Document:

Exhibit 10.2

 

TAX MATTERS AGREEMENT

 

by and between

 

VENTAS, INC.,

 

and

 

CARE CAPITAL PROPERTIES, INC.

 

Dated as of August 17, 2015

 

 

TABLE OF CONTENTS

 

	
 
    	
 
    	
 
    	
Page
    
	
 
    	
 
    	
 
    
	
ARTICLE I   DEFINITIONS
    	
 
    	
2
    
	
 
    	
 
    	
 
    	
 
    
	
Section 1.01.
    	
General
    	
 
    	
2
    
	
Section 1.02.
    	
Additional Definitions
    	
 
    	
11
    
	
 
    	
 
    	
 
    	
 
    
	
ARTICLE II   PREPARATION, FILING AND PAYMENT OF TAXES SHOWN DUE ON TAX RETURNS
    	
 
    	
11
    
	
 
    	
 
    	
 
    	
 
    
	
Section 2.01.
    	
Combined Tax Returns
    	
 
    	
11
    
	
Section 2.02.
    	
Ventas Separate Tax Returns
    	
 
    	
11
    
	
Section 2.03.
    	
SpinCo Separate Tax Returns
    	
 
    	
11
    
	
Section 2.04.
    	
Restructuring Transfer Tax Returns
    	
 
    	
11
    
	
 
    	
 
    	
 
    	
 
    
	
ARTICLE III   TAX RETURN PROCEDURES
    	
 
    	
11
    
	
 
    	
 
    	
 
    	
 
    
	
Section 3.01.
    	
Procedures relating to Combined Tax Returns and   Ventas Separate Tax Returns
    	
 
    	
11
    
	
Section 3.02.
    	
Procedures relating to SpinCo Separate Tax Returns
    	
 
    	
12
    
	
Section 3.03.
    	
Preparation of all Tax Returns
    	
 
    	
13
    
	
Section 3.04.
    	
Tax Returns Reflecting Restructuring/Distribution   Taxes
    	
 
    	
13
    
	
 
    	
 
    	
 
    	
 
    
	
ARTICLE IV   TAX TIMING AND ALLOCATION
    	
 
    	
13
    
	
 
    	
 
    	
 
    	
 
    
	
Section 4.01.
    	
Timing of Payments
    	
 
    	
13
    
	
Section 4.02.
    	
Expenses
    	
 
    	
13
    
	
Section 4.03.
    	
Apportionment of SpinCo Taxes
    	
 
    	
13
    
	
 
    	
 
    	
 
    	
 
    
	
ARTICLE V   INDEMNIFICATION
    	
 
    	
13
    
	
 
    	
 
    	
 
    	
 
    
	
Section 5.01.
    	
Indemnification by Ventas
    	
 
    	
13
    
	
Section 5.02.
    	
Indemnification by SpinCo
    	
 
    	
14
    
	
Section 5.03.
    	
Characterization of and Adjustments to Payments
    	
 
    	
14
    
	
Section 5.04.
    	
Timing of Indemnification Payments
    	
 
    	
14
    
	
Section 5.05.
    	
Certain Tax Procedures
    	
 
    	
15
    
	
 
    	
 
    	
 
    	
 
    
	
ARTICLE VI   REFUNDS, DEDUCTIONS
    	
 
    	
15
    
	
 
    	
 
    	
 
    	
 
    
	
Section 6.01.
    	
Refunds
    	
 
    	
15
    
	
Section 6.02.
    	
Treatment of Deductions Associated with   Equity-Related Compensation
    	
 
    	
15
    
	
 
    	
 
    	
 
    	
 
    
	
ARTICLE VII   TAX PROCEEDINGS
    	
 
    	
16
    
	
 
    	
 
    	
 
    	
 
    
	
Section 7.01.
    	
Notification of Tax Proceedings
    	
 
    	
16
    
					

 

i

 

	
Section 7.02.
    	
Tax Proceedings
    	
 
    	
16
    
	
 
    	
 
    	
 
    	
 
    
	
ARTICLE VIII   TAX-FREE STATUS OF THE DISTRIBUTION
    	
 
    	
17
    
	
 
    	
 
    	
 
    	
 
    
	
Section 8.01.
    	
Representations and Warranties
    	
 
    	
17
    
	
Section 8.02.
    	
Restrictions Relating to the Distribution
    	
 
    	
18
    
	
Section 8.03.
    	
Procedures Regarding Post-Distribution Rulings and   Unqualified Tax Opinions
    	
 
    	
20
    
	
Section 8.04.
    	
Section 336(e) Election
    	
 
    	
21
    
	
 
    	
 
    	
 
    	
 
    
	
ARTICLE IX   [Reserved]
    	
 
    	
22
    
	
 
    	
 
    	
 
    	
 
    
	
ARTICLE X   COOPERATION
    	
 
    	
22
    
	
 
    	
 
    	
 
    	
 
    
	
Section 10.01.
    	
General Cooperation
    	
 
    	
22
    
	
Section 10.02.
    	
Retention of Records
    	
 
    	
22
    
	
 
    	
 
    	
 
    	
 
    
	
ARTICLE XI MISCELLANEOUS
    	
 
    	
23
    
	
 
    	
 
    	
 
    	
 
    
	
Section 11.01.
    	
Dispute Resolution
    	
 
    	
23
    
	
Section 11.02.
    	
Tax Sharing Agreements
    	
 
    	
23
    
	
Section 11.03.
    	
Interest on Late Payments
    	
 
    	
23
    
	
Section 11.04.
    	
Survival of Covenants
    	
 
    	
24
    
	
Section 11.05.
    	
Severability
    	
 
    	
24
    
	
Section 11.06.
    	
Entire Agreement
    	
 
    	
24
    
	
Section 11.07.
    	
No Third-Party Beneficiaries
    	
 
    	
24
    
	
Section 11.08.
    	
Specific Performance
    	
 
    	
24
    
	
Section 11.09.
    	
Amendment
    	
 
    	
24
    
	
Section 11.10.
    	
Rules of Construction
    	
 
    	
25
    
	
Section 11.11.
    	
Counterparts
    	
 
    	
25
    
	
Section 11.12.
    	
Coordination with Separation and Distribution   Agreement
    	
 
    	
25
    
	
Section 11.13.
    	
Coordination with the Employee Matters Agreement
    	
 
    	
25
    
	
Section 11.14.
    	
Governing Law
    	
 
    	
25
    
	
Section 11.15.
    	
Assignability
    	
 
    	
26
    
	
Section 11.16.
    	
Notices
    	
 
    	
26
    
	
Section 11.17.
    	
Effective Date
    	
 
    	
27
    

 

ii

 

DEFINED TERMS

 

	
 
    	
 
    	
Page
    
	
 
    	
 
    	
 
    
	
Accounting Firm
    	
 
    	
2, 23
    
	
Acquisition
    	
 
    	
1, 2
    
	
Acquisition Date
    	
 
    	
2
    
	
Acquisition Transaction
    	
 
    	
2
    
	
Adjustment
    	
 
    	
3
    
	
Agreement
    	
 
    	
1, 3
    
	
Ancillary Agreement
    	
 
    	
3
    
	
Benefited Party
    	
 
    	
3, 15
    
	
Cash Distribution
    	
 
    	
3
    
	
Code
    	
 
    	
3
    
	
Combined Tax Return
    	
 
    	
3
    
	
Contribution
    	
 
    	
3
    
	
Disqualifying Action
    	
 
    	
3
    
	
Distribution
    	
 
    	
1, 3
    
	
Distribution Date
    	
 
    	
3
    
	
Due Date
    	
 
    	
3
    
	
Effective Time
    	
 
    	
3
    
	
Employee Matters Agreement
    	
 
    	
3
    
	
Equity Securities
    	
 
    	
3
    
	
Fifty-Percent or Greater Interest
    	
 
    	
4
    
	
Final Determination
    	
 
    	
4
    
	
Healthtrust
    	
 
    	
1
    
	
Income Tax Return
    	
 
    	
4
    
	
Income Taxes
    	
 
    	
4
    
	
Indemnified Party
    	
 
    	
4
    
	
Indemnifying Party
    	
 
    	
4
    
	
Information
    	
 
    	
4, 22
    
	
Information Request
    	
 
    	
4, 22
    
	
IRS
    	
 
    	
4
    
	
Law
    	
 
    	
4
    
	
Non-Income Tax Return
    	
 
    	
4
    
	
Non-Income Taxes
    	
 
    	
5
    
	
Notified Action
    	
 
    	
5, 20
    
	
Ordinary Course of Business
    	
 
    	
5
    
	
Parties
    	
 
    	
1
    
	
Party
    	
 
    	
1, 5
    
	
Past Practice
    	
 
    	
5, 12
    
	
Person
    	
 
    	
5
    
	
Plan of Reorganization
    	
 
    	
5
    
	
Post-Distribution Ruling
    	
 
    	
5, 20
    
	
Post-Separation Period
    	
 
    	
5
    
	
Record Holders
    	
 
    	
5
    
	
Refund
    	
 
    	
5
    

 

iii

 

	
REIT
    	
 
    	
5
    
	
REIT Taxable Income
    	
 
    	
5
    
	
REIT Taxes
    	
 
    	
5
    
	
Representatives
    	
 
    	
5
    
	
Restriction Period
    	
 
    	
5
    
	
Restructuring
    	
 
    	
1, 6
    
	
Restructuring Transfer Taxes
    	
 
    	
6
    
	
Restructuring/Distribution Taxes
    	
 
    	
6
    
	
SAG
    	
 
    	
6
    
	
Section 336(e) Election
    	
 
    	
6, 21
    
	
Section 8.02(e) Acquisition Transaction
    	
 
    	
6
    
	
Separate Return
    	
 
    	
6
    
	
Separation and Distribution Agreement
    	
 
    	
1, 6
    
	
SpinCo
    	
 
    	
1, 6
    
	
SpinCo Active Trade or Business
    	
 
    	
6
    
	
SpinCo Assets
    	
 
    	
6
    
	
SpinCo Business
    	
 
    	
6
    
	
SpinCo Disqualifying Action
    	
 
    	
6
    
	
SpinCo Entity
    	
 
    	
7
    
	
SpinCo Group
    	
 
    	
7
    
	
SpinCo Income
    	
 
    	
7
    
	
SpinCo Liabilities
    	
 
    	
7
    
	
SpinCo REIT Distribution Indemnification Amount
    	
 
    	
7
    
	
SpinCo Separate Tax Return
    	
 
    	
7
    
	
SpinCo Shares
    	
 
    	
1
    
	
SpinCo Tax Proceeding
    	
 
    	
7, 16
    
	
SpinCo Taxes
    	
 
    	
7
    
	
Straddle Period
    	
 
    	
8
    
	
Subsidiary
    	
 
    	
8
    
	
Tax
    	
 
    	
8
    
	
Tax Attributes
    	
 
    	
8
    
	
Tax Counsel
    	
 
    	
8
    
	
Tax Item
    	
 
    	
8
    
	
Tax Matter
    	
 
    	
8, 22
    
	
Tax Opinion
    	
 
    	
8
    
	
Tax Opinion Documents
    	
 
    	
8, 17
    
	
Tax Package
    	
 
    	
8
    
	
Tax Proceeding
    	
 
    	
8
    
	
Tax Return
    	
 
    	
9
    
	
Tax-Free Status
    	
 
    	
9
    
	
Taxing Authority
    	
 
    	
9
    
	
Taxing Jurisdiction
    	
 
    	
9
    
	
Transactions
    	
 
    	
9
    
	
Transfer Taxes
    	
 
    	
9
    
	
Treasury Regulations
    	
 
    	
9
    
	
U.S.
    	
 
    	
9
    

 

iv

 

	
Unqualified Tax Opinion
    	
 
    	
9
    
	
UPREIT
    	
 
    	
1
    
	
Ventas
    	
 
    	
1, 9
    
	
Ventas Board
    	
 
    	
9
    
	
Ventas Business
    	
 
    	
9
    
	
Ventas Disqualifying Action
    	
 
    	
10
    
	
Ventas Entity
    	
 
    	
10
    
	
Ventas Group
    	
 
    	
10
    
	
Ventas Income
    	
 
    	
10
    
	
Ventas REIT Distribution Indemnification Amount
    	
 
    	
10
    
	
Ventas Separate Tax Return
    	
 
    	
10
    
	
Ventas Shares
    	
 
    	
1
    
	
Ventas Tax Proceeding
    	
 
    	
10, 16
    
	
Ventas Taxes
    	
 
    	
10
    
	
Waiver
    	
 
    	
11, 20
    

 

v

 

TAX MATTERS AGREEMENT

 

THIS TAX MATTERS AGREEMENT (this “Agreement”), dated as of August 17, 2015, is by and between Ventas, Inc., a Delaware corporation (“Ventas”), and Care Capital Properties, Inc., a Delaware corporation (“SpinCo”). Each of Ventas and SpinCo is sometimes referred to herein as a “Party” and, collectively, as the “Parties.”

 

RECITALS

 

WHEREAS, Ventas has elected to be classified as a REIT and SpinCo intends to elect to be classified as a REIT;

 

WHEREAS, Ventas, through its respective Subsidiaries, is engaged in the Ventas Business and the SpinCo Business;

 

WHEREAS, the Ventas Board has determined that it is in the best interests of Ventas and its stockholders to create a new publicly traded company which shall operate the SpinCo Business;

 

WHEREAS, Ventas and SpinCo have entered into the Separation and Distribution Agreement, dated as of August 17, 2015 (the “Separation and Distribution Agreement”), providing for the separation of the SpinCo Business from the Ventas Business, pursuant to which (a) Ventas will, and will cause its Subsidiaries to, transfer the SpinCo Assets and the SpinCo Liabilities to SpinCo and its Subsidiaries, as a result of which transfer SpinCo and its Subsidiaries will own, directly and through their respective Subsidiaries, the SpinCo Business (the “Restructuring”) and (b) Ventas will distribute all of the outstanding shares of common stock, par value $0.01 per share, of SpinCo (“SpinCo Shares”) owned by Ventas to the Record Holders of the issued and outstanding shares of common stock, par value $0.25 per share, of Ventas (“Ventas Shares”) on a pro rata basis (the “Distribution”);

 

WHEREAS, for U.S. federal Income Tax purposes, it is intended that the Contribution (as defined herein) and the Distribution, taken together, shall qualify as a tax-free transaction under Sections 355(a) and 368(a)(1)(D) of the Code;

 

WHEREAS, as a result of the acquisition (the “Acquisition”) by Care Capital Properties LP, a Delaware limited partnership and indirect wholly owned Subsidiary of SpinCo (“UPREIT”) of all the membership units of Healthtrust, L.L.C., a Florida limited liability company (“Healthtrust”), pursuant to the Unit Purchase Agreement, dated as of April 4, 2015, by and among Ventas, UPREIT, Healthtrust, and certain other Persons, SpinCo will cease to be a “qualified REIT subsidiary” of Ventas (within the meaning of Section 856(i)(2) of the Code) and instead will elect to be taxed as a REIT; and

 

WHEREAS, the Parties wish to (a) provide for the payment of Tax liabilities and entitlement to refunds thereof, (b) allocate responsibility for, and cooperation in, the filing of Tax Returns, and provide for certain other matters relating to Taxes, and (c) set forth certain covenants and indemnities relating to the preservation of the tax-free status of certain steps of the Restructuring and the Distribution.

 

 

NOW, THEREFORE, in consideration of the foregoing and the terms, conditions, covenants and provisions of this Agreement, each of the Parties mutually covenants and agrees as follows:

 

ARTICLE I

 

DEFINITIONS

 

Section 1.01.             General. As used in this Agreement, the following terms shall have the following meanings:

 

“Accounting Firm” has the meaning set forth in Section 11.01.

 

“Acquisition” has the meaning set forth in the Recitals.

 

“Acquisition Date” means the closing date of the Acquisition.

 

“Acquisition Transaction” means a transaction or series of transactions (or any agreement, understanding or arrangement, within the meaning of Section 355(e) of the Code and Treasury Regulations Section 1.355-7, or any other regulations promulgated thereunder, to enter into a transaction or series of transactions), whether such transaction is supported, permitted or solicited by management or shareholders of SpinCo, is a hostile acquisition, or otherwise, as a result of which such SpinCo would merge or consolidate with or enter into any other reorganization transaction with any other Person or as a result of which one or more Persons would (directly or indirectly) acquire, or have the right to acquire, from SpinCo and/or one or more holders of outstanding shares of Equity Securities of SpinCo, as the case may be, a number of shares of Equity Securities of SpinCo that would, when combined with any other changes in ownership of the Equity Securities of SpinCo pertinent for purposes of Section 355(e) of the Code, comprise a forty percent (40%) or greater interest in SpinCo (A) by value, as of the date of such transaction, or in the case of a series of transactions, the date of the last transaction of such series, or (B) by vote, as of the date of such transaction, or in the case of a series of transactions, the date of the last transaction of such series. Notwithstanding the foregoing, an Acquisition Transaction shall not include (A) the adoption by SpinCo of a shareholder rights plan or (B) issuances of Equity Securities by SpinCo that satisfy Safe Harbor VIII (relating to acquisitions in connection with a person’s performance of services) or Safe Harbor IX (relating to acquisitions by a retirement plan of an employer) of Treasury Regulations Section 1.355-7(d). For purposes of determining whether a transaction constitutes an indirect acquisition, any recapitalization resulting in a shift of voting power shall be treated as an indirect acquisition of shares of Equity Securities by the shareholders whose voting power is increased thereby and any redemption of shares of Equity Securities shall be treated as an indirect acquisition of shares of Equity Securities by the non-exchanging shareholders. For purposes of this definition, each reference to SpinCo shall include a reference to any entity treated as successor thereto. This definition and the application thereof is intended to monitor compliance with Section 355(e) of the Code and shall be interpreted accordingly. Any clarification of, or change in, the statute or regulations promulgated under Section 355(e) of the Code or published IRS guidance with respect thereto shall be incorporated in this definition and its interpretation.

 

2

 

“Adjustment” means any change in the Tax liability of a taxpayer, whether in connection with a Tax Proceeding, resulting from a change in facts or subsequent transactions, pursuant to amendment or otherwise, determined issue-by-issue, transaction-by-transaction, or with respect to a taxable period, as the case may be.

 

“Agreement” has the meaning set forth in the preamble.

 

“Ancillary Agreement” has the meaning set forth in the Separation and Distribution Agreement.

 

“Benefited Party” has the meaning set forth in Section 6.01(b).

 

“Cash Distribution” has the meaning set forth in the Separation and Distribution Agreement.

 

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

 

“Combined Tax Return” means a consolidated, combined, unitary, affiliated or similar Income Tax Return or Non-Income Tax Return that actually includes, by election or otherwise, one or more members of the Ventas Group together with one or more members of the SpinCo Group.

 

“Contribution” means the contribution and assignment by Ventas and certain of its Subsidiaries of certain SpinCo Assets and SpinCo Liabilities to SpinCo in exchange for SpinCo Shares and the proceeds of the Cash Distribution.

 

“Disqualifying Action” means a Ventas Disqualifying Action or a SpinCo Disqualifying Action.

 

“Distribution” has the meaning set forth in the Recitals.

 

“Distribution Date” has the meaning set forth in the Separation and Distribution Agreement.

 

“Due Date” means (i) with respect to a Tax Return, the date (taking into account all valid extensions) on which such Tax Return is required to be filed under applicable Law and (ii) with respect to a payment of Taxes, the date on which such payment is required to be made to avoid the incurrence of interest, penalties and/or additions to Tax.

 

“Effective Time” has the meaning set forth in the Separation and Distribution Agreement.

 

“Employee Matters Agreement” has the meaning set forth in the Separation and Distribution Agreement.

 

“Equity Securities” means, with respect to a Person, all classes or series of capital stock of such Person (or any entity treated as a successor to such Person) and all other instruments treated as stock in such Person (or any entity treated as a successor to such Person) for U.S.

 

3

 

federal Income Tax purposes, and including all options, warrants or any other rights to acquire such stock.

 

“Fifty-Percent or Greater Interest” has the meaning ascribed to such term for purposes of Sections 355(d) and (e) of the Code.

 

“Final Determination” means the final resolution of liability for any Tax or Tax Item, which resolution may be for a specific issue or adjustment or for a taxable period, by or as a result of (i) IRS Form 870 or 870-AD (or any successor forms thereto), on the date of acceptance by or on behalf of the taxpayer, or by a comparable form under the Laws of any Taxing Jurisdiction, except that an IRS Form 870 or 870-AD or comparable form shall not constitute a Final Determination to the extent that it reserves (whether by its terms or by operation of law) the right of the taxpayer to file a claim for Refund or the right of the Taxing Authority to assert a further deficiency in respect of such issue or adjustment or for such taxable period (as the case may be); (ii) a final decision, judgment, decree or other order by any court of competent jurisdiction that can no longer be appealed; (iii) a final settlement with the IRS, a closing agreement or accepted offer in compromise under Sections 7121 or 7122 of the Code, or a comparable agreement under the Laws of any Taxing Jurisdiction; (iv) any allowance of a Refund or credit in respect of an overpayment of Tax, but only after the expiration of all periods during which such Refund or credit may be recovered by the jurisdiction imposing the Tax; or (v) any other final resolution, including by reason of the expiration of the applicable statute of limitations, the execution of a pre-filing agreement with the IRS or other Taxing Authority or by mutual agreement of the Parties.

 

“Income Tax Return” means any Tax Return relating to Income Taxes.

 

“Income Taxes” means any Taxes measured by or calculated with respect to net income, profits, net receipts or gross receipts (including any margin Tax, REIT Taxes, capital Tax, excise Tax or franchise Tax), but excluding (i) any Transfer Taxes and (ii) those Taxes listed on Schedule 1.

 

“Indemnified Party” means the Party which is entitled to seek indemnification from another Party pursuant to the provisions of Article V.

 

“Indemnifying Party” means the Party from which another Party is entitled to seek indemnification pursuant to the provisions of Article V.

 

“Information” has the meaning set forth in Section 10.01.

 

“Information Request” has the meaning set forth in Section 10.01.

 

“IRS” means the U.S. Internal Revenue Service.

 

“Law” has the meaning set forth in the Separation and Distribution Agreement.

 

“Non-Income Tax Return” means any Tax Return relating to Taxes other than Income Taxes.

 

4

 

“Non-Income Taxes” means (i) any Taxes other than Income Taxes and (ii) for the avoidance of doubt, those Taxes listed on Schedule 1.

 

“Notified Action” has the meaning set forth in Section 8.03(a).

 

“Ordinary Course of Business” means an action taken by a Person only if such action is taken in the ordinary course of the normal day-to-day operations of such Person.

 

“Party” has the meaning set forth in the preamble.

 

“Past Practice” has the meaning set forth in Section 3.01(a).

 

“Person” has the meaning set forth in the Separation and Distribution Agreement.

 

“Plan of Reorganization” has the meaning set forth in the Separation and Distribution Agreement.

 

“Post-Distribution Ruling” has the meaning set forth in Section 8.02(d).

 

“Post-Separation Period” means any taxable period (or portion thereof) beginning on or after the Acquisition Date, including for the avoidance of doubt, the portion of any Straddle Period beginning on or after the Acquisition Date.

 

“Record Holders” has the meaning set forth in the Separation and Distribution Agreement.

 

“Refund” means any refund (or credit in lieu thereof) of Taxes (including any overpayment of Taxes that can be refunded or, alternatively, applied to other Taxes payable), including any interest paid on or with respect to such refund of Taxes; provided, however, that for purposes of this Agreement, the amount of any Refund required to be paid to another Party shall be reduced by the net amount of any Income Taxes imposed on, related to, or attributable to, the receipt or accrual of such Refund.

 

“REIT” means a real estate investment trust within the meaning of Section 856(a) of the Code.

 

“REIT Taxable Income” means “real estate investment trust taxable income” within the meaning of Section 857(b)(2) of the Code.

 

“REIT Taxes” means (i) any Taxes imposed as a result of the disqualification of Ventas or SpinCo, as the case may be, as a REIT, (ii) any Taxes imposed under Section 857(b)(5) of the Code, and (iii) any excise Taxes imposed under Section 4981 of the Code.

 

“Representatives” has the meaning set forth in the Separation and Distribution Agreement.

 

“Restriction Period” means the period beginning on the date hereof and ending on the twenty five (25) month anniversary of the Distribution Date.

 

5

 

“Restructuring” has the meaning set forth in the recitals and includes, for the avoidance of doubt, the Contribution and the Distribution.

 

“Restructuring/Distribution Taxes” means any Taxes imposed on, in connection with, or by reason of the Restructuring or the Distribution (including REIT Taxes but not including any Transfer Taxes), other than any such Taxes caused by a Disqualifying Action.

 

“Restructuring Transfer Taxes” means any Transfer Taxes imposed on, in connection with, or by reason of the Restructuring or the Distribution.

 

“SAG” has the meaning ascribed to the term “separate affiliated group” in Section 355(b)(3)(B) of the Code.

 

“Section 336(e) Election” has the meaning set forth in Section 8.04.

 

“Section 8.02(e) Acquisition Transaction” means any transaction or series of transactions that is not an Acquisition Transaction but would be an Acquisition Transaction if the percentage reflected in the definition of Acquisition Transaction were thirty percent (30%) instead of forty percent (40%).

 

“Separate Return” means (i) in the case of any Tax Return required to be filed by any member of the Ventas Group (including any consolidated, combined, unitary or similar Tax Return), any such Tax Return that does not include any member of the SpinCo Group and (ii) in the case of any Tax Return required to be filed by any member of the SpinCo Group (including any consolidated, combined, unitary or similar Tax Return), any such Tax Return that does not include any member of the Ventas Group.

 

“Separation and Distribution Agreement” has the meaning set forth in the recitals.

 

“SpinCo” has the meaning set forth in the preamble.

 

“SpinCo Active Trade or Business” means the trade or business actively conducted (within the meaning of Section 355(b) of the Code) by SpinCo (taking into account Section 355(b)(3) of the Code and Revenue Ruling 2007-42, 2007-2 C.B. 44) immediately prior to the Distribution and relied upon to satisfy the requirements of Section 355(b) of the Code with respect to the Distribution, as set forth in the Tax Opinion Documents.

 

“SpinCo Assets” has the meaning set forth in the Separation and Distribution Agreement.

 

“SpinCo Business” has the meaning set forth in the Separation and Distribution Agreement.

 

“SpinCo Disqualifying Action” means (i) any action (or the failure to take any action) by SpinCo or any SpinCo Entity (including entering into any agreement, understanding or arrangement or any negotiations or discussions with respect to any transaction or series of transactions) that, (ii) any acquisition of all or a portion, or any event (or series of events) involving, the Equity Securities of SpinCo, any assets of SpinCo or any Equity Securities or assets of any SpinCo Entity that, or (iii) any inaccuracy in or breach by SpinCo or any SpinCo

 

6

 

Entity of any of the representations, warranties or covenants of or made by SpinCo in this Agreement or in connection with the Tax Opinion (irrespective of whether Ventas made the same representation or warranty on behalf of, or with respect to, SpinCo or any SpinCo Entity), that, in each case, causes any of the Transactions to fail to have Tax-Free Status (regardless of whether a Post-Distribution Ruling, Unqualified Tax Opinion or Waiver may have been obtained or provided with respect to such action, event, inaccuracy or breach); provided, however, that the term “SpinCo Disqualifying Action” shall not include any action expressly contemplated by the Separation and Distribution Agreement or any Ancillary Agreement or that is undertaken pursuant to the Restructuring, the Distribution or the Plan of Reorganization.

 

“SpinCo Entity” means any member of the SpinCo Group other than SpinCo.

 

“SpinCo Group” means individually or collectively, as the case may be, (a) SpinCo and any of its Subsidiaries (including, for the avoidance of doubt, any such Subsidiary that is treated as a “disregarded entity” for U.S. federal Income Tax purposes (or for purposes of any state, local or foreign Tax law) immediately after the Effective Time (and giving effect to the Restructuring and the Distribution), (b) any Person that shall have merged or liquidated into SpinCo or any such Subsidiary and (c) any predecessor or successor to any Person otherwise described in this definition.

 

“SpinCo Income” means (i) any REIT Taxable Income attributable to, or arising with respect to, assets or activities of the SpinCo Business (excluding any REIT Taxable Income attributable to the Restructuring or the Distribution), (ii) any REIT Taxable Income attributable to a SpinCo Disqualifying Action and (iii) any REIT Taxable Income resulting from any inaccuracy in or breach by SpinCo or any SpinCo Entity of any of the representations, warranties or covenants of or made by SpinCo in this Agreement.

 

“SpinCo Liabilities” has the meaning set forth in the Separation and Distribution Agreement.

 

“SpinCo REIT Distribution Indemnification Amount” means any amount required to be distributed by Ventas pursuant to Section 857(a) of the Code in order for Ventas to maintain its status as a REIT for any taxable period as a result of any SpinCo Income required to be included in taxable income of Ventas for U.S. federal Income Tax purposes for such taxable period.

 

“SpinCo Separate Tax Return” means any Separate Return required to be filed by any member of the SpinCo Group.

 

“SpinCo Tax Proceeding” has the meaning set forth in Section 7.02(a).

 

“SpinCo Taxes” means, without duplication, (i) any Income Taxes of or imposed on any member of the SpinCo Group (including any Taxes reported on or otherwise imposed with respect to a Combined Tax Return), in each case, for any Post-Separation Period, attributable to, or arising with respect to, assets or activities of the SpinCo Business (excluding any Restructuring/Distribution Taxes or any Restructuring Transfer Taxes), whether imposed as a result of an Adjustment, amendment or otherwise, (ii) any Non-Income Taxes of or imposed on any member of the Ventas Group or any member of the SpinCo Group (including any Taxes reported on or otherwise imposed with respect to a Combined Tax Return), in each case, required

 

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to be paid in any Post-Separation Period, attributable to, or arising with respect to, assets or activities of the SpinCo Business (excluding any Restructuring/Distribution Taxes or any Restructuring Transfer Taxes), whether imposed as a result of an Adjustment or amendment or otherwise, (iii) any Restructuring Transfer Taxes resulting from an Adjustment or amendment and attributable to, or arising with respect to, assets or activities of the SpinCo Business, and (iv) any Taxes attributable to a SpinCo Disqualifying Action (including any REIT Taxes), whether imposed as a result of an Adjustment, amendment or otherwise; provided, that SpinCo Taxes shall not include any Taxes attributable to a Ventas Disqualifying Action.

 

“Straddle Period” means any taxable period beginning prior to the Acquisition Date and ending on or after the Acquisition Date.

 

“Subsidiary” has the meaning set forth in the Separation and Distribution Agreement.

 

“Tax” means (i) all taxes, charges, fees, duties, levies, imposts, or other similar assessments, imposed by any U.S. federal, state or local or foreign governmental authority, including, but not limited to (A) income, gross receipts, excise, property, sales, use, license, capital stock, transfer, franchise, margin, payroll, withholding, social security, value added and other taxes and (B) for the avoidance of doubt, those taxes listed on Schedule 1, (ii) any interest, penalties or additions attributable thereto and (iii) all liabilities in respect of any items described in clause (i) or (ii) payable by reason of assumption, transferee or successor liability, operation of Law or Treasury Regulations Section 1.1502-6(a) (or any predecessor or successor thereof or any analogous or similar provision under Law).

 

“Tax Attributes” means net operating losses, capital losses, credits, earnings and profits (including any REIT earning and profits), overall foreign losses, previously taxed income, separate limitation losses and all other Tax attributes.

 

“Tax Counsel” shall mean tax counsel of recognized national standing that is acceptable to Ventas.

 

“Tax Item” means any item of income, gain, loss, deduction, credit, recapture of credit or any other item that increases or decreases Taxes paid or payable.

 

“Tax Matter” has the meaning set forth in Section 10.01.

 

“Tax Opinion” shall mean the opinion issued by Tax Counsel to Ventas with respect to certain Tax aspects of the Contribution and the Distribution, as referenced in Section 3.3(a)(iii) of the Separation and Distribution Agreement.

 

“Tax Opinion Documents” has the meaning set forth in Section 8.01(a).

 

“Tax Package” means all relevant Tax-related information relating to the operations of the Ventas Business or the SpinCo Business, as applicable, that is reasonably necessary to prepare and file the applicable Tax Return.

 

“Tax Proceeding” means any audit, assessment of Taxes, pre-filing agreement, other examination by any Taxing Authority, proceeding, appeal of a proceeding or litigation relating to

 

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Taxes, whether administrative or judicial, including proceedings relating to competent authority determinations.

 

“Tax Return” means any return, report, certificate, form or similar statement or document (including any related or supporting information or schedule attached thereto and any information return, or declaration of estimated Tax) supplied to, filed with or required to be supplied to or filed with, a Taxing Authority in connection with the payment, determination, assessment or collection of any Tax or the administration of any Laws relating to any Tax and any amended Tax return or claim for refund.

 

“Tax-Free Status” means the qualification of the Contribution and the Distribution, taken together, (i) as a reorganization described in Sections 355(a) and 368(a)(1)(D) of the Code, (ii) as a transaction in which the stock distributed thereby is “qualified property” for purposes of Sections 355(d), 355(e) and 361(c) of the Code, and (iii) as a transaction in which Ventas, SpinCo and the shareholders of Ventas recognize no income or gain for U.S. federal Income Tax purposes pursuant to Sections 355, 361 and 1031 of the Code.

 

“Taxing Authority” means any governmental authority or any subdivision, agency, commission or entity thereof or any quasi-governmental or private body having jurisdiction over the assessment, determination, collection or imposition of any Tax (including the IRS).

 

“Taxing Jurisdiction” means the United States and every other government or governmental unit having jurisdiction to tax Ventas, SpinCo or any of their respective Affiliates.

 

“Transactions” means the transactions referred to in the definition of “Tax-Free Status.”

 

“Transfer Taxes” means all sales, use, transfer, real property transfer (whether such transfer is direct or indirect), intangible, recordation, registration, documentary, stamp or similar Taxes.

 

“Treasury Regulations” means the final and temporary (but not proposed) income Tax regulations promulgated under the Code, as such regulations may be amended from time to time (including corresponding provisions of succeeding regulations).

 

“U.S.” means the United States of America.

 

“Unqualified Tax Opinion” means a “will” opinion, without substantive qualifications, of a nationally recognized law firm, which law firm is reasonably acceptable to Ventas, to the effect that a transaction will not affect the conclusions set forth in the Tax Opinion.

 

“Ventas” has the meaning set forth in the preamble.

 

“Ventas Board” has the meaning set forth in the Separation and Distribution Agreement.

 

“Ventas Business” has the meaning set forth in the Separation and Distribution Agreement.

 

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“Ventas Disqualifying Action” means (i) any action (or the failure to take any action) by Ventas or any Ventas Entity (including entering into any agreement, understanding or arrangement or any negotiations or discussions with respect to any transaction or series of transactions) that, (ii) any acquisition of all or a portion, or any event (or series of events) involving, the Equity Securities of Ventas, any assets of Ventas or any Equity Securities or assets of any Ventas Entity that, or (iii) any inaccuracy in or breach by Ventas or any Ventas Entity of any of the representations, warranties or covenants of or made by Ventas in this Agreement or in connection with the Tax Opinion (other than, in each case, any representations and warranties made by Ventas on behalf of, or with respect to, SpinCo or any SpinCo Entity) that, in each case, causes any of the Transactions to fail to have Tax-Free Status; provided, however, that the term “Ventas Disqualifying Action” shall not include any action expressly contemplated by the Separation and Distribution Agreement or any Ancillary Agreement or that is undertaken pursuant to the Restructuring, the Distribution or the Plan of Reorganization.

 

“Ventas Entity” means any member of the Ventas Group other than Ventas.

 

“Ventas Group” means, individually or collectively, as the case may be, (a) Ventas and any of its Subsidiaries (including, for the avoidance of doubt, any such Subsidiary that is treated as a “disregarded entity” for U.S. federal Income Tax purposes (or for purposes of any state, local or foreign Tax law) immediately after the Effective Time (and giving effect to the Restructuring and the Distribution), (b) any Person that shall have merged or liquidated into Ventas or any such Subsidiary and (c) any predecessor or successor to any Person otherwise described in this definition.

 

“Ventas Income” means (i) any REIT Taxable Income attributable solely to, or arising solely with respect to, assets or activities of the Ventas Business (excluding any REIT Taxable Income attributable to the Restructuring or the Distribution), (ii) any REIT Taxable Income attributable to a Ventas Disqualifying Action and (iii) any REIT Taxable Income resulting from any inaccuracy in or breach by Ventas or any Ventas Entity of any of the representations, warranties or covenants of or made by Ventas in this Agreement.

 

“Ventas REIT Distribution Indemnification Amount” means any amount required to be distributed by SpinCo pursuant to Section 857(a) of the Code in order for SpinCo to maintain its status as a REIT for any taxable period as a result of any Ventas Income required to be included in the taxable income of SpinCo for U.S. federal Income Tax purposes for such taxable period.

 

“Ventas Separate Tax Return” means any Separate Return required to be filed by any member of the Ventas Group.

 

“Ventas Tax Proceeding” has the meaning set forth in Section 7.02(a).

 

“Ventas Taxes” means, without duplication, (i) any Taxes of or imposed on Ventas or any Ventas Entity (including any Taxes reported on or otherwise imposed with respect to a Combined Tax Return, but excluding any Restructuring/Distribution Taxes), whether imposed as a result of an Adjustment, amendment or otherwise, (ii) any Restructuring Transfer Taxes (A) due in connection with an originally-filed Tax Return that Ventas determines to be due or (B) attributable to, or arising with respect to, assets or activities of the Ventas Business (in the

 

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case of clause (B), whether imposed as a result of an Adjustment, amendment or otherwise), (iii) any Restructuring/Distribution Taxes, whether imposed as a result of an Adjustment, amendment or otherwise, and (iv) any Taxes attributable to a Ventas Disqualifying Action (including any REIT Taxes), whether imposed as a result of an Adjustment, amendment or otherwise; provided, that, notwithstanding anything in clauses (i) through (iv) to the contrary, Ventas Taxes shall not include any SpinCo Taxes (including, for the avoidance of doubt, any Taxes attributable to a SpinCo Disqualifying Action).

 

“Waiver” has the meaning set forth in Section 8.02(d).

 

Section 1.02.              Additional Definitions. Capitalized terms not defined in this Agreement shall have the meaning ascribed to them in the Separation and Distribution Agreement.

 

ARTICLE II

 

PREPARATION, FILING AND PAYMENT OF TAXES SHOWN DUE

ON TAX RETURNS

 

Section 2.01.               Combined Tax Returns. Ventas shall prepare and file (or cause to be prepared and filed) all Combined Tax Returns and shall pay (or cause to be paid) all Taxes shown to be due and payable on such Tax Returns; provided, that SpinCo shall reimburse Ventas for any such Taxes that are SpinCo Taxes.

 

Section 2.02.               Ventas Separate Tax Returns. Ventas shall prepare and file (or cause to be prepared and filed) all Ventas Separate Tax Returns and shall pay (or cause to be paid) all Taxes shown to be due and payable on such Tax Returns; provided, that SpinCo shall reimburse Ventas for any such Taxes that are SpinCo Taxes.

 

Section 2.03.               SpinCo Separate Tax Returns. SpinCo shall prepare and file (or cause to be prepared and filed) all SpinCo Separate Tax Returns and shall pay (or cause to be paid) all Taxes shown to be due and payable on such Tax Returns; provided, that Ventas shall reimburse SpinCo for any such Taxes that are Ventas Taxes.

 

Section 2.04.               Restructuring Transfer Tax Returns. Ventas shall prepare and file (or cause to be prepared and filed) all Tax Returns required to be filed with respect to Restructuring Transfer Taxes and Ventas shall pay (or cause to be paid) all Taxes shown to be due and payable on such Tax Returns; provided, that SpinCo shall reimburse Ventas for any such Taxes that are SpinCo Taxes.

 

ARTICLE III

 

TAX RETURN PROCEDURES

 

Section 3.01.               Procedures relating to Combined Tax Returns and Ventas Separate Tax Returns.

 

(a)                                 In connection with the preparation of any Combined Tax Return pursuant to Section 2.01 or any Ventas Separate Tax Return pursuant to Section 2.02 that may include Tax

 

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Items relating to the activities or assets of the SpinCo Business, SpinCo will (and will cause the SpinCo Entities to) assist and cooperate with Ventas by preparing and providing to Ventas such information and other documentation as may be requested by or necessary to enable Ventas, in such form as Ventas may reasonably request, to prepare such Combined Tax Return or Ventas Separate Tax Return, including, but not limited to, pro forma Tax Returns for SpinCo and any SpinCo Entity to be included in such Combined Tax Return or equivalent financial data to be used in the preparation of such Ventas Separate Tax Return, as applicable. Any such pro forma Tax Return or equivalent financial data shall be prepared in accordance with past practices, accounting methods, elections and conventions (“Past Practice”), unless otherwise required by Law or reasonably requested in writing by Ventas, and shall be delivered no later than sixty (60) days following Ventas’s request therefor. At its option, Ventas may engage an accounting firm of its choice to review the pro forma Tax Return or equivalent financial data, supporting documentation, and statements submitted by SpinCo and in connection therewith, shall determine whether such Tax Return was prepared in accordance with Past Practice. All costs and expenses associated with such review will be borne by SpinCo upon receipt of invoices detailing the work performed by such accounting firm.

 

(b)                                 Ventas (or its designee) shall determine the entities to be included in any Combined Tax Return and make or revoke any Tax elections, adopt or change any Tax accounting methods, and determine any other position taken on or in respect of any Combined Tax Return or Ventas Separate Tax Return. Notwithstanding the immediately preceding sentence, any Combined Tax Return or Ventas Separate Tax Return shall, to the extent relating to SpinCo, any SpinCo Entity or the activities or assets of the SpinCo Business, be prepared in good faith. Ventas shall deliver to SpinCo for its review a draft of any Combined Tax Return or Ventas Separate Tax Return, in each case, if such Tax Return reflects or relates to Taxes for which SpinCo would reasonably be expected to be liable hereunder, at least fifteen (15) days prior to the Due Date for such Tax Return to enable SpinCo to analyze and comment on such Tax Return (along with a statement setting forth the calculation of the Tax shown due and payable on such Tax Return reimbursable by SpinCo under Sections 2.01 or 2.02). Ventas shall in good faith consider any such reasonable comments received from SpinCo and Ventas and SpinCo shall attempt in good faith to resolve any issues arising out of the review of any such Tax Return; provided, however, that nothing herein shall prevent Ventas from timely filing (or causing to be filed) any such Tax Return.

 

Section 3.02.               Procedures relating to SpinCo Separate Tax Returns. In the case of any SpinCo Separate Tax Return that reflects or relates to Taxes for which Ventas would reasonably be expected to be liable hereunder, SpinCo shall (1) unless otherwise required by Law or agreed to in writing by Ventas, prepare (or cause to be prepared) such Tax Return in a manner consistent with Past Practice to the extent such items affect the Taxes for which Ventas may be responsible pursuant to this Agreement, and (2) submit to Ventas a draft of any such Tax Return (along with a statement setting forth the calculation of the Tax shown due and payable on such Tax Return reimbursable by Ventas under Section 2.03) at least fifteen (15) days prior to the Due Date for such Tax Return to enable Ventas to analyze and comment on such Tax Return. SpinCo shall reflect any such reasonable comments received from Ventas in good faith, to the extent such comments relate to Taxes for which Ventas would reasonably be expected to be liable hereunder.

 

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Section 3.03.               Preparation of all Tax Returns. Except as required by applicable Law or as a result of a Final Determination, (i) neither Ventas nor SpinCo shall (nor shall cause or permit any members of the Ventas Group or SpinCo Group, respectively, to) take any position that is either inconsistent with the Tax-Free Status (or analogous status under any state or local Law) or, with respect to a specific Tax Item on any Tax Return, treat such Tax Item in a manner that is inconsistent with the manner such Tax Item is reported on a Tax Return prepared or filed by Ventas pursuant to Article II hereof (including, without limitation, the claiming of a deduction previously claimed on any such Tax Return) and (ii) Ventas and SpinCo shall (and shall cause the members of the Ventas Group and SpinCo Group, respectively, to) prepare all Tax Returns in a manner consistent with the terms of this Agreement and the Separation and Distribution Agreement.

 

Section 3.04.               Tax Returns Reflecting Restructuring/Distribution Taxes. Notwithstanding anything to the contrary in Articles II, III and IV, the portion of any Tax Return that relates to any Restructuring/Distribution Taxes or any Taxes attributable to a Ventas Disqualifying Action shall be prepared by Ventas in the manner determined by Ventas in its sole discretion.

 

ARTICLE IV

 

TAX TIMING AND ALLOCATION

 

Section 4.01.               Timing of Payments. All Taxes required to be paid or caused to be paid pursuant to Article II by either Ventas or SpinCo, as the case may be, to an applicable Taxing Authority or to be reimbursed by Ventas or SpinCo to the other Party (or any member of its Group) pursuant to this Agreement, shall, in the case of a payment to a Taxing Authority, be paid on or before the Due Date for the payment of such Taxes and, in the case of a payment to the other Party, be paid at least two (2) business days before the Due Date for the payment of such Taxes by the other Party.

 

Section 4.02.               Expenses. Except as expressly provided herein (including, Section 3.01 and Section 11.01(b)), each Party shall bear its own expenses incurred in connection with Articles II, III and IV.

 

Section 4.03.               Apportionment of SpinCo Taxes. For all purposes of this Agreement, Ventas shall determine in its sole discretion exercised in good faith which Tax Items are properly attributable to assets or activities of the SpinCo Business (and in the case of a Tax Item that is properly attributable to both the SpinCo Business and the Ventas Business, the allocation of such Tax Item between the SpinCo Business and the Ventas Business).

 

ARTICLE V

 

INDEMNIFICATION

 

Section 5.01.               Indemnification by Ventas. Ventas shall pay, and shall indemnify and hold SpinCo and the SpinCo Entities harmless from and against, without duplication, (i) all Ventas Taxes, (ii) all Taxes (including any REIT Taxes) incurred by SpinCo or any SpinCo

 

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Entity as a result of any inaccuracy in or breach by Ventas or any Ventas Entity of any of the representations, warranties or covenants of or made by Ventas in this Agreement, (iii) the Ventas REIT Distribution Indemnification Amount for any taxable period, and (iv) any costs and expenses related to the foregoing (including reasonable fees of attorneys and experts and out-of-pocket expenses).

 

Section 5.02.               Indemnification by SpinCo. SpinCo shall pay, and shall indemnify and hold Ventas and the Ventas Entities harmless from and against, without duplication, (i) all SpinCo Taxes, (ii) all Taxes (including any REIT Taxes) incurred by Ventas or any Ventas Entity as a result of any inaccuracy in or breach by SpinCo or any SpinCo Entity of any of the representations, warranties or covenants of or made by SpinCo in this Agreement, (iii) the SpinCo REIT Distribution Indemnification Amount for any taxable period, and (vi) any costs and expenses related to the foregoing (including reasonable fees of attorneys and experts and out-of-pocket expenses).

 

Section 5.03.               Characterization of and Adjustments to Payments.

 

(a)                                 For all Tax purposes, the Parties agree to treat (and to cause their respective Affiliates to treat) (i) any payment required by this Agreement (other than payments with respect to interest accruing after the Acquisition Date) as either a contribution by Ventas to SpinCo or a distribution by SpinCo to Ventas, as the case may be, occurring immediately prior to the Acquisition or as a payment of an assumed or retained Liability and (ii) any payment of non-federal Taxes by or to a Taxing Authority or any payment of interest as taxable or deductible, as the case may be, to the Party entitled under this Agreement to retain such payment or required under this Agreement to make such payment, in each case, except as otherwise required by applicable Law.

 

(b)                                 Any indemnification payment under this Article V and under Article IV of the Separation and Distribution Agreement shall be increased to take into account any inclusion in income of the Indemnified Party arising from the receipt of such indemnity payment (including any additional REIT Taxes or additional amount required to be distributed under Section 857(a) of the Code resulting therefrom) and shall be decreased to take into account any reduction in income of the Indemnified Party arising from such indemnified Liability (including any reduction in REIT Taxes or reduction in the amount required to be distributed under Section 857(a) of the Code resulting therefrom). For purposes hereof, any adjustment to an indemnification payment on account of Taxes (or REIT Taxes) shall be determined (i) using the highest marginal rates in effect for Ventas, in the case of an Indemnified Party that is a member of the Ventas Group, or for SpinCo, in the case of an Indemnified Party that is a member of the SpinCo Group, at the time of the determination and (ii) assuming that the Indemnified Party will be liable for Taxes at such rate and has no Tax Attributes at the time of the determination.

 

Section 5.04.               Timing of Indemnification Payments. Indemnification payments required pursuant to this Article V shall be paid by the Indemnifying Party to the Indemnified Party within ten (10) business days of the receipt by the Indemnifying Party of notification of the amount owed, together with reasonable documentation showing (i) the basis for the calculation of such amount and (ii) if the Indemnified Party has already paid such amount to the relevant Taxing Authority or other recipient, evidence of such payment.

 

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Section 5.05.               Certain Tax Procedures. For the avoidance of doubt, Section 4.11 of the Separation and Distribution Agreement shall apply with respect to any indemnification payments required to be made pursuant to this Agreement.

 

ARTICLE VI

 

REFUNDS, DEDUCTIONS

 

Section 6.01.               Refunds.

 

(a)                                 Ventas shall be entitled to all Refunds of Taxes for which Ventas is responsible pursuant to Article II or for which Ventas is or may be liable pursuant to Article V, and SpinCo shall be entitled to all Refunds of Taxes for which SpinCo is responsible pursuant to Article II or for which SpinCo is or may be liable pursuant to Article V. A Party receiving a Refund to which the other Party is entitled pursuant to this Agreement shall pay the amount to which such other Party is entitled within ten (10) days after the receipt of the Refund.

 

(b)                                 In the event of an Adjustment relating to Taxes for which one Party is responsible pursuant to Article II or is or may be liable pursuant to Article V which would have given rise to a Refund but for an offset against the Taxes for which the other Party is or may be liable pursuant to Article V (the “Benefited Party”), then the Benefited Party shall pay to the other Party, within ten (10) days of the Final Determination of such Adjustment an amount equal to the lesser of (i) the amount of such hypothetical Refund or (ii) the amount of such reduction in the Taxes of the Benefited Party, in each case plus interest at the rate set forth in Section 6621(a)(1) of the Code on such amount for the period from the filing date of the Tax Return that would have given rise to such Refund to the payment date. For purposes of this Section 6.01(b), a decrease in REIT Taxable Income shall be considered a reduction in Taxes of a Benefited Party, and an increase in REIT Taxable Income shall be considered Taxes for which a party is or may be liable.

 

(c)                                  Notwithstanding Section 6.01(a), to the extent that a Party applies or causes to be applied an overpayment of Taxes as a credit toward or a reduction in Taxes otherwise payable (or a Taxing Authority requires such application in lieu of a Refund) and such overpayment of Taxes, if received as a Refund, would have been payable by such Party to the other Party pursuant to this Section 6.01, such Party shall pay such amount to the other Party no later than the Due Date of the Tax Return for which such overpayment is applied to reduce Taxes otherwise payable.

 

(d)                                 To the extent that the amount of any Refund under this Section 6.01 is later reduced by a Taxing Authority or a Tax Proceeding, such reduction shall be allocated to the Party to which such Refund was allocated pursuant to this Section 6.01 and an appropriate adjusting payment shall be made.

 

Section 6.02.               Treatment of Deductions Associated with Equity-Related Compensation. The treatment of Tax deductions associated with equity-related compensation shall be governed by Section 5.3 of the Employee Matters Agreement.

 

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ARTICLE VII

 

TAX PROCEEDINGS

 

Section 7.01.               Notification of Tax Proceedings. Within thirty (30) days after an Indemnified Party becomes aware of the commencement of a Tax Proceeding that may give rise to Taxes for which an Indemnifying Party is responsible pursuant to Article V, such Indemnified Party shall notify the Indemnifying Party of such Tax Proceeding, and thereafter shall promptly forward or make available to the Indemnifying Party copies of notices and communications relating to such Tax Proceeding. The failure of the Indemnified Party to notify the Indemnifying Party of the commencement of any such Tax Proceeding within such thirty (30)-day period or promptly forward any further notices or communications shall not relieve the Indemnifying Party of any obligation which it may have to the Indemnified Party under this Agreement except to the extent that the Indemnifying Party is actually prejudiced by such failure.

 

Section 7.02.               Tax Proceedings.

 

(a)                                 Generally. Except as provided in Section 7.02(c)(i), Ventas (or such member of the Ventas Group as Ventas shall designate) shall have the sole right to control, and to represent the interests of the members of the Ventas Group and the members of the SpinCo Group and to employ counsel of its choice at its expense in, any Tax Proceeding (including any Tax Proceeding with respect to Restructuring/Distribution Taxes) relating to (i) any Combined Tax Return, (ii) any Ventas Separate Tax Return, (iii) any Restructuring/Distribution Taxes, or (iv) any Non-Income Taxes that are both SpinCo Taxes and Ventas Taxes (each, a “Ventas Tax Proceeding”). Except as provided in Section 7.02(c)(ii), SpinCo (or such member of the SpinCo Group as SpinCo shall designate) shall have the sole right to control, and to represent the interests of the members of the SpinCo Group and to employ counsel of its choice at its expense in, (i) any Tax Proceeding relating to any SpinCo Separate Tax Return and (ii) any Non-Income Taxes or Restructuring Transfer Taxes that are attributable to, or arise with respect to, assets or activities of the SpinCo Business, in each case, other than a Ventas Proceeding (a “SpinCo Tax Proceeding”).

 

(b)                                 Power of Attorney. SpinCo shall (and shall cause the members of the SpinCo Group to) execute and deliver to Ventas (or such member of the Ventas Group as Ventas shall designate) any power of attorney or other document reasonably requested by Ventas (or such designee) in connection with any Ventas Tax Proceeding.

 

(c)                                  Participation Rights.

 

(i)                                     Ventas Tax Proceedings. In the event of any Ventas Tax Proceeding the resolution of which could reasonably be expected to give rise to an indemnification obligation of SpinCo pursuant to Article V, (A) Ventas shall consult with SpinCo reasonably in advance of taking any significant action in connection with such Tax Proceeding, (B) Ventas shall consult with SpinCo and offer SpinCo a reasonable opportunity to comment before submitting any written materials prepared or furnished in connection with such Tax Proceeding, (C) Ventas shall defend such Tax Proceeding diligently and in good faith as if it were the only party in interest in connection with such Tax Proceeding, and (D) Ventas shall provide SpinCo copies of any

 

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written materials relating to such Tax Proceeding received from the relevant Taxing Authority. Notwithstanding anything in the preceding sentence to the contrary, the final determination of the positions taken, including with respect to settlement or other disposition, in any Ventas Tax Proceeding shall be made in the sole discretion of Ventas and shall be final and not subject to the dispute resolution provisions of Section 11.01 (or Article VII of the Separation and Distribution Agreement).

 

(ii)                                  SpinCo Tax Proceedings. In the event of any SpinCo Tax Proceeding the resolution of which could reasonably be expected to give rise to an indemnification obligation of Ventas pursuant to Article V or which otherwise could reasonably be expected to have a significant adverse impact on Ventas, (A) SpinCo shall consult with Ventas reasonably in advance of taking any significant action in connection with such Tax Proceeding, (B) SpinCo shall consult with Ventas and offer Ventas a reasonable opportunity to comment before submitting any written materials prepared or furnished in connection with such Tax Proceeding, (C) SpinCo shall defend such Tax Proceeding diligently and in good faith as if it were the only party in interest in connection with such Tax Proceeding, (D) SpinCo shall provide Ventas copies of any written materials relating to such Tax Proceeding received from the relevant Taxing Authority, (E) Ventas shall be entitled to participate in such Tax Proceeding at its own expense and (F) SpinCo shall not settle, compromise or abandon any such Tax Proceeding without obtaining the prior written consent of Ventas, which consent shall not be unreasonably withheld, conditioned or delayed.

 

ARTICLE VIII

 

TAX-FREE STATUS OF THE DISTRIBUTION

 

Section 8.01.               Representations and Warranties.

 

(a)                                 SpinCo.

 

(i)                                     SpinCo hereby represents and warrants that (i) it has examined (A) the representation letter by and or on behalf of Ventas and SpinCo addressed to Tax Counsel and delivered in connection with the Tax Opinion and (B) any other information, documents or other materials delivered or deliverable by Ventas or SpinCo in connection with the Tax Opinion (all of the foregoing, collectively, the “Tax Opinion Documents”) and (ii) the facts presented and the representations made in the Tax Opinion Documents, to the extent descriptive of or in reference to the SpinCo Group or the SpinCo Business (including with respect to the plans, proposals, intentions and policies of the SpinCo Group), are true, correct and complete in all respects.

 

(ii)                                  SpinCo hereby represents and warrants that during the two (2)-year period ending on the Distribution Date, there was no “agreement,” “understanding,” “arrangement,” “substantial negotiations” or “discussions” (as such terms are defined in Treasury Regulations Section 1.355-7(h)) by any one or more officers or directors of any member of the SpinCo Group or by any other person or persons with the implicit or explicit permission of one or more of such officers or directors regarding an acquisition of all or a significant portion of the Equity Securities of SpinCo (or any predecessor); provided, that no representation or warranty is made by SpinCo regarding any “agreement,” “understanding,” “arrangement,” “substantial

 

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negotiations” or “discussions” (as such terms are defined in Treasury Regulations Section 1.355-7(h)) by one or more officers or directors of Ventas.

 

(b)                                 Ventas. Ventas hereby represents and warrants that (i) it has delivered complete and accurate copies of the Tax Opinion Documents to SpinCo and (ii) the facts presented and the representations made in the Tax Opinion Documents, to the extent descriptive of or in reference to the Ventas Group or the Ventas Business (including with respect to the business purposes for the Distribution described in the Tax Opinion Documents and the plans, proposals, intentions and policies of the Ventas Group), are true, correct and complete in all respects.

 

(c)                                  No Contrary Plan. Each of Ventas and SpinCo represents and warrants that neither it, nor any of its Affiliates, has any plan or intention to take any action (or fail to take any action) or knows of any fact or circumstance (after due inquiry) (A) which is inconsistent with any statements or representations made in the Tax Opinion Documents, this Agreement or the Separation and Distribution Agreement (or that could cause any such statements or representations to be untrue) or (B) which may cause any of the Transactions not to have Tax-Free Status.

 

Section 8.02.               Restrictions Relating to the Distribution.

 

(a)                                 General. SpinCo shall not, and shall not permit any SpinCo Entity to, take any action that constitutes (and shall not fail to take an action, the omission of which would result in) a Disqualifying Action described in the definition of SpinCo Disqualifying Action.

 

(b)                                 SpinCo Obligations. SpinCo shall not take any action (including, but not limited to, any cessation, transfer or disposition of all or any portion of any SpinCo Business, payment of extraordinary dividends and acquisitions or issuance of Equity Securities) or permit any member of the SpinCo Group to take any such action, and SpinCo shall not fail to take any such action or permit any SpinCo Entity to fail to take any such action, in each case, unless such action or failure to act (x) could not reasonably be expected to cause any of the Transactions to fail to have Tax-Free Status or (y) could not require Ventas or SpinCo to reflect a liability or reserve for Taxes or other amounts with respect to the Transactions in its financial statements.

 

(c)                                  SpinCo Restrictions. Prior to the first (1st) day after the end of the Restriction Period, SpinCo:

 

(i)                                     (x) shall continue and cause to be continued the active conduct (within the meaning of Section 355(b) of the Code) of the SpinCo Active Trade or Business as conducted immediately prior to the Distribution, taking into account Section 355(b)(3) of the Code and Revenue Ruling 2007-42, 2007-2 C.B. 44, and (y) shall not engage (or permit any SpinCo Entity to engage) in any transaction (including, without limitation, any cessation, transfer or disposition of all or any portion of any SpinCo Business) that could reasonably be expected to result in SpinCo ceasing to be a company engaged in the SpinCo Active Trade or Business.

 

(ii)                                  shall not, and shall not permit any SpinCo Entity (other than any SpinCo Entity treated as an entity disregarded as separate from its owner for U.S. federal Income Tax

 

18

 

purposes) to, voluntarily dissolve or liquidate (or take any other action or enter into any transaction that would effect a liquidation for U.S. federal Income Tax purposes).

 

(iii)                               shall not (1) enter into, solicit, agree to, participate in, approve or effect any Acquisition Transaction or, to the extent SpinCo has the right to prohibit any Acquisition Transaction, permit any Acquisition Transaction to occur, (2) redeem or otherwise repurchase or agree to redeem or otherwise repurchase (directly or through an Affiliate) any Equity Securities of SpinCo except to the extent such repurchases satisfy Section 4.05(1)(b) of Revenue Procedure 96-30 (as in effect prior to the amendment of such Revenue Procedure by Revenue Procedure 2003-48), (3) amend its certificate of incorporation (or other organizational documents), or take any other action, whether through a stockholder vote or otherwise, affecting the relative voting rights of its Equity Securities (including through the conversion of any Equity Securities into another class of Equity Securities), (4) merge or consolidate (or agree to merge or consolidate) with any other Person and shall not permit any SpinCo Entity to merge or consolidate (or agree to merger or consolidate) with any other Person (other than SpinCo or a SpinCo Entity) or (5) take any other action or actions (including any action or transaction that would be reasonably likely to be inconsistent with any statement or representation made in the Tax Opinion Documents) which, individually or in the aggregate (and taking into account any other transactions described in this Section 8.02(c)(iii)) would be reasonably likely to have the effect of causing or permitting one or more Persons (whether or not acting in concert) to acquire, directly or indirectly, Equity Securities representing a Fifty-Percent or Greater Interest in SpinCo or otherwise jeopardize the Tax-Free Status of any of the Transactions. In addition, SpinCo shall not at any time, whether before or subsequent to the expiration of the Restriction Period, engage in any action described in the immediately preceding sentence if it is pursuant to an agreement negotiated (in whole or in part) prior to the second (2nd) anniversary of the Distribution, even if at the time of the Distribution or thereafter such action is subject to various conditions.

 

(iv)                              shall not, and shall not permit any SpinCo Entity to, (x) sell, transfer, or otherwise dispose of or agree to, sell, transfer or otherwise dispose (including in any transaction treated for U.S. federal Income Tax purposes as a sale, transfer or disposition) of assets (including, any shares of Equity Securities of a Subsidiary) that, in the aggregate, constitute more than thirty percent (30%) of the gross assets of SpinCo or more than thirty percent (30%) of the consolidated gross assets of SpinCo and the members of its SAG or (y) sell, transfer, or otherwise dispose of or agree to, sell, transfer or otherwise dispose (including in any transaction treated for U.S. federal Income Tax purposes as a sale, transfer or disposition) or otherwise terminate the business conducted by Healthtrust. The foregoing sentence shall not apply to (A) sales, transfers, or dispositions of assets in the Ordinary Course of Business, (B) any cash paid to acquire assets from an unrelated Person in an arm’s-length transaction, (C) any assets transferred to a Person that is disregarded as an entity separate from the transferor for U.S. federal Income Tax purposes or (D) any mandatory or optional repayment (or pre-payment) of any indebtedness of SpinCo (or any member of its SAG). The percentages of gross assets of SpinCo or of the consolidated gross assets SpinCo and the members of its SAG, as the case may be, sold, transferred, or otherwise disposed of, shall be based on the fair market value of the gross assets of such entity or entities as of the Distribution Date. For purposes of this Section 8.02(c)(iv), a merger of SpinCo (or a member of its SAG) with and into any Person shall constitute a disposition of all of the assets of such entity or such member.

 

19

 

(d)                                 Notwithstanding the restrictions imposed by Section 8.02(c), during the Restriction Period, SpinCo may proceed with any of the actions or transactions described in Section 8.02(c), if (x) such action or transaction is not described in Section 8.02(a) or Section 8.02(b) and (y) prior to entering into any agreement contemplating such action or transaction, and prior to taking or consummating any such action or transaction, (i) SpinCo shall first have requested Ventas to obtain a private letter ruling from the IRS (and any other relevant Taxing Authority) (a “Post-Distribution Ruling”) in accordance with Section 8.03 of this Agreement to the effect that such action or transaction will not affect the Tax-Free Status of any of the Transactions and Ventas shall have received such Post-Distribution Ruling in form and substance satisfactory to Ventas in its sole and absolute discretion, (ii) SpinCo shall have provided Ventas with an Unqualified Tax Opinion in form and substance satisfactory to Ventas in its sole and absolute discretion, or (iii) Ventas shall have waived in writing (a “Waiver”) the requirement to obtain such Post-Distribution Ruling or Unqualified Tax Opinion. In determining whether a Post-Distribution Ruling or Unqualified Tax Opinion is satisfactory, Ventas shall exercise its discretion in good faith and may consider, among other factors, the appropriateness of any underlying assumptions or representations used as a basis for the Post-Distribution Ruling or Unqualified Tax Opinion and the views on the substantive merits. For the avoidance of doubt, SpinCo shall not be relieved of any indemnification obligation pursuant to Article V or otherwise under this Agreement as a result of having satisfied the requirements of clauses (i), (ii) or (iii) of this Section 8.02(d).

 

(e)                                  Certain Issuances of Capital Stock. If SpinCo proposes to enter into any Section 8.02(e) Acquisition Transaction or, to the extent SpinCo has the right to prohibit any Section 8.02(e) Acquisition Transaction, proposes to permit any Section 8.02(e) Acquisition Transaction to occur, in each case, during the Restriction Period, SpinCo, shall provide Ventas, no later than ten (10) days following the signing of any written agreement with respect to any Section 8.02(e) Acquisition Transaction, with a written description of such transaction (including the type and amount of SpinCo Equity Securities to be issued in such transaction).

 

(f)                                   Tax Reporting. Each of SpinCo and Ventas covenants and agrees that it will not take, and will cause its respective Affiliates not to take, any position on any Tax Return that is inconsistent with the Tax-Free Status of the Transactions.

 

Section 8.03.               Procedures Regarding Post-Distribution Rulings and Unqualified Tax Opinions.

 

(a)                                 Notification. If SpinCo determines that it desires to take one of the actions described in Sections 8.02(c) (a “Notified Action”), SpinCo shall promptly notify Ventas of this fact in writing.

 

(b)                                 Post-Distribution Rulings or Unqualified Tax Opinions at SpinCo’s Request. Upon the reasonable request of SpinCo pursuant to Section 8.03(a), Ventas shall cooperate with SpinCo and use its commercially reasonable efforts to seek to obtain, as expeditiously as possible, a Post-Distribution Ruling or an Unqualified Tax Opinion for the purpose of permitting SpinCo to take the Notified Action unless Ventas shall have waived the requirement to obtain such Post-Distribution Ruling or Unqualified Tax Opinion in writing pursuant to Section 8.02(d). Notwithstanding the foregoing, in no event shall Ventas be required to file or cooperate in the

 

20

 

filing of any ruling request for a Post-Distribution Ruling under this Section 8.03(b) unless Spinco represents that (i) it has read such ruling request, and (ii) all statements, information and representations relating to any member of the SpinCo Group contained in such ruling request are (subject to any qualifications therein) true, correct and complete. SpinCo shall reimburse Ventas for all reasonable costs and expenses incurred by the Ventas Group in obtaining a Post-Distribution Ruling or Unqualified Tax Opinion requested by Ventas within ten (10) days after receiving an invoice from Ventas therefor.

 

(c)                                  Post-Distribution Rulings or Unqualified Tax Opinions at Ventas’s Request. Ventas shall have the right to obtain a Post-Distribution Ruling or a tax opinion at any time in its sole and absolute discretion. If Ventas determines to obtain a Post-Distribution Ruling or a tax opinion, SpinCo shall (and shall cause each SpinCo Entity to) cooperate with Ventas and use commercial reasonably efforts to take any and all actions reasonably requested by Ventas in connection with obtaining such Post-Distribution Ruling or tax opinion (including, without limitation, by making any representation or covenant or providing any information, documents and materials requested by the IRS, any other relevant Taxing Authority or the Tax Counsel issuing such opinion); provided, that SpinCo shall not be required to make (or cause a SpinCo Entity to make) any representation or covenant that is inconsistent with historical facts or as to future matters or events over which it has no control. Ventas and SpinCo shall each bear its own costs and expenses in obtaining a Post-Distribution Ruling or tax opinion requested by Ventas.

 

(d)                                 All Post-Distribution Rulings. Ventas shall have sole and exclusive control over the process of obtaining any Post-Distribution Ruling, and only Ventas shall be permitted to apply for a Post-Distribution Ruling. In connection with obtaining a Post-Distribution Ruling, (i) Ventas shall keep SpinCo informed in a timely manner of all material actions taken or proposed to be taken by Ventas in connection therewith; (ii) Ventas shall (1) reasonably in advance of the submission of any request for a Post-Distribution Ruling provide SpinCo with a draft copy thereof; (2) reasonably consider SpinCo’s comments on such draft copy; and (3) provide SpinCo with a final copy; and (iii) Ventas shall provide SpinCo with notice reasonably in advance of, and SpinCo shall have the right to attend, any formally scheduled meetings with the IRS (subject to the approval of the IRS) that relate to such Post-Distribution Ruling. Neither SpinCo nor any SpinCo Entity shall seek any guidance from the IRS or any other Taxing Authority (whether written, verbal or otherwise) at any time concerning the Restructuring or the Distribution (including the impact of any transaction on the Restructuring or the Distribution) without Ventas’s prior written consent.

 

Section 8.04.               Section 336(e) Election. If Ventas determines, in its sole discretion, that a protective election under Section 336(e) of the Code (a “Section 336(e) Election”) shall be made with respect to the Distribution, SpinCo shall (or shall cause the relevant SpinCo Entity to) join with Ventas or the relevant Ventas Entity in the making of such election and shall take any action reasonably requested by Ventas or that is otherwise necessary to give effect to such election (including making any other related election). If a Section 336(e) Election is made with respect to the Distribution, then this Agreement shall be amended in such a manner as is determined by Ventas in good faith to take into account such Section 336(e) Election (including by requiring that, in the event the Transactions fail to have Tax-Free Status and Ventas is not entitled to indemnification for any Taxes (including REIT Taxes) or Losses arising from such failure, SpinCo shall pay over to Ventas any refund, credit, or other reduction in otherwise

 

21

 

required Tax payments realized by the SpinCo Group or any member of the SpinCo Group arising from the step-up in Tax basis resulting from the Section 336(e) Election).

 

ARTICLE IX

[Reserved]

 

ARTICLE X

COOPERATION

 

Section 10.01. General Cooperation.

 

(a)                                 The Parties shall each cooperate fully (and each shall cause its respective Subsidiaries to cooperate fully) with all reasonable requests in writing (“Information Request”) from the other Party hereto, or from an agent or Representative of such Party, in connection with the preparation and filing of Tax Returns (including the preparation of Tax Packages), claims for Refunds, Tax Proceedings, and calculations of amounts required to be paid pursuant to this Agreement, in each case, related or attributable to or arising in connection with Taxes of any of the Parties or their respective Subsidiaries covered by this Agreement and the establishment of any reserve required in connection with any financial reporting (a “Tax Matter”). Such cooperation shall include the provision of any information reasonably necessary or helpful in connection with a Tax Matter (“Information”) and shall include, without limitation, at each Party’s own cost:

 

(i)                                     the provision of any Tax Returns of the Parties and their respective Subsidiaries, books, records (including information regarding ownership, Tax basis of property, and earnings and profits), documentation and other information relating to such Tax Returns, including accompanying schedules, related work papers, and documents relating to rulings or other determinations by Taxing Authorities;

 

(ii)                                  the execution of any document (including any power of attorney) in connection with any Tax Proceedings of any of the Parties or their respective Subsidiaries, or the filing of a Tax Return or a Refund claim of the Parties or any of their respective Subsidiaries;

 

(iii)                               the use of the Party’s reasonable best efforts to obtain any documentation in connection with a Tax Matter; and

 

(iv)                              the use of the Party’s reasonable best efforts to obtain any Tax Returns (including accompanying schedules, related work papers, and documents), documents, books, records or other information in connection with the filing of any Tax Returns of any of the Parties or their Subsidiaries.

 

(b)                                 Each Party shall make its employees, advisors, and facilities available, without charge, on a reasonable and mutually convenient basis in connection with the foregoing matters.

 

Section 10.02. Retention of Records. Ventas and SpinCo shall retain or cause to be retained all Tax Returns, schedules and work papers, and all material records or other documents relating thereto in their possession, until sixty (60) days after the expiration of the applicable statute of limitations (including any waivers or extensions thereof) of the taxable periods to

 

22

 

which such Tax Returns and other documents relate or until the expiration of any additional period that any Party reasonably requests, in writing, with respect to specific material records or documents. A Party intending to destroy any material records or documents shall provide the other Party with reasonable advance notice and the opportunity to copy or take possession of such records and documents. The Parties hereto will notify each other in writing of any waivers or extensions of the applicable statute of limitations that may affect the period for which the foregoing records or other documents must be retained.

 

ARTICLE XI

 

MISCELLANEOUS

 

Section 11.01. Dispute Resolution. In the event of any dispute between the Parties as to any matter covered by this Agreement, the Parties shall cooperate in good faith to resolve such dispute. If the Parties cannot resolve such dispute within thirty (30) days from the time such dispute arises, the Parties shall appoint a nationally recognized independent accounting firm (other than the current auditing firm of Ventas or SpinCo) (the “Accounting Firm”) to resolve such dispute. The Parties shall cooperate in good faith in jointly selecting the Accounting Firm. The Accounting Firm shall make determinations with respect to the disputed items based solely on representations made by Ventas and SpinCo and their respective Representatives, and not by independent review, and shall function only as an expert and not as an arbitrator and shall be required to make a determination in favor of one Party only. The Parties shall require the Accounting Firm to resolve all disputes no later than fifteen (15) days after the submission of such dispute to the Accounting Firm, but in no event later than the Due Date for the payment of Taxes or the filing of the applicable Tax Return, if applicable, and agree that all decisions by the Accounting Firm with respect thereto shall be final and conclusive and binding on the Parties. The Accounting Firm shall resolve all disputes in a manner consistent with this Agreement and, to the extent not inconsistent with this Agreement, in a manner consistent with the Past Practices of Ventas and the members of the Ventas Group, except as otherwise required by applicable Law. The Parties shall require the Accounting Firm to render all determinations in writing and to set forth, in reasonable detail, the basis for such determination. The fees and expenses of the Accounting Firm shall be paid by the non-prevailing Party.

 

Section 11.02. Tax Sharing Agreements. All Tax sharing, indemnification and similar agreements, written or unwritten, as between Ventas or a Ventas Entity, on the one hand, and SpinCo or a SpinCo Entity, on the other hand (other than this Agreement, the Separation and Distribution Agreement, any other Ancillary Agreement and any agreement entered into after the Distribution), shall be or shall have been terminated no later than the Effective Time and, after the Effective Time, none of Ventas, any Ventas Entity, SpinCo or any SpinCo Entity shall have any further rights or obligations under any such Tax sharing, indemnification or similar agreement.

 

Section 11.03. Interest on Late Payments. With respect to any payment between the Parties pursuant to this Agreement not made by the due date set forth in this Agreement for such payment, the outstanding amount will accrue interest at a rate per annum equal to the rate in effect for underpayments under Section 6621 of the Code from such due date to and including

 

23

 

the earlier of the ninetieth (90th) day or the payment date, and thereafter will accrue interest at a rate per annum equal to Prime Rate plus 2%.

 

Section 11.04. Survival of Covenants. Except as otherwise contemplated by this Agreement, all covenants and agreements of the Parties contained in this Agreement shall survive the Effective Time and remain in full force and effect in accordance with their applicable terms; provided, however, that the representations and warranties and all indemnification for Taxes shall survive until sixty (60) days following the expiration of the applicable statute of limitations (taking into account all extensions thereof), if any, for assessment of the Tax that gave rise to the indemnification; provided, further, that, in the event that notice for indemnification has been given within the applicable survival period, such indemnification shall survive until such time as such claim is finally resolved.

 

Section 11.05. Severability. If any term or other provision of this Agreement is invalid, illegal or incapable of being enforced under any Law or as a matter of public policy, all other conditions and provisions of this Agreement shall remain in full force and effect. Upon such determination that any term or other provision is invalid, illegal or incapable of being enforced, the Parties to this Agreement shall negotiate in good faith to modify this Agreement so as to effect the original intent of the Parties as closely as possible in a mutually acceptable manner.

 

Section 11.06. Entire Agreement. Except as otherwise expressly provided in this Agreement and subject to Section 11.12 hereof, this Agreement, the Employee Matters Agreement, and the Separation and Distribution Agreement constitute the entire agreement of the Parties hereto with respect to the subject matter of this Agreement and supersede all prior agreements and undertakings, both written and oral, between or on behalf of the Parties hereto with respect to the subject matter of this Agreement.

 

Section 11.07. No Third-Party Beneficiaries. Except as provided in Article V with respect to indemnified Parties, this Agreement is for the sole benefit of the Parties to this Agreement and their respective Subsidiaries and their permitted successors and assigns and nothing in this Agreement, express or implied, is intended to or shall confer upon any other Person any legal or equitable right, benefit or remedy of any nature whatsoever under or by reason of this Agreement.

 

Section 11.08. Specific Performance. In the event of any actual or threatened default in, or breach of, any of the terms, conditions and provisions of this Agreement, the Party who is or is to be thereby aggrieved shall have the right to specific performance and injunctive or other equitable relief of its rights under this Agreement, in addition to any and all other rights and remedies at law or in equity, and all such rights and remedies shall be cumulative. The Parties agree that the remedies at law for any breach or threatened breach, including monetary damages, may be inadequate compensation for any loss, and that any defense in any action for specific performance that a remedy at law would be adequate is waived. Any requirements for the securing or posting of any bond with such remedy are waived by the Parties to this Agreement.

 

Section 11.09. Amendment. No provision of this Agreement may be amended or modified except by a written instrument signed by the Parties to this Agreement. No waiver by any Party of any provision of this Agreement shall be effective unless explicitly set forth in

 

24

 

writing and executed by the Party so waiving. The waiver by any Party of a breach of any provision of this Agreement shall not operate or be construed as a waiver of any other subsequent breach.

 

Section 11.10. Rules of Construction. Interpretation of this Agreement shall be governed by the following rules of construction: (i) words in the singular shall be held to include the plural and vice versa and words of one gender shall be held to include the other gender as the context requires; (ii) references to the terms Article, Section, paragraph, clause, Exhibit and Schedule are references to the Articles, Sections, paragraphs, clauses, exhibits and schedules of this Agreement unless otherwise specified; (iii) the terms “hereof,” “herein,” “hereby,” “hereto,” and derivative or similar words refer to this entire Agreement, including the Schedules and Exhibits hereto; (iv) references to “$” shall mean U.S. dollars; (v) the word “including” and words of similar import when used in this Agreement shall mean “including without limitation,” unless otherwise specified; (vi) the word “or” shall not be exclusive; (vii) references to “written” or “in writing” include in electronic form; (viii) provisions shall apply, when appropriate, to successive events and transactions; (ix) the table of contents and headings contained in this Agreement are for reference purposes only and shall not affect in any way the meaning or interpretation of this Agreement; (x) Ventas and SpinCo have each participated in the negotiation and drafting of this Agreement and if an ambiguity or question of interpretation should arise, this Agreement shall be construed as if drafted jointly by the parties hereto and no presumption or burden of proof shall arise favoring or burdening either Party by virtue of the authorship of any of the provisions in this Agreement or any interim drafts of this Agreement; and (xi) a reference to any Person includes such Person’s successors and permitted assigns.

 

Section 11.11. Counterparts. This Agreement may be executed in one or more counterparts, each of which when executed shall be deemed to be an original, but all of which taken together shall constitute one and the same agreement. Delivery of an executed counterpart of a signature page to this Agreement by facsimile or portable document format (PDF) shall be as effective as delivery of a manually executed counterpart of any such Agreement.

 

Section 11.12. Coordination with Separation and Distribution Agreement. In the event of any inconsistency between this Agreement and the Separation and Distribution Agreement, the Employee Matters Agreement, or any other Ancillary Agreement with respect to matters addressed herein the provisions of this Agreement shall control.

 

Section 11.13. Coordination with the Employee Matters Agreement. To the extent any covenants or agreements between the Parties with respect to employee withholding Taxes are expressly set forth in the Employee Matters Agreement, such Taxes shall be governed exclusively by the Employee Matters Agreement and not by this Agreement.

 

Section 11.14. Governing Law. This Agreement (and any claims or disputes arising out of or related hereto or to the transactions contemplated hereby or to the inducement of any Party to enter herein, whether for breach of contract, tortious conduct or otherwise and whether predicated on common law, statute or otherwise) shall be governed by and construed and interpreted in accordance with the Laws of the State of Delaware, irrespective of the choice of Laws principles of the State of Delaware, including all matters of validity, construction, effect, enforceability, performance and remedies.

 

25

 

Section 11.15. Assignability. This Agreement shall be binding upon and inure to the benefit of the Parties and their respective successors and permitted assigns. Neither Party may assign its rights or delegate its obligations under this Agreement without the express prior written consent of the other Party hereto; provided, however, that each Party may assign all of its rights and obligations under this Agreement to any of its Subsidiaries; provided, further, that no such assignment shall release the assigning Party from any of its liabilities or obligations under this Agreement.

 

Section 11.16. Notices. Any notice, demand, claim or other communication under this Agreement will be in writing and will be deemed to have been given (a) on delivery if delivered personally; (b) on the date on which delivery thereof is guaranteed by the carrier if delivered by a national courier guaranteeing delivery within a fixed number of days of sending; or (c) on the date of facsimile transmission thereof if delivery is confirmed, but, in each case, only if addressed to the Parties in the following manner at the following addresses or facsimile numbers (or at the other address or other number as a Party may specify by notice to the others):

 

	
If to Ventas, to:
    
	
 
    
	
Ventas, Inc.
    
	
10350 Ormsby Park Place, Suite 300
    
	
Louisville, KY 40223
    
	
Attention:
    	
General Counsel
    
	
Facsimile:
    	
(502) 357-9001
    
	
 
    	
 
    
	
with a copy (until the Effective Time) to:
    
	
 
    
	
Wachtell, Lipton, Rosen & Katz 51
    
	
West 52nd Street
    
	
New York, New York 10019
    
	
Attention:
    	
Robin Panovka
    
	
 
    	
Karessa Cain
    
	
 
    	
Victor Goldfeld
    
	
Facsimile:
    	
(212) 403-2000
    
	
 
    	
 
    
	
If to SpinCo, to:
    
	
 
    	
 
    
	
Care Capital Properties, Inc.
    
	
353 North Clark Street
    
	
Suite 2900
    
	
Chicago, Illinois 60654
    
	
Attention:
    	
General Counsel
    
	
Facsimile:
    	
312-881-4798
    

 

26

 

	
with a copy (until the Effective Time) to:
    
	
 
    
	
Wachtell,   Lipton, Rosen & Katz
    
	
51 West 52nd Street
    
	
New York, New York 10019
    
	
Attention:
    	
Robin Panovka
    
	
 
    	
Karessa Cain
    
	
 
    	
Victor Goldfeld
    
	
Facsimile:
    	
(212) 403-2000
    

 

Section 11.17. Effective Date. This Agreement shall become effective only upon the occurrence of the Distribution.

 

[The remainder of this page is intentionally left blank.]

 

27

 

IN WITNESS WHEREOF, the Parties have caused this Agreement to be executed by their duly authorized representatives as of the day and year first above written.

 

	
 
    	
VENTAS, INC.
    
	
 
    	
 
    
	
 
    	
 
    
	
 
    	
By:
    	
/s/ Brian K.   Wood
    
	
 
    	
 
    	
Name: Brian K.   Wood
    
	
 
    	
 
    	
Title: Sr. Vice   President & Chief Tax Officer
    
	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    
	
 
    	
CARE CAPITAL   PROPERTIES, INC.
    
	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    
	
 
    	
By:
    	
/s/ Raymond J.   Lewis
    
	
 
    	
 
    	
Name: Raymond J.   Lewis
    
	
 
    	
 
    	
Title: Chief   Executive Officer
    

 

[Signature Page to Tax Matters Agreement]Exhibit 10.3

 

EMPLOYEE MATTERS AGREEMENT

 

BY AND BETWEEN

 

VENTAS, INC.

 

AND

 

CARE CAPITAL PROPERTIES, INC.

 

DATED AS OF AUGUST 17, 2015

 

 

TABLE OF CONTENTS

 

	
 
    	
Page
    
	
 
    	
 
    
	
ARTICLE I   DEFINITIONS
    	
1
    
	
 
    	
 
    
	
 
    	
1.1
    	
Definitions
    	
1
    
	
 
    	
 
    
	
ARTICLE II   EMPLOYMENT GENERALLY
    	
6
    
	
 
    	
 
    
	
 
    	
2.1
    	
Continuation of   Employment
    	
6
    
	
 
    	
2.2
    	
Service Recognition
    	
6
    
	
 
    	
2.3
    	
No Severance Benefits
    	
7
    
	
 
    	
2.4
    	
Former Employees
    	
7
    
	
 
    	
 
    
	
ARTICLE III   RETIREMENT PLANS
    	
7
    
	
 
    	
 
    
	
 
    	
3.1
    	
The Ventas   401(k) Plan and SpinCo 401(k) Plan
    	
7
    
	
 
    	
3.2
    	
Reservation of Rights
    	
8
    
	
 
    	
 
    
	
ARTICLE IV HEALTH   AND WELFARE PLANS
    	
8
    
	
 
    	
 
    
	
 
    	
4.1
    	
SpinCo Health and   Welfare Plans
    	
8
    
	
 
    	
4.2
    	
Flexible Spending   Accounts
    	
9
    
	
 
    	
4.3
    	
COBRA and HIPAA   Compliance
    	
9
    
	
 
    	
4.4
    	
Time-Off Benefits
    	
9
    
	
 
    	
4.5
    	
Incurred Claim   Definition
    	
9
    
	
 
    	
4.6
    	
Workers Compensation
    	
10
    
	
 
    	
 
    
	
ARTICLE V   EQUITY-BASED INCENTIVE PLANS; DEFERRED COMPENSATION PLANS
    	
10
    
	
 
    	
 
    
	
 
    	
5.1
    	
Adjustment of Equity   Awards
    	
10
    
	
 
    	
5.2
    	
Establishment of SpinCo   Equity Plan
    	
11
    
	
 
    	
5.3
    	
Liabilities for Settlement   of Awards
    	
12
    
	
 
    	
5.4
    	
Deferred Compensation   Plans
    	
12
    
	
 
    	
 
    
	
ARTICLE VI   ADDITIONAL COMPENSATION MATTERS; SEVERANCE
    	
13
    
	
 
    	
 
    
	
 
    	
6.1
    	
Incentive Awards
    	
13
    
	
 
    	
6.2
    	
Individual Agreements
    	
13
    
	
 
    	
6.3
    	
Severance Liabilities
    	
14
    
	
 
    	
 
    
	
ARTICLE VII   GENERAL AND ADMINISTRATIVE
    	
14
    
	
 
    	
 
    
	
 
    	
7.1
    	
Sharing of Participant   Information
    	
14
    
	
 
    	
7.2
    	
Reasonable   Efforts/Cooperation
    	
15
    
	
 
    	
7.3
    	
No Third-Party   Beneficiaries
    	
15
    

 

i

 

	
 
    	
7.4
    	
Not a Change in Control
    	
15
    
	
 
    	
 
    
	
ARTICLE VIII MISCELLANEOUS
    	
15
    
	
 
    	
 
    
	
 
    	
8.1
    	
Relationship of Parties
    	
15
    
	
 
    	
8.2
    	
Affiliates
    	
15
    
	
 
    	
8.3
    	
Representations
    	
15
    
	
 
    	
8.4
    	
Governing Law
    	
16
    
	
 
    	
8.5
    	
Survival of Covenants
    	
16
    
	
 
    	
8.6
    	
Force Majeure
    	
16
    
	
 
    	
8.7
    	
Notices 
    	
16
    
	
 
    	
8.8
    	
Termination
    	
16
    
	
 
    	
8.9
    	
Severability
    	
17
    
	
 
    	
8.10
    	
Entire Agreement
    	
17
    
	
 
    	
8.11
    	
Indemnification;   Dispute Resolutions
    	
17
    
	
 
    	
8.12
    	
Assignment
    	
17
    
	
 
    	
8.13
    	
Specific Performance
    	
17
    
	
 
    	
8.14
    	
Amendment
    	
18
    
	
 
    	
8.15
    	
Rules of   Construction
    	
18
    
	
 
    	
8.16
    	
Counterparts
    	
18
    

 

ii

 

EMPLOYEE MATTERS AGREEMENT

 

This EMPLOYEE MATTERS AGREEMENT (the “Agreement”), dated as of August 17, 2015, is by and among VENTAS, INC., a Delaware corporation (“Ventas”), and CARE CAPITAL PROPERTIES, INC., a Delaware corporation (“SpinCo” and together with Ventas, each a “Party” and collectively, the “Parties”).

 

WHEREAS, the board of directors of Ventas has determined that it is in the best interests of Ventas and its shareholders to create a new publicly traded company which shall operate the SpinCo Business;

 

WHEREAS, in furtherance of the foregoing, the board of directors of Ventas has determined that it is appropriate and desirable to separate the SpinCo Business from the Ventas Business (the “Separation”);

 

WHEREAS, in furtherance of the foregoing, the Parties have entered into a Separation and Distribution Agreement, dated as of August 17, 2015 (the “Separation Agreement”) (any capitalized terms used but not defined herein shall have the meanings given to them in the Separation Agreement), and have entered or will enter into other Ancillary Agreements that will govern certain matters relating to the Distribution and the relationship of Ventas, SpinCo and their respective Affiliates prior to and following the Distribution Date; and

 

WHEREAS, pursuant to the Separation Agreement, the Parties have agreed to enter into this Agreement for the purpose of allocating assets, liabilities and responsibilities with respect to certain human resources, employee compensation and benefits matters between them to the extent not provided in, or varying from, the Separation Agreement.

 

NOW, THEREFORE, in consideration of the premises and of the respective agreements and covenants contained in this Agreement, and for other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the Parties, intending to be legally bound hereby, agree as follows:

 

ARTICLE I

DEFINITIONS

 

1.1                               Definitions. The following terms shall have the following meanings:

 

“Additional Contribution” has the meaning ascribed thereto in Section 3.1.2 of this Agreement.

 

“Affiliate” has the meaning ascribed thereto in the Separation Agreement.

 

“Agreement” has the meaning ascribed thereto in the preamble to this Agreement.

 

“Ancillary Agreements” has the meaning ascribed thereto in the Separation Agreement.

 

“Assets” has the meaning ascribed thereto in the Separation Agreement.

 

 

“Benefit Plan” means, with respect to an entity, each plan, program, arrangement, agreement or commitment that is an employment, consulting, non-competition or deferred compensation agreement, or an executive compensation, incentive bonus or other bonus, employee pension, profit-sharing, savings, retirement, supplemental retirement, stock option, stock purchase, stock appreciation rights, restricted stock, operating partnership unit, other equity-based compensation, severance pay, salary continuation, life, health, hospitalization, sick leave, vacation pay, paid time-off, disability or accident insurance plan, program, arrangement, agreement or commitment, corporate-owned or key-man life insurance or other compensatory or employee benefit plan, program, arrangement, agreement or commitment, including any “employee benefit plan” (as defined in Section 3(3) of ERISA), sponsored or maintained by such entity (or to which such entity contributes or is required to contribute).

 

“COBRA” means the continuation coverage requirements for “group health plans” under Title X of the Consolidated Omnibus Budget Reconciliation Act of 1985, as amended, and as codified in Code Section 4980B and Sections 601 through 608 of ERISA, and any similar state group health plan continuation Law, together with all regulations and proposed regulations promulgated thereunder, including any amendments or other modifications of such Laws and regulations that may be made from time to time.

 

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

 

“Confidentiality Agreement” means the standard-form Confidentiality Agreement that Ventas and its Affiliates regularly enter into with their employees (and any predecessors to such form).

 

“Daily Stock Price” for a particular day for the SpinCo Common Stock or Ventas Common Stock, as applicable, means the closing price of the applicable stock on the New York Stock Exchange for such day, as reported by the Wall Street Journal.

 

“Distribution” has the meaning set forth in the recitals to the Separation Agreement.

 

“Distribution Date” has the meaning ascribed thereto in the Separation Agreement.

 

“Effective Time” has the meaning ascribed thereto in the Separation Agreement.

 

“Employee” means any individual who is a full or part-time common law employee of the applicable entity.

 

“ERISA” means the Employee Retirement Income Security Act of 1974, as amended.

 

“Exchange Act” means the U.S. Securities Exchange Act of 1934, as amended, together with the rules and regulations promulgated thereunder.

 

“Force Majeure” has the meaning ascribed thereto in the Separation Agreement.

 

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“Former Employee” means any former Employee or former non-employee director of Ventas or an Affiliate of Ventas or of SpinCo or an Affiliate of SpinCo, as of immediately prior to the Effective Time, whether having last been employed or retained by a member of the Ventas Group or a member of the SpinCo Group, including retired and other inactive terminated Employees. Without limiting the generality of the foregoing, individuals who are on long-term disability leave as of the Effective Time shall be considered Former Employees for purposes of this Agreement.

 

“Governmental Authority” has the meaning ascribed thereto in the Separation Agreement.

 

“Group” means either the SpinCo Group or the Ventas Group, as the context requires.

 

“HIPAA” means the Health Insurance Portability and Accountability Act of 1996, as amended.

 

“Individual Agreement” means any individual (a) employment contract, (b) retention, severance or change in control agreement, (c) expatriate (including any international assignee) contract or agreement (including agreements and obligations regarding repatriation, relocation, equalization of taxes and living standards in the host country), or (d) other agreement containing restrictive covenants (including confidentiality, non-competition and non-solicitation provisions) with a Ventas Group Employee or SpinCo Group Employee that is in effect immediately prior to the Distribution Date.

 

“Law” has the meaning ascribed thereto in the Separation Agreement.

 

“Liabilities” has the meaning ascribed thereto in the Separation Agreement.

 

“Parties” has the meaning ascribed thereto in the preamble to this Agreement.

 

“Person” means an individual, a general or limited partnership, a corporation, a trust, a joint venture, an unincorporated organization, a limited liability entity, any other entity and any Governmental Authority.

 

“Record Date” means the close of business on the date to be determined by the Ventas board of directors as of the record date for determining holders of Ventas Common Stock entitled to receive SpinCo Common Stock pursuant to the Distribution.

 

“Separation” has the meaning ascribed thereto in the recitals to this Agreement.

 

“Separation Agreement” has the meaning ascribed thereto in the recitals to this Agreement.

 

“Severance Benefits” has the meaning ascribed thereto in Section 6.3.1 of this Agreement.

 

“SpinCo” has the meaning ascribed thereto in the preamble to this Agreement.

 

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“SpinCo 401(k) Plan” has the meaning ascribed thereto in Section 3.1.1 of this Agreement.

 

“SpinCo Annual Bonus Plan” has the meaning ascribed thereto in Section 6.1 of this Agreement.

 

“SpinCo Benefit Plan” means any Benefit Plan sponsored, maintained or contributed to by a member of the SpinCo Group after the Effective Time, but excluding any Ventas Benefit Plan.

 

“SpinCo Business” has the meaning ascribed thereto in the Separation Agreement.

 

“SpinCo Common Stock” means a share of common stock, par value $0.01 per share, of SpinCo.

 

“SpinCo Equity Plan” has the meaning ascribed thereto in Section 5.2 of this Agreement.

 

“SpinCo Group” has the meaning ascribed thereto in the Separation Agreement.

 

“SpinCo Group Employee” means, as of immediately prior to the Effective Time (x) each Employee of Ventas and its Subsidiaries who was employed by Healthtrust L.L.C. and who commences employment with Ventas and its Subsidiaries pursuant to the acquisition by SpinCo of Healthtrust L.L.C., and (y) each individual listed on Schedule A, including, in each case, any such Employee who is on an approved leave at such time, unless the applicable individual is absent as of the Effective Time due to long-term disability leave.

 

“SpinCo Group Non-Employee Director” means any Person who, immediately following the Effective Time, is a non-employee director of any member of the SpinCo Group.

 

“SpinCo Participant” means any SpinCo Group Employee who was, prior to the Effective Time, a participant in the applicable Ventas Benefit Plan or is, after the Effective Time, a participant in the applicable SpinCo Benefit Plan, or is a beneficiary, dependent or alternate payee of such a participant.

 

“SpinCo Ratio” means the quotient obtained by dividing the Ventas Stock Value by the SpinCo Stock Value.

 

“SpinCo Restricted Share Award” means an award of restricted shares of SpinCo Common Stock granted pursuant to the SpinCo Equity Plan.

 

“SpinCo Stock Option” means a stock option to purchase shares of SpinCo Common Stock granted pursuant to a SpinCo Equity Plan.

 

“SpinCo Stock Value” means the average of the per-share Daily Stock Prices of SpinCo Common Stock on the New York Stock Exchange on the first ten trading days that immediately follow the Distribution Date.

 

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“SpinCo Welfare Plans” means Welfare Plans that are maintained or contributed to by a member of the SpinCo Group, but excluding the Ventas Welfare Plans.

 

“Subsidiary” has the meaning ascribed thereto in the Separation Agreement.

 

“Transfer” has the meaning ascribed thereto in Section 3.1.2 of this Agreement.

 

“Transferred Account Balances” has the meaning ascribed thereto in Section 4.2 of this Agreement.

 

“Transition Services Agreement” has the meaning ascribed thereto in the Separation Agreement.

 

“U.S.” means the United States of America.

 

“Ventas 401(k) Plan” means the Ventas, Inc. 401(k) Profit Sharing Plan.

 

“Ventas Annual Bonus Plans” has the meaning ascribed thereto in Section 6.1 of this Agreement.

 

“Ventas Benefit Plan” means any Benefit Plan sponsored, maintained or contributed to by Ventas or any of its Affiliates.

 

“Ventas Business” has the meaning ascribed thereto in the Separation Agreement.

 

“Ventas Common Stock” means a share of common stock, par value $0.25 per share, of Ventas.

 

“Ventas Deferred Compensation Plans” means the Ventas Executive Deferred Stock Compensation Plan and the Ventas Nonemployee Directors’ Deferred Stock Compensation Plan.

 

“Ventas DSUs” means deferred stock units in respect of Ventas Common Stock issued pursuant to the Ventas Deferred Compensation Plans.

 

“Ventas Equity Plans” means the Ventas, Inc. 2012 Incentive Plan, the Ventas, Inc. 2006 Incentive Plan (as amended December 8, 2008), the Ventas, Inc. 2006 Stock Plan for Directors, the Ventas, Inc. 2004 Stock Plan for Directors, the Ventas, Inc. 2000 Incentive Compensation Plan and the Nationwide Health Properties, Inc. 2005 Performance Incentive Plan.

 

“Ventas ESPP” means the Ventas Employee and Director Stock Purchase Plan.

 

“Ventas Group” has the meaning ascribed thereto in the Separation Agreement.

 

“Ventas Group Employee” means any Employee of Ventas and its Subsidiaries immediately prior to the Effective Time who is not a SpinCo Group Employee, including any such Employee (who is not a SpinCo Group Employee) who is on an approved leave at such time.

 

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“Ventas Group Non-Employee Director” means any Person who, immediately following the Effective Time, is a non-employee director of any member of the Ventas Group.

 

“Ventas Participant” means any Ventas Group Employee or Former Employee and who is, at any time prior to, on, or after the Effective Time, a participant in the applicable Ventas Benefit Plan or is a beneficiary, dependent or alternate payee of such a participant.

 

“Ventas Post-Separation Stock Value” means the average of the per-share Daily Stock Prices of Ventas Common Stock on the New York Stock Exchange on the first ten trading days that immediately follow the Distribution Date.

 

“Ventas Ratio” means the quotient obtained by dividing the Ventas Stock Value by the Ventas Post-Separation Stock Value.

 

“Ventas Restricted Share Award” means an award of restricted shares of Ventas Common Stock granted pursuant to a Ventas Equity Plan.

 

“Ventas RSU Award” means an award of restricted stock units in respect of Ventas Common Stock granted pursuant to a Ventas Equity Plan.

 

“Ventas Stock Option” means a stock option to purchase shares of Ventas Common Stock granted pursuant to a Ventas Equity Plan.

 

“Ventas Stock Value” means the Daily Stock Price of Ventas Common Stock on the Distribution Date (or, if the Distribution Date is not a trading day, the first trading day immediately preceding the Distribution Date).

 

“Ventas Welfare Plans” means the Ventas Welfare Plans in which SpinCo Group Employees participate immediately prior to the Effective Time.

 

“Welfare Plan” means a plan that provides for health, welfare or other insurance benefits (within the meaning of Section 3(1) of ERISA).

 

“Welfare Plan Transition Period” means, unless otherwise agreed by the parties, the period from the Effective Time through December 31, 2015.

 

ARTICLE II

EMPLOYMENT GENERALLY

 

2.1                               Continuation of Employment. Except as required by applicable local Law, Ventas and its Affiliates shall take all actions necessary to ensure that, as of immediately prior to the Effective Time, (i) all SpinCo Group Employees are employed by a member of the SpinCo Group and (ii) all Ventas Group Employees are employed by a member of the Ventas Group.

 

2.2                               Service Recognition. SpinCo shall give, or shall cause its Affiliates to give, each SpinCo Group Employee full credit for all purposes under any SpinCo Benefit Plan for such SpinCo Group Employee’s service with Ventas or any of its Affiliates prior to the Effective Time to the same extent such service was recognized by the corresponding Ventas Benefit Plan

 

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immediately prior to the Effective Time; provided, however, that such service shall not be recognized to the extent that such recognition would result in the duplication of benefits or as otherwise provided by applicable Law.

 

2.3                               No Severance Benefits. The Distribution and the assignment, transfer, or continuation of employment of any Employee of Ventas or any of its Affiliates in connection therewith (including in accordance with Section 2.1 hereof) shall not be deemed a termination of employment entitling such Employee to severance or other similar termination payments or benefits under any applicable Law, Ventas Benefit Plan or SpinCo Benefit Plan.

 

2.4                               Former Employees. SpinCo shall have no liability with respect to Former Employees, if any, as of the Effective Time. Ventas shall retain all liabilities with respect to Former Employees.

 

ARTICLE III

RETIREMENT PLANS

 

3.1                               The Ventas 401(k) Plan and SpinCo 401(k) Plan.

 

3.1.1                     Establishment of Plan and Trust. SpinCo or one of its Affiliates shall adopt a retirement plan and related trust which are qualified and tax-exempt pursuant to Code Sections 401(a) and 501(a), respectively, and which are intended to meet the requirements of Code Section 401(k) (the “SpinCo 401(k) Plan”), and any trust agreement or other plan documents reasonably necessary in connection therewith, and shall cause a trustee to be appointed for the SpinCo 401(k) Plan. Such actions shall be completed prior to, or as soon as reasonably practicable following, the Effective Time.

 

3.1.2                     Assumption of Liabilities; Transfer of Assets. As soon as practicable after the Effective Time and subject to Applicable Law: (a) Ventas shall cause the accounts (including any outstanding loan balances) of each SpinCo Group Employee in the Ventas 401(k) Plan to be transferred to the SpinCo 401(k) Plan and its related trust; (b) the SpinCo 401(k) Plan shall assume and be solely responsible for all Liabilities under the SpinCo 401(k) Plan relating to the accounts that are so transferred as of and following the time of such transfer; and (c) SpinCo shall cause such transferred accounts to be accepted by the SpinCo 401(k) Plan and its related trust and shall cause the SpinCo 401(k) Plan to satisfy all protected benefit requirements under the Code and applicable Law with respect to the transferred accounts (the “Transfer”). Such Transfer shall be made in (i) cash but only to the extent it is not practicable to transfer in kind (as determined by the administrator of the Ventas 401(k) Plan) and (ii) promissory notes evidencing the transfer of outstanding loans. As soon as practicable after the Effective Time and subject to Applicable Law, Ventas shall contribute to the account of each SpinCo Group Employee who is a participant in the SpinCo 401(k) Plan, to the extent not previously made, any matching contribution that it would ordinarily have made on behalf of such SpinCo Group Employee in the year in which the Effective Time occurs with respect to contributions actually made to the Ventas 401(k) Plan by such SpinCo Group Employee on or prior to the Effective Time (the “Additional Contribution”), and SpinCo shall cause such amount to be accepted by the SpinCo 401(k) Plan and its related trust for the benefit of each such SpinCo Group Employee.

 

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3.2                               Reservation of Rights. Except as provided in Section 3.1, the Parties hereby acknowledge that nothing in this Article III shall be construed to require (a) Ventas or any of its Affiliates to continue the Ventas 401(k) Plan before or after the Effective Time, and (b) SpinCo or any of its Affiliates to continue the SpinCo 401(k) Plan after the Effective Time following its establishment and receipt of the Asset and Liability transfer described in Section 3.1. The Parties agree that (i) Ventas reserves the right, in its sole discretion, to amend or terminate the Ventas 401(k) Plan at any time following the date of this Agreement in accordance with its terms and applicable Law, and (ii) SpinCo reserves the right, in its sole discretion, to amend or terminate the SpinCo 401(k) Plan at any time following the date of this Agreement in accordance with its terms and applicable Law; provided; however that no such amendment to either the Ventas 401(k) Plan or the SpinCo 401(k) Plan shall prevent the actions described in Section 3.1.

 

ARTICLE IV

HEALTH AND WELFARE PLANS

 

4.1                               SpinCo Health and Welfare Plans.

 

4.1.1                     Welfare Plan Transition Period; Cessation of Participation in Ventas Health and Welfare Plans. During the Welfare Plan Transition Period, SpinCo Group Employees shall continue (and employees of the SpinCo Group hired during the Welfare Plan Transition Period shall be eligible, so long as the SpinCo Group provides Ventas with all necessary notifications, eligibility verifications, and forms) to participate in the Ventas Welfare Plans providing medical, dental, life insurance, accidental death & dismemberment, employee assistance, and short-term and long-term disability benefits, on substantially the same terms applicable to similarly situated Ventas Group Employees. SpinCo shall reimburse Ventas for the cost of such participation, in accordance with the provisions of Article II of the Transition Services Agreement, and such continued participation shall constitute “Services” for purposes of the Transition Services Agreement. No later than the last day of the Welfare Plan Transition Period, SpinCo (acting directly or through its Affiliates) shall establish the SpinCo Welfare Plans. It is the intention of the parties that SpinCo shall make available to SpinCo Group Employees (including for this purpose employees of the SpinCo Group hired during the Welfare Plan Transition Period) and their covered dependents who participate in Ventas Welfare Plans immediately prior to the conclusion of the Welfare Plan Transition Period the opportunity to enroll as of the day immediately following the conclusion of the Welfare Plan Transition Period in SpinCo Welfare Plans.

 

4.1.2                     Allocation of Health and Welfare Plan Liabilities. All outstanding Liabilities relating to, arising out of, or resulting from health and welfare claims incurred by or on behalf of SpinCo Group Employees or their covered dependents under the Ventas Welfare Plans on or before the Distribution Date, or, in the case of claims under the Ventas Welfare Plans for medical, dental, life insurance, accidental death & dismemberment, employee assistance, and short-term and long-term disability benefits, on or before the conclusion of the Welfare Plan Transition Period, including, in all cases, claims incurred but not reported, shall (subject to the provisions of Article II of the Transition Services Agreement) be retained by Ventas.

 

4.1.3                     Waiver of Conditions. To the extent permitted by applicable Law and the terms of the applicable SpinCo Welfare Plan, SpinCo (acting directly or through its Affiliates)

 

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shall take commercially reasonable efforts to cause the SpinCo Welfare Plans to (a) waive all limitations as to preexisting conditions, exclusions, and service conditions with respect to participation and coverage requirements applicable to any SpinCo Group Employee, other than limitations that were in effect with respect to the SpinCo Group Employee under the generally corresponding Ventas Welfare Plan immediately prior to the conclusion of the Welfare Plan Transition Period , and (b) waive any waiting period limitation or evidence of insurability requirement applicable to a SpinCo Group Employee other than limitations or requirements that were in effect with respect to such SpinCo Group Employee under the corresponding Ventas Welfare Plan immediately prior to the conclusion of the Welfare Plan Transition Period. Such waivers shall apply to initial enrollment in the SpinCo Welfare Plans effective immediately following the conclusion of the Welfare Plan Transition Period. Following the initial enrollment, pre-existing condition limitations, exclusions, and services conditions under the SpinCo Welfare Plans shall apply only to the extent allowable under HIPAA.

 

4.2                               Flexible Spending Accounts. With respect to each SpinCo Group Employee, the parties shall use commercially reasonable efforts to ensure that any health or dependent care flexible spending accounts as of the Effective Time of such SpinCo Group Employee (whether positive or negative) (the “Transferred Account Balances”) under Ventas Welfare Plans that are health or dependent care flexible spending account plans are transferred, as soon as practicable after the Effective Time, from the Ventas Welfare Plans to SpinCo or its applicable Subsidiary. SpinCo or its applicable Subsidiary shall assume responsibility as of the Effective Time for all outstanding health or dependent care claims under the corresponding Ventas Welfare Plans of each SpinCo Group Employee for the calendar year in which the Effective Time occurs.

 

4.3                               COBRA and HIPAA Compliance. Ventas shall continue to be responsible for compliance with the health care continuation requirements of COBRA (including the requirements under the American Recovery and Reinvestment Act), and the corresponding provisions of the Ventas Welfare Plans, with respect to any Employee of any member of the Ventas Group or the SpinCo Group or any of such employee’s covered dependents who incurs a qualifying event or loss of coverage under COBRA at or before the Effective Time (including as a result of the Separation and Distribution). SpinCo shall be responsible for compliance with the health care continuation requirements of COBRA, and the corresponding provisions of the SpinCo Welfare Plans, with respect to any SpinCo Group Employee or any of such employee’s covered dependents who incurs a qualifying event or loss of coverage under the SpinCo Welfare Plans after the Effective Time (including during the Welfare Plan Transition Period, provided that coverage for the duration of such period shall be provided pursuant to the Ventas Welfare Plans).

 

4.4                               Time-Off Benefits. SpinCo shall credit each SpinCo Group Employee immediately following the Effective Time with the amount of accrued but unused paid time-off as such SpinCo Group Employee had under the applicable Ventas paid time-off policy immediately prior to the Effective Time.

 

4.5                               Incurred Claim Definition. For purposes of this Article IV, a claim or Liability is deemed to be incurred, unless otherwise provided in the governing plan document or insurance contract: (a) with respect to medical, dental, and/or prescription drug benefits, upon the rendering of health services giving rise to such claim or Liability; (b) with respect to life

 

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insurance, accidental death and dismemberment and business travel accident insurance, upon the occurrence of the event giving rise to such claim or Liability; (c) with respect to disability benefits, upon the date of an Employee’s disability, as determined by the disability benefit insurance carrier or claim administrator, giving rise to such claim or Liability; and (d) with respect to a period of continuous hospitalization, upon the date of admission to the hospital.

 

4.6                               Workers Compensation. The ownership and administration of workers compensation insurance shall be governed by Section 5.1 of the Separation Agreement regarding insurance matters. For the avoidance of doubt, nothing in this Agreement shall be interpreted to allocate between the Parties the claims and Liabilities under any workers compensation insurance policies.

 

ARTICLE V

EQUITY-BASED INCENTIVE PLANS; DEFERRED COMPENSATION PLANS

 

5.1                               Adjustment of Equity Awards.

 

5.1.1                     Ventas Stock Options held by Ventas Group Employees, Ventas Group Non-Employee Directors, SpinCo Group Non-Employee Directors, and Former Employees. Each Ventas Stock Option held by a Ventas Group Employee, a Ventas Group Non-Employee Director, SpinCo Group Non-Employee Director, or Former Employee that is outstanding and unexercised as of immediately prior to the Effective Time shall be subject to the same terms and conditions after the Effective Time as the terms and conditions applicable to such Ventas Stock Option immediately prior to the Effective Time; provided, however, that from and after the Effective Time:

 

(a)                                 the number of shares of Ventas Common Stock subject to such Ventas Stock Option, rounded down to the nearest whole number of shares, shall be equal to the product obtained by multiplying (i) the number of shares of Ventas Common Stock subject to such Ventas Stock Option immediately prior to the Effective Time by (ii) the Ventas Ratio; and

 

(b)                                 the per share exercise price of such Ventas Stock Option, rounded up to the nearest whole cent, shall be equal to the quotient obtained by dividing (i) the per share exercise price of such Ventas Stock Option immediately prior to the Effective Time by (ii) the Ventas Ratio.

 

5.1.2                     Ventas Stock Options held by SpinCo Group Employees. Each Ventas Stock Option held by a SpinCo Group Employee that is outstanding and unexercised as of immediately prior to the Effective Time shall be converted into a SpinCo Stock Option and shall otherwise be subject to the same terms and conditions after the Effective Time as the terms and conditions applicable to such Ventas Stock Option immediately prior to the Effective Time (except that references to Ventas in the applicable plan and award agreement shall be deemed to refer to SpinCo, unless clearly dictated otherwise by context); provided, however, that from and after the Effective Time:

 

(a)                                 the number of shares of SpinCo Common Stock subject to such SpinCo Stock Option, rounded down to the nearest whole number of shares, shall be equal to the product

 

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obtained by multiplying (i) the number of shares of Ventas Common Stock subject to such Ventas Stock Option immediately prior to the Effective Time by (ii) the SpinCo Ratio; and

 

(b)                                 the per share exercise price of such SpinCo Stock Option, rounded up to the nearest whole cent, shall be equal to the quotient obtained by dividing (i) the per share exercise price of such Ventas Stock Option immediately prior to the Effective Time by (ii) the SpinCo Ratio.

 

5.1.3                     Ventas RSU Awards, Ventas Restricted Share Awards, and Ventas DSUs held by Ventas Group Employees, Ventas Group Non-Employee Directors, SpinCo Group Non-Employee Directors, and Former Employees. Each Ventas RSU Award, Ventas Restricted Share Award, and Ventas DSU held by a Ventas Group Employee, Ventas Non-Employee Director, SpinCo Non-Employee Director, or Former Employee, as applicable, that is outstanding as of immediately prior to the Effective Time shall be subject to the same terms and conditions after the Effective Time as the terms and conditions applicable to such Ventas RSU Award, Ventas Restricted Share Award, or Ventas DSU, as applicable, immediately prior to the Effective Time; provided, however, that from and after the Effective Time, the number of shares of Ventas Common Stock to which such Ventas RSU Award, Ventas Restricted Share Award, or Ventas DSU, as applicable, relates shall be equal to the product, rounded to the nearest whole number of shares, obtained by multiplying (a) the number of shares of Ventas Common Stock to which such Ventas RSU Award, Ventas Restricted Share Award, or Ventas DSU, as applicable, related immediately prior to the Effective Time by (b) the Ventas Ratio.

 

5.1.4                     Ventas Restricted Share Awards held by SpinCo Group Employees. Each Ventas Restricted Share Award held by a SpinCo Group Employee that is outstanding as of immediately prior to the Effective Time shall be converted into a SpinCo Restricted Share Award, and shall otherwise be subject to the same terms and conditions after the Effective Time as the terms and conditions applicable to such Ventas Restricted Share Award immediately prior to the Effective Time (except that references to Ventas in the applicable plan and award agreement shall be deemed to refer to SpinCo, unless clearly dictated otherwise by context); provided, however, that from and after the Effective Time, the number of shares of SpinCo Common Stock to which such SpinCo Restricted Share Award relates shall be equal to the product, rounded to the nearest whole number of shares, obtained by multiplying (a) the number of shares of Ventas Common Stock to which such Ventas Restricted Share Award related immediately prior to the Effective Time by (b) the SpinCo Ratio.

 

5.1.5                     For clarity, neither the Distribution nor the assignment, transfer, or continuation of employment or service of any Employee of Ventas or any of its Affiliates or of any non-employee director of any member of the Ventas Group in connection with the Distribution (including in accordance with Section 2.1 hereof) shall be deemed to be a termination of employment or service for purposes of the Ventas Equity Plans and the applicable award agreements thereunder.

 

5.2                               Establishment of SpinCo Equity Plan. As of or prior to the Effective Time, SpinCo shall adopt an equity compensation plan (the “SpinCo Equity Plan”) pursuant to which equity awards may be granted to SpinCo Group Employees. The SpinCo Equity Plan shall generally provide for the same types of awards as the Ventas Equity Plan. Ventas and SpinCo

 

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shall take all actions as may be necessary or advisable to adopt and obtain shareholder and/or board of directors approval of the SpinCo Equity Plan (and the awards in respect of shares of SpinCo Common Stock thereunder) in order to satisfy the requirement of Rule 16b-3 under the Exchange Act, and the applicable rules and regulations of any applicable exchange on which shares of SpinCo Common Stock will be traded. The SpinCo Equity Plan shall be approved prior to the Effective Time by a member of the Ventas Group as SpinCo’s sole shareholder.

 

5.3                               Liabilities for Settlement of Awards. Ventas shall be responsible for all Liabilities (and entitled to the tax deduction) associated with awards that relate to Ventas Common Stock following the Effective Time, including without limitation such awards held by Former Employees and SpinCo Group Non-Employee Directors, and SpinCo shall be responsible for all Liabilities (and entitled to the tax deduction) associated with awards that relate to SpinCo Common Stock following the Effective Time. SpinCo shall notify Ventas of the occurrence of any settlement event with respect to Ventas Common Stock-based awards of a SpinCo Group Non-Employee Director as practicable but in no event later than 30 days thereafter and shall promptly provide to Ventas any other relevant information for purposes of such settlement.

 

5.4                               Deferred Compensation Plans.

 

5.4.1                     Ventas shall retain, or cause the applicable member of the Ventas Group to retain, all Assets and all Liabilities arising out of or relating to the Ventas Deferred Compensation Plans, and shall make payments to all participants in such Ventas Deferred Compensation Plans who are SpinCo Group Employees or SpinCo Group Non-Employee Directors in accordance with the terms of the applicable Ventas Deferred Compensation Plans. SpinCo shall notify Ventas of the occurrence of any payment event with respect to a SpinCo Group Employee or SpinCo Group Non-Employee Director under the Ventas Deferred Compensation Plans as promptly as practicable but in no event later than 30 days thereafter and shall promptly provide to Ventas any other relevant information for purposes of payments pursuant to the Ventas Deferred Compensation Plans to SpinCo Group Employees or SpinCo Group Non-Employee Directors.

 

5.4.2                     Ventas and SpinCo acknowledge that none of the transactions contemplated by the Separation Agreement will, in and of itself, constitute a “separation from service” under Section 409A of the Code or trigger a payment or distribution of compensation under the Ventas Deferred Compensation Plans and, consequently, that the payment or distribution of any compensation to which any Ventas Group Former Employee, Ventas Group Non-Employee Director or SpinCo Group Non-Employee Director is entitled under the Ventas Deferred Compensation Plans will occur only at such time or times as provided in the applicable plan document and the applicable deferral election.

 

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ARTICLE VI

ADDITIONAL COMPENSATION MATTERS; SEVERANCE

 

6.1                               Incentive Awards.

 

6.1.1                     Annual Incentive Plan. Immediately prior to the Effective Time, SpinCo Group Employees shall cease participating in each Ventas annual bonus plan or policy (“Ventas Annual Bonus Plans”) and, as of the Effective Time, there shall be an accrual on the financial statements of SpinCo equal to the amount accrued by Ventas on its financial statements for the period beginning January 1, 2015 and ending immediately prior to the Effective Time for SpinCo Group Employees under such plans as appropriate based on the results achieved to date and the forecasted achievement of applicable annual targets. As of the Effective Time, SpinCo Group Employees who were eligible to participate in the Ventas Annual Bonus Plans shall be eligible to participate in the SpinCo annual bonus plans or policies (“SpinCo Annual Bonus Plans”). SpinCo shall be solely responsible for funding, paying and discharging all obligations under the SpinCo Annual Bonus Plans in respect of the annual bonus payable to the SpinCo Group Employees in respect of the calendar year in which the Effective Time occurs (and Ventas shall have no liability with respect to annual bonuses for such year).

 

6.1.2                     Long-Term Incentive Plan. SpinCo shall be solely responsible for granting any equity-based compensation in respect of the service of SpinCo Group Employees with the Ventas Group or the SpinCo Group, prior to and following the Effective Time, respectively. As of the Effective Time, there shall be an accrual on the financial statements of SpinCo equal to the amount accrued by Ventas on its financial statements for the period beginning January 1, 2015 and ending immediately prior to the Effective Time for equity-based compensation awards previously accrued but ungranted to SpinCo Group Employees based on the results achieved to date and the forecasted achievement of applicable annual targets. Ventas shall have no responsibility of fulfilling its obligations for any previously accrued but ungranted equity-based compensation awards in respect of the service of SpinCo Group Employees with the Ventas Group or the SpinCo Group, prior to and following the Effective Time. As such, Ventas shall have no liability with respect to such equity-based compensation.

 

6.2                               Individual Agreements. The parties hereto intend that, as of, and contingent upon, the Effective Time, all Individual Agreements between any SpinCo Group Employee and any member of the Ventas Group shall, other than with respect to restrictive covenants contained therein (including any provisions with respect to the ability to enforce such restrictive covenants), have been superseded by Individual Agreements between the applicable SpinCo Group Employee and a member of the SpinCo Group. To the extent that any such Individual Agreement has not been so superseded as of the Effective Time, such Individual Agreement, other than with respect to restrictive covenants contained therein (including any provisions with respect to the ability to enforce such restrictive covenants), is hereby assigned, as of the Effective Time, by Ventas (acting directly or through the applicable member of the Ventas Group) to SpinCo or a member of the SpinCo Group, it being understood that an Individual Agreement consisting in substance solely of restrictive covenants (including, without limitation, Confidentiality Agreements) shall not be so assigned. With respect to restrictive covenants set forth in Individual Agreements (including in Confidentiality Agreements), Ventas or the applicable member of the Ventas Group may continue to enforce such covenants following the

 

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Effective Time as provided in such Individual Agreements; provided, however, that (a) the Effective Time shall be treated as the date of termination of employment for purposes of the duration of any such restrictive covenants and (b) in no event may a member of the Ventas Group enforce any such restrictive covenant against a SpinCo Group Employee or former SpinCo Group Employee for actions taken in such individual’s capacity as a SpinCo Group Employee that are reasonably related to the SpinCo Business, and in no event shall service to the SpinCo Group be deemed to violate any non-competition covenants in favor of any member of the Ventas Group. The parties shall take commercially reasonable efforts to effectuate the intent of this Section 6.2.

 

6.3                               Severance Liabilities.

 

6.3.1                     Severance Liabilities of SpinCo. SpinCo shall be solely responsible for all Liabilities in respect of all the costs of providing benefits under any applicable severance, separation, redundancy, termination or similar plan, program, practice, contract, agreement, law or regulation (such benefits to include any medical or other welfare benefits, outplacement benefits, accrued vacation, and taxes) (collectively, “Severance Benefits”) relating to the termination or alleged termination of employment of any SpinCo Group Employee that occurs on or after the Distribution Date.

 

6.3.2                     Severance Liabilities of Ventas. Ventas shall be solely responsible for all Liabilities in respect of all the costs of providing the Severance Benefits relating to the termination or alleged termination of employment of any Ventas Group Employee that occurs before, on, or after the Distribution Date.

 

6.3.3                     Code Section 409A. Notwithstanding anything to the contrary herein, if any of the provisions of this Agreement would result in imposition of taxes and/or penalties under Section 409A of the Code, Ventas and SpinCo shall cooperate in good faith to modify the applicable provision so that such taxes and/or penalties do not apply in order to comply with the provisions of Section 409A of the Code, other applicable provisions of the Code and/or any rules, regulations or other regulatory guidance issued under such statutory provisions.

 

ARTICLE VII

GENERAL AND ADMINISTRATIVE

 

7.1                               Sharing of Participant Information. Ventas and SpinCo shall share, and Ventas shall cause each other member of the Ventas Group to share, and SpinCo shall cause each other member of the SpinCo Group to share with each other and their respective agents and vendors (without obtaining releases) all participant information necessary for the efficient and accurate administration of each of the SpinCo Benefit Plans and the Ventas Benefit Plans. Ventas and SpinCo and their respective authorized agents shall, subject to applicable laws, be given reasonable and timely access to, and may make copies of, all information relating to the subjects of this Agreement in the custody of the other Party, to the extent necessary for such administration. Until the Distribution Date, all participant information shall be provided in the manner and medium applicable to participating companies in Ventas Benefit Plans generally, and thereafter all participant information shall be provided in a manner and medium as may be mutually agreed to by Ventas and SpinCo.

 

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7.2                               Reasonable Efforts/Cooperation. Each of the Parties hereto will use its commercially reasonable efforts to promptly take, or cause to be taken, all actions and to do, or cause to be done, all things necessary, proper or advisable under applicable laws and regulations to consummate the transactions contemplated by this Agreement. Without limiting the generality of the foregoing, subject to applicable Law, Ventas shall make commercially reasonable efforts to provide SpinCo with access to, or copies of, (a) the employee records and files of the SpinCo Group Employees, and (b) employee data, beneficiary designations, and similar information utilized for purposes of the Ventas Benefit Plans. Each of the Parties hereto shall cooperate fully on any issue relating to the transactions contemplated by this Agreement for which the other Party seeks a determination letter or private letter ruling from the Internal Revenue Service, an advisory opinion from the Department of Labor or any other filing (including, but not limited to, securities filings (remedial or otherwise)), consent or approval with respect to or by a Governmental Authority in any jurisdiction in the U.S. or abroad.

 

7.3                               No Third-Party Beneficiaries. Except as expressly provided for in this Agreement or the Separation Agreement, no provision of this Agreement or any of the other Transaction Documents shall be construed to create any right, or accelerate entitlement, to any compensation or benefit whatsoever on the part of any Ventas Group Employee, SpinCo Group Employee or any Former Employee, or future Employee of Ventas or any of its Affiliates or SpinCo or any of its Affiliates under any Ventas Benefit Plan or SpinCo Benefit Plan or otherwise, nor shall any such provision be construed as an amendment to any employee benefit plan or other employee compensatory or benefit arrangement. Furthermore, nothing in this Agreement is intended to confer upon any Employee or Former Employee any right to continued employment or continued service, any recall or similar rights to an Employee on layoff or any type of approved leave, or to change the employment status of any Employee from “at will.”

 

7.4                               Not a Change in Control. The Parties acknowledge and agree that the transactions contemplated by the Separation Agreement and this Agreement do not constitute a “change in control” for purposes of any Ventas Benefit Plan or SpinCo Benefit Plan.

 

ARTICLE VIII

MISCELLANEOUS

 

8.1                               Relationship of Parties. Nothing in this Agreement shall be deemed or construed by the Parties or any third party as creating the relationship of principal and agent, partnership or joint venture between the Parties, it being understood and agreed that no provision contained herein, and no act of the Parties, shall be deemed to create any relationship between the Parties other than the relationship set forth herein.

 

8.2                               Affiliates. Each of Ventas and SpinCo shall cause to be performed, and hereby guarantees the performance of, all actions, agreements and obligations set forth in this Agreement to be performed by each of their respective Affiliates.

 

8.3                               Representations. Ventas represents on behalf of itself and on behalf of other members of the Ventas Group, and SpinCo represents on behalf of itself and on behalf of other members of the SpinCo Group, as follows:

 

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8.3.1                     Corporate Power. Each such Person has the requisite corporate power and authority and has taken all corporate action necessary in order to execute, deliver and perform this Agreement and to consummate the transactions contemplated hereby and thereby.

 

8.3.2                     Due Execution. This Agreement has been duly executed and delivered by it and constitutes a valid and binding agreement of it enforceable in accordance with the terms thereof.

 

8.4                               Governing Law. This Agreement (and any claims or disputes arising out of or related hereto or to the transactions contemplated hereby or to the inducement of any party to enter herein, whether for breach of contract, tortious conduct or otherwise and whether predicated on common law, statute or otherwise) shall be governed by and construed and interpreted in accordance with the Laws of the State of Delaware irrespective of the choice of laws principles of the State of Delaware including all matters of validity, construction, effect, enforceability, performance and remedies.

 

8.5                               Survival of Covenants. Except as expressly set forth in any other Ancillary Agreement, the covenants and other agreements contained in this Agreement, and Liability for the breach of any obligations contained herein or therein, shall survive each of the transactions described in the Plan of Reorganization (as defined in the Separation Agreement) and the Distribution and shall remain in full force and effect.

 

8.6                               Force Majeure. No Party shall be deemed in default of this Agreement or, unless otherwise expressly provided therein, any other Ancillary Agreement for any delay or failure to fulfill any obligation (other than a payment obligation) hereunder or thereunder so long as and to the extent to which any delay or failure in the fulfillment of such obligation is prevented, frustrated, hindered or delayed as a consequence of circumstances of Force Majeure. In the event of any such excused delay, the time for performance of such obligations (other than a payment obligation) shall be extended for a period equal to the time lost by reason of the delay. A Party claiming the benefit of this provision shall, as soon as reasonably practicable after the occurrence of any such event, (a) provide written notice to the other Party of the nature and extent of any such Force Majeure condition; and (b) use commercially reasonable efforts to remove any such causes and resume performance under the Ancillary Agreements, as applicable, as soon as reasonably practicable.

 

8.7                               Notices. All notices, requests, claims, demands and other communications under this Agreement shall be in writing and shall be given or made (and shall be deemed to have been duly given or made upon receipt) in accordance with Section 10.5 of the Separation Agreement.

 

8.8                               Termination. Notwithstanding any provision to the contrary, this Agreement may be terminated and the Distribution abandoned at any time prior to the Effective Time by and in the sole discretion of Ventas without the prior approval of any Person, including SpinCo. In the event of such termination, this Agreement shall become void and no Party, or any of its officers and directors, shall have any liability to any Person by reason of this Agreement. After the Effective Time, this Agreement may not be terminated except by an agreement in writing signed by each of the Parties.

 

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8.9                               Severability. If any provision of this Agreement or any Ancillary Agreement or the application thereof to any Person or circumstance is determined by a court of competent jurisdiction to be invalid, void or unenforceable, the remaining provisions hereof or thereof, or the application of such provision to Persons or circumstances or in jurisdictions other than those as to which it has been held invalid or unenforceable, shall remain in full force and effect and shall in no way be affected, impaired or invalidated thereby. Upon such determination, the Parties shall negotiate in good faith in an effort to agree upon such a suitable and equitable provision to effect the original intent of the Parties

 

8.10                        Entire Agreement. Except as otherwise expressly provided in this Agreement, this Agreement (including the Schedules hereto) and the applicable provisions of the Separation Agreement together constitute the entire agreement of the Parties with respect to the subject matter of this Agreement and supersedes all prior agreements and undertakings, both written and oral, between or on behalf of the Parties with respect to the subject matter of this Agreement.

 

8.11                        Indemnification; Dispute Resolutions. Article IV of the Separation Agreement governs the Parties’ indemnification rights and obligations and Article VII of the Separation Agreement governs the resolution of any dispute between the Parties.

 

8.12                        Assignment. This Agreement shall be binding upon and inure to the benefit of the parties hereto and their respective successors and permitted assigns; provided, however, that neither party hereto may assign its rights or delegate its obligations under this Agreement without the express prior written consent of the other party. Notwithstanding the foregoing, no such consent shall be required for the assignment of a party’s rights and obligations under this Agreement and the Ancillary Agreements (except as may be otherwise provided in any such Ancillary Agreement) in whole (i.e., the assignment of a party’s rights and obligations under this Agreement and all Ancillary Agreements all at the same time) in connection with a change of control of a party so long as the resulting, surviving or transferee Person assumes all the obligations of the relevant party thereto by operation of Law or pursuant to an agreement in form and substance reasonably satisfactory to the other party. Nothing herein is intended to, or shall be construed to, prohibit either party or any member of its Group from being party to or undertaking a change of control. Except as provided in Article IV of the Separation Agreement with respect to Indemnifying Parties (as defined in the Separation Agreement), this Agreement is for the sole benefit of the Parties and members of their respective Group and their permitted successors and assigns and nothing in this Agreement, express or implied, is intended to or shall confer upon any other Person any legal or equitable right, benefit or remedy of any nature whatsoever under or by reason of this Agreement.

 

8.13                        Specific Performance. Subject to the provisions of Article VII of the Separation Agreement, in the event of any actual or threatened default in, or breach of, any of the terms, conditions and provisions of this Agreement, the Party or Parties who are or are to be thereby aggrieved shall have the right to specific performance and injunctive or other equitable relief (on an interim or permanent basis) of its rights under this Agreement, in addition to any and all other rights and remedies at law or in equity, and all such rights and remedies shall be cumulative. The Parties agree that the remedies at law for any breach or threatened breach, including monetary damages, may be inadequate compensation for any loss and that any defense in any action for specific performance that a remedy at law would be adequate is waived. Any

 

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requirements for the securing or posting of any bond with such remedy are waived by each of the Parties.

 

8.14                        Amendment. No provision of this Agreement may be amended or modified except by a written instrument signed by all the Parties. No waiver by any Party of any provision of this Agreement shall be effective unless explicitly set forth in writing and executed by the Party so waiving. The waiver by any Party of a breach of any provision of this Agreement shall not operate or be construed as a waiver of any other subsequent breach.

 

8.15                        Rules of Construction. Interpretation of this Agreement shall be governed by the following rules of construction (a) words in the singular shall be held to include the plural and vice versa and words of one gender shall be held to include the other gender as the context requires, (b) references to the terms Article, Section, paragraph, clause, Exhibit and Schedule are references to the Articles, Sections, paragraphs, clauses, Exhibits and Schedules of this Agreement unless otherwise specified, (c) the terms “hereof,” “herein,” “hereby,” “hereto,” and derivative or similar words refer to this entire Agreement, including the Schedules and Exhibits hereto, (d) references to “$” shall mean U.S. dollars, (e) the word “including” and words of similar import when used in this Agreement shall mean “including without limitation,” unless otherwise specified, (f) the word “or” shall not be exclusive, (g) references to “written” or “in writing” include in electronic form, (h) unless the context requires otherwise, references to “Party” shall mean Ventas or SpinCo, as appropriate, and references to “Parties” shall mean Ventas and SpinCo, (i) provisions shall apply, when appropriate, to successive events and transactions, (j) the table of contents and headings contained in this Agreement are for reference purposes only and shall not affect in any way the meaning or interpretation of this Agreement, (k) Ventas and SpinCo have each participated in the negotiation and drafting of this Agreement and if an ambiguity or question of interpretation should arise, this Agreement shall be construed as if drafted jointly by the Parties and no presumption or burden of proof shall arise favoring or burdening either Party by virtue of the authorship of any of the provisions in this Agreement or any interim drafts of this Agreement, and (l) a reference to any Person includes such Person’s successors and permitted assigns.

 

8.16                        Counterparts. This Agreement may be executed in one or more counterparts, and by the different Parties in separate counterparts, each of which when executed shall be deemed to be an original but all of which taken together shall constitute one and the same agreement. Delivery of an executed counterpart of a signature page to this Agreement by facsimile or portable document format (PDF) shall be as effective as delivery of a manually executed counterpart of any such Agreement.

 

[Remainder of Page Intentionally Left Blank]

 

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IN WITNESS WHEREOF, the Parties have caused this Agreement to be executed by their duly authorized representatives as of the day and year first above written.

 

	
 
    	
VENTAS, INC.
    
	
 
    	
 
    
	
 
    	
By: 
    	
/s/ Brian K.   Wood
    
	
 
    	
Name: Brian K.   Wood
    
	
 
    	
Title: Sr. Vice   President & Chief Tax Officer
    
	
 
    	
 
    
	
 
    	
CARE CAPITAL   PROPERTIES, INC.
    
	
 
    	
 
    
	
 
    	
By: 
    	
/s/ Raymond J. Lewis
    
	
 
    	
Name: Raymond J.   Lewis
    
	
 
    	
Title: Chief   Executive Officer
    

 

[Signature Page to Employee Matters Agreement]

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