Exhibit 10.3
VENTAS, INC.
June 30, 2011
Douglas M. Pasquale
900 E Balboa Blvd.
Newport Beach, CA 92611
Dear Mr. Pasquale,
On behalf of Ventas, Inc. (the “Company”) and in accordance with the terms and
conditions outlined in this letter (the “Letter”), I am pleased to confirm that
the Company hereby offers you employment, effective upon the Effective Time (as
defined under the Agreement and Plan of Merger by and among the Company, Needles
Acquisition LLC and Nationwide Health Properties, Inc. (“NHP”), dated as of
February 27, 2011 (the “Merger Agreement”)). This Letter will be of no force or
effect if the Merger Agreement terminates before the Effective Time. Capitalized
terms used but not defined herein will have the meaning ascribed to them in the
Merger Agreement. Except as explicitly provided in this Letter, as of and
following the Effective Time, this Letter shall supersede and preempt the Second
Amended and Restated Employment Agreement between you and NHP, effective as of
October 28, 2008 (the “NHP Employment Agreement”).
Below are the terms of your employment with the Company on and following the
Effective Time, as well as the treatment of certain equity and equity-related
NHP awards held by you:

  •   Position. Member of the Board of Directors of the Company (the “Board”)
and Senior Advisor to the Chief Executive Officer (“Senior Advisor”). As Senior
Advisor, you will report to the Chief Executive Officer of the Company, with
duties and responsibilities consistent with assisting in an orderly transition
and integration of NHP into the Company, and otherwise as reasonably requested
by the Chief Executive Officer of the Company consistent with the terms and
conditions of this Letter.

  •   Location. Newport Beach, CA

  •   Term and Termination. Your employment with the Company shall be for a
period commencing at the Effective Time and terminating as of December 31, 2011
(the “Term”). Notwithstanding the above, either you or the Company may terminate
your employment with the Company for any reason upon two days’ advance written
notice to the other. The “Termination Date” shall be the date on which your
employment with the Company (but not your service as member of the Board) ceases
for any reason in a manner that constitutes a “separation from service” within
the meaning of Treasury Regulation Section 1.409A-1(h), including your
resignation for any reason, the Company’s termination of your employment for any
reason, or your death or Disability (as defined in the NHP Employment
Agreement).

 

 

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  •   Termination for Cause. The term “Cause” shall be as defined in the NHP
Employment Agreement; provided however, a determination of a termination for
Cause must be approved by a vote of at least two-thirds of the Board (excluding
you), including at least one member of the Board voting for Cause termination
who was a member of the board of directors of NHP immediately prior to the
Effective Time.

  •   Duties. During the Term, you agree to devote your full attention and time
during normal business hours to the business and affairs of the Company, to
discharge the responsibilities reasonably assigned to you hereunder, and to use
your reasonable best efforts to perform faithfully and efficiently such
responsibilities. During the Term, you shall not, without the consent of the
Chief Executive Officer of the Company, be actively engaged in any other
business activity, whether or not such business activity is pursued for gain,
profit or other pecuniary advantage, that competes, conflicts or interferes with
the performance of your duties hereunder in any material way; provided that, it
will not be a violation of this Letter for you to serve on civic or charitable
boards or committees, or, with the advance consent of the Chief Executive
Officer of the Company, which consent shall not be unreasonably withheld, and
subject to Ventas’ Guidelines on Governance, to serve on other corporate boards.
The following corporate boards are hereby pre-approved: Alexander & Baldwin;
Matson Navigation Company, Inc. (a wholly-owned subsidiary of Alexander &
Baldwin); and Terreno Realty Corporation.

  •   Base Salary. You shall be a paid base salary at an annual rate of $700,000
(“Base Salary”), in accordance with the Company’s normal payroll practices, and
subject to your continued employment on each payment date; provided however, in
the event you are terminated by the Company without Cause, or are terminated for
death or Disability during the Term, your Base Salary will continue to be
payable on the same schedule as if you had continued to work until the end of
the Term. In the event your employment with the Company is terminated by either
you or the Company, or upon expiration of the Term, and you continue to serve as
a member of the Board, you shall receive compensation with respect to your
director services on the same terms as all other non-employee directors of the
Company during the period of such service.

  •   Supplemental Salary. In consideration for the restrictive covenants set
forth in this Agreement and for the services you will provide to the Company
during the Term, you shall receive an additional cash payment at an annual rate
of $180,000 (the “Supplemental Salary”), paid in accordance with the Company’s
normal payroll practices, subject to your continued employment at the Company.
The Supplemental Salary shall terminate upon the termination of your employment
with the Company for any reason.

  •   Incentive Compensation. In consideration for the restrictive covenants set
forth in this Agreement and for the services you will provide to the Company
during the Term, you shall receive incentive compensation in the amount of
$4,320,000 (the “Incentive Compensation”), payable promptly following the
earlier of (i) December 31, 2011, if you remain employed with the Company
through such date or (ii) your termination either by the Company without Cause
or due to death or Disability during the Term. For the avoidance of doubt, if
your employment with the Company ceases prior to December 31, 2011 for any
reason other than (i) termination by the Company without Cause, (ii) death or
(iii) Disability, you shall not receive the Incentive Compensation.

 

 

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  •   Benefit Plans. The Company shall provide to you during your employment
with the Company the following benefits: (i) medical insurance (including
dental, vision, and prescription drug coverage) and life insurance with terms no
less favorable, in the aggregate, than the most favorable of those provided to
you during the year immediately preceding the Effective Time and (ii) the
following perquisites, in annual amounts no greater than listed below, pro-rated
for the period of time you are employed with the Company:

  •   Performing Arts — $3,500

  •   Pacific Club — $7,100

  •   Tennis Club — $1,800

  •   Gym — $1,100.

The Company shall also, consistent with the Company’s customary practices,
arrange to provide you, during the period of your employment with the Company,
with office accommodations and support, which shall include computer, personal
digital assistant, cell phone, and telecommunication office equipment (e.g., fax
machine, copy machine, telephone), reasonable office supplies, subscription to
the Wall Street Journal and other publications to which you currently subscribe,
and full-time secretarial and IT support (“Advisor Benefits”). If at any point
during the Term, the Company terminates your employment as Senior Advisor
without Cause, your Advisor Benefits will continue until December 31, 2011.

  •   Termination of Employment: Severance and Benefits. If, at any time, your
employment ceases for any reason in a manner that constitutes a “separation from
service” within the meaning of Treasury Regulation Section 1.409A-1(h), you will
be entitled to receive severance payments and benefits equal to those you would
have received under Section IV(1) of the NHP Employment Agreement had you
resigned with “Good Reason” as defined therein immediately prior to the
Effective Time, which payments and benefits you and the Company agree are
properly summarized on Exhibit A hereto. For the avoidance of doubt, the parties
agree that you shall not be entitled to any severance payments or benefits under
the NHP Employment Agreement other than what is explicitly set forth in this
Letter.

 

 

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  •   Vacation. You shall be eligible for paid vacation time of three (3) weeks
during the Term.

  •   Expense Reimbursement. You shall be reimbursed for out-of-pocket expenses
(in your capacity as an employee or director of the Board) in accordance with
the Company’s policies and procedures.

  •   Stock Options. At the Effective Time, each of your unvested NHP stock
options shall become vested, and you shall be entitled to a cash payment in
respect of each of your NHP stock options (including both previously vested
options and options which become vested at the Effective Time, each of which is
listed on Exhibit B) in accordance with Section 3.3(a)(i) of the Merger
Agreement; provided, however, that the NHP stock options granted to you pursuant
to the Stock Option Agreement between you and the Company dated February 15,
2011, shall not become vested at the Effective Time, and instead will be assumed
by the Company, in accordance with Section 3.3(a)(ii) of the Merger Agreement
and shall vest on the Termination Date as set forth in Section 2(c) of
Exhibit A.

  •   Restricted Stock Units. At the Effective Time, each of your outstanding
and unvested NHP restricted stock units (each, an “NHP RSU”) (as listed in
Exhibit B) shall become vested and you shall be entitled to a cash payment in
respect thereof in accordance with Section 3.3(b)(i) of the Merger Agreement;
provided, however, that the NHP RSUs granted to you pursuant to the Stock Unit
Award Agreement between you and the Company dated February 15, 2011 (“2011
RSUs”), shall not become vested at the Effective Time, and instead will be
assumed by the Company in accordance with Section 3.3(b)(ii) of the Merger
Agreement (including with respect to the dividend rights described in the 2011
RSU Stock Unit Award Agreement) and shall vest on the Termination Date as set
forth in Section 2(c) Exhibit A.

  •   2009 and 2010 Performance Shares. At or immediately following the
Effective Time, you shall receive, with respect to each of your 2009 and 2010
NHP performance shares (as listed in Exhibit B), a number of shares of common
stock of the Company (“Company Common Stock”) equal to the greater of the Actual
Performance Share Amount (as defined below) or the Target Performance Share
Amount (as defined below). The “Actual Performance Share Amount” shall mean a
number of shares of Company Common Stock equal to (x) the number of performance
shares that would have vested in accordance with the applicable Performance
Share Award Agreement based on NHP’s actual performance for a shortened
performance period that terminates immediately prior to the Effective Time,
multiplied by (y) the Exchange Ratio (as defined in the Merger Agreement). The
“Target Performance Share Amount” shall mean a number of shares of Company
Common Stock equal to (x) one hundred percent (100%) of the number of
performance shares subject to the applicable Performance Share Award Agreement
(i.e., the number of shares vesting at an “Applicable Percentage” (as defined in
the each Performance Share Award Agreement) of 100%, and which number of
Performance Shares are listed on Exhibit B), multiplied by (y) the Exchange
Ratio. Your right to receive the excess of the Target Performance Share Amount
over the Actual Performance Share Amount, if any, is in consideration for the
restrictive covenants set forth in this Agreement.

 

 

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  •   2011 Performance Shares. At or immediately following the Effective Time,
you shall receive with respect to each of your 2011 NHP performance shares (as
listed in Exhibit B) a number of shares of Company Common Stock equal to the
lesser of the Actual Performance Share Amount or the Target Performance Share
Amount (for the avoidance of doubt, taking into account any pro-ration thereof,
in accordance with Section 7.1 of the 2011 Performance Share Award Agreement).

  •   Dividend Equivalent Rights. The dividend equivalent rights that were
granted to you in respect of your 2003, 2004, 2009, 2010 and 2011 NHP stock
options and 2006 NHP RSUs (each of which are listed in Exhibit B and
collectively referred to as the “NHP DERs”) shall terminate at the Effective
Time in accordance with Section 3.3(e) of the Merger Agreement, and be treated
in accordance with the terms set forth below.

  •   2003/2004 Stock Option NHP DERs. Terminate at the Effective Time except
with respect to the rights preserved under Section 2(b)(i) of Exhibit A.

  •   2009/2010 Stock Option NHP DERs. Terminate at the Effective Time and an
amount in respect of each of the 2009 and 2010 DERs shall be paid to you at or
immediately following the Effective Time (and in no event later than sixty
(60) days following the Effective Time) equal to the product of (i) the number
of remaining dividend payments (as listed on Exhibit B) that would have been
payable following the Effective Time pursuant to the terms of the 2009 or 2010
NHP DERs, as applicable, if the transaction contemplated by the Merger Agreement
had not occurred, multiplied by (ii) the number of 2009 or 2010 NHP DERs, as
applicable (as listed on Exhibit B), multiplied by (iii) the value of the
regularly scheduled quarterly dividend payment paid on NHP common stock that was
most recently paid prior to the Effective Time.

  •   2011 Stock Option NHP DERs. You shall receive a number of replacement
dividend rights (each a “Company DER Replacement Right”) equal to the number of
2011 stock option NHP DERs (the “2011 NHP Option DERs”) multiplied by the
Exchange Ratio (the number of Company DER Replacement Rights with respect to the
2011 NHP Option DERs is set forth in Exhibit B). The Company DER Replacement
Rights will replace the 2011 NHP Option DERs, which will terminate at the
Effective Time. The Company DER Replacement Rights shall entitle you to receive
a payment, on each date on which a dividend is paid on Company Common Stock (a
“Dividend Payment Date”) which occurs during your employment with the Company,
equal to the product of (i) the number of Company DER Replacement Rights,
multiplied by (ii) the per-share ordinary cash dividend paid on Company Common
Stock on such Dividend Payment Date, and all remaining Company DER Replacement
Rights in respect of the 2011 NHP Option DERs shall accelerate and be paid to
you on or immediately following the Termination Date in accordance with
Section 2(b)(ii) of Exhibit A.

 

 

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  •   2006 NHP RSU DERs. In the event that NHP pays a cash dividend on its
common stock for which the related dividend payment record date occurs during
the calendar quarter in which the Effective Time occurs and prior to the
occurrence of the Effective Time, you shall be entitled to an additional number
of NHP RSUs immediately prior to the Effective Time equal to (i) the per-share
cash dividend paid by NHP on its common stock with respect to such record date,
multiplied by (ii) the total number of outstanding and unpaid 2006 NHP RSUs
(including any dividend equivalents previously credited thereunder) held by you
as of such record date, and in the event that the Effective Time is on or after
July 1, 2011, you shall also be entitled to an additional number of NHP RSUs
that accrue from the last dividend record date through the Effective Time on a
daily rate basis of $.00526 per share of NHP common stock. You shall receive, in
respect of any such additional RSUs thereof, a cash payment in accordance with
Section 3.3(b)(i) of the Merger Agreement.

  •   10b5-1 Plan. The Company shall give you the opportunity to participate in
a 10b5-1 plan commencing on the Effective Time on the same terms as provided to
any other executive officer of the Company.

  •   Irrevocable Grantor Trust. Not later than the Effective Time, the
following amounts shall be placed in an irrevocable “rabbi trust” (which shall
be a grantor trust consistent with the form prescribed by IRS Revenue Procedure
92-64) for your benefit (the “Grantor Trust”): (i) the cash severance amounts
described in Sections 1(b), 1(c) and 1(d) of Exhibit A, (ii) the cash amount set
forth in Section 2(a) of Exhibit A, (iii) the deferred compensation amount set
forth on Section 2(d) of Exhibit A, and (iv) the Incentive Compensation. The
amounts in the Grantor Trust will vest and will be paid to you in accordance
with the timing set forth in Exhibit A. The grantor of the Grantor Trust shall
be the Company and the trustee of the Grantor Trust shall be a bank or trust
company as reasonably agreed upon between you and the Company. With respect to
the Annual Bonus (as defined in the NHP Employment Agreement) described in
Section 1(b) of Exhibit A, an estimated amount equal to $910,000 (the “Estimated
2011 Bonus”) shall be placed into the Grantor Trust not later than the Effective
Time. Within thirty (30) days after the end of the 2011 calendar year, a
pro-rated portion of your actual Annual Bonus for such year shall be determined
(the “Actual 2011 Bonus”) by a subcommittee of the Board comprised of (i) two
members of the Board who were each a member of the board of directors of NHP
immediately prior to the Effective Time (but shall not include you) and (ii) one
member of the Board who was not a member of the board of directors of NHP
immediately prior to the Effective Time. Any excess of the Estimated 2011 Bonus
over the Actual 2011 Bonus will be promptly returned by the Grantor Trust to the
Company, and any excess of the Actual 2011 Bonus over the Estimated 2011 Bonus
will be promptly paid to you by the Company. The amounts in the Grantor Trust
shall be placed in cash or cash equivalents, including U.S. Treasury bills and
certificates of deposit. Upon the satisfaction of the portion of the amounts
described above in accordance with the terms of this Letter and Exhibit A
hereof, the Grantor Trust shall be terminated.

 

 

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  •   Additional Payments by the Company. Notwithstanding anything in this
Letter to the contrary, Section IV(5) of your NHP Employment Agreement relating
to “excess parachute payments” under Section 280G of the Internal Revenue Code
of 1986, as amended (the “Code”), shall survive and remain in effect in respect
of the “change of ownership” (as such term is used in Section 280G of the Code)
of NHP which occurs by virtue of the transactions described in the Merger
Agreement (the “280G Gross Up”); provided that, the following terms shall apply:

Within 10 days following the Effective Time, the Company shall submit a proposed
computation of the amount that must be paid to you such that after the payment
of (i) the excise tax payable under Section 4999 of the Code by you in respect
of any amounts payable to you and (ii) any and all federal and state income,
excise and other tax payable by you on the increased amounts payable hereunder,
the amount received by you is equal to all severance amounts payable by the
Company to you (the “Proposed 280G Calculation”), which Proposed 280G
Calculation shall be substantially the same as the 280G calculation which is
attached as Exhibit C hereto (other than in respect of facts which have changed
since the date of this letter (e.g., the Company stock price), for your review
and comment, which comments shall be made within 10 days of your receipt of the
Proposed 280G Calculation. For purposes of making the Proposed 280G Calculation,
the Company shall assume that you pay U.S. federal and state income tax at the
highest marginal rates applicable to an individual resident of California, with
the Federal rate being adjusted to take into account the deduction against
federal taxable income for state income taxes.
The Company shall be obligated, in good faith, to review any of your suggested
modification to the Proposed 280G Calculation, and consider changes based
thereon. The Company shall make a final determination of the amount payable to
you pursuant to the 280 Gross Up within 15 days of receiving any suggested
modifications from you (or immediately after 10 days of your receipt of the
Proposed 280G Calculation in the event you do not make any suggested
modifications), and such final determination shall become the “Final
Calculation.” Any time after the date the Company determines the Final
Calculation, upon your written request to the Company, the Company shall pay to
you the amount determined by the Final Calculation as soon as practicable and no
later than 10 days after receiving your written request; provided however, the
Final Calculation shall be paid no later than the end of the first year
following the year in which the related taxes are remitted to the appropriate
taxing authority. You shall report, for U.S. federal and state income tax
purposes, in a manner that is consistent with the Final Calculation (the
“Reported Position”).

 

 

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Without duplication of the 280G Gross Up, the Company shall indemnify you for
any additional tax, penalty and interest, and legal, accounting, and related
costs (including tax return preparation and defense) incurred by you as a result
of the application of either Code Section 4999 or any similar provision of state
or local income tax law, to any severance amounts payable by the Company to you.
Any amount for which you are indemnified under the preceding sentence
(“Indemnified Amount”) shall be computed on an after-tax basis, taking into
account any income, excise or other taxes, including interest and penalties.
Upon payment of any Indemnified Amount, or (if the Indemnified Amount is not yet
payable) upon the Company’s written affirmation of the Company’s obligation to
indemnify you with respect to the Reported Position, the Company shall be
entitled, at its sole expense, to control the contest of any disallowance or
proposed disallowance of the Reported Position (a “Contest”), and you agree to
cooperate in good faith in connection with a Contest, including, without
limitation, executing powers of attorney and other documents, and providing
information relating to such Contest requested by the Company, all at the
reasonable request of the Company. An Indemnified Amount shall be payable by the
Company whenever the related amount is payable to a taxing authority or whenever
you incur an expense or cost described in the first sentence of this paragraph.
Following payment by the Company of any Indemnified Amount, if the Reported
Position is sustained by the Internal Revenue Service or the courts, the Company
shall be entitled to any resulting receipt of interest or refund of taxes,
interest and penalties that were properly attributable to the Indemnified
Amount. If the Reported Position is sustained in whole or in part in a final
resolution of a Contest, and if the Indemnified Amount therefore exceeds the
amount of taxes, penalties and interest payable by you as a result of the
Reported Position (determined on an after-tax basis after taking into account
payments made pursuant to the preceding sentence and this sentence), any such
excess portion of the Indemnified Amount shall be returned by you to the
Company. The Company shall make any payment of an Indemnified Amount to you as
soon as practicable, but not later than 10 days after you have provided to the
Company a written notice that you have remitted the taxes or incurred the
expense to which the Indemnified Amount is related; provided however, any
Indemnified Amount shall be paid no later than the end of the first year
following the year in which the related taxes are remitted to the appropriate
taxing authority, or where as a result of a Contest no taxes are remitted, no
later than the end of the year following the year in which the Contest is
completed or there is a final and nonappealable settlement or other resolution
of the Contest (for the avoidance of doubt, the foregoing proviso shall not
permit the Company to delay the payment of the Indemnified Amount to you beyond
10 days after you have provided to the Company a written notice that you have
remitted the taxes or incurred the expense to which the Indemnified Amount is
related).

  •   Other Payments and Benefits. Except as provided in this Letter, any
payments or benefits to which you are entitled pursuant to the terms of any NHP
benefit plans, agreements and arrangements as of the date hereof shall be
governed by the terms of such plans, agreements and arrangements.

 

 

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  •   Confidentiality. You shall hold in a fiduciary capacity for the benefit of
the Company all secret or confidential business information and knowledge or
data relating to the Company and its business which shall have been obtained
during your employment by the Company and which shall not be or become public
knowledge (other than by acts of you or your representatives in violation of
this Letter). After the Termination Date, you shall not, without the prior
written consent of the Board, or as may otherwise be required by law or legal
process, communicate or divulge any such information, knowledge or data to
anyone other than the Company or those designated by it. For the avoidance of
doubt, nothing in this paragraph shall be deemed to be a “non-compete”
provision.

  •   Restrictive Covenants. You shall not during the Term and through the
period ending on June 30, 2012 (the “Restricted Period”), either directly or
indirectly (through another business or person) engage in or facilitate any of
the following activities anywhere in the United States or in any location
outside the United States where the Company conducts business: (i) soliciting to
hire, recruit or employ any person who is, or during the six-month period
preceding such activity was, employed by the Company or any subsidiary, or
causing or attempting to cause any third party to do any of the foregoing or
(ii) performing services as an employee, director, officer, consultant,
independent contractor or advisor; or investing in, whether in the form of
equity or debt, owning any interest or otherwise having an ownership or other
interest in any Prohibited Entity (as defined below); provided however, on or
after January 1, 2012, you shall have the right to terminate the Restricted
Period by providing written notice (“Non-Compete Termination Notice”) to the
Company of such intent and making a lump-sum cash payment of $8 million to the
Company no later than five (5) business days following the delivery to the
Company of the Non-Compete Termination Notice.

Nothing in the foregoing clause (ii) shall however, restrict you from (A) making
an investment in or owning up to five percent (5%) of the common stock of any
company, provided that such investment does not give you the right or ability to
control or influence the policy decisions of any Prohibited Entity, and provided
further that you may, with the advance written consent of the Chief Executive
Officer of the Company, make investments in over five percent (5%) of the common
stock of a company, or (B) performing services as an employee, director,
officer, consultant, independent contractor or advisor for any entity that is
not a Prohibited Entity. For purposes of this Letter, a “Prohibited Entity”
means any of the following entities and any of their respective parents,
affiliated entities, or subsidiaries: (1) HCP, Inc., (2) Health Care REIT, Inc.,
(3) Healthcare Trust of America, Inc., (4) H&R REIT or (5) Grubb & Ellis
Healthcare REIT.

 

 

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  •   Section 409A of the Code. Each amount to be paid or benefit to be provided
pursuant to this Letter shall be construed to be a separately identified payment
for purposes of Section 409A of the Code. If, at the time of your termination of
employment, you are a “specified employee” (as defined in Section 416(i) of the
Code and the regulations and other published guidance under Section 409A of the
Code) and the Company’s stock is publicly traded on an established securities
market or otherwise, any portion of the payments or benefits under this Letter
that would otherwise be subject to taxation pursuant to Section 409A of the Code
shall be payable not earlier than the earlier of (i) six (6) months after the
date of your termination for any reason other than death, or (ii) the date of
your death. As soon as practicable following the earlier of (i) or (ii), and in
any event within ten (10) business days of such date, you shall receive the
entire amount that would have been paid earlier but for such six (6) month
delay. Notwithstanding any provision of this Letter to the contrary, to the
extent necessary to avoid the imposition of any taxes under Section 409A of the
Code, no payment or distribution under this Letter that becomes payable by
reason of your termination of employment with the Company will be made to you
unless your termination of employment constitutes a “separation from service”
(as such term is defined in the Treasury Regulations issued under Section 409A
of the Code). The Company and you intend that no payments or benefits to you
under this Letter or any other compensation plan or arrangement shall be subject
to the tax imposed under Section 409A of the Code, and this Letter is to be
interpreted according to such intention and administered by the Company in
accordance with such interpretation and Section 409A of the Code. No payment to
be made under this Letter shall be made at a time earlier than that provided for
in this Letter unless such payment is (i) an acceleration of payment permitted
to be made under Treasury Regulation Section 1.409A-3(j)(4) or (ii) a payment
that would otherwise not be subject to additional taxes and interest under
Section 409A of the Code. With regard to any provision herein that provides for
reimbursement of expenses, except as permitted by Section 409A of the Code,
(i) the right to reimbursement shall not be subject to liquidation or exchange
for another benefit, (ii) the amount of expenses eligible for reimbursement
provided during any taxable year shall not affect the expenses eligible for
reimbursement in any other taxable year, and (iii) such payments shall be made
in accordance with the Company’s applicable policies, but in no event later than
on or before the last day of your taxable year following the taxable year in
which the expense occurred (for the avoidance of doubt, the foregoing proviso
shall not permit the Company to delay the payments beyond what is required under
the Company’s applicable policies). The Company and you further agree to act
reasonably and to cooperate to amend or modify this Letter or any other such
compensation arrangement to the extent reasonably necessary to avoid the
imposition of tax under Section 409A of the Code. Pursuant to Treasury
Regulations Section 1.409A-1(h)(4), there shall be no “separation from service”
upon the Effective Time.

  •   No Set-Offs. The Company’s obligations to make the payments provided for
in this Letter and otherwise to perform its obligations hereunder shall not be
affected by any set-off, counterclaim, defense or other claim, right or action
which the Company may have against you or others. You shall not be obligated to
seek other employment or to take any other action by way of mitigation of the
amounts payable to you under any of the provisions of this Letter, and in the
event you do seek other employment, the terms of such employment (including any
compensation received in conjunction therewith) shall not modify, mitigate or
offset the amounts payable to you under any of the provisions of this Letter.

 

 

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  •   General. This Letter shall be governed by and construed in accordance with
the laws of the State of Illinois. Any disputes arising in connection with, or
actions to enforce, this Letter shall be resolved by arbitration as provided in
Section X of the NHP Employment Agreement. Notwithstanding the foregoing
sentence, in any arbitration to enforce any of the provisions or rights under
this Letter or the surviving provisions of the NHP Employment Agreement, each
party shall bear its own expenses. The captions of this Letter are not part of
the provisions hereof and shall have no force or effect. Except as explicitly
provided, this Letter contains the entire agreement of the parties with respect
to the subject matter hereof and supersedes all prior agreements (including the
NHP Employment Agreement), promises, covenants, arrangements, communications,
whether written or oral, with respect to the subject matter hereof. This Letter
may not be amended or modified otherwise than by a written agreement executed by
the parties hereto or their respective successors and legal representatives. The
invalidity or unenforceability of any provision of this Letter shall not affect
the validity or enforceability of any other provision of this Letter. Any
failure by you or the Company to insist upon strict compliance with any
provision hereof or any other provision of this Letter, or the failure to assert
any right you or the Company may have hereunder, shall not be deemed to be a
waiver of such provision or right or any other provision or right of this
Letter.

  •   Successors. This Letter is personal to you and without the prior written
consent of the Board shall not be assignable by you otherwise than by will or by
the laws of descent and distribution. This Letter shall inure to the benefit of
and be enforceable by your legal representatives. This Letter shall inure to the
benefit of and be binding upon the Company and its successors and assigns.

  •   Directors and Officers Insurance. You shall have indemnification rights
against the Company no less favorable than those for other executives or
directors of the Company, and you shall be covered under directors and officers
liability insurance on the most favorable terms as provided to any other
executive officer of the Company from the Effective Time until no potential
liability exists for you after the period of your employment hereunder.

  •   Legal Expenses. The Company shall reimburse all legal expenses incurred by
you in the preparation, negotiation and execution of this Letter, the Grantor
Trust and any other related documents, at your counsel’s regular hourly rates,
and such expenses shall be reimbursed to you as soon as practicable, but not
later than 10 days after you have provided to the Company written evidence,
reasonably satisfactory to the Company, that you have incurred any such legal
fees expense, regardless of whether the Merger Agreement terminates before the
Effective Time.

  •   Tax Preparation Expenses. The Company shall reimburse all expenses not to
exceed $10,000 incurred by you in the preparation of your 2011 income tax
return, and such expenses shall be reimbursed to you as soon as practicable, but
not later than 10 days after you have provided to the Company written evidence,
reasonably satisfactory to the Company, that you have incurred any such expense.

 

 

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  •   Non-Exclusivity of Rights; Controlling Agreement. Nothing in this Letter
shall prevent or limit your continuing or future participation in any plan,
program, policy or practice provided by the Company for which you may qualify,
nor shall anything herein limit or otherwise affect such rights as you may have
under any contract or agreement with the Company. Amounts which are vested or
which you are otherwise entitled to receive under any plan, policy, practice or
program of, or any contract or agreement (other than this Letter) with the
Company at or subsequent to the Termination Date shall be payable in accordance
with such plan, policy, practice or program or contract or agreement except as
explicitly modified by this Letter. Notwithstanding any other provision of any
plan, policy, award agreement, practice or program in which you participate, in
the event there is any conflict between the terms of such plan, policy, award
agreement practice or program with the rights that you have under this Letter
with regard to payments, vesting or any other matter, this Letter shall control.

  •   Notices.

If to you:
Douglas M. Pasquale
900 E Balboa Blvd.
Newport Beach, CA 92611
With a copy to:
Matthew R. Perkins
Davis Graham & Stubbs LLP
1550 17th Street, Suite 500
Denver, Colorado 80202
If to the Company:
Ventas, Inc.
10350 Ormsby Park Place
Suite 300
Louisville, Kentucky 40223
Attn: General Counsel
With a copy to:
Michael J. Segal
Wachtell, Lipton, Rosen & Katz
51 W. 52nd Street
New York, New York 10019

 

 

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On behalf of the Board, we are excited that you have agreed to accept this offer
of employment and look forward to the consummation of the transactions described
in the Merger Agreement and the commencement of your employment. Please sign in
the space provided below to formally accept this Letter and return the original
to me.

            Very Truly Yours,
      By:   /s/ Debra A. Cafaro         Name:   Debra A. Cafaro        Title:  
Chief Executive Officer     

Acknowledgement:
I accept the position as offered under the terms and conditions set forth in
this Letter.

             
/s/ Douglas M. Pasquale
 
Name: Douglas M. Pasquale
      6/30/2011
 
Date: