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ELECTRONICALLY FILED
BOUTIN JONES INC. Superior Court of California,
Daniel S. Stouder (SBN 226753) Count of Placer
Danielle M. Patterson (SBN 337200) 04/09/2024 at 02:41:44 PM
555 Capitol Mall, Suite 1500
By: Breanne E Sanders
Sacramento, CA 95814-4603
Deputy Clerk
T: (916) 321-4444/F: (916) 441-7597
Email: dstouder@boutinjones.com
dpatterson@boutinjones.com
Attorneys for Petitioners Eric Lee, Kevin Massey, and Christina Massey
SUPERIOR COURT OF THE STATE OF CALIFORNIA
IN AND FOR THE COUNTY OF PLACER
10 UNLIMITED JURISDICTION
11 ERIC LEE, KEVIN MASSEY and Case No. §-C\V¥-0052597
CHRISTINA MASSEY,
12 DECLARATION OF DANIEL S.
Petitioners, STOUDER IN SUPPORT OF VERIFIED
13 PETITION FOR WRIT OF MANDATE TO
vs. COMPEL INSPECTION AND COPYING
14 OF CORPORATE BOOKS AND
AMETHYST GROVE ASSISTED LIVING, RECORDS
15 INC,
16 Respondent.
17
18 I, Daniel S. Stouder, declare as follows:
19 1 Tam an attorney with the law firm of Boutin Jones Inc., attorneys of record for Petitioners
20 Eric Lee, Kevin Massey, and Christina Massey (“Petitioners”). I am licensed to practice before all
21 courts in the State of California. I have personal knowledge of the facts set forth in this Declaration
22 and if called as a witness to testify to the truth of the matters contained herein, I could and would so
23 testify.
24 2 I make this declaration in support of the Petition for Writ of Mandate (“Petition”), made
25 in Petitioners’ capacities as directors and shareholders of Amethyst Grove Assisted Living, Inc. (the
26 “Company”).
27 3. On October 27, 2023, I reached out to Mare Allen (“Mr. Allen’) explaining that he had
28 breached the parties’ Buy-Sell Agreement and his fiduciary duties as the majority shareholder by
1
DSS DECL. ISO VERIFIED PETITION FOR WRIT OF MANDATE 4868-6579-4215.2
competing with the Company. I requested a response by close of business on November 3, 2023. A
true and correct copy of this correspondence is attached hereto as Exhibit A.
4. I exchanged a few letters with Mr. Allen. On dated November 27, 2023, I received a
letter from Mr. Allen in which he claimed he was specifically exempted from Section 7.04 of the
Agreement, the noncompete provision. A true and correct copy of this correspondence is attached
hereto as Exhibit B.
5. After consulting with my clients, I learned that they did not agree to exempt Mr. Allen
from the noncompete provision, and that Mr. Allen had falsely informed the Company’s counsel
that Petitioners had consented to that change. I responded to Mr. Allen’s letter on January 9, 2024,
10 highlighting the above. A true and correct copy of this correspondence is attached hereto as Exhibit
11 xCc
12 6. In response, Mr. Allen promised a robust response to my January 9, 2024, letter. This
13 never happened. He suddenly noticed a shareholders meeting for January 22, 2024. The agenda
14 items for that meeting included a vote to dissolve the Company, and to replace Petitioners on the
15 board of directors.
7
16 I wrote Mr. Allen again, on January 19, 2024, informing him that the agenda for the
17 shareholders meeting was in breach of the fiduciary duties he owed to Petitioners as the majority
18 shareholder. I did not receive any response to this letter. A true and correct copy of this
19 correspondence is attached hereto as Exhibit D.
20 I declare under penalty of perjury under the laws of the State of California that the foregoing
21 is true and correct and that this declaration was executed on April 9, 2024 at Sacramento, California.
22
23
24 eb
Daniel S. Stouder
25
26
27
28
2
DSS DECL. ISO VERIFIED PETITION FOR WRIT OF MANDATE 4868-6579-4215.2
EXHIBIT A
BoutinJones...
ATTORNEYS AT LAW
Daniel S. Stouder
Attorney
dstouder@boutinjones.com
October 27, 2023
Sent Via FedEx and Email
Marc Allen
1211 Adora Circle
Roseville, CA 95678
marc@amethystgrove.com
SUBJECT: Amethyst Grove Assisted Living, Inc. (the “Company”)
SETTLEMENT COMMUNICATION — EVIDENCE CODE Sec. 1152
Dear Mr. Allen:
I represent Eric Lee, Kevin Massey, and Christina Massey. My clients have serious concerns
about your clear violations of the Company’s Buy-Sell Agreement as well as your breaches of
the duty of care and loyalty to the Company and its minority shareholders.
My clients genuinely desire to resolve this matter amicably and before litigation, and therefore
they jointly make the demand below. If you have an attorney in connection with this matter,
please put him or her directly in contact with me.
Background
My clients collectively own 11,925 ofthe outstanding shares of the Company to your 51,000.
The purchased their minority shares in the Company for a combined $75,000. They did so with
the promise of regular distributions and a profitable investment. They have received neither.
After they made their investments, you opened a larger, competing assisted living facility near
the Company’s sole location. And yet, Section 7.04 of the Buy-Sell Agreement unequivocally
prohibits any shareholder from competing against the Company while employed or engaged with
the Company and for 24 consecutive months thereafter (“Restricted Period”). During the
Restricted Period, you, as a shareholder and employee of the Company, are prohibited from: a)
providing services or advice to a competitor; b) affiliating with a competitor in any manner; or c)
owning, managing, operating, controlling, or participating in any fashion in a competing
business. You appear to be in violation of all these prohibitions.
The reason for these clear prohibitions are obvious. Given the fiduciary duties owed,
shareholders should not be devoting time to competing endeavors at the expense of the
555 Capitol Mall Tel / 916.321.4444
Suite 1500 Fax / 916.441.7597
Sacramento, CA 95814 BOUTINJONES.COM
4892-4472-1034.2
BoutinJones.. Marc Allen
October 27, 2023
Page 2 of 2
Company’s business. And that is exactly what my clients believe you have been doing. Without
getting into all the specifics, my clients believe you have given preferential treatment to the
competing facility since it opened without committing the necessary resources and time to
growing the Company’s business so as to maximize profits and protect all shareholders’
investments. To wit, other than one nominal distribution, my clients have not seen any return on
their investments as was promised. Had you not violated the noncompete, my clients believe
they would have been paid significant sums relative to their investment.
The Buy-Sell Agreement contains some interesting dispute resolution provisions. My clients are
happy to invoke them if necessary. However, given the clear violation above, and the obvious
damages that flow from it, | am writing to inquire whether you are interested in buying your
peace and making my clients whole without incurring substantial attorneys’ fees in the process.
As to that point, I am compelled to inform you that Section 12.14 of the Buy-Sell Agreement
allows my clients to recover their attorneys’ fees and costs incurred in mediation, arbitration, and
beyond from you as the prevailing parties. Thus, in addition to paying my clients’ damages, you
stand to be responsible for much more out of pocket losses should you choose to drag this
process out.
My clients demand that you pay them $115,000, representing the full return of their investments,
credit for prior distributions not made, damages you caused by way of your breaches ofthe Buy-
Sell Agreement/fiduciary duties, plus lost expected future profits. In exchange, my clients will
forfeit their shares and enter into a settlement agreement and mutual general release whereby all
parties will waive claims against each other related to the Company. We feel parting ways now
with a fair buyout is preferred to litigation, but my clients are prepared to go that route should
you force them in that direction. I can assure you that the price tag to buy my clients out will
only go up from here if we are not able to find an acceptable near-term resolution.
lask that you or your attorney respond in writing to my clients’ demand by no later than close of
business on November 3, 2023.
Sincerely,
BOUTIN JONES INC.
nee
Daniel S. Stouder
4892-4472-1034.2
EXHIBIT B
A
AMETHYST GROVE ASSISTED LIVING, INC.
1211 Adora Circle
Roseville, CA 95678
ee— ———————
r
‘November 27, 2023
Boutin Jones, Inc., Attorneys at Law Eric Lee
Daniel S. Stouder — Attorney 4124 Zephyt Way
555 Capitol Mall, Suite 1500 Sacramento, CA 95821
Sacramento, CA 95814
Keviri R. Massey Christina T. Massey
1408 Black Bear Street 1408 Black Bear Street
Roseville, CA 95747 Roseville,CA 95747
Dear Mr, Stouder,,
This communication to. you is in response to your communications dated October 27, 2023, Exhibit Al, and Navember
16, 2023, ExhibitA2, This communication will clear up misunderstandings related to events, communications and
factual evidence, which I believe your clients have misinformed you. I will. also use this communication to deny any
and all alleged wrong doings you are suggesting I have allegedly committed, against. your clients, by your
communications, ExhibitAl and Exhibit A2.
‘There are circumstances. ofevidence-which need to be.clatified to ensure we-engage in a conversatian surrounding
facts of concern in this matter. The following evidence and some details mentioned, surrounding such evidence, but
not limited to, are being attached to this: communication and detailed for-your consideration, s0 we may bring
resolution to your clients’ misunderstood, grievances:
EX ATION RECE IVED FROM D ANTE! id ER dated October 02
CHIBIT A COMMUN]
BX Hl ITA COMML TION, EIVED FR OM DANIEI STOUDER dated November 023
EXH BUY GREEMENT dated in 02
The Buy-Sell Agreement, hereinafter referred to as “Agreement”, clarifies percentage of ownership and stock
shares owned in Amethyst Grove Assisted Living, Inc., hereinafter referred to as “Corporation”. The
following details the percentage of ownership and stock shares owned in the Corporation per the Agreement:
Mare Allen 81.00% Ownership, 81,000 shares of stock
Eric-Lee 10.00% Ownership, 10,000 shares of stock
Kevin Massey 4.50% Ownership, 4,500 shares of stock
Christina Massey 4.50% Ownership, 4.500 shares of stock
Section 3.04 of the Agreement states the Corporation has the: first right of refusal to purchase selling
shareholder stock.
eee
—————
Page 10f5
Sections within ARTICLE FIVE of the Agreement stipulate payment terms far sharesto be purchased.
Section'’7.04 ofthe Agreement, related to “Noncompaetition Agreement”, cleatly states that “Marc Alen shall
be exempt from the restrictions stated in this section 7.04.”
ARTICLE TWELVE — DISPUTE RESOLUTION, clearly covers the process of mediation and arbitration
‘before any judicial claims can be filed. ‘At this time, you or your clients have not requested mediation or
arbitration...
EXHIB RESO STION dated September 020,
(3 pag
On September 1, 2020, the Corporation held a meeting to amend the Bylaws. of the Corporation to
accommodate multiple shareholders and directors from the original organization of a one shareholder and
one director entity. The meeting was held and resolutions adopted in the best interest of all future directors,
officers and employees, of the Corporation. ‘The resolutions were necessary to accept the additional
shareholders and directors into the Corporation that the existing structure of the Corparation did not allow.
‘The resolutions detail such amending changesto the Bylaws of the Corporation,
BXH IB [Tr C2 AMENDED BYLAWS© Lo PORATION dated eptember 020, (2 pages
According to the. Amended Bylaws of the Corporation, indemnification, related to your clients claims, would
‘apply to this matter. Defending your clients” unsubstantiated claims, related to their unwarranted grievances,
would be detrimerital to the Corporation, and agaifist your clients’ best interest. It is highly unlikely that your
clients would receive a favorable ruling under the circumstances you are now aware of.
EXHIB It. MA COMMUNI ATION AND PROJECT PROPOSA OFFER Db TO ER
‘dated June 30, 2022, (11 pages)
The e-mail communication and project proposal, was offeredto all existing shareholders of the Corporation.
All shareholders of the Corporation have always been well aware of my desire and intent to open multiple
assisted living facilities, fully disclosed prior to their investment into the-Corporation. This was the main
reason to-exempt myself fromm any non-competition restrictions as your clients agreed to in the By-Sell
Agreement. Your clients were given multiple opportunitiesin multiple projects.to participate in. They chose
on there own to not participate in any of the new assisted living business ventures and at no time ever
communicsited any concern over my participation in new assisted living business ventures.
EXHIBIT
INCORPORATION,
E-1, ARTIGLES OF (1 page)
‘The Corporation is organized as a close: corporation when applying circumstances of corporate law or
adininistrative process and procedure.
EX] HIB Ei MINUTES AND RESO ITION THE co RPO TON ECTION
Although your clients are minority shareholders, they were elected to be majority directors. They have
participated in defining strategy and the ongoing business concern and operations of the Corporation. Their
tole collectively seemed as if their actions were more of a partner than an investor. The actions to-elect the
minority shareholders as moajority directors does not reflect any lack of consideration for your clients’ best
interest,
{All EXHIBITS LISTED ABOVE ARE ATTACHED TO THIS COMMUNICATION]
es
Page 2 of 5
Above; are just a few points of factual interest which contradicts your clients’ claims. The Corporation, as all
businesses in this country, are experiencing an unforeseen circumstance ofan economic recession which is evident to
some degree in all businesses and is a publicly Known circutristance in today’s economy. Investors, partners and
shareholders in various industries are all experiencing unforeseen down. tums ih profitability, revenue, distributions
and stock market values. The Corporation financial condition is not due to my lack
of effort to adjust to these economic
times. It's just an unforeseen matter of citcumstance and bad timing. Investment is a risk without guarantee. No
guarantees have been expressed to your clients. No evidence of guarantees exist that your clients’ should receive a
Buaranteed return or distribution on their investment. Your clients were presented with a proposal to invest in a stait
up business venture which they had over a month to decide if they wanted to invest. They submitted questions and
received. answers during this decision period. They performed their due diligence and made their decision to invest
after careful consideration, The Corporationis not failing. The Corporation is experiencing economic conditions
outside its contro]. The Corporation is adaptingto the economic conditions. The Corporation’s intent is to survive
the unforeseen current economic crisis and become profitable, secure the investment of its shareholders, to allow for
future shareholder distributions in better economic times. The Corporation doss recognize that your clients wish to
sell their stock interestto redeem their. current stock value. The Corporation does not recognize or legitimize your
clients" claims. ‘Yout clients’ claims are false, and simplyan attempt to enrich themselves at my expense and the
Corporation’s expense, to recover well over 100% of their investment, that they are not entitled to recover. The
Corporation is committedto defend itself and its officers, directors and employees against unjustified claims of this
manner, The Corporation wantsto consider realistic: solutions with its stockholders who are looking for an exit strategy
to not continue as shareholders of the Corporation. It is obvious-that based on your.claims, you are not correctly
informed, by your clients, of the circumstances that exist rélatedto the false claims in both of your communications
tome, Please consider the following carefully and-thoroughly with your clients:
According to the Buy-Sell Agreement there has been no breach of contract, duty of vare or loyalty. Your
claim is basedon breach related ta nén-competition. The'Buy-Sell Agreement clearly states that | am-exempt
from any non-competition restrictions. This of courseis in conflict with your alleged false accusations for
violations of dutyof care or loyalty.
Please do take the time to be specific, supported by fact and evidence, related to fiduciary duties you and
your clients believe that'l have allegedly compromised, as it relates to 4 close corporation. Your clients are
majority directors in the Corporation, please be sure you examine any fiduciary duties they may have
compromised.
3. ‘There has not been any triggering event, per the Buy-Sell Agreement, to initiate mediation or arbitration.
‘Your clients simply have engineered a false circumstance that. does not exist, for which the corporation has
fully indemnified its officers, directors and employees, and has full intention to defend its officers, directors
and employees againet the false alleged accusations presented by you, and your clients.
Your clients’ accusations will be:costly in professional fees and highly liable for them to pursue and will
cause a detrimental financial effect tothe corporation and its ability to stabilize its financial condition during
these hardship economic times, while defending its indemnified officer. Attorney's fees relatedto continuous.
legal counsel, discoveries, depositions, expert witnesses, judicial process for mandatory pre-setilement
conference tiediation and trial, which probably will not be evident
for two yeats or more, wouldbe a disaster
for all parties concerned with professional fee price tags in excess of $100,000.00. What also needs to be
consideredby your clients’ action is the cross complaint that will be filed against any judicial process brought
against the Corporation, its officers, directors and employees. It is important that you explain there are no
guarantees for success, and no basis for success, based on the content of this communication in responseto
false claims you and’ your clients have communicated. Your clients must consider the damages the
Corporation and myself will file in a cross complaint seeking damages for the irreversible negative financial.
effect defending their claim would cause, not limited to, closure of the corporation due to the cost of the
financial defense of false claims brought against the Corporation's officer ‘which the Corporation is boundto
a
Page 3 of 5
defend and considers the defense warranted. In such case, the Corporation and Officer of the Corporation,
Marc S, Allen, would be-seeking relief for damages related to the Corporations loss of fature income. Mare
§. Allen wouldbe seeking relief‘related to loss of future wages and loss of future profit distributions of the
Corporation, defamation caused by negatively influencing Mare S. Allen’s.credibility to acquire investors
related to fyture assisted living care home projects, all due.to the false and unwarranted claim filed against
him. Your clients.need to carefully evaluate their greatrisk in continuingto pursue this matter based on their
claims, They risk liability for recovery in damages in excess of $1,000,000.00. it would negligent and
unconscionable to not advise your clients, that this risk to them, you cannot guarantee they will not-be
subjected.to, at any manner or degree.
Your clients’ demand ta purchase their existing stock is not in good faith or even well considered. It
demonstrates only consideration of an opportunity designed to enrich themselves without thouglit to the
damages incurred by the Corporation and its officer, based on the unrealistic value placed on their stock
ownership interest in the Corporation. Your clients represent 19% ownership in the Corporation. Even ‘if
the Corporation made your ‘clients whole by purchasing their ‘stock back at their original investment of
$75,000.00, cash paid in full, this. would mean that the Corporation would have a value of estimated at
$395,000.00. This value is unrealistic based on a current book value estimated at $19,000.00. ‘The
Corporation: is service company with very little fixed asset value and contractual resident base, month to
month, ‘Client residents come and go based on economic needs and unfortunate. circumstance of health and
death, The past year turnaround in clients has been challenging due to urifortunate resident circumstances
which the Corporation has unnaturally experienced over the [ast year. The Corporation has not been in
business {ong enough to experience any significant goodwill factor. The Corporation is doing all things
necessary to maintain a break-cyen profit factor during today’s deficient public economic conditions. All
things considered, it is evident, that the stock value of the Corporation ix far less than your clients want to
recognize. It is evident that your cliénts, like many investors today, are coricemned with the value of their
investment. 1 can assure you that the value of their. investment is not due to the lack of my dedication to the
success of the Corporation. It is not realistic for ‘investors to demand full return of their investment when
uncontrollable economic conditions impair their business investment. Business investment is not without
risk unless ttiat risk is guaranteed,-in writing to the investor, not to exist.
The corporation wishes to extend this one time offer to your clients, in lieu of, a situation that the Corporation
will be forced to defend, that will cause irreversible damage to the Corporation and its Officer, Mare S. Allen,
as well a8 your clients, which your clients will be subject to the consequences of lisbility unnecessarily. The
following offer is being extended to. your clients in good faith and the offer is considered generous
considering all conditions, fasts and evidence presented in this communication:
4. ‘The Corporation wishes.td make its investors whole, in an act of good faith and goodwill, by
collectively purchasing all stock from your clients for the amount of $75,000.00, for contract
of purchase.to be prepared individually, according to their pro rata share of stock owned in the
Corporation. Such contract will contain, but not limited:to, satisfactory releases against any
liability of coricem between parties.
The Corporation will engage in a stock re ition purchase agreement for treasury stock, as
detailed in item ().above. Stock purchase will be payable by note, in favor of sellers; solely
guaranteed by the Corporation. The terms of the note executed will be, but not limited to, notes
collectively to sellers in the amount of $75,000.00, note smonnts according to seller's prorata
share of theit 19% ownership. in the Corporation, no down payment, first payment upon
execution of the notes by all parties, note payment due date the 20" of each month consecutively
following after the first payment, term of the notes will be 60: monthly payments at 5% interest,
collectively to all-sellers monthly payment for principal and interest
not to exceed $1,409.66.
$$
eS
Page 4 of 5
The final option to consider is that your clients remain as shareholders in the Corporation, exercise. patience
and understanding until the Corporation has remedied its current financial condition due to the current status
of the economy in crisis which all businesses are dealing with today. By exercising
this option, all claims of
your ctients, which have been expressed in your communications, to this date; will le considered resolved
and of no standing.
Lurge you to examine the facts and evidence in this communication, as they are now fully disclosed to you, and cease
and desist all efforts of your clients to try to. coerce recovery of their investments, in a-way-they are not entitled
to, for
the arnount they are not entitled to, and.based on false alleged accusations without fact or evidence.
The generous offer extended to your clients in item 6{a) and 6(b) above will expire and be considered ‘void 10 days
after receipt of this communication. To ensure your clients-are well informed of this communication, they willbe sent
acopy-of this communication. This is not to be considered anegotiation. This communication is tended as an offer
of goodwill to your clients,
Thank you all, for your consideration and time in reviewing this communication. | sincerely hope that you. find this
communication to be equitable in your favor'and that you recognize that mediation, arbitration and litigation each
havea severe financial consequence to all. The practical consideration in this matter does not warrant costs that are
detrimental to ail: concerned.
Si
AMETHYST GROVE ASSISTED LIVING, INC.
—
Mare:
Page5 of 5
BoutinJones x.
ATTORNEYS AT LAW
Daniel S. Stouder
Attorney
dstouder@boutinjones.com
October 27, 2023
Sent Via FedEx and Email
Mare Allen
1211 Adora Circle
Roseville, CA 95678
mare@amethystgrove.com,
SUBJECT: Amethyst Grove Assisted Living, Inc. (the “Comp:
ETT! EME] NI COMMUNI ATION
— EVID EN
Dear Mr. Allen:
I represent Eric Lee, Kevin Massey, and My clients have serious concerns
about your clear violations of the Company’ ement as well as your breaches of
the duty of care and loyalty to the Company. Hits shareholders.
My clients genuinely desire to resolve. micably and before litigation, and therefore
they jointly make the demand belo ah an attorney in connection
with this matter,
please put him or her directly in con
Background
My clients collecti 125 of the outstanding shares of the Company to your 51,000.
The purchased theif mixiprit: in the Company for a combined $75,000. They did so with
the promise
of re; Net ons and a profitable investment. They have received neither.
After they made their investments, you opened a larger, competing assisted living facility near
the Company’s sole location. And yet, Section 7.04 of the Buy-Sell Agreement unequivocally
prohibits any shareholder from competing against the Company while employed or engaged with
the Company and for 24 consecutive months thereafter (“Restricted Period”). During the
Restricted Period, you, as a shareholder and employee of the Company, are prohibited from: a)
providing services or advice to a competitor; b) affiliating with a competitor in any manner; or c)
owning, managing, operating, controlling, or participating in any fashion in a competing
business. You appear to be in violation of all these prohibitions.
The reason for these clear prohibitions are obvious. Given the fiduciary duties owed,
shareholders should not be devoting time to competing endeavors at the expense of the
656 Capitol Mall Yel / 916.321.4444
‘Suite 1600 Fax / 916.441.7687
‘Snoramento, CA 86814 BOUTINJONES.COM
4892-4472-1034.2
BoutinJones..
ATTORNEYS AT LAW
Mare Allen
October 27, 2023
Page 2 of 2
Company’s business. And that is exactly what my clients believe you have been doing. Without
getting into all the specifics,my clients believe you have given preferential treatment to the
competing facility since it opened without committing the necessary resources and time to
growing the Company’s business so as to maximize profits and protect all shareholders’
investments. To wit, other than one nominal distribution, my clients have not seen any return on
their investments as was promised. Had you not violated the noncompete, my clients believe
they would have been paid significant sums relative to their investment.
The Buy-Sell Agreement contains some interesting dispute resoluti sions, My clients are
happy to invoke them if necessary. However, given the clear viol 7 . and the obvious
damages that flow from it, I am writing to inquire whether you in in buying your
peace and making my clients whole without incurring sub nus ys’ fees in the process.
As to that point, I am compelled to inform you that Section 12. Pr Buy-Sell Agreement
allows my clients to recover their attorneys’ fees and pod in mediation, arbitration, and
beyond from you as the prevailing parties. Thus,in ion to paying my clients’ damages,
stand to be responsible for much more out of po uld you choose to drag this
process out.
My clients demand
that you pay them $1 Si senting the full return of their investments,
credit for prior distributions not made. i caused by way of your breaches of the Buy-
Sell Agreement/fiduciary duties, p ted future profits, In exchange, my clients will
forfeit their shares and enter agreement and nnutual general release whereby all
parties will waive claims related to the Company. We feel parting ways now
with a fair buyoutis p fer to lit gation, Y but my clients are prepared to go that route should
you force them in that cti an assure you that the price tag to buy my clients out will
only go up from hered are not able to find an acceptable near-term resolution.
Task that you or your 2 y respond in writing to my clients’ demand by no later than close of
business on November 3, 2023.
Sincerely,
BOUTIN JONES INC.
eK
DanielS. Stouder
4892-4472-1034.2
BoutinJones..
ATTORNEYS AT LAW
Daniel S. Stouder
Attorney
dstouder@boutinjones.com
November 16, 2023
Sent Via FedEx and Email
Mare Allen
1211 Adora Circle
Roseville, CA 95678
marc@amethystgrove.com
SUBJECT: Amethyst Grove Assisted Living, Inc. (the “Company”
ETTLEMEN] ZO) NICATION- EVIDENCE C¢ 52.
Dear Mr. Allen:
This letter responds to the recent counteroffer you ed to my clients.
First, my clients are unwilling to resolve this you expensing a settlement solely
through the Company’s future cash flows. T about which I wrote in my first letter is
entirely yours, and yours alone. You b in ompete. You caused damages to my
clients. You are continuing to dan ther. Ty ig not a Company obligation. Until you
understand this most important fact, ie sannot resolve.
I strongly suggest yor uu consulit b to advise you on these realities. Once you do, I am
confident you will see that D g poverty on behalf of the Company is irrelevant to my clients.
My clients
are prep: art
govemingdo 3 fore ill remedies under the Buy-Sell Agreement and the Company's
¢ they do, they are giving you one final chance to adopt a realistic
settlement position / ts for my clients’ investments, their future damages, your liability,
and their attorneys”
Succinetly stated, offering unsecured terms for the Company to simply return my clients’
investment without interest over many years is a non-starter. My clients are not countering this
offer because it was made in bad faith without regard to your liability and uncontroverted facts. If
you would like to settle this matter without litigation, you will need to sharpen your pencil and
make a realistic, good faith counter, in writing to me, by close of business on November 22, 2023.
My clients are not intere sted directly with you.
in negotiating
Sincerely,
BOUTIN JONES INC.
ae
Daniel S. Stouder
655 Capitol Mall Tol / 916.321.4444
Bulte 1500 Fax / 916.441.7597
Seoremento,
CA 95814 BOUTINJONES.COM
4892-2656-6544.2
DoguSign Envelope ID: F4928B9E-F 206-441 1-8454-1727AF 1B4E0B
BUY-SELL AGREEMENT NY
AMETHYST GROVE ASSISTE! » INC.
“
Y
or
LAW OFFICES.
BRANDON J, SMITH ATTORNEY AT LAW
BUGINESE & ESTATE PLANNING | REAL PROPERTY
1380 LEAD HILL BLVD. #106
ROSEVILLE, CALIFORNIA 95664
Sign Envelope ID: F4920B96-F 206-441 1-0454-1727AF1B4E08
BUY-SELL AGREEMENT OF
AMETHYST GROVE ASSISTED LIVING, INC
TABLE OF CONTENTS
Article One Corporation Ownership od
Section 1.01 Stock sepensentenenane
Section 1.02 Stock Certificates,
Section 1.03 After-Acquired Intere:
AQ
Section 1.04 Outstanding Shares. seen
Article Two Stock Transfer Restrictions
Section 2.01 General Prohibition on Share T:
Section 2.02 Encumbrance Restrictions on Shi
Section 2.03 Permitted Transfers. anaes
Section 2.04 Eligible Subchapter S Co: ion Shareholder.
Section 2.05 Effect of Improper T:
Article Three Events Requi
Stock. 2 and Sale of a Shareholder’
Section 3.01 Triggering
Section 3.02 Offer to
Section 3.03 Ac ti
Section 3.04
Section 3.05 ights during Purchase-Option Perio
“J
Section 3.06 ility Defined
Section 3.07 race Policies to Fund Buy-Sell Agreement.
Article Four chase Pricesess
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Section 4.01 Determination of Purchase Price .
Section 4.02 Stated Value. Error! ‘Bookmark: not ‘defined,
Section 4.03 Redetermining Value Error! Bookmark not defined
Section 4.04 Value Redetermined by Appraisal.
Section 4.05 Valuation Disputes
Section 4.06 Qualified Appraiser
Section 4.07 Insurance Policies Excluded.
Article Five Payment Terms 6
Section 5.01 Payment Due at Closing
Section 5.02 Closing and Closing Dat
Buy-Sell Agreement of Amethyst Grove Assisted Living, Inc.
Pagei
BRANDON J. SMITH ATTORNEY AT LAW, 1980 Lean HILt BLVD. #106, ROSEVILLE, CALIFORNIA 85661 | (916) 417-4172
DoouSign Envelope iD: F4920R9E-F2D6-441 1-0454-1727AF1B4E08
Section 5.03 Down Payment Amount
Section 5.04 Promissory Note Payments.
Section 5.05 Interest Rate
Section 5.06 Security Interes'
Section 5.07 Delivery of Closing Documents
Section 5.08 Default re
Article Six Right of First Refusal...
Section 6.01 Corporation and Shareholders Right: of First Refusal .
Section 6.02 Notice of Intent to Transfer...
Section 6.03 Corporation’s Right to Purchase
Section 6.04 Shareholders’ Right to Purchase.
Section 6.05 Payment Terms under Priority Right to Pur
Section 6.06 Transfer to Third Party after Non-Exercise jority Right
Article Seven Covenants errsesees seanen
Section 7.01 Confidentiality Agreement
Section 7.02 Permitted Disclosures... vention
Section 7.03 Certain Information Not ered Confidential 10
Section 7.04 Noncompetition Agree: pteeaeeeenenensee 10
Section 7.05 Certain Ownership No ered Competition. lt
Section 7.06 No Solicitation lo ll
Section 7.07 No Solicitati i
Section 7.08 Modificati vents il
Article Eight Sub: ovisions 12
Section 8.01 12
Section 8.02 12
Section 8.03 ing Shareholders seenaserreesanee 12
Section 8.04 it Loss of Subchapter S Status 12
Article Nine Restrictions on Corporate Action sesannnanensneatscntotenensnenencanenees 13
Article Ten Insurance Policles 13
Section 10.01 Purchasing Insurance ave 13
Section 10,02 Right to Purchase Insurance 14
Section 10.03 Exercising Right of Purchase 14
Section 10.04 Distributing Proceeds a 14
Article Eleven Further Assurances; Attorney in Fact... 14
Section 11.01 Acting to Fully Effectuate Purpose of Agreement 14
Section 11.02 Appointing Attomey in Fact. deaseretasesecaneeseensenee 14
Buy-Sell Agreement of Amethyst Grove Assisted Living,
Page ii
BRANDONJ. SMITH ATTORNEY
AT LAW, 1380 Leap Hitt BLvp. #106, ROSEVILLE, CALIFORNIA 95861 | (916) 417-4172
DacuSign Envelope ID: F4928B9E-F2D6-44 1 1-0454-1727AF1B4E08
Section 11.03 Assuming Responsibility 1S
Section 11.04 Limiting Authority of Attorney in Fact 15
Article Twelve Dispute Resolution..cossersersssrsseseceenssesssseen eesenensonses esvsensserserseese
1S
Section 12.01 Resolving Disputes among Shareholders and within the
Corporation deaneseeaneneetuerensenerasstenatnentaseeseneeesen 15
Section 12.02 Notice of Controversy and Designating Authorized
Representatives eeaneacensepeanenecerdrseanasesensseennanes 15
Section 12.03 Beginning the Dispute Resolution Procedure. 16
Section 12.04 Selecting a Mediator 16
Section 12.05 Time and Place for Mediation C 16
Section 12.06 Discovery and Exchange of Information 16
Section 12.07 Delivery of Written Summaries; Authority to Obta:
Professional Assistance 16
Section 12.08 Conducting Mediation 16
Section 12.09 Final Determinations Bind All rti 16
Section 12.10 Arbitration 17
Section 12.11 Settlement during Mediation or Arb 17
Section 12.12 Qualified Appraisals .. 17
Section 12.13 Right to Seek Equitab 7
Section 12.14 Prevailing Party Is E.~*~ All Reasonable Costs 17
Article Thirteen General Matt 17
Section 13.01 Transfers fry aships or Trusts. 17
Section 13.02 Corpo TY Purchase 17
Section 13.03 Pro Rata se. 18
Section 13.04 Intere
Preview
ELECTRONICALLY FILED BOUTIN JONES INC. Superior Court of California, Daniel S. Stouder (SBN 226753) Count of Placer Danielle M. Patterson (SBN 337200) 04/09/2024 at 02:41:44 PM 555 Capitol Mall, Suite 1500 By: Breanne E Sanders Sacramento, CA 95814-4603 Deputy Clerk T: (916) 321-4444/F: (916) 441-7597 Email: dstouder@boutinjones.com dpatterson@boutinjones.com Attorneys for Petitioners Eric Lee, Kevin Massey, and Christina Massey SUPERIOR COURT OF THE STATE OF CALIFORNIA IN AND FOR THE COUNTY OF PLACER 10 UNLIMITED JURISDICTION 11 ERIC LEE, KEVIN MASSEY and Case No. §-C\V¥-0052597 CHRISTINA MASSEY, 12 DECLARATION OF DANIEL S. Petitioners, STOUDER IN SUPPORT OF VERIFIED 13 PETITION FOR WRIT OF MANDATE TO vs. COMPEL INSPECTION AND COPYING 14 OF CORPORATE BOOKS AND AMETHYST GROVE ASSISTED LIVING, RECORDS 15 INC, 16 Respondent. 17 18 I, Daniel S. Stouder, declare as follows: 19 1 Tam an attorney with the law firm of Boutin Jones Inc., attorneys of record for Petitioners 20 Eric Lee, Kevin Massey, and Christina Massey (“Petitioners”). I am licensed to practice before all 21 courts in the State of California. I have personal knowledge of the facts set forth in this Declaration 22 and if called as a witness to testify to the truth of the matters contained herein, I could and would so 23 testify. 24 2 I make this declaration in support of the Petition for Writ of Mandate (“Petition”), made 25 in Petitioners’ capacities as directors and shareholders of Amethyst Grove Assisted Living, Inc. (the 26 “Company”). 27 3. On October 27, 2023, I reached out to Mare Allen (“Mr. Allen’) explaining that he had 28 breached the parties’ Buy-Sell Agreement and his fiduciary duties as the majority shareholder by 1 DSS DECL. ISO VERIFIED PETITION FOR WRIT OF MANDATE 4868-6579-4215.2 competing with the Company. I requested a response by close of business on November 3, 2023. A true and correct copy of this correspondence is attached hereto as Exhibit A. 4. I exchanged a few letters with Mr. Allen. On dated November 27, 2023, I received a letter from Mr. Allen in which he claimed he was specifically exempted from Section 7.04 of the Agreement, the noncompete provision. A true and correct copy of this correspondence is attached hereto as Exhibit B. 5. After consulting with my clients, I learned that they did not agree to exempt Mr. Allen from the noncompete provision, and that Mr. Allen had falsely informed the Company’s counsel that Petitioners had consented to that change. I responded to Mr. Allen’s letter on January 9, 2024, 10 highlighting the above. A true and correct copy of this correspondence is attached hereto as Exhibit 11 xCc 12 6. In response, Mr. Allen promised a robust response to my January 9, 2024, letter. This 13 never happened. He suddenly noticed a shareholders meeting for January 22, 2024. The agenda 14 items for that meeting included a vote to dissolve the Company, and to replace Petitioners on the 15 board of directors. 7 16 I wrote Mr. Allen again, on January 19, 2024, informing him that the agenda for the 17 shareholders meeting was in breach of the fiduciary duties he owed to Petitioners as the majority 18 shareholder. I did not receive any response to this letter. A true and correct copy of this 19 correspondence is attached hereto as Exhibit D. 20 I declare under penalty of perjury under the laws of the State of California that the foregoing 21 is true and correct and that this declaration was executed on April 9, 2024 at Sacramento, California. 22 23 24 eb Daniel S. Stouder 25 26 27 28 2 DSS DECL. ISO VERIFIED PETITION FOR WRIT OF MANDATE 4868-6579-4215.2 EXHIBIT A BoutinJones... ATTORNEYS AT LAW Daniel S. Stouder Attorney dstouder@boutinjones.com October 27, 2023 Sent Via FedEx and Email Marc Allen 1211 Adora Circle Roseville, CA 95678 marc@amethystgrove.com SUBJECT: Amethyst Grove Assisted Living, Inc. (the “Company”) SETTLEMENT COMMUNICATION — EVIDENCE CODE Sec. 1152 Dear Mr. Allen: I represent Eric Lee, Kevin Massey, and Christina Massey. My clients have serious concerns about your clear violations of the Company’s Buy-Sell Agreement as well as your breaches of the duty of care and loyalty to the Company and its minority shareholders. My clients genuinely desire to resolve this matter amicably and before litigation, and therefore they jointly make the demand below. If you have an attorney in connection with this matter, please put him or her directly in contact with me. Background My clients collectively own 11,925 ofthe outstanding shares of the Company to your 51,000. The purchased their minority shares in the Company for a combined $75,000. They did so with the promise of regular distributions and a profitable investment. They have received neither. After they made their investments, you opened a larger, competing assisted living facility near the Company’s sole location. And yet, Section 7.04 of the Buy-Sell Agreement unequivocally prohibits any shareholder from competing against the Company while employed or engaged with the Company and for 24 consecutive months thereafter (“Restricted Period”). During the Restricted Period, you, as a shareholder and employee of the Company, are prohibited from: a) providing services or advice to a competitor; b) affiliating with a competitor in any manner; or c) owning, managing, operating, controlling, or participating in any fashion in a competing business. You appear to be in violation of all these prohibitions. The reason for these clear prohibitions are obvious. Given the fiduciary duties owed, shareholders should not be devoting time to competing endeavors at the expense of the 555 Capitol Mall Tel / 916.321.4444 Suite 1500 Fax / 916.441.7597 Sacramento, CA 95814 BOUTINJONES.COM 4892-4472-1034.2 BoutinJones.. Marc Allen October 27, 2023 Page 2 of 2 Company’s business. And that is exactly what my clients believe you have been doing. Without getting into all the specifics, my clients believe you have given preferential treatment to the competing facility since it opened without committing the necessary resources and time to growing the Company’s business so as to maximize profits and protect all shareholders’ investments. To wit, other than one nominal distribution, my clients have not seen any return on their investments as was promised. Had you not violated the noncompete, my clients believe they would have been paid significant sums relative to their investment. The Buy-Sell Agreement contains some interesting dispute resolution provisions. My clients are happy to invoke them if necessary. However, given the clear violation above, and the obvious damages that flow from it, | am writing to inquire whether you are interested in buying your peace and making my clients whole without incurring substantial attorneys’ fees in the process. As to that point, I am compelled to inform you that Section 12.14 of the Buy-Sell Agreement allows my clients to recover their attorneys’ fees and costs incurred in mediation, arbitration, and beyond from you as the prevailing parties. Thus, in addition to paying my clients’ damages, you stand to be responsible for much more out of pocket losses should you choose to drag this process out. My clients demand that you pay them $115,000, representing the full return of their investments, credit for prior distributions not made, damages you caused by way of your breaches ofthe Buy- Sell Agreement/fiduciary duties, plus lost expected future profits. In exchange, my clients will forfeit their shares and enter into a settlement agreement and mutual general release whereby all parties will waive claims against each other related to the Company. We feel parting ways now with a fair buyout is preferred to litigation, but my clients are prepared to go that route should you force them in that direction. I can assure you that the price tag to buy my clients out will only go up from here if we are not able to find an acceptable near-term resolution. lask that you or your attorney respond in writing to my clients’ demand by no later than close of business on November 3, 2023. Sincerely, BOUTIN JONES INC. nee Daniel S. Stouder 4892-4472-1034.2 EXHIBIT B A AMETHYST GROVE ASSISTED LIVING, INC. 1211 Adora Circle Roseville, CA 95678 ee— ——————— r ‘November 27, 2023 Boutin Jones, Inc., Attorneys at Law Eric Lee Daniel S. Stouder — Attorney 4124 Zephyt Way 555 Capitol Mall, Suite 1500 Sacramento, CA 95821 Sacramento, CA 95814 Keviri R. Massey Christina T. Massey 1408 Black Bear Street 1408 Black Bear Street Roseville, CA 95747 Roseville,CA 95747 Dear Mr, Stouder,, This communication to. you is in response to your communications dated October 27, 2023, Exhibit Al, and Navember 16, 2023, ExhibitA2, This communication will clear up misunderstandings related to events, communications and factual evidence, which I believe your clients have misinformed you. I will. also use this communication to deny any and all alleged wrong doings you are suggesting I have allegedly committed, against. your clients, by your communications, ExhibitAl and Exhibit A2. ‘There are circumstances. ofevidence-which need to be.clatified to ensure we-engage in a conversatian surrounding facts of concern in this matter. The following evidence and some details mentioned, surrounding such evidence, but not limited to, are being attached to this: communication and detailed for-your consideration, s0 we may bring resolution to your clients’ misunderstood, grievances: EX ATION RECE IVED FROM D ANTE! id ER dated October 02 CHIBIT A COMMUN] BX Hl ITA COMML TION, EIVED FR OM DANIEI STOUDER dated November 023 EXH BUY GREEMENT dated in 02 The Buy-Sell Agreement, hereinafter referred to as “Agreement”, clarifies percentage of ownership and stock shares owned in Amethyst Grove Assisted Living, Inc., hereinafter referred to as “Corporation”. The following details the percentage of ownership and stock shares owned in the Corporation per the Agreement: Mare Allen 81.00% Ownership, 81,000 shares of stock Eric-Lee 10.00% Ownership, 10,000 shares of stock Kevin Massey 4.50% Ownership, 4,500 shares of stock Christina Massey 4.50% Ownership, 4.500 shares of stock Section 3.04 of the Agreement states the Corporation has the: first right of refusal to purchase selling shareholder stock. eee ————— Page 10f5 Sections within ARTICLE FIVE of the Agreement stipulate payment terms far sharesto be purchased. Section'’7.04 ofthe Agreement, related to “Noncompaetition Agreement”, cleatly states that “Marc Alen shall be exempt from the restrictions stated in this section 7.04.” ARTICLE TWELVE — DISPUTE RESOLUTION, clearly covers the process of mediation and arbitration ‘before any judicial claims can be filed. ‘At this time, you or your clients have not requested mediation or arbitration... EXHIB RESO STION dated September 020, (3 pag On September 1, 2020, the Corporation held a meeting to amend the Bylaws. of the Corporation to accommodate multiple shareholders and directors from the original organization of a one shareholder and one director entity. The meeting was held and resolutions adopted in the best interest of all future directors, officers and employees, of the Corporation. ‘The resolutions were necessary to accept the additional shareholders and directors into the Corporation that the existing structure of the Corparation did not allow. ‘The resolutions detail such amending changesto the Bylaws of the Corporation, BXH IB [Tr C2 AMENDED BYLAWS© Lo PORATION dated eptember 020, (2 pages According to the. Amended Bylaws of the Corporation, indemnification, related to your clients claims, would ‘apply to this matter. Defending your clients” unsubstantiated claims, related to their unwarranted grievances, would be detrimerital to the Corporation, and agaifist your clients’ best interest. It is highly unlikely that your clients would receive a favorable ruling under the circumstances you are now aware of. EXHIB It. MA COMMUNI ATION AND PROJECT PROPOSA OFFER Db TO ER ‘dated June 30, 2022, (11 pages) The e-mail communication and project proposal, was offeredto all existing shareholders of the Corporation. All shareholders of the Corporation have always been well aware of my desire and intent to open multiple assisted living facilities, fully disclosed prior to their investment into the-Corporation. This was the main reason to-exempt myself fromm any non-competition restrictions as your clients agreed to in the By-Sell Agreement. Your clients were given multiple opportunitiesin multiple projects.to participate in. They chose on there own to not participate in any of the new assisted living business ventures and at no time ever communicsited any concern over my participation in new assisted living business ventures. EXHIBIT INCORPORATION, E-1, ARTIGLES OF (1 page) ‘The Corporation is organized as a close: corporation when applying circumstances of corporate law or adininistrative process and procedure. EX] HIB Ei MINUTES AND RESO ITION THE co RPO TON ECTION Although your clients are minority shareholders, they were elected to be majority directors. They have participated in defining strategy and the ongoing business concern and operations of the Corporation. Their tole collectively seemed as if their actions were more of a partner than an investor. The actions to-elect the minority shareholders as moajority directors does not reflect any lack of consideration for your clients’ best interest, {All EXHIBITS LISTED ABOVE ARE ATTACHED TO THIS COMMUNICATION] es Page 2 of 5 Above; are just a few points of factual interest which contradicts your clients’ claims. The Corporation, as all businesses in this country, are experiencing an unforeseen circumstance ofan economic recession which is evident to some degree in all businesses and is a publicly Known circutristance in today’s economy. Investors, partners and shareholders in various industries are all experiencing unforeseen down. tums ih profitability, revenue, distributions and stock market values. The Corporation financial condition is not due to my lack of effort to adjust to these economic times. It's just an unforeseen matter of citcumstance and bad timing. Investment is a risk without guarantee. No guarantees have been expressed to your clients. No evidence of guarantees exist that your clients’ should receive a Buaranteed return or distribution on their investment. Your clients were presented with a proposal to invest in a stait up business venture which they had over a month to decide if they wanted to invest. They submitted questions and received. answers during this decision period. They performed their due diligence and made their decision to invest after careful consideration, The Corporationis not failing. The Corporation is experiencing economic conditions outside its contro]. The Corporation is adaptingto the economic conditions. The Corporation’s intent is to survive the unforeseen current economic crisis and become profitable, secure the investment of its shareholders, to allow for future shareholder distributions in better economic times. The Corporation doss recognize that your clients wish to sell their stock interestto redeem their. current stock value. The Corporation does not recognize or legitimize your clients" claims. ‘Yout clients’ claims are false, and simplyan attempt to enrich themselves at my expense and the Corporation’s expense, to recover well over 100% of their investment, that they are not entitled to recover. The Corporation is committedto defend itself and its officers, directors and employees against unjustified claims of this manner, The Corporation wantsto consider realistic: solutions with its stockholders who are looking for an exit strategy to not continue as shareholders of the Corporation. It is obvious-that based on your.claims, you are not correctly informed, by your clients, of the circumstances that exist rélatedto the false claims in both of your communications tome, Please consider the following carefully and-thoroughly with your clients: According to the Buy-Sell Agreement there has been no breach of contract, duty of vare or loyalty. Your claim is basedon breach related ta nén-competition. The'Buy-Sell Agreement clearly states that | am-exempt from any non-competition restrictions. This of courseis in conflict with your alleged false accusations for violations of dutyof care or loyalty. Please do take the time to be specific, supported by fact and evidence, related to fiduciary duties you and your clients believe that'l have allegedly compromised, as it relates to 4 close corporation. Your clients are majority directors in the Corporation, please be sure you examine any fiduciary duties they may have compromised. 3. ‘There has not been any triggering event, per the Buy-Sell Agreement, to initiate mediation or arbitration. ‘Your clients simply have engineered a false circumstance that. does not exist, for which the corporation has fully indemnified its officers, directors and employees, and has full intention to defend its officers, directors and employees againet the false alleged accusations presented by you, and your clients. Your clients’ accusations will be:costly in professional fees and highly liable for them to pursue and will cause a detrimental financial effect tothe corporation and its ability to stabilize its financial condition during these hardship economic times, while defending its indemnified officer. Attorney's fees relatedto continuous. legal counsel, discoveries, depositions, expert witnesses, judicial process for mandatory pre-setilement conference tiediation and trial, which probably will not be evident for two yeats or more, wouldbe a disaster for all parties concerned with professional fee price tags in excess of $100,000.00. What also needs to be consideredby your clients’ action is the cross complaint that will be filed against any judicial process brought against the Corporation, its officers, directors and employees. It is important that you explain there are no guarantees for success, and no basis for success, based on the content of this communication in responseto false claims you and’ your clients have communicated. Your clients must consider the damages the Corporation and myself will file in a cross complaint seeking damages for the irreversible negative financial. effect defending their claim would cause, not limited to, closure of the corporation due to the cost of the financial defense of false claims brought against the Corporation's officer ‘which the Corporation is boundto a Page 3 of 5 defend and considers the defense warranted. In such case, the Corporation and Officer of the Corporation, Marc S, Allen, would be-seeking relief for damages related to the Corporations loss of fature income. Mare §. Allen wouldbe seeking relief‘related to loss of future wages and loss of future profit distributions of the Corporation, defamation caused by negatively influencing Mare S. Allen’s.credibility to acquire investors related to fyture assisted living care home projects, all due.to the false and unwarranted claim filed against him. Your clients.need to carefully evaluate their greatrisk in continuingto pursue this matter based on their claims, They risk liability for recovery in damages in excess of $1,000,000.00. it would negligent and unconscionable to not advise your clients, that this risk to them, you cannot guarantee they will not-be subjected.to, at any manner or degree. Your clients’ demand ta purchase their existing stock is not in good faith or even well considered. It demonstrates only consideration of an opportunity designed to enrich themselves without thouglit to the damages incurred by the Corporation and its officer, based on the unrealistic value placed on their stock ownership interest in the Corporation. Your clients represent 19% ownership in the Corporation. Even ‘if the Corporation made your ‘clients whole by purchasing their ‘stock back at their original investment of $75,000.00, cash paid in full, this. would mean that the Corporation would have a value of estimated at $395,000.00. This value is unrealistic based on a current book value estimated at $19,000.00. ‘The Corporation: is service company with very little fixed asset value and contractual resident base, month to month, ‘Client residents come and go based on economic needs and unfortunate. circumstance of health and death, The past year turnaround in clients has been challenging due to urifortunate resident circumstances which the Corporation has unnaturally experienced over the [ast year. The Corporation has not been in business {ong enough to experience any significant goodwill factor. The Corporation is doing all things necessary to maintain a break-cyen profit factor during today’s deficient public economic conditions. All things considered, it is evident, that the stock value of the Corporation ix far less than your clients want to recognize. It is evident that your cliénts, like many investors today, are coricemned with the value of their investment. 1 can assure you that the value of their. investment is not due to the lack of my dedication to the success of the Corporation. It is not realistic for ‘investors to demand full return of their investment when uncontrollable economic conditions impair their business investment. Business investment is not without risk unless ttiat risk is guaranteed,-in writing to the investor, not to exist. The corporation wishes to extend this one time offer to your clients, in lieu of, a situation that the Corporation will be forced to defend, that will cause irreversible damage to the Corporation and its Officer, Mare S. Allen, as well a8 your clients, which your clients will be subject to the consequences of lisbility unnecessarily. The following offer is being extended to. your clients in good faith and the offer is considered generous considering all conditions, fasts and evidence presented in this communication: 4. ‘The Corporation wishes.td make its investors whole, in an act of good faith and goodwill, by collectively purchasing all stock from your clients for the amount of $75,000.00, for contract of purchase.to be prepared individually, according to their pro rata share of stock owned in the Corporation. Such contract will contain, but not limited:to, satisfactory releases against any liability of coricem between parties. The Corporation will engage in a stock re ition purchase agreement for treasury stock, as detailed in item ().above. Stock purchase will be payable by note, in favor of sellers; solely guaranteed by the Corporation. The terms of the note executed will be, but not limited to, notes collectively to sellers in the amount of $75,000.00, note smonnts according to seller's prorata share of theit 19% ownership. in the Corporation, no down payment, first payment upon execution of the notes by all parties, note payment due date the 20" of each month consecutively following after the first payment, term of the notes will be 60: monthly payments at 5% interest, collectively to all-sellers monthly payment for principal and interest not to exceed $1,409.66. $$ eS Page 4 of 5 The final option to consider is that your clients remain as shareholders in the Corporation, exercise. patience and understanding until the Corporation has remedied its current financial condition due to the current status of the economy in crisis which all businesses are dealing with today. By exercising this option, all claims of your ctients, which have been expressed in your communications, to this date; will le considered resolved and of no standing. Lurge you to examine the facts and evidence in this communication, as they are now fully disclosed to you, and cease and desist all efforts of your clients to try to. coerce recovery of their investments, in a-way-they are not entitled to, for the arnount they are not entitled to, and.based on false alleged accusations without fact or evidence. The generous offer extended to your clients in item 6{a) and 6(b) above will expire and be considered ‘void 10 days after receipt of this communication. To ensure your clients-are well informed of this communication, they willbe sent acopy-of this communication. This is not to be considered anegotiation. This communication is tended as an offer of goodwill to your clients, Thank you all, for your consideration and time in reviewing this communication. | sincerely hope that you. find this communication to be equitable in your favor'and that you recognize that mediation, arbitration and litigation each havea severe financial consequence to all. The practical consideration in this matter does not warrant costs that are detrimental to ail: concerned. Si AMETHYST GROVE ASSISTED LIVING, INC. — Mare: Page5 of 5 BoutinJones x. ATTORNEYS AT LAW Daniel S. Stouder Attorney dstouder@boutinjones.com October 27, 2023 Sent Via FedEx and Email Mare Allen 1211 Adora Circle Roseville, CA 95678 mare@amethystgrove.com, SUBJECT: Amethyst Grove Assisted Living, Inc. (the “Comp: ETT! EME] NI COMMUNI ATION — EVID EN Dear Mr. Allen: I represent Eric Lee, Kevin Massey, and My clients have serious concerns about your clear violations of the Company’ ement as well as your breaches of the duty of care and loyalty to the Company. Hits shareholders. My clients genuinely desire to resolve. micably and before litigation, and therefore they jointly make the demand belo ah an attorney in connection with this matter, please put him or her directly in con Background My clients collecti 125 of the outstanding shares of the Company to your 51,000. The purchased theif mixiprit: in the Company for a combined $75,000. They did so with the promise of re; Net ons and a profitable investment. They have received neither. After they made their investments, you opened a larger, competing assisted living facility near the Company’s sole location. And yet, Section 7.04 of the Buy-Sell Agreement unequivocally prohibits any shareholder from competing against the Company while employed or engaged with the Company and for 24 consecutive months thereafter (“Restricted Period”). During the Restricted Period, you, as a shareholder and employee of the Company, are prohibited from: a) providing services or advice to a competitor; b) affiliating with a competitor in any manner; or c) owning, managing, operating, controlling, or participating in any fashion in a competing business. You appear to be in violation of all these prohibitions. The reason for these clear prohibitions are obvious. Given the fiduciary duties owed, shareholders should not be devoting time to competing endeavors at the expense of the 656 Capitol Mall Yel / 916.321.4444 ‘Suite 1600 Fax / 916.441.7687 ‘Snoramento, CA 86814 BOUTINJONES.COM 4892-4472-1034.2 BoutinJones.. ATTORNEYS AT LAW Mare Allen October 27, 2023 Page 2 of 2 Company’s business. And that is exactly what my clients believe you have been doing. Without getting into all the specifics,my clients believe you have given preferential treatment to the competing facility since it opened without committing the necessary resources and time to growing the Company’s business so as to maximize profits and protect all shareholders’ investments. To wit, other than one nominal distribution, my clients have not seen any return on their investments as was promised. Had you not violated the noncompete, my clients believe they would have been paid significant sums relative to their investment. The Buy-Sell Agreement contains some interesting dispute resoluti sions, My clients are happy to invoke them if necessary. However, given the clear viol 7 . and the obvious damages that flow from it, I am writing to inquire whether you in in buying your peace and making my clients whole without incurring sub nus ys’ fees in the process. As to that point, I am compelled to inform you that Section 12. Pr Buy-Sell Agreement allows my clients to recover their attorneys’ fees and pod in mediation, arbitration, and beyond from you as the prevailing parties. Thus,in ion to paying my clients’ damages, stand to be responsible for much more out of po uld you choose to drag this process out. My clients demand that you pay them $1 Si senting the full return of their investments, credit for prior distributions not made. i caused by way of your breaches of the Buy- Sell Agreement/fiduciary duties, p ted future profits, In exchange, my clients will forfeit their shares and enter agreement and nnutual general release whereby all parties will waive claims related to the Company. We feel parting ways now with a fair buyoutis p fer to lit gation, Y but my clients are prepared to go that route should you force them in that cti an assure you that the price tag to buy my clients out will only go up from hered are not able to find an acceptable near-term resolution. Task that you or your 2 y respond in writing to my clients’ demand by no later than close of business on November 3, 2023. Sincerely, BOUTIN JONES INC. eK DanielS. Stouder 4892-4472-1034.2 BoutinJones.. ATTORNEYS AT LAW Daniel S. Stouder Attorney dstouder@boutinjones.com November 16, 2023 Sent Via FedEx and Email Mare Allen 1211 Adora Circle Roseville, CA 95678 marc@amethystgrove.com SUBJECT: Amethyst Grove Assisted Living, Inc. (the “Company” ETTLEMEN] ZO) NICATION- EVIDENCE C¢ 52. Dear Mr. Allen: This letter responds to the recent counteroffer you ed to my clients. First, my clients are unwilling to resolve this you expensing a settlement solely through the Company’s future cash flows. T about which I wrote in my first letter is entirely yours, and yours alone. You b in ompete. You caused damages to my clients. You are continuing to dan ther. Ty ig not a Company obligation. Until you understand this most important fact, ie sannot resolve. I strongly suggest yor uu consulit b to advise you on these realities. Once you do, I am confident you will see that D g poverty on behalf of the Company is irrelevant to my clients. My clients are prep: art govemingdo 3 fore ill remedies under the Buy-Sell Agreement and the Company's ¢ they do, they are giving you one final chance to adopt a realistic settlement position / ts for my clients’ investments, their future damages, your liability, and their attorneys” Succinetly stated, offering unsecured terms for the Company to simply return my clients’ investment without interest over many years is a non-starter. My clients are not countering this offer because it was made in bad faith without regard to your liability and uncontroverted facts. If you would like to settle this matter without litigation, you will need to sharpen your pencil and make a realistic, good faith counter, in writing to me, by close of business on November 22, 2023. My clients are not intere sted directly with you. in negotiating Sincerely, BOUTIN JONES INC. ae Daniel S. Stouder 655 Capitol Mall Tol / 916.321.4444 Bulte 1500 Fax / 916.441.7597 Seoremento, CA 95814 BOUTINJONES.COM 4892-2656-6544.2 DoguSign Envelope ID: F4928B9E-F 206-441 1-8454-1727AF 1B4E0B BUY-SELL AGREEMENT NY AMETHYST GROVE ASSISTE! » INC. “ Y or LAW OFFICES. BRANDON J, SMITH ATTORNEY AT LAW BUGINESE & ESTATE PLANNING | REAL PROPERTY 1380 LEAD HILL BLVD. #106 ROSEVILLE, CALIFORNIA 95664 Sign Envelope ID: F4920B96-F 206-441 1-0454-1727AF1B4E08 BUY-SELL AGREEMENT OF AMETHYST GROVE ASSISTED LIVING, INC TABLE OF CONTENTS Article One Corporation Ownership od Section 1.01 Stock sepensentenenane Section 1.02 Stock Certificates, Section 1.03 After-Acquired Intere: AQ Section 1.04 Outstanding Shares. seen Article Two Stock Transfer Restrictions Section 2.01 General Prohibition on Share T: Section 2.02 Encumbrance Restrictions on Shi Section 2.03 Permitted Transfers. anaes Section 2.04 Eligible Subchapter S Co: ion Shareholder. Section 2.05 Effect of Improper T: Article Three Events Requi Stock. 2 and Sale of a Shareholder’ Section 3.01 Triggering Section 3.02 Offer to Section 3.03 Ac ti Section 3.04 Section 3.05 ights during Purchase-Option Perio “J Section 3.06 ility Defined Section 3.07 race Policies to Fund Buy-Sell Agreement. Article Four chase Pricesess Wl Section 4.01 Determination of Purchase Price . Section 4.02 Stated Value. Error! ‘Bookmark: not ‘defined, Section 4.03 Redetermining Value Error! Bookmark not defined Section 4.04 Value Redetermined by Appraisal. Section 4.05 Valuation Disputes Section 4.06 Qualified Appraiser Section 4.07 Insurance Policies Excluded. Article Five Payment Terms 6 Section 5.01 Payment Due at Closing Section 5.02 Closing and Closing Dat Buy-Sell Agreement of Amethyst Grove Assisted Living, Inc. Pagei BRANDON J. SMITH ATTORNEY AT LAW, 1980 Lean HILt BLVD. #106, ROSEVILLE, CALIFORNIA 85661 | (916) 417-4172 DoouSign Envelope iD: F4920R9E-F2D6-441 1-0454-1727AF1B4E08 Section 5.03 Down Payment Amount Section 5.04 Promissory Note Payments. Section 5.05 Interest Rate Section 5.06 Security Interes' Section 5.07 Delivery of Closing Documents Section 5.08 Default re Article Six Right of First Refusal... Section 6.01 Corporation and Shareholders Right: of First Refusal . Section 6.02 Notice of Intent to Transfer... Section 6.03 Corporation’s Right to Purchase Section 6.04 Shareholders’ Right to Purchase. Section 6.05 Payment Terms under Priority Right to Pur Section 6.06 Transfer to Third Party after Non-Exercise jority Right Article Seven Covenants errsesees seanen Section 7.01 Confidentiality Agreement Section 7.02 Permitted Disclosures... vention Section 7.03 Certain Information Not ered Confidential 10 Section 7.04 Noncompetition Agree: pteeaeeeenenensee 10 Section 7.05 Certain Ownership No ered Competition. lt Section 7.06 No Solicitation lo ll Section 7.07 No Solicitati i Section 7.08 Modificati vents il Article Eight Sub: ovisions 12 Section 8.01 12 Section 8.02 12 Section 8.03 ing Shareholders seenaserreesanee 12 Section 8.04 it Loss of Subchapter S Status 12 Article Nine Restrictions on Corporate Action sesannnanensneatscntotenensnenencanenees 13 Article Ten Insurance Policles 13 Section 10.01 Purchasing Insurance ave 13 Section 10,02 Right to Purchase Insurance 14 Section 10.03 Exercising Right of Purchase 14 Section 10.04 Distributing Proceeds a 14 Article Eleven Further Assurances; Attorney in Fact... 14 Section 11.01 Acting to Fully Effectuate Purpose of Agreement 14 Section 11.02 Appointing Attomey in Fact. deaseretasesecaneeseensenee 14 Buy-Sell Agreement of Amethyst Grove Assisted Living, Page ii BRANDONJ. SMITH ATTORNEY AT LAW, 1380 Leap Hitt BLvp. #106, ROSEVILLE, CALIFORNIA 95861 | (916) 417-4172 DacuSign Envelope ID: F4928B9E-F2D6-44 1 1-0454-1727AF1B4E08 Section 11.03 Assuming Responsibility 1S Section 11.04 Limiting Authority of Attorney in Fact 15 Article Twelve Dispute Resolution..cossersersssrsseseceenssesssseen eesenensonses esvsensserserseese 1S Section 12.01 Resolving Disputes among Shareholders and within the Corporation deaneseeaneneetuerensenerasstenatnentaseeseneeesen 15 Section 12.02 Notice of Controversy and Designating Authorized Representatives eeaneacensepeanenecerdrseanasesensseennanes 15 Section 12.03 Beginning the Dispute Resolution Procedure. 16 Section 12.04 Selecting a Mediator 16 Section 12.05 Time and Place for Mediation C 16 Section 12.06 Discovery and Exchange of Information 16 Section 12.07 Delivery of Written Summaries; Authority to Obta: Professional Assistance 16 Section 12.08 Conducting Mediation 16 Section 12.09 Final Determinations Bind All rti 16 Section 12.10 Arbitration 17 Section 12.11 Settlement during Mediation or Arb 17 Section 12.12 Qualified Appraisals .. 17 Section 12.13 Right to Seek Equitab 7 Section 12.14 Prevailing Party Is E.~*~ All Reasonable Costs 17 Article Thirteen General Matt 17 Section 13.01 Transfers fry aships or Trusts. 17 Section 13.02 Corpo TY Purchase 17 Section 13.03 Pro Rata se. 18 Section 13.04 Intere