Page 29 - New Empire Affinitas Life Senior Housing Division

1.6. “Capital Account Balance” means, with respect to any Member, the cumulative Capital
Contributions made by the Member, reduced by the amount of any distributions made to such
Member pursuant to Article 5 hereof.

1.7. “Capital Account Deficit” means, with respect to any Member, the deficit balance, if any, in
such Member’s Capital Account as of the end of the relevant fiscal year after giving effect to the
following adjustments:

(i) such Capital Account will be deemed to be increased by any amounts which such
Member is obligated to restore to the Company (pursuant to this Agreement or otherwise)
or is deemed to be obligated to restore pursuant to the penultimate sentence of Treasury
Regulation section 1.704-2(g) (relating to allocations attributable to non-recourse debt); and

(ii) such Capital Account will be deemed to be decreased by the items described in
Treasury Regulation sections 1.704- I (b)(2)(ii)(d)(4), (5) and (6).

This definition of Capital Account Deficit is intended to comply with the provisions of
Treasury Regulations Sections 1.704-1(b)(2)(ii)(d) and 1.704-2 and will be interpreted
consistently with those provisions.

1.8. “Capital Contribution” means, with respect to each Member, the amount of cash and the Fair
Market Value (valued at contribution) of property which the Member has actually contributed to the
Company as of the date in question (reduced by any liabilities to which the contributed property is
subject or which the Company assumes in connection with such contribution). If an interest in the
Company is assigned pursuant to Article 9, the Capital Contribution of the Assignee will include any
Capital Contribution previously made by the Assignor.

1.9. “Cause” means fraud, embezzlement, deceit or other capital offenses (as defined by any state
where the offense occurred and as determined by a court of law; and/or a breach of any material
obligations to the Company; which breach has a material adverse effect on the Company and/or its
employees or Member and such breach is not substantially cured (if curable) within 30 days after
receipt of written notice of breach or default.

1.10. “Code” means the Internal Revenue Code of 1986, as amended.

1.11. “Company” means the limited liability company that is the subject of this Agreement.

1.12. “Company Minimum Gain” means the aggregate amount of gain (of whatever character),
determined for each non-recourse liability of the Company that would be realized by the Company if

Re-LIFE-Ment: Reinventing Past Notions of Retirement
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