Exhibit 10.3
May 12, 2011
Prometheus Senior Quarters LLC
c/o Lazard Frères Real Estate Investors L.L.C.
30 Rockefeller Plaza, 50th Floor
New York, New York 10020
Lazard Senior Housing Partners LP
c/o Lazard Real Estate Partners LLC
30 Rockefeller Plaza, 50th Floor
New York, New York 10020
LSHP Coinvestment Partnership I LP
c/o Lazard Real Estate Partners LLC
30 Rockefeller Plaza, 50th Floor
New York, New York 10020

Re:    Ownership Limit Waiver

Ladies and Gentlemen:
Reference is hereby made to that certain Merger Agreement (as amended through
the date hereof, the “Agreement”), dated October 21, 2010, by and among Ventas,
Inc., a Delaware corporation (“Acquiror”), Ventas SL I, LLC, a Delaware limited
liability company and a direct, wholly-owned subsidiary of Acquiror, Ventas SL
II, LLC, a Delaware limited liability company and a direct, wholly-owned
subsidiary of Acquiror, Ventas SL III, LLC, a Delaware limited liability company
and a direct, wholly-owned subsidiary of Acquiror, Atria Holdings LLC, a
Delaware limited liability company (“Atria Holdings”), Lazard Senior Housing
Partners LP, a Delaware limited partnership (“Senior Housing LP”), and LSHP
Coinvestment Partnership I LP, a Delaware limited partnership (“Coinvestment
LP”), Atria Senior Living Group, Inc., a Delaware corporation, One Lantern
Senior Living Inc, a Delaware corporation, and LSHP Coinvestment I Inc, a
Delaware corporation (“Coinvestment Inc”). Prometheus Senior Quarters LLC, a
Delaware limited liability company (“Prometheus”), is successor-in-interest to
Atria Holdings. Unless otherwise indicated, capitalized terms used herein but
not defined shall have the meaning given to such terms in the Agreement.

 

 

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To the extent set forth herein, the board of directors of Acquiror (the “Board”)
hereby grants a waiver (the “Waiver”), on the terms and subject to the
conditions set forth in this letter, to the Funds from the provisions of
Article IX of the Certificate of Incorporation of Acquiror that relate to
limitations upon ownership of Acquiror Common Stock, so that the Funds may
actually own, in the aggregate, up to 13.3%, in number of shares or value, of
Acquiror Common Stock during the period (the “Waiver Period”) from the date
hereof, until the expiration of the Waiver Period (the “Waiver Expiration
Date”); provided, however that subject to the provisions contained in the next
paragraph, the percentage set out in the preceding sentence shall be
(x) increased to reflect any decrease in the number of outstanding shares of
Acquiror Common Stock by reason of any non-pro-rata redemption of Acquiror
Common Stock or other transaction to which the Funds are not parties, and
(y) decreased to reflect any increase in the number of shares of Acquiror Common
Stock by reason of any issuance of Acquiror Common Stock or other transaction
that results in an increase in the number of shares of Acquiror Common Stock.
The breach of any representation, warranty, covenant or agreement contained in
this letter, or the failure by the Funds to comply with the covenants and
agreements in this letter, shall cause the Waiver granted in this letter to
become retroactively null and void, and shall retroactively cause any shares of
Acquiror Common Stock owned by the Funds in excess of the otherwise applicable
9.0% Ownership Limit (as defined in Article IX) to become designated “Excess
Shares” under Article IX, in addition to any other remedy available to Acquiror.
The “Funds” are, collectively, Atria Holdings, Prometheus, LF Strategic Realty
Investors II L.P., LFSRI II-CADIM Alternative Partnership L.P., LFSRI II
Alternative Partnership L.P., Senior Housing LP, and Coinvestment LP.
Notwithstanding the foregoing, and notwithstanding paragraph (e) hereof, the
ownership of Acquiror Common Stock by each of the Funds shall remain subject to
the otherwise applicable 9.0% Ownership Limit in the event that such ownership
would result in (i) any “individual” (within the meaning of Section 542(a)(2) of
the Internal Revenue Code of 1986, as amended (the “Code”), as modified by
Section 856(h) of the Code) owning (after taking into account the constructive
ownership rules of Section 544 of the Code, as modified by Section 856(h) of the
Code) in excess of 9.0% of the shares of Acquiror Common Stock outstanding or
(ii) any one Fund owning (either directly or by operation of the attribution
rules of Section 318 of the Code, as modified by Section 856(d)(5) of the Code)
10.0% or more of the total combined voting power, total number, or total value
of all shares of stock of Acquiror.
The Funds make the following representations, warranties, covenants and
agreements:
(a) The Waiver shall expire, and the Waiver Period shall terminate, on the first
to occur of (i) the date that the Funds actually own a percentage of Acquiror
Common Stock that is less than 50% of the percentage of Acquiror Common Stock
issued to them in the Mergers or (ii) on a breach by the Funds of any of the
representations, warranties, covenants or agreements contained in this letter.
Upon expiration of the Waiver and the Waiver Period with respect to any
Additional Shares, such Additional Shares shall automatically be designated as
“Excess Shares” under Article IX. Such designation will be effective, in the
circumstance described in clause (i) of the preceding sentence, at 11:59 p.m. on
the date of the relevant event, and, in the circumstance described in clause
(ii) of the preceding sentence, as of the close of business on the day prior to
the date of the relevant event, and each Fund understands and acknowledges that
the “Excess Share” designation shall be in addition to any other remedy that
Acquiror may have upon a breach by any Fund of any representation, warranty,
covenant or agreement contained herein. “Additional Shares” shall mean the
number of shares of Acquiror Common Stock owned by any Fund that exceeds the
9.0% Ownership Limit as to that Fund.

 

 

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(b) No Fund is a member of a partnership (as determined for federal income tax
purposes) composed of (i) such Fund and one or more of its investors or (ii) one
or more other Funds (in the case of this clause (ii), other than LF Strategic
Realty Investors II L.P., LFSRI II-CADIM Alternative Partnership L.P. and LFSRI
II Alternative Partnership L.P. with respect to their membership in Prometheus
Senior Quarters LLC).
(c) During the Waiver Period, the Funds shall notify Acquiror promptly after any
of them obtains knowledge that any one Fund owns (either directly or by
operation of the attribution rules of Section 318 of the Code, as modified by
Section 856(d)(5) of the Code) 10.0% or more of the total combined voting power,
total number, or total value of all shares of stock of Acquiror. In addition,
each Fund shall deliver to Acquiror, at such times as may reasonably be
requested by Acquiror (it being acknowledged that Acquiror may reasonably make
such request on at least a calendar quarterly basis), a certificate signed by an
authorized representative of the Funds to the effect that the Funds have
complied and expect to continue to comply with the covenant set forth in the
first sentence of this paragraph (c).
(d) Upon the failure by the Funds to comply with the covenants and agreements in
Sections 6 or 7 of the Lock-Up Agreement, the Funds shall be required to
promptly notify Acquiror in writing and to sell the Additional Shares as
promptly as practicable and in any event within 60 days of learning of such
breach.
(e) No waiver is granted hereby to any shareholder other than the Funds,
provided, however that no shares of Acquiror Common Stock actually owned by a
direct or indirect owner of the Funds shall be considered “Excess Shares” under
Article IX solely by reason of such shares being Beneficially Owned by the Funds
in a manner that is not described in clauses (i) and (ii) of the third paragraph
of this letter.
(f) The Funds understand that the breach of any representation, warranty,
covenant or agreement contained in this letter or the failure to comply with the
covenants and undertakings in this letter, in addition to any other remedy
available to Acquiror, subjects the Additional Shares to being designated as
“Excess Shares” under Article IX. In such event, any waiver granted by the Board
shall terminate and the Company may proceed in any manner permitted under
Article IX.

 

 

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            Very truly yours,

VENTAS, INC.,
a Delaware corporation
      By:   /s/ T. Richard Riney         Name:   T. Richard Riney       
Title:   Executive Vice President,
Chief Administrative Officer
and General Counsel   

 

 

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Accepted and agreed to as of the
date first written above:

              PROMETHEUS SENIOR QUARTERS LLC,
a Delaware limited liability company

  By:  LF Strategic Realty Investors II L.P.,
LFSRI II Alternative Partnership L.P. and LFSRI II-
CADIM Alternative Partnership L.P., its Managing
Members

    By:  Lazard Frères Real Estate Investors L.L.C., their General Partner
      By:   /s/ Matthew J. Lustig         Name:   Matthew J. Lustig       
Title:   Managing Principal      LAZARD SENIOR HOUSING PARTNERS LP,
a Delaware limited partnership

  By:   Lazard Senior Housing Partners GP LLC,
its General Partner
    By:   /s/ Matthew J. Lustig         Name:   Matthew J. Lustig       
Title:   Managing Principal and
Chief Executive Officer        LSHP COINVESTMENT PARTNERSHIP I LP,
a Delaware limited partnership

  By:   LSHP Coinvestment-I GP LLC,
its General Partner
      By:   /s/ Matthew J. Lustig         Name:   Matthew J. Lustig       
Title:   Managing Principal and
Chief Executive Officer