Document:

exv10w1

 

EXHIBIT 10.1

March 20, 2008

Dear Benton E. Sergi:

Origen recognizes the valuable contributions you have made to the Company and can appreciate the
uncertainty you may be feeling as a result of the turmoil in the capital markets and recent company
news.

During this time, we would like you to focus on the business at hand and to continue performing at
your best. Consequently, we are providing you the opportunity to earn a special retention bonus
(Bonus), under the conditions outlined below.

In the event your employment with the Company is terminated at any time during the following twelve
(12) months for any reason other than insubordination, incompetency or dishonesty, as determined by
the Company, and you are not offered a position by any successor to the Company, (including a firm
or entity formed by a joint venture, merger, acquisition or similar transaction with the Company),
or in the event you continue to be employed by Company or any successor to the Company for one year
from the date of the signing of this agreement, whichever first occurs, you shall be eligible to
receive a Bonus calculated on base salary, at time of execution, over a period of fifty-two (52)
weeks, payable in accordance with the Company’s payroll schedule. The Bonus, totaling $215,250.00
(less applicable withholdings as appropriate), shall be paid in no more than (26) twenty-six
payments. The payments will start with the first payroll following the earlier of your termination date or the first anniversary of this agreement.

Please acknowledge your acceptance of this offer by signing below.

Very truly yours,

/s/ W. Anderson Geater, Jr.

W. Anderson Geater, Jr.

Chief Financial Officer

I accept the terms outlined above and understand my employment and compensation continue to be
“at-will”.

	 	 	 	 	 	 	 	 	 
	/s/ Benton E. Sergi

	 	 	 	Date:	 	3/20/08	 	 
	 

Employeeexv10w29

 

    Exhibit —
    10.29

 

    CONSOLIDATED
    EBITDA

 

    Earnings before interest, taxes, depreciation and amortization,
    non-cash stock compensation and payments, non-cash charges that
    do not result in future cash obligations, any extraordinary or
    non recurring gains (losses) and any non-cash transactions
    (Consolidated EBITDA) is not intended to present a measure of
    performance in accordance with accounting principles generally
    accepted in the United States (GAAP). Nor should Consolidated
    EBITDA be considered as an alternative to statements of cash
    flows as a measure of liquidity. Consolidated EBITDA is included
    herein as means to measure operating performance that financial
    analysts, lenders, investors and other interested parties find
    to be a useful tool for analyzing companies.

 

    The definition of Consolidated EBITDA is defined in the senior
    secured convertible notes as a measurement for meeting the notes
    covenant requirements. Consolidated Net Debt is defined as the
    sum of (a) aggregate stated balance sheet amount of all
    Indebtedness of the Company plus or minus (b) any
    adjustment required to include the Amended Notes at their face
    amount rather than fair value that is used for GAAP
    presentation, minus (c) the aggregate stated balance sheet
    amount of unrestricted cash and cash equivalents of the Company
    in accordance with GAAP. For the three months ended
    December 31, 2007, the quotient of Consolidated Net Debt
    divided by Consolidated EBITDA, multiplied by four was required
    to be not less than 6.0 in order for the Company to be compliant
    with covenant requirements of the notes. The Company was in
    compliance with the required covenant at December 31, 2007.

    

    E-7

 

 

    The following table reconciles our consolidated net earnings per
    GAAP to Consolidated EBITDA:

 

	 	 	 	 	 
	
 
	
 
	
    Three Months Ended

    
	
 

	
 
	
 
	
    December 31,

    
	
 

	
 
	
 
	
    2007
	
 

	 

	

    Consolidated Net Loss

	
 
	
 
	
 
	
 

	

    Any extraordinary or non recurring gains or losses

	
 
	
    $
	
    (1,552
	
    )

	

    Loss from disposed operations, net of tax

	
 
	
 
	
     1,300
	
 

	

    Loss on sale of subsidiaries

	
 
	
 
	
    500
	
 

	

    Non-cash charges that do not result in future cash obligations

	
 
	
 
	
 
	
 

	

    Gain from fair value of notes and warrants

	
 
	
 
	
    (23
	
    )

	

    Loss from Sale of Fixed Assets

	
 
	
 
	
    3
	
 

	

    Non-cash expenses associated with stock compensation expense

	
 
	
 
	
    194
	
 

	
 
	
 
	
 
	
 
	
 

	

    Adjusted Net Loss before

	
 
	
    $
	
    422
	
 

	

    Interest Income

	
 
	
 
	
    (336
	
    )

	

    Interest Expense

	
 
	
 
	
    1,642
	
 

	

    Income tax expense

	
 
	
 
	
    21
	
 

	

    Depreciation Expense

	
 
	
 
	
    1,425
	
 

	

    Amortization Expense

	
 
	
 
	
    279
	
 

	

    Any non-cash transactions

	
 
	
 
	
 
	
 

	

    Foreign currency losses

	
 
	
 
	
    148
	
 

	

    Adjustments related to Inventory

	
 
	
 
	
    246
	
 

	

    Bad Debt Expense

	
 
	
 
	
    42
	
 

	

    Hedge or non-hedge derivative adjustments

	
 
	
 
	
    —
	
 

	
 
	
 
	
 
	
 
	
 

	

    Consolidated EBITDA

	
 
	
    $
	
    3,889
	
 

	
 
	
 
	
 
	
 
	
 

	

    Other Financial Disclosure Required based on terms of
    notes:

	
 
	
 
	
 
	
 

	

    Consolidated Net Interest Expense

	
 
	
    $
	
    1,306
	
 

	
 
	
 
	
 
	
 
	
 

	

    Consolidated Net Debt (Total Debt less Cash and Cash
    Equivalents) at December 31, 2007

	
 
	
    $
	
    19,516
	
 

	
 
	
 
	
 
	
 
	
 

	

    Quotient of Consolidated Net Debt divided by Consolidated
    EBITDA, multiplied by 4

	
 
	
 
	
    1.25
	
 

	
 
	
 
	
 
	
 
	
 

	

    Covenant Requirement — not more than

	
 
	
 
	
    6.00
	
 

	

    Covenant Status

	
 
	
 
	
    PASSED
	
 

	
 
	
 
	
 
	
 
	
 

    

    E-8exv10w1

 

Exhibit 10.1

SETTLEMENT AGREEMENT

     This SETTLEMENT AGREEMENT (the “Agreement”) is made and entered into as of March 19,
2008, by and among Capital Senior Living Corporation, a Delaware corporation (“Capital
Senior”); West Creek Capital, LLC, a Delaware limited liability company (“West Creek”);
Harvey Hanerfeld (“Hanerfeld”); and Roger Feldman (“Feldman” and, together with
Hanerfeld and West Creek, the “West Creek Parties”).

RECITALS

     WHEREAS, West Creek has indicated that it may solicit proxies in connection with Capital
Senior’s 2008 annual meeting of stockholders (the “2008 Annual Meeting”); and

     WHEREAS, among other things, Capital Senior is willing to add to its board of directors (the
“Board”) certain individuals jointly selected with West Creek and to create a Special
Committee of the Board (the “Special Committee”), and, subject to the terms and conditions
of this agreement, West Creek is willing to forbear from soliciting proxies in connection with the
2008 Annual Meeting;

     NOW, THEREFORE, in consideration of the premises, the mutual covenants and agreements
contained herein and other good and valuable consideration, the receipt and sufficiency of which
are hereby acknowledged, the parties hereto agree as follows:

ARTICLE I

AGREEMENTS

     Section 1.1. Certain Definitions. For purposes of this Agreement, the following terms shall
have the following meanings:

     “2009 Annual Meeting” shall mean the annual meeting of Capital Senior’s stockholders
to be held in 2009, or any special meeting of stockholders held in lieu thereof at which directors
are to be elected to the Board.

     “Affiliate” shall mean (a) with respect to any Person, any other Person that directly,
or indirectly through one or more intermediaries, controls, is controlled by, or is under common
control with, such first Person and (b) any officers, directors or members of West Creek.

     “Common Stock” shall mean the common stock, par value $.01 per share, of Capital
Senior.

     “Exchange Act” shall mean the Securities Exchange Act of 1934, as amended.

     “Governmental or Regulatory Authority” shall mean any court, tribunal, arbitrator,
authority, agency, commission, official or other instrumentality of the United States, any foreign
country or any domestic or foreign state, county, city or other political subdivision, or any stock
exchange or market in which the Common Stock is listed for trading or traded.

 

 

     “Management Proposal” shall mean a proposal presented by the Board for consideration
at an annual meeting of Capital Senior’s stockholders that is anything other than the election of
directors or ratification of the appointment of Capital Senior’s independent auditors.

     “Person” shall mean any individual, corporation, limited liability company,
partnership, trust, other entity or group (within the meaning of Section 13(d)(3) of the Exchange
Act.

     “Resignation Date” shall mean the first date on which (i) any of the West Creek
Parties or any other member of the West Creek Group shall engage in, or announce an intention to
engage in, any Restricted Activity with respect to the election of directors at the 2009 Annual
Meeting or (ii) the West Creek Parties and their Affiliates own fewer than 500,000 shares of Common
Stock.

     “Restricted Activity” shall mean (i) soliciting proxies or consents for the voting of
any shares of Common Stock or otherwise becoming a “participant,” directly or indirectly, in any
“solicitation” of “proxies” or consents to vote, or becoming a “participant” in any “election
contest” involving Capital Senior (all terms used herein and defined in Regulation 14A under the
Exchange Act having the meanings assigned to them therein), (ii) seeking to advise or influence any
person with respect to the voting of any shares of Common Stock in a manner other than as
recommended by the Board, (iii) initiating, proposing or otherwise “soliciting” Capital Senior
stockholders for the approval of shareholder proposals, (iv) otherwise communicating with Capital
Senior’s stockholders or others pursuant to Rule 14a-1(l)(2)(iv) under the Exchange Act, (v)
otherwise engaging in any course of conduct with the purpose of causing any other stockholder of
Capital Senior to vote contrary to the recommendation of the Board on any matter presented to
Capital Senior’s stockholders for their vote or (vi) otherwise acting, directly or indirectly,
alone or in concert with others, to seek to control or influence the management, the Board,
policies or affairs of Capital Senior, other than through Hanerfeld solely in his capacity as a
member of the Board. Notwithstanding the foregoing, no activity specified in any of the foregoing
clauses (ii) through (vi) inclusive shall, with respect only to a Management Proposal, be deemed to
be a Restricted Activity during the Solicitation Period for the 2008 Annual Meeting. For the
avoidance of doubt, any of the activities specified in the any of the foregoing clauses (ii)
through (vi) inclusive shall, during the Solicitation Period for the 2008 Annual Meeting, be deemed
to be Restricted Activities to the extent they are taken with respect to any matter considered at
such annual meeting that is not a Management Proposal.

     “Solicitation Period” shall mean, with respect to any annual meeting of Capital
Senior’s stockholders, the time period from (A) the earlier of (i) the time when notice of such
annual meeting is given by Capital Senior or (ii) such earlier time, if any, as Capital Senior
shall publicly announce or disclose an intention to present a Management Proposal at such annual
meeting to (B) the conclusion of such annual meeting.

     “West Creek Group” shall mean (a) the West Creek Parties; (b) any and all Affiliates
of any West Creek Party, (c) any Person as to which beneficial ownership of Common Stock, directly
or indirectly, is controlled or shared by a West Creek Party; (d) any then-current officers,
directors or managing members (or Persons serving in equivalent capacities) of any Person described
in clauses (a)

2

 

or (b) above; and (e) with respect to any Person described in clauses (a) or (b)
above who is an individual, (i) any and all immediate family members of such Person, (ii) the
heirs, executors, personal representatives and administrators of such Person, (iii) any and all
trusts established for the benefit of such Person and (iv) any and all charitable foundations the
investment decisions of which are controlled by such Person.

     Section 1.2. Board Composition Matters; Nominations at 2008 Annual Meeting.

     (a) Capital Senior shall as promptly as practicable, and in any event within five business
days after the date hereof, take all action necessary (including the calling of a special meeting
of the Board to approve such actions) to:

     (i) expand the size of the Board so as to create two new directorships on the Board in
accordance with Article Five of its Amended and Restated Certificate of Incorporation and
Article Three of its Amended and Restated By-Laws, and

     (ii) appoint Hanerfeld and Peter Martin (“Martin” and, together with Hanerfeld,
the “New Directors”) to fill such newly-created directorships, with Hanerfeld
serving a term that expires in 2010 and Martin serving a term that expires in 2008.

     (b) At the 2008 Annual Meeting, Capital Senior shall nominate three individuals, one of whom
shall be Martin (such three individuals, the “2008 Nominees”), to serve as directors for
terms expiring in 2011. Capital Senior shall use its reasonable best efforts to cause the election
of the 2008 Nominees at the 2008 Annual Meeting, including, without limitation, recommending that
Capital Senior’s stockholders vote in favor of the election of the 2008 Nominees at such annual
meeting and voting the shares of Common Stock represented by all proxies granted by stockholders in
connection with the solicitation of proxies by the Board in connection with such meeting in favor
of the 2008 Nominees, except for such proxies that specifically indicate a vote to withhold
authority with respect to the 2008 Nominees. Capital Senior shall not, and shall use all
commercially reasonable efforts to cause its officers not to, take any position, make any
statements or take any action inconsistent with such recommendation. West Creek agrees that, as
promptly as practical following the request of Capital Senior, West Creek shall submit to Capital
Senior all information relating to Hanerfeld (or a West Creek Replacement (as defined below), as
the case may be) required by applicable law to be included in Capital Senior’s proxy statement
seeking votes for the election of such individual as a director of Capital Senior and such
individual’s agreement to being named in Capital Senior’s proxy statement and to serve as a
director of Capital Senior if so elected.

     (c) If at any time on or before the Resignation Date, there shall occur a vacancy in the Board
seat held by a New Director (or by any director appointed pursuant to this Section 1.2(c)) by
reason of his resignation, removal, death or incapacity, then the Capital Senior Parties shall
take all necessary action to promptly fill such vacancy (i) with respect to Hanerfeld (or any
replacement appointed in accordance herewith), by a person (other than a principal of West Creek in
the case of a resignation on or before September 30, 2008), proposed in writing by West Creek whom
the Nominating Committee reasonably determines in good faith meets the qualifications of the Board
as then in effect (a “West Creek Replacement”) and (ii) with respect to Martin (or any
Institutional Nominee, by a person recommended in writing by an institutional

3

 

stockholder that
beneficially owns more than 1,000,000 shares of Common Stock (a “Qualified Institutional
Holder”), which person (x) shall have had no prior relationship with Capital Senior or West
Creek or their respective managements during the four years preceding his or her election and/or
appointment to the Board and (y) the Nominating Committee reasonably determines meets the
qualifications of the Board as then in effect. In connection with the foregoing clause (i), West
Creek shall promptly submit to Capital Senior the name of the proposed West Creek Replacement,
together with such information reasonably requested by the Nominating Committee in order to make a
determination if such person meets the qualifications of the Board as then in effect, as well as
such person’s agreement to meet with Capital Senior’s Nominating Committee at their request. In
the event that the Nominating Committee reasonably determines in good faith that any West Creek
Replacement does not meet the qualifications of the Board as then in effect, West Creek shall
promptly propose in writing, and the Nominating Committee shall promptly consider to fill such
vacancy, another West Creek Replacement to be appointed in accordance with the provisions of this
Section 1.2(c).

     (d) Capital Senior shall provide the West Creek Parties with true and complete copies of the
Form 8-K being filed with respect to this Agreement, as well as any portion of the draft
preliminary or definitive proxy statements for the 2008 Annual Meeting that contains information
regarding this Agreement, a New Director (or any West Creek Replacement, as the case may be) or any
member of the West Creek Group. The Capital Senior Parties shall consider in good faith any
comments of the West Creek Parties and their counsel and shall use the language, or any summary
thereof that is agreed upon in the foregoing filings, in all other filings with the Securities and
Exchange Commission that disclose, discuss, refer to or are being filed in response to or as a
result of this Agreement.

     (e) The West Creek Parties shall provide Capital Senior with true and complete copies of the
amendment to Schedule 13D being filed with respect to this Agreement. The West Creek Parties shall
consider in good faith any comments of Capital Senior and their counsel and shall use the language,
or any summary thereof that is agreed upon in the foregoing filing, in all other filings with the
Securities and Exchange Commission that disclose, discuss, refer to or are being filed in response
to or as a result of this Agreement.

     (f) Promptly following the 2008 Annual Meeting, Hanerfeld shall be assigned to the Board’s
Nominating Committee, which shall consist of three members after Hanerfeld joins it, and Martin
shall be assigned to the Compensation Committee, which also shall consist of three members after
Martin joins it. Capital Senior agrees that, at the direction of West Creek, either Hanerfeld or
the other New Director (or any West Creek Replacement, as the case may be) shall be appointed to
any other committee of the Board that currently exists and any committee of the Board formed after
the date hereof, provided in all such cases that Hanerfeld or such other New Director shall meet
any independence or other requirements under applicable law or the rules of the New York Stock
Exchange for service on such committee.

     (g) Capital Senior agrees that each of the New Directors (or any West Creek Replacement, as
the case may be) shall receive (i) the benefits of director and officer insurance, and any
indemnity and exculpation arrangements available to other directors on the Board and

4

 

(ii) receive compensation for his or her service as a director equal to the compensation received by other
directors on the Board.

     (h) West Creek and Hanerfeld acknowledge and agree that the Board, in the exercise of its
fiduciary duties, may recuse Hanerfeld from any Board or Board committee meeting or portion thereof
(i) as may be required by any “conflict of interest” policy of Capital Senior that is applicable to
directors generally or (ii) at which the Board or any such committee is evaluating and/or taking
action with respect to (A) the ownership of capital stock of Capital Senior by any member of the
West Creek Group, (B) the exercise of any of Capital Senior’s rights or enforcement of any of the
obligations under this Agreement, (C) any transaction with any member of the West Creek Group or
(D) any other matter in which the interests of any member of the West Creek Group are adverse to
those of Capital Senior, except for such matters that are applicable to directors on the Board
generally; provided that such recusal policies shall be applied equally to all directors on
the Board in similar circumstances.

     (i) Hanerfeld agrees to serve as a director of Capital Senior, subject to and in accordance
with the provisions of this Agreement and the written policies of (i) the Board, (ii) any
committees thereof and (iii) Capital Senior, in each case, that are applicable to Board members.
Hanerfeld acknowledges that his obligations under this Agreement are in addition to the fiduciary
and common law duties of any director of a Delaware corporation.

     (j) Notwithstanding any other provision of this Agreement to the contrary, Hanerfeld hereby
irrevocably resigns as a director of Capital Senior, effective immediately upon the Resignation
Date. Capital Senior and the West Creek Parties agree and acknowledge that the preceding sentence
shall serve as Hanerfeld’s formal resignation delivered to Capital Senior and that no additional
agreement, notice or action shall be necessary to immediately effectuate such resignation in
accordance therewith. The West Creek Parties agree that they shall not contest or seek to contest
the validity or effectiveness of such resignation.

     (k) The parties agree that Capital Senior shall not be required to nominate Hanerfeld or any
West Creek Replacement to stand for election at the 2010 Annual Meeting or at any other annual
meeting of Capital Senior’s stockholders.

     Section 1.3. Strategic Alternatives Process. (a) Capital Senior agrees to form the Special
Committee as a committee of the Board with the full power and authority of the Board, subject only
to the limitations on power and authority contained in Section 141(c) of the Delaware General
Corporation Law and the following sentence, to actively explore and consider for recommendation to
the Board strategic alternatives for Capital Senior, including, without limitation, (A) a sale of
Capital Senior for cash or stock, (B) a going private transaction, (C) a restructuring of Capital
Senior’s portfolio, which may include sales and/or acquisitions of assets, (D) a merger with a
private company in which Capital Senior’s stockholders may or may not retain a majority equity
interest in the surviving entity, (E) the institution of a share buyback or dividend (recurring or
extraordinary), (F) the execution of Capital Senior’s existing business plan without alteration,
and (G) any other alternative or combination of alternatives that has the potential to enhance
shareholder value (each of the transactions described in the foregoing

5

 

clauses (A) through (G) is
referred to herein as a “Strategic Transaction”). The full Board (and not the Special
Committee) shall have the sole power to approve any Strategic Transaction.

     (b) The Special Committee shall be comprised of five members: Larry Cohen, Jim Stroud, Jim
Moore, Hanerfeld and Martin.

     (c) The Special Committee shall choose one of its members to serve as Chairman of the Special
Committee. The Chairman of the Special Committee shall preside at all meetings of the Special
Committee, shall be the principal liaison of the Special Committee with its financial, legal and
other advisors and shall generally serve with respect to the Special Committee in a manner
comparable to the manner in which the Chairman of the Board serves with respect to the Board. All
significant directions to Capital Senior’s financial and other advisors and all other significant
actions and decisions of the Special Committee shall be considered and approved by the Special
Committee. All meetings of the Special Committee shall be held at reasonable times and at
reasonable places, and members of the Special Committee shall be entitled to participate in
meetings telephonically.

     (d) Without limiting the generality of the first sentence of Section 1.3(a) of this Agreement,
the Special Committee shall retain an investment banking firm as its financial advisor (the
“Financial Advisor”). The investment banking firm selected by the Special Committee as the
Financial Advisor shall be a nationally recognized investment banking firm with expertise in the
senior living industry; provided that no investment banking firm shall be retained by the
Special Committee without the approval of Hanerfeld, such approval not to be unreasonably withheld
or delayed. Any member of the Special Committee shall be entitled to speak directly with the
Financial Advisor, at such times as such Special Committee member and the Financial Advisor shall
deem necessary or appropriate, in connection with the work of the Special Committee;
provided, however, that any such discussions with the Financial Advisor shall be
reported promptly to the full Special Committee, except for discussions that are not significant
in nature. The terms of the Financial Advisor’s engagement shall be typical in the investment
banking industry for such an assignment, including allowing the Financial Advisor to earn a fee for
executing whichever Strategic Alternative the Board elects to pursue. The Special Committee shall
approve the terms of the Financial Advisor’s engagement; provided that no engagement letter with
the Financial Advisor shall be approved without the prior written consent of Hanerfeld, which
consent shall not be unreasonably withheld or delayed. Capital Senior shall cooperate fully with
the Financial Advisor, including by providing the Financial Advisor with such access to non-public
information, site visits and meetings with senior management as the Financial Advisor may deem
necessary or appropriate in the performance of its duties to the Special Committee.

     (e) Following completion of its review of Strategic Alternatives, the Special Committee shall
present a recommended Strategic Alternative to the Board. In the event that any member of the
Special Committee does not agree with the Strategic Alternative recommended by the Special
Committee to the Board, such member of the Special Committee shall be entitled to make a separate
recommendation to the Board as to a different Strategic Alternative, and the

6

 

Board shall consider
and make a determination with respect to each such Strategic Alternative presented to it by the
Special Committee or any member of the Special Committee.

     Section 1.4. Restricted Activities; Voting Agreement. (a) From the date hereof through the
completion of the 2008 Annual Meeting, no West Creek Party shall, and each of the West Creek
Parties shall use all commercially reasonable efforts to cause each other member of the West Creek
Group not to, directly or indirectly, engage in any Restricted Activity.

          (b) The West Creek Parties shall, and shall cause each other member of the West Creek Group as
to which the West Creek Parties have voting control over such other members’ Common Stock to, cause
all shares of Common Stock beneficially owned by each of them to be present at the 2008 Annual
Meeting for purposes of establishing a quorum and (x) to be voted for the nominees recommended by
the Board (provided such nominees are the 2008 Nominees), (y) to be voted or not voted on all other
proposals of the Board and any proposals by other stockholders of Capital Senior not covered by
clause (z) below, as each such Person determines is appropriate, and (z) to be voted in accordance
with the recommendation of the Board on any proposals with respect to an election of directors of
any other stockholder of Capital Senior that is proposing one or more nominees for election as
director in opposition to the nominees of the Board at any such meeting. No later than five
business days prior to the 2008 Annual Meeting, the West Creek Parties shall, and shall cause each
other member of the West Creek Group as to which the West Creek Parties have voting control over
such other members’ Common Stock to, vote in accordance with this Section 1.4(b). The West Creek
Parties shall not, and shall cause each other member of the West Creek Group not to, revoke or
change any vote in connection with the 2008 Annual Meeting unless such revocation or change is
required or permitted in accordance with the first sentence of this Section 1.4(b)(x) and (z).

     Section 1.5. 2009 Annual Meeting. If (i) the Board approves the Strategic Alternative
recommended to it by Hanerfeld or a West Creek Replacement (whether as part of the Special
Committee’s recommendation or as a separate recommendation) and has diligently pursued in good
faith such Strategic Alternative, and (ii) Capital Senior is in compliance in all material respects
with its public disclosure obligations under the Securities Exchange Act of 1934, then no West
Creek Party shall, and each of the West Creek Parties shall use all commercially reasonable efforts
to cause each other member of the West Creek Group not to, directly or indirectly, engage in any
Restricted Activity with respect to the election of directors at the 2009 Annual Meeting.

     Section 1.6. Joint Press Release. Promptly following the execution and delivery of this
Agreement, Capital Senior and the West Creek Parties shall prepare and issue a joint press release.
Thereafter, Capital Senior and the West Creek Parties shall use their reasonable best efforts to
consult with each other before issuing any press release or otherwise making any public statement
about the execution or terms of this Agreement.

7

 

ARTICLE II

MISCELLANEOUS PROVISIONS

     Section 2.1. Representations and Warranties.

     (a) Each of the parties hereto represents and warrants to the other parties that:

     (i) such party has all requisite authority and power to execute and deliver this
Agreement and to consummate the transactions contemplated hereby,

     (ii) the execution and delivery of this Agreement and the consummation of the
transactions contemplated hereby have been duly and validly authorized by all required
action on the part of such party and no other proceedings on the part of such party are
necessary to authorize the execution and delivery of this Agreement or to consummate the
transactions contemplated hereby,

     (iii) the Agreement has been duly and validly executed and delivered by such party and
constitutes the valid and binding obligation of such party enforceable against such party in
accordance with their respective terms, and

     (iv) this Agreement will not result in a violation of any terms or provisions of any
agreements to which such Person is a party or by which such party may otherwise be bound or
of any law, rule, license, regulation, judgment, order or decree governing or affecting such
party.

     (b) The parties hereto acknowledge, warrant and represent that they have carefully read this
Agreement, understand it, have consulted with and received the advice of counsel regarding this
Agreement, agree with its terms, are duly authorized to execute it and freely, voluntarily and
knowingly execute it.

     Section 2.2. General.

     (a) This Agreement shall be binding upon and inure to the benefit of and be enforceable by the
parties hereto and the respective successors, personal representatives and assigns of the parties
hereto.

     (b) This Agreement contains the entire agreement between the parties with respect to the
subject matter hereof and thereof and supersedes all prior and contemplated arrangements and
understandings with respect thereto.

     (c) This Agreement may be signed in counterparts, each of which shall constitute an original
and all of which together shall constitute one and the same Agreement.

     (d) All notices and other communications required or permitted hereunder shall be effective
upon receipt and shall be in writing and may be delivered in person, by telecopy,

8

 

electronic mail,
express delivery service or U.S. overnight mail, addressed to the party to be notified at the
respective addresses set forth below, or at such other addresses which may hereinafter be
designated in writing:

If to Capital Senior:

Capital Senior Living Corporation

14160 Dallas Parkway, Suite 300

Dallas, Texas 75254

Attention: James A. Stroud, Chairman

Fax No.: 972-770-5666

email: jastroud@capitalsenior.com

with copies to:

Capital Senior Living Corporation

14160 Dallas Parkway, Suite 300

Dallas, Texas 75254

Attention: Lawrence A. Cohen, Chief Executive Officer

Fax No.: 212-551-1774

email: lcohen@capitalsenior.com

and

Willkie Farr & Gallagher LLP

787 Seventh Avenue

New York, New York 10019

Attention: Michael A. Schwartz

Fax No.: 212-728-9267

email: mschwartz@willkie.com

If to West Creek:

West Creek Capital, LLC

1919 Pennsylvania Avenue, N.W., Ste. 725

Washington, DC 20006

Attention: Jacqueline Manger

Fax No.: 202-466-5918

email: jmchamp@westcreek.com

with a copy to:

Dechert LLP

30 Rockefeller Plaza

New York, New York 10112

Attention: Scott Zimmerman

Fax No.: 212-698-3599

email: scott.zimmerman@dechert.com 

9

 

     (e) This Agreement and the legal relations hereunder between the parties hereto shall be
governed by and construed in accordance with the laws of the State of Delaware applicable to
contracts made and performed therein, without giving effect to the principles of conflicts of law
thereof.

     (f) Whenever possible, each provision of this Agreement shall be interpreted in such manner as
to be effective and valid, but if any provision of this Agreement is held to be invalid or
unenforceable in any respect, such invalidity or unenforceability shall not render invalid or
unenforceable any other provision of this Agreement.

     (g) It is hereby agreed and acknowledged that it will be impossible to measure in money the
damages that would be suffered if the parties fail to comply with any of the obligations herein
imposed on them and that in the event of any such failure, an aggrieved person will be irreparably
damaged and will not have an adequate remedy at law. Any such person, therefore, shall be entitled
to injunctive relief, including specific performance, to enforce such obligations, without the
posting of any bond, and, if any action should be brought in equity to enforce any of the
provisions of this Agreement, none of the parties hereto shall raise the defense that there is an
adequate remedy at law.

     (h) Each party hereto shall do and perform or cause to be done and performed all such further
acts and things and shall execute and deliver all such other agreements, certificates, instruments
and documents as any other party hereto reasonably may request in order to carry out the intent and
accomplish the purposes of this Agreement and the consummation of the transactions contemplated
hereby.

     (i) Each of the parties hereto hereby irrevocably and unconditionally consents to submit to
the exclusive jurisdiction of the courts of the State of Delaware and of the United States of
America, in each case located in the County of New Castle, for any action, proceeding or
investigation in any court or before any governmental authority arising out of or relating to this
Agreement and the transactions contemplated hereby (and agrees not to commence any action,
proceeding or investigation relating thereto except in such courts), and further agrees that
service of any process, summons, notice or document by registered mail to its respective address
set forth in this Agreement shall be effective service of process for any action, proceeding or
investigation brought against it in any such court. Each of the parties hereto hereby irrevocably
and unconditionally waives any objection to the laying of venue of any action, proceeding or
investigation arising out of this Agreement or the transactions contemplated hereby in the courts
of the State of Delaware or the United States of America, in each case located in the County of New
Castle, and hereby further irrevocably and unconditionally waives and agrees not to plead or claim
in any such court that any such action, proceeding or investigation brought in any such court has
been brought in an inconvenient forum.

[Remainder of page intentionally left blank.]

10

 

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

	 	 	 	 	 	 	 
	 	 	CAPITAL SENIOR LIVING CORPORATION	 	 
	 
	 	 	 	 	 	 
	 

	 	By:
	 	/s/ James A. Stroud
 

	 	 
	 

	 	Name:
	 	James A. Stroud	 	 
	 

	 	Title:
	 	Chairman of the Company	 	 
	 
	 	 	 	 	 	 
	 	 	WEST CREEK CAPITAL, LLC	 	 
	 
	 	 	 	 	 	 
	 

	 	By:
	 	/s/ Harvey Hanerfeld	 	 
	 

	 	 	 	 	 	 
	 

	 	Name:
	 	Harvey Hanerfeld	 	 
	 

	 	Title:
	 	Managing Member	 	 
	 
	 	 	 	 	 	 
	 	 	/s/ Harvey Hanerfeld	 	 
	 	 	 	 	 
	 	 	Harvey Hanerfeld	 	 
	 
	 	 	 	 	 	 
	 	 	/s/ Roger Feldman	 	 
	 	 	 	 	 
	 	 	Roger Feldman	 	 

11

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