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EXHIBIT 10.34
ALLIANCE AGREEMENT
OF
LCOR INCORPORATED,
a Pennsylvania corporation
and
CAPITAL SENIOR LIVING CORPORATION,
a Delaware Corporation
DATED AS OF DECEMBER 10, 1997
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ALLIANCE AGREEMENT
This ALLIANCE AGREEMENT (this "Agreement") is made and entered into as
of December 10, 1997, by and between LCOR INCORPORATED, a Pennsylvania
corporation ("LCOR"), and CAPITAL SENIOR LIVING CORPORATION, a Delaware
corporation ("CSL").
WHEREAS, LCOR and its Affiliates contemplate acquiring sites ("Sites")
upon which it proposes to develop, construct, own, operate and sell or otherwise
dispose of senior living facilities (the "Improvements") within the United
States (any applicable Site, together with the related Improvements, being
herein referred to as a "Facility"), including but not limited to, facilities to
be constructed at Trumbull, Connecticut, Montclaire, New Jersey, Summit, New
Jersey and Libertyville, Illinois (the "Initial Facilities");
WHEREAS, CSL has represented (a) that CSL and its Affiliates have
experience in performing certain feasibility, predevelopment, premarketing,
preleasing and other preopening activities and analysis with regard to senior
living facilities (the "Feasibility Services") and in the development,
management, marketing, leasing, opening and operational aspects of senior living
facilities ("Management Services") and (b) that the owners and employees of CSL
are qualified consultation professionals with significant senior living facility
experience and/or qualified management, leasing and marketing professionals with
significant senior living facility experience capable of performing the
Feasibility Services and the Management Services;
WHEREAS, the parties hereto desire to enter into this Agreement to
provide the basis upon which certain senior living facilities will be
constructed, owned, operated and managed in the United States.
NOW, THEREFORE, in consideration of the mutual covenants and
agreements set forth herein, and for other good and valuable consideration, the
receipt and sufficiency of which are hereby acknowledged, and intending to be
legally bound, the parties hereto agree as follows:
I. SERVICES
1.01 CONSULTING AND MANAGEMENT SERVICES: Except as provided below in
Section 1.02, with regard to each Facility to be developed and constructed by
LCOR or any of its Affiliates within the United States, LCOR shall be obligated
to offer to CSL the opportunity to provide the Feasibility Services and the
Management Services in accordance with the terms of this Agreement. In the event
LCOR or any of its Affiliates desire to develop and construct a Facility within
the United States, LCOR shall provide to CSL written notice of such intention
after (a) LCOR has provided to CSL an initial demographic analysis and a
preliminary market study from a party or parties who are not Affiliates of LCOR
and (b) LCOR or any of its Affiliates (i) has executed a letter of intent to
purchase the Site or (ii) is negotiating an agreement to purchase the Site, or
(c) has previously acquired the Site. As promptly as practicable after the
receipt of such notice from LCOR (but in any event within 30 days), CSL shall
give written notice to LCOR which states whether CSL elects to perform the
Feasibility Services and the Management Services with regard to such Facility.
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In the event CSL elects to perform the Feasibility Services and the Management
Services, then, with regard to such Facility, CSL or its Affiliate and LCOR or
its Affiliate shall enter into (A) a Consulting Agreement in the form attached
hereto as Exhibit "A" ("Consulting Agreement"), and (B) a Management and
Marketing Agreement in the form attached hereto as Exhibit "B" ("Management
Agreement"). In the event CSL fails to timely elect to participate or elects not
to participate in such Facility as aforesaid, then, except as provided in
Section 1.03(b) below, LCOR may freely and without restriction develop,
construct, own, manage and operate such Facility on its own account or with any
other provider of Feasibility Services, Management Services, or similar services
and without any obligation to CSL or its Affiliates, except that LCOR shall
reimburse CSL for the reasonable out of pocket expenses of CSL and its
Affiliates expended in connection with the determination by CSL and its
Affiliates of whether or not to perform the Feasibility Services and the
Management Services with respect to such Facility.
1.02 LAND OWNED BY OPERATOR: The provisions of Section 1.01 shall not
restrict or prevent LCOR or any of its Affiliates from constructing, owning and
operating senior living facilities on land which has been owned by a person or
entity (which is not an Affiliate of LCOR) which under new ownership
arrangements will manage the facility upon completion of construction. Nothing
shall prevent LCOR or any of its Affiliates from directly or indirectly owning a
portion (but not all) of such entity which will manage such facility or
otherwise participate in the economic benefits of such facility in whatever
form, provided such facility is not within a five-mile radius of any senior
living facility owned by CSL or any of its Affiliates or for which CSL and/or
its Affiliates is (are) providing the same level of feasibility services and/or
the same level of management services.
1.03 LCOR PROHIBITED MANAGEMENT SERVICES AND DEVELOPMENT: (a) Except as
set forth in Section 1.02, during the term of this Agreement, neither LCOR nor
of its Affiliates may, directly or indirectly, manage a senior living facility.
(b) During the term of this Agreement, neither LCOR nor any of its
Affiliates may, directly or indirectly, develop any senior living facility for
its own account which will be operated by an operator other than CSL, if such
facility is within a 5-mile radius of any senior living facility owned by CSL or
any of its Affiliates or for which CSL and/or its Affiliates is (are) providing
the same level of Feasibility Services and/or the same level of Management
Services for an owner other than LCOR or one or more of its Affiliates.
1.04 LCOR ROFO: During the term of this Agreement, if CSL or any of
its Affiliates owns a parcel of land in metropolitan New York, Washington,
Philadelphia or Chicago and CSL or any of its Affiliates desires for a senior
living facility to be developed on such site by a third party other than Tri
Point Communities, L.P. and operated by CSL or any of its Affiliates (not
including a senior living facility to be owned and operated by CSL or any of its
Affiliates), CSL must first offer LCOR the right to develop such facility for
management by CSL or any of its Affiliates on the terms which CSL proposes to
offer to another developer which is not an Affiliate of CSL.
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II. TERM AND TERMINATION
2.01 TERM: The term of this Agreement shall commence on the date of
this Agreement and continue for a period of five years thereafter unless LCOR
and CSL agree to extend the date to a later date acceptable to LCOR and CSL, or
unless this Agreement is earlier terminated pursuant to the terms of this
Agreement.
2.02 TERMINATION: Either LCOR or CSL may at any time terminate this
Agreement upon not less than 30 days prior written notice. Upon termination of
this Agreement, the terms, conditions and provisions of this Agreement shall
cease to apply and neither party shall thereafter have any continuing obligation
to the other under this Agreement, except that (a) Sections 5.01(f), 5.11 and
5.13 shall survive the termination of this Agreement for four years and (b)
Article III shall survive the termination of this Agreement until less than two
Management Agreements remain in full force and effect.
2.03 EXISTING AGREEMENTS: Termination of this Agreement will have no
effect upon and will not terminate any existing Consulting Agreement or
Management Agreement entered into prior to the date of termination of this
Agreement and all of such Consulting Agreements and Management Agreements shall
continue in full force and effect in accordance with their respective terms,
conditions and provisions.
III. RIGHT OF FIRST REFUSAL
3.01 RIGHT OF FIRST REFUSAL: (a) In the event that a bona fide offer
is received by LCOR for the purchase or other disposition of two or more
Facilities owned by LCOR and its Affiliates (all of which are covered by
Management Agreements which are then in full force and effect) (the "Sale
Facilities") from a party which is not an Affiliate of LCOR, and LCOR is willing
to accept such offer ("Bona Fide Offer") substantially in accordance with the
terms and conditions of such Bona Fide Offer, LCOR shall deliver a copy of such
Bona Fide Offer to CSL (the "BFO Notice"). At any time within the Response
Period (as defined below), CSL shall have the right, exercisable by delivery of
written notice ("Election Notice") to LCOR, to either:
(i) Authorize LCOR to accept the Bona Fide Offer; or
(ii) Agree to purchase the Sale Facilities for the
purchase price set forth in, and subject to the other
terms and conditions of, the Bona Fide Offer, such
election to be made by delivering to LCOR the
Election Notice which shall affirmatively state that
CSL is exercising such option. Within five business
days after delivery to LCOR of an Election Notice
pursuant to this Section 3.01(a)(ii), CSL shall
establish any escrow deposit set forth in the Bona
Fide Offer on the same terms and conditions as
provided in the Bona Fide Offer.
(b) As used herein, the term "Response Period" shall mean the 30-day
period, commencing with the first day after CSL shall have received a copy of
the Bona Fide Offer. If during the Response Period, CSL neither (i) authorizes
LCOR to accept the Bona Fide Offer to purchase
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the Sale Facilities nor (ii) agrees to purchase the Sale Facilities by
delivering the Election Notice, then CSL shall be deemed to have authorized and
to have approved the sale of the Sale Facilities to the offeree specified in
such Bona Fide Offer on economic terms which are the same and on other terms
which are substantially the same as those contained in such Bona Fide Offer. If
CSL has authorized or is deemed to have authorized the sale of the Sale
Facilities on economic terms which are the same and on other terms which are
substantially the same terms as those contained in such Bona Fide Offer, LCOR
may consummate the sale of the Sale Facilities to the offeree specified in the
Bona Fide Offer without the requirement of any consent or approval of CSL
provided such sale must be consummated within 180 days after the date on which
CSL authorized or was deemed to have authorized such sale. The failure of such
sale to occur within the 180-day period referred to in the immediately preceding
sentence shall require LCOR to deliver to CSL another BFO Notice in accordance
with the terms of this Section 3.01.
(c) If CSL timely delivers an Election Notice, the closing on the sale
of the Sale Facilities to CSL shall take place on the closing date specified in
the Bona Fide Offer on the same economic terms and on materially the same other
terms and conditions as set forth in the Bona Fide Offer.
(d) If LCOR is required to convey the Sale Facilities to CSL pursuant
to the foregoing provisions, LCOR shall convey the Sale Facilities to CSL by a
special warranty deed, subject only to those exceptions permitted pursuant to
the terms of the Bona Fide Offer. Transfer taxes, title insurance premiums,
escrow fees and all other closing costs, including ad valorem and real property
taxes, in connection with such conveyance shall be allocated between and paid by
the purchaser and seller in the usual and customary manner for the locality in
which one of the Sale Facilities is located (as selected by LCOR). The closing
of such sale shall be held at such place as LCOR shall elect and which is
reasonably satisfactory to CSL. At such place and at the time set forth above,
CSL shall tender the cash portion of the purchase price by certified or cashiers
check, or wire transfer of immediately available federal funds.
(e) If the provisions of this Article III are applicable to the sale
of the Sale Facilities, the provisions of Section VI.B of the Management
Agreements covering the Sale Facilities shall not be applicable to the sale of
any of the Sale Facilities. If there is any conflict between the provisions of
this Article III and the provisions of Section VI.B of the Management Agreements
covering the Sale Facilities, the provisions of this Article III shall control
with respect to the sale of the Sale Facilities.
IV. ARBITRATION
In the event of any dispute, claim or controversy of any kind between
the parties concerning this Agreement or the terms of this Agreement, the matter
shall be submitted to binding arbitration in accordance with the rules of the
American Arbitration Association. The parties shall jointly agree on one
arbitrator. If the parties are unable to agree, in good faith, on the selection
of one arbitrator within 30 days of an arbitrator being proposed by one party,
either party may request appointment of one arbitrator chosen by the American
Arbitration Association who shall be the selected arbitrator. Such arbitrator
shall be limited in his decision to a choice between the final position as
requested by each party. Said arbitration shall be held in Delaware or such
other place as is mutually agreeable. The arbitration award made by the
arbitrator shall be final and binding on both parties, unless the
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arbitration is fraudulent or so grossly erroneously as to necessarily imply bad
faith. Costs of arbitration are to be shared by both parties equally, provided
that the arbitrator may choose to award the cost of arbitration against the
losing party, if the arbitrator determines that the final position urged by the
losing party was not reasonable.
V. MISCELLANEOUS
5.01 COVENANTS, REPRESENTATIONS AND WARRANTIES OF LCOR AND CSL: LCOR
and CSL each represents and warrants to the other as follows:
(a) It is duly organized, validly existing and in good standing under
the laws of its jurisdiction of formation with all requisite power and authority
to enter into this Agreement and to conduct its business.
(b) This Agreement constitutes the legal, valid and binding obligation
of such party enforceable in accordance with its terms, subject to the
application of principles of equity and laws governing insolvency and creditors'
rights generally.
(c) No consents or approvals are required from any governmental
authority or other person or entity for such party to enter into this Agreement.
All corporate action on the part of such party necessary for the authorization,
execution and delivery of this Agreement, and the consummation of the
transactions contemplated hereby, have been duly taken.
(d) The execution and delivery of this Agreement by such party, and
the consummation of the transactions contemplated hereby, do not conflict with
or contravene the provisions of its organization documents or any agreement or
instrument to which it is a party or by which it or its properties are bound or
any law, rule, regulation, order or decree to which it or its properties are
subject.
(e) Such party has not retained any broker, finder or other commission
or fee agent, and no such person has acted on its behalf in connection with the
execution and delivery of this Agreement.
(f) Each party agrees to indemnify and hold harmless each other and
their respective officers, directors, shareholders, employees, successors and
assigns from and against any and all loss, damage, liability or expense
(including costs and attorneys fees) which they may incur by reason of, or in
connection with, any material breach of the foregoing representations and
warranties by the indemnifying party and all such representations and warranties
shall survive the execution and delivery of this Agreement and the termination
of this Agreement.
5.02 FURTHER ASSURANCES: LCOR and CSL each agrees to execute,
acknowledge, deliver, file, record and publish such further instruments and
documents, and do all such other acts and things as may be required by law, or
as may be reasonably required to carry out the intent and purposes of this
Agreement.
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5.03 NOTICES: All notices, demands, consents, approvals, requests or
other communications which any of the parties to this Agreement may desire or be
required to give hereunder (collectively, "Notices") shall be in writing and
shall be given by (A) personal delivery, (B) facsimile transmission or (C) a
nationally recognized overnight courier service, fees prepaid, addressed as
follows:
IF TO LCOR: 000 Xxxxxx Xxxx, Xxxxx 000
Xxxxxx, Xxxxxxxxxxxx 00000
Attn: Xxxxx XxXxxxx
Facsimile No.: 610/408-4420
WITH A COPY TO: Xxxxx, Day, Xxxxxx & Xxxxx
00 Xxxx Xxxxxx, Xxxxx 0000
Xxxxxxx, Xxxxxxxx 00000
Attn: Xxx X. Xxxxxx, Esq.
Facsimile No.: 312/782-8585
IF TO CSL: 000 Xxxx Xxxxxx, 00xx Xxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attn: Xxxxxxxx X. Xxxxx
Facsimile No.: 212/551-1774
WITH A COPY TO: Xxxxx X. Xxxxxxxx, Esq.
Capital Senior Living, Inc.
00000 Xxxxxx Xxxxxxx, Xxxxx 000
Xxxxxx, Xxxxx 00000
Facsimile No.: 972/770-5666
WITH A COPY TO: Jenkens & Xxxxxxxxx
0000 Xxxx Xxxxxx, Xxxxx 0000
Xxxxxx, Xxxxx 00000
Attn: Xxxxxxx X. Xxxx, XX, Esq.
Facsimile No.: 214/855-4300
Any party may designate another addressee (and/or change its address) for
Notices hereunder by a Notice given pursuant to this Section 5.03. A Notice sent
in compliance with the provisions of this Section 5.03 shall be deemed given on
the date of receipt.
5.04 GOVERNING LAW: This Agreement shall be governed by and construed
in accordance with the laws of the State of Delaware applicable to agreements
made and to be performed wholly within that State.
5.05 CAPTIONS: All titles or captions contained in this Agreement are
inserted only as a matter of convenience and for reference and in no way define,
limit, extend or describe the scope of this Agreement or the intent of any
provision in this Agreement.
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5.06 PRONOUNS: All pronouns and any variations thereof shall be deemed
to refer to the masculine, feminine, and neuter, singular and plural, as the
identity of the party or parties may require.
5.07 SUCCESSORS AND ASSIGNS: This Agreement shall be binding upon the
parties hereto and their respective legal representatives, successors and
assigns, and shall inure to the benefit of the parties hereto and, except as
otherwise provided herein, their respective legal representatives, successors
and assigns.
5.08 EXTENSION NOT A WAIVER: No delay or omission in the exercise of
any power, remedy or right herein provided or otherwise available to any party
shall impair or affect the right of such party thereafter to exercise the same.
Any extension of time or other indulgence granted to any party hereunder shall
not otherwise alter or affect any power, remedy or right of any other party, or
the obligations of any party to whom such extension or indulgence is granted.
5.09 SEVERABILITY: In case any one or more of the provisions contained
in this Agreement or any application thereof shall be invalid, illegal or
unenforceable in any respect, the validity, legality and enforceability of the
remaining provisions contained herein and other application thereof shall not in
any way be affected or impaired thereby.
5.10 ENTIRE AGREEMENT: This Agreement, together with any applicable
Consulting Agreements and Management Agreements, contains the entire agreement
between the parties relating to the subject matter hereof and all prior
agreements relative hereto which are not contained herein or therein are
terminated. Amendments, variations, modifications or changes herein may be made
effective and binding upon the parties hereto by, and only by, the setting forth
of same in a document duly executed by each party to this Agreement, and any
alleged amendment, variation, modification or change herein which is not so
documented shall not be effective as to any party to this Agreement.
5.11 PUBLICITY: Neither CSL nor LCOR nor any of their respective
advisors, employees or agents shall issue any press release or otherwise
publicize or disclose the terms of this Agreement or the proposed terms of any
acquisition, development or disposition of any Facility or any portion thereof,
without the express written consent of the other party to this Agreement, which
consent shall not be unreasonably withheld, or except as such disclosure may be
made in the course of normal reporting practices to the disclosing party's
shareholders, to prospective lenders or to investors in the disclosing party or
as otherwise required by law (it being specifically understood and agreed that
anything set forth in a registration statement or any other document filed
pursuant to the securities laws will be deemed required by law). A disclosing
party will provide the other party with a copy of any such disclosure either
before or after such disclosure is made.
5.12 COUNTERPARTS: This Agreement may be executed in multiple
counterparts, each of which shall be an original but all of which together shall
constitute but one and the same agreement.
5.13 CONFIDENTIALITY: (a) The terms of this Agreement, the identity of
any person with whom LCOR or CSL may be holding discussions with respect to any
investment, acquisition, disposition or other transaction, and all other
business, financial or other information relating directly
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to any Facility or the conduct of the business and affairs of LCOR or CSL or the
relative or absolute rights or interests of LCOR or CSL (collectively, the
"Confidential Information") that has not been publicly disclosed pursuant to
authorization by LCOR or CSL, as applicable, is confidential and proprietary
information of LCOR or CSL, as applicable, the disclosure of which would cause
irreparable harm to LCOR or CSL, as applicable. Accordingly, each of LCOR and
CSL represents that it has not and agrees that it shall not and will direct its
shareholders, directors, officers, agents, advisors and Affiliates not to,
disclose to any person any Confidential Information or confirm any statement
made by third persons regarding Confidential Information until LCOR or CSL, as
applicable, has publicly disclosed the Confidential Information and has notified
the other party that it has done so; provided, however, that LCOR or CSL, as
applicable (or their Affiliates) may disclose such Confidential Information to
any prospective lenders or to investors in the disclosing party and if necessary
for it to perform any of its duties or obligations hereunder or required by law
(it being specifically understood and agreed that anything set forth in a
registration statement or any other document filed pursuant to the securities
laws shall be deemed required by law). A disclosing party will provide the other
party with a copy of such disclosure either before or immediately after such
disclosure is made.
(b) Subject to the provisions of Section 5.13(a), each of LCOR and CSL
agrees not to disclose any Confidential Information to any person (other than a
person agreeing to maintain all Confidential Information in strict confidence or
a judge, magistrate or referee in any action, suit or proceeding relating to or
arising out of this Agreement or otherwise), and to keep confidential all
documents (including, without limitation, responses to discovery requests)
containing any Confidential Information. Each of LCOR and CSL hereby consents in
advance to any motion for any protective order brought by the other party to
this Agreement and represented as being intended by the movant to implement the
purposes of this Section 5.13. If LCOR or CSL, as the case may be, receives a
request to disclose any Confidential Information under the terms of a valid and
effective order issued by a court or governmental agency and the order was not
sought by or on behalf of or consented to by the party receiving the request,
then the party receiving the request may disclose the Confidential Information
to the extent required, if the party receiving the request as promptly as
practicable (i) notifies the other party to this Agreement of the existence,
terms and circumstances of the order, (ii) if disclosure of the Confidential
Information is required, and the party receiving the request reasonably
cooperates with the other party in any attempts by the other party to obtain a
protective order or other reliable assurance that confidential treatment will be
accorded to the portion of the disclosed Confidential Information that such
other party designates. The cost (including, without limitation, attorneys' fees
and expenses) of obtaining a protective order covering Confidential Information
designated by the party requesting the protective order will be borne by such
party.
(c) The covenants contained in this Section 5.13 will survive the
termination of this Agreement for four years.
5.14 DEFINITION OF AFFILIATE: For the purposes of this Agreement, the
term "Affiliate" shall have the same meaning as is ascribed to such term in the
Management Agreement.
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IN WITNESS WHEREOF, the parties hereto have executed this Agreement as
of the date set forth in the introductory paragraph hereof.
LCOR:
LCOR INCORPORATED,
a Pennsylvania corporation
By: /s/ XXXXX XXXXXXX
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Name: Xxxxx Xxxxxxx
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Title: President and CEO
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CSL:
CAPITAL SENIOR LIVING CORPORATION,
a Delaware corporation
By: /s/ XXXXX X. XXXXXXXX
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Name: Xxxxx X. Xxxxxxxx
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Title: Vice President
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