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Agreement, dated March 18, 2016 (this Agreement ), is by and among each of the persons listed on Schedule A (collectively, the Lucus Group ) and Capital Senior Living Corporation (the
In consideration of and reliance upon the mutual covenants and agreements contained herein, and for other
good and valuable consideration, the receipt and sufficiency of which is hereby acknowledged, the parties hereto agree as follows:
Lucus Group Voting and Related Items. Upon execution of this Agreement, the Lucus Group hereby irrevocably: (i) agrees not to, directly or indirectly, nominate any person for election at the Company s 2016 Annual Meeting of its
stockholders (the 2016 Annual Meeting ), submit any proposal for consideration at, or bring any other business before, the 2016 Annual Meeting, or initiate, encourage or participate in any withhold or similar campaign
with respect to the 2016 Annual Meeting and (ii) agrees to appear in person or by proxy and cause all shares of Company common stock ( Common Stock ) over which it has the right to vote or direct the voting to be present for quorum
purposes and voted (or consent to be given (if applicable)), in each case, at the 2016 Annual Meeting or at any special meeting of the stockholders of the Company that may be held prior to the Expiration Date, (w) in favor of all nominees
recommended by the board of directors of the Company (the Board ), (x) against any nominees for director not recommended by the Board, (y) against any stockholder proposals to remove any director and (z) in favor of (A) the
Company s say-on-pay proposal and (B) the Company s proposal for ratification of the appointment of the Company s independent registered public accounting firm. The Lucus Group shall, and shall cause its Affiliates to,
take each of the required actions (or refrain from taking each of the prohibited actions) set forth in this Section 1, as applicable, and shall not publicly or privately encourage or support any other stockholder of the Company to take any
action in violation of this Section 1.
2. Board Matters. The Nominating and Corporate Governance Committee (the
Nominating Committee ) of the Board, the Board and the Company shall work in good faith and each shall use their commercially reasonable efforts to identify and appoint to the Board no later than the conclusion of the 2016 Annual
Meeting a new independent (pursuant to NYSE standards) director (hereinafter, the New Director ). The New Director shall be included in the Company s proxy statement relating to the 2016 Annual Meeting as a nominee for
director in the class of directors with terms that will expire at the Company s 2019 Annual Meeting of its stockholders, such proxy statement to include no more than three nominees for election as directors at the 2016 Annual Meeting. In
connection with the 2016 Annual Meeting, the Company will (i) nominate the New Director for election as a director of the Company, (ii) recommend that the Company s stockholders vote in favor of the election of the New Director, (iii) use
commercially reasonable efforts to cause the election of the New Director (including supporting the New Director for election in a manner no less rigorous than the manner in which the Company supports all other director nominees), and (iv) solicit
proxies in favor of the New Director and cause all Voting Securities represented
by proxies granted to it (or any of its officers, directors or representatives) to be voted in favor of the New Director. Upon becoming a member of the Board, the New Director shall have the same
rights and benefits as any other Board member and shall be subject to the same duties, protections and policies of the Company that are applicable to all members of the Board. Furthermore, the New Director shall be considered by the Nominating
Committee for inclusion on committees of the Board in good faith in a manner consistent with other members of the Board, in accordance with past practice, for which purpose his or her qualifications and experience shall be reasonably
considered. The Nominating Committee will lead the search for the New Director and will consider in good faith up to two candidates proposed by the Lucus Group (any candidate proposed by the Lucus Group, a Lucus
Candidate ). The Nominating Committee will evaluate and give due consideration to all candidates considered for appointment as the New Director, including the Lucus Candidates, consistent with the Nominating Committee s fiduciary
duties under applicable law, and, in good faith, the Chair of the Nominating Committee shall consult with Schuster Tanger ( Tanger ) and keep Tanger reasonably updated throughout the search process described herein (including,
without limitation, by providing the names of any candidates that are formally considered by the Nominating Committee for selection as the New Director nominee following the date hereof). Tanger shall be entitled, upon reasonable advance notice
and during normal business hours, to have a reasonable number of meetings (in person or telephonic) with the Chair of the Nominating Committee to discuss the proposed candidates prior to the final selection of the New Director; provided, that the
Nominating Committee shall have the ultimate discretion to select the New Director.
3. Standstill. From the date of this Agreement
to the Expiration Date (the Restricted Period ), the Lucus Group shall not, and shall cause its Affiliates and its and their respective principals, directors, general partners, officers, employees, and agents and representatives
acting on its or their behalf, as applicable, not to, in any way, directly or indirectly (in each case except as expressly permitted by this Agreement):
The Lucus Group, jointly and severally, agrees to be responsible for any action or omission
by any of the following that would constitute a breach of this Agreement if directly or indirectly taken or omitted by the Lucus Group: any consultants, agents, representatives, attorneys and advisors of the Lucus Group, to the extent such persons
are directly or indirectly acting on behalf of the Lucus Group.
The restrictions set forth above in this Section 3 shall not apply for the
duration of any period that the Company is not in material compliance with its obligations under Section 2, Section 6 or Section 16 of this Agreement.
4. Representations and Warranties of All Parties; Representations and Warranties of the Lucus Group. Each of the parties
represents and warrants to the other party that: (a) such party has all requisite corporate or limited liability company power (or legal capacity, as applicable) and authority to execute and deliver this Agreement and to perform its obligations
hereunder; (b) this Agreement has been duly and validly authorized, executed and delivered by it and is a valid and binding obligation of such party, enforceable against such party in accordance with its terms; (c) this Agreement will not result in
a violation of any terms or conditions of any agreements to which such person is a party or by which such party may otherwise be bound or of any law, rule, license, regulation, judgment, order or decree governing or affecting such party; and (d)
there is currently no pending or outstanding litigation between the Lucus Group and the Company or any of its subsidiaries. The Lucus Group hereby represents and warrants to the Company that as of the date hereof, (i) the Lucus Group
beneficially owns in the
aggregate 1,878,829 shares of Common Stock, (ii) neither the Lucus Group nor any of its Affiliates is a party to any swap or hedging transactions or other derivative agreement of any nature with
respect to the Voting Securities; and (iii) neither the Lucus Group nor any of its Affiliates is a member of a group with any person or entity outside of the Lucus Group within the meaning of Section 13(d) of the Exchange Act.
5. Remedies; Forum and Governing Law. The parties hereto recognize and agree that if for any reason any of the provisions of this
Agreement are not performed in accordance with their specific terms or are otherwise breached, immediate and irreparable harm or injury would be caused for which money damages would not be an adequate remedy. Accordingly, each party agrees that
in addition to other remedies that any other party shall be entitled to at law or equity, such other party shall be entitled to seek an injunction or injunctions to prevent breaches of this Agreement and to enforce specifically the terms and
provisions of this Agreement exclusively in the Court of Chancery or other federal or state courts of the State of Delaware. In the event that any action shall be brought in equity to enforce the provisions of this Agreement, no party shall
allege, and each party hereby waives the defense, that there is an adequate remedy at law. Furthermore, each of the parties hereto (a) consents to submit itself to the personal jurisdiction of the Court of Chancery or other federal or state
courts of the State of Delaware in the event any dispute arises out of this Agreement or the transactions contemplated by this Agreement, (b) agrees that it shall not attempt to deny or defeat such personal jurisdiction by motion or other request
for leave from any such court, (c) agrees that it shall not bring any action relating to this Agreement or the transactions contemplated by this Agreement in any court other than the Court of Chancery or other federal or state courts of the State of
Delaware, and each of the parties irrevocably waives the right to trial by jury, (d) agrees to waive any bonding requirement under any applicable law, in the case any other party seeks to enforce the terms by way of equitable relief and (e)
irrevocably consents to service of process by a reputable overnight mail delivery service, signature requested, to the address of such party s principal place of business or as otherwise provided by applicable law. THIS AGREEMENT SHALL BE
GOVERNED IN ALL RESPECTS, INCLUDING VALIDITY, INTERPRETATION AND EFFECT, BY THE LAWS OF THE STATE OF DELAWARE APPLICABLE TO CONTRACTS EXECUTED AND TO BE PERFORMED WHOLLY WITHIN SUCH STATE WITHOUT GIVING EFFECT TO THE CHOICE OF LAW PRINCIPLES OF SUCH
6. Press Release; Non-Disparagement. The parties agree that the Company and the Lucus Group shall jointly issue a
press release no later than two (2) business days following the execution of this Agreement announcing the entry into this Agreement, in the form attached hereto as Exhibit A, and none of the parties to this Agreement shall issue any other
press release with respect to the matters specified herein. During the Restricted Period, each party hereto agrees that it will not, and will cause its Affiliates, Associates, directors, officers and employees not to, and will direct its
agents, representatives, attorneys and advisors not to make, or cause to be made, any statement or announcement that constitutes an ad hominem attack on, or otherwise disparages, impugns or is reasonably likely to damage the reputation of, (i) in
the case of statements or announcements made by the Lucus Group, the Company or any of its current or
former officers, directors or employees or (ii) in the case of statements or announcements made by the Company, the Lucus Group or any of its current of former officers, directors, partners,
employees or advisors, in each of the cases in clauses (i) or (ii), in any public communication or in any communication that would reasonably be expected to enter the public domain. The foregoing shall not restrict the ability of any person to
(i) comply with any subpoena or other legal process or respond to a request for information from any governmental authority with jurisdiction over the party from whom information is sought or (ii) make private statements to directors of the Board in
a manner in which public dissemination of such statements would not be reasonably anticipated.
7. Definitions. As used in this
Agreement, the term (a) person shall be interpreted broadly to include, among others, any individual, general or limited partnership, corporation, limited liability or unlimited liability company, joint venture, estate, trust,
group, association or other legal entity of any kind or structure; (b) Affiliate shall have the meaning set forth in Rule 12b-2 promulgated under the Exchange Act and shall include persons who become Affiliates of any person
subsequent to the date of this Agreement; (c) Associate shall have the meaning set forth in Rule 12b-2 promulgated under the Exchange Act and shall include persons who become Associates of any person subsequent to the date of this
Agreement; (d) Voting Securities shall mean the shares of the Common Stock and any other securities of the Company entitled to vote in the election of directors, or securities convertible into, or exercisable or exchangeable for,
such shares or other securities, whether or not subject to the passage of time or other contingencies; (e) business day shall mean any day other than a Saturday, Sunday or a day on which the Federal Reserve Bank of New York is
closed; (f) beneficially own , beneficially owned and beneficial ownership shall have the meaning set forth in Rule 13d-3 promulgated under the Exchange Act; (g) Expiration
Date means the date that is the earlier of (i) thirty (30) days prior to the last date pursuant to which stockholder nominations for director elections are permitted pursuant to the Company s bylaws with respect to the Company s
2017 Annual Meeting of stockholders and (ii) ninety (90) days prior to the first anniversary of the date of the 2016 Annual Meeting; and (h) Extraordinary Transaction shall have the meaning set forth in Section 3(c) of this
8. No Waiver. Any waiver by any party of a breach of any provision of this Agreement shall not operate as or be
construed to be a waiver of any other breach of such provision or of any breach of any other provision of this Agreement. The failure of a party to insist upon strict adherence to any term of this Agreement on one or more occasions shall not be
considered a waiver or deprive that party of the right thereafter to insist upon strict adherence to that term or any other term of this Agreement.
9. Further Assurances. From and after the execution of this Agreement until the Expiration Date the parties shall cooperate with
each other in good faith in order to implement and carry out the intent of this Agreement.
10. Entire Agreement. This
Agreement contains the entire understanding of the parties with respect to the subject matter hereof and may be amended only by an agreement in writing executed by the parties hereto.
11. Notices. All notices, consents, requests, instructions, approvals and other
communications provided for herein and all legal process in regard hereto shall be in writing and shall be deemed validly given, made or served, if (a) given by email, when such email is sent to the email address set forth below and the appropriate
confirmation is received or (b) if given by any other means, when actually received during normal business hours at the address specified in this subsection:
Senior Living Corporation
14160 Dallas Parkway, Suite 300
Attention: David R. Brickman
Senior Vice President,
Email: dbrickman@capitalsenior.com
With a copy to (which shall not constitute notice):
Paul, Weiss, Rifkind, Wharton & Garrison, LLP
1285 Avenue of the Americas
Attention: Robert B. Schumer
Email: rschumer@paulweiss.com
If to the Lucus Group:
New York, New York 10004
Attention: Schuster Tanger
With a copy to (which shall not constitute notice):
Gibson, Dunn & Crutcher LLP
Attention: Richard J. Birns
Email: rbirns@gibsondunn.com