Developments, a leading developer of retail, mixed use, and multifamily properties, EVP Corporate Development and Interim Chief Operating Officer at Digital Risk, LLC, where he delivered over $11million of annual operating margin growth through operational improvements and supported the 2012 sale for $175 billion to Mphasis Ltd., (an HP Company), and Chief Operating Officer at Liberty Investment Properties, Inc., where he led national hotel development programs with Goldman Sachs and Angelo Gordon. Mr. Johnston started his public accounting career as a financial modeling specialist and IT systems specialist at PriceWaterhouseCoopers, LLC. He has held various global corporate finance roles which include North American Chief Financial Officer, Managing Director of Global Financial Services and head of North American Real Estate for London-based multinational Tibbett & Britten Group, PLC through the growth of its North American operation from a startup to over 11,000 team members handling $35 billion of goods annually. Mr. Johnston holds an Executive MBA from Harvard University, Master of Accountancy, and Bachelor of Commerce degrees from McGill University. He is a Certified Public Accountant (Illinois) and Chartered Professional Accountant (Canada).

 

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Christopher P. Young, Chief Operating Officer. Mr. Young is responsible for the on-time, on-budget delivery of the Company’s development projects and day to day operations. He has previously served as the chief operating officer for a regional senior living developer based in central Florida, where he was in charge of the day-to-day operations of the companies and the development of assisted living division. As chief operating officer, he created the business model for the site acquisition and market penetration criteria. While there, he was responsible for the development of three assisted living facilities with an approximate value of $100 million. He has over thirty years of operational and executive-level experience with small and large corporations, including General Motors and General Dynamics. This experience also includes small and large-scale construction projects, with up to $300 million in total construction cost. Mr. Young earned a Bachelor of Arts degree in administration and pre-law from Michigan State University and is finishing his Master of Science in acquisition and contracts from the University of West Florida. Mr. Young resides in Orlando, Florida.

 

Charles C. Smith, Jr., Chief Development Officer. Prior to joining the company in 2012, Mr. Smith was the CEO and Founder of Delta Advisory Group, Inc., a federally registered investment advisory firm and a Co-Founder and Partner of Delta Realty Advisors, Inc. a real estate investment company. During his 40-year business career, he has been a principal party in the formation, capitalization and operational aspects of an extensive number of business enterprises. These ventures have spanned a wide range of sectors including banking, retail, multifamily residential development, commercial retail development, marina services, and radio station syndication. He has organized and served as a managing partner in real estate projects with capitalization in excess of $200 million and as a managing principal of market equities in excess of $150 million. Mr. Smith is an alumnus of the University of South Carolina in Columbia where he served as an intern in the Office of Dean of Student Affairs and a Page in the South Carolina State Senate. Post-graduation, he engaged in studies of philosophy and apologetics at L’Abri Fellowship in Huemoz, Switzerland under the leadership of founder Dr. Francis A. Schaeffer.

 

Sean D. Casterline, Corporate Equity Officer. Mr. Casterline began his career with Delta First Financial as an asset manager. During his time at Delta, he progressed through the company to eventually land as the Senior Portfolio Manager with the firm. In 1998, he left for an opportunity to work with Wealth Management Financial Group as their Senior Portfolio Manager. While there, Mr. Casterline managed client assets totaling over $200 million and co-hosted a syndicated financial radio show, which was broadcast nationwide in such cities as New York, San Francisco, and Dallas. Mr. Casterline earned both his Bachelor’s Degree in Finance and Master’s Degree in Business Administration from the University of Florida. He also has the distinction of being a CFA Charter holder and was an Arbitrator for the NASD. Mr. Casterline is an active member at the University of Florida Alumni Association and has also served as a Director for the CFA-Orlando Society. He has been involved with other charitable organizations such as the Fellowship of Christian Athletes, Big Brothers/Big Sisters of Gainesville and Habitat for Humanity. He is a member of YPO (Young Presidents’ Organization) and The CFA (Chartered Financial Analysts) Institute.

 

Sponsor Affiliates have raised $22.4mm of capital from unaffiliated accredited investors for the development and acquisition of a variety of Sponsor Affiliate senior living communities under exemption from the registration provisions of Rule 506 of Regulation D of the Securities Act through the following affiliated funds: (1) Tuscan Gardens Senior Living Fund, LLC, (2) Tuscan Garden Real Estate Fund, LLC, (3) Tuscan Gardens Income Fund, LLC, (4) Tuscan Gardens Income Fund II, LLC, (5) Tuscan Gardens Income Fund III, LLC (6) Tuscan Gardens Growth & Income Fund, LLC, and (7) Living Well Lodges Capital Partners, LLC. Management of the Sponsor maintains control over the corporate and business matters affecting Company Properties, the Sponsor, and the funds described above.

 

(d)Legal proceedings.

 

None

 

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COMPENSATION OF MANAGEMENT AND DIRECTORS

 

Compensation of Management

 

Currently, each member of the Company Management is an employee of Company Affiliates and the Company does not currently have any plans to hire additional employees who will be compensated directly by the Company. Each member of Management receives compensation for his or her services, including services performed for the Company, from Company Affiliates. These individuals will serve to manage the Company’s day-to-day affairs. Although the Company will indirectly bear some of the costs of the compensation paid to these individuals through fees that the Company pays to Company Affiliates, the Company does not intend to pay any compensation directly to these individuals.

 

Consequently, the Net Offering Proceeds will not be used to compensate or otherwise make payments to Management in their role as officers or directors of the Company. Should the Company, in the future choose to hire additional employees, it may need to offer substantial cash compensation to attract qualified individuals, and may, depending on market conditions, be required to provide equity incentive awards as part of their compensation packages.

 

 

PRINCIPAL SHAREHOLDERS

 

The Company is a newly-formed entity organized on July 20, 2018. Tuscan Gardens Capital Partners, LLC (the “Sponsor”) a Florida limited liability corporation, is the sole common shareholder having purchased 50,000 Common Shares for a cash consideration of $50,000.00 on August 7, 2018.

 

No other Common Shares or Preferred Shares have been issued.

 

The following table displays, as of August 10, 2018, the voting and non-voting securities of the Company:

 

Title of Class  Name and Address of
Beneficial Owner
  Amount and Nature of
Beneficial Ownership
   Percent of
Class
   Percent of
Company
Total Voting
Power
 
Common Voting Shares ($1.00 par value)  Tuscan Gardens Capital Partners, LLCNote 1  $50,000.00    100.0%   100.0%

Class A Non-Voting Preferred Shares

($1,000.00 par value)

  None issued   N/A    N/A    0.00%
Total     $50,000.00         100.00%

 

 

 Note 1 - Tuscan Gardens Capital Partners, LLC (“Sponsor”) is a Management controlled Company Affiliate.

 

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CERTAIN RELATIONSHIPS AND RELATED PARTY TRANSACTIONS

  

The Asset Manager, Advisor and other Sponsor affiliates (collectively “Company Affiliates”) will be engaged by the Company and its affiliates to perform various value add services for day to day management of the Company including the investment of its assets, the acquisition, development, financing and disposition of properties, and offering placement services. Company Affiliates will receive fees and compensation for such services as described in this section. None of the agreements for such services are the result of arm’s-length negotiations. The Company believes, however, that the terms of such arrangements are reasonable and are comparable to those that could be obtained from unaffiliated entities. The timing and nature of these fees could create a conflict between and among the interests of the Asset Manager, the Company, and those of the Investors. 

 

Asset Manager Services to the Company. In order to ensure the generation of revenue for the Company, ongoing operation of Company Properties will be overseen by an affiliate entity, Tuscan Gardens Senior Living Communities Asset Management, LLC (“Asset Manager”) pursuant to an agreement between the Asset Manager and the Company (“Asset Management Agreement”). The Company’s strategy is to hire experienced third-party operators (“Community Manager”) to operate the senior living communities that it builds or acquires, and to leverage the Asset Manager’s expertise and oversight of the Community Manager to ensure operational and financial performance objectives are achieved by the Community Manager.

 

Advisor Services to the Company. In order to achieve its investment objectives, the Company provides for an advisor’s oversight of the Company’s acquisitions, developments, financing, and disposition activities including without limitation the negotiation and execution of all agreements pertaining to development, acquisition, financing, and disposition of the Company’s assets. Tuscan Gardens Advisors, LLC (the “Advisor”) will serve as the management and business advisor to the Company pursuant to an advisory agreement with the Company (the “Advisory Agreement”) to advise on all business matters of the Company pursuant to the Advisory Agreement. The Advisor is a wholly-owned, captive affiliate of Tuscan Gardens Management Group, LLC (“TGMG”), a Florida limited liability company, is not a registered investment advisor under the Investment Advisers Act of 1940, and exclusively provides management and business consulting, rather than investment advisory services, to the Company and its majority-owned affiliates which include Tuscan Gardens Senior Living Fund, LLC and Tuscan Gardens Senior Living Income Fund, LLC. TGMG is a real estate private equity company specializing in senior living community development and acquisitions. TGMG’s leadership has over 100 years of collective experience investing in income producing real estate including senior living communities, hospitality, retail, multifamily, industrial, restaurant and other real estate sectors. The Advisor may terminate the Advisory Agreement with or without cause and without penalty, by giving sixty (60) days’ prior written notice to the Company.

 

Services performed by Company Affiliates include the following:

 

Service   Determination of Amount   Estimated Amount
    Organization and Offering Stage    
         
Organizational and Offering
Expenses
  The Company will reimburse the Asset Manager, the Advisor, or Company Affiliates for Organizational and Offering Expenses up to five (5.0%) percent of Maximum Offering Amount.  As used herein, “Organizational and Offering Expenses” means any and all costs and expenses, exclusive of the Placement Fee, the Marketing Support Fee, the Dealer Manager Fee, and the Acquisition Fees incurred by the Company, the Asset Manager, the Advisor or any Company Affiliate in connection with the formation, qualification, organization and registration of the Company and the marketing, distribution and issuance of Preferred Shares, including, without limitation, the following:  legal, accounting and escrow fees, costs of printing, amending, supplementing, mailing, and distribution costs; filing, registration, and qualification fees and taxes; personnel costs associated with processing Investor subscriptions, the preparation and dissemination of organizational and Offering documents and sales materials, and the attendance by the Company or Company Affiliates at sales meetings; telecopy and telephone costs, all advertising, promotional and marketing expenses, including the costs related to Investor and broker-dealer sales meetings or events paid or reimbursed by the Company; and bona fide due diligence expenses incurred by the Placement Agent and Participating Brokers.   If the Company raises the Maximum Offering Amount, will equal $2,500,000.

 

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Service   Determination of Amount   Estimated Amount
    Organization and Offering Stage    
         

 

Reimbursement of Advisor
Operating Expenses
  The Company will cause each respective Holdco to pay the Advisor and its Affiliates, as applicable, for Advisor’s ongoing operating expenses incurred on behalf of the Company, the Holdcos or their affiliates.  These amounts are expected to be funded with working capital reserves established with Offering proceeds prior to such time as the Company receives distributions from the Holdcos in amounts sufficient to pay such operating expenses. These amounts are estimated to be two (2.0%) percent of the Company’s prorata percentage of total Holdco preferred ownership interests multiplied by Total Project Costs.       As actual amounts are dependent upon the Offering proceeds the Company raises, any leverage it employs, and the costs of the Advisor’s operations, the Company cannot determine these amounts at the present time.
         
Placement Agent Services  

The Company relies on non-affiliated entities and individuals (“Placement Agent”) to prepare, issue, market, and distribute the Offering to qualified investors. The Company has entered into, or will enter into arrangements for compensation and fees to its Managing Broker-Dealer (“MBD”) which include a placement fee equal to seven (7.0%) percent of Gross Offering Proceeds (the “Placement Fee”) which the Placement Agent in turn may re-allow up to all of the Placement Fee to Participating Brokers who are not Affiliates of the Company, a marketing support fee equal to one and one-half (1.5%) percent of Gross Offering Proceeds (the “Marketing Support Fee”), up to all of which may be reallowed to Participating Brokers who are not Affiliates of the Advisor, and a dealer manager fee of up to two (2.0%) percent (subject to reduction in certain circumstances) of Gross Offering Proceeds (the “Dealer Manager Fee”), up to all of which may be reallowed to Participating Brokers.  Notwithstanding the foregoing, the Advisor, its employees, officers and directors, registered principals or representatives of the Placement Agent or a Participating Broker and the immediate friends and family of any of the foregoing persons, as well as clients of an investment adviser registered under the Investment Advisers Act of 1940, as amended, who have been advised by such adviser on an ongoing basis regarding investments other than in the Company, and who are not being charged by such adviser or its affiliates through the payment of commissions or otherwise for the advice rendered by such adviser in connection with the purchase of Preferred Shares through a Participating Broker, may purchase Preferred Shares at a discounted price equal to One Thousand ($1,000.00) Dollars, less the Seven (7.0%) Percent Placement Fee, for a net discounted price of Nine- Hundred Thirty ($930.00) Dollars per Preferred Share.

  If the Company raises the Maximum Offering Amount, it will equal $5,250,000.

  

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Service   Determination of Amount   Estimated Amount
    Acquisition and Development Stage    
         
Acquisition Services   The Company will cause each respective Holdco to pay the Advisor acquisition fees (the “Acquisition Fees”) for the selection, purchase, underwriting, financing, development or construction of the Communities equal to three (3.0%) percent of the Company’s prorata percentage of total Holdco preferred ownership interests multiplied by estimated Total Project Costs, as defined herein, upon the acquisition of each Company Property.  In the event the Acquisition Fees are paid to the Advisor in connection with any property that is not ultimately acquired by the Company, such Acquisition Fees shall be promptly repaid by the Advisor to the Company.     As actual amounts are dependent upon the Offering proceeds the Company raises, any leverage it employs, and the Total Project Costs of Company Properties, the Company cannot determine these amounts at the present time.
         
Development Services   The Company relies upon dedicated, affiliate community specific development entities (“Devco”) to achieve on-time, on-budget completion of each Company Property it develops.  These Devcos are responsible for the successful engagement with sellers, regulatory officials, and other parties necessary to secure land use entitlements, requisite development approvals and permits, as well as the oversight of general contractors.  In consideration for these services, the Company will cause each respective Propco to pay the applicable Developer Entity a site development fee in an amount equal to five (5.0%) to seven (7.0%) percent of Total Project Costs (including financing costs and interest expense, pre-opening operating expenses and working capital reserves) for design and development services.  Upon commencement of construction at each site, or sooner as provided for under the applicable development agreement between each respective Propco and the applicable Developer Entity, an amount not to exceed seventy-five (75%) percent of this fee will be due and payable for the respective Company Property, with the balance paid in installments over the projected site construction period, which is typically eighteen (18) to twenty-four (24) months, subject to any additional lender requirements.     As actual amounts are dependent upon the Offering proceeds the Company raises, any leverage it employs, and the Total Project Costs of Company Properties, the Company cannot determine these amounts at the present time.

 

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Service   Determination of Amount   Estimated Amount
    Acquisition and Development Stage    
         

Asset Manager Acquisition
Expenses
  The Company will reimburse the Asset Manager for actual expenses incurred in connection with the selection or acquisition of an investment, whether or not it ultimately acquires the investment.  

As actual amounts are dependent upon the Offering proceeds the Company raises, any leverage it employs, and the costs and frequency of the Asset Manager’s selection or acquisition of investments, the Company cannot determine these amounts at the present time.

         
Financial Guarantee   The Company will cause each respective Holdco to pay the Advisor, on a monthly basis, an annual Guarantee Fee (the “Financial Guarantee Fee”) equal to three quarters of one (0.75%) percent of guaranteed amounts under total aggregate financing (“Guaranteed Amount”) for each Company Property for which Advisor or its affiliates provide financial or carve-out guarantees.  The Company will pay the Advisor the Financial Guarantee Fee earned with respect to the Guaranteed Amount upon the execution of guarantees by Advisor or its affiliates at each Company Property. In the event the Financial Guarantee Fee is paid to the Advisor in connection with any Company Property that is not ultimately developed or acquired by the Company, such Financial Guarantee Fee shall be promptly repaid by the Advisor to the Company.  These amounts are expected to be funded with working capital reserves established with Net Offering Proceeds prior to such time as the Company receives distributions from the Holdcos in amounts sufficient to pay such fees. As used herein, “Breakeven Cash Flow” means the amount of net cash flow from the operations of a Company Property necessary to meet any capital expenditure reserve payments and all principal and interest debt service payments.   As actual amounts are dependent upon the Offering proceeds the Company raises, any leverage it employs, the Total Project Costs of Company Properties, and the frequency and magnitude of lender requirements for financial guarantees, the Company cannot determine these amounts at the present time.

 

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Service   Determination of Amount   Estimated Amount
    Operational Stage    
         
Asset Management   The Asset Manager is responsible for the oversight of day to day Company Property management decisions by the Community Manager pursuant to an agreement between the Asset Manager and the Company (“Asset Management Agreement”). Under the Asset Management Agreement, the Company will pay the Asset Manager, on a monthly basis, an annual Asset Management Fee (the “Asset Management Fee”) equal to two (2.0%) percent of Gross Assets under management.  In the event the Asset Management Fee is paid to the Asset Manager in connection with any community that is not ultimately acquired by the Company, such Asset Management Fee shall be promptly repaid by the Asset Manager to the Company.  These amounts are expected to be funded with working capital reserves established with Net Offering Proceeds prior to such time as the Company receives distributions from the Holdcos in amounts sufficient to pay such fees. As used herein, “Breakeven Cash Flow” means the amount of net cash flow from the operations of a Company Property necessary to meet any capital expenditure reserve payments and all principal and interest debt service payments.  

As actual amounts are dependent upon the Offering proceeds the Company raises, any leverage it employs, and the costs and frequency of the Asset Manager’s selection or acquisition of investments, the Company cannot determine these amounts at the present time.

         
Reimbursement of Advisor
Operating Expenses
  The Company will cause each respective Holdco to pay the Advisor and its Affiliates, as applicable, for Advisor’s ongoing operating expenses incurred on behalf of the Company, the Holdcos or their affiliates.  These amounts are expected to be funded with working capital reserves established with Offering proceeds prior to such time as the Company receives distributions from the Holdcos in amounts sufficient to pay such operating expenses. These amounts are estimated to be two (2.0%) percent of the Company’s prorata percentage of total Holdco preferred ownership interests multiplied by Total Project Costs.      

As actual amounts are dependent upon the Offering proceeds the Company raises, any leverage it employs, and the costs of the Advisor’s operations, the Company cannot determine these amounts at the present time.

 

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Service   Determination of Amount   Estimated Amount
    Operational Stage    
         
Disposition Services   The Company will cause each respective Holdco to pay the Advisor disposition fees (the “Disposition Fees”) for the disposition, recapitalization, or sale of Communities equal to three (3.0%) percent of the Company’s prorata percentage of total Holdco preferred ownership interests multiplied by the actual selling price or recapitalized amount, as defined herein, upon the sale or recapitalization of each Company Property.  In the event the Disposition Fees are paid to the Advisor in connection with any Company Property that is not ultimately sold or recapitalized by the Company, such Disposition Fees shall be promptly repaid by the Advisor to the Company.     As actual amounts are dependent upon the Offering proceeds the Company raises, any leverage it employs, the frequency and magnitude of dispositions of Company Properties, the Company cannot determine these amounts at the present time.

 

Conflicts of Interest

 

There are conflicts of interest between and among the Company, the Asset Manager, the Advisor, the Sponsor, the Development Entities, and other Company Affiliates. Asset Manager and Advisor may provide services to other affiliate companies in addition to the Company. All of the agreements and arrangements between Company Affiliates and the Company, including those related to compensation, are not the result of arm’s-length negotiations. The Company will try to balance the interests of Company Affiliates with the interests of the Company. However, to the extent that the Company takes actions that are more favorable to Company Affiliates than the Company, these actions could have a negative impact on the Company’s financial performance and, consequently, on the dividends to holders of Preferred Shares and the value of those securities. The Company has not adopted, and does not intend to adopt in the future, either a conflicts of interest policy or a conflicts resolution policy.

 

The Company relies on key real estate professionals, including Laurence J. Pino, William N. Johnston, and Christopher P. Young (collectively “Management”), for the day-to-day operation of its business. As a result of their interests in other Company Affiliates, their obligations to other investors, and the fact that they engage in and will continue to engage in other business activities on behalf of themselves and others, Management will face conflicts of interest in allocating their time among us, the Asset Manager, the Advisor, other Company Affiliates, and other business activities in which they are involved. However, the Company believes that the Asset Manager, Advisor, and their respective affiliates have sufficient real estate professionals to fully discharge their responsibilities to the Company.

 

There are no other material relationships or related party transactions.

 

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SHAREHOLDER RIGHTS UNDER THE COMPANY’S ARTICLES OF INCORPORATION AND BYLAWS 

 

The following is a summary of the material provisions of the Company’s Articles of Incorporation dated July 20, 2018 (“Company Articles of Incorporation”) and Bylaws dated July 20, 2018 (“Company Bylaws”) attached hereto as Exhibit A and Exhibit B respectively (collectively “Governing Documents”), as they pertain to the rights and obligations of Shareholders thereunder.

 

The following description does not purport to be complete and is subject to and qualified in its entirety by reference to (i) applicable provisions of the laws of the State of Florida, (ii) the entirety of the Governing Documents.

 

The Company encourages you to read the entire Governing Documents attached hereto as Exhibit A and Exhibit B.

 

All capitalized terms appearing but not defined in this section will have the meanings set forth in the Governing Documents.

 

Series A $1,000 Par Value Preferred Shares

 

The Preferred Shares being offered pursuant to this Offering Circular are Preferred Shares representing preferred non-voting interests in the Company. Purchasers of the Preferred Shares (“Preferred Shareholders”) have no rights to direct or vote on any matter concerning the Company or the management of the Company, including whether or not the Company should dissolve.

 

Preferred Shareholders have the right to receive dividends as set forth in the Governing Documents, as amended from time to time at the sole discretion of Management based on its determination of what is in the best interests of the Company. See the section entitled “Preferred Dividends” below.

 

The Governing Documents

 

This Company shall be governed by and construed in accordance with the laws of the state of Florida.

 

“Shareholder” means a person who has been admitted as a shareholder of the Company and has an ownership interest in the Company with rights, obligations and preferences and limitations specified in the Governing Documents and pursuant to the Florida Business Corporations Act (“FBCA”). Shareholders include voting Common Shareholders and non-voting Preferred Shareholders.

 

Management, Voting and Governance

 

Except as otherwise provided in the Governing Documents, Company Management will conduct, direct and exercise full control over all major activities of the Company, including all decisions relating to the issuance of Preferred Shares. The Company will have two classes of shares, common voting shares with $1.00 par value per share (“Common Shares”) and Series A Preferred Non-Voting Preferred Shares with $1,000.00 par value per share (“Preferred Shares”). Tuscan Gardens Capital Partners, LLC (“Sponsor”) will be the only Common Shareholder. All other shareholders will be Preferred Shareholders and will have no voting rights. Unless otherwise specifically provided in this Agreement, no action may be taken or authorized on the part of the shareholders without the Common Shareholder’s agreement. Management will have the sole power and authority to bind or take any action on behalf of the Company, or to exercise any rights and powers granted to the Company under Company’s Articles of incorporation, Bylaws, or any other agreement, instrument, or other document to which the Company is a party. Except as otherwise required by law, the Preferred Shareholders will have no voting rights or governance rights.

 

The approval of the Board of Directors is required in connection with:

 

(a)The admission of an additional Common Shareholder;

 

(b)The initiation of a proceeding for the bankruptcy of the Company;

 

(c)The change in the business or purpose of the Company;

 

(d)The approval of a merger, conversion or the application of any statute (the application of which is elective) to the Company;

 

(e)Trading for or in the Company’s proprietary account, except for any normal operating error account;

 

(f)The amendment of this Agreement or any action taken in violation of this Agreement;

 

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(g)The determination of the amount of, and the making of, Dividends;

 

(h)The determination of the amount of, and the making of, the transfer of any Fund Company Property to any person or entity;

 

(i)Assumption of debt by the Company or its affiliates; including but not limited to, the borrowing of money and issuing of evidences of mortgage and subordinate institutional indebtedness in an amount equal to ninety-two (92.0%) or more of the total fair market value of the Company Properties once completed, as is necessary, convenient, or incidental to the accomplishment of the purposes of the Company, and securing the same by mortgage, pledge, or other lien thereon;

 

(j)The institution, prosecution, and defense of any Proceeding in the Company's name;

 

(k)The investment and reinvestment of the Company's funds, and receipt and holding of Company Property as security for repayment;

 

(l)The sale, exchange, transfer, Distribution, or other Disposition of all, or substantially all, of the Company Property; and

 

(m)The redemption of all or any portion of the Preferred Shareholder’s Preferred Shares. 

 

 

Management is authorized under the Governing Documents to oversee and make decisions regarding:

 

(a)The conduct of the Company's business, the establishment of Company offices, and the exercise of the powers of the Company within or without Florida;

 

(b)The appointment of employees and agents of the Company, the defining of their duties, and the establishment of their annual compensation;

 

(c)The payment of compensation, or additional compensation to a Shareholder and employees on account of services previously rendered to the Company, whether or not an agreement to pay such compensation was made before such services were rendered;

 

(d)The purchase of liability and other insurance to protect the Company's Property and business and the purchase of insurance on the life of any of the Shareholders or employees for the benefit of the Company;

 

(e)The employment of accountants, legal counsel, managing agents, or other experts to perform services for the Company and to compensate them from Fund funds; and

 

(f)The doing and performing of all other acts as may be necessary or appropriate to carry out the Company's day to day business.

 

(g)The negotiation and execution of contracts, partnerships, and joint venture relationships with other parties in order to facilitate the successful acquisition, construction, development, and operation of Company Properties; and

 

(h)Negotiate and receive advances that are required to address economic or financial shortfalls on behalf of the Company and its affiliates, including without limitation advances from the Asset Manager or its Affiliates (“Affiliate Advances”). In the event of Affiliate Advances, any such Affiliate Advances shall be reimbursed to the advancing party by the Company, or its affiliate with accrued interest at a monthly rate of one (1.0%) percent on such advances prior to any return of any shareholder capital.

 

As the Sponsor will exercise complete control over the Company, it will have the ability to make decisions regarding (i) changes to share classes without shareholder notice or consent, (ii) making changes to the Company’s Articles of Incorporation whether to issue additional common stock and preferred stock, including to itself, (iii) employment decisions, including compensation arrangements; and (iv) whether to enter into material transactions with related parties.

 

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Standard of Care of the Board of Directors

 

The Board of Directors’ duty of care in the discharge of its’ duties to the Company is limited to refraining from engaging in grossly negligent or reckless conduct, willful or intentional misconduct, or a knowing violation of law. In discharging its’ duties, the Board of Directors shall be fully protected in relying in good faith upon the records required to be maintained by the Company and upon such information, opinions, reports, or statements by any of its agents, or by any other Person, as to matters the Board of Directors reasonably believe are within such other Person’s professional or expert competence and who has been selected with reasonable care by or on behalf of the Company, including information, opinions, reports, or statements as to the value and amount of the assets, liabilities, profits, or losses of the Company or any other facts pertinent to the existence and amount of assets from which Preferred Dividends or Special Dividends to the shareholders, including Manager might properly be paid.

 

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Books, Records and Accounting

 

During the Term of the Governing Documents and for one (1) year thereafter, the Company shall maintain proper records and books of account prepared using consistent accounting principles relating to the computation of payments owed and costs charged to the Company. The Company, for accounting and income tax purposes, shall operate on a Fiscal Year ending December 31 of each year, and shall make such income tax elections and use such methods of depreciation as shall be determined by the Company. The books and records of the Company shall be maintained at the principal place of business of the Company. The Company shall make the Company books and records available for inspection and copying by any Shareholder at reasonable times during normal business hours upon at least 10 days prior notice.

 

Conflicts of Interest

 

The Asset Manager, Advisor, and the Management Corporation are comprised of individuals who are also principals of the Company, other affiliated entities and the law firm which represents all of the above identified entities. One or more principals of the Asset Manager, Advisor, and the Management Corporation will also operate as the developers of the properties to be purchased, developed and constructed by the Company and will receive development fees associated therewith. One or more principals of the Asset Manager, Advisor, and the Management Corporation will also operate as advisors to the Company and will receive fees for their services. One or more principals of the Asset Manager, Advisor, and Management Corporation may provide additional or subsequent private Offerings or terms of offer different than herein for the construction, development and/or operation of Company Properties. In addition, one or more principals or affiliates of the Asset Manager, Advisor, and Management Corporation own the Trademarks and other Intellectual Property associated with Tuscan Gardens and have licensed the Intellectual Property to the Projects associated with the Company Properties

 

The Asset Manager, Advisor, and Company Affiliates do not violate a duty or obligation to the Company merely because their conduct furthers their own interest. The Asset Manager, Advisor, and Company Affiliates may lend money to and transact other business with the Company. The rights and obligations of the Asset Manager, Advisor, and Company Affiliates who lends money to or transacts business with the Company are the same as those of an arm’s length Person, subject to other applicable law. No transaction with the Company shall be voidable solely because the Asset Manager, Advisor, or Company Affiliates has a direct or indirect interest in the transaction if either the transaction is fair to the Company or the Asset Manager with knowledge of the interest and transaction of the Asset Manager. Moreover, all documents and legal work associated with the creation of the entities associated herewith, including the Company, Asset Manager, Advisor, and Company Affiliates, have been provided by the law firm of Pino Nicholson PLLC (“PNL”). A principal of PNL is also a principal herein. The Shareholders, Asset Manager, Advisor, and Company Affiliates intentionally waive any and all objections to PNL continuing to represent the Asset Manager and the Company regardless of any conflict of interest considerations.

 

Preferred Dividend

 

Subject to declaration by the Board of Directors on no less than a quarterly basis, acting in its sole discretion based on the best interests of the Company, the Company will seek to provide ongoing income to investors in the Preferred Shares, paid or accrued monthly (“Preferred Dividend”).

 

Any unpaid Preferred Dividends will accrue at a non-compounded rate of eight (8.0%) percent per annum on the Preferred Share’s par value.

 

For purposes of calculating the Preferred Dividend, all capital contributions and dividends occurring during a given month will be deemed to have occurred on the first day of the month. Such dividends will be made from available cash that remains following the payment of Company obligations as more fully described in Article IV D of the Articles of Incorporation. Payment of the Preferred Dividend is further contingent upon the Company retaining available cash to offset any losses in the event the Company is operating at a loss. In the event the Company does not have available cash to distribute, an investor will neither receive nor be entitled to payment of the Preferred Dividend.

 

Special Dividends

 

Once any one of the Company Properties reaches Stabilization, which is typically twenty-four (24) months from the commencement of operations. the Company may elect to pay additional dividends to the Preferred Shareholders from the distributions it receives from the respective Holdco, less certain expenses and reserves (see “Net Operating Cash Flow”). The amount of Net Operating Cash Flow of the Company to be paid as Special Dividends shall be determined by the Company, in its sole and absolute discretion.

 

The Company does not expect to receive distributions from the Holdcos and, therefore, commence the payment of Special Dividends based on Net Operating Cash Flow to Preferred Shareholders, until one or more of the Company Properties have begun to generate sufficient cash flow in excess of any debt service and reserve requirements. As a result there can be no assurance as to the date on which distributions will commence or the timing or amount of such distributions, if any, from the Net Operating Cash Flow. Any unpaid Special Dividends shall accrue until such time as the Board of Directors authorizes payment, acting in its sole discretion based on the best interests of the Company.

 

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The Company expects to pay dividends to the holders of Preferred Shares and holders of Common Shares from distributions it receives from the Holdcos in connection with any sale, refinancing, redemption or other disposition of the Communities, less certain expenses (“Net Disposition Proceeds”).

 

Dividends shall be payable only when, as and if declared by the Company’s Board of Directors under Article IV D of the Company’s Articles of Incorporation. Dividends resulting from Net Disposition Proceeds received by the Company from Holdcos shall be determined as follows:

 

a)First, to the Preferred Shareholders to the extent of and in proportion to their respective unpaid eight (8.0%) percent Preferred Return until such Preferred Shareholders' unpaid eight (8.0%) percent Preferred Return has been paid in full;
b)Second, fifty (50%) percent of the Net Distribution Proceeds to the Preferred Shareholders’ Special Dividends allocated among Preferred Shareholders in proportion to the amount and duration of each Preferred Shareholder’s invested capital; and
c)Third, any remaining Net Distribution Proceeds to the Common Shareholders. 

 

Liquidating Dividends

 

The proceeds from the liquidation of the Company will be distributed within Ninety (90) days of the date of liquidation in the following order and priority:

 

a)First, to creditors of the Company, including Shareholders who are creditors, to the extent otherwise permitted by law, in satisfaction of all debts, liabilities, obligations and expenses of the Company, including, without limitation, the expenses incurred in connection with the liquidation of the Company; and
b)Second, to the Preferred Shareholders to the extent of and in proportion to their invested capital until the aggregate amount paid to such Preferred Shareholders is sufficient to provide for a complete return of such Preferred Shareholders invested capital; and
c)Third, to the Preferred Shareholders to the extent of and in proportion to their respective unpaid eight (8.0%) percent Preferred Return until such Preferred Shareholders' unpaid eight (8.0%) percent Preferred Return has been paid in full; and
d)Fourth, fifty (50%) percent of any remaining proceeds from the liquidation of the Company to the Preferred Shareholders’ Liquidating Dividends allocated among Preferred Shareholders in proportion to the amount and duration of each Preferred Shareholder’s invested capital; and
e)Fifth, to the Common Shareholders.

 

Allocation of Profits and Losses

 

The Holdco operating agreements provide for the allocation of income and gain to both the Holdco Common Members and Holdco Preferred Members, and the losses to the Holdco Common Members. The Company believes that all material allocations to the Shareholders as Preferred Members of each Holdco may or may not be respected for U.S. federal income tax purposes. The rules regarding allocations are complex and no assurance can be given that the IRS will not successfully challenge the allocations in the Governing Documents and/or the Holdco operating agreements, and reallocate items of income, gain, loss or deduction in a manner which adversely increases the income allocable to the Shareholders of the Company. 

 

Exculpation and Indemnification of the Common Shareholder, Asset Manager, Advisor and Company Affiliates

 

Neither the Common Shareholder, Asset Manager, Advisor or Company Affiliates shall be liable for the liabilities of the Company to third parties. The failure of the Company to observe any formalities or requirements relating to the exercise of its powers or management of its business or affairs under this Agreement or the Act shall not be grounds for imposing personal liability on the Common Shareholder, Asset Manager, Advisor or Company Affiliates for liabilities of the Company.

 

The Company shall indemnify the Common Shareholder, Asset Manager, Advisor or Company Affiliates for all costs, losses, liabilities, and damages paid or accrued by the Common Shareholder, Asset Manager, Advisor or Company Affiliates (either as Common Shareholder, Asset Manager, Advisor or, or agent) or because it is a Common Shareholder, Asset Manager, Advisor or Company Affiliate, to the fullest extent provided or allowed by the law of Florida. To the extent the Company is required to indemnify the Common Shareholder, Asset Manager, Advisor or Company Affiliates , as set forth herein, the Common Shareholder, Asset Manager, Advisor or Company Affiliates shall cause the Company to advance costs of participation in any Proceeding to the Common Shareholder, Asset Manager, Advisor or Company Affiliates. The Common Shareholder, Asset Manager, Advisor or Company Affiliates may, based on its sole discretion, indemnify all other employees and agents of the Company for all costs, losses, liabilities, and damages paid or accrued by the agent or employee in connection with the business of the Company or because such Person is an agent or employee, to the fullest extent provided or allowed by the laws of Florida. 

 

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Additional Rights and Obligations Considerations

 

There are no conversion, pre-emptive, sinking fund, or liability for further call rights or obligations associated with the Common Shares or Preferred Shares.

 

Amendment

 

The Governing Documents may not be amended except with the consent of the Common Shareholder.

 

Dissolution

 

The Common Shareholder must consent to dissolve the Company, which it may elect to do at any time without the consent of the Preferred Shareholders. Upon dissolution of the Company, Management will wind up the Company’s affairs and make all liquidating dividends in accordance with Article IV D of the Articles of Incorporation.

 

Mandatory Binding Arbitration

 

The Company’s Articles of Incorporation, Bylaws, Subscription Agreement, and Shareholder Agreement all provide mandatory binding arbitration provisions that, unlike in judicial proceedings, are subject to determination by an arbitrator, not a judge, who is not necessarily governed by the same standards. In light of that, there is a risk that an arbitrator will not view the contract or the law in the same way a judge would and may grant a remedy or award relief that the arbitrator deems just and equitable and within the scope of the agreement of the parties or based on simple notions of equity, rather than the facts or the relevant law. Furthermore, there is a risk that an arbitrator may interpret the relevant agreements or facts without regard to legal precedent. That risk is exacerbated by the fact that it is more difficult to overturn or vacate an arbitration award, because the law supports confirmation of an arbitration decision which is not otherwise arbitrary or capricious; therefore, investors should consider the difficulty of reversing an arbitration award, once made.

 

The Company believes that binding arbitration is legally enforceable based on case law provisions as applicable to claims in connection with this offering (including secondary transactions whereunder Preferred Shares are resold by initial investors, and subsequent, secondary investors are governed by the Company’s Articles of Incorporation, Bylaws, and Shareholder Agreement) under federal law, state law, and U.S. federal securities laws. The legal enforceability based on case law as upheld by U.S. Supreme Court rulings, which, for the Commission’s reference, include but are not limited to the following: Arthur Andersen LLP v. Carlisle, 556 U.S. 624 (2009); Gilmer v. Interstate/Johnson Lane Corp., 500 U.S. 20 (1991); Rodriguez de Quijas v. Shearson/American Express, Inc., 490 U.S. 477 (1989); Shearson/American Express v. McMahon, 482 U.S. 220 (1987); and Dean Witter Reynolds Inc. v. Byrd, 470 U.S. 213 (1985). 

 

As a result of this mandatory binding arbitration provision, Investors may incur increased costs to bring a claim, have limited access to information, and these provisions can discourage claims or limit investors’ ability to bring a claim in a judicial forum that they find favorable, In the event of arbitration these clauses would limit the legal remedies available to holders of Preferred Shares to arbitration for any claims they may have, however by agreeing to be subject to these arbitration provisions, investors will not be deemed to waive the company’s compliance with the federal securities laws and the rules and regulations promulgated thereunder. Notwithstanding case law supporting the enforceability of arbitration, there does appear to be a split of authority suggesting that arbitration provisions are not always enforceable under federal and state law. Nonetheless, to the extent any arbitration provisions are ruled unenforceable, the Company would abide by such ruling.

 

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FEDERAL INCOME TAX CONSEQUENCES OF AN INVESTMENT IN THE COMPANY

 

The following is a discussion of certain U.S. federal income tax considerations relevant to an investment in Preferred Shares of the Company. This discussion does not address all U.S. tax considerations that may be relevant to an investment in Preferred Shares, and it does not cover every aspect of U.S. federal income taxation that may be relevant to a particular taxpayer in light of their particular circumstances or to investors having a special legal status (such as tax-exempt investors, dealers in securities, banks, thrifts, trusts, insurance companies, corporations that may be treated as personal holding companies under the Internal Revenue Code of 1986, as amended (the “Code”), or persons who acquire interests in the Company in connection with the performance of services), or to investors holding their interest in the Company other than as a capital asset. In addition, except as expressly indicated below, the discussion does not address state or local income tax considerations, nor does it address taxes other than income taxes. The following discussion also does not address tax considerations that may be relevant under the laws of jurisdictions other than the United States.

 

IN VIEW OF THE SUMMARY NATURE OF THIS DISCUSSION, EACH PROSPECTIVE INVESTOR IS URGED TO CONSULT THEIR OWN TAX ADVISOR REGARDING THE SPECIFIC TAX CONSEQUENCES TO SUCH PROSPECTIVE INVESTOR OF AN INVESTMENT IN PREFERRED SHARES OF THE COMPANY.

 

The following discussion of certain U.S. federal income tax considerations relevant to an investment in the Company is based on the Code and other currently applicable legal authorities such as the regulations promulgated under the Code (the “Treasury Regulations”), administrative rulings and judicial decisions. The Code and other legal authorities are subject to change at any time, possibly on a retroactive basis, by legislative, judicial or administrative action. No rulings have been or are expected to be requested from the U.S. Internal Revenue Service (the “IRS”) or any other tax authority as to any matter, and no assurance can be provided that any such authorities will not successfully assert a position contrary to one or more of the legal conclusions discussed herein.

 

This discussion assumes each investor (a “Shareholder”) is a “U.S. Holder.” A “U.S. Holder” is an individual or entity that is, for purposes of the Code: (i) a citizen or resident of the United States; (ii) a corporation or other entity taxable as a corporation created or organized under the laws of the United States or any political subdivision of the United States; (iii) an estate, the income of which is subject to U.S. federal income taxation regardless of its source; (iv) a trust (1) the administration of which is subject to primary supervision by a court within the United States and as to which one or more U.S. persons have the authority to control all substantial decisions, or (2) which was in existence on August 20, 1996, and has properly elected to be treated as a “United States person” for federal income tax purposes; or (v) otherwise subject to U.S. federal income tax on a net income basis with respect to its income from The Company. No discussion is provided herein concerning the eligibility requirements applicable to a Shareholder that is not a U.S. Holder.

 

If a partnership (including for this purpose any entity treated as a partnership for U.S. federal income tax purposes) is the beneficial owner of an interest in Preferred Shares, the U.S. federal income tax treatment of a partner in the partnership (or owner of such entity) will generally depend on the status of the partner (or other owner) and the activities of the partnership (or entity). Investors that are treated as partnerships for U.S. federal income tax purposes and their owners should each consult their own tax advisors about potential U.S. federal income tax consequences of an investment in The Company.

 

General Matters Relevant to Investment in the Company

 

 

Taxation of Shareholders

 

Taxation of Proceeds and Dividends in General. Shareholders are required to declare all proceeds received in connection with dividends or proceeds from sale of their Preferred Shares. The recognition of such receipts as income or capital gain will depend on multiple factors including without limitation the Shareholder’s basis for tax purposes and whether dividends qualify as ordinary or qualified under IRS guidelines. The rules governing basis adjustments and the taxation of proceeds and dividends are complex, and investors are urged to consult with their own U.S. tax advisors concerning these rules 

 

Property Held Primarily for Sale. If the Company is deemed for tax purposes to be a “dealer” in real property, defined as one who holds real estate primarily for sale to customers in the ordinary course of business, any gain recognized upon a sale of such real property (commonly referred to as “Dealer Property”) will be taxable as ordinary income, rather than as capital gain, and will constitute “unrelated business taxable income” (“UBTI”). Furthermore, all of such property would be treated as “inventory items”. Under existing law, whether property is held primarily for sale to customers in the ordinary course of business must be determined from all the facts and circumstances surrounding the particular property and sale in question. Accordingly, it is possible that the Company could be deemed to be a dealer in real estate, and that the Company’s share of profits from its disposition of real property would therefore be considered ordinary income.

 

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Liquidation. Upon the dissolution and liquidation of the Company, the Company will pay its debts and liabilities, and the Shareholders will be entitled to receive dividends as provided in the Governing Documents. The Company’s sale of its assets and the liquidation will generally be recognition events for U.S. federal income tax purposes. If a Shareholder recognizes gain upon the liquidation of their Preferred Shares, the gain may consist of both ordinary income and capital gain components. If a Shareholder realizes a loss upon the liquidation of the Company, the Shareholder will be entitled to recognize such loss for tax purposes only if the Company’s liquidating distribution consists solely of cash, or of cash and “unrealized receivables” (as defined in the Code).

 

Tax Information and Tax Audits. The Company will file a U.S. federal tax return reporting its annual operations and will provide each Shareholder with the information for Preferred Dividends, Special Dividends, or redemptions of Preferred Shares by the Company needed to file their U.S. federal income tax return. However, the Company may not be able to provide U.S. tax information to its Shareholders in time to prevent such Shareholders from having to obtain extensions of the filing dates of applicable tax returns. The Company is not obligated to provide tax information to persons who are not Shareholders of record. The Code imposes certain penalties in the event of failure to make various filings in a timely manner and in the event of various understatements of income tax. The Company intends to comply fully with all applicable filing and reporting requirements.

 

 FATCA

 

The Foreign Account Tax Compliance Act (“FATCA”) generally imposes a withholding tax of 30% on “withholdable payments” made to a “foreign financial institution” unless the foreign financial institution enters into an agreement with the IRS to collect and provide to the IRS on an annual basis substantial information regarding its U.S. account holders or an exception applies. If a foreign financial institution enters into such an agreement but is unable to obtain the relevant information from its direct and indirect account holders or owners on an annual basis, the foreign financial institution will be required to withhold 30% of any withholdable payment allocable to such account holders, and there is a risk that the IRS may determine that the foreign financial institution is not in compliance with its agreement, resulting in the foreign financial institution becoming subject to the 30% withholding tax on all of the withholdable payments made to it. The term “withholdable payment” includes any payment of (i) interest or dividends, (ii) the gross proceeds of a disposition of shares or of debt instruments, and (iii) “foreign pass-thru payments,” in each case with respect to any U.S. investment. It is not yet clear whether and to what extent the gross proceeds from the disposition of an interest in a partnership or limited liability company will be treated as a withholdable payment. The legislation also generally imposes a withholding tax of 30% on withholdable payments made to a non-U.S. entity that is not a foreign financial institution unless such entity provides the withholding agent with a certification identifying the substantial U.S. owners of the entity, which are generally defined as any U.S. persons who directly or indirectly own more than 10% of the entity, or unless an exception applies. Withholding on gross proceeds and “foreign pass-thru payments” will not apply until after December 31, 2018. A generally will be required to withhold 30% of withholdable payments received thereby that are distributable to any Shareholder thereof that is a foreign financial institution or other non-U.S. entity unless such investor complies with the applicable requirements discussed above. Accordingly, the investors may be required to provide certain information to the Company in order to avoid the imposition of the 30% withholding tax on any withholdable payments made by the Company.

 

The foregoing is only a general summary of certain provisions of FATCA. Prospective investors are urged to consult with their own tax advisers regarding the application of FATCA to their investment in the Company.

 

Reportable Transactions Regulations. Regulations impose special reporting rules for “reportable transactions.” A reportable transaction includes, among other things: (i) a transaction in which an advisor limits the disclosure of the tax treatment or tax structure of the transaction and receives a fee in excess of certain thresholds, and (ii) a “transaction of interest” that the IRS believes has a potential for tax avoidance or evasion, but for which the IRS lack enough information to determine whether the transaction should be identified specifically as a tax avoidance transaction. The Company intends to take the position that no investment in the Company constitutes a reportable transaction, that the Company does not engage in transactions which themselves constitute reportable transactions, and that neither the Company nor any of its respective Shareholders are participants in a transaction of interest by virtue of their investment in the Company. If any of these transactions were determined to constitute a reportable transaction, then the Company, or each Shareholder may be required to complete and file IRS Form 8886 with their respective tax returns for the applicable tax year. The Company reserves the right to disclose certain information about the Company’s Shareholders on Form 8886, including the Shareholders’ capital commitments, tax identification numbers (if any), and dates of admission to the Company, to facilitate compliance with the reportable transaction rules if necessary. Certain legislation imposes substantial excise taxes and additional reporting requirements and penalties on certain tax-exempt investors (and, in some cases, the managers of tax-exempt investors), that are, directly or in some cases indirectly, parties to certain types of reportable transactions. In addition, certain states have similar reporting requirements and may impose penalties for failure to report. Shareholders should consult their tax advisors for advice concerning compliance with the reportable transaction regulations.

 

EACH PROSPECTIVE INVESTOR IS URGED TO CONSULT ITS OWN TAX ADVISORS WITH RESPECT TO THE LOCAL, FOREIGN AND OTHER TAX CONSEQUENCES TO SUCH INVESTOR OF THE PURCHASE AND OWNERSHIP OF AN INTEREST IN THE COMPANY.

 

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LEGAL MATTERS

 

The validity of the issuance of the Preferred Shares offered by this Offering Circular has been passed upon as of December 1, 2018 by Pino Nicholson PLLC.

 

EXPERTS

 

The Balance Sheet of the Company as of August 10, 2018 has been included in this Offering in reliance upon the report of Grennan Fender Hess & Poparad LLP, and independent registered public accounting firm, and upon the authority of said firm as experts in accounting and auditing.

 

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ADDITIONAL INFORMATION

 

The Company has filed with the SEC an offering statement under the Securities Act on Form 1-A regarding this Offering. This Offering circular, which is part of the Offering statement, does not contain all the information set forth in the Offering statement and the exhibits related thereto filed with the SEC, reference to which is hereby made. Upon the qualification of the Offering statement, The Company will be subject to the informational reporting requirements of the Securities Act that are applicable to Tier 2 companies whose securities are registered pursuant to Regulation A, and accordingly, The Company will file annual reports, semi-annual reports and other information with the SEC. You may read and copy the Offering statement, the related exhibits and the reports and other information The Company files with the SEC at the SEC’s public reference facilities maintained by the SEC at 100 F Street, N.E., Washington, DC 20549. You can also request copies of those documents, upon payment of a duplicating fee, by writing to the SEC. Please call the SEC at 1-800-SEC-0330 for further information regarding the operation of the public reference rooms. The SEC also maintains a website at www.sec.gov that contains reports, information statements and other information regarding issuers that file with the SEC.

 

You may also request a copy of these filings at no cost, by writing, emailing or telephoning The Company at:

 

Tuscan Gardens Senior Living Communities, Inc.

189 S. Orange Ave, Suite 1650

Orlando, FL 32801

Telephone: 407-206-6577
Attention: Investor Relations
email: InvestorRelations@TuscanGardensSLC.com

 

The Company will file (i) an annual report with the SEC on Form 1-K, (ii) a semi-annual report with the SEC on Form 1-SA, (iii) current reports with the SEC on Form 1-U, and (iv) a notice under cover of Form 1-Z. The necessity to file current reports will be triggered by certain corporate events. Parts I and II of Form 1-Z will be filed by the Company if and when it decides to and is no longer obligated to file and provide annual reports pursuant to the requirements of Regulation A. The Company’s annual report will contain audited financial statements and certain other financial and narrative information that the Company is required to provide to holders of Preferred Shares.

 

The Company maintains a website at www.TuscanInvestor.com, where there may be additional information about the Company’s business, but the contents of that site are not incorporated by reference in or otherwise a part of this Offering circular.

 

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PART FS - INDEPENDENT AUDITOR'S REPORT

  

TUSCAN GARDENS SENIOR LIVING

COMMUNITIES, INC.

 

Financial Statements

and

Independent Auditor’s Report

 

August 10, 2018

 

 

 

 

 

 

 

 

 

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TUSCAN GARDENS SENIOR LIVING COMMUNITIES, INC.

 

Table of Contents

 

   
  Page
   
Independent Auditor’s Report 70
   
Financial Statements:  
   
Balance Sheet 72
   
Statement of Operations and Changes in Equity 73
   
Statement of Cash Flows 74
   
Notes to Financial Statements 75

 

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INDEPENDENT AUDITOR’S REPORT

 

 

To the Shareholders of

 

Tuscan Gardens Senior Living Communities, Inc.

 

 

We have audited the accompanying financial statements of Tuscan Gardens Senior Living Communities, Inc. (a Florida Corporation, the “Company”), which comprise the balance sheet as of August 10, 2018, and the related statements of operations and changes in equity, and cash flows for the period from inception (July 20, 2018) to August 10, 2018, and the related notes to the financial statements.

 

Management’s Responsibility for the Financial Statements

 

Management is responsible for the preparation and fair presentation of these financial statements in accordance with accounting principles generally accepted in the United States of America; this includes the design, implementation, and maintenance of internal controls relevant to the preparation and fair presentation of financial statements that are free from material misstatement, whether due to fraud or error.

 

Auditor’s Responsibility

 

Our responsibility is to express an opinion on these financial statements based on our audit. We conducted our audit in accordance with auditing standards generally accepted in the United States of America. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free from material misstatement.

 

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An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the financial statements. The procedures selected depend on the auditor’s judgment, including the assessment of the risks of material misstatement of the financial statements, whether due to fraud or error. In making those risk assessments, the auditor considers internal controls relevant to the entity’s preparation and fair presentation of the financial statements in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the entity’s internal controls. Accordingly, we express no such opinion. An audit also includes evaluating the appropriateness of accounting policies used and the reasonableness of significant accounting estimates made by management, as well as evaluating the overall presentation of the financial statements.

 

We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinion.

 

 

 

Opinion

 

In our opinion, the financial statements referred to above present fairly, in all material respects, the financial position of Tuscan Gardens Senior Living Communities, Inc.as of August 10, 2018, and the results of their operations and their cash flows for the period from July 20, 2018 to August 10, 2018 in accordance with accounting principles generally accepted in the United States of America.

 

 

 

/s/GRENNAN FENDER HESS & POPARAD LLP

 

Orlando, Florida

August 10, 2018

 

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PART FS - AUDITED FINANCIAL STATEMENT AS OF AUGUST 10, 2018

 

TUSCAN GARDENS SENIOR LIVING COMMUNITIES, INC.
 
BALANCE SHEET
 
AUGUST 10, 2018
 
ASSETS
CURRENT ASSETS:
Cash  $50,000 
      
TOTAL ASSETS  $50,000 
      
LIABILITIES AND EQUITY
CURRENT LIABILITIES:
Accounts payable and other accrued liabilities  $—   
      
TOTAL LIABILITIES   —   
      
EQUITY
Common shares - 50,000 shares issued and outstanding ($1 par value)   50,000 
Series A Preferred Shares ($1,000 par value) - 50,000 authorized   —   
      
 TOTAL EQUITY   50,000 
      
 TOTAL LIABILITIES AND EQUITY  $50,000 

 

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TUSCAN GARDENS SENIOR LIVING COMMUNITIES, INC.
 
STATEMENT OF OPERATIONS AND CHANGES IN EQUITY
 
FOR THE PERIOD FROM INCEPTION (JULY 20, 2018) TO AUGUST 10, 2018
 
REVENUE:
 
Revenues  $—   
      
TOTAL REVENUE   —   
      
OPERATING EXPENSES:
Expenses   —   
      
TOTAL OPERATING EXPENSES   —   
      
NET INCOME  $—   
      
 EQUITY, JULY 20, 2018 (INCEPTION)  $—   
      
 Purchase of common stock   50,000 
      
 EQUITY, END OF PERIOD (AUGUST 10, 2018)  $50,000 

 

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TUSCAN GARDENS SENIOR LIVING COMMUNITIES, INC.
 
STATEMENT OF CASH FLOWS
 
FOR THE PERIOD FROM INCEPTION (JULY 20, 2018) TO AUGUST 10, 2018
 
 CASH FLOWS FROM OPERATING ACTIVITIES:
Net income  $—   
      
NET CASH PROVIDED BY OPERATING ACTIVITIES   —   
      
 CASH FLOWS FROM FINANCING ACTIVITIES:
Proceeds from issuance of common stock   50,000 
      
 NET CASH PROVIDED BY FINANCING ACTIVITIES   50,000 
      
NET INCREASE IN CASH   50,000 
      
CASH, INCEPTION (JULY 20, 2018)   —   
      
CASH, END OF PERIOD (AUGUST 10, 2018)  $50,000 

 

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NOTE 1 – DESCRIPTION OF BUSINESS

 

Tuscan Gardens Senior Living Communities, Inc. (the “Company”) was organized on July 20, 2018 and is a Florida Corporation. The Company was formed to invest in wholly-owned subsidiaries that develop (“Development Projects”), acquire (“Acquisition Projects”), or convert other real estate properties including hotels (“Conversion Projects”) into senior living rental communities ranging from $15,000,000 to $100,000,000 per community, consisting of independent living, assisted living and/or memory care. The Company’s primary focus for purposes of Development Projects will be on southeastern markets, and for purposes of Acquisition Projects and Conversion Projects will be on national markets, that it considers to have favorable risk-return characteristics The Company, operating through wholly-owned special purpose entities (“SPE”) as real estate owner-operators, intends to create, operate and hold a portfolio of Company Properties on a long-term basis, approximating seven years,, and ultimately dispose of them to generate revenue for the Company.

 

NOTE 2 – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

 

Basis of Accounting

 

The accounting policies of the Company conform to accounting principles generally accepted in the United States of America.

 

Cash

 

The Company maintains its cash deposits at a bank. Cash deposits could, at times, exceed federally insured limits. As of August 10, 2018 there was no uninsured balance.

 

Use of Estimates

 

The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities, if any, at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates.

 

Income Taxes

 

There are no open federal or state tax years under audit. Financial Accounting Standards Board issued ASC 740-10 (Accounting for Uncertainty in Income Taxes), which prescribed a comprehensive model for how a company should measure, recognize, present, and disclose in its financial statements uncertain tax positions that an organization has taken or expects to take. The Company adopted ASC 740-10 and has not taken any uncertain tax positions that require disclosure in the financial statements.

 

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NOTE 2 – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)

 

Fair Value of Financial Instruments

 

The FASB ASC Topic "Financial Instruments" clarifies the definition of fair value for financial reporting, establishing a framework for measuring fair value, and requires additional disclosure about the use of fair value measurements in an effort to make the measurement of fair value more consistent and comparable. The carrying amount of cash approximates fair value due to the short maturity of this financial instruments.

 

Subsequent Events

 

Subsequent events were evaluated through August 10, 2018, which is the date the financial statements were available to be issued.

 

NOTE 3 – EQUITY AND FUTURE EQUITY

 

The Company currently has two authorized share classes: common voting shares with $1.00 par value per share (“Common Shares”) and Series A Preferred Non-Voting Preferred Shares with $1,000.00 par value per share (“Preferred Shares”). On August 10, 2018, the Company established an equity basis in 50,000 shares of $1.00 par value Common Shares.

  

The Company intends to issue an initial offering (“Offering”) on a “best efforts” basis to raise capital using its Series A Preferred Shares. The Company seeks to raise $50,000,000 from the Offering of Preferred Shares. The Company will seek to pursue Development Projects, Acquisition Projects, and Conversion Projects that have the potential to provide a ongoing income to investors in the Preferred Shares, paid or accrued monthly (“Preferred Dividend”), plus potential capital appreciation through additional dividends (“Special Dividends”) based on fifty (50%) percent participation in the net proceeds generated by the Company from the Holdco disposition of Company Properties. However, as that the Offering is a blind pool and the Company has no track record, there can be no guarantee that such returns can or will be achieved.

 

The Preferred Shares have no public market and will not be listed on any national securities exchange or on the over-the counter inter-dealer quotation system. The proposed sale of the Preferred Shares will begin as soon as practicable after the information statement has been qualified by the SEC and will terminate December 31, 2019. The Preferred Shares are being offered pursuant to Regulation A under the Securities Act of 1933, as amended, for Tier 2 offerings. The Preferred Shares will only be issued to purchasers who satisfy the requirements set forth in Regulation A. Funds from the Offering will be made available to the Company once the Offering raises a minimum of $500,000 excluding sales to Company affiliates (“Minimum Offering Amount”). There are no provisions for the return of funds once the Minimum Offering Amount is sold.

 

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PART III - EXHIBITS

 

Index to Exhibits

 

Exhibit No.   Exhibit Description
A   Articles of Incorporation of the Company dated July 20, 2018
     
B   Bylaws of the Company dated July 20, 2018
     
C   Form of Subscription Agreement
     
D   Shareholder Agreement
     
E   Advisory Agreement between the Advisor and the Company
     
F   Asset Management Agreement between the Asset Manager and the Company
     
G   Consent of Pino Nicholson PLLC to use Legal Opinion
     
H   Consent of Grennan, Fender, Hess & Poparad LLP to use Audit Opinion
     
I   Pino Nicholson PLLC Legal Opinion concerning the Issuance of Preferred Shares

 

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SIGNATURES

 

Pursuant to the requirements of Regulation A, the issuer certifies that it has reasonable grounds to believe that it meets all of the requirements for filing on Form 1-A and has duly caused this Offering Statement to be signed on its behalf by the undersigned, thereunto duly authorized, in the City of Orlando, State of Florida, on February 11, 2019. 

 

  TUSCAN GARDENS SENIOR LIVING COMMUNITIES, INC.
   
  Signed:
     
  By: /s/ Laurence J. Pino
    Name:  Laurence J. Pino
    Title:    Chief Executive Officer and Director

 

 

  By: /s/ William N. Johnston
    Name:  William N. Johnston
    Title:    Chief Financial Officer and Director 
     
     
  By: /s/ Christopher P. Young
    Name:  Christopher P. Young
    Title:    Director

 

 

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EX1A-2A CHARTER 3 ex1a_2a.htm EXHIBIT 1A-2A

Exhibit 1A-2A 

 

Exhibit A – Articles of Incorporation

 

ARTICLES OF INCORPORATION

OF

TUSCAN GARDENS SENIOR LIVING COMMUNITIES, INC.

DATED JULY 20, 2018

 

ARTICLE I – NAME

 

The name of this corporation is Tuscan Gardens Senior Living Communities, Inc. (the “Corporation”).

 

ARTICLE II – REGISTERED OFFICE

 

The address of the registered office of the Corporation in the State of Florida is 189 South Orange Avenue, Suite 1650, City of Orlando, County of Orange, 32801. The name of the registered agent at such address is Securities Transfer Corporation.

 

ARTICLE III – PURPOSE

 

The purpose for which the Corporation is organized is to engage in any lawful act or activity for which corporations may be organized under the Florida Business Corporations Act (the “FBCA”).

 

ARTICLE IV – AUTHORIZED CAPITAL

 

A. Authorized CapitalThe Corporation’s authorized capital shall consist of two classes comprised of voting common shares, and non-voting preferred shares. The total number of shares of all classes of shares which the Corporation shall have authority to issue is 100,000 shares, consisting of 50,000 shares of voting common shares, $1.00 par value per share (the “Common Shares”), and 50,000 shares of Class A Non-Voting Preferred Shares, $1,000.00 par value per share (the “Preferred Shares”). Except as otherwise stated in the Bylaws of the Corporation as may be in effect from time to time, the rights, powers and privileges and the qualifications, limitations or restrictions thereof, in respect of the Common Shares and the Preferred Shares shall be as described in this Article IV.

 

B. Liquidation, Dissolution or Winding Up. In the event of any voluntary or involuntary liquidation, dissolution or winding up of the corporation, the funds and assets available for distribution will be distributed within Ninety (90) days of the date of liquidation in the following order and priority:

 

a)First, to creditors of the Company, including Shareholders who are creditors, to the extent otherwise permitted by law, in satisfaction of all debts, liabilities, obligations and expenses of the Company, including, without limitation, the expenses incurred in connection with the liquidation of the Company; and
b)Second, to the Preferred Shareholders to the extent of and in proportion to their invested capital until the aggregate amount paid to such Preferred Shareholders is sufficient to provide for a complete return of such Preferred Shareholders invested capital; and
c)Third, to the Preferred Shareholders to the extent of and in proportion to their respective unpaid eight (8.0%) percent Preferred Return until such Preferred Shareholders' unpaid eight (8.0%) percent Preferred Return has been paid in full; and
d)Fourth, fifty (50%) percent of any remaining proceeds from the liquidation of the Company to the Preferred Shareholders’ Liquidating Dividends allocated among Preferred Shareholders in proportion to the amount and duration of each Preferred Shareholder’s invested capital; and
e)Fifth, to the Common Shareholders.

 

C. VotingEach holder of Common Shares shall be entitled to vote at all meetings of the shareholders and shall have one vote for each Common Preferred Share held by such shareholder. The Common Shares shall vote as a single class with respect to all matters submitted to a vote of shareholders of the Corporation.

 

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D. Dividends. 

 

Preferred Dividend. Each holder of Preferred Shares will be eligible to receive a “Preferred Dividend” that is expected to, with respect to the Preferred Share’s par value (cumulative and not compounded) equal to eight (8.0%) percent per annum, paid or accrued monthly. For purposes of calculating the Preferred Dividend, all capital contributions and dividends occurring during a given month will be deemed to have occurred on the first day of the month. Such dividends will be made from available cash that remains following the payment of Company obligations as more fully described in this Article IV. Payment of the Preferred Dividend is further contingent upon the Company retaining available cash to offset any losses in the event the Company is operating at a loss. In the event the Company does not have available cash to distribute, a holder of Preferred Shares will neither receive nor be entitled to payment of the Preferred Dividend.

 

Special Dividends. Once any one of the Company Properties reaches Stabilization, which is typically twenty-four (24) months from the commencement of operations. the Company may elect to pay additional dividends to the holders of Preferred Shares from the distributions it receives from a respective Holdco, less certain expenses and reserves (see “Net Operating Cash Flow”). The amount of Net Operating Cash Flow of the Company to be paid as Special Dividends shall be determined by the Company, in its sole and absolute discretion.

 

The Company does not expect to receive distributions from the Holdcos and, therefore, commence the payment of Special Dividends based on Net Operating Cash Flow to Preferred Shareholders, until one or more of the Company Properties have begun to generate sufficient cash flow in excess of any debt service and reserve requirements. As a result there can be no assurance as to the date on which distributions will commence or the timing or amount of such distributions, if any, from the Net Operating Cash Flow. The Company expects to pay dividends to the holders of Preferred Shares and holders of Common Shares from distributions it receives from the Holdcos in connection with any sale, refinancing, redemption or other disposition of the Communities, less certain expenses ("Net Disposition Proceeds").

 

Dividends shall be payable only when, as and if declared by the Company's Board of Directors.

 

Dividends resulting from Net Disposition Proceeds received by the Company from Holdcos shall be determined as follows:

 

a)First, to the Preferred Shareholders to the extent of and in proportion to their respective unpaid eight (8.0%) percent Preferred Return until such Preferred Shareholders' unpaid eight (8.0%) percent Preferred Return has been paid in full;
b)Second, fifty (50%) percent of the Net Distribution Proceeds to the Preferred Shareholders’ Special Dividends allocated among Preferred Shareholders in proportion to the amount and duration of each Preferred Shareholder’s invested capital;
c)Third, any remaining Net Distribution Proceeds to the Common Shareholders.

  

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ARTICLE V – DIRECTORS 

 

The number of Directors of the Corporation may be fixed by the Bylaws. Elections of Directors may be, but are not required to be, by written ballot.

 

ARTICLE VI – LIMITATION OF LIABILITY

 

No person who was or is a Director of this Corporation shall be personally liable to the Corporation or its shareholders for monetary damages for breach of fiduciary duty as a Director, except for liability (i) for breach of the duty of loyalty to the Corporation or its shareholders; (ii) for acts or omissions not in good faith or which involve intentional misconduct or knowing violation of law; (iii) under the FBCA; or (iv) for any transaction from which the Director derived an improper personal benefit. If the FBCA is amended after the effective date of this Article VI to further eliminate or limit, or to authorize further elimination or limitation of, the personal liability of Directors for breach of fiduciary duty as a Director, then the personal liability of a Director to this Corporation or its shareholders shall be eliminated or limited to the full extent permitted by the FBCA, as so amended. For purposes of this Article VI, “fiduciary duty as a Director” shall include any fiduciary duty arising out of serving at the request of this Corporation as a director of another corporation, partnership, joint venture, trust or other enterprise, and “personally liable to the Corporation” shall include any liability to such other corporation, partnership, joint venture, trust or other enterprise, and any liability to this Corporation in its capacity as a security holder, joint venturer, partner, beneficiary, creditor or investor of or in any such other corporation, partnership, joint venture, trust or other enterprise. Any repeal or modification of this Article VI by the shareholders of this Corporation shall not adversely affect the elimination or limitation of the personal liability of a Director for any act or omission occurring prior to the effective date of such repeal or modification. This provision shall not eliminate or limit the liability of a Director for any act or omission occurring prior to the effective date of this Article VI.

  

 

ARTICLE VII – INDEMNITY

 

A. The Corporation shall indemnify any person who was or is a party or is threatened to be made a party to any threatened, pending or completed action, suit or proceeding, whether civil, criminal, administrative or investigative (other than an action by or in the right of the Corporation) by reason of the fact that he/she is or was or has agreed to become a Director or officer of the Corporation, or is or was serving or has agreed to serve at the request of the Corporation as a director or officer of another corporation, partnership, joint venture, trust or other enterprise, or by reason of any action alleged to have been taken or omitted in such capacity, against costs, charges and other expenses (including attorneys’ fees) (“Expenses”), judgments, fines and amount paid in settlement actually and reasonably incurred by him/her in connection with such action, suit or proceeding and any appeal thereof if he/she acted in good faith and in a manner he/she reasonably believed to be in or not opposed to the best interests of the Corporation, and with respect to any criminal action or proceeding, had no reasonable cause to believe his/her conduct was unlawful. The termination of any action, suit or proceeding by judgment, order, settlement, conviction, or plea of nolo contendere or its equivalent, shall not, of itself, create a presumption that the person did not act in good faith and in a manner which he/she reasonably believed to be in or not opposed to the best interests of the Corporation, and, with respect to any criminal action or proceeding, had reasonable cause to believe that his/her conduct was unlawful. For purposes of this Article VII, “serving or has agreed to serve at the request of the Corporation as a director or officer of another corporation, partnership, joint venture, trust or other enterprise” shall include any service by a Director or officer of the Corporation as a director, officer, employee, agent or fiduciary of such other corporation, partnership, joint venture, trust or other enterprise, or with respect to any employee benefit plan (or its participants or beneficiaries) of the Corporation or any such other enterprise.

 

B. The Corporation shall indemnify any person who was or is a party or is threatened to be made a party to any threatened, pending or completed action or suit by or in the right of the Corporation to procure a judgment in its favor by reason of the fact that he/she is or was or has agreed to become a Director or officer of the Corporation or is or was serving or has agreed to serve at the request of the Corporation as a director or officer of another corporation, partnership, joint venture, trust or other enterprise or by reason of any action alleged to have been taken or omitted in such capacity against Expenses actually and reasonably incurred by him/her in connection with the investigation, defense or settlement of such action or suit and any appeal thereof if he/she acted in good faith and in a manner he/she reasonably believed to be in or not opposed to the best interests of the Corporation and except that no indemnification shall be made in respect of any claim, issue or matter as to which such person shall have been adjudged to be liable to the Corporation unless and only to the extent that the Court of Orange County, Florida or the court in which such action or suit was brought shall determine upon application that, despite the adjudication of liability but in view of all the circumstances of the case, such person is fairly and reasonably entitled to indemnity for such Expenses which the Court of Orange County, Florida or such other court shall deem proper. 

 

C. To the extent that any person referred to in paragraphs (A) or (B) of this Article VII has been successful on the merits or otherwise, including, without limitation, the dismissal of an action without prejudice, in defense of any action, suit or proceeding referred to therein or in defense of any claim, issue or matter therein, he/she shall be indemnified against Expenses actually and reasonably incurred by him/her in connection therewith.

 

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D. Any indemnification under paragraphs (A) or (B) of this Article VII (unless ordered by a court) shall be made by the Corporation only as authorized in the specific case upon a determination that indemnification of the Director or officer is proper in the circumstances because he/she has met the applicable standard of conduct set forth in paragraphs (A) or (B). Such determination shall be made (i) by the Board of Directors by a majority vote of a quorum (as defined in the By-Laws of the Corporation) consisting of Directors who were not parties to such action, suit or proceeding, or (ii) if such quorum is not obtainable, or, even if obtainable a quorum of disinterested Directors so directs, by independent legal counsel in a written opinion, or (iii) by the shareholders.

 

E. Expenses incurred in defending a civil or criminal action, suit or proceeding shall be paid by the Corporation in advance of the final disposition of such action, suit or proceeding and appeal upon receipt by the Corporation of an undertaking by or on behalf of the Director or officer to repay such amount if it shall ultimately be determined that he/she is not entitled to be indemnified by the Corporation.

 

F. The determination of the entitlement of any person to indemnification under paragraphs (A), (B) or (C) or to advancement of Expenses under paragraph (E) of this Article VII shall be made promptly, and in any event within thirty (30) days after the Corporation has received a written request for payment from or on behalf of a Director or officer and payment of amounts due under such sections shall be made immediately after such determination. If no disposition of such request is made within said thirty (30) days or if payment has not been made within ten (10) days thereafter, or if such request is rejected, the right to indemnification or advancement of Expenses provided by this Article VII shall be enforceable by or on behalf of the Director or officer in any court of competent jurisdiction. In addition to the other amounts due under this Article VII, Expenses incurred by or on behalf of a Director or officer in successfully establishing his/her right to indemnification or advancement of Expenses, in whole or in part, in any such action (or settlement thereof) shall be paid by the Corporation.

 

G. The indemnification and advancement of Expenses provided by this Article VII shall not be deemed exclusive of any other rights to which those seeking indemnification or advancement of Expenses may be entitled under any law (common or statutory), By-law, agreement, vote of shareholders or disinterested Directors or otherwise, both as to action in his/her official capacity and as to action in another capacity while holding such office, or while employed by or acting as a Director or officer of the Corporation or as a director or officer of another corporation, partnership, joint venture, trust or other enterprise, and shall continue as to a person who has ceased to be a Director or officer and shall inure to the benefit of the heirs, executors and administrators of such a person. Notwithstanding the provisions of this Article VII, the Corporation shall indemnify or make advancement of Expenses to any person referred to in paragraphs (A) or (B) of this Article VII to the full extent permitted under the laws of Florida and any other applicable laws, as they now exist or as they may be amended in the future. 

 

H. All rights to indemnification and advancement of Expenses provided by this Article VII shall be deemed to be a contract between the Corporation and each Director or officer of the Corporation who serves, served or has agreed to serve in such capacity, or at the request of the Corporation as director or officer of another corporation, partnership, joint venture, trust or other enterprise, at any time while this Article VII and the relevant provisions of the FBCA or other applicable law, if any, are in effect. Any repeal or modification of this Article VII, or any repeal or modification of relevant provisions of the FBCA or any other applicable law, shall not in any way diminish any rights to indemnification of or advancement of Expenses to such Director or officer or the obligations of the Corporation.

 

I. The Corporation shall have power to purchase and maintain insurance on behalf of any person who is or was or has agreed to become a Director or officer of the Corporation, or is or was serving or has agreed to serve at the request of the Corporation as a director or officer of another corporation, partnership, joint venture, trust or other enterprise, against any liability asserted against him/her and incurred by him/her in any such capacity, or arising out of his/her status as such, whether or not the Corporation would have the power to indemnify him/her against such liability under the provisions of this Article VII.

 

J. The Board of Directors may, by resolution, extend the provisions of this Article VII pertaining to indemnification and advancement of Expenses to any person who was or is a party or is threatened to be made a party to any threatened, pending or completed action, suit or proceeding by reason of the fact that he/she is or was or has agreed to become an employee, agent or fiduciary of the Corporation or is or was serving or has agreed to serve at the request of the Corporation as a director, officer, employee, agent or fiduciary of another corporation, partnership, joint venture, trust or other enterprise or with respect to any employee benefit plan (or its participants or beneficiaries) of the Corporation or any such other enterprise.

 

K. The invalidity or unenforceability of any provision of this Article VII shall not affect the validity or enforceability of the remaining provisions of this Article VII.

 

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ARTICLE VIII – FORUM SELECTION

 

This Agreement shall be governed by and construed in accordance with the laws of the State of Florida. In the event of a dispute regarding this Agreement or the respective rights of the parties hereunder, the parties agree to submit such dispute exclusively to binding arbitration, as legally enforceable based on case law as upheld by the U.S. Supreme Court, in Orlando, Florida before an arbitration panel consisting of three professional arbitrators with each of two arbitrators selected by the parties and the final third arbitrator selected by the selected two arbitrators. Any such arbitration shall be restricted to the party filing the arbitration and shall not be a joint or multiple arbitration reflecting more than one party and shall be commenced within fifteen (15) days of selection of the arbitrator and the discovery rules contained in the Florida Rules of Civil Procedure shall apply to all such proceedings. The arbitrator shall order all remedies permitted by law, award attorney's fees and costs to the prevailing party, and require that the entire proceeding, including the existence of the proceeding, be held confidential by the parties, and shall not be disclosed by any party. Any and all orders issued by the arbitrator shall be enforced by a state court of competent jurisdiction located in Orlando, Orange County, Florida. Notwithstanding the foregoing, by agreeing to the arbitration provision, investors will not be deemed to have waived the Company’s compliance with U.S. federal securities laws and the rules and regulations promulgated thereunder.

 

ARTICLE IX – AMENDMENTS

 

A. In furtherance and not in limitation of the powers conferred by statute, the Board of Directors is expressly authorized to adopt, amend or repeal the Bylaws or adopt new Bylaws without any action on the part of the shareholders; provided that any Bylaw adopted or amended by the Board of Directors, and any powers thereby conferred, may be amended, altered or repealed by the shareholders.

 

B. The Corporation reserves the right to amend, alter, change or repeal any provision contained in this Articles of Incorporation, in the manner now or hereafter prescribed by statute, and all rights conferred upon the shareholders herein are granted subject to this reservation.

 

*      *      *      *

 

 

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EX1A-2B BYLAWS 4 ex1a_2b.htm EXHIBIT 1A-2B

 Exhibit 1A-2B

 

Exhibit B – Bylaws

 

BY-LAWS

 

OF

 

TUSCAN GARDENS SENIOR LIVING COMMUNITIES, INC.

 

a Florida corporation

 

(in effect as of July 20, 2018)

 

 

 

TABLE OF CONTENTS

 

ARTICLE I OFFICES 1
   
Section 1.1 Registered Office and Agent. 1
Section 1.2 Books and Records. 1
     
ARTICLE II MEETINGS OF THE SHAREHOLDERS 1
   
Section 2.1 Annual Meetings. 1
Section 2.2 Special Meetings. 1
Section 2.3 Place of Meetings. 1
Section 2.4 Adjournments. 1
Section 2.5 Notice of Meetings. 1
Section 2.6 Quorum. 1
Section 2.7 Conduct of Meetings. 2
Section 2.8 Voting; Proxies. 2
Section 2.9 Action by Written Consent. 2
Section 2.10 List of Shareholders. 3
Section 2.11 Record Date. 3
     
ARTICLE III BOARD OF DIRECTORS 3
   
Section 3.1 General Powers. 3
Section 3.2 Number; Election; Term of Office. 3
Section 3.3 Vacancies. 4
Section 3.4 Removal; Resignation. 4
Section 3.5 Reliance upon Records. 4
Section 3.6 Compensation. 4
Section 3.7 Meetings. 4
Section 3.8 Place of Meetings. 4
Section 3.9 Adjourned Meetings. 4
Section 3.10 Quorum. 4
Section 3.11 Action by Majority Vote. 4
Section 3.12 Director Action Without a Meeting. 5
Section 3.13 Committees of the Board of Directors. 5
     
ARTICLE IV OFFICERS 5
   
Section 4.1 Generally. 5
Section 4.2 Term; Removal; Vacancy. 5
Section 4.3 The Chair of the Board. 5
Section 4.4 The President. 5
Section 4.5 Vice Presidents. 5
Section 4.6 The Chief Financial Officer. 6

Section 4.7 The Treasurer. 6
Section 4.8 Assistant Treasurers. 6
Section 4.9 The Secretary. 6
Section 4.10 Assistant Secretaries. 6
Section 4.11 Duties of the Officers May be Delegated. 6
Section 4.12 Compensation. 7

  

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ARTICLE V CERTIFICATES OF SHARES; TRANSFER 8
   
Section 5.1 Certificates; Signatures. 8
Section 5.2 Transfers of Shares. 8
Section 5.3 Transfer Agents and Registrars. 8
Section 5.4 Lost, Stolen or Destroyed Certificates. 8
Section 5.5 Additional Rules and Regulations. 8
     
ARTICLE VI NOTICES 8
   
Section 6.1 Manner of Notices. 8
Section 6.2 Waivers. 9
     
ARTICLE VII FORUM SELECTION 9
   
ARTICLE VIII DIVIDENDS 9
   
 ARTICLE IX MISCELLANEOUS 9
   
Section 9.1 Ratification. 9
Section 9.2 Fiscal Year. 9
Section 9.3 Bank Accounts and Drafts. 9
Section 9.4 Contracts. 10
Section 9.5 Corporate Seal. 10
Section 9.6 Inspection of Books. 10
Section 9.7 Section Headings. 10
Section 9.8 Conflict with Applicable Law or Articles of Incorporation. 10
     
ARTICLE X LIMITATION OF LIABILITY; INDEMNITY 10
   
Section 10.1 Limitation of Liability. 10
Section 10.2 Indemnity 10

 

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BY-LAWS

 

OF

 

TUSCAN GARDENS SENIOR LIVING COMMUNITIES, INC.

 

a Florida Corporation

 

ARTICLE I
OFFICES

 

Section 1.1 Registered Office and Agent.  The registered office of Tuscan Gardens Senior Living Communities, Inc., a Florida corporation (the “Corporation”), shall be located at 189 South Orange Street, City of Orlando, County of Orange, State of Florida 32801. The name of its registered agent at such address isthe Securities Transfer Corporation. The Corporation may have other offices at such places, both within and without of the State of Florida, as the Board of Directors of the Corporation (the “Board of Directors” and each member of the Board of Directors, a “Director”) may from time to time determine or the business of the Corporation may require.

 

Section 1.2 Books and Records.  Any records maintained by the Corporation in the regular course of its business, including its shares ledger, books of account and minute books, may be maintained on any information storage device, third party provider, or method; providedhowever, that any records so kept can be converted into clearly legible paper form within a reasonable time. The Corporation shall convert any such records within a reasonable timeframe upon the request of any person entitled to inspect such records pursuant to applicable law.

 

ARTICLE II
MEETINGS OF THE SHAREHOLDERS

 

Section 2.1 Annual Meetings.  The annual meeting of the voting shareholders for the election of Directors and for the transaction of such other business as may properly come before the meeting shall be held at such date, time and place, if any, as shall be determined by the Board of Directors and stated in the notice of meeting.

 

Section 2.2 Special Meetings.  Special meetings of voting shareholders for any purpose or purposes shall be called pursuant to a resolution approved by the Board of Directors and may not be called by any other person or persons. The only business which may be conducted at a special meeting shall be the matter or matters set forth in the notice of such meeting.

 

Section 2.3 Place of Meetings.  The Board of Directors may designate any place, either within or without the State of Florida, as the place of meeting for any annual meeting or special meeting. If no such place is designated by the Board of Directors, the place of meeting will be the principal business office of the Corporation. The Board of Directors may, in its sole discretion, determine that the meeting shall not be held at any place, but will instead be held solely by means of remote communication as provided under Section 211(a)(2) of the Florida Business Corporations Act (the “FBCA”).

  

Section 2.4 Adjournments.  Any meeting of the voting shareholders, annual or special, may be adjourned from time to time to reconvene at the same or some other place, if any, and notice need not be given of any such adjourned meeting if the time and, as applicable, place and means of remote communication are announced at the meeting at which the adjournment is taken. At the adjourned meeting, the Corporation may transact any business which might have been transacted at the original meeting. If the adjournment is for more than thirty (30) days, a notice of the adjourned meeting shall be given to each voting shareholder of record entitled to vote at the meeting. If after the adjournment a new record date is fixed for voting shareholders entitled to vote at the adjourned meeting, the Board of Directors shall fix a new record date for notice of the adjourned meeting and shall give notice of the adjourned meeting to each shareholder of record entitled to vote at the adjourned meeting as of the record date fixed for notice of the adjourned meeting.

 

Section 2.5 Notice of Meetings.  Notice of the place, if any, date, hour, the record date for determining the voting shareholders entitled to vote at the meeting (if such date is different from the record date for shareholders entitled to notice of the meeting) and means of remote communication, if any, of every meeting of the voting shareholders shall be given by the Corporation in accordance with this Section 2.5 and Article VI of these By-Laws, not less than ten (10) days nor more than sixty (60) days before the meeting (unless a different time is specified by law) to every shareholder entitled to vote at the meeting as of the record date for determining the shareholders entitled to notice of the meeting. Notices of special meetings shall also specify the purpose or purposes for which the meeting has been called.

 

Section 2.6 Quorum.  Unless otherwise required by law, the Corporation’s Articles of Incorporation (the “Articles of Incorporation”) or these By-Laws, at each meeting of the shareholders, holders of a majority of the shares of the Corporation entitled to vote at such meeting, present in person or represented by proxy, shall constitute a quorum. If, however, such quorum shall not be present or represented at any meeting of the shareholders, the shareholders entitled to vote thereat, present in person or represented by proxy, shall have the power, by the affirmative vote of a majority in voting power thereof, to adjourn the meeting from time to time, in the manner provided in Section 2.4 of these By-Laws, until a quorum shall be present or represented. At any such adjourned meeting at which there is a quorum, any business may be transacted that might have been transacted at the meeting originally called.

 

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 Section 2.7 Conduct of Meetings.  The Board of Directors may adopt by resolution such rules and regulations for the conduct of meetings of the shareholders as it shall deem appropriate. At every meeting of the shareholders, the Chair of the Board, or in his or her absence or inability to act, President, or, in his or her absence or inability to act, an officer of the Corporation whom the Board of Directors shall appoint, shall act as chair of, and preside at, the meeting. the Secretary or, in his or her absence or inability to act, the person whom the chair of the meeting shall appoint secretary of the meeting, shall act as secretary of the meeting and keep the minutes thereof. Except to the extent inconsistent with such rules and regulations as adopted by the Board of Directors, the chair of any meeting of the shareholders shall have the right and authority to prescribe such rules, regulations and procedures and to do all such acts as, in the judgment of such chair, are appropriate for the proper conduct of the meeting. Such rules, regulations or procedures, whether adopted by the Board of Directors or prescribed by the chair of the meeting, may include, without limitation, the following: (a) the establishment of an agenda or order of business for the meeting, (b) the determination of when the polls shall open and close for any given matter to be voted on at the meeting, (c) rules and procedures for maintaining order at the meeting and the safety of those present, (d) limitations on attendance at or participation in the meeting to shareholders of record of the corporation, their duly authorized and constituted proxies or such other persons as the chair of the meeting shall determine, (e) restrictions on entry to the meeting after the time fixed for the commencement thereof and (f) limitations on the time allotted for questions or comments by participants. 

 

Section 2.8 Voting; Proxies.  Except as required by applicable law or the Articles of Incorporation, the vote at any election or upon any question at any meeting of the shareholders need not be by written ballot. Notwithstanding the immediately preceding sentence, the Board of Directors, in its discretion, or the chair presiding at a meeting of the shareholders, in his or her discretion, may require that any votes cast at such meeting shall be cast by written ballot. Except as otherwise required by law, the Articles of Incorporation, the provisions regarding the election of Directors set forth in Section 3.2 of these By-Laws, or the provisions of any shareholders’ agreement between the Corporation and its shareholders, as the same may be amended, modified, supplemented or restated from time to time in accordance with its terms, any matter brought before any meeting of shareholders shall be decided by the affirmative vote of the majority of the shares of Common Shares, $1.00 par value per share (“Common Shares”) voting as a single class, present in person or represented by proxy at the meeting and entitled to vote on the matter. Each shareholder entitled to vote at a meeting of shareholders or to express consent to corporate action in writing without a meeting may authorize another person or persons to act for such shareholder by proxy, but no such proxy shall be voted or acted upon after three years from its date, unless the proxy provides for a longer period. A proxy shall be irrevocable if it states that it is irrevocable and if, and only as long as, it is coupled with an interest sufficient in law to support an irrevocable power. A shareholder may revoke any proxy which is not irrevocable by attending the meeting and voting in person or by delivering to the Secretary of the Corporation a revocation of the proxy or a new proxy bearing a later date.

 

Section 2.9 Action by Written Consent.

 

(a)       Unless otherwise provided in the Articles of Incorporation, any action that is required to or otherwise may be taken at any annual or special meeting of the shareholders of the Corporation, may be taken without a meeting, without prior notice, and without a vote if a consent in writing, setting forth the action so taken, is (i) signed by the holders of outstanding voting shares having not less than the minimum number of votes that would be necessary to authorize or take such action at a meeting at which all shares entitled to vote thereon were present and voted and (ii) delivered (by hand or by certified or registered mail, return receipt requested) to the Corporation by delivery to its registered office in the State of Florida, its principal place of business or an officer or agent of the Corporation having custody of the book in which proceedings of meetings of shareholders are recorded. Every written consent shall bear the date of signature of each voting shareholder who signs the consent, and no written consent shall be effective to take the corporate action referred to therein unless, within sixty (60) days of the earliest dated consent delivered in the manner required by this Section 2.9(a), written consents signed by a sufficient number of holders to take action are delivered to the Corporation as aforesaid. A telegram, cablegram, electronic mail or other electronic transmission consenting to an action to be taken and transmitted by a shareholder shall be deemed to be written, signed and dated for purposes of this Section 2.9(a) to the extent permitted by law. Any such consent shall be delivered in accordance with the FBCA. Any copy, facsimile or other reliable reproduction of a consent in writing may be substituted or used in lieu of the original writing for any and all purposes for which the original writing could be used, provided that such copy, facsimile or other reproduction shall be a complete reproduction of the entire original writing. 

 

(b)       Prompt notice of the taking of the corporate action without a meeting by less than unanimous written consent shall, to the extent required by applicable law, be given to those voting shareholders who have not consented in writing, and who, if the action had been taken at a meeting, would have been entitled to notice of the meeting if the record date for notice of such meeting had been the date that written consents signed by a sufficient number of holders to take the action were delivered to the Corporation. If the action which is consented to is such as would have required the filing of a certificate under any section of the FBCA if such action had been voted on by shareholders at a meeting thereof, then the certificate filed under such section shall state, in lieu of any statement required by such section concerning any vote of shareholders, that written notice and written consent have been given as provided in the FBCA.

 

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 Section 2.10 List of Voting Shareholders.  The officer of the Corporation who has charge of the share ledger shall prepare a complete list of the shareholders entitled to vote at any meeting of the voting shareholders (providedhowever, if, pursuant to Section 2.11, the record date for determining the shareholders entitled to vote is less than ten (10) days before the date of the meeting, the list shall reflect the shareholders entitled to vote as of the tenth day before the meeting date), arranged in alphabetical order, and showing the address of each shareholder and the number of shares of each voting class of authorized capital of the Corporation registered in the name of each shareholder. Such list shall be open to the examination of any voting shareholder, for any purpose germane to the meeting, for a period of at least ten (10) days prior to the meeting (a) on a reasonably accessible electronic network, provided that the information required to access such list is provided with the notice of meeting; or (b) during ordinary business hours at the principal place of business of the Corporation. If the meeting is to be held at a place, the list shall also be produced and kept at the time and place of the meeting the whole time thereof and may be inspected by any shareholder who is present. If the meeting is held solely by means of remote communication, the list shall also be open for inspection by any voting shareholder during the whole time of the meeting as provided by applicable law. Except as provided by applicable law, the share ledger of the Corporation shall be the only evidence as to who are the voting shareholders entitled to examine the share ledger and the list of voting shareholders or to vote in person or by proxy at any meeting of the shareholders. 

 

Section 2.11 Record Date.

 

(a)       In order that the Corporation may determine the shareholders entitled to notice of or to vote at any meeting of the voting shareholders or any adjournment thereof, the Board of Directors may fix a record date, which record date shall not precede the date upon which the resolution fixing the record date is adopted by the Board of Directors, and which record date shall not be more than sixty (60) nor less than ten (10) days before the date of such meeting. If the Board of Directors so fixes a date, such date shall also be the record date for determining the shareholders entitled to vote at such meeting unless the Board of Directors determines, at the time it fixes such record date, that a later date on or before the date of the meeting shall be the date for making such determination. If no record date is fixed by the Board of Directors, the record date for determining shareholders entitled to notice of or to vote at a meeting of the shareholders shall be at the close of business on the day next preceding the day on which notice is given, or, if notice is waived, at the close of business on the day next preceding the day on which the meeting is held. A determination of shareholders of record entitled to notice of or to vote at a meeting of the shareholders shall apply to any adjournment of the meeting, provided that the Board of Directors may fix a new record date for the determination of shareholders entitled to vote at the adjourned meeting and in such case shall also fix as the record date for voting shareholders entitled to notice of such adjourned meeting the same or an earlier date as that fixed for the determination of shareholders entitled to vote therewith at the adjourned meeting.

 

(b)       In order that the Corporation may determine the voting shareholders entitled to consent to corporate action in writing without a meeting, the Board of Directors may fix a record date, which record date shall not precede the date upon which the resolution fixing the record date is adopted by the Board of Directors, and which record date shall not be more than ten (10) days after the date upon which the resolution fixing the record date is adopted by the Board of Directors. If no record date has been fixed by the Board of Directors, the record date for determining voting shareholders entitled to consent to corporate action in writing without a meeting shall be determined as follows: (i) when no prior action by the Board of Directors is required by law, the record date for such purpose shall be the first date on which a signed written consent setting forth the action taken or proposed to be taken is delivered to the Corporation by delivery (by hand, or by certified or registered mail, return receipt requested) to its registered office in the State of Florida, its principal place of business, or an officer or agent of the Corporation having custody of the book in which proceedings of meetings of shareholders are recorded, and (ii) if prior action by the Board of Directors is required by law, the record date for such purpose shall be at the close of business on the day on which the Board of Directors adopts the resolution taking such prior action.

 

(c)       In order that the Corporation may determine the shareholders entitled to receive payment of any dividend or other distribution or allotment of any rights or the shareholders entitled to exercise any rights in respect of any change, conversion or exchange of shares, or for the purpose of any other lawful action, the Board of Directors may fix a record date, which record date shall not precede the date upon which the resolution fixing the record date is adopted, and which record date shall be not more than sixty (60) days prior to such action. If no record date is fixed, the record date for determining shareholders for any such purpose shall be at the close of business on the day on which the Board of Directors adopts the resolution relating thereto. 

 

ARTICLE III
BOARD OF DIRECTORS

 

Section 3.1 General Powers.  The business and affairs of the Corporation shall be managed by and/or under the direction of the Board of Directors. The Board of Directors may adopt such rules and procedures, not inconsistent with the Articles of Incorporation, these By-Laws or applicable law, as it may deem proper for the conduct of its meetings and the management of the Corporation.

 

Section 3.2 Number; Election; Term of Office.  The number of Directors constituting the entire Board of Directors shall be no fewer than (3) nor more than five (5). The exact number of Directors shall be set within such limits from time to time by the affirmative vote of a majority of the voting shareholders or by resolution of the Board of Directors. The number of Directors shall be initially set at three (3) comprised of Laurence J. Pino, William N. Johnston, and Christopher P. Young. Each director shall be elected by a plurality of all the votes cast by the holders of Common Shares, voting together as a single class, at a meeting of shareholders duly called and at which a quorum is present. Directors who are elected at an annual meeting of shareholders, and Directors who are elected in the interim to fill vacancies and newly created Directorships, shall hold office until the next annual meeting of shareholders and until their successors are elected and qualified or until their earlier resignation or removal.

 

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Section 3.3 Vacancies.  A vacancy occurring on the Board of Directors, including, without limitation, a vacancy created by an increase in the authorized number of Directors or resulting from the shareholders’ failure to elect the full authorized number of Directors, may be filled by a vote of a majority of the Directors then in office or, if the Directors remaining in office constitute less than a quorum of the Directors, by the affirmative vote of a majority of all remaining Directors or by the sole remaining Director. If the vacant office was held by a Director elected by a voting group, only the remaining Director or Directors elected by that voting group or the holders of shares of that voting group are entitled to fill the vacancy. A Director elected to fill a vacancy shall be elected for the unexpired term of such Director’s predecessor in office. The shareholders may elect a Director at any time to fill any vacancy not filled by the Directors.

 

Section 3.4 Removal; Resignation.  Directors may be removed from office with or without cause by a vote of shareholders holding a majority of the outstanding voting shares entitled to vote at an election of Directors. If a Director is elected by a voting group of shareholders, only the shareholders of that voting group may participate in the vote to remove him. If any Directors are so removed, new Directors may be elected at the same meeting. Any Director may resign by delivering a resignation in writing or by electronic transmission to the Corporation at its principal office or to the Chair of the Board, the Chief Executive Officer, the President or the Secretary. Such resignation shall be effective upon receipt unless it is specified to be effective at some later time or upon the happening of some later time or upon the happening of some later event. 

 

Section 3.5 Reliance upon Records.  Every Director, and every member of any committee of the Board of Directors, shall, in the performance of his or her duties, be fully protected in relying in good faith upon the records of the Corporation and upon such information, opinions, reports or statements presented to the Corporation by any of its officers or employees, or committees of the Board of Directors, or by any other person as to matters any Director or member reasonably believes are within such other person’s professional or expert competence and who has been selected with reasonable care by or on behalf of the Corporation, including, but not limited to, such records, information, opinions, reports or statements as to the value and amount of the assets, liabilities and/or net profits of the Corporation, or any other facts pertinent to the existence and amount of surplus or other funds from which dividends might properly be declared and paid, or with which the Corporation’s shares might properly be purchased or redeemed.

 

Section 3.6 Compensation.  Directors may be paid their expenses, if any, of attendance at each meeting of the Board of Directors and may be paid a fixed sum for attendance at each meeting of the Board of Directors, a fixed quarterly fee or a stated salary as a Director. No such payment shall preclude any Director from serving the Corporation in any other capacity and receiving compensation therefor. Members of special or standing committees may be allowed like compensation for attending committee meetings.

 

Section 3.7 Meetings.  Regular meetings of the Board of Directors may be held without notice at such times as may be determined from time to time by the Board of Directors. Special meetings of the Board of Directors may be called by or at the request of the Chair of the Board, the President or at least two-thirds of the number of Directors constituting the whole board, on at least three (3) days’ notice to each Director given by one of the means specified in Article VI of these By-Laws (other than by mail), or on at least five (5) days’ notice if given by mail.

 

Section 3.8 Place of Meetings.  Meetings of the Board of Directors may be held at such place within or without the State of Florida as shall be stated in the notice of meeting or waiver thereof or, in the case of a regular meeting of the Board of Directors, as determined by the Board of Directors. Any Director may participate in a meeting of the Board of Directors by means of a conference telephone or similar communications equipment by means of which all persons participating in the meeting can hear each other and such participation shall constitute presence in person at such meeting.

 

Section 3.9 Adjourned Meetings.  A majority of the Directors present at any meeting of the Board of Directors, including an adjourned meeting, whether or not a quorum is present, may adjourn and reconvene such meeting to another time and place. At least three (3) days’ notice of any adjourned meeting of the Board of Directors shall be given to each Director whether or not present at the time of the adjournment. Any business may be transacted at an adjourned meeting that might have been transacted at the meeting as originally called.

 

Section 3.10 Quorum.  At all meetings of the Board of Directors, a majority of the total number of Directors shall constitute a quorum for the transaction of business. If a quorum shall not be present at any meeting of the Board of Directors, then a majority of the Directors present may adjourn the meeting from time to time to another date, place or time, without notice other than announcement at the meeting, until a quorum shall be present. 

 

Section 3.11 Action by Majority Vote.  Except as otherwise expressly required by these By-Laws, the Articles of Incorporation or by applicable law, the vote of a majority of the Directors present at a meeting at which a quorum is present shall be the act of the Board of Directors.

 

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 Section 3.12 Director Action Without a Meeting.  Unless otherwise restricted by the Articles of Incorporation or these By-Laws, any action required or permitted to be taken at any meeting of the Board of Directors or of any committee thereof may be taken without a meeting, if all members of the Board of Directors or committee, as the case may be, consent thereto in writing (which may be by facsimile, electronic mail or other similar transmission), and the writing or writings are filed with the minutes of proceedings of the Board of Directors or committee.

 

Section 3.13 Committees of the Board of Directors.  The Board of Directors may designate one or more committees, each committee to consist of one or more of the Directors of the Corporation. The Board of Directors may designate one or more Directors as alternate members of any committee, who may replace any absent or disqualified member at any meeting of the committee. If a member of a committee shall be absent from any meeting, or disqualified from voting thereat, the remaining member or members present at the meeting and not disqualified from voting, whether or not such member or members constitute a quorum, may unanimously appoint another member of the Board of Directors to act at the meeting in the place of any such absent or disqualified member. To the extent permitted by the FBCA, any such committee shall have and may exercise all the powers and authority of the Board of Directors in the management of the business and affairs of the Corporation and may authorize the seal of the Corporation to be affixed to all papers that may require it to the extent so authorized by the Board of Directors. Unless the Board of Directors provides otherwise, at all meetings of such committee, a majority of the then authorized members of the committee shall constitute a quorum for the transaction of business, and the vote of a majority of the members of the committee present at any meeting at which there is a quorum shall be the act of the committee. Each committee shall keep regular minutes of its meetings. Unless the Board of Directors provides otherwise, each committee designated by the Board of Directors may make, alter and repeal rules and procedures for the conduct of its business. In the absence of such rules and procedures each committee shall conduct its business in the same manner as the Board of Directors conducts its business pursuant to this Article III.

 

ARTICLE IV
OFFICERS

 

Section 4.1 Generally.  The Board of Directors shall elect the officers of the Corporation, and such officers shall consist of the President, and Secretary and Treasurer. The Board of Directors, in its discretion, may also elect a Chair of the Board (who must be a Director), a Chief Financial Officer and one or more Vice Presidents, Assistant Treasurers and Assistant Secretaries. The Board of Directors may appoint such other officers and agents as it shall deem necessary and such other officers and agents shall hold their offices for such terms and shall exercise such powers and perform such duties as shall be determined from time to time by the Board of Directors. Any two or more offices may be held by the same person.

 

Section 4.2 Term; Removal; Vacancy.  Each officer of the Corporation shall hold office until such officer’s successor is elected and qualified or until such officer’s earlier death, resignation or removal. Any officer elected and/or appointed by the Board of Directors may be removed by the Board of Directors at any time with or without cause by the majority vote of the members of the Board of Directors then in office. The removal of an officer shall be without prejudice to his or her contract rights, if any. The election or appointment of an officer shall not of itself create contract rights. Any officer of the Corporation may resign at any time by giving written notice of his or her resignation to the President or the Secretary. Any such resignation shall take effect at the time specified therein or, if the time when it shall become effective shall not be specified therein, immediately upon its receipt. Unless otherwise specified therein, the acceptance of such resignation shall not be necessary to make it effective. Should any vacancy occur among the officers, the position shall be filled for the unexpired portion of the term by appointment made by the Board of Directors.

 

Section 4.3 The Chair of the Board.  The Chair of the Board, if any, shall preside at all meetings of the shareholders and of the Board of Directors and shall have such other powers and duties as the Board of Directors may from time to time prescribe.

 

Section 4.4 The President.  The President of the Corporation shall have general supervision, direction and control of the business and the officers of the Corporation and shall have the general powers and duties of management incident to the office of the President and any other duties as may be from time to time assigned to the President by the Board of Directors.

 

Section 4.5 Vice Presidents.  In the absence of the President or in the event of such person’s inability or refusal to act, the Vice President, if there be any (or in the event there be more than one Vice President, the Vice Presidents in the order designated by the Board of Directors, or in the absence of any designation, then in the order of their election), shall perform the duties of the President, and when so acting, shall have all the powers of and be subject to all the restrictions upon the President. In addition to the foregoing, the Vice President shall have the general powers and duties usually assumed by the office of Vice President of a corporation and shall have such other powers and perform such other duties as may be specifically prescribed from time to time by the Board of Directors and/or the President.

 

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 Section 4.6 The Chief Financial Officer.  The Chief Financial Officer, if any, shall have overall supervision of the financial operations of the Corporation and shall keep and maintain, or cause to be kept and maintained, adequate and correct books and records of accounts of the properties and business transactions of the Corporation, including accounts of its assets, liabilities, receipts, disbursements, gains, losses, capital, retained earnings and shares. The books of account shall at all reasonable times be open to inspection by the Board of Directors. The Chief Financial Officer shall render to the President and/or the Board of Directors, upon request, an account of his or her transactions as Chief Financial Officer and of the financial condition of the Corporation. In addition to the foregoing, the Chief Financial Officer shall have the general powers and duties usually assumed by the office of chief financial officer of a corporation and shall have such other powers and perform such other duties as may be specifically prescribed from time to time by the Board of Directors and/or the President. 

 

Section 4.7 The Treasurer.  The Treasurer shall keep and maintain, or cause to be kept and maintained, adequate and correct books and records with respect to all bank accounts, deposit accounts, cash management accounts and other investment and financial accounts of the Corporation. The books of account shall at all reasonable times be open to inspection by the Board of Directors. The Treasurer shall deposit, or cause to be deposited, all moneys and other valuables in the name and to the credit of the corporation with such depositories as may be designated by the Board of Directors. He or she shall disburse the funds of the Corporation as may be ordered by the Board of Directors and shall render to the Chief Financial Officer, the President and/or the Board of Directors, upon request, an account of all his or her transactions as treasurer. In addition to the foregoing, the Treasurer shall have the general powers and duties usually assumed by the office of treasurer of a corporation and shall have such other powers and perform such other duties as may be specifically prescribed from time to time by the Board of Directors and/or the President.

 

Section 4.8 Assistant Treasurers.  The Assistant Treasurer, if any, or if there shall be more than one, the Assistant Treasurers in the order determined by the Board of Directors (or if there be no such determination, then in the order of their election), shall, in the absence of the Treasurer or in the event the Treasurer is not able or refuses to act, perform the duties and exercise the powers of the Treasurer and shall perform such other duties and have such other powers as may be specifically prescribed from time to time by the Board of Directors and/or the President.

 

Section 4.9 The Secretary.  The Secretary shall attend all sessions of the Board of Directors and all meetings of the shareholders and record all votes and the minutes of all proceedings in a book to be kept for that purpose and shall perform like duties for committees when required. The Secretary shall give, or cause to be given, notice of all meetings of the shareholders and meetings of the Board of Directors. The Secretary shall keep, or cause to be kept, at the principal executive office of the Corporation or at the office of the Corporation’s transfer agent or registrar, as determined by resolution of the Board of Directors, a share register, or a duplicate share register, showing the names of all shareholders and their addresses, the number and classes of shares held by each, the number and date of certificates evidencing such shares and the number and date of cancellation of every certificate surrendered for cancellation. The Secretary shall keep in safe custody the seal of the Corporation and have authority to affix the seal to all documents requiring it and attest to the same, provided that the Board of Directors may give general authority to any other officer to affix the seal of the Corporation and to attest the affixing by such officer’s signature. In addition to the foregoing, the Secretary shall have the general powers and duties usually assumed by the office of secretary of a corporation and shall have such other powers and perform such other duties as may be specifically prescribed from time to time by the Board of Directors and/or the President.

 

Section 4.10 Assistant Secretaries.  The Assistant Secretary, if any, or if there shall be more than one, the Assistant Secretaries in the order determined by the Board of Directors (or if there be no such determination, then in the order of their election), shall, in the absence of the Secretary or in the event the Secretary is not able or refuses to act, perform the duties and exercise the powers of the Secretary and shall perform such other duties and have such other powers as may be specifically prescribed from time to time by the Board of Directors and/or the President. 

 

Section 4.11 Duties of the Officers May be Delegated.  In the absence of any officer of the Corporation, or for any other reason the Board of Directors may deem sufficient, the Board of Directors may delegate the powers or duties, or any of such powers or duties, of any officers or officer to any other officer or to any Director.

 

Accordingly, the approval of the Board of Directors is required in connection with:

 

(a)The admission of an additional Common Shareholder;

 

(b)The initiation of a proceeding for the bankruptcy of the Company;

 

(c)The change in the business or purpose of the Company;

 

(d)The approval of a merger, conversion or the application of any statute (the application of which is elective) to the Company;

 

(e)Trading for or in the Company’s proprietary account, except for any normal operating error account;

 

(f)The amendment of this Agreement or any action taken in violation of this Agreement;

 

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(g)The determination of the amount of, and the making of, Dividends;

 

(h)The determination of the amount of, and the making of, the transfer of any Fund Company Property to any person or entity;

 

(i)Assumption of debt by the Company or its affiliates; including but not limited to, the borrowing of money and issuing of evidences of mortgage and subordinate institutional indebtedness in an amount equal to ninety-two (92.0%) or more of the total fair market value of the Company Properties once completed, as is necessary, convenient, or incidental to the accomplishment of the purposes of the Company, and securing the same by mortgage, pledge, or other lien thereon;

 

(j)The institution, prosecution, and defense of any Proceeding in the Company's name;

 

(k)The investment and reinvestment of the Company's funds, and receipt and holding of Company Property as security for repayment;

 

(l)The sale, exchange, transfer, Distribution, or other Disposition of all, or substantially all, of the Company Property; and

 

(m)The redemption of all or any portion of the Preferred Shareholder’s Preferred Shares. 

 

 

Management is authorized to oversee and make decisions regarding:

 

 

(a)The conduct of the Company's business, the establishment of Company offices, and the exercise of the powers of the Company within or without Florida;

 

(b)The appointment of employees and agents of the Company, the defining of their duties, and the establishment of their annual compensation;

 

(c)The payment of compensation, or additional compensation to a Shareholder and employees on account of services previously rendered to the Company, whether or not an agreement to pay such compensation was made before such services were rendered;

 

(d)The purchase of liability and other insurance to protect the Company's Property and business and the purchase of insurance on the life of any of the Shareholders or employees for the benefit of the Company;

 

(e)The employment of accountants, legal counsel, managing agents, or other experts to perform services for the Company and to compensate them from Fund funds; and

 

(f)The doing and performing of all other acts as may be necessary or appropriate to carry out the Company's day to day business.

 

(g)The negotiation and execution of contracts, partnerships, and joint venture relationships with other parties in order to facilitate the successful acquisition, construction, development, and operation of Company Properties; and

 

(h)Negotiate and receive advances that are required to address economic or financial shortfalls on behalf of the Company or its affiliates, including without limitation advances from the Asset Manager or its Affiliates (“Affiliate Advances”). In the event of Affiliate Advances, any such Affiliate Advances shall be reimbursed to the advancing party by the Company or its affiliates with accrued interest at a monthly rate of one (1.0%) percent on such advances prior to any return of any shareholder capital.

 

Section 4.12 Compensation.  The Board of Directors shall have the authority to establish reasonable compensation of all officers for services to the Corporation. 

 

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ARTICLE V
SHARE CERTIFICATES; TRANSFER

 

Section 5.1 Certificates; Signatures.  The shares of the Corporation shall be represented by certificates; provided that the Board of Directors may provide by resolution that some or all of any class or series shall be uncertificated shares that may be evidenced by a book-entry system maintained by the registrar of such shares. Any such resolution shall not apply to shares previously represented by a certificate until such certificate is surrendered to the Corporation. The certificates representing shares of each class shall be signed by, or in the name of, the Corporation by the President or any Vice President, and by the Treasurer, any Assistant Treasurer, the Secretary or any Assistant Secretary. Although any officer, transfer agent or registrar whose manual or facsimile signature is affixed to such a certificate ceases to be such officer, transfer agent or registrar before such certificate has been issued, it may nevertheless be issued by the Corporation with the same effect as if such officer, transfer agent or registrar were still such at the date of its issue. The name of the holder of record of the shares represented thereby, with the number of such shares and the date of issue, shall be entered on the books of the Corporation.

 

Section 5.2 Transfers of Shares.  Transfers of shares shall be made on the books of the Corporation only by the holder of record thereof, by such person’s attorney lawfully constituted in writing and, in the case of certificated shares, upon the surrender of the certificate thereof, which shall be cancelled before a new certificate or uncertificated shares shall be issued. No transfer of shares shall be valid as against the Corporation for any purpose until it shall have been entered in the share records of the Corporation by an entry showing from and to whom transferred. To the extent designated by the President, any Vice President or the Treasurer of the Corporation, the Corporation may recognize the transfer of fractional uncertificated shares but shall not otherwise be required to recognize the transfer of fractional shares.

 

Section 5.3 Transfer Agents and Registrars.  The Board of Directors may, in its discretion, appoint responsible banks or trust companies or other qualified institutions to act as transfer agents or registrars of the shares of the Corporation. Any such bank, trust company or other qualified institution appointed to act as transfer agent or registrar of the shares of the Corporation shall transfer shares of the Corporation in accordance with its customary transfer procedures and in accordance with applicable laws and regulations. 

 

Section 5.4 Lost, Stolen or Destroyed Certificates.  The Board of Directors may direct a new certificate or uncertificated shares to be issued in place of any certificate theretofore issued by the Corporation alleged to have been lost, stolen or destroyed upon the making of an affidavit of that fact by the owner of the allegedly lost, stolen or destroyed certificate. When authorizing such issue of a new certificate or uncertificated shares, the Board of Directors may, in its discretion and as a condition precedent to the issuance thereof, require the owner of the lost, stolen or destroyed certificate, or the owner’s legal representative to give the Corporation a bond sufficient to indemnify it against any claim that may be made against the Corporation with respect to the certificate alleged to have been lost, stolen or destroyed or the issuance of such new certificate or uncertificated shares.

 

Section 5.5 Additional Rules and Regulations.  The Board of Directors may make such additional rules and regulations as it may deem expedient, and not inconsistent with these By-Laws, concerning the issue, transfer and registration of certificated or uncertificated shares of the Corporation. All references to shares in these By-Laws shall refer to either shares represented by certificates or uncertificated shares, and no such reference shall be construed to require certificated shares or to grant additional or different rights or obligations as between the holders of certificated and uncertificated shares of the Corporation.

 

ARTICLE VI
NOTICES

 

Section 6.1 Manner of Notices.

 

(a)       Except as otherwise provided by law, the Articles of Incorporation or these By-Laws, whenever notice is required to be given to any shareholder, Director or member of any committee of the Board of Directors, such notice may be given by (i) personal delivery, (ii) depositing it, in a sealed envelope, in the United States mail, first class postage prepaid, addressed, (iii) delivering by overnight or second day mail or delivery, (iv) delivering it to a telegraph company, charges prepaid, for transmission, or by transmitting it via telecopier or (v) any other reliable means permitted by applicable law (including, subject to this Section 6.1, electronic transmission) to such shareholder, Director or member, either at the address of such shareholder, Director or member as it appears on the records of the Corporation or, in the case of such a Director or member, at his or her business address, and such notice shall be deemed to be given at the time when it is thus personally delivered, deposited, delivered or transmitted, as the case may be.

 

(b)       Without limiting the foregoing, any notice to any shareholder, Director or member of any committee of the Board of Directors given by the Corporation pursuant to these By-Laws shall be effective if given by a form of electronic transmission consented to by such shareholder, Director or member to whom the notice is given. Any such consent shall be revocable by such shareholder, Director or member by written notice to the Corporation and shall also be deemed revoked if (i) the Corporation is unable to deliver by electronic transmission two consecutive notices given by the Corporation in accordance with such consent, and (ii) such inability becomes known to the Secretary or an Assistant Secretary of the Corporation, the transfer agent or other person responsible for the giving of notice, provided that the inadvertent failure to treat such inability as a revocation shall not invalidate any meeting or other action. Notice given to any shareholder, Director or member by a form of electronic transmission in accordance with these By-Laws shall be deemed given as follows: (1) if by facsimile telecommunication, when directed to a number at which such shareholder, Director or member has consented to receive notice, (2) if by electronic mail, when directed to an electronic mail address at which such shareholder, Director or member has consented to receive notice, (3) if by a posting on an electronic network, together with separate notice to such shareholder, Director or member of such specific posting, upon the later of such posting and the giving of such separate notice or (4) if by another form of electronic transmission, when directed to such shareholder, Director or member. 

 

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Section 6.2 Waivers.  Whenever any notice is required to be given under applicable requirements of law or pursuant to the Articles of Incorporation or of these By-Laws, a waiver thereof in writing, signed by the person or persons entitled to said notice, whether before or after the time of the event for which notice is to be given, shall be deemed equivalent thereto. Neither the business nor the purpose of any meeting need be specified in such a waiver. Attendance by a Director or shareholder at a meeting shall constitute a waiver of notice of such meeting except when such Director or shareholder attends a meeting for the express purpose of objecting, at the beginning of the meeting, to the transaction of any business on the ground that the meeting has not been lawfully called or convened. Any shareholder or Director so waiving notice of the meeting shall be bound by the proceedings of the meeting in all respects as if due notice thereof had been given.

 

ARTICLE VII
FORUM SELECTION

 

This Agreement shall be governed by and construed in accordance with the laws of the State of Florida. In the event of a dispute regarding this Agreement or the respective rights of the parties hereunder, the parties agree to submit such dispute exclusively to binding arbitration, as legally enforceable based on case law as upheld by the U.S. Supreme Court, in Orlando, Florida before an arbitration panel consisting of three professional arbitrators with each of two arbitrators selected by the parties and the final third arbitrator selected by the selected two arbitrators. Any such arbitration shall be restricted to the party filing the arbitration and shall not be a joint or multiple arbitration reflecting more than one party and shall be commenced within fifteen (15) days of selection of the arbitrator and the discovery rules contained in the Florida Rules of Civil Procedure shall apply to all such proceedings. The arbitrator shall order all remedies permitted by law, award attorney's fees and costs to the prevailing party, and require that the entire proceeding, including the existence of the proceeding, be held confidential by the parties, and shall not be disclosed by any party. Any and all orders issued by the arbitrator shall be enforced by a state court of competent jurisdiction located in Orlando, Orange County, Florida. Notwithstanding the foregoing, by agreeing to the arbitration provision, investors will not be deemed to have waived the Company’s compliance with U.S. federal securities laws and the rules and regulations promulgated thereunder.

 

ARTICLE VIII
DIVIDENDS

 

Unless otherwise provided in the Articles of Incorporation and subject to applicable law and pursuant to the Corporation’s dividend policy in place from time to time, the Board of Directors shall have full power to determine whether any, and, if any, what part of any, funds legally available for the payment of dividends shall be declared as dividends and paid to shareholders. The division of the whole or any part of such funds of the Corporation shall rest wholly within the lawful discretion of the Board of Directors, and it shall not be required at any time, against such discretion, to divide or pay any part of such funds among or to the shareholders as dividends or otherwise. Before payment of any dividend, there may be set aside out of any funds of the Corporation available for dividends such sum or sums as the Board of Directors from time to time, in its absolute discretion, deems proper as a reserve or reserves to meet contingencies, or for equalizing dividends, or for repairing or maintaining any property of the Corporation, or for such other purpose as the Board of Directors shall think conducive to the interest of the Corporation, and the Board of Directors may modify or abolish any such reserve in the manner in which it was created. 

 

ARTICLE IX
MISCELLANEOUS

 

Section 9.1 Ratification.  Any transaction, questioned in any law suit on the ground of lack of authority, defective or irregular execution, adverse interest of Director, officer or shareholder, non-disclosure, miscomputation or the application of improper principles or practices of accounting, may be ratified before or after judgment, by the Board of Directors or by the shareholders, and if so ratified shall have the same force and effect as if the questioned transaction had been originally duly authorized. Such ratification shall be binding upon the Corporation and its shareholders and shall constitute a bar to any claim or execution of any judgment in respect of such questioned transaction.

 

Section 9.2 Fiscal Year.  The fiscal year of the Corporation shall be fixed, and shall be subject to change, by the Board of Directors. Unless otherwise fixed by the Board of Directors, the fiscal year of the Corporation shall be the calendar year.

 

Section 9.3 Bank Accounts and Drafts.  The funds of the Corporation shall be deposited to its credit in such banks, trust companies or other financial institutions as may be determined from time to time by the Board of Directors, the Chief Financial Officer or any other officer designated by the Board of Directors. All checks and drafts on the Corporation’s bank accounts and all bills of exchange and promissory notes, and all acceptances, obligations and other instruments for the payment of money, shall be signed by such officer or officers or agent or agents as shall be thereunto authorized from time to time by the Board of Directors.

 

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Section 9.4 Contracts.  The Board of Directors may authorize any person or persons, in the name and on behalf of the Corporation, to enter into or execute and deliver any and all deeds, bonds, mortgages, contracts and other obligations or instruments, and such authority may be general or confined to specific instances.

 

Section 9.5 Corporate Seal.  The Corporation may have a corporate seal. The corporate seal shall have inscribed thereon the name of the Corporation and the year of its incorporation and shall be in such form and contain such other words and/or figures as the Board of Directors shall determine. The corporate seal may be used by printing, engraving, lithographing, stamping or otherwise making, placing or affixing, or causing to be printed, engraved, lithographed, stamped or otherwise made, placed or affixed, upon any paper or document, by any process whatsoever, an impression, facsimile or other reproduction of said corporate seal.

 

Section 9.6 Inspection of Books.  The Board of Directors shall cause to be kept a record containing the minutes of the proceedings of the meetings of the Board of Directors and of the shareholders, appropriate share books and registers and such books of records and accounts as may be necessary for the proper conduct of the business of the Corporation. The Board of Directors shall have power to keep all such books, documents and accounts of the Corporation outside of the State of Florida, except as otherwise expressly provided by law. 

 

Section 9.7 Section Headings.  The headings of the Articles and Sections of these By-Laws are inserted for convenience or reference only and shall not be deemed to be a part thereof or used in the construction or interpretation thereof.

 

Section 9.8 Conflict with Applicable Law or Articles of Incorporation.  These By-Laws are adopted subject to any applicable law and the Articles of Incorporation. Whenever these By-Laws may conflict with any applicable law or the Articles of Incorporation, such conflict shall be resolved in favor of such law or the Articles of Incorporation.

 

ARTICLE X
LIMITATION OF LIABILITY; INDEMNITY

 

Section 10.1 Limitation of Liability.  No person who was or is a Director of this Corporation shall be personally liable to the Corporation or its shareholders for monetary damages for breach of fiduciary duty as a Director, except for liability (a) for breach of the duty of loyalty to the Corporation or its shareholders, (b) for acts or omissions not in good faith or which involve intentional misconduct or knowing violation of law, (c) under the FBCA or (d) for any transaction from which the Director derived an improper personal benefit. If the FBCA is amended after the effective date of this Article to further eliminate or limit, or to authorize further elimination or limitation of, the personal liability of Directors for breach of fiduciary duty as a Director, then the personal liability of a Director to this Corporation or its shareholders shall be eliminated or limited to the full extent permitted by the FBCA, as so amended. For purposes of this Article X, “fiduciary duty as a Director” shall include any fiduciary duty arising out of serving at the request of this Corporation as a Director of another corporation, partnership, joint venture, trust or other enterprise, and “personally liable to the Corporation” shall include any liability to such other Corporation, partnership, joint venture, trust or other enterprise, and any liability to this Corporation in its capacity as a security holder, joint venturer, partner, beneficiary, creditor or investor of or in any such other corporation, partnership, joint venture, trust or other enterprise. Any repeal or modification of this Section 10.1 by the shareholders of this Corporation shall not adversely affect the elimination or limitation of the personal liability of a Director for any act or omission occurring prior to the effective date of such repeal or modification. This provision shall not eliminate or limit the liability of a Director for any act or omission occurring prior to the effective date of this Article X.

 

Section 10.2 Indemnity

 

(a)       The Corporation shall indemnify any person who was or is a party or is threatened to be made a party to any threatened, pending or completed action, suit or proceeding, whether civil, criminal, administrative or investigative (other than an action by or in the right of the Corporation) by reason of the fact that he or she is or was or has agreed to become a Director or officer of the Corporation, or is or was serving or has agreed to serve at the request of the Corporation as a director or officer of another corporation, partnership, joint venture, trust or other enterprise, or by reason of any action alleged to have been taken or omitted in such capacity, against costs, charges and other expenses (including reasonable attorneys’ fees) (“Expenses”), judgments, fines and amount paid in settlement actually and reasonably incurred by him or her in connection with such action, suit or proceeding and any appeal thereof if he or she acted in good faith and in a manner he or she reasonably believed to be in or not opposed to the best interests of the Corporation, and with respect to any criminal action or proceeding, had no reasonable cause to believe his or her conduct was unlawful. The termination of any action, suit or proceeding by judgment, order, settlement, conviction, or plea of nolo contendere or its equivalent, shall not, of itself, create a presumption that the person did not act in good faith and in a manner which he or she reasonably believed to be in or not opposed to the best interests of the Corporation, and, with respect to any criminal action or proceeding, had reasonable cause to believe that his or her conduct was unlawful. For purposes of this Section 10.2, “serving or has agreed to serve at the request of the Corporation as a director or officer of another corporation, partnership, joint venture, trust or other enterprise” shall include any service by a Director or officer of the Corporation as a director, officer, employee, agent or fiduciary of such other corporation, partnership, joint venture, trust or other enterprise, or with respect to any employee benefit plan (or its participants or beneficiaries) of the Corporation or any such other enterprise. 

 

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(b)       The Corporation shall indemnify any person who was or is a party or is threatened to be made a party to any threatened, pending or completed action or suit by or in the right of the Corporation to procure a judgment in its favor by reason of the fact that he or she is or was or has agreed to become a Director or officer of the Corporation or is or was serving or has agreed to serve at the request of the Corporation as a director or officer of another corporation, partnership, joint venture, trust or other enterprise or by reason of any action alleged to have been taken or omitted in such capacity against Expenses actually and reasonably incurred by him or her in connection with the investigation, defense or settlement of such action or suit and any appeal thereof if he or she acted in good faith and in a manner he or she reasonably believed to be in or not opposed to the best interests of the Corporation and except that no indemnification shall be made in respect of any claim, issue or matter as to which such person shall have been adjudged to be liable to the Corporation unless and only to the extent that the Court of Orange of Florida or the court in which such action or suit was brought shall determine upon application that, despite the adjudication of liability but in view of all the circumstances of the case, such person is fairly and reasonably entitled to indemnity for such Expenses which the Court of Orange of Florida or such other court shall deem proper.

 

(c)       To the extent that any person referred to in Section 10.2(a) or Section 10.2(b) has been successful on the merits or otherwise, including, without limitation, the dismissal of an action without prejudice, in defense of any action, suit or proceeding referred to therein or in defense of any claim, issue or matter therein, he or she shall be indemnified against Expenses actually and reasonably incurred by him or her in connection therewith.

 

(d)       Any indemnification under Section 10.2(a) or Section 10.2(b) (unless ordered by a court) shall be made by the Corporation only as authorized in the specific case upon a determination that indemnification of the Director or officer is proper in the circumstances because he or she has met the applicable standard of conduct set forth in Section 10.2(a) or Section 10.2(b). Such determination shall be made (i) by the Board of Directors by a majority vote of a quorum consisting of Directors who were not parties to such action, suit or proceeding, or (ii) if such quorum is not obtainable, or, even if obtainable, a quorum of disinterested Directors so directs, by independent legal counsel in a written opinion or (iii) by the shareholders. 

 

(e)       Expenses incurred in defending a civil or criminal action, suit or proceeding shall be paid by the Corporation in advance of the final disposition of such action, suit or proceeding and appeal upon receipt by the Corporation of an undertaking by or on behalf of the Director or officer to repay such amount if it shall ultimately be determined that he or she is not entitled to be indemnified by the Corporation.

 

(f)       The determination of the entitlement of any person to indemnification under Section 10.2(a)Section 10.2(b) or Section 10.2(c) or to advancement of Expenses under Section 10.2(e) shall be made promptly, and in any event within thirty (30) days after the Corporation has received a written request for payment from or on behalf of a Director or officer and payment of amounts due under such sections shall be made immediately after such determination. If no disposition of such request is made within said thirty (30) days or if payment has not been made within ten (10) days thereafter, or if such request is rejected, the right to indemnification or advancement of Expenses provided by this Section 10.2 shall be enforceable by or on behalf of the Director or officer in any court of competent jurisdiction. In addition to the other amounts due under this Section 10.2, Expenses incurred by or on behalf of a Director or officer in successfully establishing his or her right to indemnification or advancement of Expenses, in whole or in part, in any such action (or settlement thereof) shall be paid by the Corporation.

 

(g)       The indemnification and advancement of Expenses provided by this Section 10.2 shall not be deemed exclusive of any other rights to which those seeking indemnification or advancement of Expenses may be entitled under any law (common or statutory), agreement, vote of shareholders or disinterested Directors or otherwise, both as to action in his or her official capacity and as to action in another capacity while holding such office, or while employed by or acting as a Director or officer of the Corporation or as a Director or officer of another corporation, partnership, joint venture, trust or other enterprise, and shall continue as to a person who has ceased to be a Director or officer and shall inure to the benefit of the heirs, executors and administrators of such a person. Notwithstanding the provisions of this Section 10.2, the Corporation shall indemnify or make advancement of Expenses to any person referred to in Section 10.2(a) or Section 10.2(b) to the full extent permitted under the laws of Florida and any other applicable laws, as they now exist or as they may be amended in the future.

 

(h)       All rights to indemnification and advancement of Expenses provided by this Section 10.2 shall be deemed to be a contract between the Corporation and each Director or officer of the Corporation who serves, served or has agreed to serve in such capacity, or at the request of the Corporation as director or officer of another corporation, partnership, joint venture, trust or other enterprise, at any time while this Section 10.2 and the relevant provisions of the FBCA or other applicable law, if any, are in effect. Any repeal or modification of this Section 10.2, or any repeal or modification of relevant provisions of the FBCA or any other applicable law, shall not in any way diminish any rights to indemnification of or advancement of Expenses to such Director or officer or the obligations of the Corporation. 

 

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(i)       The Corporation shall have power to purchase and maintain insurance on behalf of any person who is or was or has agreed to become a Director or officer of the Corporation, or is or was serving or has agreed to serve at the request of the Corporation as a director or officer of another corporation, partnership, joint venture, trust or other enterprise, against any liability asserted against him or her and incurred by him or her in any such capacity, or arising out of his or her status as such, whether or not the Corporation would have the power to indemnify him or her against such liability under the provisions of this Section 10.2.

 

(j)       The Board of Directors may, by resolution, extend the provisions of this Section 10.2 pertaining to indemnification and advancement of Expenses to any person who was or is a party or is threatened to be made a party to any threatened, pending or completed action, suit or proceeding by reason of the fact that he or she is or was or has agreed to become an employee, agent or fiduciary of the Corporation or is or was serving or has agreed to serve at the request of the Corporation as a Director, officer, employee, agent or fiduciary of another corporation, partnership, joint venture, trust or other enterprise or with respect to any employee benefit plan (or its participants or beneficiaries) of the corporation or any such other enterprise.

 

(k)       The invalidity or unenforceability of any provision of this Section 10.2 shall not affect the validity or enforceability of the remaining provisions of this Section 10.2.

 

ARTICLE XI
AMENDMENTS

 

These By-Laws of the Corporation may be amended, altered, changed, adopted and repealed or new By-Laws adopted, in each case, by the shareholders entitled to vote, provided that the Corporation may, in its Articles of Incorporation, confer the power to adopt, amend or repeal these By-Laws upon the Board of Directors. The fact that such power has been so conferred upon the Board of Directors shall not divest the shareholders of the power, nor limit their power to adopt, amend or repeal these By-Laws.

 

*       *       *       *

 

Effective as of this 20th day of July, 2018

 

 

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EX1A-4 SUBS AGMT 5 ex1a_4.htm EXHIBIT 1A-4

Exhibit 1A-4

 

Exhibit C – Form of Subscription Agreement

 

SUBSCRIPTION AGREEMENT

 

THIS INVESTMENT INVOLVES A HIGH DEGREE OF RISK. THIS INVESTMENT IS SUITABLE ONLY FOR PERSONS WHO CAN BEAR THE ECONOMIC RISK FOR AN INDEFINITE PERIOD OF TIME AND WHO CAN AFFORD TO LOSE THEIR ENTIRE INVESTMENT. FURTHERMORE, INVESTORS MUST UNDERSTAND THAT SUCH INVESTMENT IS ILLIQUID AND IS EXPECTED TO CONTINUE TO BE ILLIQUID FOR AN INDEFINITE PERIOD OF TIME. NO PUBLIC MARKET EXISTS FOR THE SECURITIES, AND NO PUBLIC MARKET IS EXPECTED TO DEVELOP FOLLOWING THIS OFFERING.

 

THE SECURITIES OFFERED HEREBY HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE “SECURITIES ACT”), OR ANY STATE SECURITIES OR BLUE SKY LAWS AND ARE BEING OFFERED AND SOLD IN RELIANCE ON EXEMPTIONS FROM THE REGISTRATION REQUIREMENTS OF THE SECURITIES ACT AND STATE SECURITIES OR BLUE SKY LAWS. ALTHOUGH AN OFFERING STATEMENT HAS BEEN FILED WITH THE SECURITIES AND EXCHANGE COMMISSION (THE “SEC”), THAT OFFERING STATEMENT DOES NOT INCLUDE THE SAME INFORMATION THAT WOULD BE INCLUDED IN A REGISTRATION STATEMENT UNDER THE SECURITIES ACT. THE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SEC, ANY STATE SECURITIES COMMISSION OR OTHER REGULATORY AUTHORITY, NOR HAVE ANY OF THE FOREGOING AUTHORITIES PASSED UPON THE MERITS OF THIS OFFERING OR THE ADEQUACY OR ACCURACY OF THE SUBSCRIPTION AGREEMENT OR ANY OTHER MATERIALS OR INFORMATION MADE AVAILABLE TO SUBSCRIBER IN CONNECTION WITH THIS OFFERING OVER THE WEB-BASED PLATFORM MAINTAINED BY CROWDSTREET, INC. (THE “PLATFORM”). ANY REPRESENTATION TO THE CONTRARY IS UNLAWFUL.

 

INVESTORS WHO ARE NOT “ACCREDITED INVESTORS” (AS THAT TERM IS DEFINED IN SECTION 501 OF REGULATION D PROMULGATED UNDER THE SECURITIES ACT) ARE SUBJECT TO LIMITATIONS ON THE AMOUNT THEY MAY INVEST, AS SET OUT IN SECTION 4. THE COMPANY IS RELYING ON THE REPRESENTATIONS AND WARRANTIES SET FORTH BY EACH SUBSCRIBER IN THIS SUBSCRIPTION AGREEMENT (THIS “AGREEMENT”) AND THE OTHER INFORMATION PROVIDED BY SUBSCRIBER IN CONNECTION WITH THIS OFFERING TO DETERMINE THE APPLICABILITY TO THIS OFFERING OF EXEMPTIONS FROM THE REGISTRATION REQUIREMENTS OF THE SECURITIES ACT.

 

PROSPECTIVE INVESTORS MAY NOT TREAT THE CONTENTS OF THIS AGREEMENT, THE SHAREHOLDERS’ AGREEMENT, THE PARTICIPATING PROVIDER AGREEMENT, THE OFFERING CIRCULAR OR ANY OF THE OTHER MATERIALS AVAILABLE ON THE PLATFORM (COLLECTIVELY, THE “OFFERING MATERIALS”) OR ANY PRIOR OR SUBSEQUENT COMMUNICATIONS FROM THE COMPANY OR ANY OF ITS OFFICERS, EMPLOYEES OR AGENTS (INCLUDING “TESTING THE WATERS” MATERIALS) AS INVESTMENT, LEGAL OR TAX ADVICE. IN MAKING AN INVESTMENT DECISION, INVESTORS MUST RELY ON THEIR OWN EXAMINATION OF THE COMPANY AND THE TERMS OF THIS OFFERING, INCLUDING THE MERITS AND THE RISKS INVOLVED. EACH PROSPECTIVE INVESTOR SHOULD CONSULT THE INVESTOR’S OWN COUNSEL, ACCOUNTANT AND OTHER PROFESSIONAL ADVISORS AS TO INVESTMENT, LEGAL, TAX AND OTHER RELATED MATTERS CONCERNING THE INVESTOR’S PROPOSED INVESTMENT.

 

THE OFFERING MATERIALS MAY CONTAIN FORWARD-LOOKING STATEMENTS AND INFORMATION RELATING TO, AMONG OTHER THINGS, THE COMPANY, ITS BUSINESS PLAN AND STRATEGY DESCRIBED IN THE OFFERING CIRCULAR. THESE FORWARD-LOOKING STATEMENTS ARE BASED ON THE BELIEFS OF, ASSUMPTIONS MADE BY, AND INFORMATION CURRENTLY AVAILABLE TO THE COMPANY’S MANAGEMENT.  WHEN USED IN THE OFFERING MATERIALS, THE WORDS “ESTIMATE,” “PROJECT,” “BELIEVE,” “ANTICIPATE,” “INTEND,” “EXPECT” AND SIMILAR EXPRESSIONS ARE INTENDED TO IDENTIFY FORWARD-LOOKING STATEMENTS. THESE STATEMENTS REFLECT MANAGEMENT’S CURRENT VIEWS WITH RESPECT TO FUTURE EVENTS AND ARE SUBJECT TO RISKS AND UNCERTAINTIES THAT COULD CAUSE THE COMPANY’S ACTUAL RESULTS TO DIFFER MATERIALLY FROM THOSE CONTAINED IN THE FORWARD-LOOKING STATEMENTS. INVESTORS ARE CAUTIONED NOT TO PLACE UNDUE RELIANCE ON THESE FORWARD-LOOKING STATEMENTS, WHICH SPEAK ONLY AS OF THE DATE ON WHICH THEY ARE MADE. THE COMPANY DOES NOT UNDERTAKE ANY OBLIGATION TO REVISE OR UPDATE THESE FORWARD-LOOKING STATEMENTS TO REFLECT EVENTS OR CIRCUMSTANCES AFTER SUCH DATE OR TO REFLECT THE OCCURRENCE OF UNANTICIPATED EVENTS.

 

THE COMPANY IS NOT OFFERING THE SECURITIES IN EVERY STATE. THE OFFERING MATERIALS DO NOT CONSTITUTE AN OFFER TO SELL SECURITIES, NOR DO THEY SEEK AN OFFER TO BUY SECURITIES, IN ANY STATE OR JURISDICTION WHERE THE OFFER OR SALE OF SUCH SECURITIES IS NOT PERMITTED.

 

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THE INFORMATION PRESENTED IN THE OFFERING MATERIALS WAS PREPARED BY THE COMPANY SOLELY FOR THE USE BY PROSPECTIVE INVESTORS IN CONNECTION WITH THIS OFFERING. NO REPRESENTATIONS OR WARRANTIES ARE MADE AS TO THE ACCURACY OR COMPLETENESS OF THE INFORMATION CONTAINED IN ANY OFFERING MATERIALS, AND NOTHING CONTAINED IN THE OFFERING MATERIALS IS OR SHOULD BE RELIED UPON AS A PROMISE OR REPRESENTATION AS TO THE FUTURE PERFORMANCE OF THE COMPANY.

 

THE COMPANY RESERVES THE RIGHT IN ITS SOLE DISCRETION AND FOR ANY REASON WHATSOEVER TO MODIFY, AMEND AND/OR WITHDRAW ALL OR A PORTION OF THE OFFERING AND/OR ACCEPT OR REJECT ANY PROSPECTIVE INVESTMENT IN THE SECURITIES. EXCEPT AS OTHERWISE INDICATED, THE OFFERING MATERIALS SPEAK AS OF THEIR DATE. NEITHER THE DELIVERY NOR THE PURCHASE OF THE SECURITIES SHALL, UNDER ANY CIRCUMSTANCES, CREATE ANY IMPLICATION THAT THERE HAS BEEN NO CHANGE IN THE AFFAIRS OF THE COMPANY SINCE THAT DATE.

 

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TO:

TUSCAN GARDENS SENIOR LIVING COMMUNITIES, INC.

189 SOUTH ORANGE AVENUE, SUITE 1650

ORLANDO, FLORIDA

32801

 

Ladies and Gentlemen:

  

THE COMPANY ENCOURAGES YOU TO READ THE ENTIRE OFFERING CIRCULAR PRIOR TO INVESTING.

 

1.   Subscription.

 

(a)   The person executing this Agreement (“Subscriber”) hereby subscribes for and agrees (subject to a minimum purchase of ten (10) shares) to purchase shares for a total consideration of $ thousand dollars (“Purchase Price”) of Class A Non-Voting Preferred Shares, $1,000.00 par value per share (such shares, the “Preferred Shares,” and such share, the “Share”), of Tuscan Gardens Senior Living Communities, Inc., a Florida corporation (the “Company”), at a purchase price of $1,000.00 per Preferred Share (the “Subscription Price”), upon the terms and conditions set forth herein.

 

(b)   Subscriber understands that the Preferred Share is being offered pursuant to an offering circular dated December 1, 2018 (the “Offering Circular”), filed with the SEC as part of the Company’s Offering Statement on Form 1-A (the “Offering Statement”) in connection with the Company’s offering of up to $50,000,000 of Class A Non-Voting Preferred Shares (the “Offering”). By executing this Subscription Agreement, Subscriber acknowledges that Subscriber has received this Agreement, copies of the Offering Circular and Offering Statement, including the exhibits thereto, and any other information required by Subscriber to make an investment decision.

 

(c)   Subscriber’s subscription may be accepted or rejected by the Company at its sole discretion. The Company will notify Subscriber whether this subscription is accepted or rejected. If Subscriber’s subscription is rejected, no payment will be made by Subscriber to the Company and all of Subscriber’s obligations hereunder relating to the rejected subscription shall terminate.

 

(d)   The Company may elect at any time to accept all or any portion of this Offering on various dates (each, a “Closing Date”).

 

(e)   In the event of rejection of this subscription, or in the event the sale of the Preferred Share is not consummated for any reason, this Agreement shall have no force or effect.

 

2.   Payment and Delivery.

 

(a)   Payment. Subscriber shall pay the Subscription Price through Subscriber’s account with the Platform prior to the applicable Closing Date. Subscriber hereby authorizes the Platform to debit funds equal to the Subscription Price from Subscriber’s account. In the event of rejection of this subscription, or in the event the sale of the Preferred Share is not consummated for any reason, the Preferred Share will not be sold to Subscriber, and the Subscription Price will remain in Subscriber’s account with the Platform.

 

(b)   Delivery. Upon acceptance by the Company of a subscription on an applicable Closing Date, a confirmation of such acceptance will be sent to Subscriber.

 

3.   Representations and Warranties of the Company. As of the date of the Offering Circular and as of the applicable Closing Date, the Company represents and warrants to Subscriber as follows:

 

(a)   Organization. The Company is a corporation duly organized, validly existing and in good standing under the laws of the State of Florida and has all requisite power and authority to acquire, develop, own, lease, operate and dispose of its properties and assets and to carry on its business as it is now being conducted.

  

(b)   Authority. The Company has all requisite power and authority to execute and deliver this Agreement, to carry out its obligations hereunder, and to consummate the transactions contemplated hereby. The Company has obtained all necessary corporate approvals for the execution and delivery of this Agreement, the performance of its obligations hereunder, and the consummation of the transactions contemplated hereby. When executed and delivered by the Company, this Agreement shall constitute a legal, valid and binding obligation of the Company, enforceable against it in accordance with its terms, except as such enforceability may be limited by bankruptcy, insolvency, reorganization, moratorium or similar laws affecting creditors’ rights generally and by general principles of equity (regardless of whether enforcement is sought in a proceeding at law or in equity).

 

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(c)   No Conflict. The execution and delivery by the Company of this Agreement does not, and the consummation by the Company of the transactions contemplated hereby will not (with or without the giving of notice or the lapse of time or both), contravene, conflict with or result in a breach or violation of, or a default under (i) the organizational documents of the Company, (ii) any judgment, order, decree, statute, rule, regulation or other law applicable to the Company or (iii) in any material respect, any material contract, agreement or instrument by which the Company is bound. No material consent, approval, order or authorization of, or registration, declaration or filing with any court, administrative agency, commission or other governmental authority or instrumentality, domestic or foreign, is required by or with respect to the Company in connection with the execution and delivery by the Company of this Agreement or the consummation by the Company of the transactions contemplated hereby, except such filings (if any) as have been made or consents received (if any) prior to the applicable Closing Date.

 

(d)   Purchased Preferred Share. The Preferred Share has been duly authorized and, when issued and paid for in accordance with the terms of this Agreement, will be validly issued, fully paid, except for restrictions on transfer provided for under the Shareholders’ Agreement described in Section 6, the organizational documents of the Company or under applicable securities laws and regulations.

 

4.   Representations and Warranties of Subscriber. As of the date Subscriber executes this Agreement and as of the applicable Closing Date, Subscriber represents and warrants to the Company as follows:

 

(a)   Authority. When executed and delivered by Subscriber, this Agreement shall constitute a legal, valid and binding obligation of Subscriber, enforceable against Subscriber in accordance with its terms, except as such enforceability may be limited by bankruptcy, insolvency, reorganization, moratorium or similar laws affecting creditors’ rights generally and by general principles of equity (regardless of whether enforcement is sought in a proceeding at law or in equity). All action on Subscriber’s part required for the lawful execution and delivery of this Agreement and other agreements required hereunder has been or will be effectively taken prior to the applicable Closing Date.

 

(b)   Investment Representations. Subscriber understands that the Preferred Share has not been registered under the Securities Act and that the Offering is being made pursuant to an exemption from registration contained in the Securities Act, based in part on Subscriber’s representations contained herein.

 

(c)   Illiquidity and Restrictions on Transfer or Sale of the Preferred Share. Subscriber acknowledges and agrees that there is no public market for the Preferred Share and that a market for resale of the Preferred Share is not expected to develop. Furthermore, pursuant to the Shareholders’ Agreement described in Section 6 below. Consequently, Subscriber understands that he or she must bear the economic risks of the investment in the Preferred Share for an indefinite period of time and acknowledges that he or she is able to bear the economic risk of losing his or her entire investment in the Preferred Share.

  

(d)   Subscriber Eligibility. Subscriber understands that to participate in the Offering, he or she must satisfy the eligibility criteria established by the Company and described in the Offering Circular. These eligibility criteria are also set forth in questions (c) and (d) on the signature pages hereto. Subscriber represents and warrants that:

 

(i)Subscriber is an “accredited investor” within the meaning of Rule 501 of Regulation D under the Securities Act; or

 

(ii)The Purchase Price does not exceed 10% of the greater of Subscriber’s annual income or net worth.

 

The information set forth in response to questions (c) and (d) on the signature pages hereto concerning Subscriber’s eligibility to purchase a Preferred Share is true and correct. To the extent Subscriber had any questions with respect to his or her eligibility pursuant to the criteria set forth in such questions (c) and (d), he or she has sought professional advice.

 

(e)   Subscriber Information. The information provided on the signature pages hereto in response to question (e) thereon is true and correct with respect to Subscriber. Within five days after receipt of a request from the Company, Subscriber will provide such information with respect to its status as a shareholder or potential shareholder and execute and deliver such documents as may reasonably be necessary to comply with any and all laws and regulations to which the Company is or may become subject.

 

(f)   Company Information. With respect to the purchase of the Share, Subscriber (i) has received the Offering Materials and has had answered to Subscriber’s full satisfaction any and all questions regarding such information, (ii) has made such independent investigation of the Company as such Subscriber deems to be necessary or advisable in connection with the purchase of the Preferred Share and is able to bear the economic and financial risk of purchasing the Preferred Share (including the risk that Subscriber could lose the entire value of the Share) and (iii) acknowledges that except as set forth in this Agreement, no representations or warranties have been made to Subscriber or to his or her advisors or representatives by the Company or others with respect to the business or prospects of the Company or its financial condition.

 

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(g)   Domicile. Subscriber maintains his or her domicile (and is not a transient or temporary resident) at the address of record provided on the signature pages hereto.

  

5.   Survival of Representations and Warranties. The representations and warranties of the Company set forth in Section 3 of this Agreement, and the representations and warranties of Subscriber set forth in Section 4 of this Agreement, shall survive the execution and delivery of this Agreement and the consummation of the transactions contemplated hereby, regardless of any investigation made by any party or any other person on its behalf.

  

6.   Other Agreements.

 

(a)   Concurrently herewith, by executing this Agreement, Subscriber is deemed to have read, and agreed to be bound by the terms of the Shareholders’ Agreement of the Company in substantially the form attached hereto as Exhibit A (the “Shareholders’ Agreement”). Upon such execution and delivery and the acceptance by the Company of Subscriber’s subscription as of a Closing Date, Subscriber shall become bound by the terms and conditions of the Shareholders’ Agreement as a “Provider Investor” and “Shareholder” thereunder.

 

 

7.   Miscellaneous.

 

(a)   Notices. All notices and other communications given or made to the Company pursuant to this Agreement must be in writing and will be deemed to have been given upon the earlier of actual receipt or (i) personal delivery to the party to be notified, (ii) the date sent by facsimile, electronic mail or other similar transmission (with confirmation of transmission) during normal business hours of the recipient, and if not sent during normal business hours, then on the recipient’s next business day, (iii) five days after having been sent by registered or certified mail, return receipt requested, postage prepaid, or (iv) one business day after deposit with a nationally recognized overnight courier, freight prepaid, specifying next business day delivery, with written verification of receipt. Such communications must be sent to the Company at the following address:

 

If to the Company:   With a copy to (which shall not constitute notice):
Tuscan Gardens Senior Living Communities, Inc.   Pino Nicholson PLLC
189 S. Orange Ave, Suite 1650   189 S. Orange Ave, Suite 1650
Orlando, FL 32801   Orlando, FL 32801
    Telephone: 407-206-6577
Attention: Secretary   Email: ljp@PinoNicholsonLaw.com

 

 

In accordance with Section 7(i) below, Subscriber explicitly consents to receive all notices, requests, consents, claims, demands, waivers and other communications by e-mail, sent to Subscriber’s e-mail address of record as set forth in this Agreement or as otherwise from time to time changed or updated and disclosed to the Company.

 

(b)   Entire Agreement. This Agreement, together with the Exhibits attached hereto, constitutes the sole and entire agreement of the parties with respect to the subject matter contained herein, and supersedes all prior and contemporaneous understandings and agreements, both written and oral, with respect to such subject matter.

  

(c)   Construction. The headings used in this Agreement have been inserted for convenience of reference only and do not define or limit the provisions hereof. All pronouns and any variations thereof shall be deemed to refer to the masculine, feminine, neuter, singular or plural, as the identity of the person or persons or entity or entities may require. 

 

(d)   Forum Selection and Governing Law. This Agreement shall be governed by and construed in accordance with the laws of the State of Florida. In the event of a dispute regarding this Agreement or the respective rights of the parties hereunder, the parties agree to submit such dispute exclusively to binding arbitration, as legally enforceable based on case law as upheld by the U.S. Supreme Court, in Orlando, Florida before an arbitration panel consisting of three professional arbitrators with each of two arbitrators selected by the parties and the final third arbitrator selected by the selected two arbitrators. Any such arbitration shall be restricted to the party filing the arbitration and shall not be a joint or multiple arbitration reflecting more than one party and shall be commenced within fifteen (15) days of selection of the arbitrator and the discovery rules contained in the Florida Rules of Civil Procedure shall apply to all such proceedings. The arbitrator shall order all remedies permitted by law, award attorney's fees and costs to the prevailing party, and require that the entire proceeding, including the existence of the proceeding, be held confidential by the parties, and shall not be disclosed by any party. Any and all orders issued by the arbitrator shall be enforced by a state court of competent jurisdiction located in Orlando, Orange County, Florida. Notwithstanding the foregoing, by agreeing to the arbitration provision, Shareholders will not be deemed to have waived the Company’s compliance with the federal securities laws and the rules and regulations promulgated thereunder.

 

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(e)   Severability. If any provision of this Agreement is held to be illegal, invalid or unenforceable under any present or future law (i) such provision will be fully severable, (ii) this Agreement will be construed and enforced as if such illegal, invalid or unenforceable provision had never comprised a part hereof, (iii) the remaining provisions of this Agreement will remain in full force and effect and will not be affected by the illegal, invalid or unenforceable provision or by its severance here from and (iv) in lieu of such illegal, invalid or unenforceable provision, there will be added automatically as a part of this Agreement a legal, valid and enforceable provision as similar in terms of such illegal, invalid or unenforceable provision as may be possible.

 

(f)   Third Party Beneficiaries. This Agreement is for the sole benefit of the parties hereto and their respective successors and permitted assigns, and there shall be no third-party beneficiaries hereof.

 

(g)   Assignment. This Agreement is not transferable or assignable by Subscriber.

 

(h)   Amendments and Waivers. This Agreement may not be amended, supplemented or modified except by an instrument in writing signed by each party. Any term or condition of this Agreement may be waived at any time by the party that is entitled to the benefit thereof, but no such waiver shall be effective unless set forth in a written instrument duly executed by or on behalf of the party waiving such term or condition. No failure or delay by any party in exercising any right, power or privilege under this Agreement shall operate as a waiver thereof. No waiver by any party of any term or condition of this Agreement, in any one or more instances, shall be deemed to be or construed as a waiver of the same or any other term or condition of this Agreement on any future occasion.

 

(i)  Digital Signature.

 

(i)  The mechanics of this Agreement’s electronic signature include the time stamp within an SSL encrypted environment. The Agreement will be available to both Subscriber and the Company, so they can store and access it at any time, and it will be stored and accessible on the Platform. Subscriber hereby consents and agrees that electronically signing this Agreement constitutes his or her signature, acceptance and agreement as if signed in writing by him or her. Further, all parties agree that no certification authority or other third-party verification is necessary to validate any electronic signature and that the lack of such certification or third-party verification will not in any way affect the enforceability of their signatures or the resulting contract between Subscriber and the Company. Subscriber understands and agrees that his or her electronic signature executed in conjunction with the electronic submission of this Agreement shall be legally binding and such transaction shall be considered authorized by Subscriber. Subscriber agrees that his or her electronic signature is the equivalent of his or her manual signature on this Agreement and consents to be legally bound by the Agreement’s terms and conditions. 

 

(ii)   Subscriber and the Company each hereby agree that all current and future notices, confirmations and other communications regarding this Agreement specifically, and future communications in general between the parties, may be made by e-mail or other electronic communication, sent to the e-mail address of record as from time to time changed or updated and disclosed to the other party, without necessity of confirmation of receipt, delivery or reading, and such form of electronic communication is sufficient for all matters regarding the relationship between the parties. If any such electronically sent communication fails to be received for any reason, including but not limited to such communications being diverted to the recipient’s spam filters by the recipient’s e-mail service provider, or due to a recipient’s change of address, or due to technology issues by the recipient’s service provider, the parties agree that the burden of such failure to receive is on the recipient and not the sender, that the sender is under no obligation to resend communications via any other means, and that such communications shall for all purposes, including legal and regulatory, be deemed to have been delivered and received. No physical, paper documents will be sent to Subscriber, and if Subscriber desires physical documents, then he or she agrees to be satisfied by directly and personally printing, at Subscriber’s own expense, the electronically sent communication(s) and maintaining such physical records in any manner or form that Subscriber desires.

 

(iii)   By signing this Agreement electronically, Subscriber is explicitly agreeing to receive documents electronically, including Subscriber’s copies of this signed Agreement, and the signed Shareholders’ Agreement, as well as ongoing disclosures, communications and notices.

 

****

  

By electronically executing this Agreement, Subscriber hereby executes, adopts and agrees to all terms, conditions and representations of this Agreement.

 

(a)  The number of shares of Class A Non-Voting Preferred Shares the undersigned hereby irrevocably subscribes for is: shares
   
(b) The purchase price for the Preferred Share the undersigned hereby irrevocably subscribes for is:   $                             .00

 

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(c) By checking beside the appropriate box(es), Subscriber hereby represents that:  
   

 

he or she is an “accredited investor” within the meaning of Rule 501 of Regulation D under the Securities Act because he or she:

 

  is a director or executive officer of the Company; or
     
  had an individual income in excess of $200,000 in each of the most recent two years, or joint income with his or her spouse in excess of $300,000 in each of those two years, and has a reasonable expectation of reaching the same income level in the current year; or
     
 

has individual net worth, or joint net worth with his or her spouse, in excess of $1,000,000 (where for purposes of calculating such net worth (i) his or her primary residence shall not be included as an asset, (ii) indebtedness secured by his or her primary residence, up to the estimated fair market value of such residence at the time of the sale of the Share, shall not be included as a liability (except that if the amount of such indebtedness outstanding at the time of the sale of the Preferred Share exceeds the amount outstanding 60 days before such time, other than as a result of the acquisition of the primary residence, the amount of such excess shall be included as a liability); and (iii) indebtedness that is secured by his or her primary residence in excess of the estimated fair market value of such residence at the time of the sale of the Preferred Share shall be included as a liability); or

     
$750.00 does not exceed 10% of the greater of Subscriber’s annual income or net worth. 

 

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Signature Pages to Subscription Agreement 

 

 

 

 

   
Signature  
   
   
Name (Please Print)  
   
   
Social Security Number/EIN  
   
   
Street Address (not a P.O. Box)  
   
   
 City, State, Zip Code  
   
   
Telephone Number  
   
   
E-mail Address  
   
   
Date  

 

* * * * *

 

This Subscription is accepted on _________, 20___.

 

Tuscan Gardens Senior Living Communities, Inc.  
     
By:      
  Name:  
  Title:  

 

Signature Pages to Subscription Agreement

 

 

 

 

EXHIBIT A

 

Shareholders’ Agreement*

 

 

Page 8 of 8

 
EX1A-6 MAT CTRCT 6 ex1a_6d.htm EXHIBIT 1A-6D

Exhibit 1A-6.D

 

Exhibit D – Shareholders’ Agreement

 

SHAREHOLDERS’ AGREEMENT

 

This Shareholders’ Agreement (this “Agreement”) is made as of [FILL IN], 2018, by and among Tuscan Gardens Senior Living Communities, Inc., a Florida corporation (the “Company”), the entities that have purchased shares of the Company’s Voting Common Shares, par value $1.00 per share (the “Common Shares”) and have delivered a counterpart signature page hereto (the “Common Shareholder”) and the natural persons that have purchased a share of Class A Non-Voting Preferred Shares and have delivered a counterpart signature page hereto (“Preferred Shareholder”) and, together with the Common Shareholder, the “Shareholder”).

 

RECITALS

 

WHEREAS, the Common Shareholder has purchased Common Shares in a private placement intended to be exempt from registration under the Securities Act of 1933, as amended (the “Securities Act”); and

 

WHEREAS, the Company and the Preferred Shareholders are parties to certain subscription agreements pursuant to which the Preferred Shareholders have subscribed to purchase shares of Class A Non-Voting Preferred Shares with a $1,000.00 par value per share (“Preferred Shares”) in a public offering intended to be exempt from registration under the Securities Act pursuant to Regulation A promulgated thereunder; and

 

WHEREAS, in order to induce the Company to enter into such subscription agreements and to induce the Shareholders to invest funds in the Company pursuant to such subscription agreements, the parties desire to enter into this Agreement.

 

NOW, THEREFORE, the parties hereby agree as follows:

 

1.  ENCUMBRANCE. Any Shareholder of record holding any Common Shares or Preferred Shares of the Company (collectively, the “Securities”), may pledge or encumber any of the Securities or any interest therein.

 

2.  EXCLUSION FROM VOTING. Each Shareholder of Preferred Shares agrees that he, she or it has no right to and shall not vote on any matter submitted to the holders of Common Shares.

 

3.  REDEMPTION. There are no redemption rights associated with the Common Shares or Preferred Shares. 

 

4.  GENERAL PROVISIONS.

 

4.1 Shareholder List. The Company shall at all times maintain at its principal offices a list of all parties to this Agreement, which list shall be made available for inspection by any shareholder of the Company during regular business hours of the Company.

 

4.2 Entire Agreement. This Agreement and the Company’s Articles of Incorporation and Bylaws, as each may be amended from time to time (together, the “Governing Documents”), constitute the sole and entire agreement of the parties with respect to the subject matter contained herein and therein, and supersede all prior and contemporaneous understandings and agreements, both written and oral, with respect to such subject matter. In the event of any inconsistency or conflict between this Agreement and any Governing Document, the Shareholders and the Company shall, to the extent permitted by applicable law, amend such Governing Document to comply with the provisions of this Agreement.

 

4.3 Several Obligations. All obligations of the parties under this Agreement shall be several and not joint and, except as otherwise set forth herein, in no event shall a party have any liability or obligation with respect to the acts or omissions of any other party to this Agreement.

 

4.4 Titles and Subtitles. The titles and subtitles used in this Agreement are used for convenience only and are not to be considered in construing or interpreting this Agreement.

 

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4.5 Notices. All notices and other communications given or made to the Company pursuant to this Agreement must be in writing and will be deemed to have been given upon the earlier of actual receipt or (a) personal delivery to the party to be notified, (b) the date sent by facsimile, electronic mail or other similar transmission (with confirmation of transmission) during normal business hours of the recipient, and if not sent during normal business hours, then on the recipient’s next business day, (c) five days after having been sent by registered or certified mail, return receipt requested, postage prepaid, or (d) one business day after deposit with a nationally recognized overnight courier, freight prepaid, specifying next business day delivery, with written verification of receipt. Such communications must be sent to the Company at the following address:

 

If to the Company:   With a copy to (which shall not constitute notice):
Tuscan Gardens Senior Living Communities, Inc.   Pino Nicholson PLLC
189 S. Orange Ave, Suite 1650   189 S. Orange Ave, Suite 1650
Orlando, FL 32801   Orlando, FL 32801
    Telephone: 407-206-6577
Attention: Secretary   Email: ljp@PinoNicholsonLaw.com

 

Each Shareholder explicitly consents to receive all notices, requests, consents, claims, demands, waivers and other communications by e-mail, sent to such Shareholder’s e-mail address of record as set forth in this Agreement or as otherwise from time to time changed or updated and disclosed to the Company, without necessity of confirmation of receipt, delivery or reading, and such form of electronic communication is sufficient for all matters regarding the relationship between the parties.

 

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4.6 Assignment. The rights and obligations under this Agreement are not assignable by any Shareholder.

 

4.7 Amendments and Waivers. Any term of this Agreement may be amended, terminated or waived (either generally or in a particular instance and either retroactively or prospectively) only with the written consent of the Company and the holders of a majority of the Common Shares. Any amendment or waiver effected in accordance with this Section 4.7 will be binding upon the Company, the Shareholders and each future holder of any Securities.

 

4.8 Delays or Omissions. No delay or omission to exercise any right, power or remedy accruing to any party under this Agreement, upon any breach or default of any other party under this Agreement, will impair any such right, power or remedy of such non-breaching or non-defaulting party, nor will it be construed to be a waiver of any such breach or default, or an acquiescence therein, or of or in any similar breach or default thereafter occurring; nor will any waiver of any single breach or default be deemed a waiver of any other breach or default theretofore or thereafter occurring. Any waiver, permit, consent or approval of any kind or character on the part of any party of any breach or default under this Agreement, or any waiver on the part of any party of any provisions or conditions of this Agreement, must be in writing and shall be effective only to the extent specifically set forth in such writing. All remedies, either under this Agreement or by law or otherwise afforded to any party, are cumulative and not alternative.

 

4.9 Severability. If any provision of this Agreement is held to be illegal, invalid or unenforceable under any present or future law, (a) such provision will be fully severable; (b) this Agreement will be construed and enforced as if such illegal, invalid or unenforceable provision had never comprised a part hereof; (c) the remaining provisions of this Agreement will remain in full force and effect and will not be affected by the illegal, invalid or unenforceable provision or by its severance here from; and (d) in lieu of such illegal, invalid or unenforceable provision, there will be added automatically as a part of this Agreement a legal, valid and enforceable provision as similar in terms of such illegal, invalid or unenforceable provision as may be possible.

 

4.10 Governing Law and Dispute Resolution. This Agreement shall be governed by and construed in accordance with the laws of the State of Florida. In the event of a dispute regarding this Agreement or the respective rights of the parties hereunder, the parties agree to submit such dispute exclusively to binding arbitration, as legally enforceable based on case law as upheld by the U.S. Supreme Court, in Orlando, Florida before an arbitration panel consisting of three professional arbitrators with each of two arbitrators selected by the parties and the final third arbitrator selected by the selected two arbitrators. Any such arbitration shall be restricted to the party filing the arbitration and shall not be a joint or multiple arbitration reflecting more than one party and shall be commenced within fifteen (15) days of selection of the arbitrator and the discovery rules contained in the Florida Rules of Civil Procedure shall apply to all such proceedings. The arbitrator shall order all remedies permitted by law, award attorney's fees and costs to the prevailing party, and require that the entire proceeding, including the existence of the proceeding, be held confidential by the parties, and shall not be disclosed by any party. Any and all orders issued by the arbitrator shall be enforced by a state court of competent jurisdiction located in Orlando, Orange County, Florida. Notwithstanding the foregoing, by agreeing to the arbitration provision, Shareholders will not be deemed to have waived the Company’s compliance with the federal securities laws and the rules and regulations promulgated thereunder. To the extent any arbitration provisions are ruled unenforceable, the Company would abide by such ruling.

 

4.11 Counterparts. This Agreement may be executed and delivered by facsimile or electronic signature and in two or more counterparts, each of which will be deemed an original, but all of which together will constitute one and the same instrument. Exchange and delivery of this Agreement by exchange of electronic copies (with originals to follow) bearing the signature of a party shall constitute a valid and binding execution and delivery by such party. Such electronic copies shall constitute legally enforceable original documents.

 

 

IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of the date and year first written above.

 

  COMPANY
     
  TUSCAN GARDENS SENIOR LIVING COMMUNITIES, INC. 
     
  By:  /s/ Laurence J. Pino, Esq.     
  Name:   
  Title:  

  

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IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of the date and year first written above.

 

  PREFERRED SHAREHOLDER
     
   
  By:  
  Name:  
  Title:  
     
   
  Email Address  

 

 

IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of the date and year first written above.

 

  COMMON SHAREHOLDER
     
   
  By:  
  Name:  
  Title:  
     
   
  Email Address  

 

[Signature Page to Shareholders’ Agreement]

 

Page 4 of 4

 
EX1A-6 MAT CTRCT 7 ex1a_6e.htm EXHIBIT 1A-6E

 

Exhibit 1A-6.E

 

Exhibit E – Advisory Agreement

 

TUSCAN GARDENS SENIOR LIVING COMMUNITIES, INC.

 

ADVISORY AGREEMENT

 

This AGREEMENT is made and entered into this ___ day of _____________, 2018, by and between Tuscan Gardens Senior Living Communities, Inc., a Florida corporation (“Company”), and Tuscan Gardens Advisors, LLC, a Florida limited liability company (“Advisor”), herein referred to individually as the “Party” and collectively as the “Parties.”

WHEREAS, Tuscan Gardens Senior Living Communities, Inc. (the “Company”) is a recently formed Florida corporation organized on July 20, 2018 for the purpose of acquiring, developing, owning and disposing of multiple senior housing communities with experienced senior housing operators. The Company expects to acquire majority ownership interest in each property indirectly through a limited liability company (a “Holdco”) for each Community or Communities owned by such Holdco; and

WHEREAS, the business of the Company shall be to invest in entities which acquire and/or develop senior housing communities consisting of independent living, assisted living and/or memory care for approximately fifty (50) to two-hundred and fifty (250) residents (collectively the “Company Properties”), and ultimately to own and/or operate or sell the Company Properties; and

WHEREAS, Company desires to obtain expertise in the processes and capital allocation decisions associated with investments in Senior Living; and

WHEREAS, Advisor has been formed as an affiliated company for the purpose of providing expertise to Company in the field of acquiring, developing, and disposing of Senior Living Communities; and

WHEREAS, the Parties desire to contract with each other for the purpose of providing Advisor’s expertise to Company.

NOW, THEREFORE, in consideration of the mutual covenants contained in this Agreement, the Parties hereby agree as follows:

1.Definitions.
a.“Community” means an individual luxurious senior housing facility consisting of independent living, assisted living and/or memory care for approximately fifty (50) to two-hundred and fifty (250) residents.
b.“Disposition (Dispose)” means any sale, assignment, exchange, mortgage, pledge, grant, hypothecation, or other transfer, absolute or as security or encumbrance (including dispositions by operation of law).
c.“Holdco” means a wholly-owned limited liability subsidiary for each Community or Communities owned by the Company through which the Company expects to indirectly acquire interest in each property.
d.“Net Disposition Proceeds” means, with respect to any asset of the Company or its affiliates, or portion thereof, the proceeds, if any, with respect to the sale, refinancing, redemption or other disposition of such asset, or portion thereof (including such amounts received in distributions from an Holdco), net of any costs and expenses, including the repayment of indebtedness, incurred in connection with such sale, refinancing, redemption or other disposition and after setting aside appropriate reserves, all as determined in good faith by the Manager.

 

2.Scope of Engagement.
a.The Company authorizes Advisor to provide oversight of the Company’s acquisitions, developments, financing, and disposition activities, including, without limitation, the negotiation and execution of all agreements pertaining to development, acquisition, financing, and disposition of the Company’s assets.
b.The Company hereby appoints the Advisor as an Investment Advisor to perform the services hereinafter described, and the Advisor accepts such appointment. The Advisor shall be responsible for the investment and reinvestment of those assets of the Company designated by the Company to be subject to the Advisor’s management (which assets, together with all additions, substitutions and/or alterations thereto are hereinafter referred to as the “Assets” or “Account”);
c.The Company agrees to provide information and/or documentation requested by Advisor in furtherance of this Agreement as pertains to Company’s investment objectives, needs and goals, and to keep Advisor informed of any changes regarding same. The Company acknowledges that Advisor cannot adequately perform its services for the Company unless the Company diligently performs its responsibilities under this Agreement. Advisor shall not be required to verify any information obtained from the Company, Company’s attorney, accountant or other professionals, and is expressly authorized to rely thereon; and

 

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d.Company authorizes Advisor to respond to inquiries from, and communicate and share information with, Company’s attorney, accountant, and other professionals to the extent necessary in furtherance of Advisor services under this agreement; and
e.Company acknowledges and understands that the service to be provided by Advisor under this Agreement is limited to the management of the Assets and does not include financial planning or any other related or unrelated services.

 

3.Advisor Compensation. The Advisor will receive the following compensation for its services:

a.Acquisition Fees. The Company will cause each respective Holdco to pay the Advisor acquisition fees (the “Acquisition Fees”) for the selection, purchase, underwriting, financing, development or construction of the Communities equal to three (3.0%) percent of the Company’s prorata percentage of total Holdco preferred ownership interests multiplied by estimated Total Project Costs, as defined herein, upon the acquisition of each Community. In the event the Acquisition Fees are paid to the Advisor in connection with any Community that is not ultimately acquired by the Company, such Acquisition Fees shall be promptly repaid by the Advisor to the Company.
b.Financial Guarantee Fee. The Company will cause each respective Holdco to pay the Advisor, on a monthly basis, an annual Guarantee Fee (the “Financial Guarantee Fee”) equal to three quarters of one (0.75%) percent of the guaranteed amounts under total aggregate financing (“Guaranteed Amount”) for each Community for which Advisor or its affiliate provides financial or carve-out guarantees. The Company will pay the Advisor the Financial Guarantee Fee earned with respect to the Guaranteed Amount upon the execution of guarantees by Advisor or its affiliates at each Community. In the event the Financial Guarantee Fee is paid to the Advisor in connection with any Community that is not ultimately developed or acquired by the Company, such Financial Guarantee Fee shall be promptly repaid by the Advisor to the Company. These amounts are expected to be funded with working capital reserves established with Net Offering Proceeds prior to such time as the Company receives distributions from the Holdcos in amounts sufficient to pay such fees. As used herein, “Breakeven Cash Flow” means the amount of net cash flow from the operations of a Community necessary to meet any capital expenditure reserve payments and all principal and interest debt service payments.
c.Disposition Fees. The Company will cause each respective Holdco to pay the Advisor disposition fees (the “Disposition Fees”) for the disposition, recapitalization, or sale of Communities equal to three (3.0%) percent of the Company’s prorata percentage of total Holdco preferred ownership interests multiplied by the actual selling price or recapitalized amount, as defined herein, upon the sale or recapitalization of each Community. In the event the Disposition Fees are paid to the Advisor in connection with any Community that is not ultimately sold or recapitalized by the Company, such Disposition Fees shall be promptly repaid by the Advisor to the Company.
d.Reimbursement of Advisor Operating Expenses. The Company will cause each respective Holdco to pay the Advisor and its Affiliates, as applicable, for Advisor’s ongoing operating expenses incurred on behalf of the Company, the Holdcos or their affiliates. These amounts are expected to be funded with working capital reserves established with Offering proceeds prior to such time as the Company receives distributions from the Holdcos in amounts sufficient to pay such operating expenses. These amounts are estimated to be two (2.0%) percent of the Company’s prorata percentage of total Holdco preferred ownership interests multiplied by Total Project Costs.  

 

4.            Risk Acknowledgment. Advisor does not guarantee the future performance of the Account or any specific level of performance, the success of any investment decision or strategy that Advisor may use, or the success of Advisor’s overall management of the Account. Company understands that investment decisions made for the Account by Advisor are subject to various market, currency, economic, political and business risks, and that those investment decisions will not always be profitable.

 

5.            Directions to the Advisor. All directions by the Company to the Advisor (including notices, instructions, directions relating to changes in the Company’s investment objectives) may be in verbal or by email (email notification). The Advisor shall be fully protected in relying upon any such direction, notice, or instruction until it has been duly advised in writing of changes therein.

 

6.            Advisor Liability. The Advisor, acting in good faith, shall not be liable for any action, omission, investment recommendation/decision, or loss in connection with this Agreement including, but not limited to, the investment of the Assets, or the acts and/or omissions of other professionals or third-party service providers recommended to the Company by the Advisor, including a broker-dealer and/or custodian. If the Account contains only a portion of the Company’s total assets, Advisor shall only be responsible for those assets that the Company has designated to be the subject of the Advisor’s investment management services under this Agreement without consideration to those additional assets not so designated by the Company.

If, during the term of this Agreement, the Advisor purchases specific individual securities for the Account at the direction of the Company (i.e. the request to purchase was initiated solely by the Company), the Company acknowledges that the Advisor shall do so as an accommodation only, and that the Company shall maintain exclusive ongoing responsibility for monitoring any and all such individual securities, and the disposition thereof. Correspondingly, the Company further acknowledges and agrees that the Advisor shall not have any responsibility for the performance of any and all such securities, regardless of whether any such security is reflected on any quarterly account reports prepared by Advisor.

 

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The Company acknowledges that investments have varying degrees of financial risk, and that Advisor shall not be responsible for any adverse financial consequences to the Account resulting from any investment that, at the time made, was consistent with the Company’s investment objectives.

 

7.            Reports. Advisor and/or Account custodian shall provide Company with periodic reports for the Account. In the event that the Advisor provides supplemental Account reports which include assets for which the Advisor does not have discretionary investment management authority, the Company acknowledges the reporting is provided as an accommodation only, and does not include investment management, review, or monitoring services, nor investment recommendations or advice. As such, the Company, and not the Advisor shall be exclusively responsible for the investment performance of any such assets or accounts. In the event the Company desires that the Advisor provide investment management services with respect to any such assets or accounts, the Company may engage the Advisor to do so for a separate and additional fee.

 

8.            Termination. This Agreement will continue in effect until terminated by either party by written sixty (60) day notice to the other (email notice will not suffice), which written notice must be signed by the terminating party. Termination of this Agreement will not affect (i) the validity of any action previously taken by Advisor under this Agreement; (ii) liabilities or obligations of the parties from transactions initiated before termination of this Agreement; or (iii) Company’s obligation to pay advisory fees (prorated through the date of termination). Upon the termination of this Agreement, Advisor will have no obligation to recommend or take any action with regard to the securities, cash or other investments in the Account.

 

9.            Assignment. This Agreement may not be assigned (within the meaning of the Advisors Act) by either the Company or the Advisor without the prior written consent of the other party. The Company acknowledges and agrees that transactions that do not result in a change of actual control or management of the Advisor shall not be considered an assignment pursuant to Rule 202(a)(1)-1 under the Investment Advisors Act of 1940, and/or relevant state law.

 

10.          Non-Exclusive Management. Advisor, its officers, employees, and agents, may have or take the same or similar positions in specific investments for their own accounts, or for the accounts of other Companies, as the Advisor does for the Account. Company expressly acknowledges and understands that Advisor shall be free to render investment advice to others and that Advisor does not make its investment management services available exclusively to Company. Nothing in this Agreement shall impose upon the Advisor any obligation to purchase or sell, or to recommend for purchase or sale, for the Account any security which the Advisor, its principals, affiliates or employees, may purchase or sell for their own accounts or for the account of any other Company, if in the reasonable opinion of the Advisor such investment would be unsuitable for the Account or if the Advisor determines in the best interest of the Account it would be impractical or undesirable.

 

11.          Death or Disability. The death, disability or incompetency of Company will not terminate or change the terms of this Agreement. However, Company’s executor, guardian, attorney-in-fact or other authorized representative may terminate this Agreement by giving written notice to Advisor. Company recognizes that the custodian may not permit any further Account transactions until such time as any documentation required is provided by the custodian.

 

12.          Governing Law and Dispute Resolution. This Agreement shall be governed by and construed in accordance with the laws of the State of Florida. In the event of a dispute regarding this Agreement or the respective rights of the parties hereunder, the parties agree to submit such dispute exclusively to binding arbitration in Orlando, Florida before an arbitration panel consisting of three professional arbitrators with each of two arbitrators selected by the parties and the final third arbitrator selected by the selected two arbitrators. Any such arbitration shall be restricted to the party filing the arbitration and shall not be a joint or multiple arbitration reflecting more than one party and shall be commenced within fifteen (15) days of selection of the arbitrator and the discovery rules contained in the Florida Rules of Civil Procedure shall apply to all such proceedings. The arbitrator shall order all remedies permitted by law, award attorney's fees and costs to the prevailing party, and require that the entire proceeding, including the existence of the proceeding, be held confidential by the parties, and shall not be disclosed by any party. Any and all orders issued by the arbitrator shall be enforced by a state court of competent jurisdiction located in Orlando, Orange County, Florida.

 

13.          Disclosure Statement. The Company hereby acknowledges prior receipt of a copy of the Disclosure Statement of the Advisor as same is set forth on Part 2 of Form ADV. Company further acknowledges that he has had a reasonable opportunity (i.e. at least 48 hours) to review said Disclosure Statement, and to discuss the contents of same with professionals of his choosing, prior to the execution of this Agreement. If the Company has not received a copy of the Advisor’s Disclosure Statement at least 48 hours prior to execution of this Agreement, the Company shall have 5 business days from the date of execution of this Agreement to terminate Advisor’s services without penalty.

 

14.          Severability. Any term or provision of this Agreement which is invalid or unenforceable in any jurisdiction shall, as to such jurisdiction, be ineffective to the extent of such invalidity or unenforceability without rendering invalid or unenforceable the remaining terms or provisions of this Agreement or affecting the validity or enforceability of any of the terms or provisions of this Agreement in any other jurisdiction.

 

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15.          Company Conflicts. If this Agreement is between the Advisor and related Companies (i.e. husband and wife, life partners, etc.), Advisor’s services shall be based upon the joint goals communicated to the Advisor. Advisor shall be permitted to rely upon instructions from either party with respect to disposition of the Assets, unless and until such reliance is revoked in writing to the Advisor. The Advisor shall not be responsible for any claims or damages resulting from such reliance or from any change in the status of the relationship between the Companies.

 

16.          Privacy Notice. The Company acknowledges prior receipt of the Advisor’s Privacy Notice.

 

17.          Authority. The Company acknowledges that he/she/they/it has (have) all requisite legal authority to execute this Agreement, and that there are no encumbrances on the Assets. The Company correspondingly agrees to immediately notify the Advisor, in writing, in the event that either of these representations should change.

 

IN WITNESS WHEREOF, the Company and Advisor have each executed this Agreement on the day, month and year first above written.

 

 

“COMPANY”    “ADVISOR”
     
TUSCAN GARDENS SENIOR LIVING   TUSCAN GARDENS ADVISORS, LLC
COMMUNITIES, INC.    
     
     
By:     By:  
  Laurence Pino, President    

William N. Johnston, President

Tuscan Gardens Management Corporation,

Manager

 

 

Page 4 of 4

 

EX1A-6 MAT CTRCT 8 ex1a_6f.htm EXHIBIT 1A-6F

 

Exhibit 1A-6.F

 

Exhibit F – Asset Management Agreement

  

TUSCAN GARDENS SENIOR LIVING COMMUNITIES, INC.

  

ASSET MANAGMENT AGREEMENT

  

This AGREEMENT is made and entered into this ___ day of ___________, 2018, by and

  

between Tuscan Gardens Senior Living Communities, Inc., a Florida corporation (“Company”), and Tuscan Gardens Senior Living Communities Asset Manager, LLC, a Florida limited liability company (“Asset Manager”), herein referred to individually as the “Party” and collectively as the “Parties.”

  

WHEREAS, Tuscan Gardens Senior Living Communities, Inc. (the “Company”) is a recently formed Florida corporation organized on July 20, 2018 for the purpose of acquiring, developing, owning and disposing of multiple senior housing communities with experienced senior housing operators. The Company expects to acquire majority interest in each property indirectly through a limited liability subsidiary (a “Holdco”) for each Community or Communities owned by such Holdco; and

 

WHEREAS, the business of the Company shall be to invest in entities which acquire and/or develop senior housing communities consisting of independent living, assisted living and/or memory care for approximately fifty (50) to two-hundred and fifty (250) residents (collectively the “Company Properties”), and ultimately to own and/or operate or sell the Company Properties; and

 

WHEREAS, Company desires to obtain expertise in the oversight of third-party managers of Company Properties; and

 

WHEREAS, Asset Manager has been formed as an affiliated company for the purpose of providing expertise to Company in the area of operating Senior Living Communities; and  

  

WHEREAS, the Parties desire to contract with each other for the purpose of providing Asset Manager’s expertise to Company.

  

NOW, THEREFORE, in consideration of the mutual covenants contained in this Agreement, the Parties hereby agree as follows:

  

1.Definitions.

a.“Community” means an individual luxurious senior housing facility consisting of independent living, assisted living and/or memory care for approximately fifty (50) to two-hundred and fifty (250) residents.

b.“Disposition (Dispose)” means any sale, assignment, exchange, mortgage, pledge, grant, hypothecation, or other transfer, absolute or as security or encumbrance (including dispositions by operation of law).

c.“Holdco” means a limited liability company for each Community or Communities owned by the Company through which the Company expects to indirectly acquire majority ownership interest in each property.

d.“Net Disposition Proceeds” means, with respect to any asset of the Company or its affiliates, or portion thereof, the proceeds, if any, with respect to the sale, refinancing, redemption or other disposition of such asset, or portion thereof (including such amounts received in distributions from an Holdco), net of any costs and expenses, including the repayment of indebtedness, incurred in connection with such sale, refinancing, redemption or other disposition and after setting aside appropriate reserves, all as determined in good faith by the Manager.

e.“Community Manager” means a third-party management company responsible for the day to day operation of the Company Properties in accordance with Company’s business plan and in compliance with regulatory bodies.

f.“Gross Assets Under Management” means the aggregate total value of all assets under the direct or indirect management or oversight by the Company or its affiliates, without any deduction for debt or leverage.

 

2.Scope of Engagement.

a.The Company authorizes Asset Manager to provide oversight of the Company Properties and Community Managers including, without limitation, the negotiation and execution of all agreements pertaining to operation of the Company Properties.

b.The Company hereby appoints the Asset Manager to perform the services hereinafter described, and the Asset Manager accepts such appointment. The Asset Manager shall be responsible for the operation of Company Assets (which assets, together with all additions, substitutions and/or alterations thereto are hereinafter referred to as the “Assets” or “Account”);

c.The Company agrees to provide information and/or documentation requested by Asset Manager in furtherance of this Agreement as pertains to Company’s investment and financial performance objectives, operational needs and goals, and to keep Asset Manager informed of any changes regarding same. The Company acknowledges that Asset Manager cannot adequately perform its services for the Company unless the Company diligently performs its responsibilities under this Agreement. Asset Manager shall not be required to verify any information obtained from the Company, Company’s attorney, accountant or other professionals, and is expressly authorized to rely thereon; and

 

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d.Company authorizes Asset Manager to respond to inquiries from, and communicate and share information with, Company’s attorney, accountant, and other professionals to the extent necessary in furtherance of Asset Manager services under this agreement; and

e.Company acknowledges and understands that the service to be provided by Asset Manager under this Agreement is limited to the operational oversight of the Community Manager and day to day management of the Assets and does not include financial planning or any other related or unrelated services.

 

3.Asset Manager Compensation. The Asset Manager is responsible for the oversight of day to day Company Property management decisions by the Community Manager. The Company will pay the Asset Manager:

a.on a monthly basis, an annual Asset Management Fee (the “Asset Management Fee”) equal to two (2.0%) percent of Gross Assets under management. In the event the Asset Management Fee is paid to the Asset Manager in connection with any community that is not ultimately acquired by the Company, such Asset Management Fee shall be promptly repaid by the Asset Manager to the Company. These amounts are expected to be funded with working capital reserves established with Net Offering Proceeds prior to such time as the Company receives distributions from the Holdcos in amounts sufficient to pay such fees. As used herein, “Breakeven Cash Flow” means the amount of net cash flow from the operations of a Company Property necessary to meet any capital expenditure reserve payments and all principal and interest debt service payments.

b.Reimbursement of Asset Manager Operating Expenses. The Company will reimburse the Asset Manager for actual expenses incurred in connection with the selection or acquisition of an investment, whether or not it ultimately acquires the investment.

 

4.            Risk Acknowledgment. Asset Manager does not guarantee the future performance of the Account or any specific level of performance, the success of any investment decision or strategy that Asset Manager may use, or the success of Asset Manager’s overall management of the Account. Company understands that investment decisions made for the Account by Asset Manager are subject to various market, currency, economic, political and business risks, and that those investment decisions will not always be profitable.

 

5.            Directions to the Asset Manager. All directions by the Company to the Asset Manager (including notices, instructions, directions relating to changes in the Company’s investment objectives) may be in verbal or by email (email notification). The Asset Manager shall be fully protected in relying upon any such direction, notice, or instruction until it has been duly advised in writing of changes therein.

  

6.            Asset Manager Liability. The Asset Manager, acting in good faith, shall not be liable for any action, omission, investment recommendation/decision, or loss in connection with this Agreement including, but not limited to, the investment of the Assets, or the acts and/or omissions of other professionals or third-party service providers recommended to the Company by the Asset Manager, including a broker-dealer and/or custodian. If the Account contains only a portion of the Company’s total assets, Asset Manager shall only be responsible for those assets that the Company has designated to be the subject of the Asset Manager’s investment management services under this Agreement without consideration to those additional assets not so designated by the Company.

  

The Company acknowledges that the operation of Company Properties has varying degrees of financial risk, and that Asset Manager shall not be responsible for any adverse financial consequences resulting from the operation of any Company Property.

 

7.            Reports. Asset Manager and/or Account custodian shall provide Company with periodic reports for the Account. In the event that the Asset Manager provides supplemental Account reports which include assets for which the Asset Manager does not have discretionary investment management authority, the Company acknowledges the reporting is provided as an accommodation only, and does not include investment management, review, or monitoring services, nor investment recommendations or advice. As such, the Company, and not the Asset Manager shall be exclusively responsible for the investment performance of any such assets or accounts. In the event the Company desires that the Asset Manager provide investment management services with respect to any such assets or accounts, the Company may engage the Asset Manager to do so for a separate and additional fee.

  

8.            Termination. This Agreement will continue in effect until terminated by either party by written sixty (60) day notice to the other (email notice will not suffice), which written notice must be signed by the terminating party. Termination of this Agreement will not affect (i) the validity of any action previously taken by Asset Manager under this Agreement; (ii) liabilities or obligations of the parties from transactions initiated before termination of this Agreement; or (iii) Company’s obligation to pay Asset Management fees (prorated through the date of termination). Upon the termination of this Agreement, Asset Manager will have no obligation to recommend or take any action with regard to the securities, cash or other investments in the Account.

  

9.            Assignment. This Agreement may not be assigned (within the meaning of the Asset Managers Act) by either the Company or the Asset Manager without the prior written consent of the other party.

 

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10.           Non-Exclusive Management. Asset Manager, its officers, employees, and agents, may have or take the same or similar positions in specific investments for their own accounts, or for the accounts of other Companies, as the Asset Manager does for the Account. Company expressly acknowledges and understands that Asset Manager shall be free to render investment advice to others and that Asset Manager does not make its investment management services available exclusively to Company. Nothing in this Agreement shall impose upon the Asset Manager any obligation to purchase or sell, or to recommend for purchase or sale, for the Account any security which the Asset Manager, its principals, affiliates or employees, may purchase or sell for their own accounts or for the account of any other Company, if in the reasonable opinion of the Asset Manager such investment would be unsuitable for the Account or if the Asset Manager determines in the best interest of the Account it would be impractical or undesirable.

 

11.           Death or Disability. The death, disability or incompetency of Company will not terminate or change the terms of this Agreement. However, Company’s executor, guardian, attorney-in-fact or other authorized representative may terminate this Agreement by giving written notice to Asset Manager. Company recognizes that the custodian may not permit any further Account transactions until such time as any documentation required is provided by the custodian.

  

12.           Governing Law and Dispute Resolution. This Agreement shall be governed by and construed in accordance with the laws of the State of Florida. In the event of a dispute regarding this Agreement or the respective rights of the parties hereunder, the parties agree to submit such dispute exclusively to binding arbitration in Orlando, Florida before an arbitration panel consisting of three professional arbitrators with each of two arbitrators selected by the parties and the final third arbitrator selected by the selected two arbitrators. Any such arbitration shall be restricted to the party filing the arbitration and shall not be a joint or multiple arbitration reflecting more than one party and shall be commenced within fifteen (15) days of selection of the arbitrator and the discovery rules contained in the Florida Rules of Civil Procedure shall apply to all such proceedings. The arbitrator shall order all remedies permitted by law, award attorney's fees and costs to the prevailing party, and require that the entire proceeding, including the existence of the proceeding, be held confidential by the parties, and shall not be disclosed by any party. Any and all orders issued by the arbitrator shall be enforced by a state court of competent jurisdiction located in Orlando, Orange County, Florida.

  

13.           Disclosure Statement. The Company hereby acknowledges prior receipt of a copy of the Disclosure Statement of the Asset Manager as same is set forth on Part 2 of Form ADV. Company further acknowledges that he has had a reasonable opportunity (i.e. at least 48 hours) to review said Disclosure Statement, and to discuss the contents of same with professionals of his choosing, prior to the execution of this Agreement. If the Company has not received a copy of the Asset Manager’s Disclosure Statement at least 48 hours prior to execution of this Agreement, the Company shall have 5 business days from the date of execution of this Agreement to terminate Asset Manager’s services without penalty.

  

14.           Severability. Any term or provision of this Agreement which is invalid or unenforceable in any jurisdiction shall, as to such jurisdiction, be ineffective to the extent of such invalidity or unenforceability without rendering invalid or unenforceable the remaining terms or provisions of this Agreement or affecting the validity or enforceability of any of the terms or provisions of this Agreement in any other jurisdiction.

  

15.           Company Conflicts. If this Agreement is between the Asset Manager and related Companies (i.e. husband and wife, life partners, etc.), Asset Manager’s services shall be based upon the joint goals communicated to the Asset Manager. Asset Manager shall be permitted to rely upon instructions from either party with respect to disposition of the Assets, unless and until such reliance is revoked in writing to the Asset Manager. The Asset Manager shall not be responsible for any claims or damages resulting from such reliance or from any change in the status of the relationship between the Companies.

 

16.           Privacy Notice. The Company acknowledges prior receipt of the Asset Manager’s Privacy Notice.

 

17.           Authority. The Company acknowledges that he/she/they/it has (have) all requisite legal authority to execute this Agreement, and that there are no encumbrances on the Assets. The Company correspondingly agrees to immediately notify the Asset Manager, in writing, in the event that either of these representations should change.

 

IN WITNESS WHEREOF, the Company and Asset Manager have each executed this Agreement on the day, month and year first above written.

  

 

“COMPANY”    “ASSET MANAGER”
     
TUSCAN GARDENS SENIOR LIVING   TUSCAN GARDENS SENIOR LIVING COMMUNITIES ASSET
MANAGER, LLC
     
COMMUNITIES, INC.    
     
By:     By:  
  Laurence Pino, President    

William N. Johnston, President

Tuscan Gardens Management Corporation,

Manager

 

 

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EX1A-6 MAT CTRCT 9 ex1a_6g.htm EXHIBIT 1A-6G

Exhibit 1A-6.G

 

Exhibit G – Consent to use Legal Opinion

 

TUSCAN GARDENS SENIOR LIVING COMMUNITIES, INC.

 

CONSENT BY PINO NICHOLSON PLLC TO USE LEGAL OPINION

 

 

 

 

To whom it may concern:

 

We consent to the inclusion of our legal opinion dated December 1, 2018, with respect to the legal authority and right of Tuscan Gardens Senior Living Communities, Inc. as of December 1, 2018 to issue Preferred Shares in this Regulation A Offering Circular on Form 1-A. We also consent to the reference to our firm under caption “Experts”.

 

 

Sincerely,

/s/Laurence J. Pino, Esq., for the firm

PINO NICHOLSON PLLC

 

 

Orlando, Florida December 1, 2018 

 

 

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EX1A-6 MAT CTRCT 10 ex1a_6h.htm EXHIBIT 1A-6H

 

Exhibit 1A-6.H

 

Exhibit H – Consent of Independent Auditor

 

TUSCAN GARDENS SENIOR LIVING COMMUNITIES, INC.

 

CONSENT BY GRENNAN, FENDER, HESS & POPARAD LLP TO USE AUDIT OPINION

 

 

 

We consent to the inclusion of our report dated August 10, 2018, with respect to the financial statements of Tuscan Gardens Senior Living Communities, Inc. as of August 10, 2018, and for the period from inception (July 20, 2018) to August 10, 2018, in this Regulation A Offering Circular on Form 1-A of Tuscan Gardens Senior Living Communities, Inc. We also consent to the reference to our firm under caption “Experts”.

 

 

 

/s/GRENNAN FENDER HESS & POPARAD LLP

 

Orlando, Florida

August 10, 2018 

 

 

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EX1A-6 MAT CTRCT 11 ex1a_6i.htm EXHIBIT 1A-6I

Exhibit 1A-6.I

 

Exhibit I – Legal Opinion

 

TUSCAN GARDENS SENIOR LIVING COMMUNITIES, INC.

 

PINO NICHOLSON PLLC OPINION REGARDING THE ISSUANCE OF PREFERRED SHARES

 

 

Pino Nicholson PLLC 

189 S. Orange Ave, Suite 1650 

Orlando, FL 32801 

Telephone: 407-206-6577 

Email: ljp@PinoNicholsonLaw.com 

 

 

December 1, 2018

 

To: Board of Directors – Tuscan Gardens Senior Living Communities, Inc. 

 

Re: Legal Opinion of the Sales of Shares of Preferred Stock

 

Gentlemen:

 

Tuscan Gardens Senior Living Communities, Inc., a Florida corporation, (the "Company"), has requested our opinion with respect to the issuance, transferability, and compliance with the registration requirements of the Securities Act of 1933, as amended (the "Securities Act"), of Company stock.

 

In rendering the legal opinion contained in this letter, we have reviewed certain documents and information furnished by the Company which have been fully relied upon as being authentic without further investigation. These documents include copies of the Articles of Incorporation; Bylaws of the Company; and the Offering Statement dated December 1, 2018 on Form 1-A as required under Regulation A of the Securities Act.

  

FACTS

 

Based upon our review of the above referenced Company documents, our law firm has ascertained the following facts and history of the Company:

 

1.The Company was organized under the laws of the State of Florida on July 20, 2018, and the Company was authorized to issue up to 100,000 shares, consisting of 50,000 shares of voting common shares, $1.00 par value per share (the “Common Shares”), and 50,000 shares of Class A Non-Voting Preferred Shares, $1,000.00 par value per share (the “Preferred Shares”).

 

2.On August 7, 2018, the Company issued 50,000 Common Shares to Tuscan Gardens Capital Partners, LLC which were fully paid. All Common Shares issued by the Company were issued under Section 4(a)(2) of the Securities Act.

  

3.During August 2018, the Company submitted an Offering Statement for an offering of up to 50,000 Preferred Shares in reliance upon the exemption from registration under Regulation A of the Securities Act.

 

4.As of August 10, 2018, the Company has 50,000 Common Shares issued and outstanding which are held by one shareholder of record.

 

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PERTINENT LAW AND EXPLANATION

 

Section 5 of the Securities Act requires that any offer or sale of securities which involves the mails, or a means of interstate commerce must be registered. Certain offerings may be exempt from the registration process by the nature of the security, nature of the transaction, or the amount of the offering.

 

Section 2(a)(4) of the Securities Act defines an "issuer" as including "-every person who issues or proposes to issue any security". An issuer is subject to the registration requirements of Section 5 of the Securities Act whenever it makes an original distribution of securities to the public.

 

Section 4 of the Securities Act provides several transactional exemptions to the registration requirements of Section 5 of the Securities Act, as do certain rules and regulations promulgated thereunder. 

 

Section 4(a)(1) of the Securities Act exempts from registration transactions which do not involve an issuer, underwriter or dealer. The burden of proof is upon the individual or entity claiming the exemption to show that they are not issuer, underwriter or dealer. Section 4(a)(2) of the Securities Act exempts from registration those "-transactions by an issuer not involving any public offering" 

 

Rule 144 provides a background for determining who is an underwriter under Section 4(a)(1) and (a)(11) of the Securities Act. This is particularly important for those who are sellers of restricted securities from being classified as underwriters. An investor holding restricted securities who are not professionals in the securities business may be considered to be underwriters if they act as links in the chain of transactions through which securities move to the public. Rule 144 attempts to provide an understanding by delimiting persons who will not be characterized as underwriters and sets out objective standards under which a Section 4(a)(1) exemption is available and provides a safe harbor for claiming it.

 

Rule 144(a)(1) provides that "An affiliate of an issuer is a person that directly, or indirectly through one or more intermediaries, controls, or is controlled by, or is under common control with, such issuer." An affiliate has also been further interpreted to include any officer, director, or ten percent (10%) shareholder of the issuer.

 

Rule 144(b) provides that any affiliate or other person who sells restricted securities of the issuer of an issuer for his or her own account, or any person who sells restricted securities or any other securities for an account of an affiliate of the issuer, is deemed not to be engaged in the distribution of securities and therefore, is not an underwriter, if the sale is made in accordance with all of the terms and conditions of the rule.

 

Rule 144(d)(1), provides that if restricted securities are sold then a "-minimum of one year must elapse between that later of the date of the acquisition of the securities from the issuer or from an affiliate of the issuer, and any resale of such securities in reliance on this section for the account of either the acquirer or any subsequent holder of those securities. If the acquirer takes these securities by purchase, the one-year period shall not begin until the full purchase price or other consideration is paid or given by the person acquiring the securities from the issuer or from an affiliate of the issuer."

 

The Preferred Shares are being offered and sold only to “qualified purchasers” (as defined in Regulation A under the Securities Act). As a Tier 2 offering pursuant to Regulation A under the Securities Act, this Offering will be exempt from state law “blue sky” review, subject to meeting certain state filing requirements and complying with certain anti-fraud provisions, to the extent that the Preferred Shares offered hereby are offered and sold only to “qualified purchasers” or at a time when the Preferred Shares are listed on a national securities exchange. “Qualified purchasers” include: (i) “accredited investors” under Rule 501(a) of Regulation D and (ii) all other investors so long as their investment in the Preferred Shares does not represent more than 10% of the greater of their annual income or net worth (for natural persons), or 10% of the greater of annual revenue or net assets at fiscal year-end (for non-natural persons). Accordingly, the Company reserves the right to reject any investor’s subscription in whole or in part for any reason, including if the Company determines in its sole and absolute discretion such investor is not a “qualified purchaser” for purposes of Regulation A of the Securities Act.

 

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To determine whether a potential investor is an “accredited investor” for purposes of satisfying one of the tests in the “qualified purchaser” definition, the investor must be a natural person who has: (i) an individual net worth, or joint net worth with the person’s spouse, that exceeds $1,000,000 at the time of the purchase, excluding the value of the primary residence of such person; or (ii) earned income exceeding $200,000 in each of the two most recent years or joint income with a spouse exceeding $300,000 for those years and a reasonable expectation of the same income level in the current year.

 

LEGAL OPINION

 

The Florida Business Corporations Act provides that a corporation existing under the laws of the State of Florida may issue its shares for consideration consisting of any tangible or intangible property or benefit to the corporation, including, but not limited to, cash, promissory notes, services performed, contracts for services to be performed or other securities of the corporation and that the judgment of the Board of Directors as to the adequacy of the consideration received for the shares issued is conclusive in the absence of substantial evidence to the contrary.

 

Upon our review of the relevant corporate documents, it is our opinion that the Company is validly organized and presently existing in good standing under the laws of the State of Florida and that it is governed by a validly constituted Board of Directors. The Board of Directors has the capacity and authority to authorize officers of the Company to enter into contracts on behalf of and binding upon the Company for any lawful purpose.

 

In connection with requesting this opinion, we have been informed by the Board of Directors that the Company was duly incorporated under the laws of the State of Florida on July 20, 2018, under the name of Tuscan Gardens Senior Living Communities, Inc. On August 7, 2018, the Company issued 50,000 Common Shares to Tuscan Gardens Capital Partners, LLC, which were fully paid.

 

During the course of September 2018, the Company filed an Offering Statement Amendment No. 1 on a Form 1-A with the Securities Exchange Commission pursuant to Regulation A of such same Act for a “best efforts” offering of up to 50,000 Preferred Shares (the “Offering”). As of August 10, 2018, the Company has 50,000 Common Shares issued and outstanding which are held by 1 shareholder of record. 

 

Based upon the documents provided by the Company and our review of the applicable securities law, it is our opinion that i) the one holder of the Company's Common Shares described above holds securities which are unrestricted and fully transferable, ii) the Board of Directors has the capacity and authority to authorize officers of the Company to issue up to 50,000 Preferred Shares under the Offering, and iii) the Preferred Shares purchased by an Investor will be validly issued, fully paid, and non-assesable.

  

The opinions herein expressed are qualified to the extent that the resales of the shares may be subject to or affected by present or future compliance with State or Federal securities laws, bankruptcy, insolvency, reorganization or other laws relating to or affecting the rights of shareholders or creditors of the Company. This firm does not express any opinion as to any National Association of Securities Dealers member or the broker/dealer's ability or willingness to create, maintain or transact trades in the shares or to whether the National Association of Securities Dealers would permit the listing of the shares of Common Stock of the Company for sale publicly.

 

This firm has made no independent attempt to verify the facts set forth in this opinion. Any subsequent information regarding the facts may affect the opinions and conclusions stated herein. The opinions expressed herein are limited to and conditioned upon the facts as stated and as deemed to be in existence based upon the information provided to this firm by the Company. These facts are deemed to be accurate as of the date of this letter and this letter and the opinions do not take into consideration any events that may occur subsequent hereto. Therefore, this firm reserves the right to modify or rescind its opinion if new facts are brought to its attention but has no obligation to expressly inform any holder of this opinion, except the Company.

 

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Be advised that opinion letters from counsel are not binding upon the Commission, regulatory bodies or the courts, and, to the extent that persons relying upon this letter may have knowledge of facts or circumstances which are contrary to or which would alter the conclusions and opinions expressed herein then the opinion(s) would not be applicable. The various statutory provisions, regulatory citations, administrative interpretations and court decisions which have reviewed and, in some cases, cited here, are necessarily subject to change from time to time. The opinions expressed herein are based, in part, upon such authorities as they exist as of the date hereof, coupled with and applied to the facts as previously stated which have been provided to this firm by the Company.

 

No opinion is expressed with respect to any federal or state law, regulation or rule not otherwise expressly referenced herein. In particular, and without limiting the generality of the foregoing, no opinion is given with respect to any secondary trading exemption under the laws of any individual state. Prior to any trading in the shares, the Company must first comply with the rules and regulations of the securities laws in the jurisdictions wherein the shares are to be traded.

 

No opinion is expressed with respect to any federal or state statute or regulation or with regard to the rules of any self-regulatory authority with which a broker/dealer trading these shares must comply. 

 

In issuing this opinion, we acknowledge that each shareholder of the Company described above and the securities broker/dealers through whom such shareholders may seek to sell their Company shares may rely upon this opinion, and we hereby grant to the Company our authorization and consent to provide a copy of this opinion to any such shareholder or his broker/dealer.

 

Sincerely,

 

/s/Laurence J. Pino, Esq., for the Firm

 

 

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