Page 45 - New Empire Affinitas Life Senior Housing Division

will designate a tax matter expert that will have sole responsibility for conducting negotiations
with the IRS in connection with any administrative proceedings at the Company level with respect
to Company items, and, if necessary, for filing a petition for a readjustment of a “final partnership
administrative adjustment” by the IRS with the United States Tax Court, the District Court of the
United States for the district in which the Company’s principal place of business is located, or the
United States Court of Federal Claims.

8.6. Section 754 Election.
The Manager may cause the Company to elect under Code section 754 to adjust the basis of
Company assets upon a distribution of Company property as described in Code section 734 or a
transfer by a Member of its interest in the Company as described in Code section 743.

8.7. Auditors.
The Manager, on behalf of the Company, may engage an accounting firm, to conduct an annual audit
of the Company’s books and records and prepare audited financial statements for the Company.

ARTICLE IX

TRANSFERABILITY

9.1. General.
a) Except as otherwise specifically provided herein, no Member shall have the right to:
sell, assign, transfer, exchange or otherwise transfer for consideration, (collectively, “sell” or “sale”),
gift, bequeath or otherwise transfer for no consideration whether or not by operation of law, except in
the case of bankruptcy (collectively “gift”) all or any part of its Membership Interest. Each Member
hereby acknowledges the reasonableness of the restrictions on sale and gift of Membership Interests
imposed by this Operating Agreement in view of the Company purposes and the relationship of
the Members. Accordingly, the restrictions on sale and gift contained herein shall be specifically
enforceable. In the event that any Member pledges or otherwise encumbers any of its Membership
Interest as security for repayment of a liability, any such pledge or hypothecation shall be made
pursuant to a pledge or hypothecation agreement that requires the pledge or secured party to be
bound by all the terms and conditions of this Article IX.

9.2. Right of First Refusal.
a) A Member which desires to sell all or any portion of its Membership Interest in the Company (a
“Selling Member”) to a third-party purchaser other than a Member shall obtain from such third-party
purchaser a bona fide written offer to purchase such interest, stating the terms and conditions upon
which the purchase is to be made and the consideration offered therefore. The Selling Member shall
give written notification to the remaining Members, by certified mail or personal delivery, of its

Re-LIFE-Ment: Reinventing Past Notions of Retirement
- 20 -

45