Document:

Exhibit
10.1

 

2013
EQUITY INCENTIVE PLAN

OF

SIGMA LABS, INC.

 

	1.	PURPOSES
    OF THE PLAN

 

The
purposes of the 2013 Equity Incentive Plan (the “Plan”) of Sigma Labs, Inc., a Nevada corporation (the “Company”),
are to:

 

1.1
Encourage selected employees, directors, consultants and advisers to improve operations and increase the profitability of the
Company;

 

1.2
Encourage selected employees, directors, consultants and advisers to accept or continue employment or association with the Company
or its Affiliates; and

 

1.3
Increase the interest of selected employees, directors, consultants and advisers in the Company’s welfare through participation
in the growth in value of the common stock of the Company (the “Common Stock”). All references herein to stock or
shares, unless otherwise specified, shall mean Common Stock.

 

	2.	TYPES
    OF AWARDS; ELIGIBLE PERSONS

 

2.1
The Administrator (as defined below) may, from time to time, take the following action, separately or in combination, under the
Plan: (i) grant “incentive stock options” (“ISOs”) intended to satisfy the requirements of Section 422
of the Internal Revenue Code of 1986, as amended, and the regulations thereunder (the “Code”); (ii) grant “non-qualified
options” (“NQOs,” and together with ISOs, “Options”); (iii) grant or sell Common Stock subject to
restrictions (“restricted stock”) or without restrictions, and (iv) grant stock appreciation rights (any such right
would permit the holder to receive the excess of the fair market value of Common Stock on the exercise date over its fair market
value (or a greater base value) on the grant date (“SARs”)), either in tandem with Options or as separate and independent
grants. Any such awards may be made to employees, including employees who are officers or directors, and to individuals described
in Section 1 of the Plan who the Administrator believes have made or will make a contribution to the Company or any Affiliate
(as defined below); provided, however, that only a person who is an employee of the Company or any Affiliate at
the date of the grant of an Option is eligible to receive ISOs under the Plan. The term “Affiliate” as used in the
Plan means a parent or subsidiary corporation as defined in the applicable provisions (currently Sections 424(e) and (f), respectively)
of the Code. The term “employee” includes an officer or director who is an employee of the Company. The term “consultant”
includes persons employed by, or otherwise affiliated with, a consultant. The term “adviser” includes persons employed
by, or otherwise affiliated with, an adviser.

 

2.2
Except as otherwise expressly set forth in the Plan, no right or benefit under the Plan shall be subject in any manner to anticipation,
alienation, hypothecation, or charge, and any such attempted action shall be void. No right or benefit under the Plan shall in
any manner be liable for or subject to debts, contracts, liabilities, or torts of any option holder or any other person except
as otherwise may be expressly required by applicable law.

 

	3.	STOCK
    SUBJECT TO THE PLAN; MAXIMUM NUMBER OF GRANTS

 

Subject
to the provisions of Sections 6.1.1 and 8.2 of the Plan, the total number of shares of Common Stock which may be issued as restricted
stock or unrestricted stock or on the exercise of Options or SARs under the Plan shall not exceed 890,000 shares of Common Stock.
The shares subject to an Option or SAR or otherwise granted under the Plan which expire, terminate or are cancelled unexercised
shall become available again for grants under the Plan. If shares of restricted stock awarded under the Plan are forfeited to
the Company or repurchased by the Company, the number of shares forfeited or repurchased shall again be available under the Plan.
Where the exercise price of an Option is paid by means of the optionee’s surrender of previously owned shares of Common
Stock or the Company’s withholding of shares otherwise issuable upon exercise of the Option as may be permitted herein,
only the net number of shares issued and which remain outstanding in connection with such exercise shall be deemed “issued”
and no longer available for issuance under the Plan. No eligible person shall be granted Options and stock appreciation rights
during any twelve-month period covering more than 300,000 shares.

 

    	 

    	 

    

 

	4.	ADMINISTRATION

 

4.1
The Plan shall be administered by the Board of Directors of the Company (the “Board”) or by a committee (the “Committee”)
to which administration of the Plan, or of part of thereof, is delegated by the Board (in either case, the “Administrator”).
The Board shall appoint and remove members of the Committee in its discretion in accordance with applicable laws. At the Board’s
discretion, the Committee may be comprised solely of “non-employee directors” within the meaning of Rule 16b-3 under
the Securities Exchange Act of 1934, as amended (the “Exchange Act”), or “outside directors” within the
meaning of Section 162(m) of the Code. The Administrator may delegate non-discretionary administrative duties to such employees
of the Company as the Administrator deems proper and the Board, in its absolute discretion, may at any time and from time to time
exercise any and all rights and duties of the Administrator under the Plan.

 

4.2
Subject to the other provisions of the Plan, the Administrator shall have the authority, in its discretion: (i) to grant Options
and SARs and grant or sell restricted stock or unrestricted stock; (ii) to determine the fair market value of the Common Stock
subject to Options or other awards; (iii) to determine the exercise price of Options granted, which shall be no less than the
fair market value of the Common Stock on the date of grant, the economic terms of SARs granted, which shall provide for a benefit
of the appreciation on Common Stock over not less than the value of the Common Stock on the date of grant, or the offering price
of restricted stock; (iv) to determine the persons to whom, and the time or times at which, Options or SARs shall be granted or
restricted stock granted or sold, and the number of shares subject to each Option or SAR or the number of shares of restricted
stock or unrestricted stock granted or sold; (v) to construe and interpret the terms and provisions of the Plan, of any applicable
agreement and all Options and SARs granted under the Plan, and of any restricted unrestricted stock award under the Plan; (vi)
to prescribe, amend, and rescind rules and regulations relating to the Plan; (vii) to determine the terms and provisions of each
Option and SAR granted and award of restricted stock or unrestricted stock (which need not be identical), including but not limited
to, the time or times at which Options and SARs shall be exercisable or the time at which the restrictions on restricted stock
shall lapse; (viii) with the consent of the grantee, to rescind any award or exercise of an Option or SAR and to modify or amend
the terms of any Option, SAR or restricted stock; (ix) to reduce the purchase price of restricted stock or unrestricted stock;
(x) to accelerate or defer (with the consent of the grantee) the exercise date of any Option or SAR or the date on which the restrictions
on restricted stock lapse; (xi) to issue shares of restricted stock to an optionee in connection with the accelerated exercise
of an Option by such optionee; (xii) to authorize any person to execute on behalf of the Company any instrument evidencing the
grant of an Option. SAR or award of restricted stock or unrestricted stock; (xiii) to determine the duration and purposes of leaves
of absence which may be granted to participants without constituting a termination of their employment for the purposes of the
Plan; and (xiv) to make all other determinations deemed necessary or advisable for the administration of the Plan, any applicable
agreement, Option, SAR or award of restricted stock or unrestricted stock.

 

4.3
All questions of interpretation, implementation, and application of the Plan or any agreement or Option, SAR or award of restricted
stock shall be determined by the Administrator, which determination shall be final and binding on all persons.

 

	5.	GRANTING
    OF OPTIONS AND SARS; AGREEMENTS

 

5.1
No Options or SARs shall be granted under the Plan after ten (10) years from the date of adoption of the Plan by the Board.

 

5.2
Each Option and SAR shall be evidenced by a written agreement, in form satisfactory to the Administrator, executed by the Company
and the person to whom such grant is made. In the event of a conflict between the terms or conditions of an agreement and the
terms and conditions of the Plan, the terms and conditions of the Plan shall govern.

 

5.3
Each agreement shall specify whether the Option it evidences is an NQO or an ISO, provided, however, all Options
granted under the Plan to non-employee directors, consultants and advisers of the Company are intended to be NQOs.

 

    	 

    	 

    

 

5.4
Subject to Section 6.3.3 with respect to ISOs, the Administrator may approve the grant of Options or SARs under the Plan to persons
who are expected to become employees, directors, consultants or advisers of the Company, but are not employees, directors, consultants
or advisers at the date of approval.

 

	6.	TERMS
    AND CONDITIONS OF OPTIONS AND SARS

 

Each
Option and SAR granted under the Plan shall be subject to the terms and conditions set forth in Section 6.1. NQOs and SARs shall
also be subject to the terms and conditions set forth in Section 6.2, but not those set forth in Section 6.3. ISOs shall also
be subject to the terms and conditions set forth in Section 6.3, but not those set forth in Section 6.2. SARs shall be subject
to the terms and conditions of Section 6.4.

 

6.1
Terms and Conditions to Which All Options and SARs Are Subject. All Options and SARs granted under the Plan shall be subject
to the following terms and conditions:

 

6.1.1
Changes in Capital Structure. Subject to Section 6.1.2, if the Common Stock of the Company is changed by reason of a stock
split, reverse stock split, stock dividend, recapitalization, combination or reclassification, or if the Company effects a spin-off
of the Company’s subsidiary, appropriate adjustments shall be made by the Administrator, in its sole discretion, in (a)
the number and class of shares of stock subject to the Plan and each Option and SAR outstanding under the Plan, and (b) the exercise
price of each outstanding Option; provided, that the Company shall not be required to issue fractional shares as a result
of any such adjustments. Any adjustment, however, in an outstanding Option shall be made without change in the total price applicable
to the unexercised portion of the Option but with a corresponding adjustment in the price for each share covered by the unexercised
portion of the Option. Adjustments under this Section 6.1.1 shall be made by the Administrator, whose determination as to the
nature of the adjustments that shall be made, and the extent thereof, shall be final, binding, and conclusive. If an adjustment
under this Section 6.1.1 would result in a fractional share interest under an option or any installment, the Administrator’s
decision as to inclusion or exclusion of that fractional share interest shall be final, but no fractional shares of stock shall
be issued under the Plan on account of any such adjustment.

 

6.1.2
Corporate Transactions. Except as otherwise provided in the applicable agreement, in the event of a Corporate Transaction
(as defined below), the Administrator shall notify each holder of an Option or SAR at least thirty (30) days prior thereto or
as soon as may be practicable. To the extent not then exercised all Options and SARs shall terminate immediately prior to the
consummation of such Corporate Transaction unless the Administrator determines otherwise in its sole discretion; provided.
however, that the Administrator, in its sole discretion, may (i) permit exercise of any Options or SARs prior to their
termination, even if such Options or SARs would not otherwise have been exercisable, and/or (ii) provide that all or certain of
the outstanding Options and SARs shall be assumed or an equivalent Option or SAR substituted by an applicable successor corporation
or entity or any Affiliate of the successor corporation or entity. A “Corporate Transaction” means (i) a liquidation
or dissolution of the Company; (ii) a merger or consolidation of the Company with or into another corporation or entity (other
than a merger with a wholly-owned subsidiary); (iii) a sale of all or substantially all of the assets of the Company; or (iv)
a purchase or other acquisition of more than 50% of the outstanding stock of the Company by one person or by more than one person
acting in concert.

 

6.1.3
Time of Option or SAR Exercise. Subject to Section 5 and Section 6.3.4, an Option or SAR granted under the Plan shall be
exercisable (a) immediately as of the effective date of the of the applicable agreement or (b) in accordance with a schedule or
performance criteria as may be set by the Administrator and specified in the applicable agreement. However, in no case may an
Option or SAR be exercisable until a written agreement in form and substance satisfactory to the Company is executed by the Company
and the grantee.

 

6.1.4
Grant Date. The date of grant of an Option or SAR under the Plan shall be the date approved or specified by the Administrator
and reflected as the effective date of the applicable agreement.

 

6.1.5
Non-Transferability of Rights. Except with the express written approval of the Administrator, which approval the Administrator
is authorized to give only with respect to NQOs and SARs, no Option or SAR granted under the Plan shall be assignable or otherwise
transferable by the grantee except by will or by the laws of descent and distribution. During the life of the grantee, an Option
or SAR shall be exercisable only by the grantee or permitted transferee.

 

    	 

    	 

    

 

6.1.6
Payment. Except as provided below, payment in full, in cash, shall be made for all Common Stock purchased at the time written
notice of exercise of an Option is given to the Company and the proceeds of any payment shall be considered general funds of the
Company. The Administrator, in the exercise of its absolute discretion after considering any tax, accounting and financial consequences,
may authorize any one or more of the following additional methods of payment:

 

(a)
Subject to the Sarbanes-Oxley Act of 2002, acceptance of the optionee’s full recourse promissory note for all or part of
the Option price, payable on such terms and bearing such interest rate as determined by the Administrator (but in no event less
than the minimum interest rate specified under the Code at which no additional interest or original issue discount would be imputed),
which promissory note may be either secured or unsecured in such manner as the Administrator shall approve (including, without
limitation, by a security interest in the shares of the Company);

 

(b)
Subject to the discretion of the Administrator and the terms of the stock option agreement granting the Option, delivery by the
optionee of shares of Common Stock already owned by the optionee for all or part of the Option price, provided the fair market
value (determined as set forth in Section 6.1.9) of such shares of Common Stock is equal on the date of exercise to the Option
price, or such portion thereof as the optionee is authorized to pay by delivery of such stock;

 

(c)
Subject to the discretion of the Administrator, through the surrender of shares of Common Stock then issuable upon exercise of
the Option, provided the fair market value (determined as set forth in Section 6.1.9) of such shares of Common Stock is equal
on the date of exercise to the Option price, or such portion thereof as the optionee is authorized to pay by surrender of such
stock; and

 

(d)
By means of so-called cashless exercises as permitted under applicable rules and regulations of the Securities and Exchange Commission
and the Federal Reserve Board.

 

6.1.7
Withholding and Employment Taxes. At the time of exercise and as a condition thereto, or at such other time as the amount
of such obligation becomes determinable, the grantee of an Option or SAR shall remit to the Company in cash all applicable federal
and state withholding and employment taxes. Such obligation to remit may be satisfied, if authorized by the Administrator in its
sole discretion, after considering any tax, accounting and financial consequences, by the holder’s (i) delivery of a promissory
note in the required amount on such terms as the Administrator deems appropriate, (ii) tendering to the Company previously owned
shares of Common Stock or other securities of the Company with a fair market value equal to the required amount, or (iii) agreeing
to have shares of Common Stock (with a fair market value equal to the required amount), which are acquired upon exercise of the
Option or SAR, withheld by the Company.

 

6.1.8
Other Provisions. Each Option and SAR granted under the Plan may contain such other terms, provisions, and conditions not
inconsistent with the Plan as may be determined by the Administrator, and each ISO granted under the Plan shall include such provisions
and conditions as are necessary to qualify the Option as an “incentive stock option” within the meaning of Section
422 of the Code.

 

6.1.9
Determination of Value. For purposes of the Plan, the fair market value of Common Stock or other securities of the Company
shall be determined as follows:

 

(a)
If the stock of the Company is listed on a securities exchange or is regularly quoted by a recognized securities dealer, and selling
prices are reported, its fair market value shall be the closing price of such stock on the date the value is to be determined,
but if selling prices are not reported, its fair market value shall be the mean between the high bid and low asked prices for
such stock on the date the value is to be determined (or if there are no quoted prices for the date of grant, then for the last
preceding business day on which there were quoted prices).

 

    	 

    	 

    

 

(b)
In the absence of an established market for the stock, the fair market value thereof shall be determined in good faith by the
Administrator, with reference to the Company’s net worth, prospective earning power, dividend-paying capacity, and other
relevant factors, including the goodwill of the Company, the economic outlook in the Company’s industry, the Company’s
position in the industry, the Company’s management, and the values of stock of other corporations in the same or a similar
line of business.

 

6.1.10
Option and SAR Term. No Option or SAR shall be exercisable more than 10 years after the date of grant, or such lesser period
of time as is set forth in the applicable agreement (the end of the maximum exercise period stated in the agreement is referred
to in the Plan as the “Expiration Date”).

 

6.2
Terms and Conditions to Which Only NQOs and SARs Are Subject. Options granted under the Plan which are designated as NQOs
and SARs shall be subject to the following terms and conditions:

 

6.2.1
Exercise Price. The exercise price of an NQO and the base value of an SAR shall be the amount determined by the Administrator
as specified in the option or SAR agreement, but shall not be less than the fair market value of the Common Stock on the date
of grant (determined under Section 6.1.9).

 

6.2.2
Termination of Employment. Except as otherwise provided in the applicable agreement, if for any reason a grantee ceases
to be employed by the Company or any of its Affiliates, Options that are NQOs and SARs held at the date of termination (to the
extent then exercisable) may be exercised in whole or in part at any time within ninety (90) days of the date of such termination
(but in no event after the Expiration Date). For purposes of this Section 6.2.2, “employment” includes service as
a director, consultant or adviser. For purposes of this Section 6.2.2, a grantee’s employment shall not be deemed to terminate
by reason of the grantee’s transfer from the Company to an Affiliate, or vice versa, or sick leave, military leave or other
leave of absence approved by the Administrator, if the period of any such leave does not exceed ninety (90) days or, if longer,
if the grantee’s right to reemployment by the Company or any Affiliate is guaranteed either contractually or by statute.

 

6.3
Terms and Conditions to Which Only ISOs Are Subject. Options granted under the Plan which are designated as ISOs shall
be subject to the following terms and conditions:

 

6.3.1
Exercise Price. The exercise price of an ISO shall not be less than the fair market value (determined in accordance with
Section 6.1.9) of the stock covered by the Option at the time the Option is granted. The exercise price of an ISO granted to any
person who owns, directly or by attribution under the Code (currently Section 424(d)), stock possessing more than ten percent
(10%) of the total combined voting power of all classes of stock of the Company or of any Affiliate (a “Ten Percent Stockholder”)
shall in no event be less than one hundred ten percent (110%) of the fair market value (determined in accordance with Section
6.1.9) of the stock covered by the Option at the time the Option is granted.

 

6.3.2
Disqualifying Dispositions. If stock acquired by exercise of an ISO granted pursuant to the Plan is disposed of in a “disqualifying
disposition” within the meaning of Section 422 of the Code (a disposition within two (2) years from the date of grant of
the Option or within one year after the issuance of such stock on exercise of the Option), the holder of the stock immediately
before the disposition shall promptly notify the Company in writing of the date and terms of the disposition and shall provide
such other information regarding the Option as the Company may reasonably require.

 

6.3.3
Grant Date. If an ISO is granted in anticipation of employment as provided in Section 5.4, the Option shall be deemed granted,
without further approval, on the date the grantee assumes the employment relationship forming the basis for such grant, and, in
addition, satisfies all requirements of the Plan for Options granted on that date.

 

6.3.4
Term. Notwithstanding Section 6.1.10, no ISO granted to any Ten Percent Stockholder shall be exercisable more than five
(5) years after the date of grant.

 

    	 

    	 

    

 

6.3.5
Termination of Employment. Except as otherwise provided in the stock option agreement, if for any reason an optionee ceases
to be employed by the Company or any of its Affiliates, Options that are ISOs held at the date of termination (to the extent then
exercisable) may be exercised in whole or in part at any time within 90 days of the date of termination (but in no event after
the Expiration Date). For purposes of this Section 6.3.5, an optionee’s employment shall not be deemed to terminate by reason
of the optionee’s transfer from the Company to an Affiliate, or vice versa, or sick leave, military leave or other leave
of absence approved by the Administrator, if the period of any such leave does not exceed ninety (90) days or, if longer, if the
optionee’s right to reemployment by the Company or any Affiliate is guaranteed either contractually or by statute.

 

6.4
Terms and Conditions Applicable Solely to SARs. In addition to the other terms and conditions applicable to SARs in this
Section 6, the holder shall be entitled to receive on exercise of an SAR only Common Stock at a fair market value equal to the
benefit to be received by the exercise.

 

	7.	MANNER
    OF EXERCISE

 

7.1
An optionee wishing to exercise an Option or SAR shall give written notice to the Company at its principal executive office, to
the attention of the officer of the Company designated by the Administrator, accompanied by payment of the exercise price and/or
withholding taxes as provided in Sections 6.1.6 and 6.1.7. The date the Company receives written notice of an exercise hereunder
accompanied by the applicable payment will be considered as the date such Option or SAR was exercised.

 

7.2
Promptly after receipt of written notice of exercise and the applicable payments called for by Section 7.1, the Company shall,
without stock issue or transfer taxes to the holder or other person entitled to exercise the Option or SAR, deliver to the holder
or such other person a certificate or certificates for the requisite number of shares of Common Stock. A holder or permitted transferee
of an Option or SAR shall not have any privileges as a stockholder with respect to any shares of Common Stock to be issued until
the date of issuance (as evidenced by the appropriate entry on the books of the Company or a duly authorized transfer agent) of
such shares.

 

	8.	STOCK

 

8.1
Grant or Sale of Stock.

 

8.1.1
No awards of Common Stock shall be granted under the Plan after ten (10) years from the date of adoption of the Plan by the Board.

 

8.1.2
The Administrator may issue Common Stock under the Plan as a grant or for such consideration (including services, and, subject
to the Sarbanes-Oxley Act of 2002, promissory notes) as determined by the Administrator. Common Stock issued under the Plan shall
be subject to the terms, conditions and restrictions determined by the Administrator. The restrictions, if any, may include restrictions
concerning transferability, repurchase by the Company and forfeiture of the shares issued, together with such other restrictions
as may be determined by the Administrator. If shares are subject to forfeiture or repurchase by the Company, all dividends or
other distributions paid by the Company with respect to the shares may be retained by the Company until the shares are no longer
subject to forfeiture or repurchase, at which time all accumulated amounts shall be paid to the recipient. All Common Stock issued
pursuant to this Section 8 shall be subject to a purchase or grant agreement, which shall be executed by the Company and the prospective
recipient of the Common Stock prior to the delivery of certificates representing such stock to the recipient. The purchase or
grant agreement may contain any terms, conditions, restrictions, representations and warranties required by the Administrator.
The certificates representing the shares shall bear any legends required by the Administrator. The Administrator may require any
purchaser or grantee of Common Stock to pay to the Company in cash upon demand amounts necessary to satisfy any applicable federal,
state or local tax withholding requirements. If the purchaser or grantee fails to pay the amount demanded, the Administrator may
withhold that amount from other amounts payable by the Company to the purchaser or grantee, including salary, subject to applicable
law. With the consent of the Administrator in its sole discretion, a purchaser or grantee may deliver Common Stock to the Company
to satisfy this withholding obligation. Upon the issuance of Common Stock, the number of shares reserved for issuance under the
Plan shall be reduced by the number of shares issued.

 

    	 

    	 

    

 

8.2
Changes in Capital Structure. In the event of a change in the Company’s capital structure, as described in Section
6.1.1, appropriate adjustments shall be made by the Administrator, in its sole discretion, in the number and class of restricted
stock subject to the Plan and the restricted stock outstanding under the Plan; provided, however, that the Company
shall not be required to issue fractional shares as a result of any such adjustments.

 

8.3
Corporate Transactions. In the event of a Corporate Transaction, as defined in Section 6.1.2 hereof, to the extent not
previously forfeited, all restricted stock shall be forfeited immediately prior to the consummation of such Corporate Transaction
unless the Administrator determines otherwise in its sole discretion; provided, however, that the Administrator,
in its sole discretion, may remove any restrictions as to any restricted stock. The Administrator may, in its sole discretion,
provide that all outstanding restricted stock participate in the Corporate Transaction with an equivalent stock substituted by
an applicable successor corporation subject to the restriction.

 

	9.	EMPLOYMENT
    OR CONSULTING RELATIONSHIP

 

Nothing
in the Plan or any Option or award of Common Stock granted under the Plan shall interfere with or limit in any way the right of
the Company or of any of its Affiliates to terminate the employment, consulting or advising of any recipient thereof or restricted
stock holder at any time, nor confer upon any recipient, optionee or restricted stock holder any right to continue in the employ
of, or consult with, or advise, the Company or any of its Affiliates.

 

	10.	CONDITIONS
    UPON ISSUANCE OF SHARES

 

10.1
Securities Act. Shares of Common Stock shall not be issued pursuant to the exercise of an Option or other award under the
Plan unless the exercise of such Option or payment under the awards, the receipt of Common Stock and the issuance and delivery
of such shares pursuant thereto shall comply with all relevant provisions of law, including, without limitation, the Securities
Act of 1933, as amended (the “Securities Act”).

 

10.2
Non-Compete Agreement. As a further condition to the receipt of Common Stock pursuant to the exercise of an Option or any
other award under the Plan, the optionee or recipient may be required not to render services for any organization, or engage directly
or indirectly in any business, competitive with the Company at any time during which (i) an Option is outstanding to such Optionee
and for six (6) months after any exercise of an Option or the receipt of Common Stock pursuant to the exercise of an Option or
other award and (ii) restricted stock is owned by such recipient and for six (6) months after the restrictions on such restricted
stock lapse. Failure to comply with this condition shall cause such Option and the exercise or issuance of shares thereunder and/or
any other award under the Plan to be rescinded and the benefit of such exercise, issuance or award to be repaid to the Company.

 

	11.	NON-EXCLUSIVITY
    OF THE PLAN

 

The
adoption of the Plan shall not be construed as creating any limitations on the power of the Company to adopt such other incentive
arrangements as it may deem desirable, including, without limitation, the granting of stock options other than under the Plan.

 

	12.	MARKET
    STAND-OFF

 

Each
optionee, holder of an SAR or recipient of Common Stock under the Plan, if so requested by the Company or any representative of
the underwriters in connection with any registration of the offering of any securities of the Company under the Securities Act,
shall not sell or otherwise transfer any shares of Common Stock so acquired during the 180-day period following the effective
date of a registration statement of the Company filed under the Securities Act; provided, however, that such restriction
shall apply only to a registration statement of the Company which includes securities to be sold on behalf of the Company to the
public in an underwritten public offering under the Securities Act and the restriction period shall not exceed 90 days after the
registration statement becomes effective.

 

	13.	AMENDMENTS
    TO PLAN

 

The
Board may at any time amend, alter, suspend or discontinue the Plan. Without the consent of an optionee, holder of an SAR or holder
of restricted stock, no amendment, alteration, suspension or discontinuance may adversely affect such person’s outstanding
Option(s), SAR(s) or the terms applicable to restricted stock except to conform the Plan and ISOs granted under the Plan to the
requirements of federal or other tax laws relating to ISOs. No amendment, alteration, suspension or discontinuance shall require
stockholder approval unless (a) stockholder approval is required to preserve incentive stock option treatment for federal income
tax purposes or (b) the Board otherwise concludes that stockholder approval is advisable.

 

	14.	EFFECTIVE
    DATE OF PLAN; TERMINATION

 

The
Plan shall become effective upon adoption by the Board; provided, however, that no Option or SAR or other award
under the Plan shall be exercisable unless and until written consent of the stockholders of the Company, or approval of stockholders
of the Company voting at a validly called stockholders’ meeting, is obtained within twelve (12) months after adoption by
the Board. If any Options, SARs or other awards are so granted and stockholder approval shall not have been obtained within twelve
(12) months of the date of adoption of the Plan by the Board, such Options, SARs or other awards shall terminate retroactively
as of the date they were granted. Awards may be made under the Plan and exercise of Options, SARs or other awards shall occur
only after there has been compliance with all applicable federal and state securities laws. The Plan (but not Options and SARs
previously granted under the Plan) shall terminate ten (10) years from the date of its adoption by the Board. Termination shall
not affect any outstanding Options or SARs or the terms applicable to other previously made awards under the Plan.csu-ex101_155.htm

EXHIBIT 10.1 

AMENDED and restated FORBEARANCE AGREEMENT

THIS AMENDED AND RESTATED FORBEARANCE AGREEMENT (this agreement, as it may be amended, restated, extended or replaced, the “Agreement”) is dated April 3, 2020, and made effective as of February 1, 2020 (the “Effective Date”), and is by and among (1) Ventas Realty, Limited Partnership, a Delaware limited partnership, as Landlord with respect to the Whitley Place Premises (“VRLP”); (2) Ventas Amberleigh, LLC, a Delaware limited liability company, as Landlord with respect to the Amberleigh Premises (“Ventas Amberleigh”); (3) Ventas Crown Pointe, LLC, a Delaware limited liability company, as Landlord with respect to the Crown Pointe Premises (“Ventas Crown Pointe”); (4) Ventas Santa Barbara, LLC, a Delaware limited liability company, as Landlord with respect to the Santa Barbara Premises (“Ventas Santa Barbara”); (5) Ventas West Shores, LLC, a Delaware limited liability company, as Landlord with respect to the West Shores Premises (“Ventas West Shores”), (6) Ventas East Lansing, LLC, a Delaware limited liability company, as Landlord with respect to the East Lansing Premises (“Ventas East Lansing”), (7) Ventas Raleigh, LLC, a Delaware limited liability company, as Landlord with respect to the Raleigh Premises (“Ventas Raleigh” and, together with VRLP, Ventas Amberleigh, Ventas Crown Pointe, Ventas Santa Barbara, Ventas West Shores, Ventas East Lansing and its and their respective successors and assigns, individually and collectively, “Landlord”); (8) Capital Senior Management 2, Inc., a Texas corporation (together with its permitted successors and assigns and any other person or entity that becomes a Tenant under the Master Lease, individually and collectively, “Tenant”); and (9) Capital Senior Living Properties, Inc., a Texas corporation (“Guarantor”).

RECITALS

Landlord and Tenant are parties to that certain Third Amended and Restated Master Lease Agreement, dated June 27, 2012 (the “2012 Master Lease”), as amended by that certain First Amendment to Third Amended and Restated Master Lease Agreement, dated October 22, 2013, that certain Second Amendment to Third Amended and Restated Master Lease Agreement, dated January 21, 2014, that certain Third Amendment to Third Amended and Restated Master Lease Agreement, dated January 21, 2014, that certain Fourth Amendment to Third Amended and Restated Master Lease Agreement, dated June 17, 2015 (the “Fourth Amendment”), and that certain Fifth Amendment to Third Amended and Restated Master Lease Agreement dated June 30, 2016 (the “Fifth Amendment, and together with the 2012 Master Lease and such other amendments thereto, collectively, the “Original Master Lease”), which Original Master Lease was combined with the East Lansing Lease and the Raleigh Lease (each as defined in the Lease Combination Agreement and Amendment) pursuant to the terms of that certain Partial Lease Termination, Lease Combination Agreement and Amendment to Lease dated as of January 31, 2017 (the “Lease Combination Agreement and Amendment”, and the Original Master Lease, as so combined and amended by the Lease Combination Agreement and Amendment, and as further amended pursuant to letter agreement dated June 30, 2017, collectively, the “Original Combined Master Lease”). Under the Original Combined Master Lease, Tenant leases from Landlord certain independent, assisted living and memory care communities located in various states; and

1

 

The Original Combined Master Lease has in turn been amended by that certain First Amendment to Combined Master Lease Agreement dated April 13, 2018, by and among Landlord, Tenant and Guarantor (the “First Combined Amendment”), that certain Second Amendment to Combined Master Lease Agreement dated June 30, 2018, by and among Landlord, Tenant and Guarantor (the “Second Combined Amendment”), and that certain Third Amendment to Combined Master Lease Agreement dated June 30, 2019 (the “Third Combined Amendment” and the Original Combined Master Lease as so amended, the “Master Lease”); and

Tenant’s obligations under the Master Lease are guaranteed by Guarantor pursuant to the terms of those three certain documents titled “Guaranty of Lease”, each dated June 27, 2012 (as the same may have been modified or amended, collectively, the “Lease Guaranty”); and

Tenant has informed Landlord that it is unable to pay, in full and in a timely manner, its Rent payments under the Master Lease and has requested payment relief from Landlord.  Landlord has informed Tenant that, on account of the non-payment of Rent and resulting Events of Default under the Master Lease, Landlord expects to incur significant damages; and

Landlord is willing to forbear from the exercise of certain remedies under the Master Lease pursuant to the terms of this Agreement; and

Tenant, Landlord and Guarantor entered into to that certain Forbearance Agreement dated March 10, 2020 and made effective as of February 1, 2020 (the “Original Forbearance Agreement”); and

Tenant, Landlord and Guarantor wish to amend and restate the Original Forbearance Agreement.

NOW, THEREFORE, in consideration of the premises and other good and valuable consideration, the parties hereby agree that the Original Forbearance Agreement is hereby superseded, amended and restated as follows:

Recitals; Capitalized Terms; Conflict.  Tenant hereby acknowledges and agrees that the recitals to this Agreement are true and correct, and the same are hereby incorporated into this Agreement.  All capitalized terms used herein and not defined herein shall have the respective meanings ascribed thereto in the Master Lease.  In the event of any conflict between the terms of this Agreement and the terms of the Master Lease, the terms of this Agreement shall govern and control.

Forbearance Through the Final Release Date. Landlord agrees that, effective from the Effective Date through the earlier to occur of (i) the Final Release Date (as defined below) and (ii) the occurrence of a Forbearance Default (as defined below) (the “Forbearance Period”), Landlord will forbear from exercising any remedies that would otherwise be available to Landlord under Section 17 of the Master Lease.

2

 

The occurrence of one or more of the following shall constitute a “Forbearance Default”:

Tenant shall fail to abide by or observe any term, condition, covenant or other provision contained in this Agreement;

An “Event of Default” or an uncured default shall occur under the Master Lease, the Lease Guaranty or any document related to or executed in connection with this Agreement or the Master Lease (other than the failure to pay full Fixed Rent or to comply with the financial covenants in Sections 8.2.6 and 8.2.7 of the Master Lease, provided that Tenant is in compliance with Section 5 below and continues to operate the Facilities consistent with past practice and provide a high quality of care for residents);

Tenant or Guarantor shall cease to exist or revoke or purport to terminate its liability under any of the Master Lease or this Agreement, or challenge the validity or enforceability of any of such agreements or deny any further liability or obligation thereunder;

Tenant or any of its Affiliates shall become subject to a voluntary or involuntary bankruptcy, receivership, foreclosure or other creditors rights proceedings or Tenant or Guarantor shall fail to pay its debts as they become due, or admits in writing (other than a writing solely to Landlord or any of its Affiliates) its inability to pay its debts generally, or makes an assignment of all or substantially all of its property for the benefit of creditors;

Tenant or Guarantor or any of their respective creditors shall commence a case, proceeding or other action against Landlord relating to any of the Master Lease, this Agreement or the Lease Guaranty or any action or omission by Landlord or its agents in connection with any of the foregoing;

Tenant shall take an action that Landlord reasonably believes in good faith is inconsistent in any material respect with any provision of this Agreement, or impairs, or is likely to impair, the prospect of payment or performance by Tenant of its obligations;

Any default by Tenant or any Affiliate of Tenant shall occur under the terms of (i) any Material Lease or (ii) any Material Financing that (A) continues beyond any applicable grace or cure periods and (B) with respect to which the counterparty exercises remedies other than applying security deposits and/or escrows. “Material Lease” shall mean any lease to which Tenant or a Tenant Affiliate is a party where Welltower or Healthpeak is the landlord. “Material Financing” shall mean any obligation of Tenant or any Affiliate of Tenant (including Guarantor) for borrowed money having a principal balance of $1,000,000 or more in the aggregate including any instrument under which any such obligation is created or secured; or

Failure of the Other Landlords Rent Condition (defined below) for any calendar month.

Surrender of Security Deposit and Escrow Deposits. Effective as of the date hereof and notwithstanding anything in the Master Lease to the contrary, the Security Deposit and all escrow deposits held by Landlord pursuant to Section 3.3 of the Master Lease have been applied to Tenant’s obligations under the Master Lease and shall be deemed fully earned by Landlord and 

3

 

non-refundable. The application of the Security Deposit and such escrow deposits contemplated by this Section 3 shall not reduce or modify Tenant’s obligations under the Master Lease in any respect, including, but not limited to, Tenant’s obligations to pay Impositions and insurance premiums and to make the escrow deposits required by Section 3.3.1 of the Master Lease from and after April 1, 2020.

Landlord’s Termination Right. At any time and from time to time from and after the Effective Date, Landlord may elect to terminate the Master Lease as to any one or more, or all, of the Facilities by written notice to Tenant delivered no later than the date that is 30 days prior to the effective date of termination, which effective date of termination may not be later than December 31, 2020 (a “Termination Notice”). Any such Termination Notice shall indicate whether Landlord elects (i) for Tenant or an Affiliate of Tenant reasonably acceptable to Landlord (“CSL Manager”) to manage the applicable Facility(ies) after the effective date of termination (a “Management Election”) or (ii) to transition the applicable Facility(ies) (a “Transition Election”) to a new operator (a “Successor Operator”). Upon any such termination, whether pursuant to a Management Election or a Transition Election, the applicable Facility shall constitute a Deleted Property and the provisions of Section 17.9 shall pertain. If, as of December 1, 2020, Landlord has not delivered a Termination Notice for any given Facility(ies), then, with respect to such Facility(ies), Landlord will be deemed to have delivered a Termination Notice making a Management Election for such Facility(ies) with an effective date of termination of December 31, 2020. Landlord and Tenant acknowledge and agree that the Fixed Rent allocable to each Facility as of the date hereof is as listed on Schedule 0 attached hereto.

If Landlord makes a Management Election, Tenant would effect an Operational Transfer to Landlord or Landlord’s affiliate pursuant to the terms of Section 37 of the Master Lease, provided, however that Tenant shall, or shall cause the CSL Manager to, upon the effective date of termination of the applicable Facility(ies), enter into a property management agreement with Landlord with respect to the applicable Facility(ies) on market terms and in form prepared by Landlord in its reasonable judgment, which management agreement shall, in any event:

Have an initial term expiring on the date that the Master Lease would have expired for the applicable Facility(ies) or such shorter term as Landlord may specific;

Provide for a management fee equal to 5% of the gross revenues of the applicable Facility(ies);

Be terminable at any time by Landlord for any or no reason on at least 30 days’ prior written notice; and

Include transition obligations substantially equivalent to the transition obligations of Tenant under the Master Lease, as supplemented by this Agreement.

If Landlord makes a Transition Election, Tenant shall effect an Operational Transfer of the applicable Facility(ies) to the Successor Operator(s) designated by Landlord pursuant to the terms of the Master Lease and, without limitation of any provision of the Master 

4

 

Lease (including without limitation Section 37 of the Master Lease [Operational Transfer]), supplemented as follows:

If licenses, permits or certificates held in Tenant’s name cannot be transferred, or cannot be transferred immediately, to Successor Operator, then Tenant shall, at Landlord’s request, enter into an interim management arrangement or another so called “bridging” arrangement in form and substance reasonably acceptable to Landlord and Successor Operator, which will lawfully permit Successor Operator to continue to operate the Facility, and engage in the normal activities of the Facility, under Tenant’s license, permit or certificate, as applicable, until the earliest of completion of such license, permit and certificate transfers, issuance of replacement licenses, permits and certificates.  Under the interim management agreement or bridging arrangements, Successor Operator will be entitled to all revenues but also bear all obligations and expenses, both operating and capital, and including all rent obligations, during the effectiveness of any such agreement.

Tenant shall, for each Facility, enter into (and perform its obligations under) an operations transfer agreement in customary form with Successor Operator providing for an orderly transfer and transition of the business operations, operational assets and employees to Successor Operator, in each case, for nominal or no consideration.  Such operations transfer agreement shall provide for customary indemnities and prorations and other payments of operating revenues and expenses between Tenant and Successor Operator, all of which Tenant agrees to pay or satisfy if and when required under the terms of such agreement provided that a reconciliation process and timeframes for such payment are included in such agreement.  Provisions regarding prorations under such operations transfer agreement shall generally provide that revenues and expenses of the Facility attributable to the period prior to the transition date or “closing” date under such operations transfer agreement (the “OTA Closing Date”) shall be for the account of Tenant and that revenues and expenses of the Facility attributable to the period from and after the OTA Closing Date shall be for the account of Successor Operator.

Tenant and its Affiliates shall agree to customary provisions regarding the non-solicitation/non-hire of employees and customers of the Facilities for a period of two years following the final transition to Successor Operator.

At the option of Landlord, Tenant shall, at its sole cost and expense, procure a two year “tail” policy providing for commercial general and professional liability insurance (if such coverage prior to closing was obtained under a claims made insurance policy) meeting the requirements of the Master Lease for such insurance, naming Landlord, Successor Operator, and/or Landlord’s other designees as additional insureds.

Tenant shall not initiate, prompt or solicit the removal or transfer to another facility of the executive director or the sales director of any Facility, save and except for any removals or transfers arising in connection with any wrongful or egregious acts or omissions, performance that is below acceptable standards, or violations of Tenant’s policies and procedures. With respect to any persons who are or who become owners, officers, directors, or employees of any Successor Operator or who are involved with any Successor Operator in any manner (or who otherwise work at any Facilities transitioned as contemplated hereunder), Tenant and its Affiliates hereby for the benefit of Landlord waive and will not enforce or seek enforcement of any non-competition 

5

 

provision in any non-competition or similar agreement in effect between Tenant and or its Affiliates and such persons. If such person is involved with any Successor Operator as provided in the preceding sentence Tenant and its Affiliates will no longer have any obligation to make payments to such persons under any employment, separation, or similar agreement with such person.

Within 45 days after the Effective Date, Tenant shall agree to a general form of operations transfer agreement on the Landlord’s approved form (and such form shall then be used for all transitions contemplated hereunder, subject to usual and customary changes requested by operators, and subject to deal specific changes applicable to the facility in question).

Tenant and its Affiliates may sell or transfer, directly or indirectly, those properties owned by an Affiliate of Tenant whose direct or indirect parent is Capital Senior Living Properties, Inc. (“CSLP”) (collectively, “Sales”), subject to the provisions of this Section 0. No Sales shall be permitted to Affiliates of Tenant other than those whose direct or indirect parent is CSLP.  If the net proceeds (after transaction costs and repayment of secured debt) in the aggregate for all Sales exceed $30,000,000.00 of net proceeds, then such excess over $30,000,000.00 shall be paid by Tenant as prepaid rent on a pro rata basis to Ventas and Welltower within three days after such sale, such pro rata basis to be determined in accordance with the modified net base or fixed rent of Facilities still owned by Ventas or Welltower and not yet transitioned. Regardless of the amount of net proceeds of Sales, no net proceeds of Sales shall be distributed to any shareholders of the public company.  Net proceeds of Sales are available for operations in the normal course of business, including the scheduled payments of principal and interest on debt of Tenant and any affiliates, regardless of whether CSLP is the direct or indirect parent; however, the net proceeds of Sales may not be used for unscheduled prepayments of debt.  No FF&E or vehicles or other equipment or materials used in connection with any Facility (i.e., covered by the Master Lease) shall be moved (other than replacements of obsolete items in the ordinary course), sold or encumbered.  

Holdover and Forbearance Period Covenants.  During the Forbearance Period, other than as expressly set forth herein, Tenant shall continue to have, and be required to observe, all of the provisions of the Master Lease.  Notwithstanding the foregoing, (a) during the Forbearance Period, Tenant shall not be required to comply with the financial covenants in Sections 8.2.6 and 8.2.7 of the Master Lease; and (b) (i) with respect to Facilities which have not yet been transitioned in accordance with the terms of this Agreement, Tenant’s obligation in respect of Fixed Rent during the Forbearance Period (A) shall, for the period from the Effective Date through December 31, 2020, be equal to 75% of the Fixed Rent that would otherwise be due pursuant to the terms of the Master Lease, as set forth on Schedule 0 under the heading “Forbearance Period Rent” (“Forbearance Period Fixed Rent”) and (B) shall be paid no later than the third calendar day of each calendar month and (ii) with respect to Facilities which have been transitioned in accordance with the terms of this Agreement, Tenant’s obligation in respect of Fixed Rent during the Forbearance Period shall nonetheless continue through December 31, 2020 in the following amount for each Facility: (x) 75% of the Fixed Rent that would otherwise be due for such Facility pursuant to the terms of the Master Lease, as set forth on Schedule 4, less (y) the lower of the 4Q19 Amount for such Facility and the T3 Amount for such Facility. “4Q19 Amount” means the amount set forth on Schedule 4A for each Facility (representing 1/3 of the EBITDAR for each Facility for the period October 1, 2019-December 31, 2019). “T3 Amount” means the average 

6

 

monthly EBITDAR for the Facility in question for the last full three months immediately preceding the transition. “EBITDAR” means, for a given period, revenues for such period less total operating expenses for such period including without limitation property taxes, insurance, professional fees and settlement costs, but excluding management fees and bad debt expense. The aggregate difference between the Forbearance Period Fixed Rent for all Facilities during the Forbearance Period and prior to the transition of such Facilities and the actual contractual Fixed Rent due during such period pursuant to the terms of the Master Lease (such difference being referred to as “Rent Difference”) shall not be released until 91 days after the Final Release Date (in which event such Rent Difference shall no longer be applicable) or the occurrence of a Forbearance Default (in which event such Rent Difference shall become immediately due).  Tenant has paid to Landlord an amount equal to $666,875, being the amount due pursuant to the terms of this Section 5 for March 2020, by automatic debit and transfer to Landlord from Tenant’s bank account.

Capital Expenditures. During the Forbearance Period, (i) Tenant shall have no obligation to fund any amounts into the Capital Expenditures Account, whether or not the Capital Expenditures made and reported by Tenant for a given Capital Expenditures Year are less than the Required Capital Expenditures Amount, (ii) Landlord shall reimburse Tenant for the amounts spent on the Special Projects listed on Schedule 6 attached hereto up to the amounts for such Special Projects as set forth on such Schedule 6 pursuant to the terms of the Master Lease applicable to reimbursement for Special Projects, including the conditions to disbursement set forth therein; provided that the failure to pay full Fixed Rent or to comply with the financial covenants in Section 8.2.6 and 8.2.7 of the Master Lease (provided no Forbearance Default has occurred) shall not constitute a failure of the condition to disbursement set forth in Section 11.5.3(b) of the Master Lease (relating to the existence of an Event of Default or default), and (iii) Landlord shall reimburse Tenant for Capital Expenditures made by Tenant up to an aggregate amount of $1,000 per Unit per Capital Expenditures Year upon written request by Tenant therefor, accompanied by a report summarizing and describing in reasonable detail all of the Capital Expenditures for which such reimbursement is sought, on both an aggregate basis and broken down by Facility, and such receipts and other information as Landlord may reasonably require, provided, however, that Landlord and Tenant may in their respective sole discretions agree on the execution, completion, and reimbursement for other Capital Expenditure projects that will exceed the $1,000 per Unit amount. The aggregate maximum amount of the foregoing reimbursement requirement shall be equitably prorated for any Facility(ies) that are subject to the Master Lease for less than the full Capital Expenditures Year (e.g., due to the effect of a Management Election or Transition Election). In the event of a Forbearance Default, all amounts reimbursed by Landlord to Tenant pursuant to this Section 6 up to the total Required Capital Expenditures Amount that would otherwise have accrued for the applicable period shall become immediately due and payable by Tenant as Additional Rent. Tenant agrees that (i) except as provided in this Section 6, Landlord has, and shall have, no reimbursement obligations to Tenant with respect to any Capital Expenditures undertaken by Tenant and (ii) Tenant shall diligently and continuously prosecute the Special Projects listed on Schedule 6 to completion.

Reporting.

On each Wednesday for so long as Tenant continues to operate any Facility, Tenant shall deliver to Landlord, or its designees, (a) weekly occupancy data; (b) weekly move-out data; 

7

 

(c) weekly sales funnel data; and within five (5) days after the end of a month (d) monthly rent rolls for each Facility, in each case in forms reasonably acceptable to Landlord.

No later than the 5th day of each month, Tenant shall deliver an officer’s certificate to Landlord signed by the CEO or CFO of Capital Senior Living, Inc. confirming that, for the immediately preceding month, (i) all consideration of any kind paid or granted by or on behalf of Tenant and/or any of Tenant’s Affiliates (each, a “Tenant Party” and, collectively, the “Tenant Parties”) to Welltower Inc. and its Affiliates (collectively, “Welltower”) during such month (including, but not limited to, base or minimum rent, capital expenditures on the leased properties, real estate tax payments and/or escrows, and insurance payments and/or escrows, but excluding any security deposits surrendered to such landlord parties on account of a default under the applicable leases) did not exceed the amounts described on Schedule 7.2 under the heading “Welltower” for such month and (ii) all consideration of any kind paid or granted by or on behalf of any Tenant Parties to Healthpeak Properties and its Affiliates (collectively, “Healthpeak”) during such month (including, but not limited to, base or minimum rent, capital expenditures on the leased properties, real estate tax payments and/or escrows, and insurance payments and/or escrows, but excluding any security deposits surrendered to such landlord parties on account of a default under the applicable leases) did not exceed the amounts described on Schedule 7.2 under the heading “Healthpeak” for such month (the “Other Landlords Rent Condition”). In the event that properties leased to Tenant Parties by Welltower or Healthpeak cease to be leased to Tenant Parties, Schedule 7.2 shall be equitably adjusted to account for the resulting reduction in the Tenant Parties’ contractual obligations. Tenant hereby represents and warrants to Landlord that the Other Landlords Rent Condition was satisfied for February, 2020, and the officer’s certificate required by April 5, 2020 shall confirm satisfaction of the Other Landlords Rent Condition for both February 2020 and March 2020.  

Final Release at Completion of Transition.  Provided that the Final Release Conditions have been satisfied in full (the date such conditions are satisfied, the “Final Release Date”), then, ninety-one (91) days following the Final Release Date (provided the Final Release Conditions remained satisfied for the entirety of such period), Landlord shall:

On behalf of itself, and its current and former subsidiaries, successors, assigns, Affiliates, agents, attorneys, employees, members, partners, officers and directors (all of the foregoing persons, collectively, the “Landlord Release Parties”), release Tenant and its current and former subsidiaries, successors, assigns, Affiliates, agents, attorneys, employees, members, partners, officers and directors (all of the foregoing persons, collectively, the “Tenant Release Parties”) from any and all liabilities, claims, actions, causes of action, suits, debts, accounts, damages, injuries or demands of whatever kind or nature (including, without limitation, any claims for attorneys’ fees) related to its obligations under the Master Lease, the Facilities or the operations thereof that any of them had, now have or may have, whether fixed, liquidated or contingent, whether known or unknown and whether asserted by way of claim, counterclaim, cross-claim, action for indemnity, contribution or otherwise, but expressly excluding (i) fraud and (ii) obligations under the Master Lease that expressly survive termination pursuant to the terms of the Master Lease (and the Guaranty shall continue to pertain with respect to such obligations); and

8

 

The “Final Release Conditions” shall mean

No Forbearance Default has occurred;

All of the Facilities have been fully and finally transitioned to Landlord’s Successor Operator (for purposes of this Section 8, such term shall include, in the event of any Management Election, Landlord or its designee) in accordance with the terms of this Agreement and the Master Lease, including, but not limited to, all necessary licenses and permits to operate the Facilities having been issued to such Successor Operator and any so-called “bridging arrangements” with respect to such Facilities having been terminated;

All prorations and other payments between Tenant, Landlord and/or Successor Operator of operating revenues and expenses have been fully and finally settled and paid;

None of Tenant nor any of its Affiliates are subject to a voluntary or involuntary petition under the Bankruptcy Code (11 U.S.C. §§ 101 et. seq.), receivership, foreclosure, assignment for benefit of creditors, or any similar proceeding for the restructuring of its respective financial affairs or liquidation of its respective assets under state or federal law;

No claim has been asserted against Tenant, Landlord, or in each case, any of their Affiliates, seeking to challenge or unwind any of the transactions contemplated herein; and

Tenant provides an updated release in the form contemplated by Section 11.2.

Bankruptcy.  Tenant hereby represents and warrants to Landlord that Tenant (a) intends to consensually restructure its financial affairs without filing a bankruptcy petition under Chapter 11 of the Bankruptcy Code and in the event any petition is filed under Chapter 11, Tenant will make every reasonable effort to propose a consensual plan of reorganization should such a filing become necessary, (b) is instead attempting to effect a consensual out of court restructuring with its creditors and other parties in interest including pursuant to the accommodations provided by Landlord under this Agreement, and (c) the relief allowed by this Agreement and the concessions made by Landlord to date are critical to the Tenant’s efforts to consensually restructure its financial affairs outside of Chapter 11 to the extent reasonably possible.  Landlord is entering into this Agreement in reliance on, among other things, Tenant’s representations, warranties, covenants and agreements set forth in this Section 9, and Tenant is making and entering into those representations, warranties, covenants and agreements in order to induce Landlord to enter into this Agreement.  Accordingly, in the event that Tenant files or becomes the subject of a petition under the Bankruptcy Code:

(i) Tenant consents to relief from any automatic stay imposed by Section 362 of the Bankruptcy Code in connection with the exercise of the rights and remedies otherwise available to Landlord, and Tenant irrevocably waives its rights to object to such relief; and (ii) Tenant agrees that no injunctive relief against Landlord shall be sought under Section 105 or other provision of the Bankruptcy Code, and irrevocably waives its right to file an adversary action to obtain injunctive relief against Landlord.

9

 

Tenant agrees that (i) Landlord is relying upon the timely performance by Tenant of all obligations hereunder, including, without limitation, in respect of its holdover tenancy and obligation to transition the Facilities to a Successor Operator notwithstanding the entry of an order for relief under the Bankruptcy Code; and (ii) the failure by Tenant to comply with its obligations hereunder and the provisions of the Master Lease that survive termination of the Master Lease for any reason whatsoever will result in immediate prejudice that constitutes cause for immediate relief from the automatic stay provisions of the Bankruptcy Code to Landlord; and (iii) upon the entry of an order by the Bankruptcy Court granting relief from the automatic stay pursuant to a request by Landlord, possession will be delivered to Landlord or its Successor Operator by Tenant immediately or as otherwise directed by Landlord, in its sole discretion, without the necessity of any further action by Landlord.

No provision of this Agreement shall be deemed a waiver of Landlord’s rights or remedies under the Bankruptcy Code or applicable law to oppose any relief sought against Landlord, including, without limitation, in respect of the Master Lease or this Agreement, to require timely performance of Tenant’s obligations hereunder, including, without limitation, its obligations to comply with the provisions of the Master Lease that survive termination of the Master Lease, or to gain possession of any Facility(ies) as to which Landlord seeks possession immediately or to assert any claim against Tenant.

The release contemplated in Section 8.1 herein shall be automatically null and void immediately upon the: (i)  filing of a voluntary or involuntary bankruptcy by or against Tenant or any of its Affiliates within 90 days of the Final Release Date; or (i) the entry of any order avoiding or otherwise disallowing the this Forbearance Agreement. Further, the calculation of Rent and damages of Landlord under the Master Lease shall include any payments made by Tenant to Landlord that are subject to any action under Chapter 5 of the Bankruptcy Code, including pursuant to any state law under Section 544 of the Bankruptcy Code.

For purposes of this Section, in the event that a bankruptcy action is commenced, the term “Tenant” shall include Tenant’s successor in bankruptcy, whether a trustee under Chapter 7 or Chapter 11 of the Bankruptcy Code, Tenant as debtor in possession, a custodian whose compliance with Section 543 of the Bankruptcy Code has been excused, or other responsible person.

Most Favored Nations. Tenant shall promptly, and in any event within two (2) business days of execution, provide to Landlord a true and complete copy of any agreement or instrument that has the effect of modifying or amending any Tenant Party’s obligations under its leases with Welltower or Healthpeak (an “Other Landlords Agreement”), together with any documents or information that may reasonably be required to determine the nature and extent of such modifications or amendments, unless complete versions of such documents are already public (including, but not limited to, exhibits). If, in Landlord’s reasonable judgement, any such Other Landlords Agreement has the effect of causing the overall rights, benefits and/or concessions granted to Welltower or Healthpeak relative to its contractual rights under its leases with the Tenant Parties as of February 1, 2020 to be, in the aggregate, more favorable to Welltower or Healthpeak, as applicable, than the rights, benefits and/or concessions granted to Landlord under this Agreement, then Landlord may require such amendments to this Agreement as may be necessary to render such rights, benefits and concessions to be reasonably equivalent to those 

10

 

granted to Welltower or Healthpeak, as applicable, and Tenant shall promptly execute and deliver any such amendment, and no Other Landlords Agreement shall cause a default under Section 7.2 provided that Tenant fully complies with the requirements of this Section 10.

Miscellaneous.

Representations and Warranties.  To induce Landlord to enter into this Agreement, Tenant hereby represents and warrants to Landlord as follows:

Tenant is a corporation, duly organized, validly existing and in good standing under its jurisdiction of organization; Tenant is qualified to do business in and is in good standing under the laws of the State in which the Facility operated by Tenant is located;

Tenant has the power and authority to execute, deliver and perform this Agreement and has taken all requisite action necessary to authorize the execution, delivery and performance of its obligations under this Agreement;

This Agreement constitutes the legal, valid and binding obligation of Tenant enforceable in accordance with its terms;

The execution, delivery and performance of this Agreement will not require any consent, approval, authorization, order or declaration of, or any filing or registration with, any court, any Governmental Authority or any other person other than those that have already been obtained or those that are provided for in this Agreement; and

The execution, delivery and performance of this Agreement do not violate any order, writ, injunction, decree, statute, rule or regulation applicable to Tenant or any of the Facilities.

Tenant has read and understands this Agreement, has consulted with and been represented by legal counsel in connection herewith, and has been advised by its counsel of its rights and obligations hereunder.

The parties hereto acknowledge and agree that this Agreement shall not be construed more favorably in favor of one than the other based upon which party drafted the same, it being acknowledged that all parties hereto contributed substantially to the negotiation and preparation of this Agreement.

Landlord Not Liable; Expenses.

Tenant hereby acknowledges and affirms that, as of the Effective Date, it has no claim, counterclaim, defense, concession, offset, abatement or deduction against its or his obligations under the Master Lease, as affected hereby.

Effective upon the execution of this Agreement, the Tenant Release Parties forever release, acquit and discharge the Landlord Release Parties from any and all liabilities, claims, actions, causes of action, suits, debts, accounts, damages, injuries or demands of whatever kind or nature (including, without limitation, any claims for attorneys’ fees) related to the Tenant 

11

 

Release Parties, the Master Lease, the Facilities or the operations thereof that any of them had, now have or may have, whether fixed, liquidated or contingent, accruing on or prior to the Effective Date, whether known or unknown and whether asserted by way of claim, counterclaim, cross-claim, action for indemnity, contribution or otherwise (collectively, the “Claims”).

In furtherance of the foregoing, the Tenant Release Parties hereby covenant and agree, for and on behalf of themselves and the other Tenant Release Parties, that they shall not, directly or indirectly, commence, maintain, prosecute or sue or cooperate in any suit against any of the Landlord Release Parties, either affirmatively or by way of cross-complaint, indemnity claim or counterclaim or in any other manner or at all on any Claim.

The Tenant Release Parties acknowledge that the release contained in this Section 11.2 (the “Release”) is intended to be effective as a bar to each and every one of the Claims.  The Tenant Release Parties expressly consent to this Release being given full force and effect according to each and all of its express terms and provisions, including, without limitation, those relating to any unknown and unsuspected Claims (notwithstanding any State, Federal or other statute, rule or law that expressly limits the effectiveness of a general release of unknown, unsuspected and unanticipated claims), if any, as well as those relating to any other Claims.  The Tenant Release Parties acknowledge and agree that: (1) execution of this Release is an essential and material inducement to Landlord agreeing to execute this Agreement; (2) this Agreement is to the benefit of, among others, the Tenant Release Parties; and (3) without this Release, Landlord would not have executed and delivered this Agreement or entered into the transactions contemplated hereby.  The Tenant Release Parties further agree that, in the event any Tenant Release Party asserts a Claim against any Landlord Release Party, this Release shall serve as a complete defense to such Claim, and any Landlord Release Party may present this Release as such a defense.

All costs, expenses and fees (including, without limitation, reasonable attorneys’ fees and other professional fees) incurred by Landlord or its Affiliates in the preparation, execution, delivery, negotiation and implementation of this Agreement, or related documents, shall be paid and reimbursed by Tenant (i) on the date of execution of this Agreement and (ii) promptly upon written demand by Landlord from time to time.

Reaffirmation of Obligations, etc.  Tenant acknowledges and agrees that the obligations hereunder, including, without limitation, the provisions of the Master Lease that survive termination of the Master Lease, and all liabilities due and owing Landlord under this Agreement and such Master Lease provisions constitute the valid and binding obligations of Tenant enforceable against Tenant in accordance with their respective terms, and Tenant reaffirms its obligations and liabilities hereunder and in respect of amounts owed under the Master Lease.  Landlord’s entry into this Agreement or any of the documents referenced herein, its negotiations with any party, its conduct of any analysis or investigation of the operations of Tenant, any collateral or any document, its acceptance of any payment from Tenant or any other party of any payments made prior to or after the date hereof and its making of any credit support prior to or after the date hereof and/or any other action or failure to act on the part of Landlord shall not, except as expressly provided herein, (a) constitute a modification of any applicable document, (b) constitute a waiver of any condition, default or Event of Default under the Master Lease, (c) excuse Tenant from any of its obligations hereunder, including, without limitation, in respect of provisions 

12

 

that survive the termination of the Master Lease, or (d) toll the running of any time periods applicable to any rights and remedies of Landlord.  Tenant agrees that it will not assert laches, waiver or any other defense to the enforcement of any of the applicable documents based upon any agreement or action by Landlord set forth in or contemplated by this Agreement.

Guarantor Reaffirmation. Guarantor joins this Agreement and hereby (a) consents to this Agreement and agrees to be bound by its terms and (b) reaffirms that its obligations under the Lease Guaranty to guarantee Tenant’s obligations under the Master Lease, as affected by this Amendment, remain in full force and effect.

Acknowledgement of Liens and Security Interests.  Tenant acknowledges, confirms and agrees that Landlord has and shall continue to have valid, enforceable and perfected first-priority liens upon and security interests in the Lease Collateral and all products and proceeds thereof as specified in the Master Lease.

No Waiver; Cumulative Remedies. No failure to exercise and no delay in exercising, on the part of Landlord, any right, remedy, power or privilege hereunder, shall operate as a waiver thereof; nor shall any single or partial exercise of any right, remedy, power or privilege hereunder preclude any other or further exercise thereof or the exercise of any other right, remedy, power or privilege.  The rights, remedies, powers and privileges herein provided are cumulative and not exclusive of any rights, remedies, powers and privileges provided by law.

Further Assurances.  Landlord and Tenant agree that they shall take such actions and execute, deliver and, if necessary, file such agreements, instruments and other documents as shall be reasonably requested by the other party hereto to preserve or further the parties’ rights pursuant hereto and in order to effectuate the intent and purposes of this Agreement.

Severability.  Whenever possible, each provision of this Agreement shall be interpreted in such a manner as to be effective and valid under applicable law, but if any provision of this Agreement is held to be invalid, illegal or unenforceable in any respect under any applicable law or rule in any jurisdiction, such invalidity, illegality or unenforceability shall not affect any other provision or any other jurisdiction, but this Agreement shall be reformed, construed and enforced in such jurisdiction as if such invalid, illegal or unenforceable provision had never been contained in this Agreement.

Governing Law.  This Agreement is made pursuant to, and shall be construed and enforced in accordance with, the laws of the State of Illinois, irrespective of the principal place of business, residence or domicile of the parties hereto, and without giving effect to otherwise applicable principles of conflicts of law.

Successors And Assigns.  This Agreement and the covenants and agreements herein contained shall be binding upon and inure to the benefit of Landlord and Tenant and their respective heirs, devisees, successors and assigns.

Integrated Agreement; Modifications.  This Agreement, and the terms of the Master Lease that survive termination of the Master Lease, constitute the entire agreement between the parties hereto with respect to the subject matter hereof and supersede any and all prior representations, understandings and agreements, whether written or oral, with respect to such 

13

 

subject matter.  Each of the parties hereto acknowledges that it has not relied upon, in entering into this Agreement, any representation, warranty, promise or condition not specifically set forth in this Agreement.  No supplement, modification or waiver of any provision of this Agreement shall be binding unless executed in writing by the party to be bound thereby.

No Waiver. No waiver of any of the provisions of this Agreement shall be deemed or shall constitute a waiver of any other provision hereof (whether or not similar), nor shall such waiver constitute a continuing waiver unless otherwise expressly provided.  Landlord hereby expressly reserves all rights and remedies that it may have at law, in equity or under the Master Lease and the Guaranty.  Landlord has not waived, does not waive, and shall not be deemed to have waived, any such right or remedy or to have made or given any election with respect to such matters or otherwise.  Nothing contained in this letter is intended to limit, nor shall it be deemed to limit or in any way affect, any of Landlord’s rights or remedies at law, in equity or under the Master Lease with respect to any current or future failure to timely pay amounts owing under the Master Lease or any other matter.  Nothing contained herein, nor any failure by Landlord to exercise, or delay by Landlord in exercising, any of its rights or remedies at law, in equity or under the Master Lease with respect to any existing or future failure to timely pay amounts owing under the Master Lease or any other matter, shall be deemed to constitute, nor is it intended to constitute, a waiver, estoppel, release, modification, limitation, forbearance or agreement by Landlord to delay the exercise of any of Landlord’s rights or remedies at law, in equity or under the Master Lease or a waiver of any obligations of Tenant under the Master Lease.  The following shall not be construed as a waiver or release of any rights or remedies by Landlord or an indication of a course of dealing, and shall not operate as a course of dealing or to toll any cure period, notice period or other applicable period or in any manner modify or give rise to an obligation of Landlord to modify the legal relationship evidenced by the Master Lease: (a) the attendance and/or participation by Landlord or its attorneys or other representatives at any telephone communications, meetings or other discussions with respect to the Master Lease; or (b) any correspondence, statements, discussions, negotiations, meetings, drafts of documents (including, without limitation, unexecuted drafts of proposed modifications) or telephone communications among Landlord and/or its attorneys or other representatives and Tenant and/or its attorneys or other representatives with respect to any proposed transactions involving the Master Lease. The reservations and disclaimers set forth in this term sheet shall continue to apply and remain in full force and effect notwithstanding any action or inaction that Landlord may or may not take with respect to any matter described herein.

Headings and Captions.  The headings and captions of the paragraphs of this Agreement are for convenience of reference only and shall not affect the meaning or interpretation of this Agreement or any provision hereof.

Gender and Number.  As used in this Agreement, the neuter shall include the feminine and masculine, the singular shall include the plural, and the plural shall include the singular, except where expressly provided to the contrary.

Counterparts; Facsimile.  This Agreement may be signed in any number of counterparts, and signature pages may be delivered by facsimile or electronic mail, each of which shall be deemed an original, but all of which together shall constitute one and the same instrument.

14

 

[Signature pages follow]

 

15

 

IN WITNESS WHEREOF, the parties hereto have executed these presents the day and year first above written.

	
 
	
LANDLORD:

Ventas Realty, Limited Partnership,
a Delaware limited partnership

	
Witness:
	
By:Ventas, Inc., a Delaware corporation,
as its general partner

	
Name:
	
 
	
 
	
By:
	
 

	
 
	
 
	
 
	
Name:
	
 

	
 
	
 
	
 
	
Title:
	
 

16

 

	
 
	
Ventas Amberleigh, LLC, a Delaware limited partnership

	
 
	
Ventas Crown Pointe, LLC, a Delaware limited partnership

	
 
	
Ventas East Lansing, LLC, a Delaware limited partnership

	
 
	
Ventas Raleigh, LLC, a Delaware limited partnership

	
 
	
Ventas Santa Barbara, LLC, a Delaware limited partnership

	
 
	
Ventas West Shores, LLC, a Delaware limited partnership

	
 
	
By:
	
Ventas Realty, Limited Partnership,
a Delaware limited partnership, the sole member of each of the foregoing Landlords

	
Witness:
	
 
	
By:
	
Ventas, Inc., a Delaware corporation, its general partner

	
Name:
	
 
	
 
	
By:
	
 
	
 

	
 
	
 
	
 
	
Name:
	
 
	
 

	
 
	
 
	
 
	
Title:
	
 
	
 

	
 
	
 

 

 

17

 

	

	
Tenant:

Capital Senior Management 2, Inc.,
a Texas corporation

	
Witness:
	
 
	
 
	
By:
	
 

	
Name:
	
 
	
 
	
Name:
	
 

	
 
	
 
	
 
	
Title:
	
 

18

 

	
 
	
Guarantor:

Capital Senior Living Properties, Inc.,
a Texas corporation

	
Witness:
	
 
	
 
	
By:
	
 

	
Name:
	
 
	
 
	
Name:
	
 

	
 
	
 
	
 
	
Title:
	
 

 

19

Source: [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00310-of-00352.parquet"}, [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00310-of-00352.parquet"}]]