STOCKHOLDERS AND VOTING
AGREEMENT
BY AND AMONG
BROOKDALE SENIOR LIVING
INC.,
FIT-ALT INVESTOR LLC
EMERITUS CORPORATION
and
NW SELECT LLC
______________
Dated as of June 29, 2005
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ARTICLE I
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DEFINITIONS
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Section
1.1
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Defined
Terms
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1
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ARTICLE II
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TRANSFER
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Section
2.1
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Restrictions on
Transfer.
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4
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Section
2.2
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Binding Effect
on Transferees
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5
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Section
2.3
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Additional
Purchases
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5
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Section
2.4
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Legend
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5
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ARTICLE III
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VOTING
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Section
3.1
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Voting of
Company Securities
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6
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Section
3.2
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Irrevocable
Proxy
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7
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ARTICLE IV
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TAG-ALONG AND DRAG-ALONG
RIGHTS
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Section
4.1
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Tag-Along
Rights.
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7
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Section
4.2
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Drag-Along
Rights.
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9
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ARTICLE V
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REPRESENTATIONS OF EACH
STOCKHOLDER
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Section
5.1
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Due
Organization, Authorization
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10
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Section
5.2
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Enforceability,
Etc
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11
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Section
5.3
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No
Conflicts
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11
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Section
5.4
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Governmental
Approvals
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11
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Section
5.5
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Litigation
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11
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Section
5.6
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Title to the
Shares
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11
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ARTICLE VI
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MISCELLANEOUS
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Section
6.1
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Effective Time
of Agreement
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12
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Section
6.2
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Further
Actions; Additional Agreements
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12
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Section
6.3
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Headings
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12
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Section
6.4
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Entire
Agreement
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13
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Section
6.5
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Further
Actions; Cooperation
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13
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Section
6.6
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Notices
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13
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Section
6.7
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Applicable Law;
Venue
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15
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Section
6.8
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Severability
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15
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Section
6.9
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Successors and
Assigns
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16
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Section
6.10
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Amendments
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16
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Section
6.11
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Waiver
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16
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Section
6.12
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Counterparts
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16
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Section
6.13
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Injunctive
Relief
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16
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Section
6.14
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Recapitalizations, Exchanges, Etc. Affecting the
Shares of Common Stock; New Issuances
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17
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Section
6.15
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Termination
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______________
THIS STOCKHOLDERS AND VOTING AGREEMENT (this "
Agreement ") is made as of June 29, 2005 and effective as of
the date set forth in Section 6.1 hereof, by and among
Brookdale Senior Living Inc., a Delaware corporation (the "
Company "), FIT-ALT Investor LLC, a Delaware limited
liability company (" FIT-ALT "), Emeritus Corporation, a
Washington corporation (" Emeritus "), and NW Select LLC, a
Washington limited liability company (" NW Select ").
Emeritus and NW Select are referred to herein individually as an "
Initial Stockholder " and collectively referred to herein as
the " Initial Stockholders ." Certain capitalized terms used
in this Agreement are defined in Article I . Unless
otherwise indicated, references to articles and sections shall be
to articles and sections of this Agreement.
WHEREAS, each Initial Stockholder and FIT-ALT
are parties to the Amended and Restated Limited Liability Company
Agreement of FEBC-ALT Investors LLC (" FEBC-ALT "), dated
the date hereof;
WHEREAS, it is contemplated that subsequent to
the date of this Agreement, each of the Initial Stockholders will
receive shares of Common Stock (as hereinafter defined) in exchange
for their respective membership interests in FEBC-ALT;
WHEREAS, prior to the Expiration Date (as
hereinafter defined) the Company desires to regulate the sale,
assignment, transfer, encumbrance or other disposition of Company
Securities (as hereinafter defined) and to provide for certain
rights and obligations in respect thereto as hereinafter provided;
and
WHEREAS, the Stockholders (as hereinafter
defined) deem it in their best interests to provide for certain
arrangements with respect to the voting of certain securities of
the Company.
NOW, THEREFORE, in consideration of the
foregoing and of the mutual covenants and agreements set forth
herein and for good and valuable consideration, the receipt and
sufficiency of which is hereby acknowledged, the parties hereto
hereby agree as follows:
DEFINITIONS
Section 1.1
Defined Terms
. For purposes of this Agreement, the terms
defined other than in this Article I shall have the meanings
indicated and the following terms shall have the following
meanings:
(a) " Affiliate " shall have the meaning set
forth in Rule 12b-2 promulgated under the Exchange Act;
provided that no Stockholder shall be deemed an Affiliate of
any other Stockholder solely by reason of any investment in the
Company.
(b) " Approved Sale " shall have the meaning
set forth in Section 4.2(a) .
(c) A Person shall be deemed to " Beneficially
Own " securities if such Person is deemed to be a "beneficial
owner" within the meaning of Rules 13d-3 and 13d-5 under the
Exchange Act as in effect on the date of this Agreement.
(d) " Common Stock " shall mean the Company's
common stock, par value $0.01 per share and any and all securities
of any kind whatsoever of the Company which may be issued and
outstanding on or after the date hereof in respect of, in exchange
for, or upon conversion of shares of Common Stock pursuant to a
merger, consolidation, stock split, stock dividend,
recapitalization of the Company or otherwise.
(e) " Company Securities " shall mean (i) any
Common Stock and (ii) any other securities of the Company entitled
to vote generally in the election of directors of the
Company.
(f) " Exchange Act " shall mean the
Securities Exchange Act of 1934, as amended.
(g) " Expiration Date " shall mean the date
of the consummation of the Initial Public Offering.
(h) " Fortress Entity " shall collectively
mean FIT-ALT or any Affiliate to which it has Transferred all of
its Company Securities.
(i) " Initial Public Offering " shall mean
the initial public offering by the Company of Common Stock pursuant
to an effective registration statement under the Securities
Act.
(j) " Liens " shall have the meaning set
forth in Section 4.1(a) .
(k) " Membership Interest Purchase Agreement
" shall mean the Membership Interest Purchase Agreement, dated as
of June 29, 2005, by and among the Initial Stockholders and FIT-ALT
Investor LLC.
(l) " Other Stockholders " shall have the
meaning set forth in Section 4.1(a) .
(m) " Participating Stockholder " shall have
the meaning set forth in Section 4.1(b) .
(n) " Permitted Transferee " shall mean, with
respect to each Stockholder, (i) any other Stockholder, (ii) such
Stockholder's Affiliates and (iii) in the case of any Stockholder,
(A) any general or limited partner or member of such Stockholder,
(B) any corporation, partnership, limited liability company or
other entity that is an Affiliate of such Stockholder or any
general or limited partner of such Stockholder (collectively, "
Stockholder Affiliates "), (C) any investment funds managed
directly or indirectly by such Stockholder or any Stockholder
Affiliates (a " Stockholder Fund "), (D) any general or
limited partner of any Stockholder Fund, (E) any managing director,
general partner, director, limited partner, officer or employee of
any Stockholder Affiliate, or any spouse, lineal descendant,
sibling, parent, heir, executor, administrator, testamentary
trustee, legatee or beneficiary of any of the foregoing persons
described in this clause (E) (collectively, " Stockholder
Associates ") or (F) any trust, the beneficiaries of which, or
any corporation, limited liability company or partnership, the
stockholders, members or general or limited partners of which
consist solely of any one or more of such Stockholder, any general
or limited partner of such Stockholder, any Stockholder Affiliates,
any Stockholder Fund, any Stockholder Associates, their spouses or
their lineal descendants.
(o) " Person " shall mean any individual,
firm, corporation, partnership, limited liability company or other
entity, and shall include any successor (by merger or otherwise) of
such entity.
(p) " Proxy " shall have the meaning set
forth in Section 3.2 .
(q) " Reorganization Transaction " shall have
the meaning assigned to it in the Amended and Restated Limited
Liability Company Agreement of FEBC-ALT Investors LLC dated as of
June 29, 2005.
(r) " Securities Act " shall mean the
Securities Act of 1933, as amended, and the rules and regulations
promulgated thereunder.
(s) " Stockholders " shall mean (i) the
Initial Stockholders and (ii) each Permitted Transferee (as defined
above) who becomes a party to or bound by the provisions of this
Agreement in accordance with the terms hereof or Permitted
Transferee thereof who is entitled to enforce the provisions of
this Agreement in accordance with the terms hereof.
(t) " Tag-Along Notice " shall have the
meaning set forth in Section 4.1(b) .
(u) " Tag-Along Notice Period " shall have
the meaning set forth in Section 4.1(b) .
(v) " Third Party " shall mean any Person
other than the Fortress Entity and its Affiliates.
(w) " Third Party Offer " shall have the
meaning set forth in Section 4.1(a) .
(x) " Third Party Notice " shall have the
meaning set forth in Section 4.1(a) .
(y) " Transfer " shall mean, with respect to
any Company Securities, (i) when used as a verb, to sell, assign,
dispose of, exchange, pledge, encumber, hypothecate or otherwise
transfer such Company Securities or any participation or interest
therein, whether directly or indirectly, or agree or commit to do
any of the foregoing and (ii) when used as a noun, a direct or
indirect sale, assignment, disposition, exchange, pledge,
encumbrance, hypothecation, or other transfer of such Company
Securities or any participation or interest therein or any
agreement or commitment to do any of the foregoing.
TRANSFER
Section 2.1
Restrictions on
Transfer .
(a) Except as set forth in Section 4.1 of the
Membership Interest Purchase Agreement and in Article IV
hereof, prior to the earlier of (i) the Expiration Date and (ii)
the date that is the six-month anniversary of the date hereof, each
Stockholder agrees that it shall not Transfer any Company
Securities. If the Expiration Date shall not have occurred prior to
the date that is the six-month anniversary of the date hereof, each
Stockholder agrees that, until the Expiration Date, it shall not
Transfer any Company Securities except for any Transfer from any
Stockholder to one or more of its respective Permitted Transferees.
The exception in the forgoing sentence is subject to the condition
that any Permitted Transferee execute the agreement referred to in
Section 2.2 . The provisions of this Agreement shall be
applied to the Company Securities acquired by any Permitted
Transferee of a Stockholder in the same manner and to the same
extent as such provisions were applicable to such Company
Securities in the hands of such Stockholder. Any reference in this
Agreement to the Stockholders shall be deemed to include each
Stockholder and its respective Permitted Transferees.
(b) Prior to the Expiration Date, each Stockholder
agrees that it will not, directly or indirectly, Transfer any
Company Securities unless such Transfer is made (i) pursuant to an
effective registration statement under the Securities Act and is
qualified under applicable state securities or blue sky laws or
(ii) without registration under the Securities Act and
qualification under applicable state securities or blue sky laws,
as a result of the availability of an exemption from registration
and qualification under such laws, and such Stockholder shall have
furnished to the other Stockholders, with a copy to the Company, a
certificate to that effect.
(c) Any purported Transfer of any Company Securities
or any economic benefit or interest therein in violation of this
Agreement shall be null and void ab initio , and shall not
create any obligation or liability of the issuer of such Company
Securities to the purported transferee, and any Person purportedly
acquiring any Company Securities or any economic benefit or
interest therein transferred in violation of this Agreement shall
not be entitled to be recognized as a holder of such Company
Securities and shall have no rights under this Agreement. In the
case of an attempted Transfer of any Company Securities or any
economic benefit or interest therein in violation of this
Agreement, the parties engaging or attempting to engage in such
Transfer shall indemnify and hold harmless the issuer of such
Company Securities and the other Investors 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 attempted Transfer or Transfer and
the enforcement of this indemnity.
Section 2.2
Binding Effect on
Transferees
. Prior to the Transfer by a Stockholder of
Company Securities to a Permitted Transferee, the transferring
Stockholder shall cause the transferee to execute an agreement on
the same terms and conditions set forth herein, providing that such
transferee shall be bound by and shall fully comply with the terms
of this Agreement (including the provisions of Section 3.2
with respect to the execution of a Proxy and the provisions of
Articles IV and V with respect to the Company
Securities being transferred to such transferee) and shall become a
Stockholder hereunder.
Section 2.3
Additional
Purchases
. Any Company Securities owned by a Stockholder
on or after the date of this Agreement shall be subject to the
terms and conditions of this Agreement.
. Each certificate representing Company
Securities issued to a Stockholder shall be stamped or otherwise
imprinted with a legend in substantially the following
form:
"The shares
represented by this certificate are subject to the transfer
restrictions and other provisions (including provisions with
respect to the voting of the shares represented by this
certificate) contained in the Stockholders and Voting Agreement
dated as of June 29, 2005 among the stockholders of the Corporation
named therein."
VOTING
Section 3.1
Voting of Company
Securities
.
(a) Each Stockholder hereby agrees that, from and
after the date hereof and until the Expiration Date, at every
meeting of the stockholders of the Company, however called (with or
without support or the recommendation of the Board of Directors of
the Company) and at every adjournment thereof, and in every action
by consent of the stockholders of the Company, each Stockholder
shall, provided that such Stockholder has not received notice from
the Fortress Entity (which notice may be delivered at any such
meeting) stating the Fortress Entity's intention to exercise the
Proxy (as defined below) at such meeting, appear at any such
meeting or otherwise cause the Company Securities Beneficially
Owned by it to be counted as present for purposes of establishing a
quorum, and shall vote or consent (or cause to be voted or
consented) such Company Securities: (i) in favor of the approval
and adoption of any transactions contemplated in connection with
the Reorganization Transaction in such manner as may be necessary
to consummate the Reorganization transaction; and (ii) otherwise as
directed in writing by the Fortress Entity.
(b) If a Stockholder fails for any reason to vote
the Company Securities Beneficially Owned by it as required by
Section 3.1(a) , the holder of the Proxy shall have the
right to vote such Company Securities at any meeting of the
Company's shareholders and in any action by written consent of the
Company's shareholders in accordance with Section 3.1(a) and
the Proxy. The vote of a holder of the Proxy shall control in any
conflict between a vote of the Company Securities by a holder of
the Proxy and a vote of the Company Securities by a
Stockholder.
(c) Each Stockholder hereby agrees that it shall
not, prior to the Expiration Date, enter into any agreement or
understanding with any person or entity with respect to the Company
Securities owned by it, the effect of which would be inconsistent
with or violative of any provision contained in this Article
III .
Section 3.2
Irrevocable Proxy
. Concurrently with the execution of this
Agreement, each Stockholder has executed and delivered a proxy in
the form attached as Exhibit A hereto (the " Proxy
"), which Stockholder agrees shall be irrevocable to the fullest
extent permissible by applicable law, with respect to any Company
Securities Beneficially Owned by it.
TAG-ALONG AND DRAG-ALONG
RIGHTS
Section 4.1
Tag-Along Rights
.
(a) If a Fortress Entity intends to Transfer all of
the Company Securities then owned by or in the name of such
Fortress Entity to a Third Party (each, a " Third Party
Offer "), the Fortress Entity shall promptly, acting in good
faith (i) cause the Third Party Offer to be reduced to writing,
which shall identify the Third Party, the Company Securities
proposed to be transferred to the Third Party by the Fortress
Entity, 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 Stockholders (the
Stockholders receiving a Third Party Notice pursuant to this
sentence being collectively referred to herein as the " Other
Stockholders "), which Third Party Notice shall (x) contain an
offer by such Third Party to purchase or otherwise acquire from
each Other Stockholder such Other Stockholder's Company Securities
(to the extent such Third Party Offer shall be allocable to such
Other Stockholder pursuant to Section 4.1(c) hereof) on the
same terms and conditions as the Third Party Offer (except that the
only representation and warranty that such Other Stockholder shall
be required to make in connection with any such Transfer is a
warranty with respect to his or its own ownership of the Company
Securities 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
(collectively, "Liens ")) and (y) be accompanied by a true
and correct copy of the Third Party Offer.
(b) Each Other Stockholder desiring to accept the
offer (each, a " Participating Stockholder ") 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
Stockholder (as such period may be extended pursuant to Section
4.1(d) hereof, (each, a " Tag-Along Notice Period "),
deliver a written notice to the Transferring Stockholder (each, a "
Tag-Along Notice "), which notice shall (i) specify the
amount of Company Securities which such Participating Stockholder
wishes to Transfer pursu-ant to the Third Party Offer and (ii)
constitute a firm acceptance by such Other Stockholder of the Third
Party Offer, except as otherwise provided in Sections 4.1(c)
and (d) hereof.
(c) If one or more Other Stockholders give the
Fortress Entity a timely Tag-Along Notice, then the Fortress Entity
shall use all reasonable efforts to cause the Third Party to agree
to acquire all Company Securities identified in all Tag-Along
Notices that are timely given to the Fortress Entity, upon the same
terms and conditions as are applicable to the Fortress Entity*s
Company Securities. If such Third Party is unwilling or unable to
acquire all of such additional Company Securities upon such terms,
then the Fortress Entity may elect to either cancel such proposed
Transfer or allocate the maximum Company Securities that such Third
Party is willing to purchase
among the
Fortress Entity and the Participating Stockholders