Document:

Amended and Restated LLC Agreement

    
      
        

      

       

      

       

      AMENDED
        AND RESTATED LIMITED LIABILITY COMPANY AGREEMENT

       

      OF

       

      FEBC-ALT
        INVESTORS LLC

       

      dated
        as of June 29, 2005

       

      

       

      

      
        
          
          

        

        
          
          

          
            

          

        

        
          
          

        

      

      

      
        	
                TABLE
                  OF CONTENTS

              
	 	 	 
	
                ARTICLE
                  I DEFINITIONS AND INTERPRETATION

              	
                1

              
	
                Section
                  1.1.

              	
                Definitions.

              	
                1

              
	
                Section
                  1.2.

              	
                Interpretation

              	
                8

              
	
                ARTICLE
                  II GENERAL PROVISIONS

              	
                8

              
	
                Section
                  2.1.

              	
                Registered
                  Office

              	
                8

              
	
                Section
                  2.2.

              	
                Other
                  Offices

              	
                8

              
	
                Section
                  2.3.

              	
                Purpose;
                  Nature of Business Permitted; Powers

              	
                8

              
	
                Section
                  2.4.

              	
                Limited
                  Liability of Members

              	
                8

              
	
                Section
                  2.5.

              	
                Tax
                  Classification; No State Law Partnership.

              	
                9

              
	
                Section
                  2.6.

              	
                Duration

              	
                9

              
	
                Section
                  2.7.

              	
                Qualification
                  in Other Jurisdictions

              	
                9

              
	
                Section
                  2.8.

              	
                Certificates

              	
                9

              
	
                ARTICLE
                  III FINANCING; ADDITIONAL MEMBERS

              	
                9

              
	
                Section
                  3.1.

              	
                Capital
                  Contributions Generally

              	
                9

              
	
                Section
                  3.2.

              	
                Additional
                  Voluntary Capital Contributions.

              	
                9

              
	
                Section
                  3.3.

              	
                Admission
                  of New Members

              	
                10

              
	
                Section
                  3.4.

              	
                Renaissance
                  Acquisition

              	
                10

              
	
                Section
                  3.5.

              	
                Pre-emptive
                  Rights

              	
                10

              
	
                ARTICLE
                  IV MANAGEMENT OF THE COMPANY

              	
                11

              
	
                Section
                  4.1.

              	
                Composition
                  of the Board of Managers.

              	
                11

              
	
                Section
                  4.2.

              	
                Authority
                  of the Board

              	
                11

              
	
                Section
                  4.3.

              	
                Other
                  Ventures.

              	
                12

              
	
                Section
                  4.4.

              	
                Meetings
                  of the Board; Notice, Quorum and Voting Requirements.

              	
                13

              
	
                Section
                  4.5.

              	
                Action
                  by Written Consent

              	
                13

              
	
                Section
                  4.6.

              	
                Compensation

              	
                14

              
	
                Section
                  4.7.

              	
                Standard
                  of Care; Fiduciary Duties

              	
                14

              
	
                Section
                  4.8.

              	
                Officers;
                  Designation; Term; Qualifications.

              	
                15

              
	
                Section
                  4.9.

              	
                Boards
                  of Subsidiaries

              	
                15

              
	
                ARTICLE
                  V TRANSFERS OF MEMBERSHIP INTERESTS

              	
                16

              
	
                Section
                  5.1.

              	
                Restrictions
                  on Transfer.

              	
                16

              
	
                Section
                  5.2.

              	
                Non-Permitted
                  Transfers.

              	
                18

              
	
                Section
                  5.3.

              	
                Tag-Along
                  Rights.

              	
                18

              
	
                Section
                  5.4.

              	
                Drag-Along
                  Rights.

              	
                20

              
	
                Section
                  5.5.

              	
                Further
                  Actions and Additional Agreements.

              	
                21

              
	
                ARTICLE
                  VI DISTRIBUTIONS AND EXPENSES

              	
                22

              
	
                Section
                  6.1.

              	
                Distributions

              	
                22

              
	
                Section
                  6.2.

              	
                Amounts
                  Withheld

              	
                22

              
	
                Section
                  6.3.

              	
                Expenses

              	
                22

              
	
                Section
                  6.4.

              	
                Omega
                  Healthcare Guarantee

              	
                22

              
	
                ARTICLE
                  VII DISSOLUTION AND TERMINATION OF THE COMPANY

              	
                23

              
	
                Section
                  7.1.

              	
                Dissolution

              	
                23

              
	
                Section
                  7.2.

              	
                Continuation
                  of Interest of Member’s Representative

              	
                23

              
	
                Section
                  7.3.

              	
                Dissolution,
                  Winding Up and Liquidation

              	
                23

              
	
                ARTICLE
                  VIII

              	 	
                24

              
	
                REPRESENTATIONS
                  AND WARRANTIES

              	
                24

              
	
                Section
                  8.1.

              	
                Representations
                  and Warranties of the Initial Members

              	
                24

              
	
                Section
                  8.2.

              	
                Survival

              	
                25

              
	
                ARTICLE
                  IX INDEMNIFICATION AND CONTRIBUTION

              	
                25

              
	
                Section
                  9.1.

              	
                Indemnity
                  by the Company.

              	
                25

              
	
                Section
                  9.2.

              	
                Exculpation

              	
                25

              
	
                Section
                  9.3.

              	
                Indemnification
                  by the Members

              	
                26

              
	
                Section
                  9.4.

              	
                Expenses

              	
                26

              
	
                Section
                  9.5.

              	
                Beneficiaries.

              	
                26

              
	
                Section
                  9.6.

              	
                Indemnification
                  Procedure for Third-Party Claims

              	
                26

              
	
                Section
                  9.7.

              	
                Other
                  Claims

              	
                27

              
	
                Section
                  9.8.

              	
                Limitation
                  on Damages

              	
                27

              
	
                Section
                  9.9.

              	
                Survival

              	
                27

              
	
                ARTICLE
                  X MISCELLANEOUS PROVISIONS

              	
                28

              
	
                Section
                  10.1.

              	
                Entire
                  Agreement

              	
                28

              
	
                Section
                  10.2.

              	
                Amendments

              	
                28

              
	
                Section
                  10.3.

              	
                Applicable
                  Law; Venue.

              	
                28

              
	
                Section
                  10.4.

              	
                Enforcement

              	
                29

              
	
                Section
                  10.5.

              	
                Headings.

              	
                29

              
	
                Section
                  10.6.

              	
                Severability

              	
                29

              
	
                Section
                  10.7.

              	
                Heirs,
                  Successors and Assigns

              	
                29

              
	
                Section
                  10.8.

              	
                Financial
                  Statements and Reports

              	
                29

              
	
                Section
                  10.9.

              	
                Counterparts

              	
                30

              
	
                Section
                  10.10.

              	
                Filings.

              	
                30

              
	
                Section
                  10.11.

              	
                Additional
                  Documents

              	
                30

              
	
                Section
                  10.12.

              	
                Notices.

              	
                30

              
	
                Section
                  10.13.

              	
                Waiver
                  of Right to Partition and Bill of Accounting.

              	
                31

              
	
                Section
                  10.14.

              	
                Confidentiality;
                  Press Releases.

              	
                31

              
	
                Section
                  10.15.

              	
                Disclosures.

              	
                32

              
	
                Section
                  10.16.

              	
                Specific
                  Enforcement

              	
                32

              
	
                Section
                  10.17.

              	
                Waivers.

              	
                32

              

      

      

      

      Schedule
        I - Schedule
        of Capital Contributions, Percentage Interests of Members and
        Balances

      Exhibit
        A
        - Form
        of
        Draft Conveyance Agreement

      

      

      
        
          
          

        

        
          
          

          
            

          

        

        
          
          

          
          

        

      

      AMENDED
        AND RESTATED LIMITED LIABILITY COMPANY AGREEMENT

       

      OF

       

      FEBC-ALT
        INVESTORS LLC

      a
        Delaware Limited Liability Company

       

      THIS
        AMENDED AND RESTATED LIMITED LIABILITY COMPANY AGREEMENT (this “Agreement”)
        of
        FEBC-ALT INVESTORS LLC, a Delaware limited liability company (the “Company”),
        is
        made as of June 29, 2005, by and among, FIT-ALT INVESTOR LLC, a Delaware
        limited
        liability company (“FIT-ALT
        Investor”),
        as
        the Class A Member, and NW SELECT LLC, a Washington limited liability company
        (“NW
        Select”),
        and
        EMERITUS CORPORATION, a Washington corporation (“Emeritus”),
        as
        the Class B Members, and the Company.

       

      RECITALS:

       

      WHEREAS,
        FIT-ALT Investor caused a Certificate of Formation of the Company to be filed
        with the Secretary of State of the State of Delaware on August 1, 2003 to
        organize the Company under and pursuant to the Act (as hereinafter
        defined);

       

      WHEREAS,
        the Initial Members entered into that certain Limited Liability Company
        Agreement of the Company dated as of October 14, 2003 and amended as of November
        17, 2003 (the “Original
        LLC Agreement”);
        and

       

      WHEREAS,
        pursuant to the Membership Interest Purchase Agreement, dated as of the date
        hereof, between Brookdale Senior Living, Inc. ("BSL"),
        FIT-ALT Investor, Emeritus and NW Select (the "Membership
        Interest Purchase Agreement"),
        FIT-ALT Investor has purchased a portion of the Membership Interest of each
        of
        Emeritus and NW Select;

       

      WHEREAS,
        in connection with the Membership Purchase Agreement and in accordance with
        the
        terms of Section 13.2 of the Original LLC Agreement, the Company and the
        Members
        desire to amend the Original LLC Agreement as set forth herein.

       

      NOW,
        THEREFORE, in consideration of the mutual promises and agreements herein
        made
        and intending to be legally bound hereby, the parties hereto agree as follows:
        

       

        

       

       

      DEFINITIONS
        AND INTERPRETATION

       

        Definitions.
        Unless
        the context otherwise requires, the terms defined in this Section
        1.1
        shall,
        for the purposes of this Agreement, have the meanings specified
        below:

       

      “Act”
        means
        the Delaware Limited Liability Company Act (as it may be amended from time
        to
        time and any successor to such Act).

       

      
        
          
          

        

        
          1

          
            

          

        

        
          
          

        

      

      “Affiliate”
        means,
        when used with reference to a specified Person (or when not referring to
        a
        specified Person shall mean an Affiliate of a Member), any Person that, directly
        or indirectly, through one or more intermediaries, Controls, is Controlled
        by or
        is under common Control with such specified Person (or Member).

       

      “Affiliated
        Individual”
        means,
        with respect to a specified Person, any individual who is an officer, director,
        shareholder, employee, partner or member of such specified Person or a Family
        Member of any of the foregoing.

       

      “Affiliated
        Initial Member Transferee”
        means
        an Affiliate of one or more of the Initial Members that is ultimately Controlled
        by one or more of the Ultimate Controlling Person(s) Controlling such Member
        as
        of the date hereof.

       

      “Agreement”
        has the
        meaning set forth in the Preamble.

       

      “Alterra”
        means
        Alterra Healthcare Corporation, a Delaware corporation.

       

      “Approved
        Sale”
        has the
        meaning set forth in Section
        5.4(a).

       

      “Bankruptcy”
        means,
        with respect to any Person, a “Voluntary
        Bankruptcy”
        or an
“Involuntary
        Bankruptcy”.
        A
“Voluntary
        Bankruptcy”
        shall
        mean, with respect to any Person, (i) an admission in writing by such Person
        of
        its inability to pay its debts generally or a general assignment by such
        Person
        for the benefit of creditors, (ii) the filing of any petition or answer by
        such
        Person seeking to adjudicate it a bankrupt or insolvent or seeking for itself
        any liquidation, winding up, reorganization, arrangement, adjustment,
        protection, relief or composition of such Person or its debts under any law
        relating to bankruptcy, insolvency, reorganization or relief of debtors,
        or
        seeking, consenting to or acquiescing in the entry of an order for relief
        or the
        appointment of a receiver, trustee, custodian or other similar official for
        such
        Person or for any substantial part of its property, or (iii) corporate action
        taken by such Person to authorize any of the actions set forth above. An
        “Involuntary
        Bankruptcy”
        shall
        mean, with respect to any Person, without the consent or acquiescence of
        such
        Person, the entering of an order for relief or approving a petition for relief
        or reorganization or any other petition seeking any reorganization, arrangement,
        composition, readjustment, liquidation, dissolution or other similar relief
        under any present or future bankruptcy, insolvency or similar statute, law
        or
        regulation or the filing of any such petition against such Person which order
        or
        petition shall not be dismissed within ninety (90) Business Days or, without
        the
        consent or acquiescence of such Person, the entering of an order appointing
        a
        trustee, custodian, receiver or liquidator of such Person or of all or any
        substantial part of the property of such Person, which order shall not be
        dismissed within ninety (90) Business Days.

       

      “Base
        Closing Date Capital Contribution”
        means,
        with respect (i) to FIT-ALT Investor, $49,000,000, (ii) Emeritus, $7,000,000,
        and (iii) NW Select, $7,000,000.

       

      “Board”
        has the
        meaning set forth in Section
        4.1.

       

      “Business
        Day”
        means
        any day other than a Saturday, Sunday or any other day on which banks in
        the
        City of New York are required or permitted by law to be closed.

       

      
        
          
          

        

        
          2

          
            

          

        

        
          
          

        

      

      “Capital
        Contribution”
        means,
        with respect to any Member, the amount of money contributed to the Company
        in
        exchange for or in respect of a Membership Interest in the Company, including
        the Base Closing Date Capital Contribution of such Member, as well as any
        Covering Capital Contribution made by such Member.

       

      “Certificate
        of Formation”
        means
        the Certificate of Formation of the Company filed with the Secretary of State
        of
        the State of Delaware on August 1, 2003 to organize the Company under and
        pursuant to the Act and all amendments thereto and restatements thereof filed
        on
        behalf of the Company with the office of the Secretary of State of the State
        of
        Delaware pursuant to the Act.

       

      “Claims
        and Expenses”
        suffered or incurred by a Person means any and all claims, actions, suits,
        proceedings, liabilities, obligations, losses, and damages, judgments, fines,
        penalties, amounts paid in settlement, interest, costs and expenses (including
        reasonable attorney’s and accountant’s fees, court costs and other out-of-pocket
        expenses actually and reasonably incurred in investigating, preparing or
        defending the foregoing) suffered or incurred by such Person.

       

      “Class
        A Investment Balance”
        means,
        as of a specified date: (i) the aggregate amount of all Capital Contributions
        made by or on behalf of the Class A Member prior to such date less
        (ii) the
        aggregate amount of all distributions made to the Class Member pursuant to
        clause (ii) of Section
        6.1
        prior to
        such date. 

       

      “Class
        A Member”
        means
        FIT-ALT Investor and its successors and permitted assigns.

       

      “Class
        A Preferred Return”
        means a
        preferred return on the Class A Investment Balance from time to time accruing,
        commencing on the Closing Date, at the rate of fifteen percent (15%) per
        annum,
        compounded monthly.

       

      “Class
        A Preferred Return Balance”
        means,
        as of a specified date: (i) the aggregate amount of the Class A Preferred
        Return
        accrued as of such date less
        (ii) the
        aggregate amount of all distributions made to the Class Member pursuant to
        clause (i) of Section
        6.1
        prior to
        such date. 

       

      “Class
        A Purchase Return Balance”
        means
        $6,000,000.

       

      “Class
        B Members”
        means
        Emeritus and NW Select, and their respective successors and permitted assigns;
        provided,
        however,
        that in
        no event shall FIT-ALT, its Affiliates or its successors or assigns be deemed
        a
        "Class B Member."

       

      “Closing
        Date”
        means
        the effective date of the Merger.

       

      “Code”
        means
        the Internal Revenue Code of 1986.

       

      “Company”
        has the
        meaning set forth in the Preamble.

       

      
        
          
          

        

        
          3

          
            

          

        

        
          
          

        

      

      “Company
        Asset”
        means
        the capital stock of FEBC-ALT Holdings or any other property or asset acquired
        by the Company.

       

      “Company
        Indemnified Person”
        has the
        meaning set forth in Section
        9.1.

       

      “Confidential
        Information”
        shall
        mean any information disclosed to a Member or any Affiliate relating to the
        business or operations of the Company or any of its Subsidiaries or the business
        or operations of any Member or any Affiliate, including any business plans,
        financial information, personnel information, secret processes, know-how,
        customer lists, formulas, facility drawings or other technical data. To the
        extent not disclosed pursuant to the Disclosure Statement distributed to
        creditors in the Chapter 11 Proceeding, the terms of this Agreement and the
        other Transaction Documents shall also be deemed to constitute Confidential
        Information for the purposes hereof. Notwithstanding the foregoing, information
        shall not be deemed to be “Confidential Information” to the extent that such
        information was (i) previously known on a nonconfidential basis by such Member
        or Affiliate, (ii) in the public domain through no fault of such Member or
        Affiliate or (iii) later lawfully acquired by a Person from sources other
        than
        such Member or Affiliate.

       

      “Control”
        means,
        with respect to any Person, the power of another Person, through ownership
        of
        equity, contract rights or otherwise, to direct the management and policies
        of
        such Person, and “Controlled” and “Controlling” have correlative
        meanings.

       

      “Covering
        Contribution”
        has the
        meaning set forth in Section
        3.2(b).

       

      “Dilution
        Adjustment”
        has the
        meaning set forth in Section
        6.4.

       

      “Emeritus”
        has the
        meaning set forth in the Preamble.

       

      “Exchange
        Act”
        means
        the Securities Exchange Act of 1934 (as it may be amended from time to time
        and
        any successor to such act) and the rules and regulations
        thereunder.

       

      “Family
        Member”
        means,
        with respect to any specified natural person, (i) any parent, child, descendant,
        or sibling of such natural person (including relationships resulting from
        adoption), (ii) the spouse of such natural person or of any person described
        in
        clause (i), or (iii) any parent, child, descendant or sibling of such spouse
        (including relationships resulting from adoption).

       

      “FEBC-ALT
        Holdings”
        means
        FEBC-ALT Holdings Inc., a Delaware corporation.

       

      “FEBC-ALT
        Investors Inc.”
        has the
        meaning set forth in the Recitals.

       

      “Fiscal
        Year”
        shall
        be the fiscal year of the Company as determined by the Board from time to
        time.

       

      “FIT-ALT
        Investor”
        has the
        meaning set forth in the Preamble.

       

      
        
          
          

        

        
          4

          
            

          

        

        
          
          

        

      

      “Formation
        Date”
        means
        October 14, 2003.

       

      “’40
        Act”
        means
        the Investment Company Act of 1940 (as it may be amended from time to time
        and
        any successor to such act), and the rules and regulations
        thereunder.

       

      “GAAP”
        means
        generally accepted accounting principles set forth in the opinions and
        pronouncements of the Accounting Principles Board of the American Institute
        of
        Certified Public Accountants and the statements and pronouncements of the
        Financial Accounting Standards Board or in such other statements by such
        other
        entity as may be approved by a significant segment of the accounting profession,
        which are applicable to the circumstances as of the date of
        determination.

       

      “Guarantee
        Payment”
        has the
        meaning set forth in Section
        6.4.

       

      “Guarantor”
        has the
        meaning set forth in Section
        6.4.

       

      “Indemnifiable
        Losses”
        has the
        meaning set forth in Section
        9.1.

       

      “Indemnified
        Party”
        has the
        meaning set forth in Section
        9.6.

       

      “Indemnifying
        Party”
        has the
        meaning set forth in Section
        9.6.

       

      “Initial
        Member”
        means
        each of FIT-ALT Investor, Emeritus and NW Select.

       

      “Initial
        Public Offering”
        has the
        meaning set forth in Section
        4.2.

       

      “IPO
        Securities”
        has the
        meaning set forth in Section
        4.2.

       

      “Manager”
        and
”Managers”
        have
        the meanings set forth in Section
        4.1(a).

       

      “Member”
        means a
        Class A Member or a Class B Member, as applicable, and “Members”
        means
        the Class A Member and Class B Members.

       

      “Membership
        Interest”
        means,
        with respect to any Member, the limited liability company interest (as defined
        in the Act) of such Member in the Company, including each Member’s voting
        rights, if any, and any other rights, benefits and obligations of such Member
        under this Agreement and the Act.

       

      “Membership
        Interest Purchase Agreement”
        has the
        meaning set forth in the Recitals.

       

      “Merger”
        means
        the merger pursuant to the Merger Agreement of FEBC-ALT Acquisition Inc.
        with
        and into Alterra, which resulted in Alterra becoming a wholly-owned subsidiary
        of FEBC-ALT Holdings.

       

      “Merger
        Agreement”
        means
        the Agreement and Plan of Merger, dated as of July 18, 2003 (the “Merger
        Agreement”),
        between FEBC-ALT Investors Inc, FEBC-ALT Acquisition Inc. and Alterra.

       

      
        
          
          

        

        
          5

          
            

          

        

        
          
          

        

      

      “NW
        Select”
        has the
        meaning set forth in the Preamble.

       

      “Officers”
        has the
        meaning set forth in Section
        4.8.

       

      “Omega”
        has the
        meaning set forth in Section
        6.4.

       

      “Omega
        Guarantee”
        has the
        meaning set forth in Section
        6.4.

       

      “Original
        LLC Agreement”
        has the
        meaning set forth in the Recitals.

       

      “Other
        Members”
        has the
        meaning set forth in Section
        5.3(a).

       

      “Participating
        Member”
        has the
        meaning set forth in Section
        5.3(b).

       

      “Percentage
        Interest”
        means,
        with respect to any Member, the percentage set forth opposite its name on
        Schedule
        I,
        as such
        schedule may be amended to reflect changes in such percentage contemplated
        by
Article
        III,
        resulting from Transfers made pursuant to and in accordance with this Agreement
        or resulting from any Reorganization Transaction.

       

      “Person”
        means
        any individual, corporation, association, partnership (general or limited),
        joint venture, trust, joint-stock company, estate, limited liability company,
        unincorporated organization or other legal entity or organization.

       

      “Principal
        Emeritus Shareholders”
        means,
        collectively, Daniel R. Baty and each other shareholder who beneficially
        owns
        (as such term is understood for purposes of Rule 13d-3 of the Exchange Act)
        as
        of the date hereof twenty-five percent (25%) or more of the common stock
        of
        Emeritus.

       

      “Renaissance
        Acquisition”
        means
        the direct or indirect acquisition by the Company or a Subsidiary thereof,
        whether by contribution, exchange, merger, sale or otherwise, of up to nine
        senior living properties (the "Renaissance
        Properties")
        subject to the Purchase and Sale Agreement, dated as of March 16, 2005, by
        and
        between SHP Pacific Inn, LLC; SHP Nohl Ranch, LLC; SHP Gables, LLC; SHP Oak
        Tree
        Villa, LLC; SHP Lexington, LLC; SHP Inn at the Park, LLC; SHP Paulin Creek,
        LLC;
        SHP Mirage Inn, LLC; SHP Ocean House, LLC and FIT REN LLC, as amended by
        that
        certain First Amendment to Purchase and Sale Agreement, dated as of June
        10,
        2005..

       

      “Renaissance
        Cut-Off Date”
        has the
        meaning set forth in Section
        6.4.

       

      “Reorganization
        Transaction”
        has the
        meaning set forth in Section
        4.2.

       

      “Representative”
        has the
        meaning set forth in Section
        7.2.

       

      “Securities
        Act”
        means
        the Securities Act of 1933 (as it may be amended from time to time and any
        successor to such act) and the rules and regulations thereunder.

       

      
        
          
          

        

        
          6

          
            

          

        

        
          
          

        

      

      “Stockholders
        Agreement”
        shall
        mean the stockholders and voting agreement attached as Exhibit IV to the
        Membership Interest Purchase Agreement by and among NW Select LLC, Emeritus
        Corporation and FIT-ALT Investor LLC.

       

      “Subsidiary”
        of a
        specified Person means any corporation, partnership, limited liability company,
        joint venture or other legal entity of which the Person (either alone or
        through
        or together with any other Subsidiary), owns, directly or indirectly, 50%
        or
        more of the outstanding voting securities or equity interests of such legal
        entity or is the general partner of such legal entity.

       

      “Tag-Along
        Notice”
        has the
        meaning set forth in Section
        5.3(b).

       

      “Tag-Along
        Notice Period”
        has the
        meaning set forth in Section
        5.3(b).

       

      "Third
        Party"
        means
        any Person other than any Affiliate of a Class A Member or BSL.

       

      “Third
        Party Claim”
        has the
        meaning set forth in Section
        9.6.

       

      “Third
        Party Notice”
        has the
        meaning set forth in Section
        5.3(a).

       

      “Third
        Party Offer”
        has the
        meaning set forth in Section
        5.3(a).

       

      “Transaction
        Documents”
        means
        this Agreement, the Merger Agreement, the related Plan of Reorganization
        of
        Alterra and Disclosure Statement, the Membership Interest Purchase Agreement,
        the Stockholders Agreement and the Registration Rights Agreement (as such
        term
        is defined in the Membership Interest Purchase Agreement) and all documents
        and
        agreements contemplated to be delivered hereunder and thereunder.

       

      “Transfer”
        has the
        meaning set forth in Section
        5.1(a).

       

      “Transferring
        Member”
        has the
        meaning set forth in Section
        5.3(a).

       

      “UCC”
        shall
        mean the Uniform Commercial Code as in effect from time to time in the State
        of
        New York.

       

      “Ultimate
        Controlling Person(s)”
        means:
        (i) with respect to NW Select -- Daniel R. Baty, (ii) with respect to Emeritus
        -- the Principal Emeritus Shareholders and (iii) with respect to any other
        specified Member -- the Person(s) ultimately Controlling such Member as of
        the
        date such Member first becomes a Member of the Company (as specified by such
        Member in a written notice to the Company and the other Members).

       

      “Up-to-Date
        Contributing Member”
        has the
        meaning set forth in Section
        3.2(b).

       

      “Voluntary
        Call Notice”
        has the
        meaning set forth in Section
        3.2(b).

       

      “Voluntary
        Capital Contributions”
        has the
        meaning set forth in Section
        3.2(a).

       

      
        
          
          

        

        
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      “Voluntary
        Non-Contributing Member”
        has the
        meaning set forth in Section 3.2(b).

       

      Any
        capitalized term not defined herein that is defined in the Act shall have
        the
        meaning ascribed to such term in the Act.

       

        Interpretation.
        Each
        definition in this Agreement includes the singular and the plural, and reference
        to the neuter gender includes the masculine and feminine where appropriate.
        The
        words “include”“includes” and “including” shall be deemed to be followed by the
        words “without limitation” whether or not such words are set forth herein.
        References to any statute or Treasury Regulations means such statute or
        regulations as amended at the time and include any successor legislation
        or
        regulations. The headings to the Articles and Sections are for convenience
        of
        reference and shall not affect the meaning or interpretation of this Agreement.
        Except as otherwise stated, reference to Articles, Sections, Exhibits and
        Schedules mean the Articles, Sections, Exhibits and Schedules of this Agreement.
        The Schedules are hereby incorporated by reference into and shall be deemed
        a
        part of this Agreement.

       

        

       

       

      GENERAL
        PROVISIONS

       

        Registered
        Office.
        The
        registered agent and office of the Company in the State of Delaware shall
        be The
        Corporation Trust Company, 1209 Orange Street, Wilmington, Delaware 19801.
        The
        Board may change such registered agent and/or registered office from time
        to
        time as it deems appropriate.

       

        Other
        Offices.
        The
        Company may have one or more offices as may be established from time to
        time.

       

        Purpose;
        Nature of Business Permitted; Powers.
        The
        Company has been organized for the business object and purpose of (i) holding,
        directly or indirectly, equity interests of Alterra or any successor thereto
        and
        (ii) such other activities as limited liability companies may engage
        in under
        the
        Act. The Company shall possess and may exercise all the powers and privileges
        granted by the Act or by any other law or by this Agreement, together with
        any
        powers incidental thereto, insofar as such powers and privileges are necessary
        or convenient
        to the conduct, promotion or attainment of the foregoing business object
        and
        purpose of the Company. 

       

        Limited
        Liability of Members.
        No
        Member or any of its Affiliates or Affiliated Individuals shall have any
        liability for the debts, obligations or liabilities of the Company or of
        any
        another Member. 

       

      
        
          
          

        

        
          8

          
            

          

        

        
          
          

        

      

      

       

        Tax
        Classification; No State Law Partnership.

       

        The
        Company and the Initial Members have elected, pursuant of
        Section 301.7701-3(c) of the Regulations, for the Company to be treated
        as
        a “C corporation” for federal income tax purposes and shall make corresponding
        elections under applicable state income tax laws effective January 31,
        2004.

       

        No
        provision of this Agreement shall be deemed or construed to constitute the
        Company (including its Subsidiaries) as a partnership (including a limited
        partnership) or joint venture, or any Member as a partner of or with any
        other
        Member, for any purposes other than federal and state tax purposes (subject
        to
Section
        2.5(a)).

       

        Duration.
        The
        Company shall continue in existence until the Company shall be dissolved
        and its
        affairs wound up in accordance with the Act or this Agreement.

       

        Qualification
        in Other Jurisdictions.
        The
        Company shall qualify to transact business in such jurisdictions other than
        the
        State of Delaware as the Board from time to time shall deem necessary,
        appropriate and in the best interests of the Company.

       

        Certificates.
        The
        Managers and each Officer are authorized Persons within the meaning of the
        Act
        to execute, deliver and file any certificates (and any amendments
        and/or restatements thereof) necessary for the Company to qualify to do business
        in a jurisdiction within the United States in which the Company may wish
        to
        conduct business; provided that the laws of such jurisdiction recognize the
        limited liability of the Members and the Company qualifies to do business
        in
        such jurisdiction as a foreign limited liability company.

       

        

       

       

      FINANCING;
        ADDITIONAL MEMBERS

       

        Capital
        Contributions Generally.
        Capital
        Contributions by the Members shall be made in U.S. dollars by wire transfer
        of
        federal funds to an account or accounts
        of the Company specified by the Board or in such other form as may be specified
        by the Board. No Member shall be entitled to any compensation by reason of
        its
        Capital Contribution. No Member shall be required to lend any funds to the
        Company.

       

      Additional
        Voluntary Capital Contributions.

       

        The
        Board, by unanimous vote of the Managers, may from time to time request that
        the
        Members make Capital Contributions, whether in respect of the existing
        Membership Interests or in connection with the issuance of additional equity
        interests (“Voluntary
        Capital Contributions”).
        Such
        Voluntary Capital Contributions shall be made by the Members pro
        rata
        in
        accordance with their respective Percentage Interests (subject to Section
        3.2(b),
        in the
        amounts and at the times the Board determines in good faith are reasonably
        required for the Company to carry out any of its permitted purposes.

       

      
        
          
          

        

        
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        If
        the
        Board at any time requests that Voluntary Capital Contributions be made by
        the
        Members in accordance with Section
        3.2(a),
        the
        Board shall give the Members at least ten (10) days’ prior notice thereof (a
“Voluntary
        Call Notice”),
        which
        Voluntary Call Notice shall set forth in reasonable detail (i) the amount
        of the
        requested Voluntary Capital Contribution, (ii) the purpose thereof and (ii)
        the
        date on which such Voluntary Capital Contribution shall be made to the Company.
        In the event that a Member (a “Voluntary
        Non-Contributing Member”)
        fails
        to contribute its pro rata share of such Voluntary Capital Contribution,
        any
        other Member (an “Up-to-Date
        Contributing Member”),
        shall
        have the right, but not the obligation, to contribute to the Company all
        or any
        portion of an amount equal to the Voluntary Capital Contribution (the
“Covering
        Contribution”)
        that
        the Voluntary Non-Contributing Member failed to make; provided
        that if
        more than one Up-to-Date Contributing Member desires to make a Covering
        Contribution, each such Up-to-Date Contributing Member shall, unless otherwise
        agreed, make such contribution in proportion to its respective Percentage
        Interest; and provided,
        further,
        that
        (1) such Covering Contribution shall result in the Percentage Interest of
        each
        Up-to-Date Contributing Member being equal to the sum of (x) the Percentage
        Interest of such Up-to-Date Contributing Member immediately prior to making
        such
        Covering Contribution and (y) the amount of such Covering Contribution expressed
        as a percentage of the aggregate of all Capital Contributions theretofore
        made
        by all Members (after giving effect to such Covering Contribution), and (2)
        the
        Percentage Interest of the Voluntary Non-Contributing Member shall be reduced
        accordingly. The Board shall not apply any Voluntary Capital Contribution
        to any
        purpose other than that stated in the Voluntary Call Notice with respect
        to
        which such Voluntary Capital Contribution was made. 

       

        Admission
        of New Members.
        Except
        as otherwise provided under Article V,
        new
        Members may only be admitted to membership in the Company with the approval
        of
        the Class A Member. A new Member must agree in writing to be bound by the
        terms
        and provisions of the Certificate of Formation and this Agreement, as amended,
        and must execute a counterpart of, or an agreement adopting, this Agreement
        or
        other related agreements as the existing Members may require and shall specify
        the Ultimate Controlling Person of such new Member. Upon admission, the new
        Member shall have all rights and duties of a Member of the Company.

       

        Renaissance
        Acquisition.
        Notwithstanding anything to the contrary contained herein, in no event shall
        any
        Class B Member be entitled to make a Voluntary Capital Contribution in
        connection with the Renaissance Acquisition, and upon the consummation of
        the
        Renaissance Acquisition, a new Member may be admitted and each Class B Member's
        respective Percentage Interest shall be adjusted accordingly. In the event
        that
        prior to the Initial Public Offering, the Board (as defined below) determines
        to
        transfer from the Company or a Subsidiary thereof the Renaissance Properties
        to
        a Person other than the Company or a Subsidiary thereof, each Class B Member's
        respective Percentage Interest shall be adjusted to equal such Class B Member's
        Percentage Interest immediately prior to the Renaissance Acquisition, as
        appropriately adjusted in accordance with the terms of this Agreement. Such
        adjustment shall occur simultaneously upon the consummation of such transfer
        of
        the Renaissance Properties.

       

      
        
          
          

        

        
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        Pre-emptive
        Rights.
        Other
        than any Membership Interests that may be issued in connection with the
        Renaissance Acquisition, the Company will not issue or sell Membership Interests
        or other debt or equity securities or securities convertible into or exercisable
        for any of the foregoing unless each existing Member is offered “pre-emptive”
        rights to
        subscribe for and
        purchase a share of such Membership Interests or securities equal to the
        quotient of its Percentage Interest divided by all Percentage
        Interests;
        provided,
        however,
        that
        nothing in this Section
        3.5
        shall be
        deemed to grant "pre-emptive" rights to any Member with respect to the issuance
        of any equity or debt securities of the Company or a Subsidiary thereof or
        securities convertible or exercisable for any of the foregoing in connection
        with the issuance of any such security to any current or future member of
        the
        management of Alterra pursuant to any existing or future stock option, incentive
        stock plan, restricted stock plan or any other management incentive
        plan. 

       

        

       

       

      MANAGEMENT
        OF THE COMPANY

       

        Composition
        of the Board of Managers.

       

        From
        and
        after the date hereof, the Board of Managers of the Company (the “Board”)
        will
        consist of three (3) managers (individually, a “Manager”
        and,
        collectively, the “Managers”),
        each
        of which will be appointed by FIT-ALT Investor (or a transferee of its Class
        A
        Membership Interest).

       

        Any
        Manager may be removed at any time, with or without cause, by the Class A
        Member
        and may not otherwise be removed by the Board or the Members. In the event
        that
        a vacancy shall exist or occur on the Board at any time by reason of a Manager’s
        death, disability, retirement, resignation, removal or otherwise, the Class
        A
        Member shall have the right to designate a new Manager to fill such
        vacancy.

       

        Each
        Manager shall hold office until his resignation or removal in accordance
        with
        the provisions hereof. Each Manager shall devote such time to the business
        and
        affairs of the Company as he deems necessary, in his sole discretion, for
        the
        performance of his duties, but in any event, shall not be required to devote
        full time to the performance of such duties and may delegate his duties and
        responsibilities as provided in this Agreement.

       

        Except
        as
        the Board may otherwise unanimously agree, no committee of the Board shall
        be
        formed unless such committee consists of (and solely of) all of the
        Managers.

       

        Authority
        of the Board.
        Subject
        to the provisions of this Agreement, the Board shall have complete and exclusive
        discretion in the management and control of the business and affairs of the
        Company, including the right to make and control all ordinary and extraordinary
        decisions concerning the business and affairs of the Company (and including,
        without limitation, the right to decide to sell or otherwise dispose of all
        or
        any part of the assets of the Company). The Board shall possess all power,
        on
        behalf of the Company, to do or authorize the Company to do, or to direct
        the
        executive officers of the Company, on behalf of 

       

      
        
          
          

        

        
          11

          
            

          

        

        
          
          

        

      

      the
        Company, to do, all things necessary or convenient to carry out the business
        and
        affairs of the Company. Notwithstanding anything to the contrary contained
        herein, each of the Members acknowledge and agree the Board may take any
        and all
        actions that it deems necessary or proper in connection with the operation
        of
        the Company, including, without limitation:

       

      (a) causing
        the Company, Alterra, or any direct or indirect Subsidiary or Affiliate of
        any
        such Person to merge, consolidate or enter into any transaction with any
        other
        Person, including, without limitation, the contribution of all of a Member's
        Membership Interests in exchange for securities of such Person;

       

      (b) cause
        the
        contribution (i) by the Members of all of the Membership Interests in exchange
        for securities issued by another Person or by the Company of any or all of
        its
        capital stock or the capital stock of Alterra, FEBC-ALT Holdings or any other
        Company Asset or asset of its Subsidiaries, to any Person or (ii) by the
        Company, Alterra or any of their respective Subsidiaries of any or all of
        its
        assets to any Person; including, without limitation, in either case, in
        connection with an initial public offering of such other Person or Affiliates
        thereof or of the Company or a Subsidiary thereof; 

       

      (c) purchase
        or otherwise acquire any assets from a third Person (including capital stock),
        whether for cash or for securities of the Company or a Subsidiary thereof
        (any
        of the transactions described in clauses (a), (b) and this clause (c), a
        "Reorganization
        Transaction");

       

      The
        Members acknowledge and agree that a Reorganization Transaction may be entered
        into with one or more Affiliates of FIT-ALT Investor. In addition, in connection
        with a Reorganization Transaction, interests received by FIT-ALT Investor
        may
        have voting or control rights different from interests received by the other
        Members.
        In
        connection with any initial public offering of securities of the Company
        or any
        successor of the Company or any Person that is a party to or results from
        a
        Reorganization Transaction (the "Initial
        Public Offering"),
        all
        Class B Members shall own, in the place of their Membership Interests,
        securities of the same class as are offered in such initial public offering
        (the
        "IPO
        Securities")
        and
        upon their issuance to the Class B Members, the IPO Securities shall be subject
        to no greater restrictions on transfer required by underwriters to facilitate
        the marketing of the IPO Securities as are the IPO Securities of the
        Class A Members. Notwithstanding any other prior Reorganization
        Transaction, the Class A Member shall undertake any additional
        Reorganization Transactions prior to an initial public offering to effect
        the
        result of the immediately preceding sentence.
        The
        issuance of the IPO Securities to the Class B Members shall be subject to
        the
        execution and delivery by the Class B Members of the Stockholders
        Agreement. 

       

      
        
          
          

        

        
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        Other
        Ventures.

       

        It
        is
        expressly agreed that each Member, each Manager and any Affiliates thereof,
        and
        their respective officers, directors, managers, stockholders, members, partners
        or employees, may engage in other business ventures of every nature and
        description, whether or not in competition with the Company or any Subsidiary
        thereof, independently or with others, and neither the Company nor the other
        Members shall have any rights in and to any independent venture or activity
        or
        the income or profits derived therefrom; the pursuit of other ventures and
        activities by any such Person is hereby consented to by each Member and shall
        not be deemed wrongful or improper.

       

        Nothing
        in this Agreement shall be construed so as to prohibit any Member, Manager
        or
        any Affiliate thereof, or any of their respective officers, directors, managers,
        stockholders, members, partners or employees, from owning, operating or
        investing in any business of any nature and description, independently or
        with
        others, and no Member or Manager need disclose its intention to make any
        such
        investment to the other Members or Managers, nor advise the Company of the
        opportunity presented by any such prospective investment. 

       

        Meetings
        of the Board; Notice, Quorum and Voting Requirements. 

       

        
        The
        Board shall meet at least quarterly (unless otherwise agreed by all the
        Managers) and shall otherwise meet upon the call of any two (2) Managers.
        Managers may participate in or hold a meeting by conference telephone or
        similar
        communications equipment by means of which all Managers participating in
        the
        meeting can hear each other, and participation in such meeting shall constitute
        attendance and presence in person at such meeting, except where a Manager
        participates in the meeting for the express purpose of objecting to the
        transaction of any business on the ground that the meeting is not lawfully
        called or convened.

       

        Written
        or telephonic notice stating the place, date and hour of any meeting of the
        Board and the purpose or purposes for which the meeting is called, shall
        be
        given not less than one (1) day before the date and time of the meeting.
        Notice
        shall be sufficient if made personally, by mail, overnight courier service,
        telecopy, telegram, telex, cablegram or telephone to each Manager. Except
        as
        provided in the last sentence of subsection (a) above, attendance by any
        Manager
        at any meeting of the Board shall constitute a waiver of notice of such meeting.
        Minutes shall be kept of any meeting of the Board attended by less than all
        of
        the Managers (unless waived by the absent Manager(s)) and shall be circulated
        to
        the Managers within a reasonable time after the Board meeting.

       

        A
        majority of the Managers shall constitute a quorum for any meeting of the
        Board.
        The Board shall approve decisions or resolutions by the vote of a majority
        of
        the Managers.

       

        Action
        by Written Consent.
        Any
        action that may be taken at a meeting of the Board may be taken without a
        meeting if a consent in writing, setting forth the action to be taken, shall
        be
        signed by the Class A Member, and such consent shall have the same 

       

      
        
          
          

        

        
          13

          
            

          

        

        
          
          

        

      

      force
        and
        effect as a unanimous vote of the Managers at a meeting duly called and held.
        No
        notice shall be required in connection with the use of a written consent
        pursuant to this Section 4.5.

       

        Compensation.
        The
        Managers and any officer of the Company or any Subsidiary who is an Affiliated
        Individual of Member shall serve without compensation (other than any
        compensation provided by such Member). Without limiting their rights of
        indemnification set forth in Article IX,
        the
        Managers and such officers shall not be entitled to reimbursement from the
        Company or any Subsidiary for any expenses incurred by them in attending
        any
        meeting of the Board or any board or other governing body of any Subsidiary
        or
        otherwise performing their duties hereunder.

       

        Standard
        of Care; Fiduciary Duties.
        Each
        Member expressly acknowledges that the Company has been formed for the purposes
        set forth in Section 2.3.
        The
        Board shall exercise all its powers and duties under this Agreement in
        accordance with the terms of this Agreement. Notwithstanding anything in
        this
        Agreement to the contrary (other than Section
        4.3),
        the
        Members agree that: (x) the Managers designated by them shall act with a
        degree
        of skill, diligence, prudence and care which, and in a manner which, other
        prudent members of a board of directors of a Delaware corporation familiar
        with
        such matters would use in the conduct of an enterprise of like character
        and
        with like aims, and (y) the
        Members and the Managers shall owe the same fiduciary duties to the Company
        and
        its Members as would apply to the shareholders and directors, respectively,
        of a
        Delaware corporation. 

       

      
        
          
          

        

        
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        Officers;
        Designation; Term; Qualifications.

       

        The
        Board
        may, from time to time designate one or more Persons to be officers of the
        Company (“Officers”),
        such
        Persons to serve in such offices until resignation or removal by the Board.
        The
        names of the Persons designated as the Officers of the Company as of the
        date
        hereof are set forth on Schedule
        II hereof.
        Any
        Officer so designated shall have such authority and perform such duties as
        the
        Board delegates. The Board may assign titles to particular Officers, and
        unless
        the Board decides otherwise, the assignment of such title shall constitute
        the
        delegation to such Officer of the authority and duties that are normally
        associated with that office, subject to any specific delegation of authority
        and
        duties made to such Officer by the Board pursuant to this Section 4.8.
        Each
        Officer shall hold office for the term for which such Officer is designated
        and
        until his or her successor shall be duly designated and shall qualify or
        until
        his or her death, resignation or removal (with or without cause) by the Board.
        Any Person may hold any number of offices. No Officer need be a Manager,
        a
        Member, a Delaware resident or a United States citizen. Designation of any
        Person as an Officer of the Company shall not of itself create any contract
        rights in such Person.

       

        Any
        Officer of the Company may be removed as such, with or without cause, by
        the
        Board; provided,
        however,
        that
        such removal shall be without prejudice to the contract rights (including
        any
        rights to indemnification and advancement of expenses under Article IX
        of this
        Agreement or under any contract between such Officer and the Company or any
        Subsidiary thereof), if any, of the Person so removed. Any Officer of the
        Company may resign as such at any time upon written notice to the Board.
        Such
        resignation shall take effect at the time specified therein, or if no time
        is
        specified therein, at the time of its receipt by the Board. The acceptance
        of a
        resignation shall not be necessary to make it effective unless expressly
        so
        provided in the resignation.

       

        Any
        vacancy occurring in any office of the Company may be filled by the
        Board.

       

        No
        Officer of the Company shall be entitled to any interest in the Company by
        reason of serving as an Officer.

       

        Each
        Officer of the Company is an agent of the Company for the purpose of the
        business of the Company in accordance with this Agreement, and the act of
        each
        Officer for apparently carrying on the ordinary course of business of the
        Company binds the Company, unless (i) the Officer so acting has in fact no
        authority to act for the Company in the particular matter and (ii) the Person
        with whom such Officer is dealing has knowledge of the fact that such Officer
        has no such authority. An act of an Officer that is not apparently carrying
        on
        the ordinary course of business of the Company does not bind the Company
        unless
        authorized by the Board.

       

        Boards
        of Subsidiaries.
        The
        Company shall cause the board of directors or similar governing body of each
        Subsidiary of the Company, and each committee of 

       

      
        
          
          

        

        
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      such
        board or governing body, to consist of the Managers then constituting the
        Board
        of the Company or comparable committee thereof.

       

        

       

       

      TRANSFERS
        OF MEMBERSHIP
        INTERESTS

       

        Restrictions
        on Transfer. 

       

        Except
        as
        provided in Sections
        5.3
        and
5.4,
        no
        Class B Member shall (voluntarily or involuntarily), directly or indirectly,
        transfer, assign, pledge or otherwise encumber or dispose of (each, a
“Transfer”)
        (including a Transfer pursuant to a foreclosure sale of all or any part of
        the
        assets of a Member) its Membership Interest or any interest therein (including
        any security received in exchange for, or in connection with, such Class
        B
        Member's Membership Interest), except, in each case subject to the next sentence
        and to Sections 5.1(b)
        and
(f)
        below:
        (i) a Transfer by any Member as permitted or required by Section 3.2(b)
        (an
        implicit Transfer based on another Member’s Covering Contribution in respect of
        such first Member’s failure to pay a Voluntary Contribution) or (ii) a Transfer
        with the written consent of the Class A Member. No Transfer of any Membership
        Interest shall be effected until ten (10) Business Days after and excluding
        the
        day upon which written notice of such proposed Transfer has been given to
        each
        of the Members. If, as a result of any acquisition, directly or indirectly,
        by a
        Person or Group of Persons (as such term is understood for purposes of Rule
        13d-3 of the Exchange Act) of any securities or other interests of any Person
        or
        Persons having a direct or indirect beneficial ownership (as such term is
        understood for purposes of Rule 13d-3 of the Exchange Act) interest in a
        Class B
        Member holding Membership Interests (other than a Class B Member that is
        a
        public company), (x) such Class B Member ceases to be ultimately controlled
        by
        the Ultimate Controlling Person(s) of such Member prior to such acquisition,
        (y)
        at least eighty percent (80%) of the economic interests of such Class B Member
        (excluding any such interests issued to the public) cease to be owned, directly
        or indirectly, by such Ultimate Controlling Person(s) or (z) any Person(s)
        other
        than such Ultimate Controlling Person(s) that are not solely Controlled by
        such
        Ultimate Controlling Person(s) acquires concurrent or supervening Control
        of
        such Class B Member, such acquisition shall be deemed a Transfer of the
        Membership Interests of such Class B Member for purposes of this Section 5.1(a)
        and
        shall have the effect set forth in Section
        5.2
        unless
        such Transfer is otherwise permitted by the first sentence of this Section
        5.1(a).
        In the
        case of a Class B Member holding Membership Interests that is a public company,
        upon the acquisition by any Person or Group of Persons (as such term is
        understood for purposes of Rule 13d-3 of the Exchange Act), other than one
        or
        more Ultimate Controlling Person(s) or Person(s) Controlled by such Ultimate
        Controlling Person(s), of direct or indirect beneficial ownership (as such
        term
        is understood for purposes of Rule 13d-3 of the Exchange Act) of securities
        representing a greater percentage of the voting power of the outstanding
        equity
        interests in such Class B Member than is represented by the equity interests
        in
        such Class B Member held by such Ultimate Controlling Person(s)
        or
        Person(s) Controlled by such Ultimate Controlling Person(s), such acquisition
        shall be deemed a Transfer of the Membership Interests of such Member for
        purposes of this Section 5.1(a)
        and
        shall have the effect set forth in Section
        5.2
        unless
        such Transfer is otherwise permitted by the first sentence of this Section
        5.1(a).

       

      
        
          
          

        

        
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        To
        the
        extent not already a Member of the Company, any transferee of a Membership
        Interest pursuant to a Transfer permitted under Section 5.1(a)
        shall
        become a substitute Member upon: (i) the transferee agreeing in writing to
        be
        bound by all the terms and conditions of this Agreement as then in effect,
        and
        specifying in writing the identity of such transferee’s Ultimate Controlling
        Person(s); (ii) compliance with applicable federal and state securities laws;
        (iii) receipt of any regulatory approvals required under applicable law;
        and
        (iv) receipt by the Company and the Class A Member of an opinion of legal
        counsel to such transferee, reasonably acceptable to the Class A Member,
        as to
        (x) the enforceability of this Agreement against such transferee and (y)
        such
        Transfer not resulting in any violation of or failure to comply with applicable
        federal and state securities laws. Unless and until a transferee of a Membership
        Interest is admitted as an additional or substitute Member, the transferee
        shall
        have no right to exercise any of the powers, rights and privileges of a Member
        hereunder. Upon the completion of any Transfer of a Membership Interest in
        accordance with the foregoing, except as otherwise indicated herein, the
        transferee shall become a successor to the rights and obligations of the
        transferor under this Agreement with respect to the Membership Interest
        transferred and any references in this Agreement to such transferor shall
        thereafter be deemed to refer to such transferee.

       

        A
        Member
        who has transferred its Membership Interest shall cease to be a Member for
        all
        purposes of this Agreement upon completion of such Transfer in accordance
        with
        the applicable provisions of this Agreement and thereafter shall have no
        powers,
        rights and privileges as a Member hereunder. 

       

        The
        Company, each Member, the Managers, the Officers of the Company and any other
        Person or Persons having business with the Company need only deal with Members
        who are admitted as Members or as additional or substitute Members of the
        Company, and they shall not be required to deal with any other Person by
        reason
        of a Transfer by a Member of any of its Membership Interests, except as may
        be
        otherwise expressly provided in this Agreement. In the absence of a transferee
        of a transferring Member’s Membership Interests being admitted as a Member as
        provided herein, any payment to the transferring Member or holder, as the
        case
        may be, shall release the Company and the Board of all liability to any other
        Person(s) who may be interested in such payment by reason of an assignment
        by
        such transferring Member or holder.

       

        Nothing
        in this Section
        5.1
        shall
        prohibit or restrict the Transfer by the Class A Member of any or all of
        its
        Membership Interests (including any Membership Interests acquired from the
        Class
        B Members pursuant to the Membership Interest Purchase Agreement).

       

        Sections 5.1(a)
        and
(b),
        and any
        successor provisions of this Agreement applicable to Class B Members
        with
        respect to IPO Securities shall terminate upon the closing of the initial
        public
        offering contemplated by Section 4.2,
        so that
        Class B Members, with respect to their Membership Interests or the
        IPO
        Securities, shall, at the time of the consummation of the IPO, be under no
        greater restrictions of transfer (other than those restrictions pursuant
        to the
        federal and state securities laws) than are applicable to the Class A
        Members, with respect to their Membership Interests or securities that are
        exchanged for the Membership Interests of the 

       

      
        
          
          

        

        
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      Class
        A
        Members in a Reorganization Transaction. Notwithstanding the foregoing, the
        Class B Members, with respect to their Membership Interests or IPO
        Securities, shall be subject to restrictions under agreements required by
        underwriters to facilitate the marketing of securities in an initial public
        offering that are no more restrictive than those applicable to the Class A
        Members, with respect to their Membership Interests or securities that are
        exchanged for such Membership Interests in a Reorganization
        Transaction.

       

        Non-Permitted
        Transfers.

       

        Any
        purported Transfer by a Class B Member of all or any portion of its Membership
        Interest or any economic benefit or other interest therein not in compliance
        with Section 5.1
        shall be
        null and void ab
        initio,
        regardless of any notice provided to the Company, and shall not create any
        obligation or liability of the Company to the purported transferee, and any
        Person purportedly acquiring all or any portion of any Membership Interest
        or
        any economic benefit or other interest therein transferred not in compliance
        with Section 5.1
        shall
        not be entitled to admission to the Company as a substitute Member and shall
        not
        have any rights under this Agreement with respect to any Membership Interests
        of
        the Company or otherwise.

       

        In
        the
        case of an attempted Transfer of all or any portion of any Membership Interests
        or any economic benefit or other interest therein that is not in compliance
        with
Section 5.1,
        the
        parties engaging or attempting to engage in such Transfer shall indemnify
        and
        hold harmless the Company, the Managers and the other Members from all cost,
        liability and damage that any of such indemnified persons may incur (including
        incremental tax liability and attorneys’ fees and expenses) as a result of such
        Transfer or attempted Transfer and the enforcement of this
        indemnity.

       

        Tag-Along
        Rights.

       

        If
        a
        Class A Member (each a "Transferring
        Member")
        intends to Transfer any or all of the Membership Interests then owned by
        or in
        the name of such Transferring Member to a Third Party (each, a "Third
        Party Offer"),
        the
        Transferring Member shall promptly, acting in good faith (i) cause the Third
        Party Offer to be reduced to writing, which shall identify the Third Party,
        the
        Membership Interests proposed to be transferred to the Third Party by the
        Transferring Member, the price to be paid in cash by the Third Party and
        all
        other material terms and conditions of the Third Party Offer and (ii) provide
        written notice (the "Third
        Party Notice")
        of
        such Third Party Offer to each of the Class B Members (the Class B Members
        receiving a Third Party Notice pursuant to this sentence being collectively
        referred to herein as the "Other
        Members"),
        which
        Third Party Notice shall (x) contain an offer by such Third Party to purchase
        or
        otherwise acquire from each Other Member such Other Member's Membership
        Interests (to
        the
        extent such Third Party Offer shall be allocable to such Other Member pursuant
        to Section
        5.3(c)
        hereof)
        on the same terms and conditions as the Third Party Offer (except that the
        only
        representation and warranty that such Other Member shall be required to make
        in
        connection with any such Transfer is a warranty with respect to his or its
        own
        ownership of the Membership Interests to be sold by him or it and his or
        its
        ability to convey title thereto free and clear of any and all liens, mortgages,
        pledges, security interests or other restrictions or encumbrances) and (y)
        be
        accompanied by a true and correct copy of the Third Party Offer.

       

      
        
          
          

        

        
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        Each
        Other
        Member desiring to accept the offer (each, a "Participating
        Member")
        set
        forth in the Third Party Notice shall, within ten (10) Business Days after
        the
        date the Third Party Notice is received by such Other Member (as such period
        may
        be extended pursuant to Section 5.3(d) hereof (each, a "Tag-Along
        Notice Period"),
        deliver a written notice to the Transferring Member (each, a "Tag-Along
        Notice"),
        which
        notice shall (i) specify the amount of Membership Interests which such
        Participating Member wishes to Transfer pursu-ant to the Third Party Offer
        and
        (ii) constitute a firm acceptance by such Other Member of the Third Party
        Offer,
        except as otherwise provided in Sections
        5.3(c)
        and
(d)
        hereof.

       

        If
        one or
        more Other Members give the Transferring Member a timely Tag-Along Notice,
        then
        the Transferring Member shall use all reasonable efforts to cause the Third
        Party to agree to acquire all Membership Interests identified in all Tag-Along
        Notices that are timely given to the Transferring Member, upon the same terms
        and conditions as are applicable to the Transferring Member's Membership
        Interests. If
        such
        Third Party is unwilling or unable to acquire all of such additional Membership
        Interests upon such terms, then the Transferring Member may elect to either
        cancel such proposed Transfer or allocate the maximum Membership Interests
        that
        such Third Party is willing to purchase among the Transferring Members and
        the
        Participating Members, with (i) each Participating Member permitted to sell
        Membership Interests corresponding to the percentage of all Membership Interests
        held by such Participating Member and (ii) the Transferring Member permitted
        to
        sell Membership Interests equal to the remaining Membership Interests that
        such
        Third Party is willing to purchase. Such allocation shall give effect to
        the
        applicable orders of priority set forth in Section
        6.1.

       

        In
        the
        event that the terms and conditions of any Third Party Offer shall be modified
        in any way prior to the consummation of the respective Transfers of Membership
        Interests contemplated by such Third Party Offer, the Transferring Member
        shall
        send a copy of the amended Third Party Offer to each of the Participating
        or
        Other Members. Any Other Member desiring to Transfer Membership Interests
        pursuant to the amended Third Party Offer, or any Participating Member desiring
        to amend or withdraw its Tag-Along Notice may do so by delivering notice
        within
        three (3) Business Days after receipt of such amended Third Party Offer to
        the
        Transferring Member. If such notice is not timely delivered, such Other Member
        shall be deemed to have elected not to participate in the Third Party Offer,
        or
        such Participating Member, as the case may be, shall be deemed to have elected
        to participate in such Third Party Offer under the same terms and conditions
        that such Participating Member shall have originally elected to Transfer
        its
        Membership Interests.

       

        Within
        three (3) Business Days after the termination of the Tag-Along Notice Period
        (including any extension thereof) with respect to any Third Party Offer,
        the
        Transferring Member, after review of the Tag-Along Notices received, and
        notices
        of withdrawal, if any, shall give written notice to each Participating Member
        of
        the time and place of the closing, which shall occur not fewer than two (2)
        Business Days and not more than sixty (60) Business Days from the date such
        notice is given. At the closing, each Participating Member shall, and hereby
        covenants to, Transfer such Participating Member's Membership Interests to
        be
        sold to such Third Party free and clear of any and all liens, mortgages,
        pledges, security interests or other restrictions or encumbrances against
        payment of the purchase price for 

       

      
        
          
          

        

        
          19

          
            

          

        

        
          
          

        

      

      such
        Membership Interests. If such Third Party does not purchase such Membership
        Interests from all Participating Members on the same terms and conditions
        applicable to the transferring Member, then the entire proposed Transfer
        by the
        Transferring Member to such Third Party shall be invalid.

       

        If
        at the
        termination of the Tag-Along Notice Period (and any extension thereof) any
        Other
        Member shall not have accepted the offer contained in the Third Party Notice,
        such Other Member shall be deemed to have waived any and all of his or its
        rights under this Section
        5.3
        to
        Transfer his or its Company Securities to such Third Party on the terms
        specified in the Third Party Offer.

       

        Drag-Along
        Rights. 

       

        If
        the
        Board approves a sale of the Company or substantially all of its assets to
        a
        Third Party (an "Approved
        Sale"),
        whether by way of merger, consolidation, sale of interests or assets, or
        otherwise, all Members shall consent to and raise no objections against the
        Approved Sale, and if the Approved Sale is structured as (i) a merger or
        consolidation of the Company, or a sale of all or substantially all of the
        Company's assets, each Member shall waive any dissenters rights, appraisal
        rights or similar rights in connection with such merger, consolidation or
        asset
        sale, or (ii) a sale of the Membership Interests of the Company, the Members
        shall agree to sell their Membership Interests on the terms and conditions
        approved by the Board in accordance with the terms hereof. The Members shall
        take all necessary and desirable actions approved by the Board in connection
        with the consummation of the Approved Sale, including the execution of such
        agreements and such instruments and other actions reasonably necessary (i)
        to
        provide the representations, warranties, indemnities, covenants, conditions,
        escrow agreements and other provisions and agreements relating to such Approved
        Sale, to the extent reasonably customary in similar transactions, and (ii)
        to
        effectuate the allocation and distribution of the aggregate consideration
        upon
        the Approved Sale.

       

        The
        obligations of the Members pursuant to this Section
        5.4
        are
        subject to the following conditions:

       

      (i) upon
        consummation of the Approved Sale, each Member shall receive the same amount
        of
        consideration from the Approved Sale with respect to its Membership Interests
        that such Member would have received if such aggregate consideration had
        been
        distributed by the Company pursuant to Section
        6.1
        (giving
        effect to applicable orders of priority);

      

      (ii) if
        any
        Members are given an option as to the form and amount of consideration to
        be
        received, all Members will be given the same option;

      

      (iii) no
        Member
        shall be obligated to make any out-of-pocket expenditure prior to the
        consummation of the Approved Sale (excluding modest expenditures for postage,
        copies, etc.) and no Member shall be obligated to pay more than his or its
        pro rata
        share
        (based upon the amount of consideration received) of reasonable expenses
        incurred in connection with a consummated Approved Sale to the extent such
        costs
        are incurred for the benefit of all Members and are not otherwise paid by
        the
        Company or the acquiring party, provided that a 

      
        
          
          

        

        
          20

          
            

          

        

        
          
          

        

      

      Member's
        liability for such expenses shall be capped at the total purchase price received
        by such Member for his or its Membership Interests; and

      

      (iv) in
        the
        event that the Members are required to provide any representations or
        indemnities in connection with the Approved Sale (other than representations
        and
        indemnities concerning each Member's valid ownership of his or its Membership
        Interests, free and clear of any and all liens, mortgages, pledges, security
        interests or other restrictions or encumbrances, each Member's authority,
        power
        and right to enter into and consummate such purchase or merger agreement
        without
        violating any other agreement and other representations and indemnities which
        are individual to each Member), then no Member shall be liable for more than
        his
        or its pro rata
        share
        (based upon the Membership Interests held and not the amount of consideration
        received) of any liability for misrepresentation or indemnity and such liability
        shall not exceed the total purchase price received by such Member for his
        or its
        Membership Interests; provided,
        however,
        that
        this Section
        5.4(b)(iv)
        shall
        not limit a Member's liability with respect to any misrepresentation made
        by
        such Member as a result of such Member's bad faith, willful misconduct or
        gross
        negligence.

      

        Further
        Actions and Additional Agreements. 

       

        Each
        Class B Member shall promptly execute and deliver, or shall cause to be executed
        and delivered, such documents and other papers and shall take, or shall cause
        to
        be taken, such further actions as may be reasonably required to carry out
        the
        provisions of this Agreement and give effect to the transactions contemplated
        by
        this Agreement,
        including the consummation
        of any Reorganization Transaction. 

       

        Each
        Class B Member shall promptly execute and deliver, or shall cause to be executed
        and delivered, customary agreements (including, without limitation, (i) the
        execution and delivery of any underwriting agreement, power of attorney,
        custody
        agreement, stock power or medallion guarantee, (ii) the delivery of an opinion
        of counsel and officers' certificate to the underwriters with respect to
        any
        securities to be sold in an initial public offering by the Class B Members
        and
        (iii) the execution and delivery of an agreement restricting the transfer
        of any
        securities owned by the Sellers as may be required by underwriters to facilitate
        the marketing of the securities in the initial public offering (so long as
        such
        restrictions on transfer are no greater than the restrictions contained in
        a
        similar agreement with the underwriters with respect to the IPO Securities
        of
        the Class A Member) and take such other actions as the Class A Member or
        an
        underwriter reasonably requests in connection with any (i) public offering
        of
        securities of the Company, Alterra, FEBC-ALT Holdings, any successor or
        Affiliate thereof, or any transferee of the assets of the Company, Alterra
        or
        FEBC-ALT Holdings or an Affiliate of such transferee, or (ii) merger,
        consolidation or other business combination involving the Company, Alterra,
        FEBC-ALT Holdings or any successor or Affiliate thereof, including, without
        limitation, if requested by the Class A Member, the prompt execution and
        delivery of a conveyance agreement, in the draft form attached as Exhibit
        A
        hereto
        and with such changes as may be made subsequent to the date hereof which
        do not
        disproportionately affect the Class B Members.

       

      
        
          
          

        

        
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      DISTRIBUTIONS
        AND EXPENSES

       

        Distributions.
        The
        Company may make distributions of cash or property to the Members at such
        times
        and in such amounts as the Board deems appropriate. Any distribution by the
        Company shall be distributed to the Members as follows:

       

      (i) First,
        to
        the Class A Member until the Class A Preferred Return Balance has been reduced
        to zero;

       

      (ii) Second,
        to the Class A Member until the Class A Investment Balance has been reduced
        to
        zero;

       

      (iii) Third,
        to
        the Class A Member until the Class A Purchase Return Balance has been reduced
        to
        zero;

       

      (iv) Thereafter,
        to each of the Members pro rata in accordance with their respective Percentage
        Interests.

       

        Amounts
        Withheld.
        All
        amounts withheld or paid pursuant to the Code or any provisions of state,
        local
        or foreign tax law with respect to any payment, distribution, allocation
        or
        other consideration paid to the Members, including in connection with a
        contribution of assets to the Company by a Member, shall be treated as amounts
        paid or distributed, as the case may be, to the Members with respect to which
        such amount was withheld or paid pursuant to this Section 6.2
        for all
        purposes under this Agreement. The Company is authorized to withhold or pay,
        when required under applicable law, from payments, distributions, or other
        consideration paid to Members, and with respect to allocations to the Members,
        and to pay
        over
        to any federal, state, local or foreign government any amounts required to
        be so
withheld
        or paid pursuant to the Code or any provisions of any federal, state, local
        or
        foreign law,
        and
        shall allocate any such amounts to the Members with respect to which such
        amounts were withheld or paid.

       

        Expenses.
        Except
        as otherwise provided in this Agreement, the Company will be responsible
        for all
        third party expenses of the Company and each Member shall be
        responsible for all costs and expenses incurred by such Member in the
        performance of its obligations under this Agreement. 

       

        Omega
        Healthcare Guarantee.
        Each of
        the Class B Members acknowledges that in connection with the proposed purchase
        by Alterra (or a Subsidiary thereof) of the six properties currently subject
        to
        leases between Omega Healthcare Investors, Inc. (“Omega”)
        and
        Alterra (or a Subsidiary thereof), Fortress Investment Trust II (the
“Guarantor”),
        an
        Affiliate of FIT-ALT Investor, shall be required to execute a guarantee in
        favor
        of Omega as a condition to such purchase, (the “Omega
        Guarantee”).
        Each
        Class B Member agrees that in the 

       

      
        
          
          

        

        
          22

          
            

          

        

        
          
          

        

      

      event
        the
        Guarantor is required to pay any amounts under the Omega Guarantee, each
        Class B
        Member shall, upon written notice from the Class A Member, promptly pay to
        the
        Guarantor in immediately available funds (a "Guarantee
        Payment")
        an
        amount equal to the product of (x) the total amount paid by the Guarantor
        pursuant to the Omega Guarantee and (y) such Class B Member's Percentage
        Interest of the Company, computed at the time of any such payment; provided,
        however,
        that
        with respect to any Guarantee Payment made during the period commencing with
        the
        date of the consummation of the Renaissance Acquisition and ending with the
        date
        that is the nine month anniversary of the date of the consummation of the
        Renaissance Acquisition (the "Renaissance
        Cut-Off Date"),
        the
        amount of any Guarantee Payment for each Class B Member shall equal the product
        of (x) the total amount paid by the Guarantor pursuant to the Omega Guarantee
        and (y) such Class B Member's Percentage Interest of the Company, computed
        at
        the time of any such payment but adjusted (the "Dilution
        Adjustment")
        so as
        to not give effect to any dilution of such Class B Member's Percentage Interest
        of the Company as a result of the Renaissance Acquisition; provided,
        further,
        that
        (i) in the event any Class B Member has made any Guarantee Payment prior
        to the
        Renaissance Cut-Off Date and (ii) on the Renaissance Cut-Off Date the
        Renaissance Properties are held by the Company, a successor thereto or any
        Subsidiary thereof, the Class B Member shall be entitled to a refund from
        the
        Guarantor of an amount equal to the difference between (A) the aggregate
        amount
        of Guarantee Payments actually made by such Class B Member prior to the
        Renaissance Cut-Off Date and (B) the aggregate amount of Guarantee Payments
        such
        Class B Member would have been obligated to make prior to the Renaissance
        Cut-Off Date pursuant to this Section
        6.4
        if not
        for the Dilution Adjustment. Notwithstanding anything to the contrary herein,
        in
        no event shall the aggregate amounts paid by each Class B Member as a Guarantee
        Payment exceed $2,550,000. 

       

        

       

       

      DISSOLUTION
        AND TERMINATION OF THE COMPANY

       

        Dissolution.
        The
        Company shall be dissolved and its affairs shall be wound up upon: (a) the
        direction of Class A Member or (b) the entry of a decree of judicial dissolution
        pursuant to Section 18-802 of the Act.

       

        Continuation
        of Interest of Member’s Representative.
        Notwithstanding anything contained in Article V,
        upon
        the expulsion, receivership, dissolution or Bankruptcy of a Member, the personal
        representative, trustee-in-bankruptcy, debtor-in-possession, receiver, other
        representative, successor, heir or legatee (each a “Representative”)
        of
        such Member shall, subject to the provisions of Section 5.1(b),
        immediately succeed to the Membership Interests of such Member in the Company.
        Such Representative shall appoint an individual (which
        may be such Representative) who will represent the Representative’s voting
        interest, if any, in the Company.

       

        Dissolution,
        Winding Up and Liquidation.
        Upon a
        dissolution of the Company, the Company shall continue solely for purposes
        of
        winding up its affairs in an orderly manner, liquidating its assets, and
        satisfying claims of its creditors. The liquidator of the Company shall take
        full account of the Company’s liabilities and property and shall cause the
property
        or the proceeds from the sale thereof, to the extent sufficient therefor,
        to be
        applied and distributed, to the maximum extent permitted by law, in the
        following order:

       

      
        
          
          

        

        
          23

          
            

          

        

        
          
          

        

      

      

       

      (i) first,
        to
        the payment of the expenses of winding-up, liquidation and dissolution of
        the
        Company;

       

      (ii) second,
        to pay all creditors (including Members who are creditors) in satisfaction
        of
        all the Company’s debts and other liabilities, either by payment thereof or
        making of reasonable provisions therefor;

       

      (iii) third,
        to
        establish reserves, in amounts determined by the Board or the liquidator,
        to
        other liabilities of the Company; and

       

      (iv) fourth,
        to make distributions to the Members in accordance with Section 6.1.

       

        

       

      REPRESENTATIONS
        AND WARRANTIES

       

        Representations
        and Warranties of the Initial Members.
        Each of
        the Initial Members hereby severally and not jointly represents and warrants
        to
        the Company and to each of the other Initial Members, as of the date hereof
        that:

       

        If
        such
        Initial Member is a corporation or limited liability company, it is duly
        incorporated or otherwise duly organized, validly existing and in good standing
        under the laws of the jurisdiction of its incorporation or organization,
        and if
        its is a partnership, it is validly constituted and not dissolved, and, in
        each
        case, has the power and lawful authority to own its assets and properties
        and to
        carry on its business as now conducted.

       

        The
        execution and delivery of this Agreement and the performance of its obligations
        hereunder have been duly authorized by all necessary action on the part of
        each
        of such Initial Member, and this Agreement has been duly executed and delivered
        by a duly authorized officer of such Initial Member and constitutes the valid,
        legal and binding obligation of such Initial Member and is enforceable against
        such Initial Member in accordance with its terms, except as (i) such
        enforceability may be limited by bankruptcy, reorganization or moratorium
        or
        other similar laws affecting the enforcement of creditors’ rights generally and
        (ii) the availability of equitable remedies may be limited by equitable
        principles of general applicability.

       

        The
        execution, delivery and performance of this Agreement by such Initial Members
        will not result in (i) any conflict with the certificate of incorporation
        or
        certificate of formation of such Initial Member, (ii) any material breach
        or
        violation of or default under any statute, law, rule, regulation, judgment,
        decree, order or any material mortgage, deed of trust, indenture, agreement
        or
        any other instrument to which such Initial Member or any Subsidiary is a
        party
        or by which any of their respective material properties or assets is bound,
        or
        (iii) the creation or imposition of any lien, charge, pledge or encumbrance
        thereon, except for such breaches, violations or defaults and such liens,
        charges, pledges or encumbrances except, in each 

       

      
        
          
          

        

        
          24

          
            

          

        

        
          
          

        

      

      case,
        for
        such breaches violations or defaults that would not, individually or in the
        aggregate, materially impair the ability of such Initial Member to perform
        its
        obligations hereunder.

       

        No
        approval or consent of any governmental authority or of any other Person
        is
        required in connection with the execution and delivery by such Initial Member
        of
        this Agreement and the consummation and performance by such Initial Member
        of
        the transactions contemplated hereunder, except such as have been obtained
        and
        are in full force and effect.

       

        Survival.
        The
        representations and warranties of the Initial Members contained in this
        Agreement shall survive until the expiration of the applicable statute of
        limitations.

       

        

       

       

      INDEMNIFICATION
        AND CONTRIBUTION

       

        Indemnity
        by the Company. 

       

        Subject
        to the provisions of Section 9.6,
        the
        Company shall indemnify any Person who was or is a party or is threatened
        to be
        made a party to any threatened, pending or completed action, suit or proceeding,
        whether civil, criminal, administrative or investigative by reason of the
        fact
        that such Person is or was a Manager, Member, Officer, director, controlling
        person, employee, legal representative or agent of the Company or any of
        its
        Subsidiaries, or is or was serving at the request of the Company or any of
        its
        Subsidiaries as manager, director, officer, partner, member, shareholder,
        controlling person,
        employee, legal representative or agent of another limited liability company,
        partnership, corporation, joint venture, trust or other enterprise (a
“Company
        Indemnified Person”),
        from
        and against any Claims and Expenses suffered or incurred by such Company
        Indemnified Person while serving in such capacity or that otherwise in any
        way
        relate to or arise out of any action or inaction by such Company Indemnified
        Person or the Company or any of its Subsidiaries, including, without limitation,
        this Agreement (collectively, “Indemnifiable
        Losses”),
        if
        such Company Indemnified Person acted in good faith and in a manner that
        such
        Company Indemnified Person reasonably believed to be in or not opposed to
        the
        best interests of the Company and its Subsidiaries and not in violation of
        this
        Agreement, and, with respect to a criminal action or proceeding, had no
        reasonable cause to believe such Person’s conduct was unlawful; provided
        that the
        Company shall have no obligation to indemnify or defend hereunder to the
        extent
        such action, suit or proceeding arises from fraud, willful misconduct or
        gross
        negligence on the part of such Company Indemnified Person.

       

        Subject
        to the provisions of Section 9.6,
        the
        Company shall also indemnify each of the Members and their respective
        Affiliates, and each officer, director, employee and legal representative
        thereof, from and against any Claims and Expenses suffered or incurred by
        any
        such Person as a result of any breach by the Company of any covenant,
        representation or warranty of the Company contained in this Agreement.

       

        Notwithstanding
        anything to the contrary set forth above, the provisions of this Section
        9.1
        shall
        not apply in the case of any action, suit or proceeding initiated by a
        Member.

       

      
        
          
          

        

        
          25

          
            

          

        

        
          
          

        

      

      

       

        Exculpation.
        Except
        as otherwise provided in Section
        4.7,
        no
        Company Indemnified Person shall be liable to any Member or the Company or
        any
        of its Subsidiaries for any act or failure to act on behalf of the Company
        or
        any of its Subsidiaries unless such act or failure to act resulted from fraud,
        willful misconduct or gross negligence of the Company Indemnified Person.
        Each
        Company Indemnified Person may consult with legal counsel and accountants
        in
        respect of the affairs of the Company and its Subsidiaries and shall be fully
        protected and justified in any action or inaction which is taken in accordance
        with the advice or opinion of such counsel or accountants.

       

        Indemnification
        by the Members.
        Subject
        to the provisions of Section 9.6,
        each
        Member shall indemnify each of the other Members and their respective
        Affiliates, and each officer, director, employee and legal representative
        thereof, from and against any Claims and Expenses suffered or incurred by
        such
        any such Person as a result of any breach by
        such
        first Member of any covenant, representation or warranty of such first Member
        contained in this Agreement or the Original LLC Agreement. 

       

        Expenses.
        Any
        indemnification under Section 9.1
        or
9.3,
        as well
        as the advance payment of expenses permitted under this Section 9.4
        shall be
        made by the Company or the applicable Member to the fullest extent permitted
        under the Act. The expenses of any Company Indemnified Person incurred in
        defending a civil or criminal action, suit or proceeding may be paid by the
        Company as they are incurred and in advance of the final disposition of the
        action, suit or proceeding, upon receipt of an undertaking by or on behalf
        of
        such Company Indemnified Person (in form and substance, from an indemnitor,
        reasonably satisfactory to all the Members), to repay the amount if it is
        ultimately determined by a court of competent jurisdiction that such Company
        Indemnified Person is not entitled to be indemnified by the Company. The
        provisions of this Section 9.4
        do not
        affect and shall not be deemed exclusive of any other rights, including,
        without, limitation, any rights to indemnification or advancement of expenses
        to which any such Company Indemnified Person other than the Members may be
        entitled under any contract, pursuant to approval of the Members, or otherwise
        by law.

       

        Beneficiaries.
        The
        indemnification and advancement of expenses authorized in or ordered by a
        court
        pursuant to this Article IX
        continues for a Person who has ceased to be a Member, officer, employee or
        agent
        and inures to the benefit of the heirs, executors and administrators of such
        Person.

       

        Indemnification
        Procedure for Third-Party Claims.
        A party
        against whom indemnification is sought under this Agreement (the “Indemnifying
        Party”)
        shall
        have the right, but not the obligation, exercisable by written notice to
        the
        Person seeking such
        indemnification hereunder (the “Indemnified
        Party”)
        within
        thirty (30) days after receipt of written notice from the Indemnified Party
        of
        the commencement of or assertion of any claim, action, suit or proceeding
        by a
        third party in respect of which indemnity may be sought hereunder (a
“Third-Party
        Claim”),
        to
        assume the defense and control the settlement of such Third-Party Claim (subject
        to the limitations set forth below) if such Third Party Claim involves (and
        continues to involve) solely money damages. The Indemnified Party shall have
        the
        right to 

       

      
        
          
          

        

        
          26

          
            

          

        

        
          
          

        

      

      assume
        the defense and control the settlement of any Third-Party Claim (x) not
        described in the preceding sentence or (y) described in the preceding sentence
        whose defense and control of settlement has not been assumed by the Indemnifying
        Party. The Indemnifying Party or the Indemnified Party, as the case may be,
        shall have the right to participate in (but not control), at its own expense,
        the defense of any Third-Party Claim that the other has the right to defend,
        as
provided
        in this Agreement. The Indemnifying Party, if it has assumed the defense
        of any
        Third-Party Claim as provided in this Agreement, shall not consent to a
        settlement of, or the entry of any judgment arising from, any such Third-Party
        Claim without the Indemnified Party’s prior written consent (which consent shall
        not be unreasonably withheld or delayed). The Indemnifying Party shall not,
        without the Indemnified Party’s prior written consent, enter into any compromise
        or settlement which (i) commits the Indemnified Party to take, or to forbear
        to
        take, any action or (ii) does not provide for a complete release by such
        Third
        Party of the Indemnified Party. The Indemnified Party shall have the sole
        and
        exclusive right to settle any Third-Party Claim, on such terms and conditions
        as
        it deems reasonably appropriate, to the extent such Third-Party Claim involves
        equitable or other non-monetary relief against the Indemnified Party, and
        shall
        have the right to settle any Third-Party Claim involving money damages for
        which
        the Indemnifying Party has not assumed the defense pursuant to this Section 9.6
        with the
        written consent of the Indemnifying Party, which consent shall not be
        unreasonably withheld or delayed.

       

        Other
        Claims.
        In the
        event an Indemnified Party shall claim a right to payment pursuant to this
        Agreement for other than a Third-Party Claim, such Indemnified Party shall
        send
        written notice of such claim to the Indemnifying Party. Such notice shall
        specify the basis for such claim. As promptly as possible after the Indemnified
        Party has given such notice, the Indemnified Party and the Indemnifying Party
        shall attempt to resolve such claim by mutual agreement before resorting
        to
        other legal means to resolve such claim.

       

        Limitation
        on Damages.
        Notwithstanding anything contained in this Agreement to the contrary, no
        party
        shall be liable to any other party for any indirect, special, punitive,
        exemplary or consequential loss or damage (including any loss of revenue
        or
        profit) arising out of this Agreement including in respect of any breach
        by any
        Member of this Agreement; provided,
        that
        the foregoing shall not be construed to preclude recovery by any Indemnified
        Party in respect of Indemnifiable Losses directly incurred from Third Party
        Claims. 

       

        Survival.
        The
        representations and warranties of the Members contained in Article X of the
        Original LLC Agreement shall survive the Formation Date and the Closing Date
        for
        the purposes of this Article IX.

       

      
        
          
          

        

        
          27

          
            

          

        

        
          
          

        

      

      

       

        

       

       

      MISCELLANEOUS
        PROVISIONS

       

        Entire
        Agreement.
        This
        Agreement, the Certificate of Formation and the other Transaction Documents
        constitute the complete and exclusive statement of the agreement
        among the Members with respect to the subject matter contained herein and
        therein. This Agreement, the Certificate of Formation and the other Transaction
        Documents replace and supersede all prior agreements by and among the Members
        with respect to the subject matter contained herein and therein, including
        the
        term sheets dated October 1, 2003 entered into by FIT ALT Investor, NW Select
        and Emeritus contemplating the formation of the Company and, except as provided
        in Section
        6.3,
        the
        expense sharing letter agreement dated July 22, 2003 between Emeritus and
        Fortress Investment Group LLC; provided,
        however,
        that
        the Old LLC Agreement shall be deemed to have been in effect through the
        date of
        this Agreement.

       

        Amendments.
        This
        Agreement may be amended only by a written agreement executed by the Class
        A
        Member; provided,
        however,
        that
        any amendment to Sections
        2.4,
        2.5,
        10.2,
        10.8
        or
10.14
        or
Articles III,
        V,
        VI
        or
        IX
        in a
        manner materially adverse to the Class B Members shall also require the written
        consent of the Class B Members; provided,
        however,
        that in
        no event shall the consent of the Class B Members be required in connection
        with
        any Reorganization Transaction, as long as any such Reorganization Transaction
        does not impair the rights of the Class B Members as provided in the
        penultimate sentence of Section 4.2
        or in
Section 5.1(f).

       

        Applicable
        Law; Venue.

       

        The
        Certificate of Formation and this Agreement shall be governed exclusively
        by
        their respective terms and the laws of the State of Delaware, without regard
        to
        the conflicts of laws principles thereof.

       

        Any
        legal
        action or proceeding with respect to this Agreement and any action for
        enforcement of any judgment in respect thereof may be brought in the courts
        of
        the State of New York or of the United States of America for the Southern
        District of New York and, by execution and delivery of this Agreement, each
        Member hereby accepts for itself and in respect of its property, generally
        and
        unconditionally, the non-exclusive jurisdiction of the aforesaid courts and
        the
        appellate courts thereof. Each Member irrevocably consents to the service
        of
        process out of any of the aforementioned courts in any such action or proceeding
        by the mailing of copies thereof by registered or certified mail, postage
        prepaid, to such party at the address for notices set forth herein. Each
        Member
        hereby irrevocably waives any objection which it may now or hereafter have
        to
        the laying of venue of any of the aforesaid actions or proceedings arising
        out
        of or in connection with this Agreement brought in the courts referred to
        above
        and hereby further irrevocably waives and agrees not to plead or claim in
        any
        such court that any such action or proceeding brought in any such court has
        been
        brought in an inconvenient forum.

       

      
        
          
          

        

        
          28

          
            

          

        

        
          
          

        

      

      

       

        EACH
        PARTY HERETO HEREBY IRREVOCABLY WAIVES ALL RIGHT TO TRIAL BY JURY IN ANY
        PROCEEDING (WHETHER BASED IN CONTRACT, TORT OR OTHERWISE) ARISING OUT OF
        OR
        RELATING TO THIS AGREEMENT OR ANY TRANSACTION OR AGREEMENT CONTEMPLATED HEREBY
        OR
        THE
        ACTIONS OF ANY PARTY HERETO IN THE NEGOTIATION, ADMINISTRATION, PERFORMANCE
        OR
        ENFORCEMENT HEREOF.

       

        Enforcement.
        In the
        event of an action, suit or proceeding initiated by any Member against another
        Member or the Company involving the enforcement of its rights hereunder,
        the
        prevailing party (upon receipt of a final non-appealable judgment or order)
        shall be
        entitled to indemnification from the other party of reasonable
        attorneys’ fees and expenses incurred in enforcing its rights in such action,
        suit or proceeding.

       

        Headings.
        The
        headings in this Agreement are inserted for convenience only and are in no
        way
        intended to describe, interpret, define, or limit the scope, extent or intent
        of
        this Agreement or any provisions contained herein.

       

        Severability.
        If any
        provision of this Agreement or the application thereof to any Person or
        circumstance shall be deemed invalid, illegal or unenforceable to any extent,
        the remainder of this Agreement and the application thereof shall not be
        affected and shall be enforceable to the fullest extent permitted by
        law.

       

        Heirs,
        Successors and Assigns.
        Each
        and all of the covenants, terms, provisions and agreements contained in this
        Agreement shall be binding upon and inure to the benefit of the Initial Members,
        all new and substituted Members, and their respective permitted assigns,
        heirs,
        legal representatives and successors; provided, however, that no assignment
        shall be made by any Member other than pursuant to, in accordance with and
        as
        permitted by Article V
        of this
        Agreement.

       

        Financial
        Statements and Reports.
        The
        Company will furnish each Member the information required below at the times
        set
        forth below:

       

      (a) Annual
        Financial Statements.
        As soon
        as available and in any event within ninety (90) days after the close of
        each
        Fiscal Year of the Company, the consolidated and consolidating balance sheets
        of
        the Company and its Subsidiaries, as at the end of such Fiscal Year and the
        related consolidated and consolidating statements of earnings and cash flow
        for
        such Fiscal Year, in each case setting forth comparative figures for the
        preceding Fiscal Year, and, in the case of such consolidated statements,
        audited
        by independent certified public accountants of recognized national standing
        whose opinion shall not be qualified as to the scope of audit, (or, in the
        case
        of such consolidating statements, certified by the chief financial officer
        of
        the Company).

       

      (b) Quarterly
        Financial Statements.
        As soon
        as available and in any event within forty-five (45) days after the close
        of
        each fiscal quarter the consolidated and consolidating balance sheets of
        the
        Company and its Subsidiaries, as at the end of such fiscal quarter and the
        related consolidated and consolidating statements of earnings and cash flow
        for

       

      
        
          
          

        

        
          29

          
            

          

        

        
          
          

        

      

      such
        fiscal quarter and for the elapsed portion of the Fiscal Year ended with
        the
        last day of such fiscal quarter, and in each case setting forth comparative
        figures for the corresponding periods in the prior Fiscal Year and in the
        budget
        delivered in respect of the current Fiscal Year, all of which shall be certified
        by the chief financial officer of the Company, subject to changes resulting
        from
        audit and normal year-end audit adjustments.

       

        Counterparts.
        This
        Agreement may be executed in several counterparts with the same effect as
        if the
        parties executing the several counterparts had all executed one
        counterpart.

       

        Filings.
        Following the execution and delivery of this Agreement, the Officers or their
        designee, under the supervision and control of the Board, shall promptly
        prepare
        any documents required to be filed and recorded under the Act, and the Officers
        or such designee shall promptly cause each such document to be filed and
        recorded in accordance with the Act and, to the extent required by local
        law, to
        be filed and recorded or notice thereof to be published in the appropriate
        place
        in each jurisdiction in which the Company may hereafter establish a place
        of
        business. The Officers or such designee, under the supervision and control
        of
        the Board, shall also promptly cause to be filed, recorded and published
        such
        statements of fictitious business name and any other notices, certificates,
        statements or other instruments required by any provision of any applicable
        law
        of the United States or any state or other jurisdiction which governs the
        conduct of its business from time to time.

       

        Additional
        Documents.
        Each
        Member agrees to perform all further acts and to execute, acknowledge and
        deliver any documents that may be reasonably necessary to carry out the
        provisions of this Agreement.

       

        Notices.
        All
        notices, requests and other communications to any party hereunder shall be
        in
        writing (including facsimile) and shall be effective and deemed delivered
        or given, as the case may be, (a) if given by facsimile, when transmitted
        and
        the appropriate confirmation is received from the machine transmitting such
        facsimile, and followed by hard copy via overnight mail or reputable overnight
        courier for receipt the next Business Day, (b) if given by reputable overnight
        courier, on the next Business Day or (c) by hand delivery, when
        delivered:

       

      If
        to
        FIT-ALT Investor, addressed as follows:

       

      FIT-ALT
        Investor LLC

      c/o
        Fortress Investment Group LLC

      1251
        Avenue of the Americas

      16th
        Floor

      New
        York,
        New York 10020

      Attention:
        Randal Nardone

      Facsimile
        number: (212) 798-6120

       

      
        
          
          

        

        
          30

          
            

          

        

        
          
          

        

      

      

       

      with
        a
        copy to:

       

      Skadden,
        Arps, Slate, Meagher & Flom LLP

      4
        Times
        Square 

      New
        York,
        New York 10036

      Attn:
        Joseph A. Coco

      Facsimile
        Number: (212) 735-2000

       

      If
        to
        Emeritus, addressed as follows:

       

      Emeritus
        Corporation

      3131
        Eliott Avenue 

      Suite
        500

      Seattle,
        Washington 98121

      Attention:
        Raymond R. Brandstrom

      Facsimile
        number: (206) 378-4205

       

      with
        a
        copy to:

       

      Perkins
        Coie

       

      1201
        Third Avenue

       

      Seattle,
        WA 98101

       

      Attention:
        Michael E. Stansbury

       

      Facsimile
        number: 206-359-9771

       

      

       

      If
        to NW
        Select, addressed as follows:

       

      NW
        Select
        LLC

       

      600
        University Street, Suite 2500

       

      Seattle,
        Washington 98101

       

      Attention:
        Daniel R Baty

       

      Facsimile
        number: (206) 728-9327 

       

      If
        to the
        other Members, at the addresses or facsimile numbers set forth in a schedule
        filed with the records of the Company or such other addresses or facsimile
        numbers as such Members may hereafter specify to the Board, who shall so
        notify
        the other Members.

       

      Any
        Member may change its address(es) and/or facsimile number(s) for the purposes
        of
        this Section 10.12
        by
        written notice to the Company and each of the other Members given at least
        three
        (3) Business Days prior to the effective date of such change.

       

      Failure
        or delay in delivering copies of any notice or other communication to the
        persons designated above to receive copies shall in no way adversely affect
        the
        effectiveness of such notice, demand, request, consent, approval, declaration
        or
        other communication. 

       

      
        
          
          

        

        
          31

          
            

          

        

        
          
          

        

      

      

       

        Waiver
        of Right to Partition and Bill of Accounting.
        To the
        fullest extent permitted by applicable law, each Member covenants that it
        will
        not, and hereby waives any right to, file a bill for partnership accounting.
        Each Member irrevocably waives any right that it may have to maintain any
        action
        for dissolution of the Company (unless the Company is dissolved pursuant
        to
Section 7.1)
        or
        partition with respect to any of the Company’s assets.

       

        Confidentiality;
        Press Releases.
        Each
        Class B Member shall keep confidential all Confidential Information obtained
        pursuant to this Agreement, except that a Member
        shall be entitled to disclose such Confidential Information to its lawyers,
        accountants and other service providers as reasonably necessary in the
        furtherance of such Member’s bona fide interests, as otherwise required by law
        or judicial process and to comply with reporting requirements (including
        the
        rules of any applicable securities exchange or quotation or listing system),
        and
        to potential permitted transferees of its Membership Interest, provided
        that
        such potential transferees enter into customary confidentiality agreements,
        with
        the Company and the other Members expressly stated therein to be third party
        beneficiaries thereof prior to the disclosure of Confidential Information.
        Each
        Class B Member agrees to not to issue any press release or make any public
        statement with respect to the business and affairs of the Company, Alterra
        and
        their respective Subsidiaries and Affiliates without the prior written consent
        of the Class A Member (which shall not be unreasonably withheld); provided,
        however,
        in the
        event a Class B Member is required by applicable law or any listing agreement
        with any national securities exchange or quotation or listing system to issue
        a
        press release or make a public statement prior to such consent, such Class
        B
        Member shall
        only be required to consult with the Class A Member and the Company before
        issuing such press release or making such public statement and will not issue
        any such press release or make any such public statement prior to such
        consultation.. Notwithstanding the foregoing, each Class B Member (and each
        employee, representative or other agent of a Member) may disclose to any
        and all
        Persons, without limitation of any kind, the tax treatment and tax structure
        of
        the transactions contemplated by this Agreement and all materials of any
        kind
        (including opinions or other tax analyses) that are provided to such Member
        relating to such tax treatment and tax structure. 

       

        DISCLOSURES. 

       

      THE
        SECURITIES OFFERED HEREBY HAVE NOT BEEN REGISTERED UNDER THE SECURITIES EXCHANGE
        ACT OF 1933, AS AMENDED (THE “1933 ACT”), OR THE SECURITIES LAWS OF ANY STATE
        AND ARE BEING OFFERED AND SOLD IN RELIANCE ON EXEMPTIONS FROM THE REGISTRATION
        REQUIREMENTS OF THE 1933 ACT AND SUCH LAWS. SUCH SECURITIES ARE SUBJECT TO
        RESTRICTIONS ON TRANSFERABILITY AND RESALE AND MAY NOT BE TRANSFERRED OR
        RESOLD
        EXCEPT AS PERMITTED UNDER THE 1933 ACT AND SUCH LAWS PURSUANT TO EXEMPTION
        FROM
        REGISTRATION THEREUNDER. THERE WILL NOT BE ANY PUBLIC MARKET FOR THE SECURITIES.
        IN ADDITION, THE TERMS OF THIS AGREEMENT RESTRICT THE TRANSFERABILITY OF
        THE
        SECURITIES.

      

        Specific
        Enforcement.
        Each of
        the Members expressly agrees that the other Members will be irreparably damaged
        if this Agreement is not specifically enforced. 

       

      
        
          
          

        

        
          32

          
            

          

        

        
          
          

        

      

      Upon
        a
        breach or threatened breach of the terms, covenants and/or conditions of
        this
        Agreement by any Member, the other Members shall, in addition to all other
        remedies, each be entitled to a temporary or permanent injunction, without
        showing any actual damage or the posting of any bond, and/or a decree for
        specific performance, in accordance with the provisions hereof.

       

        Waivers.
        No
        failure by any party to insist upon the strict performance of any covenant,
        duty, agreement or condition of this Agreement or to exercise any right or
        remedy consequent upon a breach thereof shall constitute a waiver of any
        such
        breach or any other covenant, duty, agreement or conditions.

       

      
        
          
          

        

        
          33

          
            

          

        

        
          
          

        

      

      IN
        WITNESS WHEREOF, the parties hereto have executed this Agreement on the date
        first above written.

       

      
        	
                Company:

                 

              
	
                FEBC-ALT
                  INVESTORS LLC, 

                 

                a
                  Delaware limited liability company

                 

              
	
                By:  

                     
                    /s/
                  William Doniger

                Name:
                  William
                  Doniger

                 

                Title:
                  

                 

              
	
                Initial
                  Members:

                 

              
	
                FIT-ALT
                  INVESTOR LLC,

                 

                a
                  Delaware limited liability company

                 

              
	
                By:  

                
                         
                    /s/ William Doniger

                

                Name:
                  William Doniger

                 

                Title:
                  

                 

              
	
                EMERITUS
                  CORPORATION, a Washington corporation:

                 

              
	
                By:  

                        /s/
                  Raymond R. Brandstrom

                Name:
                  Raymond R.
                  Brandstrom

                Title:
                  Vice President of Finance

                 

              
	
                NW
                  SELECT LLC, a Washington 

                 

                limited
                  liability company

                 

              
	
                By:  

                    
                     /s/ Daniel R.
                  Baty

                         
Name:
                  Daniel R.
                  Baty

                     
                  Title: Manager

              

      

      

      
        
          
          

        

        
          34

          
            

          

        

        
          
          

          
          

        

      

      Schedule
        I

      to

      Limited
        Liability Company Agreement

       

      Schedule
        of Capital Contributions, Percentage Interests of Members and
        Balances

       

      
        	
                MEMBER’S

                 

                NAME

                 

              	
                PERCENTAGE
                  INTEREST

                 

              
	
                Emeritus

                 

              	
                12.5%

                 

              
	
                FIT-ALT
                  Investor

                 

              	
                75%

                 

              
	
                NW
                  Select

                 

              	
                12.5%

                 

              

      

      

      
        
          
          

        

        
          
          

          
            

          

        

        
          
          

        

      

      Schedule
        II

      to

      Limited
        Liability Company Agreement

      

      Name Initial
        Officers

      

      Wesley
        Edens CEO

      Randal
        Nardone COO
        and
        Secretary

      Jeffrey
        Rosenthal CFO

      William
        Doniger Vice
        President

      

      
        
          
          

        

        
          
          

          
            

          

        

        
          
          

        

      

      Exhibit
        A

      to

      Limited
        Liability Company Agreement

      

      Form
        of
        Draft Conveyance AgreementMembership Interest Purchase Agreement

    
      

    

    

     

    

     

    MEMBERSHIP
      INTEREST PURCHASE AGREEMENT

     

    This
      MEMBERSHIP INTEREST PURCHASE AGREEMENT (this "Agreement"),
      dated
      as of June 29, 2005, is by and among NW SELECT LLC, a Washington limited
      liability company ("NW
      Select"),
      EMERITUS CORPORATION, a Washington corporation ("Emeritus"
      and,
      together with NW Select, the "Sellers",
      and
      each individually, a "Seller"),
      FIT-ALT INVESTOR LLC, a Delaware limited liability company ("Buyer"),
      and
      BROOKDALE SENIOR LIVING INC., a Delaware corporation ("Newco").

    

     

    RECITALS

     

    WHEREAS,
      the Sellers and the Buyer entered into that certain Limited Liability Company
      Agreement of FEBC-ALT Investors LLC, a Delaware limited liability company (the
      "Company"),
      dated
      as of October 14, 2003 and amended as of November 17, 2003 (the “LLC
      Agreement”);
      and
      each capitalized term used but not otherwise defined herein has the meaning
      given to such term in the Amended and Restated Limited Liability Company
      Agreement of the Company in the form attached as Exhibit I hereto (the
      "Amended
      LLC Agreement");

    

    WHEREAS,
      Sellers, as of the date hereof and as Class B Members, own Membership Interests
      of the Company representing in the aggregate a 50% Percentage Interest in the
      Company; 

    

    WHEREAS,
      Sellers desire to sell, assign and transfer to Buyer, and Buyer desires to
      purchase and acquire from Sellers, 50% of each of the Seller's Membership
      Interests in the Company as set forth on Schedule A hereto (collectively, the
      "Purchased
      Membership Interests"),
      for
      the consideration and upon the terms and subject to the conditions set forth
      in
      this Agreement; 

    

    WHEREAS,
      concurrently with the sale and purchase of the Purchased Membership Interests,
      Sellers, Buyer and the Company shall enter into the Amended LLC
      Agreement;

    

    WHEREAS,
      subsequent to the consummation of the sale and purchase of the Purchased
      Membership Interests, it is contemplated that each of the Members shall receive
      securities ("Newco
      Shares")
      of
      Newco in connection with a Reorganization Transaction (as such term is defined
      in the Amended LLC Agreement); 

    

    WHEREAS,
      simultaneously with the execution of this Agreement, the parties hereto desire
      to enter into the Stockholders and Voting Agreement, in the form attached as
      Exhibit
      II
      hereto
      (the "Stockholders
      Agreement"),
      which
      sets forth certain rights and obligations of the Sellers with respect to their
      Newco Shares; and

    
      
        
        

      

      
        1

        
          

        

      

      
        
        

      

    

    

    WHEREAS,
      the Sellers have agreed to sell the Newco Shares to be received by them in
      an
      initial public offering (the "IPO")
      of
      Newco Shares pursuant to a registration statement (the "Registration
      Statement")
      under
      the Securities Act of 1933, as amended (the "Securities
      Act"),
      and,
      if the Sellers are unable to sell all such Newco Shares in the IPO, Sellers
      and
      Newco shall enter into a Registration Rights Agreement in the form attached
      as
Exhibit
      III
      hereto
      (the "Registration
      Rights Agreement").

    

    NOW,
      THEREFORE, in consideration of the foregoing premises, the mutual covenants,
      promises and agreements hereinafter set forth, the receipt and sufficiency
      of
      which are hereby acknowledged and accepted, the parties hereto hereby agree
      as
      follows:

    

    ARTICLE
      I  

     

    SALE
      AND TRANSFER OF SHARES

     

    Section
      1.1  Sale
      and Purchase of Purchased Membership Interests.
      Upon
      the terms and subject to the conditions set forth in this Agreement, Sellers
      hereby sell, assign, transfer and convey the Purchased Membership Interests
      to
      Buyer, and Buyer hereby purchases and accepts the Purchased Membership Interests
      from Sellers, free and clear of all liens, mortgages, pledges, security
      interests, claims, encumbrances or other restrictions. 

     

    Section
      1.2 Consideration
      for the Purchased
      Membership
      Interests.
      The
      aggregate consideration
      for the Purchased Membership Interests is $50,000,000. Concurrently with the
      execution of this Agreement, Buyer shall pay in cash $23,000,000 to NW Select
      (the "NW
      Purchase Price")
      and
      $25,000,000 to Emeritus (the "Emeritus
      Purchase Price"),
      in
      each case by delivery of immediately available funds by wire transfer to an
      account designated by each of the Sellers prior to the execution hereof. The
      balance of $2,000,000 shall be paid to NW Select immediately after the receipt
      from Omega Healthcare Investors, Inc. ("Omega") of a consent waiving the net
      worth requirement in connection with the proposed purchase by Alterra Healthcare
      Corporation ("Alterra") (or a Subsidiary thereof) of the six properties
      currently subject to leases between Omega and Alterra (or a Subsidiary thereof),
      but in any event not later than 30 days following the date of this Agreement.
      

     

    ARTICLE
      II  

     

    REPRESENTATIONS
      AND WARRANTIES

     

    Section
      2.1  Representations
      and Warranties of Sellers.
      Each of
      the Sellers represents and warrants, severally for itself and not jointly with
      the other Seller, as follows:

     

    (a)  Authorization;
      Due Execution and Delivery. Such Seller has all requisite power and authority
      to
      execute, deliver and perform this Agreement and consummate the transactions
      contemplated hereby, and the execution and performance by such Seller of this
      Agreement have been duly authorized by all requisite action by such Seller.
      This
      Agreement has been duly executed and delivered by such Seller and, assuming
      due
      execution by Buyer and Newco, this Agreement constitutes a valid and binding
      obligation of such Seller, enforceable against such Seller in accordance with
      its terms, subject to applicable bankruptcy, insolvency, 

     

    
      
        
        

      

      
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    reorganization,
      fraudulent conveyance, moratorium or other similar laws and subject to general
      principles of equity.

     

    (b)  Title.
      Such Seller has not sold, transferred or otherwise disposed of any interest
      in
      the Company since it acquired an interest in the Company on October 14, 2003.
      Such Seller has valid title to its respective Membership Interests, free and
      clear of all liens, mortgages, pledges, security interests, claims, encumbrances
      or other restrictions in respect of the Membership Interests. The sale of the
      Purchased Membership Interests by such Seller pursuant to this Agreement will
      pass good, valid and marketable title in such Membership Interests to
      Buyer.

     

    (c) Information.
      Neither
      Buyer nor the Company has provided, and will not be providing, such Seller
      with
      any material or information regarding the transactions contemplated by this
      Agreement, except as contemplated by Section 10.8 of the Amended LLC Agreement,
      and such Seller acknowledges that it has had the opportunity to ask questions
      and receive answers from the Company, the Buyer or any persons acting on behalf
      of the Company or Buyer, has been furnished with all other materials that it
      considers relevant to its investment in the Company and has been given the
      opportunity fully to perform its own due diligence. Such Seller is experienced,
      sophisticated and knowledgeable in the trading of public and private companies
      and the operation of assisted living facilities and understands the disadvantage
      to which it is subject on account of the disparity of information regarding
      the
      Company and any Reorganization Transaction (as such term is defined in the
      Amended LLC Agreement) between such Seller and the Buyer.

     

    (d) Reorganization
      Transaction and Initial Public Offering.
      Each
      Seller acknowledges that there can be no assurance that any Reorganization
      Transaction and/or the IPO will be consummated.

     

    Section
      2.2  Representations
      and Warranties of Buyer.
      Buyer
      represents and warrants as follows: Buyer has all requisite power and authority
      to execute, deliver and perform this Agreement and consummate the transactions
      contemplated hereby, and the execution and performance by Buyer of this
      Agreement have been duly authorized by all requisite action by Buyer. This
      Agreement has been duly executed and delivered by Buyer and, assuming due
      execution by Sellers and Newco, this Agreement constitutes a valid and binding
      obligation of Buyer, enforceable against Buyer in accordance with its terms,
      subject to applicable bankruptcy, insolvency, reorganization, fraudulent
      conveyance, moratorium or other similar laws and subject to general principles
      of equity.

     

    Section
      2.3  Representations
      and Warranties of Newco. Newco represents and warrants as follows: Newco has
      all
      requisite power and authority to execute, deliver and perform this Agreement
      and
      consummate the transactions contemplated hereby, and the execution and
      performance by Newco of this Agreement have been duly authorized by all
      requisite action by Newco. This Agreement has been duly executed and delivered
      by Newco and, assuming due execution by Sellers and Buyer, this Agreement
      constitutes a valid and binding obligation of Newco, enforceable against Newco
      in accordance with its terms, subject to applicable bankruptcy, insolvency,
      reorganization, fraudulent conveyance, moratorium or other similar laws and
      subject to general principles of equity.

     

    
      
        
        

      

      
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    ARTICLE
      III  

     

    CLOSING

     

    Section
      3.1  Closing.
      

     

    (a)  The
      parties confirm that the closing of the transactions contemplated by this
      Agreement (the "Closing") took place at the offices of Skadden, Arps, Slate,
      Meagher & Flom LLP, Four Times Square, New York, New York, 10036, or such
      other place as may be mutually agreed upon by the parties on the date
      hereof.

     

    (b)  At
      the
      Closing, each Seller delivered to the Buyer:

     

    (i)
       a
      copy of
      this Agreement duly executed by each of the Sellers;

     

    (ii)
       a
      copy of
      the Amended LLC Agreement duly executed by each of the Sellers; 

     

    (iii) a
      copy of
      the Stockholders Agreement duly executed by each of the Sellers;

     

    (iv)
       resignations
      executed by each of Daniel R. Baty and Raymond R. Brandstrom, dated the date
      hereof, from each board of directors, board of managers or similar governing
      body of the Company, Alterra and any of their respective subsidiaries,
      including, without limitation, the Company's Board of Managers and the Board
      of
      Directors of Alterra; and

     

    (v) a
      copy of
      the non-foreign status affidavit in the form of Exhibit
      IV
      attached
      hereto, as required by Section 1445 of the Internal Revenue Code and the
      regulations thereunder, duly executed by the Sellers.

     

    (c)  At
      the
      Closing, the Buyer delivered to each Seller:

     

    (i) a
      copy of
      this Agreement duly executed by the Buyer;

     

    (ii)
       a
      copy of
      the Amended LLC Agreement duly executed by the Buyer;

     

    (iii) a
      copy of
      the Stockholders Agreement, duly executed by the Buyer; and

     

    (iv) the
      NW
      Purchase Price or the Emeritus Purchase Price, as applicable.

     

    (d)  At
      the
      Closing, Newco delivered to each Seller a copy of the Stockholders Agreement,
      duly executed by Newco.

     

    
      
        
        

      

      
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    ARTICLE
      IV  

     

    SALE
      IN INITIAL PUBLIC OFFERING AND ADDITIONAL AGREEMENTS

     

    Section
      4.1 Election
      to Participate in the IPO; Sale in the IPO.
      

     

    (a) At
      least
      10 days prior to the initial filing of the Registration Statement with the
      Securities and Exchange Commission, Newco shall deliver to Sellers a draft
      of
      such Registration Statement and a written notice stating the anticipated date
      of
      such initial filing (the "Filing
      Date Notice").
      At
      Sellers' sole option, Sellers may elect, by delivery of an irrevocable written
      notice to Buyer not for than five days after receipt of the Filing Date Notice,
      to sell as a "selling stockholder" pursuant to the Registration Statement the
      Newco Shares received, or to be received, by the Sellers in a Reorganization
      Transaction (the "Election
      Notice").
      If
      the Sellers deliver an Election Notice, each Seller shall promptly furnish
      to
      Newco in writing such information regarding it and its Newco Shares as Newco
      may
      from time to time reasonably request to complete or amend the information
      required by such Registration Statement (including, without limitation,
      information regarding such Seller's ownership of Newco Shares), shall promptly
      execute and deliver, or cause to be executed and delivered, customary agreements
      and take such other actions as Newco or an underwriter reasonably requests
      in
      connection with the IPO, including, without limitation, (i) the execution and
      delivery of any underwriting agreement, power of attorney, custody agreement,
      stock power or medallion guarantee, (ii) the delivery of a reasonable and
      customary opinion of counsel and officers' certificate to the underwriters
      with
      respect to any Newco Shares to be sold in the IPO by the Sellers and (iii)
      the
      execution and delivery of an agreement restricting the Transfer (as such term
      is
      defined in the Stockholders Agreement) of any Newco Shares owned by the Sellers
      as may be required by underwriters to facilitate the marketing of the securities
      in the IPO (so long as such restrictions on Transfer are no greater than the
      restrictions contained in a similar agreement with the underwriters with respect
      to the Newco Shares of the Fortress Entity (as such term is defined in the
      Stockholders Agreement). Each of the Sellers hereby elects to sell as a "selling
      stockholder" all of the Newco Shares received or to be received by it in a
      Reorganization Transaction in the IPO, and this sentence shall be deemed to
      be
      an Election Notice under this Section
      4.1(a)
      for
      purposes of the IPO; provided,
      however,
      that
      this election shall be effective only if the IPO is completed on or before
      December 31, 2005. If the IPO is not completed on or before December 31, 2005,
      then the Sellers' rights to elect to sell Newco Shares under this Section
      4.1(b)
      shall be
      reinstated and Newco shall be required to deliver an Election Date Notice to
      the
      Sellers with respect to and IPO thereafter.

     

    (b) Each
      Seller shall pay its portion of all underwriting discounts and commissions
      and
      transfer taxes, if any, relating to the sale of such Seller's Newco Shares
      pursuant to the IPO.

     

    (c) If,
      in
      connection with the IPO, any managing underwriter advises Newco in writing
      that,
      in its opinion, the inclusion of all the equity securities sought to be included
      in the IPO by (i) Newco, (ii) the Sellers pursuant to Section
      4.1(a),
      and
      (iii) any other proposed seller of equity securities of Newco which is an
      Affiliate of Buyer (other than Newco) (such persons being "Other
      Proposed Sellers"),
      would
      adversely affect the marketability of the 

     

    
      
        
        

      

      
        5

        
          

        

      

      
        
        

      

    

    equity
      securities sought to be sold in the IPO (an "IPO
      Reduction"),
      then
      Buyer shall cause Newco to include in the Registration Statement only such
      equity securities as Newco is so advised by such underwriter can be sold without
      such an effect, as follows and in the following order of priority: (i) first,
      such number of equity securities to be sold by Newco as Newco, in its reasonable
      judgment and acting in good faith and in accordance with sound financial
      practice, shall have determined and (B) second, that number of Newco Shares
      to
      be sold by the Sellers (allocated on a pro rata basis amongst each Seller)
      and
      (C) third, other equity securities held by any Other Proposed Sellers. As used
      herein, "Affiliate"
      shall
      have the meaning set forth in Rule 12b-2 promulgated under the Securities
      Exchange Act of 1934, as amended; provided
      that no
      person shall be deemed an Affiliate of any other person solely by reason of
      any
      investment in Newco .

     

    Section
      4.2 Indemnification.
      

     

    (a)(i) Newco
      shall indemnify and hold harmless, to the fullest extent permitted by law,
      each
      Seller, its officers, directors, employees, managers, partners and agents and
      each person who controls (within the meaning of Section 15 of the Securities
      Act
      and Section 20 of the Securities Exchange Act of 1934, as amended (the
      "Exchange
      Act"))
      such
      Seller or such other indemnified person from and against all losses, claims,
      damages, liabilities and expenses (including reasonable expenses of
      investigation and reasonable attorneys' fees and expenses) (collectively, the
      "Losses")
      caused
      by, resulting from or relating to any untrue statement (or alleged untrue
      statement) of a material fact contained in any registration statement
      (including, without limitation, the Registration Statement), prospectus or
      preliminary prospectus or any amendment thereof or supplement thereto or any
      omission (or alleged omission) of a material fact required to be stated therein
      or necessary to make the statements therein, in light of the circumstances
      under
      which they were made, not misleading, except insofar as the same are caused
      by
      any information furnished in writing to Newco by such Seller expressly for
      use
      therein or by such Seller's failure to deliver a copy of a current prospectus
      or
      any amendments or supplements thereto (which does not contain any such material
      misstatements or omissions) after Newco has furnished such holder with a
      sufficient number of copies of the same. 

     

    (ii) To
      the
      extent permitted by law, each Seller shall, severally and not jointly, indemnify
      Newco, its directors, officers, employees and agents and each Person who
      controls (within the meaning of Section 15 of the Securities Act and Section
      20
      of the Exchange Act) Newco or such other indemnified Person against all Losses
      caused by any untrue statement of material fact contained in any registration
      statement (including, without limitation, the Registration Statement),
      prospectus or preliminary prospectus or any amendment thereof or supplement
      thereto or any omission of a material fact required to be stated therein or
      necessary to make the statements therein, in light of the circumstances under
      which they were made, not misleading, but only to the extent that such untrue
      statement or omission is caused by and contained in such information so
      furnished in writing by such Seller expressly for use therein; provided,
      however,
      that
      each Seller's obligation to indemnify Newco hereunder shall, to the extent
      more
      than one Seller is subject to the same indemnifica-tion obligation, be
      apportioned between each Seller based upon the net amount received by each
      Seller from the sale of Newco Shares, as compared to the total net amount
      received in aggregate by the Sellers for securities sold pursuant to such
      registration statement. Notwith-standing the foregoing, no Seller shall be
      

     

    
      
        
        

      

      
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    liable
      to
      the Company for amounts in excess of the lesser of (i) such apportionment and
      (ii) the amount received by such holder in the offering giving rise to such
      liability.

     

    (b) Any
      person entitled to indemnification under this Section
      4.2
      shall
      give prompt written notice to the indemnifying party of any claim with respect
      to which it seeks indemnification; provided,
      however,
      the
      failure to give such notice shall not release the indemnifying party from its
      obligation, except to the extent that the indemnifying party has been materially
      prejudiced by such failure to provide such notice on a timely
      basis.

     

    (c) In
      any
      case in which any such action is brought against any indemnified party, and
      it
      notifies an indemnifying party of the commencement thereof, the indemnifying
      party will be entitled to participate therein, and, to the extent that it may
      wish, jointly with any other indemnifying party similarly notified, to assume
      the defense thereof, with counsel reasonably satisfactory to such indemnified
      party, and after notice from the indemnifying party to such indemnified party
      of
      its election so to assume the defense thereof, the indemnifying party will
      not
      (so long as it shall continue to have the right to defend, contest, litigate
      and
      settle the matter in question in accordance with this paragraph) be liable
      to
      such indemnified party hereunder for any legal or other expense subsequently
      incurred by such indemnified party in connection with the defense thereof other
      than reasonable costs of investigation, supervision and monitoring (unless
      (i)
      such indemnified party reasonably objects to such assumption on the grounds
      that
      there may be defenses available to it which are different from or in addition
      to
      the defenses available to such indemnifying party or (ii) the indemnifying
      party
      shall have failed within a reasonable period of time to assume such defense
      and
      the indemnified party is or is reasonably likely to be prejudiced by such delay,
      in either event the indemnified party shall be promptly reimbursed by the
      indemnifying party for the expenses incurred in connection with retaining
      separate legal counsel). An indemnifying party shall not be liable for any
      settlement of an action or claim effected without its consent. The indemnifying
      party shall lose its right to defend, contest, litigate and settle a matter
      if
      it shall fail to diligently contest such matter (except to the extent settled
      in
      accordance with the next following sentence). No matter shall be settled by
      an
      indemnifying party without the consent of the indemnified party (which consent
      shall not be unreasonably withheld, it being understood that the indemnified
      party shall not be deemed to be unreasonable in withholding its consent if
      the
      proposed settlement imposes any obligation on the indemnified party other than
      the payment of money).

     

    (d) The
      indemnification provided for under this Section
      4.2
      shall
      remain in full force and effect regardless of any investigation made by or
      on
      behalf of the indemnified person and will survive the transfer of the Newco
      Shares and the termination of this Agreement.

     

    (e) If
      recovery is not available under the foregoing indemnification provisions for
      any
      reason or reasons other than as specified therein, any person who would
      otherwise be entitled to indemnification by the terms thereof shall nevertheless
      be entitled to contribution with respect to any Losses with respect to which
      such person would be entitled to such indemnification but for such reason or
      reasons. In determining the amount of contribution to which the respective
      persons are entitled, there shall be considered the persons' relative knowledge
      and access to information concerning the matter with respect to which the claim
      was 

     

    
      
        
        

      

      
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    asserted,
      the opportunity to correct and prevent any statement or omission, and other
      equitable considerations appropriate under the circumstances. It is hereby
      agreed that it would not necessarily be equitable if the amount of such
      contribution were determined by pro rata or per capita allocation. No person
      guilty of fraudulent misrepresentation (within the meaning of Section 11(f)
      of
      the Securities Act) shall be entitled to contribution from any person who was
      not found guilty of such fraudulent misrepresentation. Notwithstanding the
      foregoing, no Seller or transferee thereof shall be required to make a
      contribution in excess of the net amount received by such holder from its sale
      of Newco Shares in connection with the offering that gave rise to the
      contribution obliga-tion.

     

    Section
      4.3 Registration
      Rights Agreement.
      In the
      event (i) an IPO Reduction occurs and the Sellers are unable to sell all of
      the
      Newco Shares owned by them in the IPO, or (ii) the IPO is not completed on
      or
      before December 31, 2005 but occurs thereafter and the terms of the Registration
      Rights Agreement would be applcable to either of the Sellers after the
      completion of that IPO, Newco shall, simultaneously with the consummation of
      the
      IPO, execute and deliver to Sellers, and Sellers shall execute and deliver
      to
      Newco, the Registration Rights Agreement.

     

    

     

    ARTICLE
      V  

     

    MISCELLANEOUS

     

    Section
      5.1  Notices.
      All
      notices and other communications hereunder shall be in writing and shall be
      deemed given if delivered personally or by commercial delivery service, or
      sent
      via telecopy (receipt confirmed) to the parties at the addresses or telecopy
      numbers (or at such other address or telecopy numbers for a party as shall
      be
      specified by like notice) set forth in Section 10.12 of the Amended LLC
      Agreement or if to Newco, at the address or telecopy numbers set forth in
      Section 10.12 of the Amended LLC Agreement for the Buyer.

     

    Section
      5.2  Further
      Action. Subject to the terms and conditions provided herein, each of the parties
      hereto will at any time from and after the execution hereof, execute,
      acknowledge and deliver all such further acts, deeds, assignments, transfers,
      certificates, instruments, conveyances, powers of attorney, assurances and
      other
      documents as may be required to carry out the intent of this Agreement, and
      to
      transfer and vest title to the Membership Interests being transferred hereunder,
      and to protect the right, title and interest in and enjoyment of the Membership
      Interests sold, assigned and transferred pursuant to this Agreement; provided,
      however, that this Agreement shall be effective regardless of whether any such
      additional documents are executed.

     

    Section
      5.3  Assignment.
      This
      Agreement and the rights and obligations hereunder shall be assignable or
      transferable by Buyer in its discretion, without the need for any consent of
      the
      other parties. This Agreement will apply to, be binding in all respects upon
      and
      inure to the benefit of any assigns of Buyer. Notwithstanding any assignment
      by
      Buyer, Buyer shall remain liable for any and all obligations under this
      Agreement.

     

    Section
      5.4  Waivers
      and Amendments.
      This
      Agreement may be amended or modified only by a written instrument executed
      by
      the parties hereto. Any failure of a party hereto to 

     

    
      
        
        

      

      
        8

        
          

        

      

      
        
        

      

    

    comply
      with any obligation, covenant, agreement or condition herein may be waived
      by
      the party entitled to the benefits thereof only by a written instrument signed
      by the party granting such waiver. 

     

    Section
      5.5  Headings.
      The
      headings in this Agreement are for convenience of reference only and shall
      not
      be deemed to alter or affect the meaning or interpretation of any provision
      hereof. 

     

    Section
      5.6  Severability.
      In the
      event that any one or more of the terms or provisions contained in this
      Agreement shall be held to be invalid, illegal or unenforceable in any respect,
      such invalidity, illegality or unenforceability shall not affect any other
      term
      or provision of this Agreement. Any term or provision of this Agreement held
      invalid or unenforceable only in part, degree or within certain jurisdictions
      will remain in full force and effect to the extent not held invalid or
      unenforceable to the extent consistent with the intent of the parties as
      reflected by this Agreement. 

     

    Section
      5.7  Binding
      Effect; Entire Agreement.
      This
      Agreement shall be binding upon and shall inure to the benefit of the parties
      hereto and their respective heirs, successors, executors, administrators and
      assigns. This Agreement, together with any other documents contemplated hereby,
      constitutes the entire agreement of the parties hereto with respect to the
      subject matter hereof, and supersedes any prior agreements or undertakings
      between the parties, both written and oral, with respect to the subject matter
      hereof.

     

    Section
      5.8  Applicable
      Law; Venue.
      The substantive laws of the State of Delaware shall govern the interpretation,
      validity and performance of the terms of this Agreement, without regard to
      conflicts of law doctrines. Any legal action or proceeding with respect to
      this
      Agreement and any action for enforcement of any judgment in respect thereof
      may
      be brought in the courts of the State of New York or of the United States of
      America for the Southern District of New York and, by execution and delivery
      of
      this Agreement, each party hereto hereby accepts for itself and in respect
      of
      its property, generally and unconditionally, the non-exclusive jurisdiction
      of
      the aforesaid courts and the appellate courts thereof. Each party hereto
      irrevocably consents to the service of process out of any of the aforementioned
      courts in any such action or proceeding by the mailing of copies thereof by
      registered or certified mail, postage prepaid, to such party at the address
      for
      notices set forth herein. Each party hereto hereby irrevocably waives any
      objection which it may now or hereafter have to the laying of venue of any
      of
      the aforesaid actions or proceedings arising out of or in connection with this
      Agreement brought in the courts referred to above and hereby further irrevocably
      waives and agrees not to plead or claim in any such court that any such action
      or proceeding brought in any such court has been brought in an inconvenient
      forum. EACH PARTY HERETO HEREBY IRREVOCABLY WAIVES ALL RIGHT TO TRIAL BY JURY
      IN
      ANY PROCEEDING (WHETHER BASED IN CONTRACT, TORT OR OTHERWISE) ARISING OUT OF
      OR
      RELATING TO THIS AGREEMENT OR ANY TRANSACTION OR AGREEMENT CONTEMPLATED HEREBY
      OR
      THE
      ACTIONS OF ANY PARTY HERETO IN THE NEGOTIATION, ADMINISTRATION, PERFORMANCE
      OR
      ENFORCEMENT HEREOF. 

     

    
      
        
        

      

      
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    Section
      5.9  Counterparts.
      This
      Agreement may be executed in one or more counterparts, each of which when
      executed shall be deemed to be an original, but all of which taken together
      shall constitute one and the same agreement.

     

    Section
      5.10  Injunctive
      Relief. The parties hereto acknowledge and agree that it will be impossible
      to
      measure in money the damages that would be suffered if any party hereto violates
      any of the terms of this Agreement and that any such violation will cause an
      aggrieved party irreparable injury for which an adequate remedy at law is not
      available. Therefore, the parties hereto shall be entitled (in addition to
      any
      other remedy to which they may be entitled in law or in equity) to specific
      performance or an injunction, restraining order or other equitable relief from
      any court of competent jurisdiction, restraining any party hereto from
      committing any violations of the provisions of this Agreement, and none of
      the
      parties hereto shall raise the defense that there is an adequate remedy at
      law
      or request that any bond be posted in connection with seeking such equitable
      relief.

     

    

     

    [Remainder
      of Page Intentionally Left Blank]

     

    
      
         

      

      
        10

        
          

        

      

      
         

      

    

     

    

     

    

    

      IN
        WITNESS WHEREOF, the parties hereto have caused this Agreement to be duly
        executed and delivered, each as of the date first above written.

       

      

       

      BROOKDALE
        SENIOR LIVING INC.

      

      

      By:
        /s/
        Randal A. Nardone    

      Name:
        Randal A. Nardone

      Title:

      

      

      FIT-ALT
        INVESTOR

      

      

      By:
        /s/
        William Doniger   

      Name:
        William Doniger

      Title:

      

      

      EMERITUS
        CORPORATION

      

      

      By:
        /s/
        Raymond R. Brandstrom  

      Name:
        Raymond R. Brandstrom

      Title:
        Vice President of Finance

      

      

      NW
        SELECT LLC

      

      

      By:
        /s
        Danniel R. Baty

      Name:
        Daniel R. Baty

      Title:
        Manager

    

     

    
      
        
        

      

      
        11

        
          

        

      

      
        
        

      

    

    Schedule
      A

    

    Membership
      Interests to be Purchased by Buyer

    

    
      	
              Seller

            	
              Percentage
                Interest

            
	
              Emeritus

            	
              12.5%

            
	
              NW
                Select

            	
              12.5%

            

    

    

    
      
        
        

      

      
        12

        
          

        

      

      
        
        

      

    

    Exhibit
      I

    

    Amended
      LLC Agreement

    

    
      
        
        

      

      
        13

        
          

        

      

      
        
        

      

    

    Exhibit
      II

    

    Stockholders
      and Voting Agreement

    
      
        
        

      

      
        14

        
          

        

      

      
        
        

      

    

    Exhibit
      III

    

    Registration
      Rights Agreement

    
      
        
        

      

      
        15

        
          

        

      

      
        
        

      

    

    Exhibit
      IV

     

    

      

       

      NON-FOREIGN
        CERTIFICATE

       

      

       

      Section 1445
        of the Internal Revenue Code provides that a transferee of a United States
        real
        property interest must withhold tax if the transferor is a foreign person.
        For
        U.S. tax purposes (including Section 1445), the owner of a disregarded
        entity (which has legal title to a U.S. real property interest under local
        law)
        will be the transferor of the property and not the disregarded entity. To
        inform
        FIT ALT Investor LLC ("Buyer") that withholding of tax is not required upon
        the
        disposition of a United States real property interest by NW
        SELECT
        LLC,
        a
        Washington limited liability company (the “Seller”), the undersigned hereby
        certifies the following on behalf of Seller:

       

      

       

      
        	 	
                1.

              	
                Seller
                  is not a foreign corporation, foreign partnership, foreign trust,
                  or
                  foreign estate (as those terms are defined in the Internal Revenue
                  Code
                  and Income Tax Regulations); and

              

      

       

      

       

      
        	 	
                2.

              	
                Seller
                  is not a disregarded entity as defined in Section 1.1445-2(b)(2)(iii)
                  of the Income Tax Regulations issued under the Internal Revenue
                  Code.
                  

              

      

       

      

       

      
        	 	
                3.

              	
                Seller's
                  U.S. employer tax identification number is 56-7368711;
                  and

              

      

       

      

       

      
        	 	
                4.

              	
                Seller's
                  office address is 600 University St, Suite 2500, Seattle WA
                  .98101.

              

      

       

      

       

      Seller
        understands that this certification may be disclosed to the Internal Revenue
        Service by transferee and that any false statement contained herein could
        be
        punished by fine, imprisonment, or both.

       

      
        
           

        

        
          16

          
            

          

        

        
           

        

      

      

       

      The
        undersigned declares that the undersigned has examined this certification
        and to
        the best of the undersigned’s knowledge and belief it is true, correct and
        complete, and the undersigned further declares that such party has authority
        to
        sign this document on behalf of Seller.

       

      

       

      
        	
                 

                 

                Certified,
                  sworn to and subscribed before

                 

                me
                  this ___ day of ____________, 2005.

                 

                 

                 

                 

                 

                _________________________________

                 

                Notary
                  Public

                 

                 

                 

                My
                  Commission Expires:

                 

                 

                 

                _________________________________

                 

                 

                 

                (NOTARIAL
                  SEAL)

                 

              	
                 

                 

                SELLER:
                  NW SELECT LLC,
                  a
                  Washington limited liability company

                 

                 

                 

                By:
                  _/s/
                  Daniel R. Baty

                 

                Name:
                  Daniel R. Baty

                 

                Title:
                  Manager

                 

                 

              

      

      

      
        
           

        

        
          17

          
            

          

        

        
           

        

      

      

       

      NON-FOREIGN
        CERTIFICATE

       

      

       

      Section 1445
        of the Internal Revenue Code provides that a transferee of a United States
        real
        property interest must withhold tax if the transferor is a foreign person.
        For
        U.S. tax purposes (including Section 1445), the owner of a disregarded
        entity (which has legal title to a U.S. real property interest under local
        law)
        will be the transferor of the property and not the disregarded entity. To
        inform
        FIT ALT Investor LLC ("Buyer") that withholding of tax is not required upon
        the
        disposition of a United States real property interest by
        EMERITUS
        CORPORATION,
        a
        Washington corporation (the “Seller”), the undersigned hereby certifies the
        following on behalf of Seller:

       

      

       

      
        	 	
                1.

              	
                Seller
                  is not a foreign corporation, foreign partnership, foreign trust,
                  or
                  foreign estate (as those terms are defined in the Internal Revenue
                  Code
                  and Income Tax Regulations); and

              

      

       

      

       

      
        	 	
                2.

              	
                Seller
                  is not a disregarded entity as defined in Section 1.1445-2(b)(2)(iii)
                  of the Income Tax Regulations issued under the Internal Revenue
                  Code.
                  

              

      

       

      

       

      
        	 	
                3.

              	
                Seller's
                  U.S. employer tax identification number is 91-1605464;
                  and

              

      

       

      

       

      
        	 	
                4.

              	
                Seller's
                  office address is 3131 Elliott Avenue, Suite 500, Seattle WA
                  .98121.

              

      

       

      

       

      Seller
        understands that this certification may be disclosed to the Internal Revenue
        Service by transferee and that any false statement contained herein could
        be
        punished by fine, imprisonment, or both.

       

      
        
           

        

        
          18

          
            

          

        

        
           

        

      

      

       

      The
        undersigned declares that the undersigned has examined this certification
        and to
        the best of the undersigned’s knowledge and belief it is true, correct and
        complete, and the undersigned further declares that such party has authority
        to
        sign this document on behalf of Seller.

       

      

       

      
        	
                 

                 

                Certified,
                  sworn to and subscribed before

                 

                me
                  this ___ day of ____________, 2005.

                 

                 

                 

                 

                 

                _________________________________

                 

                Notary
                  Public

                 

                 

                 

                My
                  Commission Expires:

                 

                 

                 

                _________________________________

                 

                 

                 

                (NOTARIAL
                  SEAL)

                 

              	
                 

                 

                SELLER:
                  EMERITUS CORPORTION,
                  a
                  Washington corporation

                 

                 

                 

                By:
                  _/s/
                  Raymond R. Brandstrom

                 

                Name:
                  Raymond R. Brandstrom

                 

                Title:
                  Vice President of Finance

                 

                 

              

      

      

      
        
           

        

        
          19

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