Exhibit 10.1

 

VENTAS, INC.

 

2012 INCENTIVE PLAN

 

I.                                        Purpose

 

The purpose of the Ventas, Inc. 2012 Incentive Plan (“Plan”) is to promote the
growth and profitability of Ventas, Inc., a Delaware corporation (“Company”),
and its subsidiaries and to increase stockholder value by providing officers,
key employees and non-employee directors with incentives to achieve long-term
objectives of the Company.  The Plan is also intended to help attract and retain
officers, key employees and non-employee directors, to advance the interests of
the Company by giving officers, key employees and non-employee directors a stake
in the Company’s future growth and success, and to strengthen the alignment of
interests of officers, key employees and non-employee directors with those of
the Company’s stockholders.

 

II.                                   Definitions and Construction

 

2.1.                            Definitions.  Unless otherwise defined herein,
capitalized terms used herein shall have the respective meanings set forth in
Appendix I (and such terms shall apply equally to both the singular and plural
forms of the terms defined).

 

2.2.                            Gender and Number.  Except where otherwise
indicated by the context, reference to the masculine gender shall include the
feminine gender, the plural shall include the singular and the singular shall
include the plural.

 

2.3.                            Severability.  In the event any provision of the
Plan shall be held illegal or invalid for any reason, the illegality or
invalidity shall not affect the remaining parts of the Plan, and the Plan shall
be construed and enforced as if the illegal or invalid provision had not been
included.

 

III.                              Plan Administration

 

3.1.                            The Committee.  The Plan shall be administered
by and all Awards under the Plan shall be authorized by the Committee.  The
“Committee” means the Board or one or more committees appointed by the Board to
administer all or certain aspects of the Plan.  Any such committee shall consist
of one or more directors of the Company and shall serve at the discretion of the
Board.  To the extent deemed appropriate by the Board, members of the Committee
shall be “outside directors” within the meaning of Section 162(m) of the Code
(or any successor provision thereto) and “non-employee directors” within the
meaning of Rule 16b-3 under the Exchange Act.

 

3.2.                            Delegation.  Notwithstanding the foregoing, the
Board or the Committee may delegate some or all of its responsibility for
granting Awards and otherwise administering the Plan with respect to Nonemployee
Directors or designated classes of Employees to one or more different committees
consisting of one or more members of the Board, subject to such limitations as
the Board or the Committee deems appropriate.  To the extent consistent with
applicable law, the Board or the Committee may authorize one or more officers of
the Company to grant Awards to designated classes of Employees, within limits
specifically prescribed by the Board or the Committee.  The Board has delegated
the ability to grant Awards to Nonexecutive Employees to

 

1

--------------------------------------------------------------------------------

 

a Board committee comprised of the Chief Executive Officer.  Consistent with
this paragraph, each year the Board or the Committee shall establish an annual
allotment of Shares with respect to which such Board committee or Company
officer authorized pursuant to this paragraph may grant Awards to Nonexecutive
Employees.  Unless another amount shall otherwise be determined by the Board or
the Committee by authorized action, an annual allotment of ten thousand (10,000)
Shares or OP Units is hereby established with respect to which such Board
committee or Company officer is authorized pursuant to this paragraph to grant
each year.  Any Shares or OP Units within such annual allotment with respect to
which Awards are not granted during such year shall be automatically added to
the annual allotment available pursuant to this paragraph in each succeeding
year for Awards to Nonexecutive Employees until such Shares or OP Units are used
for Awards.  If and to the extent an Award granted pursuant to this paragraph
shall expire or terminate for any reason without having been exercised in full,
or shall be forfeited, the Shares or OP Units associated with such Awards shall
again become available for Awards pursuant to this paragraph.

 

3.3.                            Authority of the Committee.  Subject to the
provisions of the Plan, the Committee shall have full authority to do all things
and make all determinations necessary or advisable in connection with the
administration of the Plan, including without limitation the authority to:

 

(a)                                 select Participants to whom Awards are
granted;

 

(b)                                 determine the types, amounts and frequency
of Awards granted under the Plan;

 

(c)                                  determine the terms and conditions of
Awards, including, without limitation, the treatment of the Award upon a
Participant’s termination of employment or cessation of service or any
limitations, restrictions or conditions upon the Awards, which need not be
identical;

 

(d)                                 accelerate or extend the vesting or
exercisability of any Award, for any reason, including, without limitation, a
Change in Control;

 

(e)                                  construe and interpret the Plan and any
agreement or instrument entered into under the Plan; and

 

(f)                                   establish, amend and rescind rules and
regulations relating to administration of the Plan.

 

The Committee may delegate its authority as identified hereunder; provided,
however, that such delegation is permitted by law.  The Committee (or the Board,
in the absence of any such Committee) shall have the discretion to determine for
purposes of the Plan whether any Participant (i) is or remains (or is not or
does not remain) an employee of the Company, and (ii) shall have incurred (or
shall not have incurred) a termination of employment or cessation of service.

 

3.4.                            Decisions Binding.  All actions taken and all
determinations and decisions made by the Committee pursuant to the provisions of
the Plan shall be final, conclusive and binding

 

2

--------------------------------------------------------------------------------

 

upon all persons, including the Company, its stockholders, Employees,
Nonemployee Directors, Participants and their estates and beneficiaries.

 

IV.                               Shares Subject to the Plan and Maximum Awards

 

4.1.                            Shares Available.  Subject to adjustment as
provided in Section 4.3, the number of Shares and OP Units available for
issuance under the Plan shall be equal to the sum of the following:

 

(a)                                 7,500,000; plus

 

(b)                                 the number of Shares available for issuance,
and not issued or subject to outstanding awards, under the Company’s 2006
Incentive Plan (the “2006 Employee Plan”) and the Company’s 2006 Stock Plan for
Directors (the “2006 Director Plan”); plus

 

(c)                                  the number of any Shares subject to stock
options granted under the 2006 Employee Plan or the 2006 Director Plan and
outstanding on the Effective Date which expire, or for any reason are forfeited,
cancelled or terminated, after the Effective Date without being exercised; plus

 

(d)                                 the number of any Shares of restricted stock
or restricted stock units granted under the 2006 Employee Plan or the 2006
Director Plan and outstanding on the Effective Date which for any reason are
forfeited, cancelled, terminated or otherwise reacquired by the Company after
the Effective Date without having become vested.

 

Any Shares or OP Units issued under the Plan may be, in whole or in part, of
original issuance or held in treasury.  If and to the extent an Award shall
expire or terminate for any reason without having been exercised in full, or
shall be forfeited, the Shares or OP Units associated with such Awards shall
again become available for Awards under the Plan.  Shares or OP Units that are
exchanged by a Participant or withheld by the Company as full or partial payment
in connection with any Award or to satisfy tax withholding obligations related
to any Award shall not be available for subsequent Awards under the Plan. 
Substitute Awards may be granted under the Plan, and such Substitute Awards
shall not reduce the aggregate number of Shares or OP Units available for Awards
under the Plan.

 

4.2.                            Maximum Awards.  Subject to adjustment as
provided in Section 4.3, the maximum number of Shares and OP Units with respect
to which Awards (or any type of Award) may be granted to any Participant under
the Plan shall be 7,500,000, and the maximum number of ISOs that may be granted
to any Participant under the Plan shall be 7,500,000.

 

4.3.                            Adjustments in Authorized Shares and Outstanding
Awards.  In the event of a merger, reorganization, consolidation,
recapitalization, reclassification, split-up, spin-off, separation, liquidation,
stock dividend, stock split, reverse stock split, property dividend, share
repurchase, share combination, share exchange, issuance of warrants, rights or
debentures, or other change in the corporate structure of the Company affecting
the Shares or OP Units, the Committee may substitute or adjust the total number
and class of Shares, OP Units or other stock or securities which may be issued
under the Plan, and the number, class and/or price of Shares or

 

3

--------------------------------------------------------------------------------

 

OP Units subject to outstanding Awards, as it determines to be appropriate and
equitable to prevent dilution or enlargement of the rights of Participants and
to preserve, without exceeding, the value of any outstanding Awards; provided,
that the number of Shares or OP Units subject to any Award shall always be a
whole number.  In the case of ISOs, such adjustments shall be made in such a
manner so as not to constitute a “modification” within the meaning of Section
424(h)(3) of the Code and only to the extent otherwise permitted by Sections 422
and 424 of the Code.

 

In the event of a Change in Control, the Committee shall, in its sole
discretion, determine the appropriate adjustment, if any, to be effected and
effect such adjustment. In addition, in the event of a Change in Control, the
Committee existing prior to such Change in Control may accelerate the time or
times at which any Award may be exercised and may provide for cancellation of
such accelerated Awards that are not exercised within a time prescribed by the
Committee in its sole discretion. In the event of any Change in Control, the
Committee existing prior to such Change in Control, in its sole discretion, may
provide that any Award shall terminate and an equitable cash amount as
determined by the Committee in its sole discretion be paid. Without limitation
on the foregoing, an amount equal to the excess (if there is an excess and zero
if there is no excess) by which the fair market value of the Shares subject to
the Option exceeds the aggregate exercise price with respect to such Option
shall constitute an equitable cash amount.

 

Any adjustments pursuant to this Section 4.3 to Awards that are considered 409A
Awards are intended to be made only if permitted by Section 409A of the Code and
only in a manner in compliance with the requirements of Section 409A of the
Code, and any adjustments made pursuant to this Section 4.3 to Awards that are
not considered 409A Awards are intended to be made only if and in such a manner
that after such adjustment the Awards either continue not to be 409A Awards or
comply with the requirements of Section 409A of the Code.

 

V.                                    Eligibility and Participation

 

All Employees are eligible to receive Awards under the Plan.  In selecting
Employees to receive Awards under the Plan, as well as in determining the number
of Shares or OP Units subject to, and the other terms and conditions applicable
to, each Award, the Committee shall take into consideration such factors as it
deems relevant in promoting the purposes of the Plan, including the duties of
the Employees and their present and potential contribution to the success of the
Company.

 

All Nonemployee Directors are eligible to receive Awards under the Plan. 
Subject to the limitations of the Plan, the Committee may grant Awards to
Nonemployee Directors on terms as the Committee shall from time to time
determine.

 

VI.                               Stock Options

 

6.1.                            Grant of Options.  Subject to the terms and
provisions of the Plan, the Committee may grant Options to Participants at any
time and from time to time, in the form of Options which are intended to qualify
as incentive stock options within the meaning of Section 422 of the Code
(“ISOs”), Options which are not intended to so qualify (“NQSOs”) or a
combination

 

4

--------------------------------------------------------------------------------

 

thereof.  All ISOs must be granted within ten years from the date on which the
Plan was adopted by the Board, and may only be granted to employees of the
Company or any subsidiary corporation (within the meaning of Section 424(f)) and
may not exceed the maximum limit set forth in Section 4.2.  The Option Exercise
Price shall not be less than the Fair Market Value of a Share on the date of
grant (110% of Fair Market Value in the case of an ISO granted to a Ten Percent
Shareholder).

 

6.2.                            Option Agreement.  Each Option shall be
evidenced by an Option Agreement that shall specify the Option Exercise Price,
the duration of the Option, the number of Shares to which the Option relates and
such other provisions as the Committee may determine or which are required by
the Plan.  The Option Agreement shall also specify whether the Option is
intended to be an ISO or a NQSO and shall include such provisions applicable to
the particular type of Option granted.

 

6.3.                            Duration of Options.  Each Option shall expire
at such time as is determined by the Committee at the time of grant; provided,
however, that no Option shall be exercised later than the tenth anniversary of
the date of its grant (fifth anniversary in the case of an ISO granted to a Ten
Percent Shareholder).

 

6.4.                            Exercise of Options.  Options shall be
exercisable at such times and be subject to such restrictions and conditions as
the Committee shall approve at the time of grant, which need not be the same for
each grant or for each Participant.  The Committee may accelerate the
exercisability of any Option.  Options shall be exercised, in whole or in part,
by delivery to the Company of a written notice of exercise, setting forth the
number of Shares with respect to which the Option is to be exercised and
accompanied by full payment of the Option Exercise Price and all applicable
withholding taxes.

 

6.5.                            Payment of Option Exercise Price.  The Option
Exercise Price for Shares as to which an Option is exercised shall be paid to
the Company in full at the time of exercise by one or a combination of the
following methods:

 

(a)                                 cash in the form of currency or other cash
equivalent acceptable to the Company;

 

(b)                                 the tender of Shares (by either actual
delivery or by attestation) having a Fair Market Value (determined as of the
close of the business day immediately preceding the day on which the Option is
exercised) equal to the Option Exercise Price;

 

(c)                                  a reduction in the number of Shares
otherwise deliverable pursuant to the Award; or

 

(d)                                 any other reasonable consideration that the
Committee may deem appropriate.

 

The Committee may permit the cashless exercise of Options as described in
Regulation T promulgated by the Federal Reserve Board, subject to applicable
securities law restrictions, or by any other means which the Committee
determines to be consistent with the Plan’s purpose and applicable law.

 

5

--------------------------------------------------------------------------------

 

6.6.                            Transferable Options.  The Committee may, in its
discretion by appropriate provision in the Participant’s Option Agreement,
authorize all or a portion of any NQSOs granted to a Participant to be on terms
which permit transfer by such Participant to (i) the Participant’s child,
stepchild, grandchild, parent, stepparent, grandparent, spouse, former spouse,
sibling, niece, nephew, mother-in-law, father-in-law, son-in-law,
daughter-in-law, brother-in-law or sister-in-law, including adoptive
relationships, or any person sharing the Participant’s household (other than a
tenant or employee) (“Family Members”), (ii) a trust or trusts in which the
Participant and/or his Family Members have more than 50% of the beneficial
interest, or (iii) a partnership, limited liability company or other entity in
which the Participant and/or his Family Members own more than 50% of the voting
interests in exchange for an interest in the entity; provided, that (a) there
may be no consideration for any such transfer (other than interests in such
partnership, limited liability company or other entity), (b) the Option
Agreement must expressly provide for transferability in a manner consistent with
this Section 6.6, and (c) subsequent transfers of transferable NQSOs shall be
prohibited except by will or the laws of descent and distribution.  Following
transfer, any such NQSOs shall continue to be subject to the same terms and
conditions as were applicable immediately prior to transfer; provided, that for
purposes of this Article 6 (excluding as set forth in the following sentence),
the term “Participant” shall be deemed to refer to the transferee.  The events
of termination of employment or cessation of service shall continue to be
applied with respect to the original Participant.  Any transferred NQSOs shall
be exercisable by the transferee only to the extent, and for the periods,
specified in the Option Agreement.

 

6.7.                            Legend.  For any Shares issued upon exercise of
or in connection with an Award, the Company may legend such Shares as it deems
appropriate.

 

6.8.                            Committee Determination of Option Terms.  The
Committee determines the period of time during which the Option is exercisable
(provided, that no Option shall be exercised later than the tenth anniversary of
the date of its grant (fifth anniversary in the case of an ISO granted to a Ten
Percent Shareholder)), and the Option Agreement shall control as to such
exercisability.

 

VII.                          Restricted Stock and Restricted Stock Units

 

7.1.                            Grant of Restricted Stock and Restricted Stock
Units.  Subject to the terms and provisions of the Plan, the Committee may grant
Restricted Stock or Restricted Stock Units to Participants at any time and from
time to time and upon such terms and conditions as it may determine.

 

7.2.                            Restricted Award Agreement.  Each grant of
Restricted Stock or Restricted Stock Unit shall be evidenced by a Restricted
Award Agreement that shall specify the Restriction Period, the number of shares
of Restricted Stock or Restricted Stock Units granted, the payment date for
Restricted Stock Units, and such other provisions as the Committee may determine
and which are required by the Plan.

 

7.3.                            Non-Transferability of Restricted Stock and
Restricted Stock Units.  Except as provided in this Article 7, shares of
Restricted Stock and Restricted Stock Units may not be sold, transferred,
pledged, assigned or otherwise alienated or hypothecated until the end of the

 

6

--------------------------------------------------------------------------------

 

applicable Restriction Period or later as specified in the Restricted Award
Agreement, or upon earlier satisfaction of any other conditions determined at
the time of grant specified in the Restricted Award Agreement.

 

7.4.                            Other Restrictions.  The Committee may impose
such other restrictions on any shares of Restricted Stock or any Restricted
Stock Units as it may deem advisable, including without limitation restrictions
based upon the achievement of Performance Goals, years of service and/or
restrictions under applicable Federal or state securities laws.  The Committee
may provide that any share of Restricted Stock shall be held (together with a
stock power executed in blank by the Participant) in custody by the Company
until any or all restrictions thereon shall have lapsed.

 

7.5.                            Reacquisition of Restricted Stock and Forfeiture
of Restricted Stock Units.  The Committee shall determine and set forth in a
Participant’s Restricted Award Agreement such events upon which a Participant’s
shares of Restricted Stock shall be reacquired by the Company or Restricted
Stock Units shall be forfeited, which may include without limitation a
Participant’s termination of employment or cessation of service during the
Restriction Period or the nonachievement of Performance Goals.  Any such
forfeited shares of Restricted Stock held by a Participant which are to be
reacquired by the Company shall be immediately returned to the Company by the
Participant, and the Participant shall only receive the amount, if any, paid by
the Participant for such Restricted Stock.

 

7.6.                            Certificate Legend.  In addition to any legends
placed on certificates pursuant to Section 7.4, each certificate representing
shares of Restricted Stock shall bear the following legend:

 

“The sale or other transfer of the shares represented by this Certificate,
whether voluntary, involuntary or by operation of law, is subject to certain
restrictions on transfer as set forth in the Ventas, Inc. 2012 Incentive Plan,
and in the related Restricted Stock Agreement.  A copy of the Plan and such
Restricted Stock Agreement may be obtained from the Secretary of Ventas, Inc.”

 

7.7.                            Lapse of Restrictions Generally.  Except as
otherwise provided in this Article 7, shares of Restricted Stock shall be
delivered to the Participant and no longer subject to reacquisition after the
last day of the Restriction Period and Restricted Stock Units shall be fully
vested after the last day of the Restriction Period and shall be paid as set
forth in the Restricted Award Agreement; provided, however, that if the
restriction relates to the achievement of a Performance Goal, the Restriction
Period shall not end until the Committee has certified in writing that the
Performance Goal has been met.  Once the shares of Restricted Stock are released
from their restrictions, the Participant shall be entitled to have the legend
required by Section 7.6 removed from the Participant’s share certificate, which
certificate shall thereafter represent Shares free from any and all restrictions
under the Plan.

 

7.8.                            Voting Rights; Dividends and Other
Distributions.  During the Restriction Period, Participants holding shares of
Restricted Stock may exercise full voting rights and, if the Committee so
determines as provided in the Award Agreement, shall be entitled to receive all
dividends and other distributions paid, with respect to such Restricted Stock;
provided, that if

 

7

--------------------------------------------------------------------------------

 

any dividends or distributions are paid in Shares, the Shares shall be subject
to the same restrictions as the shares of Restricted Stock with respect to which
they were paid.

 

If the Committee so determines as provided in the Award Agreement, on each
dividend or other distribution date with respect to Shares, (i) a cash dollar
amount equal to the amount of cash dividends or the fair market value of
property other than Shares that would have been paid or distributed on a number
of Shares equal to the number of Restricted Stock Units held by Participants as
of the close of business on the record date for such dividend or distribution
shall be paid in cash to such Participants, and (ii) if such dividend or
distribution is payable in Shares, Participants shall be credited with an
additional number of Restricted Stock Units equal to the product of the number
of Restricted Stock Units held by such Participants on the record date for such
dividend or distribution multiplied by the number of Shares (including fractions
thereof) distributable as a dividend or distribution on a Share.  Restricted
Stock Units which are credited to Participants pursuant to the preceding
sentence shall be subject to the same terms and conditions of the Plan, the
Restricted Award Agreement and elections applicable with respect to such
Restricted Stock Units with respect to which they relate.

 

VIII.                     LTIP Units

 

8.1.                            Grant of LTIP Units.  Subject to the terms and
provisions of the Plan, the Committee may grant LTIP Units to Participants at
any time and from time to time and upon such terms and conditions as it may
determine, including without limitation as an alternative to other Awards.

 

8.2.                            LTIP Unit Award Agreement.  Each grant of LTIP
Units shall be evidenced by a LTIP Unit Award Agreement that shall specify the
Restriction Period, the number of LTIP Units granted and such other provisions
as the Committee may determine and which are required by the Plan.

 

8.3.                            Non-Transferability of LTIP Units.  Except as
provided in this Article 8, LTIP Units may not be sold, transferred, pledged,
assigned or otherwise alienated or hypothecated until the end of the applicable
Restriction Period or later as specified in the LTIP Unit Award Agreement or
Partnership Agreement, or upon earlier satisfaction of any other conditions
determined at the time of grant specified in the LTIP Unit Award Agreement.

 

8.4.                            Other Restrictions.  The Committee may impose
such other restrictions on any LTIP Units as it may deem advisable, including
without limitation restrictions based upon the achievement of Performance Goals,
years of service and/or restrictions under applicable Federal or state
securities laws.

 

8.5.                            Reacquisition or Forfeiture of LTIP Units.  The
Committee shall determine and set forth in a Participant’s LTIP Unit Award
Agreement such events upon which a Participant’s LTIP Units shall be reacquired
by the Company or shall be forfeited, which may include without limitation the
Participant’s termination of employment or cessation of service during the
Restriction Period or the nonachievement of Performance Goals.

 

8.6.                            Distributions.  The right to distributions with
respect to the LTIP Units shall be determined as set forth in the LTIP Unit
Award Agreement and Partnership Agreement.

 

8

--------------------------------------------------------------------------------

 

IX.                              Performance Units

 

9.1.                            Grant of Performance Units.  The Committee may,
from time to time and upon such terms and conditions as it may determine, grant
Performance Units which will become payable to a Participant upon certification
in writing by the Committee that the Performance Goals related thereto have been
achieved.  If the Performance Goals are achieved in full, and the Participant
remains employed with the Company as of the end of the relevant Performance
Period, the Participant will be allocated Shares equal to the number of
Performance Units initially awarded to the Participant for the relevant
Performance Period.  Each award of Performance Units may provide for the
allocation of fewer Performance Units in the event of partial fulfillment of
Performance Goals.

 

9.2.                            Performance Unit Agreement.  Each Performance
Unit grant shall be evidenced by a Performance Unit Agreement that shall specify
the Performance Goals, the Performance Period and the number of Performance
Units to which it pertains.

 

9.3.                            Performance Period.  The period of performance
(“Performance Period”) with respect to each Performance Unit shall be such
period of time, which shall not be less than six months, nor more than five
years, as determined by the Committee, for the measurement of the extent to
which Performance Goals are attained.

 

9.4.                            Performance Goals.  The goals (“Performance
Goals”) that are to be achieved with respect to each Performance Unit (or
Restricted Stock, Restricted Stock Unit, LTIP Units, stock award or cash award
subject to a requirement that Performance Goals be achieved), shall be those
objectives established by the Committee as it deems appropriate, and which may
be expressed in terms of (a) earnings per Share, (b) Share price, (c) pre-tax
profit, (d) net earnings,  (e) earnings before interest, taxes, depreciation and
amortization, (f) return on equity or assets, (g) revenues, (h) normalized or
other adjusted funds from operations in the aggregate or per Share, (i) relative
or absolute total stockholder return, (j) diversification, balance sheet or
credit metrics or ratings,  (k) a growth rate in any of the foregoing, (l) any
combination of the foregoing, or (m) such other goals as the Committee may
determine.  Performance Goals may be in respect of the performance of the
Company and its Subsidiaries (which may be on a consolidated basis), a
Subsidiary, a division or other operating unit of the Company.  Performance
Goals may be absolute or relative and may be expressed in terms of a progression
within a specified range.  The Committee shall establish Performance Goals
applicable to a particular fiscal year within 90 days of the commencement of
such fiscal year; provided, that the outcome of the Performance Goal is
substantially uncertain at the time of its adoption.  To the extent deemed
appropriate by the Committee, the Performance Goals with respect to a
Performance Period shall be established by the Committee in order to comply with
Section 162(m) of the Code.  The Committee shall determine the target levels of
performance that must be achieved with respect to each criterion that is
identified in a Performance Goal in order for a Performance Goal to be treated
as attained in whole or in part.  In the event that the Performance Goals are
based on more than one business criteria, the Committee may determine to make a
grant of an Award upon attainment of the Performance Goal relating to any one or
more of such criteria.

 

9

--------------------------------------------------------------------------------

 

9.5.                            Payment of Performance Units.  Subject to such
terms and conditions as the Committee may impose, and unless otherwise provided
in the Performance Unit Agreement, Performance Units shall be payable within 90
days following the end of the Performance Period during which the Participant
attained at least the minimum acceptable level of achievement under the
Performance Goals, or 30 days following a Change in Control, as applicable.  The
Committee, in its discretion, may determine at the time of payment required in
connection with a Performance Unit whether such payment shall be made (a) solely
in cash, (b) solely in Shares (valued at the Fair Market Value of the Shares on
the date of payment), or (c) a combination of cash and Shares; provided,
however, that if a Performance Unit becomes payable upon a Change in Control,
the Performance Unit shall be paid solely in cash.

 

9.6.                            No Rights as Stockholder.  The award of
Performance Units to a Participant shall not create any rights in such
Participant as a stockholder of the Company, until the payment of any Shares
associated with such Performance Units.

 

X.                                   Stock Appreciation Rights

 

10.1.                     Grant of Stock Appreciation Rights.  An SAR is a right
to receive, without payment to the Company, a number of Shares, cash or any
combination thereof, the amount of which is determined pursuant to the formula
set forth in Section 10.5.  An SAR may be granted (a) with respect to any Option
granted under the Plan, either concurrently with the grant of such Option or at
such later time as determined by the Committee (as to all or any portion of the
Shares subject to the Option) or (b) alone, without reference to any Option.

 

10.2.                     Number of SARs.  Each SAR granted to any Participant
shall relate to such number of Shares as the Committee shall determine, subject
to adjustment as provided in Section 4.3.  If an SAR is granted in conjunction
with an Option, the number of Shares to which the SAR pertains shall be reduced
by the same number of Shares for which the holder of the Option exercises the
related Option.

 

10.3.                     Duration.  Subject to early termination as herein
provided, the term of each SAR shall be as determined by the Committee, but
shall not exceed ten years from the date of grant.  Unless otherwise determined
by the Committee and provided in the SAR Agreement, each SAR shall become
exercisable at such time or times, to such extent and upon such conditions as
the Option, if any, to which it relates is exercisable.  The Committee may, in
its discretion, accelerate the exercisability of any SAR.

 

10.4.                     Exercise.  A holder may exercise an SAR, in whole or
in part, by giving written notice to the Company, specifying the number of SARs
which such Participant wishes to exercise.  Upon receipt of such written notice,
the Company shall deliver, within 30 days thereafter, to the exercising holder,
the Shares or cash or both as determined by the Committee, to which the
Participant is entitled pursuant to Section 10.5.

 

10.5.                     Payment.

 

(a)                                 Number of Shares.  Subject to the right of
the Committee to deliver cash in lieu of Shares (which, as it pertains to
officers and directors of the Company, shall comply with all requirements of the
Exchange Act and regulations adopted thereunder),

 

10

--------------------------------------------------------------------------------

 

the number of Shares which shall be issuable upon the exercise of an SAR shall
be determined by dividing (i) the number of Shares to which the SAR is exercised
multiplied by the amount of the appreciation in such Shares (for this purpose,
the “appreciation” shall be the amount by which the Fair Market Value of the
Shares subject to the SAR on the date of exercise exceeds (x) in the case of an
SAR related to an Option, the Option Exercise Price of the Shares under the
Option or (y) in the case of an SAR granted alone without reference to a related
Option, an amount that the Committee determined at the time of grant to be the
Fair Market Value of a Share, subject to adjustment as provided in Section 4.3)
by (ii) the Fair Market Value of a Share on the exercise date.

 

(b)                                 Cash.  In lieu of issuing Shares upon the
exercise of an SAR, the Committee may elect, in its sole discretion, to pay the
holder of the SAR cash equal to the Fair Market Value on the exercise date of
any or all of the Shares which would otherwise be issuable.  No fractional
Shares shall be issued upon exercise of an SAR; instead, the holder of the SAR
shall be entitled to receive a cash adjustment equal to the same fraction of the
Fair Market Value of a Share on the exercise date or to purchase the portion
necessary to make a whole Share at its Fair Market Value on the date of
exercise.

 

10.6.                     SAR Agreement.  Each SAR shall be evidenced by an SAR
Agreement that shall further specify the terms and conditions of such Award. 
Any terms and conditions of the Award shall be consistent with the terms of the
Plan.

 

XI.                              Stock and Cash Awards

 

A stock award consists of the transfer by the Company to a Participant of
Shares, without other payment therefor, as additional compensation for services
to the Company.  A cash award consists of a monetary payment made by the Company
to a Participant as additional compensation for services to the Company.  The
Committee shall determine, in its sole discretion, the amount of any stock or
cash award.  Stock and cash awards may be subject to the terms and conditions,
which may vary from time to time and among Participants, as the Committee deems
appropriate.  The maximum amount of a cash award which may be granted to a
Participant during any calendar year under the Plan shall not be greater than
$10,000,000.  Payment of a stock or cash award can depend on meeting Performance
Goals.  Each award of stock or cash may provide for lesser payment in the event
of partial fulfillment of Performance Goals.

 

XII.                         Amendment, Modification and Termination

 

12.1.                     Effective Date.  The Plan shall become effective as of
January 1, 2013 (“Effective Date”) provided it is approved by the Company’s
stockholders at a meeting of the Company’s stockholders.  The Plan shall be
rescinded and all Options, Shares of Restricted Stock, Restricted Stock Units,
LTIP Units, SARs, Performance Units and other Awards granted shall be null and
void unless within 12 months from the date of the adoption of the Plan by the
Board it shall have been approved by the Company’s stockholders.

 

12.2.                     Termination Date.  The Plan shall terminate on the
earliest to occur of (a) the tenth anniversary of the Effective Date, (b) the
date when all Shares and OP Units available

 

11

--------------------------------------------------------------------------------

 

under the Plan shall have been acquired pursuant to the exercise of Awards and
the payment of all benefits in connection with Awards has been made, or (c) such
other date as the Board may determine in accordance with Section 12.3.

 

12.3.                     Amendment, Modification and Termination.  The Board
may, at any time, amend, modify or terminate the Plan.  However, no such
amendment or modification may make a material revision to the Plan without the
approval of the stockholders of the Company if such stockholder approval is
required by the Code and the rules promulgated thereunder, any national
securities exchange or system on which the Shares are then listed or reported or
a regulatory body having jurisdiction with respect hereto.  Without limitation
on the preceding sentence, no amendment may increase the number of Shares or OP
Units available under the Plan without the approval of the stockholders of the
Company.

 

12.4.                     Awards Previously Granted.  No amendment, modification
or termination of the Plan shall in any manner adversely affect any outstanding
Award without the written consent of the Participant holding such Award;
provided, that no such consent shall be required with respect to any amendment,
modification or termination if the Committee determines in its reasonable
discretion that such amendment, modification or termination is required or
advisable in order for the Company, the Plan or the Award to satisfy or conform
to any law or regulation or to meet the requirements of any accounting standard.

 

12.5.                     No Repricing.  Except for the adjustments set forth in
Section 4.3 or otherwise in connection with a corporate transaction involving
the Company (including without limitation any stock dividend, stock split,
extraordinary cash dividend, recapitalization, reorganization, merger,
consolidation, split-up, spin-off, combination, or exchange of shares), no
outstanding Options or SARs shall be amended to reduce their exercise price or
base price, and no outstanding Options or SARs with an exercise price or base
price less than current Fair Market Value shall be cancelled in exchange for
cash, other Awards or Options or SARs with an exercise price or base price that
is less than the exercise price or base price of the original Options or SARs
without the approval of the stockholders of the Company.

 

XIII.                    Non-Transferability

 

13.1.                     Except as expressly provided in the Plan, a
Participant’s rights under the Plan may not be assigned, pledged or otherwise
transferred other than by will or the laws of descent and distribution.  Except
as expressly provided in the Plan, during a Participant’s lifetime, an Award may
be exercised only by such Participant.   In the event of the death of a
Participant, the Award may be exercised by the person or persons to whom rights
pass by will or by the laws of descent and distribution or, if appropriate, the
legal representative of the deceased Participant’s estate.  In the event of the
Disability of a Participant, the Award may be exercised by the Participant or,
if such Participant is incapable of exercising the Award, by such Participant’s
legal representative.

 

XIV.                     No Employment or Reelection Rights

 

Neither the Plan, nor any action taken under the Plan, shall be construed as
giving any Employee or Nonemployee Director the right to become a Participant,
nor shall an Award under the Plan be construed as giving a Participant any right
with respect to continuance of

 

12

--------------------------------------------------------------------------------

 

employment by or service with the Company or any right to be re-nominated by the
Board or reelected by the stockholders of the Company as a director.  The
Company expressly reserves the right to terminate, whether by dismissal,
discharge, removal or otherwise, a Participant’s employment or service at any
time, with or without Cause, except as may otherwise be provided by any written
agreement between the Company and the Participant or applicable law.

 

XV.                          Withholding

 

15.1.                     Tax Withholding.  A Participant shall remit to the
Company an amount sufficient to satisfy Federal, state and local taxes
(including the Participant’s FICA and Medicare obligation) required by law to be
withheld with respect to any grant, exercise or payment made under or as a
result of the Plan.

 

15.2.                     Share Withholding.  If the Company has a withholding
obligation upon the issuance of Shares or OP Units under the Plan, a Participant
may, subject to the discretion of the Committee, elect to satisfy the
withholding requirement, in whole or in part, by having the Company withhold
Shares having a Fair Market Value on the date the withholding tax is to be
determined equal only to the minimum amount required to be withheld under
applicable law.

 

XVI.                     Section 16 and 409A Compliance

 

It is the intention of the Company that the Plan and the administration of the
Plan comply in all respects with Section 16(b) of the Exchange Act and
Section 409A of the Code and the rules and regulations promulgated thereunder to
the extent deemed appropriate by the Committee.  If any Plan provision, or any
aspect of the administration of the Plan, is found not to be in compliance with
Section 16(b) of the Exchange Act or Section 409A of the Code, the provision or
administration shall be deemed null and void to the extent deemed appropriate by
the Committee, and the Plan shall be construed in favor of its meeting the
requirements of Rule 16b-3 promulgated under the Exchange Act and Section 409A
of the Code to the extent deemed appropriate by the Committee.  Notwithstanding
anything in the Plan to the contrary, the Board or the Committee, in its
discretion, may bifurcate the Plan so as to restrict, limit or condition the use
of any provision of the Plan to Participants who are subject to Section 16 of
the Exchange Act without so restricting, limiting or conditioning the Plan with
respect to other Participants.

 

Notwithstanding anything contained in the Plan to the contrary, the Company
intends that Awards payable under the Plan shall satisfy the requirements for
exemption from, or compliance with, Section 409A of the Code and that all terms
and provisions shall be interpreted, operated and administered to satisfy such
requirements.  To the extent Section 409A of the Code is applicable to any
Award, it is intended that such 409A Award complies with the deferral, payout
and other limitations and restrictions imposed under Section 409A of the Code.

 

Regardless of what may be contained in any Award Agreement, to the extent that
any 409A Award is treated as payable upon a “separation from service” pursuant
to Section 409A of the Code (as determined, and in accordance with the
methodology selected by the Company, consistent with Section 409A of the Code)
(“Separation from Service”), then, if payment is triggered by reason of the
Separation from Service, and on the date of the Participant’s Separation from
Service the Participant is a Specified Employee, to the extent required for the

 

13

--------------------------------------------------------------------------------

 

Participant not to incur additional taxes pursuant to Section 409A of the Code,
no payment with respect to the 409A Award shall be made to the Participant prior
to the earlier of (i) six (6) months after the Participant’s Separation from
Service; or (ii) the date of the Participant’s death.  Should the limitation set
forth in the preceding sentence result in payment later than otherwise provided
in the Plan or 409A Award, on the first day any such payment may be made without
incurring additional tax pursuant to Section 409A of the Code, such payment
shall be made to the Participant in a lump sum.  Notwithstanding anything
contained in the Plan or Award to the contrary, the date on which a
Participant’s Separation from Service occurs shall be treated as the
Participant’s termination of employment or cessation of service date or
comparable concept for purposes of determining the timing of payments under the
Plan and Award to the extent necessary to have such payments under the Plan and
Award be exempt from or comply with the requirements of Section 409A of the
Code; provided, however, this sentence shall have no impact on whether or not an
Award becomes vested.  No 409A Award shall be subject to acceleration or to any
change in the specified time or method of payment, except as permitted by
Section 409A of the Code or as otherwise provided under the Plan or Award and
consistent with Section 409A of the Code.

 

These last three paragraphs of this Article XVI are not intended to impose any
restrictions on Awards, other than those required for the Participant not to
incur additional tax under Code Section 409A, and shall be interpreted and
operated accordingly.  Notwithstanding any other provision in the Plan, the
Committee makes no representations that Awards granted under the Plan shall be
exempt from, or comply with, Section 409A of the Code and makes no undertaking
to preclude Section 409A of the Code from applying to Awards granted under the
Plan.  No provision of the Plan shall be interpreted or construed to transfer
any liability for failure to comply with Section 409A from the Participant or
any other individual to the Company.

 

XVII.                Indemnification

 

No member of the Board or the Committee, nor any officer or Employee acting on
behalf of the Board or the Committee, shall be personally liable for any action,
determination or interpretation taken or made with respect to the Plan, and all
members of the Board, the Committee and each officer or Employee of the Company
acting on their behalf shall, to the extent permitted by law, be fully
indemnified and protected by the Company with respect to any such action,
determination or interpretation.

 

XVIII.           Successors

 

All obligations of the Company with respect to Awards granted under the Plan
shall be binding on any successor to the Company, whether the existence of such
successor is a result of a direct or indirect purchase, merger, consolidation or
otherwise, of all or substantially all of the business and/or assets of the
Company.

 

XIX.                    Participants in Other Countries or Jurisdictions

 

Without amending the Plan, the Committee may grant Awards to Employees or
Nonemployee Directors who are foreign nationals on such terms and conditions
different from those specified in the Plan, as may, in the judgment of the
Committee, be necessary or desirable

 

14

--------------------------------------------------------------------------------

 

to foster and promote achievement of the purposes of the Plan, and the Committee
shall have the authority to adopt such modifications, procedures, subplans and
the like as may be necessary or desirable to comply with provisions of the laws
or regulations of other countries or jurisdictions in which the Company or any
Subsidiary may operate or have employees to ensure the viability of the benefits
from Awards granted to Participants employed in such countries or jurisdictions,
meet the requirements that permit the Plan to operate in a qualified or tax
efficient manner, comply with applicable foreign laws or regulations and meet
the objectives of the Plan.

 

XX.                         No Trust or Fund

 

The Plan is intended to constitute an “unfunded” plan.  Nothing contained herein
shall require the Company to segregate any monies or other property, or Shares,
or to create any trusts, or to make any special deposits for any immediate or
deferred amounts payable to any Participant, and no Participant shall have any
rights that are greater than those of a general unsecured creditor of the
Company.

 

XXI.                    Governing Law

 

To the extent not preempted by Federal law, the Plan and all agreements and
instruments entered into under the Plan shall be governed by, and construed in
accordance with, the laws of the State of Delaware without regard to its
conflict of laws rules.  Participants irrevocably consent to the personal
jurisdiction and exclusive venue of the state and Federal courts in Illinois. 
Furthermore, the Plan and all Option Agreements relating to ISOs shall be
interpreted to the extent deemed appropriate by the Committee so as to qualify
as incentive stock options under the Code.

 

15

--------------------------------------------------------------------------------

 

APPENDIX I
Definitions

 

“409A Award” shall mean an Award that constitutes a “deferral of compensation”
subject to the requirements of Section 409A of the Code.

 

“Award” shall mean, individually or collectively, a grant under the Plan of
Options, Restricted Stock, Restricted Stock Units, LTIP Units, SARs, Performance
Units, stock awards and cash awards.

 

“Award Agreement” shall mean an Option Agreement, Restricted Award Agreement,
LTIP Unit Award Agreement, SAR Agreement, Performance Unit Agreement or other
agreement evidencing an Award as described in this Plan.

 

“Board” shall mean the Board of Directors of the Company.

 

“Cause” shall have the same meaning as provided in a Participant’s employment or
change in control severance agreement, or if no such agreement exists, unless
otherwise defined in an agreement evidencing an Award, a felony conviction of a
Participant or the failure of a Participant to contest prosecution for a felony,
or a Participant’s willful misconduct or dishonesty, any of which is determined
by the Committee to be directly and materially harmful to the business or
reputation of the Company or its Subsidiaries.

 

“Change in Control” shall have the same meaning as provided in a Participant’s
employment or change in control severance agreement, or if no such agreement
exists, unless otherwise defined in an agreement evidencing an Award, shall mean
any of the following events:

 

(1)           An acquisition (other than directly from the Company) of any
voting securities of the Company (“Voting Securities”) by any Person immediately
after which such Person has beneficial ownership (within the meaning of
Rule 13d-3 promulgated under the Exchange Act) (“Beneficial Ownership and/or
Beneficially Owned”) of 20% or more of the combined voting power of the
Company’s then outstanding Voting Securities; provided, however, that in
determining whether a Change in Control has occurred, Voting Securities which
are acquired in a Non-Control Acquisition (as hereinafter defined) shall not
constitute an acquisition which would cause a Change in Control.  A Non-Control
Acquisition shall mean an acquisition by (i) the Company or any Subsidiary,
(ii) an employee benefit plan (or a trust forming a part thereof) maintained by
the Company or any Subsidiary, or (iii) any Person in connection with a
Non-Control Transaction (as hereinafter defined);

 

(2)           The individuals who, as of May 17, 2012, are members of the Board
(“Incumbent Board”) cease for any reason to constitute at least a majority of
the Board; provided, however, that if the election, or nomination for election
by the Company’s stockholders, of any new director was approved by a vote of at
least a majority of the Incumbent Board, such new director shall, for purposes
of the Plan, be considered as a member of the Incumbent Board; and provided,
further, however, that no individual shall be considered a member of the
Incumbent Board if such individual initially assumed office as a result of
either an actual or threatened election contest (as described in former

 

16

--------------------------------------------------------------------------------

 

Rule 14a-11 promulgated under the Exchange Act) (“Election Contest”) or other
actual or threatened solicitation of proxies or consents by or on behalf of a
Person other than the Board (“Proxy Contest”) including by reason of any
agreement intended to avoid or settle any Election Contest or Proxy Contest; or

 

(3)           Approval by stockholders of the Company and the consummation of:

 

(A)          A merger, consolidation or reorganization involving the Company,
unless such is a Non-Control Transaction.  For purposes of the Plan, the term
“Non-Control Transaction” shall mean a merger, consolidation or reorganization
of the Company in which:

 

(i)            the stockholders of the Company, immediately before such merger,
consolidation or reorganization, own, directly or indirectly immediately
following such merger, consolidation or reorganization, at least a majority of
the combined voting power of the voting securities of the corporation or entity
resulting from such merger or consolidation or reorganization (“Surviving
Corporation”) over which any Person has Beneficial Ownership in substantially
the same proportion as their ownership of the Voting Securities immediately
before such merger, consolidation or reorganization;

 

(ii)           the individuals who were members of the Incumbent Board
immediately prior to the execution of the agreement providing for such merger,
consolidation or reorganization constitute at least a majority of the members of
the board of directors or equivalent body of the Surviving Corporation; and

 

(iii)          no Person (other than the Company, any Subsidiary, any employee
benefit plan (or any trust forming a part thereof) maintained by the Company,
the Surviving Corporation, or any Person who, immediately prior to such merger,
consolidation or reorganization had Beneficial Ownership of 20% or more of the
then outstanding Voting Securities) has Beneficial Ownership of 20% or more of
the combined voting power of the Surviving Corporation’s then outstanding voting
securities;

 

(B)          A complete liquidation or dissolution of the Company; or

 

(C)          The sale or other disposition of all or substantially all of the
assets of the Company to any Person (other than a transfer to a Subsidiary).

 

Notwithstanding the foregoing, a Change in Control shall not be deemed to occur
solely because any Person (“Subject Person”) acquired Beneficial Ownership of
more than the permitted amount of the outstanding Voting Securities as a result
of the acquisition of Voting Securities by the Company which, by reducing the
number of Voting Securities outstanding, increases the proportional number of
shares Beneficially Owned by the Subject Person; provided, however, that if a
Change in Control would occur (but for the operation of this sentence) as a
result of the acquisition of Voting Securities by the Company, and after such
share

 

17

--------------------------------------------------------------------------------

 

acquisition by the Company, the Subject Person becomes the Beneficial Owner of
any additional Voting Securities which increases the percentage of the then
outstanding Voting Securities Beneficially Owned by the Subject Person, then a
Change in Control shall occur.

 

With respect to any 409A Award but only to the extent necessary for such 409A
Award to comply with Section 409A of the Code, a Change in Control must
constitute a change in the ownership or effective control of the Company, or in
the ownership of a substantial portion of the assets of the Company, within the
meaning of Section 409A(a)(2)(A)(v) of the Code for any acceleration of the
timing of payment of the 409A Award because of the Change in Control.  The
preceding sentence shall not affect the vesting of any Award.

 

“Code” shall mean the Internal Revenue Code of 1986, as amended from time to
time, or any successor thereto.

 

“Committee” shall mean the committee described in Section 3.1 or, as applicable,
any other committee or any officer to whom the Board or the Committee has
delegated authority in accordance with Section 3.2.

 

“Disability” shall mean the total disability as determined by the Committee in
accordance with standards and procedures similar to those under the Company’s
long-term disability plan, or, if none, a physical or mental infirmity which the
Committee determines impairs the Participant’s ability to perform substantially
his or her duties for a period of 180 consecutive days.

 

“Employee” shall mean an individual who is an employee of the Company or a
Subsidiary.

 

“Exchange Act” shall mean the Securities Exchange Act of 1934, as amended from
time to time.

 

“Fair Market Value” of the Shares shall mean, as of any applicable date, the
closing sale price of the Shares on the New York Stock Exchange or any national
or regional stock exchange on which the Shares are traded, or if no such
reported sale of the Shares shall have occurred on such date, on the next
preceding date on which there was such a reported sale.  If there shall be any
material alteration in the present system of reporting sale prices of the
Shares, or if the Shares shall no longer be listed on the New York Stock
Exchange or a national or regional stock exchange, the fair market value of the
Shares as of a particular date shall be determined by such method as shall be
determined by the Committee.

 

“ISOs” shall have the meaning given such term in Section 6.1.

 

“LTIP Unit” shall mean an OP Unit granted pursuant to Section 8.1.

 

“LTIP Unit Agreement” shall mean an agreement evidencing a LTIP Unit Award, as
described in Section 8.2.

 

“Nonexecutive Employees” shall mean Employees who are not executive officers of
the Company.

 

18

--------------------------------------------------------------------------------

 

“Nonemployee Director” shall mean an individual who is a member of the Board but
is not an Employee.

 

“NQSOs” shall have the meaning given such term in Section 6.1.

 

“OP” means an operating partnership of the Company.

 

“Option” shall mean an option to purchase Shares granted pursuant to Article 6.

 

“Option Agreement” shall mean an agreement evidencing the grant of an Option as
described in Section 6.2.

 

“Option Exercise Price” shall mean the purchase price per Share subject to an
Option, which shall not be less than the Fair Market Value of the Share on the
date of grant (110% of Fair Market Value in the case of an ISO granted to a Ten
Percent Shareholder).

 

“OP Unit” shall mean a unit of partnership interest in an OP.

 

“Participant” shall mean any Employee or Nonemployee Director selected by the
Committee to receive an Award under the Plan.

 

“Partnership Agreement” shall mean the Partnership Agreement from the applicable
OP, as same may be amended or restated from time to time.

 

“Performance Goals” shall have the meaning given such term in Section 9.4.

 

“Performance Period” shall have the meaning given such term in Section 9.3.

 

“Performance Unit” shall mean the right to receive a payment from the Company
upon the achievement of specified Performance Goals as set forth in a
Performance Unit Agreement.

 

“Performance Unit Agreement” shall mean an agreement evidencing a Performance
Unit Award, as described in Section 9.2.

 

“Person” shall have the meaning ascribed to such term in Section 3(a)(9) of the
Exchange Act and as used in Sections 13(d) and 14(d) thereof, including a
“group” as defined in Section 13(d).

 

“Plan” shall mean this Ventas, Inc. 2012 Incentive Plan, as the same may be
amended from time to time.

 

“Restricted Award Agreement” shall mean an agreement evidencing a Restricted
Stock Award or Restricted Stock Unit Award, as described in Section 7.2.

 

“Restricted Stock” shall mean Shares granted pursuant to Article 7 as to which
the restrictions have not expired.

 

“Restricted Stock Unit” shall mean an Award granted pursuant to Article 7
denominated in units of the Company’s common stock, par value $0.25 per share.

 

19

--------------------------------------------------------------------------------

 

“Restriction Period” shall mean the period determined by the Committee during
which the transfer of Shares or OP Units is limited in some way or Shares or
Restricted Stock Units or LTIP Units are otherwise restricted or subject to
forfeiture as provided in Article 7 or Article 8.

 

“Shares” shall mean the shares of the Company’s common stock, par value $0.25
per share.

 

“Subsidiary” shall mean any company, corporation, partnership, limited liability
company or other Person in which the Company directly or indirectly owns a
majority interest.

 

“Substitute Award” shall mean an Award granted in connection with a transaction
in substitution, exchange, conversion, adjustment, assumption or replacement of
awards previously granted by an entity acquired by the Company or a Subsidiary
or with which the Company or a Subsidiary merges or otherwise combines.

 

“Ten Percent Shareholder” shall mean an Employee who, at the time an ISO is
granted, owns (within the meaning of Section 422(b)(6) of the Code) stock
possessing more than 10% of the total combined voting power of all classes of
stock of the Company.

 

20

--------------------------------------------------------------------------------