Document:

exv10w4w1

 

Exhibit 10.4.1

RIGHT OF FIRST REFUSAL AGREEMENT

     THIS RIGHT OF FIRST REFUSAL AGREEMENT (this “Agreement”) is entered into
the 18th day of August, 2004 (the “Effective Date”), by and between Covenant
Place of Abilene, Inc., a Delaware corporation (“Covenant”), and Capital Senior
Living Acquisition, LLC, a Delaware limited liability company (“Capital”).

W I T N E S S E T H:

     WHEREAS, Covenant is the owner of the real property more particularly
described on Exhibit “A” attached hereto and made a part hereof for all
purposes, and of the improvements thereon (the “Property”); and

     WHEREAS, the parties desire to evidence Covenant’s agreement to grant to
Capital a right of first refusal to purchase a fee simple interest in the
Property upon the occurrence of certain events and otherwise subject to the
terms and conditions of this Agreement.

     NOW, THEREFORE, for and in consideration of TEN DOLLARS ($10.00) and other
good and valuable consideration, the receipt and sufficiency of which is hereby
acknowledged, the parties have agreed and do hereby’ agree as follows:

     1. Restrictions
on Transfer and Certain Definitions.

     (a) Covenant shall not Transfer any Property Interest without first
complying with the terms and provisions of this Agreement.

     (b) For the purposes of this Agreement, (i) “Property Interest”
means (A) with respect to the Property, any interest in the Property or
in any portion of the Property, (B) with respect to Covenant, any
interest in Covenant, (C) with respect to an Affiliate Property (as
defined in Section 2(d) below), any interest in the Affiliate Property or
in any portion of the Affiliate Property, and (D) with respect to an
Affiliate Owner (as defined in Section 2(d) below), any interest in such
Affiliate Owner, and (ii) “Transfer” means to sell, assign, lease, or
otherwise transfer to any person or entity other than the Transferor’s
lender.

     2. Right of First Refusal. Commencing on the Effective Date and continuing
thereafter for a period of fifteen (15) years (the “Refusal Period”), Covenant
shall not Transfer any Property Interest unless Covenant shall have first
offered the Property Interest subject to the proposed Transfer to Capital in
the manner and to the extent hereinafter set forth:

     (a) Third-Party Offer. If Covenant desires to effect a Transfer of a
Property Interest (the “Third Party Offeror”) pursuant to a bona fide
written offer (“Offer”), it shall send to Capital a written notice
thereof (“Third Party Offer Notice”), which Notice shall include a true
copy of the Offer.

RIGHT OF FIRST REFUSAL AGREEMENT — Page 1

 

 

     (b) Capital Purchase Right. Capital shall have a prior right to
purchase all of the Property Interest that is the object of the Offer
(the “Capital Purchase Right”) on the terms and conditions set forth in
this Agreement by sending written notice of Capital’s election to
exercise the Capital Purchase Right (the “Capital Election Notice”) to
Covenant within fifteen (15) days after Capital receives the Third Party
Offer Notice. Exercise of the Capital Purchase Right in accordance with
the terms and conditions of this Agreement shall entitle Capital to
purchase the Property Interest on the identical terms and conditions set
forth in the Offer except (i) with respect to the identity of the
Purchaser, (ii) that the relevant time periods in the Offer (such as, for
example, with respect to feasibility and due diligence periods, and
closing) shall be extended by no more than thirty (30) days if Capital, j
in its reasonable judgment, needs such additional time to close the
purchase of the Property Interest and so notifies Covenant in a writing
to such effect signed by an executive officer of Capital, and (iii) that
if Capital delivers to Covenant the Capital Election Notice by no later
than 5:00 p.m. Central Standard Time on February 18, 2007, the purchase
price for the Property Interest subject to the Offer shall be the lesser
of (i) the purchase price contained in the Offer, or (ii) Two Million
Nine Hundred Seventy-Four Thousand One Hundred Forty-Three Dollars
($2,974,143) (the “Purchase Price”). The delivery to Covenant of a
Capital Election Notice as provided herein shall constitute Capital’s
obligation to purchase the applicable Property Interest in accordance
with the terms and conditions of this Agreement and of the Definitive
Agreement (as defined in subsection (c) below).

     (c) Consummation of Purchase and Sale of Property Interest. In the
event that Capital exercises the Capital Purchase Right, the purchase and
sale of the applicable Property Interest shall be consummated pursuant to
the terms and conditions; set forth in a definitive agreement of purchase
and sale that includes the terms And conditions of the Offer (as modified
in accordance with subsection (b) above) and such other customary terms
and conditions as the parties, acting reasonably, may agree (a
“Definitive Agreement”).

     (d) Sale to Third Party Offeror. In the event that Capital fails
timely to exercise the Capital Purchase Right in accordance with the
terms and conditions of this Agreement (whether or not Capital has
delivered a Capital Election Notice to Covenant), Covenant shall be free,
in its sole discretion, to consummate the sale of the Property Interest
to the Third Party Offeror pursuant to the terms and conditions of a
definitive agreement of purchase and sale that includes the terms and
conditions of the Offer; provided, however, that, in the event that the
purchase and sale of the applicable Property Interest is not consummated
within the time frame(s) provided in the Offer, then such Property
Interest shall once again be subject to the terms and conditions of this
Agreement. Notwithstanding anything in this Agreement or in any other
agreement to the contrary, Covenant shall not be entitled to accept the
Offer and to consummate the Transfer of any Property Interest (i)
described in Section l(b)(i)(A) above unless (A) the Offer includes a
Transfer of an analogous Property Interest in all of the properties
listed in Schedule 1 attached hereto and made a part hereof (the
“Affiliate Properties”) from the owners of such properties, which are
affiliates of Covenant (the “Affiliate Owners”), and (B) Transfer of the
Property Interest and of all such analogous Property Interests owned by
the Affiliated Owners are consummated simultaneously, and (ii) described
in Section

RIGHT OF FIRST REFUSAL AGREEMENT — Page 2

 

 

l(b)(i)(B) above unless (A) the Offer includes a Transfer of an
analogous Property Interest in all Affiliate Owners, and (B) Transfer of
the Property Interest and of all such analogous Property Interests of all
such Affiliate Owners are consummated simultaneously. Notwithstanding
anything in this Agreement or in any other agreement; to the contrary,
the Capital Purchase Right shall apply only in the event that Capital
duly exercises such right (or an analogous right) with respect to all
Property Interests that are the subject of the Offer.

     3. Transfer Contrary to Agreement. Any purported Transfer in violation of
any provisions of this Agreement shall be void and ineffectual, shall not
operate to transfer any interest or title to the purported transferee and shall
give Capital an option to purchase such Property Interest in the manner and on
the terms and conditions provided for herein.

     4. Termination. This Agreement (and the Capital Purchase Right) shall
terminate and be of no further force or effect upon the earliest to occur of
the following events:

     (a) the written agreement of Covenant and Capital (or, to the extent
applicable, of their respective successors and permitted assigns);

     (b) upon the Transfer of Covenant of all of a Property Interest in
accordance with the terms and conditions of this Agreement, such that
Covenant no longer owns, directly or indirectly, any of such Property
Interest;

     (c) Capital shall have delivered a Capital Exercise Notice to
Covenant as to a Property Interest and thereafter shall have failed to
consummate the closing of the purchase and sale of the subject Property
Interest in violation of the terms and conditions of the Definitive
Agreement; and

     (d) the expiration of the Refusal Period.

     5. Assignment. Covenant may not assign its obligations under this
Agreement without Capital’s prior written consent; provided that Covenant shall
be entitled to assign such obligations to Covenant’s lender without prior
notice to or the consent of Capital. Capital may assign its obligations under
this Agreement only to an affiliate of Capital or to any entity in which
Capital owns ten percent (10%) or more of the equity interest, with such
assignment to be effective as to Covenant only upon Covenant’s receipt of
written notice thereof from Capital in accordance with the terms and conditions
of this Agreement. Subject to the remaining provisions of this Section 5, this
Agreement shall be binding upon and inure to the benefit of each of the parties
Thereto and their respective successors and permitted assigns.

     6. Recordation. A memorandum of this Agreement, reasonably satisfactory
in form and substance to Covenant and Capital, shall be executed and
acknowledged by Covenant and Capital and recorded in the real property records
in which the Property is located.

     7. Alternative Dispute Resolution.

     (a) In the event of any dispute, controversy, or claim arising out
of or in connection; with this Agreement or with the transactions
contemplated hereby, or with

RIGHT OF FIRST REFUSAL AGREEMENT — Page 3

 

 

the breach or alleged breach hereof, in each case whether sounding
in contract, tort, or otherwise (each a “Dispute”), the parties shall
settle such Dispute in accordance with the provisions of this Section 7.

     (b) Upon the occurrence and during the continuation of a Dispute,
the parties agree first to attempt to settle such Dispute amicably
through consultation and negotiation between their respective executive
officers.

     (c) Upon the occurrence and during the continuation of any Dispute
that remains unresolved notwithstanding compliance with Section 7(ii)
above, the parties agree to attempt to settle such Dispute through
non-binding mediation conducted by a mediator with at least five (5)
years of mediation experience who has been qualified under the Texas
Alternative Dispute Resolution Act and who has knowledge regarding real
estates operations (a “Mediator”). In the event that the parties cannot
agree on a single Mediator, then each of the parties shall select a
Mediator, and the two (2) Mediators thus selected shall select a single
Mediator to hear the Dispute. Each of the parties shall pay one-half
(1/2) of the aggregate fees and expenses of the mediation.

     (d) Any Dispute that remains unresolved notwithstanding compliance
with Sections 7(ii) and 7(iii) above, or any Dispute with respect to
which one or more parties shall fail to comply in all material respects
with the requirements of, such Sections 7(ii) and/or 7(iii) promptly
following the written request of the other party, shall be settled by
arbitration administered by the American Arbitration Association (“AAA”)
under its “R-Series” Commercial Arbitration Rules, as supplemented and
modified by its “E-Series” Commercial Arbitration Rules (or under such
other AAA rules as may then apply with respect to Expedited arbitration),
and judgment on the award (the “Award”) rendered by the arbitrators) (the
“Arbitrator”) may be entered in any court having jurisdiction thereof.
The parties] agree to and mutually request an oral hearing of the
Dispute. The Arbitrator must have at least five (5) years of arbitration
experience and have knowledge regarding real estate operations.

     (e) The parties expressly agree that, prior to the appointment of
the Arbitrator, nothing in this Agreement shall prevent a party from
applying to a court that otherwise would be of competent jurisdiction
solely to obtain a preliminary injunction or other similar provisional or
interim relief to maintain the status quo. Upon appointment of the
Arbitrator, the Arbitrator shall have sole jurisdiction to hear any such
applications, except that any such provisional or interim measures that
the Arbitrator may order may be immediately and specifically enforced by
a court that otherwise would be of competent jurisdiction.

     (f) Each of the parties shall pay one-half (1/2) of the aggregate
fees and expenses of the arbitration, and all other fees and expenses
(such as, for example, attorney and accounting fees, actuarial and other
experts) shall be paid by the party incurring them; provided, however,
that a party prevailing on substantially all of its claims shall be
entitled to reasonable attorneys’ fees, costs, and other disbursements
in addition to any other relief to which such party may be entitled.

RIGHT OF FIRST REFUSAL AGREEMENT — Page 4

 

 

     (g) The place of any arbitration instituted under this Section 7
shall be Dallas, Texas. Each party consents to jurisdiction in such
forum.

     8. Non-Disclosure. The parties shall use reasonable efforts to not
disclose the existence or contents of this Agreement to third parties except to
the extent required in order to discharge their respective duties and
obligations hereunder and except as provided in Section 6 above. Neither party
shall issue any press release or make any public announcement relating to the
subject matter of this Agreement without the prior written approval of the
other party; provided, however, that Capital may make any public disclosure it
believes in good faith is required by applicable law or any listing or trading
agreement concerning its publicly traded securities (in which case Capital will
use its reasonable best efforts to advise and solicit input from Covenant prior
to making the disclosure).

     9. Notices. All notices, requests, demands, claims, and other
communications hereunder will be in writing. Any notice, request, demand,
claim, or other communication hereunder shall bel deemed (i) duly given if (A)
it is faxed to the intended recipient as set forth below, and (B) thereafter it
is sent by registered or certified mail, return receipt requested, postage
prepaid, and addressed to the intended recipient as set forth below, and (ii)
duly received upon actual receipt:

	 	 	 	 	 
	If to Grantor:	 	Copy to:
	 
	 	 	 	 
	Covenant Place of Abilene, Inc.	 	Brian D. Bowden, Esq.
	5601 Bridge Street, Suite 504	 	Brian D. Bowden, P.C.
	Fort Worth, Texas 76112	 	2900 Westridge Avenue
	Attn: Mr. Robert Bullock	 	Fort Worth, Texas 76116
	Fax: 817-446-0923	 	Fax: 817-732-7722
	 
	 	 	 	 
	If to Grantee:	 	Copy to:
	 
	 	 	 	 
	Capital Senior Living Acquisition, LLC	 	Jeffrey L. Fisher, Esq.
	14160 Dallas Parkway, Suite 300	 	Geary, Porter & Donovan, P.C.
	Dallas, Texas 75254	 	16475 Dallas Parkway, Suite 500
	Attn:

	 	Mr. James A. Stroud and
	 	Addison, Texas 75001
	

	 	Mr. David R. Brickman
	 	Fax: 972-931-9208
	Fax: 972-770-5666	 	 

     Either party may change the address to which notices, requests, demands,
claims, and other communications hereunder are to be delivered by giving the
other party notice in the manner herein set forth.

     10. Governing Law. This Agreement shall be governed by and construed in
accordance with e domestic laws of the State of Texas without giving effect to
any choice or conflict of law provision or rule (whether of the State of Texas
or any other jurisdiction) that would cause the application of the laws of any
jurisdiction other than the State of Texas.

RIGHT OF FIRST REFUSAL AGREEMENT — Page 5

 

 

     11. Headings. The section headings contained in this Agreement are
inserted for convenience only and shall not affect in any way the meaning or
interpretation of this Agreement.

     12. Severability. Any term or provision of this Agreement that is invalid
or unenforceable in any situation in any jurisdiction shall not affect the
validity or enforceability of the remaining terms and provisions hereof or the
validity or enforceability of the offending term or provision in any other
situation or in any other jurisdiction.

     13. Gender and Number. Whenever the context requires, all words in this
Agreement in one gender shall be deemed to include the other genders, all
singular words shall include the plural, and all plural words shall include the
singular.

     14. Amendments and Waivers. No amendment of any provision of this
Agreement shall be valid unless the same shall be in writing and signed by
Covenant and Capital. No waiver by either party of any default,
misrepresentation, or breach of warranty or covenant hereunder, whether
intentional or not, shall be deemed to extend to any prior or subsequent
default, misrepresentation, or breach of warranty or covenant hereunder or
affect in any way any rights arising by virtue of any prior or subsequent such
occurrence.

     15. Incorporation of Exhibits. The exhibits identified in this Agreement
are incorporated herein by reference and made a part hereof.

     16. Entire Agreement. This Agreement (including the exhibits attached
hereto) constitutes the entire agreement between the parties and supersedes any
prior understandings, agreements, or representations by or between the parties,
written or oral, to the extent that they relate in any way to the subject
matter hereof.

     17. Timing. Time is of the essence in the parties’ performance of their
respective obligations under this Agreement.

     18. No Restriction on Covenant’s Discretion with respect to Offer.
Notwithstanding anything in this Agreement to the contrary, Covenant shall have
the right, in its sole and absolute discretion and for any reason or for no
reason, to refuse to enter into discussions with respect to, or to accept, any
Offer, even though such refusal prevents Capital from being entitled to
exercise the Capital Purchase Right.

     19. Brokerage Commission. In the event that Capital elects to exercise
the Capital Purchase Right, and upon the closing, funding and sale of the
Property Interest to Capital, then SSM, Inc. shall be entitled to a brokerage
fee of one percent (1%) of the purchase price. The one percent (1%) fee shall
be split between Covenant and Capital, and be paid at closing.

     IN WITNESS WHEREOF, the parties have entered into this Right of First
Refusal Agreement as of the date first above written.

RIGHT OF FIRST REFUSAL AGREEMENT — Page 6

 

 

	 	 	 	 	 
	 	COVENANT PLACE OF ABILENE, INC.

 	 
	 	By:  	/s/ Robert Bullock
 	 
	 	 	Robert Bullock, Executive Vice President 	 
	 	 	 	 
	 
	 	CAPITAL SENIOR LIVING ACQUISITION, LLC

 	 
	 	By:  	/s/ James A. Stroud
 	 
	 	 	James A. Stroud, Chairman of the Company 	 
	 	 	 	 
	 

RIGHT OF FIRST REFUSAL AGREEMENT — Page 7exv10w4w2

 

Exhibit 10.4.2

SCHEDULE IDENTIFYING SUBSTANTIALLY IDENTICAL AGREEMENTS TO EXHIBIT 10.4.1

Right of First Refusal Agreement, dated as of August 18, 2004, by and between
Covenant Place of Burleson, Inc. and Capital Senior Living Acquisition, LLC

	 	 	This Right of First Refusal Agreement relates to the Covenant
Place of Burleson property and differs from Exhibit 10.4.1 in the
following respects:
	 
	 	 	In Section 2(b)(ii), the purchase price is $6,557,506.

Right of First Refusal Agreement, dated as of August 18, 2004, by and between
Cedar Hill Retirement Community, Inc. and Capital Senior Living Acquisition,
LLC

	 	 	This Right of First Refusal Agreement relates to the Crescent
Point Retirement Community property and differs from Exhibit
10.4.1 in the following respects:
	 
	 	 	In Section 2(b)(ii), the purchase price is $10,217,620.

Right of First Refusal Agreement, dated as of August 18, 2004, by and between
Covenant Place of Richland Hills, Inc. and Capital Senior Living Acquisition,
LLC

	 	 	This Right of First Refusal Agreement relates to the Good Place
Assisted Living property and differs from Exhibit 10.4.1 in the
following respects:
	 
	 	 	In Section 2(b)(ii), the purchase price is $4,557,155.

Right of First Refusal Agreement, dated as of August 18, 2004, by and between
CGI Real Estate, Inc. and Capital Senior Living Acquisition, LLC

	 	 	This Right of First Refusal Agreement relates to the Meadow Lakes
Retirement Community property and differs from Exhibit 10.4.1 in
the following respects:
	 
	 	 	In Section 2(b)(ii), the purchase price is $9,737,920.

Right of First Refusal Agreement, dated as of August 18, 2004, by and between
Covenant Place of Arlington, Inc. and Capital Senior Living Acquisition, LLC

	 	 	This Right of First Refusal Agreement relates to the Meadow View
Assisted Living property and differs from Exhibit 10.4.1 in the
following respects:
	 
	 	 	In Section 2(b)(ii), the purchase price is $3,309,933.

Right of First Refusal Agreement, dated as of August 18, 2004, by and between
Covenant Place of Waxahachie, Inc. and Capital Senior Living Acquisition, LLC

	 	 	This Right of First Refusal Agreement relates to the Covenant
Place of Waxahachie property and differs from Exhibit 10.4.1 in
the following respects:
	 
	 	 	In Section 2(b)(ii), the purchase price is $3,645,724.

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