Exhibit 10.77
CONSULTING/SEVERANCE AGREEMENT
THIS CONSULTING/SEVERANCE AGREEMENT ("Agreement") is made and
entered into as of the 20th day of May, 1999, by and between Capital Senior
Living Corporation, a Delaware corporation ("CSLC"), and Xxxxxxx X. Xxxx, an
individual ("Xxxx").
WHEREAS, Xxxx is a founder of CSLC and his leadership and commitment
has been instrumental in the success of CSLC, and he has prior to the date
hereof been the Chief Executive Officer, a director and Co-Chairman of CSLC;
WHEREAS, Xxxx now desires for personal reasons to retire from his
positions with CSLC and its subsidiaries, and he and CSLC have determined to
terminate that certain Amended and Restated Employment Agreement, dated
October 8, 1997, by and between Xxxx and CSLC;
WHEREAS, CSLC considers Xxxx'x knowledge of CSLC, its business and
the senior living industry and his relationships with and knowledge of others
engaged in the senior living business to be of great strategic value to CSLC;
and
WHEREAS, CSLC therefore desires to retain Xxxx as a strategic
consultant, and Xxxx is willing to agree to those arrangements;
NOW, THEREFORE, in consideration of the premises and covenants
considered in this Agreement, the parties hereto agree as follows:
AGREEMENTS
1. XXXX'X OBLIGATIONS. During the term of this Agreement, Xxxx
shall consult in an advisory capacity to the Board of Directors of CSLC (the
"Board"). As consultant, Xxxx shall provide to the Board strategic advice and
recommendations affecting the general welfare and business of CSLC and, as an
"elder statesman" of the senior living industry, act as a goodwill ambassador
for CSLC. Xxxx shall provide such services at the Board's request, upon
reasonable notice, at such time or times and for such duration as shall be
mutually agreed upon in any instance. It is expressly agreed that neither the
Board's failure to request such services nor any failure or refusal by Xxxx
to agree to any particular time or times and duration shall constitute a
breach of this Agreement, whether such failures or refusals be in a
particular instance or series of instances, the Board reposing great trust in
Xxxx to determine whether or not advisory services or the timing thereof are
appropriate in any particular instance or series of instances. It is also
expressly agreed that neither CSLC nor the Board has any right under this
Agreement to require Xxxx to report to or spend any time at CSLC's offices or
other facilities or that he attend any particular Board meetings. In the
event Xxxx becomes disabled during the term of this Agreement and as a result
is unable to perform the services provided for in this Section 1, the
payments and other benefits provided for in this Agreement shall nonetheless
continue and all other terms and conditions of this Agreement shall remain in
full force and effect. In the event of a Fundamental Change (as defined in
Section 15(b)
of this Agreement) during the term of this Agreement, Xxxx shall have no
further obligation to provide services under this Section 1, CSLC shall have
no further obligation to provide the benefits under Section 6, this Agreement
shall immediately and automatically without further action by any person
become solely a severance agreement and the payments and benefits to Xxxx
provided for in this Agreement shall continue and all other terms and
conditions of this Agreement shall remain in full force and effect.
2. CONFIDENTIALITY. Xxxx hereby acknowledges his understanding
that as a result of his prior employment by CSLC and the consultancy provided
for in this Agreement, he has had and may have access to, and possession of,
valuable and important confidential or proprietary data, documents and
information concerning CSLC, its operations and its future plans. Xxxx hereby
agrees that he will not, either during the term of this Agreement, or at any
time after the term of this Agreement with CSLC, divulge or communicate to
any person or entity, or use to the detriment of CSLC or for the benefit of
any other person or entity, or make or remove any copies of, such
confidential information or proprietary data or information, whether or not
marked or otherwise identified as confidential or secret. Upon any
termination of this Agreement for any reason whatsoever, Xxxx shall surrender
to CSLC any and all materials, including but not limited to drawings,
manuals, reports, documents, lists, photographs, maps, surveys, plans,
specifications, accountings and any and all other materials relating to CSLC
or any of its business, including all copies thereof, that Xxxx has in his
possession, whether or not such material was created or compiled by Xxxx, but
excluding, however, personal memorabilia belonging to Xxxx and notes taken by
him as a member of the Board of Directors ("Excluded Items"). With the
exception of the Excluded Items, Xxxx acknowledges that all such material is
solely the property of CSLC, and that Xxxx has no right, title or interest in
or to such materials. Notwithstanding anything to the contrary set forth in
this Section 2, the provisions of this Section 2 shall not apply to
information which: (i) is or becomes generally available to the public other
than as a result of disclosure by Xxxx, or (ii) is already known to Xxxx as
of the date of this Agreement from sources other than CSLC, or (iii) is
required to be disclosed by law or by regulatory or judicial process.
3. NON-COMPETITION; NON-SOLICITATION. Xxxx hereby agrees that
during the term of this Agreement and for a period of one (1) year after any
termination for any reason whatsoever of this Agreement, he will not and will
cause his Affiliates not to, directly or indirectly, acquire, develop or
operate senior living facilities anywhere in the United States. CSLC hereby
acknowledges and agrees that (i) Xxxx'x or Xxxx'x Affiliates' ownership of a
class of securities listed on a stock exchange or traded on the
over-the-counter market that represents five percent (5%) or less of the
number of shares of such class of securities then issued and outstanding, and
(ii) Xxxx'x services to Capital Senior Living Communities, LP and direct or
indirect interests therein shall not constitute a violation of this Section
3. During the term of this Agreement and following the termination for any
reason of this Agreement, Xxxx shall not for himself or any third party,
directly or indirectly employ, solicit for employment, or recommend for
employment any person employed by CSLC or its affiliated companies during the
period of such person's employment and for a period of two (2) years
thereafter without CSLC's consent.
The parties hereto have carefully considered the necessity for
protection of the goodwill and business of CSLC and the scope of such
protection. Xxxx acknowledges that the restrictions, prohibitions and other
provisions of this Section 3 are reasonable, fair and equitable in scope,
terms
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and duration, are necessary and essential to protect the legitimate business
interests and goodwill of CSLC, are a material inducement to CSLC to enter
into the transactions contemplated by this Agreement and that adequate
consideration has been and will be received under this Agreement by Xxxx for
such restrictions, prohibitions and other provisions.
4. WORK PRODUCT. Xxxx acknowledges that all innovations,
improvements, developments, methods, designs, analyses, reports and all
similar or related information which relates to CSLC's or any of its
subsidiaries' or affiliates' actual or anticipated business, or existing or
future products or services and which were conceived, developed or made by
Xxxx while employed by CSLC or during the term of this Agreement ("Work
Product") belong to CSLC or such subsidiary or affiliate. Xxxx will perform
all actions requested by the Board of Directors of CSLC to establish and to
confirm such ownership (including, without limitation, assignments, consents,
powers of attorney and other instruments).
5. COMPENSATION. CSLC shall pay to Xxxx consulting
compensation of $100,000 per year during the term of this Agreement, paid in
approximately equal installments no less frequently than twice a month. CSLC
shall not withhold or deduct from such compensation any amounts, Xxxx being
an independent contractor under this Agreement. CSLC shall also reimburse
Xxxx'x reasonable and necessary business expenses incurred in providing
services to CSLC under this Agreement upon his presentation to CSLC of
itemized bills, vouchers or accountings.
6. OTHER BENEFITS. During the term of this Agreement and for
one year thereafter, CSLC, at CSLC's option, either shall continue to provide
health benefits made generally available by CSLC to its senior executives to
Xxxx and his dependents or shall reimburse Xxxx for the cost of obtaining
substantially equivalent benefits. During the term of this Agreement, CSLC
shall provide for Xxxx office facilities and furnishings identified on
Schedule A attached to this Agreement or substantially equivalent office
facilities. During the term of this Agreement, CSLC shall employ Xxxxxxxx
Xxxx for three days a week and shall assign Xx. Xxxx, as her sole and
exclusive duty, to provide administrative support to Xxxx; provided that
during the six months commencing with the execution and delivery of this
Agreement, Xx Xxxx will also be required to assist CSLC's management with
respect to insurance matters for CSLC and its affiliates. During such
assignment, Xx. Xxxx shall continue to be employed by CSLC with a benefits
package no less favorable than the one she now has, her compensation shall be
not less than 60% of the compensation she now receives, and she shall be
entitled to receive raises and additional benefits, including grants of stock
options, no less favorable than 60% of the higher of those provided to the
secretaries or administrative or executive assistants of the Chief Executive
Officer and the Chief Operating Officer of CSLC.
7. TERM OF AGREEMENT. Subject to the survival provisions of
Section 14 of this Agreement, the term of this Agreement shall be for a three
(3) year period commencing on the date of this Agreement. Xxxx may terminate
this Agreement at any time by written notice to CSLC, but any termination by
Xxxx shall not affect those parts of this Agreement the survival of which is
provided for in Section 14 of this Agreement. CSLC may terminate this
Agreement at any time by written notice to Xxxx, but any termination by CSLC
shall terminate only the rights of CSLC to consulting services under Section
1 of this Agreement and the obligations of Xxxx to provide such
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consulting services and shall not otherwise affect those parts of this
Agreement the survival of which is provided for in Section 14 of this
Agreement.
8. STOCK OPTIONS. All options for CSLC common stock granted by
CSLC to Xxxx and not exercised prior to the date of this Agreement, whether
or not presently vested and notwithstanding any other term thereof, shall
become fully vested upon the execution of this Agreement and shall be
exercisable at any time during the term of this Agreement and for one (1)
year after the expiration of the three-year term of this Agreement
(notwithstanding an earlier termination of this Agreement, if any).
9. REGISTRATION RIGHTS. Xxxx shall have the following
registration rights.
(a) For purposes of this Section 9, the term "Registrable
Securities shall mean any shares of CSLC common stock ("Common Stock")
beneficially owned by Xxxx (directly or indirectly) plus all shares of
Common Stock that Xxxx may acquire pursuant to the exercise of stock
options.
(b) If CSLC at any time proposes to register any of its
securities under the Securities Act for sale to the public, whether for
its own account or for the account of other security holders or both
(except with respect to registration statements on Forms S-4 or S-8 or
another form not available for registering the Registrable Securities
for sale to the public), each such time it will give written notice to
Xxxx of its intention so to do. Upon the written request of Xxxx,
received by the Company within 30 days after the giving of any such
notice by CSLC, CSLC will cause the Registrable Securities as to which
registration shall have been so requested to be included in the
securities to be covered by the registration statement proposed to be
filed by CSLC, all to the extent requisite to permit the sale or other
disposition by Xxxx (in accordance with its written request) of such
Registrable Securities so registered; provided, however, that if the
managing underwriter of CSLC's offering delivers in good faith a
written opinion to Xxxx that either because of (i) the kind of
securities which Xxxx or CSLC intends to include in the offering or
(ii) the size of the offering which Xxxx or CSLC intend to make, the
success of the offering or the market for CSLC's Common Stock would be
materially and adversely affected by the inclusion of the Registrable
Securities requested to be included (A) in the event that the size of
the offering is the basis for the managing underwriter's opinion, the
amount of the securities to be offered for the account of Xxxx and each
other person registering securities of CSLC pursuant to similar
incidental registration rights shall be reduced pro rata to the extent
necessary to reduce the total amount of securities to be included in
such offering to the amount reasonably recommended by such managing
underwriter; and (B) in the event that the combination of securities to
be offered is the basis of such managing underwriter's opinion (1) the
Registrable Securities and other securities to be included in such
offering shall be reduced as described in clause (A) above or, (2) if
the actions described in Clause (A) would, in the reasonable judgment
of the managing underwriter, be insufficient to substantially eliminate
the material and adverse effect that inclusion of the Registrable
Securities requested to be included would have on such offering, such
Registrable Securities will be excluded from such offering.
Notwithstanding the foregoing provisions, CSLC may withdraw any
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registration statement referred to in this Section 9(b) without thereby
incurring any liability to Xxxx.
(c) If and whenever CSLC is required by Section 9(b) to
effect a piggy back registration, CSLC shall as expeditiously as
possible:
(i) prepare and file with the Securities and
Exchange Commission ("Commission") a registration statement
(which, in the case of an underwritten public offering shall
be on Form S-1, Form X-0, Xxxx X-0, any successor forms
thereto, or other form of general applicability satisfactory
to the managing underwriter selected as therein provided) with
respect to such securities and use its best efforts to cause
such registration statement to become and remain effective for
the period of the distribution contemplated thereby (as
determined hereinafter); provided, however, that CSLC may
postpone the filing, effectiveness, supplementing or amending
of the registration statement for up to 90 days if, in the
good faith opinion of CSLC's Board of Directors, the
registration or sale of Registrable Securities would adversely
affect a material financing, acquisition, disposition of
assets or stock, merger or other comparable transaction or
would require CSLC to make public disclosure of information
the public disclosure of which would have a material adverse
effect upon CSLC. During any time that CSLC defers amending or
supplementing the registration statement, the holders of
Registrable Securities shall discontinue disposing of
Registrable Securities;
(ii) subject to the proviso in subsection (i),
prepare and file with the Commission such amendments and
supplements to such registration statement and the prospectus
used in connection therewith as may be necessary to keep such
registration statement effective for the period of
distribution and comply with the provisions of the Securities
Act with respect to the disposition of all Registrable
Securities covered by such registration statement in
accordance with the intended method of disposition set forth
in such registration statement for such period;
(iii) furnish to Xxxx and to each underwriter such
number of copies of the registration statement and the
prospectus included therein (including each preliminary
prospectus) as such persons reasonably may request in order to
facilitate the public sale or other disposition of the
Registrable Securities covered by such registration statement;
(iv) use its best efforts to register or qualify
the Registrable Securities covered by such registration
statement under the securities or "blue sky" laws of such
jurisdictions as Xxxx or, in the case of an underwritten
public offering, the managing underwriter reasonably shall
request, PROVIDED HOWEVER, that CSLC shall not for any such
purpose be required to qualify generally to transact business
as a foreign corporation in any jurisdiction where it is not
so qualified or to consent to general service of process in
any such jurisdiction;
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(v) use its best efforts to list or qualify for
quotation the Registrable Securities covered by such
registration statement with any securities exchange or
inter-dealer quotation system on which the Common Stock is
then listed or quoted;
(vi) notify Xxxx at any time when a prospectus
relating to Registrable Securities is required to be delivered
under the Securities Act or the happening of any event as a
result of which the prospectus included in such registration
statement contains an untrue statement of a material fact or
omits any fact necessary to make the statements therein not
misleading, and, at the request of Xxxx, XXXX will prepare a
supplement or amendment to such prospectus so that, as
thereafter delivered to the purchasers of such Registrable
Securities, such prospectus will not contain an untrue
statement of a material fact or omit to state any fact
necessary to make the statements therein not misleading,
provided that the 180-day period described below will be
tolled from the time a prospectus contains such a statement or
omission until a prospectus correcting such statement or
omission has been delivered to Xxxx and may be delivered to
the purchasers of such Registrable Securities in compliance
with the Securities Act;
(vii) notify Xxxx immediately, and confirm the
notice in writing, (1) when the registration statement becomes
effective, (2) of the issuance by the Commission of any stop
order or of the initiation, or the threatening, of any
proceedings for that purpose, (3) of the receipt by CSLC of
any notification with respect to the suspension of
qualification of the Registrable Securities for sale in any
jurisdiction or of the initiation, or the threatening, of any
proceedings for that purpose, and (4) of the receipt of any
comments, or requests for additional information, from the
Commission or any state regulatory authority. If the
Commission or any state regulatory authority shall enter such
a stop order or order suspending qualification at any time,
CSLC will promptly use its best reasonable efforts to obtain
the lifting of such order; and
(viii) otherwise use its best efforts to comply
with all applicable rules and regulations of the Commission,
and make available to its security holders as soon as
reasonably practicable, but not later than 15 months after the
effective date of the registration statement, a statement
covering a period of at least 12 months beginning after the
effective date of the registration statement, which earnings
statement shall satisfy the provisions of Section 11(a) of the
Securities Act.
For purposes hereof, the period of distribution of Registrable
Securities in a firm commitment underwritten public offering shall be deemed to
extend until each underwriter has completed the distribution of all securities
purchased by it, and the period of distribution of Registrable Securities in any
other registration shall be deemed to extend until the earlier of the sale of
all Registrable Securities covered thereby or 180 days after the effective date
thereof.
In connection with each registration hereunder, Xxxx will furnish to
CSLC in writing such information with respect to Xxxx as reasonably shall be
necessary in order to assure compliance with federal and applicable state
securities laws.
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In connection with each registration pursuant to this Section 9
covering an underwritten public offering, CSLC and Xxxx agree to use their best
efforts to select a managing underwriter (and any co-managers) and to enter into
a written agreement with the managing underwriter in such form and containing
such provisions as are customary in the securities business for such an
arrangement between such underwriter and companies of CSLC's size and investment
stature.
(d) All expenses incurred by CSLC in complying with this
Section 9, including, without limitation, all registration and filing
fees, printing expenses, fees and disbursements of counsel and
independent public accountants for CSLC, fees and expenses (including
counsel fees) incurred in connection with complying with state
securities or "blue sky" laws, fees of the National Association of
Securities Dealers, Inc., transfer taxes, fees of transfer agents and
registrars, costs of insurance, and fees and disbursements of one
counsel for Xxxx but excluding any Selling Expenses, are called
"Registration Expenses." All underwriting discounts and selling
commissions applicable to the sale of Registrable Securities are called
"Selling Expenses."
(i) CSLC shall pay all Registration Expenses
attributable to the shares of Registrable Securities included
in the registration in connection with each registration
statement under this Section 9.
(ii) All Selling Expenses in connection with each
such registration statement applicable to Registrable
Securities sold by Xxxx shall be borne by Xxxx.
(e) Subject to applicable law, CSLC will indemnify each
underwriter, Xxxx and each person controlling any of them, against all
claims, losses, damages and liabilities, including legal and other
expenses reasonably incurred, arising out of any untrue statement of a
material fact contained in the registration statement, or any omission
to state a material fact required to be stated in the registration
statement or necessary to make the statements not misleading, or
arising out of any violation by CSLC of the Securities Act, any state
securities or "blue-sky" laws or any applicable rule or regulation.
This indemnification will not apply to any claims, losses, damages or
liabilities to the extent that they may have been caused by an untrue
statement or omission based upon information furnished in writing to
CSLC by such underwriter, Xxxx or controlling person, respectively,
expressly for use in the registration statement. With respect to such
untrue statement or omission in the information furnished in writing to
CSLC by Xxxx, he will indemnify the underwriters, CSLC, its directors
and officers, and each person controlling any of them against any
losses, claims, damages, expenses or liabilities to which any of them
may become subject as a result of such untrue statement or omission.
(f) The registration rights of Xxxx under this Agreement
may be transferred to any trust, family partnership or other family
entity formed by Xxxx to hold shares of Common Stock and to any member
of his family.
(g) In the event of any merger, consolidation or share
exchange pursuant to which CSLC is not the surviving or resulting
corporation, CSLC's obligations under this Section 9 shall be assumed
by such surviving or resulting corporation.
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(h) The registration obligations of CSLC under this
Section 9 shall terminate on the date when CSLC delivers to Xxxx a
written opinion of a law firm with recognized securities law expertise,
reasonably acceptable to Xxxx, addressed to Xxxx that he is permitted
to sell all Registrable Securities to the public without registration
under applicable law, other than pursuant to Rule 144 or any similar
rule.
10. INDEMNIFICATION BY CSLC. CSLC shall and hereby does indemnify
Xxxx to the extent and in accordance with the terms of ATTACHMENT I to this
Agreement.
11. TERMINATION OF AMENDED AND RESTATED EMPLOYMENT AGREEMENT. Xxxx
and CSLC hereby agree that the Amended and Restated Employment Agreement, dated
October 8, 1997, between Xxxx and CSLC shall be, subject to Section 12 below,
upon execution and delivery of this Agreement, cancelled and of no further force
and effect. Xxxx hereby resigns each and every directorship and officer position
held on or prior to the date hereof with CSLC and any subsidiary or affiliate of
CSLC.
12. NO EFFECT ON EMPLOYMENT COMPENSATION. Nothing in this
Agreement shall be construed to affect in any way employment compensation
amounts paid or payable to Xxxx by CSLC, whether or not determined on or prior
to the date of this Agreement, with respect to his employment by CSLC prior to
the date hereof. The parties hereto agree that no bonus payments are payable to
Xxxx with respect to his employment by CSLC prior to the date hereof.
13. MUTUAL RELEASE. CSLC and Xxxx have, simultaneously with the
execution and delivery of this Agreement, executed and delivered the mutual
release attached hereto as Attachment II. CSLC represents and warrants to Xxxx
that the release, attached as Attachment II hereto, this Agreement and the
Indemnity, attached as Attachment I hereto, have each been approved in good
faith by the Board of Directors of CSLC at a meeting, duly called and held in
accordance with CSLC's Restated Certificate of Incorporation, its Bylaws and
Delaware General Corporation Law, under the procedures provided in Delaware
General Corporation Law Section 144(a)(1) with respect to transactions between a
corporation and one or more of its directors or officers having a direct or
indirect financial interest in the transaction.
14. SURVIVAL OF CERTAIN PROVISIONS. Sections 1 (last two sentences
only), 2, 3 (to the extent provided therein), 6, 8, 9 and 10 (including
ATTACHMENT I to this Agreement), 13, this Section 14, and Sections 16 through 22
of this Agreement shall survive the expiration or termination of this Agreement.
15. CERTAIN TERMS DEFINED. For purposes of this Agreement, the
following defined terms have the meaning set forth below:
(a) "Affiliate" with regard to Xxxx means any person
controlled by or under common control with him. "Affiliate" with regard
to CSLC means any person controlled by or under common control with
CSLC. For purposes of these definitions, "Control" when used with
respect to any person means the power to direct the management and
policies of such person, whether through the ownership of voting
securities, by contract or otherwise.
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(b) "Fundamental Change" means any of the following: (i)
a merger, consolidation, statutory share exchange or sale, lease,
exchange or other transfer (in one transaction or a series of related
transactions) of all or substantially all of the assets of CSLC that
requires the consent or vote of the holders of the Common Stock, other
than a consolidation, merger or share exchange of CSLC in which the
holders of the Common Stock immediately prior to such transaction have
the same proportionate ownership or control of Common Stock of the
surviving corporation immediately after such transaction; (ii) the
stockholders of CSLC approve any plan or proposal for the liquidation
or dissolution of CSLC; (iii) the cessation of control (by virtue of
their not constituting a majority of directors) of the Board of
Directors of CSLC by the individuals (the "Continuing Directors") who
(x) at the date of this Agreement were directors or (y) become
directors after the date of this Agreement and whose election or
nomination for election by CSLC's stockholders was approved by a vote
of at least two-thirds of the directors then in office who were
directors at the date of this Agreement or whose election or nomination
for election was previously so approved; (iv) the acquisition of
beneficial ownership (within the meaning of Rule 13d-3 under the
Securities Exchange Act of 1934) of an aggregate of 20% or more of the
voting power of CSLC's outstanding voting securities by any person or
group (as such term is used in Rule 13d-5 under the Securities Exchange
Act of 1934) who beneficially owned less than 15% of the voting power
of CSLC's outstanding voting securities on the date of this Agreement,
or the acquisition of beneficial ownership of an additional 5% of the
voting power of CSLC's outstanding voting securities by any person or
group who beneficially owned at least 15% of the voting power of CSLC's
outstanding voting securities on the date of this Agreement; PROVIDED,
HOWEVER, that notwithstanding the foregoing, an acquisition shall not
constitute a Fundamental Change hereunder if the acquiror is (x) a
trustee or other fiduciary holding securities under any employee
benefit plan of CSLC and acting in such capacity, (y) a wholly-owned
subsidiary of CSLC or a corporation owned, directly or indirectly, by
the stockholders of CSLC in the same proportions as their ownership of
voting securities of CSLC or (z) any other person whose acquisition of
shares of voting securities is approved in advance by a majority of the
Continuing Directors; or (v) in a Title 11 bankruptcy proceeding, the
appointment of a trustee or the conversion of a case involving CSLC to
a case under Chapter 7.
16. EQUITABLE REMEDY. In the event of a breach by Xxxx of the
provisions of Sections 2 or 3 of this Agreement, CSLC shall, in addition to any
other available remedies, be entitled to an injunction restraining Xxxx from
violating the terms of the applicable Section and Xxxx and CSLC agree that said
injunction is appropriate and proper relief for such violation.
17. XXXX'X LEGAL FEES AND EXPENSES. It is the intent of CSLC that
Xxxx not be required to incur legal fees and the related expenses associated
with the interpretation, enforcement or defense of his rights under this
Agreement by litigation or otherwise because the cost and expense thereof would
substantially detract from the benefits intended to be extended to Xxxx
hereunder. Accordingly, if it should appear to Xxxx that CSLC has failed to
comply with any of its obligations under this Agreement or in the event that
CSLC or any other person takes or threatens to take any action to declare this
Agreement void or unenforceable, or institutes any litigation or other action or
proceeding designed to deny, or to recover from, Xxxx the benefits provided or
intended to be provided to Xxxx hereunder, CSLC irrevocably authorizes Xxxx from
time to time to retain counsel
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of Xxxx'x choice, at the reasonable expense of CSLC as hereafter provided, to
advise and represent Xxxx in connection with any such interpretation,
enforcement or defense, including without limitation the initiation or
defense of any litigation or other legal action, whether by or against CSLC
or any director, officer, stockholder or other person affiliated with CSLC,
in any jurisdiction. CSLC will advance and be solely financially responsible
for any and all reasonable attorneys' and related fees and reasonable
expenses incurred by Xxxx in connection with any of the foregoing; provided
that, if Xxxx is not successful on the merits or otherwise, Xxxx shall
reimburse CSLC for any advances and payments for his attorneys and related
fees and expenses under this Section 17.
18. NOTICES. All notices and other communications provided to
either party hereto under this Agreement shall be in writing and delivered by
hand delivery, overnight courier service or certified mail, return receipt
requested, to the party being notified at such party's address set forth
adjacent to such party's signature on this Agreement, or at such other address
as may be designated by a party in a notice to the other party given in
accordance with this Agreement. Notices given by hand delivery or overnight
courier service shall be deemed received on the date of delivery shown on the
courier's delivery receipt or log. Notices given by certified mail shall be
deemed received three (3) days after deposit in the U.S. Mail.
19. CONSTRUCTION. In construing this Agreement, if any portion of
this Agreement shall be found to be invalid or unenforceable, the remaining
terms and provisions of this Agreement shall be given effect to the maximum
extent possible without considering the void, invalid or unenforceable
provision. In construing this Agreement, no meaning or effect shall be given to
the captions of the paragraphs in this Agreement, which are inserted for
convenience of reference only.
20. CHOICE OF LAW. This Agreement shall be governed and construed
in accordance with the internal laws of the State of Texas without resort to
choice of law principles.
21. INTEGRATION; AMENDMENTS. This is an integrated Agreement. This
Agreement (including Attachment I hereto) constitutes and is intended as a final
expression and a complete and exclusive statement of the understanding and
agreement of the parties hereto with respect to the subject matter of this
Agreement. All negotiations, discussions and writings between the parties hereto
relating to the subject matter of this Agreement are merged into this Agreement,
and there are no rights conferred, nor promises, agreements, conditions,
undertakings, warranties or representations, oral or written, expressed or
implied, between the undersigned parties as to such matters other than as
specifically set forth herein. No amendment or modification of or addendum to,
this Agreement shall be valid unless the same shall be in writing and signed by
the parties hereto. No waiver of any of the provisions of this Agreement shall
be valid unless in writing and signed by the party against whom it is sought to
be enforced.
22. SUCCESSORS AND BINDING AGREEMENT:
(a) CSLC will require any successor (whether direct or
indirect, by purchase, merger, consolidation, reorganization or
otherwise) to all or substantially all of the business or assets of
CSLC, by agreement in form and substance reasonably satisfactory to
Xxxx, expressly to assume and agree to perform this Agreement in the
same manner and to the same extent CSLC would be required to perform if
no such succession had taken place. This
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Agreement will be binding upon and inure to the benefit of CSLC and
any successor to CSLC, including without limitation any persons
acquiring directly or indirectly all or substantially all of the
business or assets of CSLC whether by purchase, merger, consolidation,
reorganization or otherwise, but will not otherwise be assignable,
transferable or delegable by CSLC.
(b) This Agreement will inure to the benefit of and be
enforceable by Xxxx'x personal or legal representatives, executors,
administrators, successors, heirs, distributees, legatees and permitted
assignees.
IN WITNESS WHEREOF, the parties have executed this Agreement on the
date set forth above to be effective as of the date specified in the preamble of
this Agreement.
CAPITAL SENIOR LIVING CORPORATION
a Delaware corporation
Address:
00000 Xxxxxx Xxxxxxx, #000
Xxxxxx, XX 00000 By: /s/ Xxxxx X. Xxxxxxxx
---------------------------------
Its: Vice President
---------------------------------
XXXXXXX X. XXXX
Address:
0000 Xxxxxxxx Xxxxx
Xxxxxx, XX 00000 /s/ Xxxxxxx X. Xxxx
----------------------------------------
Xxxxxxx X. Xxxx
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ATTACHMENT I
INDEMNITY
1. CAPITAL SENIOR LIVING CORPORATION (the "Corporation") will
indemnify XXXXXXX X. XXXX ("Indemnitee") in accordance with the following terms.
2. DEFINITIONS. As used in this Indemnity:
(a) The term "Proceeding" shall include any threatened,
pending or completed investigation, claim, action, suit or proceeding, whether
of a civil, criminal, administrative or investigative nature (including without
limitation any action, suit or proceeding by or in the right of the Corporation
or Other Entity to procure a judgment in its favor), in which Indemnitee may be
or may have been or may be threatened to be made or to become involved in any
manner (including without limitation as a party or a witness) by reason of the
fact that Indemnitee has advised the Corporation (as an officer, director or
consultant of the Corporation) with respect to any matter, is alleged to have
advised Other Entities with respect to any matter in which the Corporation was
involved or related or by reason of anything actually or allegedly done or not
done by Indemnitee in any of such capacities, and whether such advice, action or
inaction occurred in the past or occurs after the date hereof. It is expressly
agreed that "Proceeding" shall include any claim, action, suit or proceeding
arising out of or related to the Corporation's business relationships with and
proposed mergers with ILM Senior Living, Inc. and ILM II Senior Living, Inc., in
connection with which the Corporation's Board of Directors in considering this
Agreement has determined Indemnitee's actions and advice were in good faith and
in the best interests of the Corporation. It is also expressly agreed that
"Proceeding" shall include any claim, action, suit or proceeding arising out of
allegations that Indemnitee's affiliates have engaged in transactions with the
Corporation in which Indemnitee had a financial or conflicting interest.
(b) The term "Expenses" includes, without limitation,
reasonable attorneys' fees and disbursements and all other reasonable costs,
expenses and obligations actually and reasonably incurred by Indemnitee in
connection with (i) investigating, defending, being a witness in or otherwise
participating in, or preparing to defend, be a witness in or participate in, any
Proceeding, or (ii) establishing a right to indemnification under Paragraph 6 of
this Indemnity, but shall not include the amount of any judgments, fines or
penalties entered or assessed against Indemnitee or any amounts paid or payable
in settlement by Indemnitee.
(c) The term "Other Entity" includes, without limitation,
any subsidiary or affiliate of the Corporation and any entity with which
Indemnitee has served or is serving as an officer or director or otherwise in
the general interest of the Corporation's business. It is expressly agreed that
Indemnitee's (i) service with Capital Realty Group Senior Housing, Inc., a Texas
corporation, and with its subsidiaries and partnerships in which it is a general
partner, (ii) service with Capital Senior Living Communities, LP, and its
general partner, Retirement Living Communities, L.P. and (iii) service with
Tri-Point Communities, L.P. were all undertaken by the Indemnitee for the
benefit of the Corporation, and all such entities and their affiliates are
hereby agreed to be Other Entities within the meaning of this definition.
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3. SCOPE OF INDEMNIFICATION. Subject to Paragraph 7 of this
Indemnity, the Corporation shall indemnify Indemnitee in accordance with the
provisions of this Paragraph 3 if Indemnitee is or was or is threatened to be
made or to become involved in any manner, including without limitation as a
party or witness, in any Proceeding (including a Proceeding by or in the right
of the Corporation or Other Entity to procure a judgment in its favor) against
any and all Expenses and any and all judgments, fines and penalties entered or
assessed against Indemnitee, and any and all amounts reasonably paid or payable
in settlement by Indemnitee, in connection with such Proceeding, but only if
Indemnitee acted in good faith and in a manner Indemnitee reasonably believed to
be in or not opposed to the Corporation's best interests and without gross
negligence. THIS INDEMNITY EXPRESSLY INDEMNIFIES INDEMNITEE AGAINST HIS OWN
NEGLIGENCE. The termination of any Proceeding by judgment, order of court,
settlement or conviction, or upon a plea of nolo contendere or its equivalent,
shall not, of itself, create a presumption for purposes of any provision of this
Indemnity that Indemnitee did not act in good faith and in a manner Indemnitee
reasonably believed to be in or not opposed to the Corporation's best interests,
or with gross negligence.
4. INDEMNIFICATION OF EXPENSES OF SUCCESSFUL PARTY; NO ADVERSE
PRESUMPTION. Notwithstanding any other provisions of this Indemnity, to the
extent that Indemnitee has been successful on the merits or otherwise, in
defense of any Proceeding or in defense of any claim, issue or matter therein,
including the dismissal of an action without prejudice, Indemnitee shall be
indemnified against all Expenses incurred in connection therewith.
5. ADVANCES OF EXPENSES. The Expenses incurred by Indemnitee
pursuant to Paragraph 3 in any Proceeding shall be paid by the Corporation in
advance, promptly upon the written request of the Indemnitee, if Indemnitee
shall undertake to repay such amount to the extent that it is ultimately
determined that Indemnitee is not entitled to indemnification. No security for
the performance of any such undertaking shall be required and any such
undertaking shall be accepted by the Corporation without regard to the financial
capacity of Indemnitee to perform his obligations thereunder.
6. RIGHT OF INDEMNITEE TO INDEMNIFICATION UPON APPLICATION:
PROCEDURE UPON APPLICATION. Without limiting the obligation of the Corporation
to promptly make payments in respect of Expenses in accordance with Paragraph 5,
any indemnification under Paragraph 3 shall be made no later than 45 days after
receipt by the Corporation of the written request of Indemnitee, unless a
determination is made within said 45-day period by (1) the Board of Directors of
the Corporation by a majority vote of a quorum consisting of Directors who are
not and were not parties to the relevant Proceeding, or (2) independent legal
counsel in a written opinion (which counsel shall be appointed if such a quorum
is not obtainable) that the Indemnitee has not met the relevant standards for
indemnification set forth in Paragraph 3.
The right to indemnification or advances as provided by this Indemnity
shall be enforceable by Indemnitee in any court of competent jurisdiction. The
burden of proving that indemnification is not appropriate shall be on the
Corporation. Indemnitee's Expenses reasonably incurred in connection with
successfully establishing his or her right to indemnification, in whole or in
part, in any such proceeding shall also be indemnified by the Corporation.
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7. INDEMNIFICATION HEREUNDER NOT EXCLUSIVE; CONSTRUCTION. The
indemnification provided by this Indemnity shall not be deemed exclusive of any
other rights to which Indemnitee may be entitled under the General Corporation
Law of the State of Delaware, the Amended and Restated Certificate of
Incorporation and/or Bylaws of the Corporation, any other indemnity, any vote of
stockholders or disinterested Directors, or otherwise, either as to action in
his official capacity on, prior or after the date hereof or as to action in any
other capacity. The corporation hereby agrees and acknowledges that it will
continue to honor its indemnification obligations to Indemnitee set forth in its
Amended and Restated Certificate of Incorporation and/or Bylaws with respect to
any existing or future lawsuit against the Corporation and any other actions
pursuant to which Indemnitee would be entitled to indemnification.
8. PARTIAL INDEMNIFICATION. In the event that Indemnitee is
entitled under any provision of this Indemnity to indemnification by the
Corporation for a portion but less than the entire amount of any Expenses,
judgments, fines, penalties and/or amounts paid or payable in settlement, the
Corporation shall fully indemnify Indemnitee in accordance with the applicable
provisions of this Indemnity for such portion of such Expenses, judgments,
fines, penalties and/or amounts paid in settlement.
9. SUBROGATION. In the event that the Corporation provides any
indemnification or makes any payment to Indemnitee in respect of any matter in
respect of which indemnification or the advancement of expenses is provided for
herein, the Corporation shall be subrogated to the extent of such
indemnification or other payment to all of the related rights of recovery of
Indemnitee against other persons or entities. Indemnitee shall execute all
papers reasonably required and shall do everything that may be reasonably
necessary to secure such rights and enable the Corporation effectively to bring
suit to enforce such rights (with all of Indemnitee's reasonable costs and
expenses, including attorneys' fees and disbursements, to be reimbursed by or,
at the option of Indemnitee, advanced by the Corporation).
10. NO DUPLICATION OF PAYMENTS. The Corporation shall not be
obligated under this Indemnity to provide any indemnification or make any
payment to which Indemnitee is otherwise entitled hereunder to the extent, but
only to the extent, that such indemnification or payment hereunder would be
duplicative of any amount actually received by Indemnitee pursuant to any
insurance policy, the General Corporation Law of the State of Delaware, the
Amended and Restated Certificate of Incorporation and/or the Bylaws of the
Corporation or otherwise. With respect to the Corporation's indemnity
obligations concerning Other Entities, the Corporation shall have no obligation
hereunder until and unless Xxxx has first sought all available insurance
coverage benefitting such Other Entities and indemnity available from such Other
Entities and such insurance coverage and indemnity has been exhausted or has
been denied.
11. SAVING CLAUSE. If any provision of this Indemnity or the
application of any provision hereof to any circumstance is held illegal, invalid
or otherwise unenforceable, the remainder of this Indemnity and the application
of such provision to any other circumstance shall not be affected, and the
provision so held to be illegal, invalid or otherwise unenforceable shall be
reformed to the extent (but only to the extent) necessary to make it legal,
valid and enforceable.
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12. NOTICE. Indemnitee shall give to the Corporation notice in
writing as soon as practicable of any claim made against him or her for which
indemnification will or could be sought under this Indemnity, provided, however,
that any failure to give such notice to the Corporation will relieve the
Corporation from its obligations hereunder only if, and to the extent that, such
failure results in the forfeiture of substantial rights and defenses. Notice to
the Corporation shall be directed to the Corporation (to the attention of the
Chief Executive Officer, with a copy to the General Counsel) at its principal
executive office or such other address as the Corporation shall designate in
writing to Indemnitee. Notice shall be deemed received when hand delivered or
dispatched by electronic facsimile transmission (with receipt thereof orally
confirmed), or three calendar days after having been mailed by United States
registered or certified mail, return receipt requested, postage prepaid, or one
business day after having been sent for next-day delivery by a nationally
recognized overnight courier. In addition, Indemnitee shall give the Corporation
such information and cooperation as it may reasonably require and shall be
within Indemnitee's power. The Corporation shall give prompt notice to
Indemnitee of any potential claims against Indemnitee of which the Corporation
becomes aware.
13. APPLICABLE LAW. This Indemnity shall be governed by and
construed in accordance with the laws of the State of Delaware, without giving
effect to the principles of conflicts of law thereof.
14. SUCCESSORS. This Indemnity shall be binding upon the
Corporation and its successors, including without limitation any person
acquiring directly or indirectly all or substantially all of the business or
assets of the Corporation whether by purchase, merger, consolidation,
reorganization or otherwise (and such successor will thereafter be deemed the
"Corporation" for purposes of this Indemnity), but will not otherwise be
assignable, transferable or delegable by the Corporation. The Corporation shall
require any successor (whether direct or indirect, by purchase, merger,
consolidation, reorganization or otherwise) to all or substantially all of the
business or assets of the Corporation, to assume and agree in writing to perform
this Indemnity, expressly for the benefit of Indemnitee, in the same manner and
to the same extent the Corporation would be required to perform if no such
succession had taken place.
Dated: May 20, 1999 CAPITAL SENIOR LIVING CORPORATION
By: /s/ Xxxxx X. Xxxxxxxx
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Title: Vice President
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