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
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:
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.
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,
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.
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.
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
