SETTLEMENT AGREEMENT
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PREAMBLE
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In consideration of the covenants, agreements and mutual releases set
forth below, ILM Senior Living, Inc. (formerly PaineWebber Independent Living
Mortgage Fund, Inc.), ILM II Senior Living, Inc. (formerly PaineWebber
Independent Living Mortgage Inc. II), ILM Holding, Inc., ILM II Holding, Inc.,
ILM I Lease Corporation, ILM II Lease Corporation, Capital Senior Living, Inc.,
Capital Senior Management 2, Inc., Capital Senior Living Corporation, Xxxxxxxx
X. Xxxxx, Xxxxxxx X. Xxxx and Xxxxx X. Xxxxxx (collectively "the ILM/Capital
parties") on the one hand, and Angeles Housing Concepts, Inc. ("AHC"), Xxxx X.
Xxxxxxxx, Xxxxxxx Xxxxxxxx, Xxxxx X. Xxxxxxxx, Xxxxxxx X. Xxxxxxx and Xxxxx
Xxxxxxx (collectively, "the AHC parties") on the other, hereby agree to resolve
fully the disputes between them, including, but not limited to, the issues in
the following actions: (1) ILM Holding, Inc., ILM II Holding, Inc., ILM I Lease
Corporation and ILM II Lease Corporation vs. Angeles Housing Concepts, Inc.,
filed on July 29, 1996 in the United States District Court for the Eastern
District of Virginia as Civil Action No. 3:96CV623 (the "Virginia action"); and
(2) Angeles Housing Concepts, Inc. vs. Capital Senior Living, Inc., Capital
Senior Management 2, Inc., Xxxxxxxx X. Xxxxx, Xxxxxxx X. Xxxx, Xxxxx X. Xxxxxx,
Capital Senior Living Corporation and Does 1 through 50, inclusive, filed on
February 4, 1997 in the Superior Court for the State of California for the
County of Los Angeles, as Case No. BC 165455 and now pending in the United
States District Court for the Central District of California as Case No.
97-1412-CM (McX) (the "California action").
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TERMS AND CONDITIONS
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The parties agree as follows:
1. Dismissal of All Actions: Subject to the provisions of Paragraph 2
below, within ten (10) days of execution of this Settlement Agreement by all
parties, ILM Holding, Inc., ILM II Holding, Inc., ILM Lease Corporation and ILM
II Lease Corporation shall cause to be filed a Request for Dismissal with
Prejudice of the Virginia action and Angeles Housing Concepts, Inc. shall cause
to be filed Requests for Dismissal with Prejudice of the California action and
of its Counterclaim in the Virginia action. In addition, the ILM/Capital parties
and each of the AHC parties shall dismiss with prejudice any actions other than
the Virginia and California actions that they or any affiliated person or entity
may have filed against the other or its affiliated persons or entities. The
dismissals shall provide that each party is to bear its or his own attorneys'
fees and costs.
2. Payment of the Settlement Amount: Within ten (10) days of execution
of this Settlement Agreement by all parties, and concurrently with the filing of
dismissals required by Paragraph 1, the ILM/Capital parties shall pay to Angeles
Housing Concepts, Inc. the sum of Two Million Two Hundred Fifty Thousand Dollars
($2,250,000.00) (the "Settlement Amount") in the form of three certified checks
or cashier's checks as follows: (a) one check shall be made payable to "Xxxxxxx
X. Ready, Esq. in trust for the benefit of Xxxxxxx Xxxxxxxx, Xxxxx Xxxxxxxx, and
Xxxx Xxxxxxxx" in the amount of Four Hundred and Ten Thousand Dollars
($410,000.00), and delivered to Xxxxxxx & Ready, 0000 Xxxxxxxxxx Xxxxxx, Xxxxx
#0, Xxxx Xxxxxx, Xxxxxxxxxxxxx 00000-0000; and (b) two checks shall be made
payable to "Xxxxx Xxxxxxx Xxxxxx & Xxxxxx LLP Client Trust Account for the
benefit of Angeles Housing Concepts, Inc. and Xxxxxxx X. Xxxxxxx" in the total
amount of One Million Eight Hundred and Forty Thousand
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Dollars ($1,840,000.00), and delivered to the offices of Xxxxx Xxxxxxx Xxxxxx &
Xxxxxx LLP. The date upon which these payments are made are referred to as the
"Closing Date."
3. Disclosure and Immediate Transfer of Voting Rights: On the Closing
Date, each of the AHC parties shall transmit to the ILM/Capital parties: (1) the
names, addresses and telephone numbers of all persons or entities under their
control, any minor children in their custody and any spouses or parents, who own
or control any voting securities in the ILM/Capital parties, and the nature and
amount of such interest; and (2) an irrevocable comprehensive proxy, effective
through December 31, 2014, in a form prepared on behalf of the ILM/Capital
parties, with respect to any and all voting securities in the ILM/Capital
parties they control or that are controlled by any person or entity under their
control, any minor children in their custody or any spouses or parents;
provided, however, that with respect to any voting securities sold or
transferred by any of the AHC parties to an unaffiliated third party, such
irrevocable comprehensive proxy shall terminate automatically and shall be of no
further force or effect as of the date of any such sale.
4. Representation of Authority: By their assent to this Settlement
Agreement, each of the AHC parties represents and warrants that he has authority
from persons or entities under his control, all minor children in his custody
and all spouses and parents to enter into this Settlement Agreement and to
perform the acts described herein.
5. Standstill agreement: Each of the AHC parties represents and agrees
that he will not, until after December 31, 2014:
(a) acquire, announce an intention to acquire, offer or
propose to acquire, or agree to acquire, directly or indirectly, by
purchase or otherwise, beneficial ownership of any voting securities of
the ILM/Capital parties, or direct or indirect rights to options to
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acquire (through purchase, exchange, conversion or otherwise) any
voting securities of the ILM/Capital parties;
(b) make, or in any way participate, directly or indirectly,
in any "solicitation" of "proxies" (as such terms are defined in Rule
14a-1 under the Securities Exchange Act of 1934, as amended (the "1934
Act")) to vote any voting securities of the ILM/Capital parties, seek
to advise, encourage or influence any person or entity with respect to
the voting of any voting securities of the ILM/Capital parties,
initiate or propose any shareholder proposal or induce or attempt to
induce any other person to initiate any shareholder proposal;
(c) make any statement or proposal, whether written or oral,
to the Boards of Directors of the ILM/Capital parties, or to any
director, officer or agent of the ILM/Capital parties, or make any
public announcement or proposal whatsoever with respect to a merger or
other business combination, sale or transfer of assets,
recapitalization, dividend, share repurchase, liquidation or other
extraordinary corporate transaction with the ILM/Capital parties or any
other transaction which could result in a change of control, or solicit
any other person to make any such statement or proposal;
(d) form, join or in any way participate in a "group" (within
the meaning of Section 13(d)(3) of the 0000 Xxx) with respect to any
securities of the ILM/Capital parties;
(e) deposit any voting securities of the ILM/Capital parties
into a voting trust or subject any voting securities to any arrangement
or agreement with respect to the voting of any voting securities other
than this Settlement Agreement, or enter into any agreement with any
trust or charitable trust or charitable foundation to which any shares
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owned by the AHC parties, their agents, employees, minor children in
their custody, spouses and parents are transferred that fails to comply
with the provisions of this Settlement Agreement;
(f) execute any written consent with respect to the
ILM/Capital parties, except in accordance with this Settlement
Agreement;
(g) otherwise act, alone or in concert with others, to seek to
exercise any control over the management, Boards of Directors or
policies of the ILM/Capital parties;
(h) make a public request to the ILM/Capital parties (or to
their directors, officers, shareholders, employees or agents) to amend
or waive any provisions of this Settlement Agreement, the Certificates
of Incorporation or By-Laws of the ILM/Capital parties, including
without limitation any public request to permit the AHC parties or any
other person to take any action in respect of the matters referred to
in this Paragraph;
(i) take any action, and/or disclose any intention, plan or
arrangement, inconsistent with the foregoing; or
(j) participate, directly or indirectly, in any litigation
against the ILM/Capital parties, or any of their directors, officers,
shareholders, managers, employees or agents. Notwithstanding any other
legal or equitable remedies that may be available, it is expressly
agreed among the parties that the provisions of this paragraph may be
enforced through an injunction entered by any court of competent
jurisdiction and that a violation of this paragraph will cause
immediate and irreparable harm to the ILM/Capital parties. Nothing
contained in this paragraph shall be deemed to limit the right of any
of the AHC parties to sell or otherwise transfer the voting securities
of the ILM/Capital parties. Nothing contained in this paragraph shall
be deemed to preclude, or constitute an agreement to preclude, any
party from giving
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testimony under oath pursuant to a lawful subpoena, or to limit any
factual statements or disclosures that are required to be made by any
party under applicable legal or accounting principles. Subject to the
execution of an irrevocable comprehensive proxy by Xxxxxxx Xxxxxxxx as
contemplated by the terms of paragraph 3 above, nothing contained in
this paragraph shall be deemed to preclude, or constitute an agreement
to preclude, the transfer to Xxxxxxx Xxxxxxxx of 763.14 shares in ILM
Senior Living, Inc. and 1,119.24 shares in ILM II Senior Living, Inc.,
legal title to which is now owned or controlled by Xxxxxxx X. Xxxxxxx
or Xxxxx Xxxxxxx.
6. Non-Disparagement and Non-Instigation: Each of the AHC parties and
the ILM/Capital parties represent, warrant and covenant as follows:
(a) that they will not in any way publicly or privately
disparage the reputation of the other, or any individuals or entities
with which the other is affiliated, by allegations of fraud,
misconduct, breach of duty, conflict of interest, self-dealing or
negligence, or otherwise cast each other in any negative light;
(b) they will not initiate, incite, aid or encourage,
directly, indirectly, derivatively or otherwise, any legal claims
against the other, or against any individuals or entities with which
the other is affiliated; and
(c) they will not instigate, encourage or incite any action,
prosecution, investigation, inquiry or other proceeding by any
official, agency or regulatory body except as mandated by law. In the
event any party believes any action described herein is mandated by
law, such party shall provide the other relevant parties with no fewer
than thirty (30) days' written notice in advance of such action. All
parties represent that as of the Closing Date they are aware of no
action mandated by law to be taken.
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Nothing contained in this paragraph shall be deemed to preclude, or constitute
an agreement to preclude, any party from giving testimony under oath pursuant to
a lawful subpoena, or to limit any factual statements or disclosures that are
required to be made by any party under applicable legal or accounting
principles.
7. Release by the AHC parties: Except for such rights and obligations
as are created by this Settlement Agreement and the ownership rights in voting
securities retained by any of the AHC parties or their family members pursuant
to this agreement, each of the AHC parties, for themselves, their parent
companies, subsidiaries, affiliates, family members, assigns and heirs, fully
release and discharge the ILM/Capital parties, as well as their parent
companies, subsidiaries, affiliates, shareholders, directors, officers, agents,
employees, advisors, insurers, attorneys, assigns and heirs, from any and all
claims, demands, losses, costs, expenses, attorneys' fees, actions, causes of
action or other liabilities relating in any way to the prior dealings among the
parties, or any of them, including specifically, but without limitation, the
acts and transactions involved in the Virginia action and the California action.
Notwithstanding the foregoing, this release specifically excludes from its scope
any release of PaineWebber Incorporated, PaineWebber Properties, Inc. or any
other PaineWebber entity (which claims are included among those assigned to the
ILM parties under Paragraph 10). Nothing herein shall constitute a waiver or
release by AHC of any right to indemnity that otherwise would exist with respect
to claims, demands and/or causes of action asserted by employees or third
parties arising out of AHC's prior management of ILM facilities, provided that
the existence of any such claim, demand and/or cause of action is unknown to AHC
as of the date of this Agreement.
8. Release by the ILM/Capital Parties: Except for such rights and
obligations as are created by this Settlement Agreement, each of the ILM/Capital
parties, for themselves, their
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parent companies, subsidiaries, affiliates, family members, assigns and heirs,
fully release and discharge each of the AHC parties, their parent companies,
subsidiaries, affiliates, shareholders, directors, officers, agents, employees,
advisors, insurers, attorneys, family members, assigns and heirs, from any and
all claims, demands, losses, costs, expenses, attorneys' fees, actions, causes
of action or other liabilities relating in any way to the prior dealings among
the parties, or any of them, including specifically, but without limitation, the
acts and transactions involved in the Virginia action and the California action.
Notwithstanding the foregoing, this release specifically excludes from its scope
any release of PaineWebber Incorporated, PaineWebber Properties, Inc. or any
other PaineWebber entity.
9. Waiver Under California Civil Code ss. 1542: Within the scope of the
releases provided herein, the releases constitute a waiver by each of the
parties of any and all rights under ss. 1542 of the Civil Code of California,
which provides "[a] general release does not extend to claims which the creditor
does not know or suspect to exist in his favor at the time of executing the
release, which if known by him must have materially affected his settlement with
the debtor." Each of the AHC parties and each of the ILM/Capital parties
acknowledge that each may have sustained damages, losses, costs or expenses that
are presently unknown or unsuspected and that such damages, losses, costs or
expenses as may have been sustained may give rise to additional damages, losses,
costs or expenses in the future. Nevertheless, each of the AHC parties and each
of the ILM/Capital parties acknowledge that this Settlement Agreement has been
negotiated and agreed upon in light of this situation and expressly waive any
and all rights which each may have under Section 1542 of the California Civil
Code, or any other state or federal statute or common law principle of similar
effect.
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10. Assignment by the AHC Parties of Claims Against Third Parties: Each
of the AHC parties hereby assigns to the ILM parties all claims, demands, debts,
liabilities, obligations, accounts, reckonings, costs, expenses, liens, actions
or cause of action ("Claims") that may exist in favor of the AHC parties against
any third party, including but not limited to, PaineWebber, Inc. and PaineWebber
Properties Inc., arising from AHC's former business relationship with the ILM
entities. Each of the ILM parties acknowledge that none of the AHC parties, has
made any representation to any of the ILM parties that any Claims exist and that
this assignment is made by each of the AHC parties solely because such
assignment was demanded by the ILM parties in connection with this Settlement
Agreement. The ILM parties shall prosecute such Claims, if at all, in their own
name as assignees. The AHC parties agree to tender, on the Closing Date, a
separate assignment instrument that is consistent with this paragraph, in a form
prepared by counsel for the ILM parties. Nothing herein shall be construed to
constitute an assignment of any Claims held by Xxxx Xxxxxxxx against PaineWebber
Properties, Inc. or PaineWebber Incorporated (collectively, "PW") arising out of
Xxxx Xxxxxxxx'x former employment by PW. Nor shall anything herein be construed
to prohibit the ILMs from bringing an action of any nature against PW.
11. No Admission of Liability: This Settlement Agreement constitutes a
compromise of vigorously disputed claims and does not constitute and shall not
be construed as an admission of liability by any of the parties hereto. The
parties hereto specifically state that they entered into this Settlement
Agreement solely to avoid the burden and expense of further litigation, and for
the mutual covenants, releases and agreements contained herein.
12. No Previous Assignments: Each of the parties represent and warrant
to one another that none of them has heretofore assigned or transferred or
purported to assign or transfer
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to any person or entity any claim, demand, debt, liability, obligation, account,
reckoning, cost, expense, lien, action or cause of action or any part or portion
thereof released herein.
13. No Actions Brought: Each of the AHC parties covenants and agrees
never to commence, prosecute or cause to be commenced or prosecuted, any action
or other proceeding against the ILM/Capital parties based upon any claims,
demands and causes of action which are the subject of this Settlement Agreement.
Each of the AHC parties who has brought, assisted, or prosecuted any action or
proceeding contrary to the provisions of this Settlement Agreement agrees to
indemnify and to hold the ILM/Capital parties harmless from and against any and
all claims, including court costs and attorneys' fees, from or in connection
therewith.
14. No Future Assignments: Each of the parties, on their own behalf and
on behalf of each of their respective or collective heirs, trustees, employees,
agents, partners, subsidiaries, affiliates, officers, directors, shareholders,
representatives, licensees, predecessors, successors, assigns, attorneys and
insurers, represent and warrant that they have not heretofore assigned,
transferred or hypothecated or set over to any person or entity any interest in
any claims that are subject to this Settlement Agreement, and covenant that they
shall not assign, transfer or hypothecate or set over to any person or entity
any interest in any of the claims that are subject to this Settlement Agreement.
15. Return of Confidential Documents: All documents marked
"Confidential" and produced during the course of the California action and the
Virginia action under protective orders entered during both actions, and all
documents derived from such documents, shall be returned to the party that
produced the documents within 30 days after the Closing Date, accompanied by a
declaration signed under penalty of perjury, attesting to the thoroughness of
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the respective party's search for such documents and to the completeness of the
return of all documents found as the result of this search.
16. Integrated Agreement: The terms of this Settlement Agreement are
the final expression of the agreement between the ILM/Capital parties, on the
one hand, and each of the AHC parties, on the other, with respect to the subject
matter hereof and may not be contradicted by evidence of any prior or
contemporaneous agreement. The parties further intend that this Settlement
Agreement shall constitute the complete and exclusive statement of its terms and
that no extrinsic evidence whatsoever may be introduced in any judicial,
administrative or other legal proceeding involving this Settlement Agreement.
17. Resolution of Disputes: Any dispute between one or more parties
relating to this Settlement Agreement shall be subject to binding arbitration
through the offices and under the rules of the American Arbitration Association
in Chicago, Illinois.
18. Attorneys' Fees. In the event a dispute between the parties arises
in connection with this Settlement Agreement, the prevailing party in said
dispute shall be entitled to collect from the other party reasonable attorneys'
fees and expenses incurred in connection with such dispute.
19. Understanding and Voluntariness of Agreement: Each of the parties
to this Settlement Agreement declares that he knows and understands the contents
of this agreement and that the Settlement Agreement has been reviewed by counsel
of his choice. The parties declare that they have executed this Agreement
voluntarily and that they understand that no party can proceed against any other
party hereto with respect to or on account of any claims or matters released
hereby. Each party has had the opportunity to consult with counsel in connection
with
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this Settlement Agreement, and to investigate the claims alleged in the Virginia
action and in the California action.
20. Successors and Assigns: The parties agree that this Agreement shall
be binding upon their respective successors and assigns, and shall inure to the
benefit of their successors, assigns, parents, subsidiaries, affiliates,
segments or divisions thereof, directors (present or former), officers (present
or former), employees, representatives and agents.
21. Severability, Integration and Modification: This Settlement
Agreement constitutes the entire agreement of the ILM/Capital parties, on the
one hand, and the AHC parties, on the other, and shall supersede all prior and
contemporaneous negotiations, representations, agreements and understandings. In
the event one or more provisions of this Settlement Agreement is held to be
unenforceable, illegal or invalid in any respect, the enforceability, legality
or validity of the remaining provisions shall not be affected thereby. This
Settlement Agreement may be modified only by a subsequent agreement in writing
among all parties.
22. Warranty of Authority: Each individual signing this Agreement
expressly warrants to the other party that he is fully authorized to sign this
Agreement and bind the corporation and all individuals and/or entities on whose
behalf he signs to all the terms of this Agreement.
23. Modifications: No modification of, or amendment to, the Settlement
Agreement shall be valid unless it is in writing and signed by the party or
parties to be charged.
24. California Law: This Settlement Agreement has been negotiated and
entered into in the State of California, and shall be governed by, construed and
enforced in accordance with the laws of the state of California, except that:
(a) conflicts of laws principles recognized under
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California law shall not be applied; and (b) to the extent this Agreement
implicates internal corporate governance of the ILM entities (including, but not
limited to, the form and effect of proxies provided under Paragraph 3) that are
subject to Virginia law, Virginia law shall continue to control such matters.
25. Number/Gender: Whenever the singular number is used herein and when
required by the context, the same shall include the plural, and the masculine,
feminine, and neuter genders shall each include the others, and the word
"person" shall include corporation, partnership, joint venture, association,
trust, estate, or other entity.
26. Facsimile Transmittal: A facsimile transmittal of this Settlement
Agreement shall be deemed to be an original document.
27. Execution in Counterparts: This Settlement Agreement may be
executed in one or more counterparts, each of which shall be deemed an original,
and all of which shall constitute one document.
IN WITNESS WHEREOF each of the parties hereto has executed this
Agreement.
ILM SENIOR LIVING, INC.
DATED: _______ __, 1998. By:
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Its:
ILM II SENIOR LIVING, INC.
DATED: _______ __, 1998. By:
-----------------------------
Its:
ILM HOLDING, INC.
DATED: ________ __, 1998. By:
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Its: Director
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ILM HOLDING II, INC.
DATED: ________ __, 1998. By:
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Its: Director
ILM I LEASE CORPORATION
DATED: ________ __, 1998. By:
-----------------------------
Its:
ILM II LEASE CORPORATION
DATED: ________ __, 1998. By:
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Its:
CAPITAL SENIOR LIVING, INC.
DATED: ________ __, 1998. By:
-----------------------------
Its:
CAPITAL SENIOR MANAGEMENT 2 INC.
DATED: ________ __, 1998. By:
-----------------------------
Its:
CAPITAL SENIOR LIVING CORPORATION
DATED: ________ __, 1998. By:
-----------------------------
Its:
DATED: ________ __, 1998. ---------------------------------
XXXXXXXX X. XXXXX
DATED: ________ __, 1998. ---------------------------------
XXXXXXX X. XXXX
DATED: ________ __, 1998. ---------------------------------
XXXXX X. XXXXXX
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ANGELES HOUSING CONCEPTS, INC.
DATED: ________ __, 1998. By:
-----------------------------
Its:
DATED: ________ __, 1998. ---------------------------------
XXXX X. XXXXXXXX
DATED: ________ __, 1998. ---------------------------------
XXXXXXX XXXXXXXX
DATED: ________ __, 1998. ---------------------------------
XXXXX X. XXXXXXXX
DATED: ________ __, 1998. ---------------------------------
XXXXXXX X. XXXXXXX
DATED: ________ __, 1998. ---------------------------------
XXXXX XXXXXXX
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