Document:

EMPLOYMENT AGREEMENT 

This Agreement (“Agreement”) by and between Ben Franklin Bank of Illinois, a federal savings bank (the “Bank”), with its principal office in Arlington Heights, Illinois, and Joseph E. Shultz (“Executive”) is entered into on this 1st day of November, 2016.  Any reference to the Company shall refer to Ben Franklin Financial, Inc., the holding company of the Bank.

WHEREAS, in order to induce Executive to remain in the employ of the Bank and to provide further incentive to achieve the financial and performance objectives of the Bank, the parties desire to enter into this Agreement upon the terms and conditions hereof; and 

WHEREAS, Section 409A of the Internal Revenue Code of 1986, as amended (the “Code”) provides that certain severance payments and other benefits to Executive hereunder must comply with its terms and the Treasury regulations promulgated thereunder (the “Treasury Regulations”), or subject Executive to additional taxes and penalties; and

WHEREAS, the Bank has been designated as being "in troubled condition" by the Office of the Comptroller of the Currency ("OCC") and this Agreement has been prepared in compliance with 12 C.F.R. Part 359 of the Federal Deposit Insurance Corporation ("FDIC") regulations and is subject to the prior approval of the OCC.

NOW, THEREFORE, in consideration of the mutual covenants herein contained, and upon the other terms and conditions hereinafter provided, the parties hereby agree as follows:

1.                  POSITION AND RESPONSIBILITIES.

Executive agrees to serve as the Senior Vice President and Chief Lending Officer of the Bank and as such, Executive shall be responsible for the lending activities of the Bank, to include oversight of business development, credit risk management, collections and problem loan workout, development of sales activities, initiatives and strategy.  Executive agrees to serve, if elected, as a director of the Bank or an officer and/or director of any affiliate of the Bank.  Failure to reappoint Executive as Senior Vice President and Chief Lending Officer of the Bank during the term of this Agreement without his consent (except for any termination for Just Cause or Retirement, as defined herein) shall constitute a breach of this Agreement.

2.                  TERM AND DUTIES.

(a)               The term of this Agreement and the period of Executive’s employment hereunder will begin as of the Effective Date and will continue for a period of twelve (12) full calendar months thereafter.  On the first day of January each year (the “Anniversary Date”), this Agreement shall renew for an additional year such that the remaining term shall be twelve (12) full calendar months provided, however, that the Board shall at least sixty (60) days before such Anniversary Date conduct a comprehensive performance evaluation and review of Executive for purposes of determining whether to extend this Agreement.  The Board shall give Executive notice of its decision whether or not to renew this Agreement at least thirty (30) days and not more than sixty (60) days prior to the Anniversary Date, and if written notice of non-renewal is provided to Executive within said time frame, the term of this Agreement shall not be extended.  

(b)               During the period of his employment hereunder, except for periods of absence occasioned by illness, reasonable vacation periods, and reasonable leaves of absence approved by the Board, Executive shall devote substantially all his business time, attention, skill, and efforts to the faithful performance of his duties hereunder including activities and services related to the organization, operation and management of the Bank; provided, however, that with the approval of the Board, Executive may serve, or continue to serve, on the boards of directors of, and hold any other offices or positions in, business, social, religious, charitable or similar organizations which will not present any conflict of interest with the Bank or materially affect the performance of Executive’s duties pursuant to this Agreement.

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3.                  COMPENSATION, BENEFITS AND REIMBURSEMENT.

(a)              The compensation specified under this Agreement shall constitute the salary and benefits paid for the duties described in Section 2.  The Bank shall pay Executive as compensation a salary of not less than $120,000 per year (“Base Salary”).  Such Base Salary shall be payable biweekly, or with such other frequency as officers and employees are generally paid. During the period of this Agreement, Executive’s Base Salary shall be reviewed at least annually. Such review shall be conducted by the Compensation Committee of the Board, and the Bank may increase, but not decrease (except a decrease that is generally applicable to all employees) Executive’s Base Salary (with any increase in Base Salary to become “Base Salary” for purposes of this Agreement).  Base Salary shall not include any director’s fees that Executive is entitled to receive as a director of the Bank or any affiliate of the Bank.  Such director’s fees shall be separately paid to Executive.

(b)                Executive will be entitled to participate in and receive benefits under any employee benefit plans including, but not limited to, retirement plans, supplemental retirement plans, pension plans, profit-sharing plans, health-and-accident insurance plans, medical coverage or any other employee benefit plan or arrangement made available by the Bank currently or in the future to its senior executives and key management employees.  Executive will be entitled to participate in any incentive compensation and bonus plans offered by the Bank in which Executive is eligible to participate.  Nothing paid to Executive under any such plan or arrangement will be deemed to be in lieu of other compensation to which Executive is entitled under this Agreement.  

(c)                In addition to the Base Salary provided for by paragraph (a) of this Section 3, the Bank shall pay or reimburse Executive for all reasonable travel and other reasonable expenses incurred by Executive performing his obligations under this Agreement and may provide such additional compensation in such form and such amounts as the Board may from time to time determine.  The Bank shall reimburse Executive for his ordinary and necessary business expenses including, without limitation, fees for memberships in such clubs and organizations as Executive and the Board shall mutually agree are necessary and appropriate for business purposes, and travel and entertainment expenses, incurred in connection with the performance of his duties under this Agreement.  If Executive is entitled to be paid or reimbursed for any taxable expenses under this Section and such payments or reimbursements are includible in Executive’s federal gross taxable income, the amount of such expenses reimbursable in any one calendar year shall not affect the amount reimbursable in any other calendar year, and the reimbursement of an eligible expense must be made no later than December 31 of the year after the year in which the expense was incurred.  No right of Executive to reimbursement of expenses under this Section 3(d) shall be subject to liquidation or exchange for another benefit.

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4.                   PAYMENTS TO EXECUTIVE UPON AN EVENT OF TERMINATION.

(a)       Upon the occurrence of an Event of Termination (as herein defined) during Executive’s term of employment under this Agreement, the provisions of this Section 4 shall apply.  As used in this Agreement, an “Event of Termination” shall mean and include any of the following: 

(i)         the involuntary termination by the Bank of Executive’s full-time employment hereunder for any reason other than termination governed by Section 5 (Termination for Cause) or termination governed by Section 6 (Termination for Disability or death) or termination governed by Section 7 (Termination Upon Retirement), provided that such termination of employment constitutes a “Separation from Service” within the meaning of Section 4(d) hereof; or

(ii)       Executive’s voluntary resignation from the Bank’s employ for any of the following reasons: 

(A)          the failure to appoint or reappoint Executive to the position set forth under Section 1 or, if Executive is also a director of the Bank or the Company as of the date hereof, failure to re-nominate Executive as a director of the Bank or the Company as applicable; 

(B)        a material change in Executive’s functions, duties, or responsibilities with the Bank, which change would cause Executive’s position to become one of lesser responsibility, importance, or scope from the position and attributes thereof described in Section 1, above;  

(C)         a relocation of Executive’s principal place of employment by more than forty-five (45) miles from its location at the Effective Date of this Agreement;

(D)            a material reduction in the benefits and perquisites to Executive from those being provided as of the later of the Effective Date or any subsequent Anniversary Date of this Agreement, other than an employee-wide reduction in pay or benefits;

(E)              a liquidation or dissolution of the Bank; or 

(F)               a material breach of this Agreement by the Bank or the Company. 

           Upon the occurrence of any event described in clauses (A), (B), (C), (D), (E) or (F), above, Executive shall have the right to elect to terminate his employment under this Agreement by resignation upon not less than thirty (30) days prior written Notice of Termination, as defined in Section 9(a), given within ninety (90) days after the event giving rise to said right to elect.  The Bank will have thirty (30) days to cure the conditions giving rise to the Event of Termination, provided that the Bank may elect to waive such thirty (30) day period.  Notwithstanding the preceding sentence, in the event of a continuing breach of this Agreement by the Bank, Executive, after giving due notice within the prescribed time frame of an initial event specified above, shall not waive any of his rights under this Agreement and this Section solely by virtue of the fact that Executive has submitted his resignation, provided Executive has remained in the employment of the Bank and is engaged in good faith discussions to resolve any occurrence of an event described in clauses (A), (B), (C), (D) or (F) above.

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(iii)    Executive’s involuntary termination by the Bank (or any successor thereto) on the effective date of, or at any time following, a Change in Control, or (B) Executive’s resignation from the employment with the Bank (or any successor thereto) following a Change in Control as a result of any event described in Section 4(a)(ii)(A), (B), (C), (D), or (F) above.  For purposes of this Agreement, the term “Change in Control” shall mean the occurrence of any of the following events:

(A)      Merger:  The Company or the Bank merges into or consolidates with another entity, or merges another bank or corporation into the Bank or the Company, and as a result, less than a majority of the combined voting power of the resulting corporation immediately after the merger or consolidation is held by persons who were stockholders of the Company or the Bank immediately before the merger or consolidation, provided, however, that a second-step conversion of the Company’s mutual holding company is specifically excluded from consideration as a Change in Control under this definition;

(B)      Acquisition of Significant Share Ownership:  There is filed, or is required to be filed, a report on Schedule 13D or another form or schedule (other than Schedule 13G) required under Sections 13(d) or 14(d) of the Securities Exchange Act of 1934, as amended, if the schedule discloses that the filing person or persons acting in concert has or have become the beneficial owner of 25% or more of a class of the Company’s or the Bank’s voting securities; provided, however, this clause (ii) shall not apply to beneficial ownership of the Company’s or the Bank’s voting shares held in a fiduciary capacity by an entity of which the Company directly or indirectly beneficially owns 50% or more of its outstanding voting securities;

(C)     Change in Board Composition:  During any period of two consecutive years, individuals who constitute the Company’s or the Bank’s Board of Directors at the beginning of the two-year period cease for any reason to constitute at least a majority of the Company’s or the Bank’s Board of Directors; provided, however, that for purposes of this clause (iii), each director who is first elected by the board (or first nominated by the board for election by the stockholders) by a vote of at least two-thirds (2/3) of the directors who were directors at the beginning of the two-year period or who is appointed to the Board as the result of a directive, supervisory agreement or order issued by the primary federal regulator of the Company or the Bank or by the FDIC shall be deemed to have also been a director at the beginning of such period; and provided, further, that the elimination of the Company’s board of directors by merger into a new stock holding company in connection with a second-step conversion of the Company’s mutual holding company shall not be deemed a Change in Control if the Bank’s Board of Directors continues to satisfy this requirement; or

(D)      Sale of Assets:  The Company or the Bank sells to a third party all or substantially all of its assets.

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 (b)       Upon the occurrence of an Event of Termination under Sections 4(a) (i), (ii) or (iii), on the Date of Termination, as defined in Section 9(b), the Bank shall be obligated to pay Executive, or, in the event of his subsequent death, his beneficiary or beneficiaries, or his estate, as the case may be, as severance pay or liquidated damages, or both, an amount equal to the sum of: (i) his earned but unpaid salary as of the date of his termination of employment with the Bank; (ii) the vested benefits, if any, to which he is entitled as a former employee under the employee benefit plans and programs and compensation plans and programs maintained for the benefit of the Bank’s officers and employees; and (iii) a payment equal to one year's Base Salary.  Any payments hereunder shall be made in a lump sum within thirty (30) days after the Date of Termination, except as otherwise provided herein.  Such payments shall not be reduced in the event Executive obtains other employment following termination of employment.  However, such payments shall be reduced by the amount equal to the Bank’s payment for medical coverage for Executive and his family under Section 4(c) of this Agreement.

(c)       Upon the occurrence of an Event of Termination under Section 4(a)(i), (ii) or (iii), the Bank will cause to be continued, at the Bank’s expense, medical coverage for Executive and his family under any Bank sponsored "employee welfare benefit plan," as such term is defined in section 3(1) of the Employee Retirement Income Security Act of 1974, as amended, which coverage shall be substantially identical to the coverage maintained by the Bank for Executive and his family prior to Executive’s termination.  Such coverage shall continue at the Bank’s expense for a period of one year following Executive's Date of Termination.

(d)       For purposes of this Agreement, a “Separation from Service” shall have occurred if the Bank and Executive reasonably anticipate that no further services will be performed by Executive after the date of the Event of Termination (whether as an employee or as an independent contractor) or the level of further services performed will not exceed 49% of the average level of bona fide services in the 36 months immediately preceding the Event of Termination.  For all purposes hereunder, the definition of “Separation from Service” shall be interpreted consistent with Treasury Regulation Section 1.409A-1(h)(ii).  If Executive is a Specified Employee, as defined in Code Section 409A and any payment to be made under subparagraph (b) of this Section 4 shall be determined to be subject to Code Section 409A, then if required by Code Section 409A, such payment or a portion of such payment (to the minimum extent possible) shall be delayed and shall be paid on the first day of the seventh month following Executive’s Separation from Service.

(e)       In the event Executive resigns for any reason other than an Event of Termination (as described in Section 4), Termination for Just Cause (as described in Section 5), Termination for Disability or Death (as described in Section 6) or Termination Upon Retirement (as described in Section 7), all obligations of the Bank hereunder shall immediately cease upon the date of such resignation.

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5.                   TERMINATION FOR JUST CAUSE. 

 (a)       The term “Termination for Just Cause” shall mean termination because of Executive’s personal dishonesty, incompetence, willful misconduct, breach of fiduciary duty involving personal profit, intentional failure to perform stated duties, willful violation of any law, rule or regulation (other than traffic violations or similar offenses) or final cease-and-desist order, or material breach of any provision of this Agreement. 

 (b)       Notwithstanding Section 5(a), the Bank may not terminate Executive for Just Cause unless and until there shall have been delivered to him a Notice of Termination which shall include a copy of a resolution duly adopted by the affirmative vote of not less than a majority of the entire membership of the Board at a meeting of the Board called and held for that purpose, finding that in the good faith opinion of the Board, Executive had engaged in or committed the conduct justifying Termination for Just Cause.  Executive shall not have the right to receive compensation or other benefits for any period after Termination for Just Cause.  During the period beginning on the date of the Notice of Termination for Just Cause pursuant to Section 5 hereof through the Date of Termination, any unvested stock options and related rights granted to Executive under any stock option plan of the Bank or the Company (or any affiliate) shall not be exercisable nor shall any unvested awards granted to Executive under any stock benefit plan of the Bank or Company (or affiliate thereof) vest.  At the Date of Termination, any such unvested stock options and related rights and any such unvested awards shall become null and void and shall not be exercisable by or delivered to Executive at any time subsequent to such Termination for Just Cause.

6.                   TERMINATION FOR DISABILITY OR DEATH.

 (a)       The Bank or Executive may terminate Executive’s employment after having established Executive’s Disability.  For purposes of this Agreement, “Disability” means a physical or mental infirmity that impairs Executive’s ability to substantially perform his duties under this Agreement and that results in Executive’s becoming eligible for long-term disability benefits under a long-term disability plan of the Bank (or, if the Bank has no such plan in effect, that impairs Executive’s ability to substantially perform his duties under this Agreement for a period of one hundred eighty (180) consecutive days).  The Board shall determine in good faith, based upon competent medical advice and other factors that they reasonably believe to be relevant, whether or not Executive is and continues to be disabled for purposes of this Agreement.  As a condition to any benefits, the Board may require Executive to submit to such physical or mental evaluations and tests as it deems reasonably appropriate, at the Bank’s expense. 

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 (b)       In the event of such Disability, Executive’s obligation to perform services under this Agreement will terminate.  In the event of such termination, Executive shall be entitled to receive benefits under any disability program sponsored by the Bank.  

 (c)       In the event of Executive’s death during the term of this Agreement, his estate, legal representatives or named beneficiary or beneficiaries (as directed by Executive in writing) shall be paid Executive’s Base Salary, as defined in Section 3, at the rate in effect at the time of Executive’s death for a period of one (1) year from the date of Executive’s death. In addition, Executive's family shall be entitled to continued medical coverage under any Bank sponsored "employee welfare benefit plan," as such term is defined in section 3(1) of the Employee Retirement Income Security Act of 1974, as amended, which coverage shall be substantially identical to the coverage maintained by the Bank for Executive and his family prior to Executive’s termination.  

7.                   TERMINATION UPON RETIREMENT

 Termination of Executive’s employment based on “Retirement” shall mean termination of Executive’s employment at age 65, unless extended by the Board.  Upon termination of Executive’s employment based on Retirement, no amounts or benefits shall be due Executive under this Agreement, and Executive shall be entitled to all benefits under any retirement plan of the Bank and other plans to which Executive is a party.

8.                   RESIGNATION FROM BOARDS OF DIRECTORS

 In the event of Executive’s termination of employment for any reason other than upon a Change in Control, Executive shall resign, if previously appointed, as a director of the Bank and as a director and/or officer of any affiliate of the Bank.

9.                   NOTICE

 (a)       Any notice required hereunder shall be in writing and hand-delivered to the other party.  Hand delivery to the Bank shall be made to the Chairman or the Secretary of the Board of Directors.  Any termination by the Bank or by Executive shall be communicated by Notice of Termination to the other party hereto.  For purposes of this Agreement, a “Notice of Termination” shall mean a written notice which shall indicate the specific termination provision in this Agreement relied upon and shall set forth in reasonable detail the facts and circumstances claimed to provide a basis for termination of Executive’s employment under the provision so indicated.

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 (b)      “Date of Termination” shall mean (A) if Executive’s employment is terminated for Disability, thirty (30) days after a Notice of Termination is given (provided that he shall not have returned to the performance of his duties on a full-time basis during such thirty (30) day period), and (B) if his employment is terminated for any other reason, the date specified in the Notice of Termination.

 (c)       If the party receiving a Notice of Termination desires to dispute or contest the basis or reasons for termination, the party receiving the Notice of Termination must notify the other party within thirty (30) days after receiving the Notice of Termination that such a dispute exists, and shall pursue the resolution of such dispute in good faith and with reasonable diligence pursuant to Section 19 of this Agreement.  During the pendency of any such dispute, the Bank shall not be obligated to pay Executive compensation or other payments beyond the Date of Termination.

10.                   SOURCE OF PAYMENTS.

   All payments provided in this Agreement shall be timely paid in cash or check from the general funds of the Bank.

11.                   EFFECT ON PRIOR AGREEMENTS AND EXISTING BENEFITS PLANS.

  This Agreement contains the entire understanding between the parties hereto and supersedes any prior employment agreement between the Bank or any predecessor of the Bank and Executive.  No provision of this Agreement shall be interpreted to mean that Executive is subject to receiving fewer benefits than those available to him without reference to this Agreement.

12.                   NO ATTACHMENT; BINDING ON SUCCESSORS.

(a)       Except as required by law or as otherwise provided in this Agreement, no right to receive payments under this Agreement shall be subject to anticipation, commutation, alienation, sale, assignment, encumbrance, charge, pledge, or hypothecation, or to execution, attachment, levy, or similar process or assignment by operation of law, and any attempt, voluntary or involuntary, to effect any such action shall be null, void, and of no effect.

(b)       This Agreement shall be binding upon, and inure to the benefit of, Executive and the Bank and their respective successors and assigns.

13.                   MODIFICATION AND WAIVER.

(a)        This Agreement may not be modified or amended except by an instrument in writing signed by the parties hereto.

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(b)       No term or condition of this Agreement shall be deemed to have been waived, nor shall there be any estoppel against the enforcement of any provision of this Agreement, except by written instrument of the party charged with such waiver or estoppel.  No such written waiver shall be deemed a continuing waiver unless specifically stated therein, and each such waiver shall operate only as to the specific term or condition waived and shall not constitute a waiver of such term or condition for the future as to any act other than that specifically waived.

14.                   REQUIRED PROVISIONS.

  (a)       The Bank may terminate Executive’s employment at any time, but any termination by the Board other than Termination for Just Cause as defined in Section 5 hereof shall not prejudice Executive’s right to compensation or other benefits under this Agreement.  Executive shall have no right to receive compensation or other benefits for any period after Termination for Cause. 

  (b)       If Executive is suspended from office and/or temporarily prohibited from participating in the conduct of the Bank’s affairs by a notice served under Section 8(e)(3) [12 USC §1818(e)(3)] or 8(g)(1) [12 USC §1818(g)(1)] of the Federal Deposit Insurance Act (the “FDI Act”), the Bank’s obligations under this Agreement shall be suspended as of the date of service, unless stayed by appropriate proceedings.  If the charges in the notice are dismissed, the Bank may in its discretion (i) pay Executive all or part of the compensation withheld while its contract obligations were suspended and (ii) reinstate (in whole or in part) any of its obligations which were suspended.

  (c)       If Executive is removed and/or permanently prohibited from participating in the conduct of the Bank’s affairs by an order issued under Section 8(e)(4) [12 USC §1818(e)(4)] or 8(g)(1) [12 USC §1818(g)(1)] of the FDI Act, all obligations of the Bank under this Agreement shall terminate as of the effective date of the order, but vested rights of the contracting parties shall not be affected.

  (d)       If the Bank is in default as defined in Section 3(x)(1) [12 USC §1813(x)(1)] of the FDI Act, all obligations of the Bank under this Agreement shall terminate as of the date of default, but this paragraph shall not affect any vested rights of the contracting parties.

  (e)       All obligations under this Agreement shall be terminated, except to the extent determined that continuation of this Agreement is necessary for the continued operation of the Bank, (i) by the Comptroller of the OCC or his or her designee, at the time the FDIC enters into an agreement to provide assistance to or on behalf of the Bank under the authority contained in Section 13(c) [12 USC §1823(c)] of the FDI Act; or (ii) by the Comptroller or his or her designee at the time the Director or his or her designee approves a supervisory merger to resolve problems related to operation of the Bank or when the Bank is determined by the Comptroller to be in an unsafe or unsound condition.  Any rights of the parties that have already vested, however, shall not be affected by such action.

  (f)      Notwithstanding anything herein contained to the contrary, any payments to Executive by the Bank, whether pursuant to this Agreement or otherwise, are subject to and conditioned upon their compliance with Section 18(k) of the FDI Act, 12 U.S.C. Section 1828(k), and the regulations promulgated thereunder in 12 C.F.R. Part 359.

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15.                   NON-COMPETITION AND POST-TERMINATION OBLIGATIONS.

  (a)       All payments and benefits to Executive under this Agreement shall be subject to Executive’s compliance with paragraph (b), (c) and (d) of this Section 15.

  (b)       Executive shall, upon reasonable notice, furnish such information and assistance to the Bank as may reasonably be required by the Bank in connection with any litigation in which it or any of its subsidiaries or affiliates is, or may become, a party; provided, however, that Executive shall not be required to provide information or assistance with respect to any litigation between Executive and the Bank or any of its subsidiaries or affiliates.

  (c)       Executive recognizes and acknowledges that the knowledge of the business activities and plans for business activities of the Bank and affiliates thereof, as it may exist from time to time, is a valuable, special and unique asset of the business of the Bank and affiliates thereof.  Executive will not, during or after the term of his employment, disclose any knowledge of the past, present, planned or considered business activities of the Bank or affiliates thereof to any person, firm, corporation, or other entity for any reason or purpose whatsoever (except for such disclosure as may be required to be provided to the OCC, the FDIC, or other regulatory agency with jurisdiction over the Bank or Executive).  Notwithstanding the foregoing, Executive may disclose any knowledge of banking, financial and/or economic principles, concepts or ideas which are not solely and exclusively derived from the business plans and activities of the Bank, and Executive may disclose any information regarding the Bank which is otherwise publicly available or which Executive is otherwise legally required to disclose.  In the event of a breach or threatened breach by Executive of the provisions of this Section 15, the Bank will be entitled to an injunction restraining Executive from disclosing, in whole or in part, his knowledge of the past, present, planned or considered business activities of the Bank or any of its affiliates, or from rendering any services to any person, firm, corporation or other entity to whom such knowledge, in whole or in part, has been disclosed or is threatened to be disclosed.  Nothing herein will be construed as prohibiting the Bank from pursuing any other remedies available to them for such breach or threatened breach, including the recovery of damages from Executive.

  (d)       Upon any termination of Executive’s employment hereunder for any reason other than (i) pursuant to Section 4(a)(iii); (ii) pursuant to Section 6; or (iii) any termination of Executive’s employment hereunder as a result of the expiration of Executive’s employment term following a notice of non-renewal pursuant to Section 2, Executive agrees not to compete in the banking and lending business with the Bank and any of its affiliates for a period of one (1) year following such termination in any city or town in which the Bank has an office or has filed an application for regulatory approval to establish an office, determined as of the effective date of such termination, except as agreed to pursuant to a resolution duly adopted by the Board.  Executive agrees that during such period and within said cities and towns, Executive shall not work for or advise, consult or otherwise serve with, directly or indirectly, any entity whose business materially competes with the depository, lending or other business activities of the Bank.  The parties hereto, recognizing that irreparable injury will result to the Bank, its business and property in the event of Executive’s breach of this Section 15(d) agree that in the event of any such breach by Executive, the Bank will be entitled, in addition to any other remedies and damages available, to an injunction to restrain the violation hereof by Executive, Executive’s partners, agents, servants, employers, employees and all persons acting for or with Executive.  Executive represents and admits that Executive’s experience and capabilities are such that Executive can obtain employment in a business engaged in other lines and/or of a different nature than the Bank, and that the enforcement of a remedy by way of injunction will not prevent Executive from earning a livelihood.  Nothing herein will be construed as prohibiting the Bank from pursuing any other remedies available to them for such breach or threatened breach, including the recovery of damages from Executive.

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  (e)       Upon any termination of Executive’s employment hereunder for any reason other than (i) pursuant to Section 4(a)(iii); (ii) pursuant to Section 6; or (iii) any termination of Executive’s employment hereunder as a result of the expiration of Executive’s employment term following a notice of non-renewal pursuant to Section 2, Executive agrees that Executive will not, in any manner whatsoever, for a period of one (1) year following the termination of Executive’s employment with the Bank either as an individual or as a partner, stockholder, director, officer, principal, employee, agent, consultant, or in any other relationship or capacity, with any person, firm, corporation or other business entity, either directory or indirectly, solicit or induce or aid in the solicitation or inducement of any employees of the Bank to leave their employment with the Bank.  Executive further agrees that Executive will not, in any manner whatsoever, for a period of one (1) year following the termination of Executive’s employment with the Bank, either as an individual or as a partner, stockholder, director, officer, principal, employee, agent, consultant or in any other relationship or capacity with any person, firm, corporation or other business entity, either directly or indirectly, solicit the business of any customers or clients of the Bank at the time of termination of Executive’s employment with the Bank.

16.                   SEVERABILITY.

   If, for any reason, any provision of this Agreement, or any part of any provision, is held invalid, such invalidity shall not affect any other provision of this Agreement or any part of such provision not held so invalid, and each such other provision and part thereof shall to the full extent consistent with law continue in full force and effect.

17.                   HEADINGS FOR REFERENCE ONLY.

   The headings of sections and paragraphs herein are included solely for convenience of reference and shall not control the meaning or interpretation of any of the provisions of this Agreement.

18.                   GOVERNING LAW.

   This Agreement shall be governed by the laws of the State of Illinois but only to the extent not superseded by federal law.

19.                   ARBITRATION.

  Any dispute or controversy arising under or in connection with this Agreement shall be settled exclusively by binding arbitration, conducted before a single arbitrator selected by the Bank and Executive sitting in a location selected by the Bank and Executive within twenty-five (25) miles of Arlington Heights, Illinois in accordance with the rules of the American Arbitration Association then in effect.  Judgment may be entered on the arbitrator’s award in any court having jurisdiction.

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20.                   PAYMENT OF LEGAL FEES.

  All reasonable legal fees paid or incurred by Executive pursuant to any dispute or question of interpretation relating to this Agreement shall be paid or reimbursed by the Bank, provided that the dispute or interpretation has been settled by Executive and the Bank or resolved in Executive’s favor.  To the extent necessary to avoid taxes and penalties under Code Section 409A, such reimbursement shall be paid within two and one-half months following the resolution of any such dispute.

21.                   INDEMNIFICATION.

  (a)       The Bank shall provide Executive (including his heirs, executors and administrators) with coverage under a standard directors’ and officers’ liability insurance policy at its expense, and shall indemnify Executive (and his heirs, executors and administrators) for the term of this Agreement and for a period of six years thereafter to the fullest extent permitted under applicable law against all expenses and liabilities reasonably incurred by him in connection with or arising out of any action, suit or proceeding in which he may be involved by reason of his performance of services as a director or officer of the Bank (whether or not he continues to be a director or officer at the time of incurring such expenses or liabilities), such expenses and liabilities to include, but not be limited to, judgments, court costs and attorneys’ fees and the cost of reasonable settlements (such settlements must be approved by the Board); provided, however, the Bank shall not be required to indemnify or reimburse Executive for legal expenses or liabilities incurred in connection with an action, suit or proceeding arising from any illegal or fraudulent act committed by Executive.  Any such indemnification shall be made consistent with OCC Regulations and Section 18(k) of the FDI Act, 12 U.S.C. §1828(k), and the regulations issued thereunder in 12 C.F.R. Part 359.

  (b)       Notwithstanding the foregoing, no indemnification shall be made unless the Bank gives the OCC at least 60 days’ notice of its intention to make such indemnification.  Such notice shall state the facts on which the action arose, the terms of any settlement, and any disposition of the action by a court.  Such notice, a copy thereof, and a certified copy of the resolution containing the required determination by the Board shall be sent to the supervisory office of the OCC, who shall promptly acknowledge receipt thereof.  The notice period shall run from the date of such receipt.  No such indemnification shall be made if the OCC advises the Bank in writing within such notice period, of its objection thereto.

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IN WITNESS WHEREOF, the Bank has caused this Agreement to be executed by its duly authorized representative, and Executive has signed this Agreement, effective as of the day and date first above written.  

	
ATTEST:

	
BEN FRANKLIN BANK OF ILLINOIS 

	
 

	
 

	
 

	
 

	
 

	
 

	
/s/ Bernadine V. Dziedzic               

Corporate Secretary

	
By: /s/ C. Steven Sjogren                            

      Chairman of the Board

	
 

	
 

	
 

	
 

	
WITNESS:

	
EXECUTIVE:

	
 

	
 

	
 

	
 

	
 

	
 

	
/s/ Steven D. Olson                        

Steven D. Olson

	
/s/ Joseph E. Shultz                            

Joseph E. Shultz

	
 

	
 

	13Exhibit 4.2

 

EXECUTION VERSION

 

FOURTH SUPPLEMENTAL INDENTURE

 by and among

 Ventas Realty, Limited Partnership, as Issuer,

Ventas, Inc., as Guarantor

 and

 U.S. Bank National Association,

as Trustee

 

$400,000,000

3.100% Senior Notes due 2023

 

$400,000,000

3.850% Senior Notes due 2027

 

 

Dated as of March 29, 2017

 

Supplement to Indenture dated as of July 16, 2015 (Senior Debt Securities)

 

 

TABLE OF CONTENTS

 

	
 
    	
 
    	
Page
    
	
 
    	
 
    	
 
    
	
ARTICLE I   CREATION OF THE SECURITIES
    	
2
    
	
 
    	
 
    	
 
    
	
Section 1.01
    	
Designation of the   Series; Securities Guarantee
    	
2
    
	
Section 1.02
    	
Form of Notes
    	
2
    
	
Section 1.03
    	
No Limit on Amount of   Notes
    	
2
    
	
Section 1.04
    	
Ranking
    	
3
    
	
Section 1.05
    	
Authentication of 2023   Notes
    	
3
    
	
Section 1.06
    	
Authentication of 2027   Notes
    	
3
    
	
Section 1.07
    	
No Sinking Fund
    	
3
    
	
Section 1.08
    	
No Additional Amounts
    	
3
    
	
Section 1.09
    	
Definitions
    	
3
    
	
 
    	
 
    	
 
    
	
ARTICLE II   REDEMPTION
    	
10
    
	
 
    	
 
    	
 
    
	
Section 2.01
    	
Amendment to Article 3
    	
10
    
	
 
    	
 
    	
 
    
	
ARTICLE III   COVENANTS
    	
11
    
	
 
    	
 
    	
 
    
	
Section 3.01
    	
Amendments to   Article 4
    	
11
    
	
 
    	
 
    	
 
    
	
ARTICLE IV   SUCCESSORS
    	
15
    
	
 
    	
 
    	
 
    
	
Section 4.01
    	
Amendments to   Article 5
    	
15
    
	
 
    	
 
    	
 
    
	
ARTICLE V   DEFAULTS AND REMEDIES
    	
17
    
	
 
    	
 
    	
 
    
	
Section 5.01
    	
Amendments to   Article 6
    	
17
    
	
 
    	
 
    	
 
    
	
ARTICLE VI   TRUSTEE
    	
19
    
	
 
    	
 
    	
 
    
	
Section 6.01
    	
Amendments to   Article 7
    	
19
    
	
 
    	
 
    	
 
    
	
ARTICLE VII
    	
19
    
	
 
    	
 
    	
 
    
	
Section 7.01
    	
Amendments to   Article 9
    	
19
    
	
 
    	
 
    	
 
    
	
ARTICLE VIII   LEGAL DEFEASANCE AND COVENANT DEFEASANCE
    	
20
    
	
 
    	
 
    	
 
    
	
Section 8.01
    	
Applicability of   Defeasance Provisions
    	
20
    
	
Section 8.02
    	
Determinations Under   Section 8.03
    	
20
    
	
Section 8.03
    	
Determination Under   Section 8.07
    	
20
    
	
Section 8.04
    	
Amendments to   Article 8
    	
20
    
	
 
    	
 
    	
 
    
	
ARTICLE IX   GUARANTEES
    	
20
    
	
 
    	
 
    	
 
    
	
Section 9.01
    	
Applicability of   Guarantee Provisions
    	
20
    
				

 

	
 
    	
 
    	
 
    
	
ARTICLE X   MISCELLANEOUS
    	
21
    
	
 
    	
 
    	
 
    
	
Section 10.01
    	
Determination Under   Section 13.10
    	
21
    
	
Section 10.02
    	
Application of Fourth   Supplemental Indenture; Ratification
    	
21
    
	
Section 10.03
    	
Benefits of Fourth   Supplemental Indenture
    	
21
    
	
Section 10.04
    	
Effective Date
    	
22
    
	
Section 10.05
    	
Governing Law
    	
22
    
	
Section 10.06
    	
Counterparts
    	
22
    

 

	
SCHEDULE 1
    	
 
    	
Real Estate Revenues
    
	
 
    	
 
    	
 
    
	
EXHIBIT A
    	
 
    	
Form of 2023 Note
    
	
EXHIBIT B
    	
 
    	
Form of 2027 Note
    

 

 

THIS FOURTH SUPPLEMENTAL INDENTURE, dated as of March 29, 2017 (this “Fourth Supplemental Indenture”), is by and among Ventas Realty, Limited Partnership, a Delaware limited partnership (the “Issuer”), Ventas, Inc., a Delaware corporation, and U.S. Bank National Association, having a Corporate Trust Office at 425 Walnut ML CN WN 06 CT, Cincinnati, Ohio 45202, as Trustee (the “Trustee”) under the Indenture (as defined below).

 

WHEREAS, Ventas, Inc., the Issuer and the Trustee are parties to that certain indenture dated as of July 16, 2015 (the “Base Indenture” and, together with this Fourth Supplemental Indenture, as amended and supplemented from time to time, the “Indenture”), providing for the issuance by Ventas, Inc. or by the Issuer together from time to time of their respective senior debt securities in one or more series (the “Securities”);

 

WHEREAS, Sections 2.01, 2.02 and 9.01 of the Base Indenture provide, among other things, that, without the consent of any Holder of the Securities, one or more indentures supplemental to the Base Indenture may be entered into to establish the form or terms of Securities of any series or to change or eliminate any of the provisions of the Base Indenture; provided that any such change or elimination shall become effective only when there is no Security Outstanding of any series created prior to the execution of such supplemental indenture which is entitled to the benefit of such provisions;

 

WHEREAS, the Issuer, acting in its capacity as issuer under the Base Indenture, desires to issue two series of its Securities under the Base Indenture, and has duly authorized the creation and issuance of such series of Securities and the execution and delivery of this Fourth Supplemental Indenture to establish such series of Securities, to modify certain terms of the Base Indenture as they apply to such series of Securities and to provide certain additional provisions in respect of such Securities as hereinafter described;

 

WHEREAS, the Issuer desires to issue such Securities with the benefit of a Securities Guarantee provided by Ventas, Inc. on the terms set forth in the Indenture;

 

WHEREAS, the Issuer, Ventas, Inc. and the Trustee deem it advisable to enter into this Fourth Supplemental Indenture for the purposes of establishing the terms of such series of Securities and the related Securities Guarantee, and providing for the rights, obligations and duties of the Trustee with respect to such Securities;

 

WHEREAS, concurrently with the execution hereof, the Issuer has delivered to the Trustee an Officers’ Certificate and has caused its counsel to deliver to the Trustee an Opinion of Counsel or a reliance letter upon an Opinion of Counsel satisfying the requirements of Section 2.03 of the Base Indenture; and

 

WHEREAS, all conditions and requirements of the Base Indenture necessary to make this Fourth Supplemental Indenture a valid, binding and legal instrument, enforceable in accordance with its terms, have been performed and fulfilled by the parties hereto, and the execution and delivery hereof have been in all respects duly authorized by the parties hereto.

 

 

NOW, THEREFORE, for and in consideration of the premises and agreements herein contained, it is mutually covenanted and agreed, for the equal and proportionate benefit of all Holders of the Securities of such series established hereby, as follows:

 

ARTICLE I

 

CREATION OF THE SECURITIES

 

Section 1.01          Designation of the Series; Securities Guarantee.

 

(a)           The changes, modifications and supplements to the Base Indenture effected by this Fourth Supplemental Indenture shall be applicable only with respect to, and govern the terms of, the Notes (as defined below), which shall not apply to any other Securities that have been or may be issued under the Base Indenture, unless a supplemental indenture with respect to such other Securities specifically incorporates such changes, modifications and supplements.  Pursuant to the terms hereof and Sections 2.01 and 2.02 of the Base Indenture, the Issuer hereby creates (i) a series of Securities designated as the “3.100% Senior Notes due 2023” (the “2023 Notes”) and (ii) a series of Securities designated as the “3.850% Senior Notes due 2027” (the “2027 Notes” and, together with the 2023 Notes, the “Notes”), which Notes shall be deemed “Securities” for all purposes under the Base Indenture.  Except as otherwise provided in the Base Indenture, the 2023 Notes and the 2027 Notes shall each form their own series for voting purposes and shall not be part of the same class or series as any other Securities issued by the Issuer or by Ventas, Inc.

 

(b)           Each of the Notes will be guaranteed by the Guarantor in accordance with Article 10 of the Base Indenture and Article IX of this Fourth Supplemental Indenture.

 

Section 1.02              Form of Notes.  The Notes will be issued in permanent global form as one or more Global Securities substantially in the forms set forth in Exhibit A and Exhibit B attached hereto, which are incorporated herein and made a part hereof.  The 2023 Notes and the 2027 Notes shall bear interest, be payable and have such other terms as are stated in such form of global 2023 Note or global 2027 Note, as applicable, or in the Indenture.  The stated maturity of the principal of the 2023 Notes shall be January 15, 2023, and the stated maturity of the principal of the 2027 Notes shall be April 1, 2027.

 

Section 1.03              No Limit on Amount of Notes.  The Trustee shall authenticate and deliver on the Issue Date under the Indenture 2023 Notes for original issue in an aggregate principal amount of up to $400,000,000 and 2027 Notes for original issue in an aggregate principal amount of up to $400,000,000.  Notwithstanding the foregoing, the aggregate principal amount of the 2023 Notes and the 2027 Notes that may be authenticated and delivered under the Indenture shall be unlimited, subject to the covenants set forth in the Indenture, including under Section 4.10 hereof; provided, that the terms of all Notes of a series issued under this Fourth Supplemental Indenture (other than the date of issuance, the issuance price and the initial Interest Payment Date) shall be the same as the terms of all other Notes in such series.  The Issuer may, upon the execution and delivery of this Fourth Supplemental Indenture or from time to time thereafter, execute and deliver the Notes to the Trustee for authentication, and the Trustee shall

 

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thereupon authenticate and deliver said Notes upon an Authentication Order and delivery of an Officers’ Certificate and Opinion of Counsel as contemplated by Section 2.03 of the Base Indenture, without further action by the Issuer.

 

Section 1.04              Ranking.  The Notes will be the Issuer’s unsecured and unsubordinated obligations and rank equal in right of payment with all of the Issuer’s existing and future unsecured and unsubordinated indebtedness.

 

Section 1.05              Authentication of 2023 Notes.  The Trustee shall authenticate  the 2023 Notes by executing the Global Security, substantially as provided in the form of Note attached hereto as Exhibit A.

 

Section 1.06              Authentication of 2027 Notes.  The Trustee shall authenticate the 2027 Notes by executing the Global Security, substantially as provided in the form of Note attached hereto as Exhibit B.

 

Section 1.07              No Sinking Fund.  No sinking fund will be provided with respect to the Notes (notwithstanding any provisions of the Base Indenture with respect to sinking fund obligations).

 

Section 1.08              No Additional Amounts.  No Additional Amounts will be payable with respect to the Notes (notwithstanding any provisions of the Base Indenture with respect to Additional Amount obligations).

 

Section 1.09              Definitions.

 

(a)           Capitalized terms used herein and not otherwise defined herein shall have the respective meanings assigned thereto in the Base Indenture.

 

(b)           Solely for purposes of this Fourth Supplemental Indenture and the Notes, the following definitions in Section 1.01 of the Base Indenture are hereby amended in their entirety to read as follows:

 

“Business Day” means any day other than a Saturday or Sunday or a day on which banking institutions in The City of New York are required or authorized to close.

 

(c)           Solely for purposes of this Fourth Supplemental Indenture and the Notes, the following terms shall have the indicated meanings:

 

“Consolidated EBITDA” means, for any period of time, the net income (loss) of Ventas, Inc. and its Subsidiaries, determined on a consolidated basis in accordance with GAAP for such period, before deductions for (without duplication):

 

(1)           Interest Expense;

 

(2)           taxes;

 

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(3)           depreciation, amortization and all other non-cash items, as determined reasonably and in good faith by Ventas, Inc., deducted in arriving at net income (loss);

 

(4)           extraordinary items;

 

(5)           non-recurring items or other unusual items, as determined reasonably and in good faith by Ventas, Inc. (including, without limitation, all prepayment penalties and all costs or fees incurred in connection with any debt financing or amendment thereto, acquisition, disposition, recapitalization or similar transaction (regardless of whether such transaction is completed));

 

(6)           noncontrolling interests;

 

(7)           income or expense attributable to transactions involving derivative instruments that do not qualify for hedge accounting in accordance with GAAP; and

 

(8)           gains or losses on dispositions of depreciable real estate investments, property valuation losses and impairment charges.

 

For purposes of calculating Consolidated EBITDA, all amounts shall be as determined reasonably and in good faith by Ventas, Inc. and in accordance with GAAP except to the extent that GAAP is not applicable with respect to the determination of all non-cash and non-recurring items.

 

“Consolidated Financial Statements” means, with respect to any Person, collectively, the consolidated financial statements and notes to those financial statements, of that Person and its Subsidiaries prepared in accordance with GAAP.

 

“Contingent Liabilities of Ventas, Inc. and Subsidiaries” means, as of any date, those liabilities of Ventas, Inc. and its Subsidiaries consisting of (without duplication) indebtedness for borrowed money, as determined in accordance with GAAP, that are or would be stated and quantified as contingent liabilities in the notes to the Consolidated Financial Statements of Ventas, Inc. as of the date of determination.

 

“Debt” means, as of any date (without duplication), (1) all indebtedness and liabilities for borrowed money, secured or unsecured, of Ventas, Inc. and its Subsidiaries, including mortgages and other notes payable (including the Notes to the extent outstanding from time to time), but excluding any indebtedness, including mortgages and other notes payable, which is secured by cash, cash equivalents or marketable securities or defeased (it being understood that cash collateral shall be deemed to include cash deposited with a trustee with respect to third-party indebtedness) and (2) all Contingent Liabilities of Ventas, Inc. and its Subsidiaries, excluding in each of clauses (1) and (2) Intercompany Debt and all liabilities associated with customary exceptions to Non-Recourse Debt, such as for fraud, misapplication of funds, environmental indemnities, voluntary bankruptcy, collusive involuntary bankruptcy and other similar exceptions.

 

It is understood that Debt shall not include any redeemable equity interest in Ventas, Inc.

 

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“Fourth Supplemental Indenture” has the meaning stated in the preamble.

 

“Guarantor” means Ventas, Inc. and its successors and assigns; provided, however, that any Person constituting a Guarantor as described above shall cease to constitute a Guarantor when its Guarantee of the Notes is released in accordance with the terms of the Indenture.

 

“Intercompany Debt” means, as of any date, Debt to which the only parties are Ventas, Inc. and any of its Subsidiaries as of such date; provided, however, that with respect to any such Debt of which the Issuer or the Guarantor is the borrower, such Debt is subordinate in right of payment to the Notes.

 

“Interest Expense” means, for any period of time, the aggregate amount of interest recorded in accordance with GAAP for such period by Ventas, Inc. and its Subsidiaries, but excluding (i) interest reserves funded from the proceeds of any loan, (ii) prepayment penalties, (iii) amortization of deferred financing costs and (iv) non-cash swap ineffectiveness charges, in all cases as reflected in the applicable Consolidated Financial Statements.

 

“Issue Date” means March 29, 2017.

 

“Issuer” has the meaning stated in the preamble.

 

“Latest Completed Quarter” means, as of any date, the then most recently ended fiscal quarter of Ventas, Inc. for which Consolidated Financial Statements of Ventas, Inc. have been completed, it being understood that at any time when Ventas, Inc. is subject to the informational requirements of the Exchange Act, and in accordance therewith files annual and quarterly reports with the Commission, the term “Latest Completed Quarter” shall be deemed to refer to the fiscal quarter covered by Ventas, Inc.’s most recently filed Quarterly Report on Form 10-Q, or, in the case of the last fiscal quarter of the year, Ventas, Inc.’s Annual Report on Form 10-K.

 

“Make-Whole Amount” means, in connection with any optional redemption of the Notes, the excess, if any, of:

 

(1)           the aggregate present value as of the date of such redemption of each dollar of principal of the series of Notes being redeemed or paid and the amount of interest (exclusive of interest accrued to the date of redemption or accelerated payment) that would have been payable in respect of each such dollar if such redemption or accelerated payment had been made on December 15, 2022, in the case of the 2023 Notes, and January 1, 2027, in the case of the 2027 Notes, determined by discounting, on a semi-annual basis, such principal and interest at the applicable Reinvestment Rate (determined on the third Business Day preceding the date a notice of redemption is given or declaration of acceleration is made) from the respective dates on which such principal and interest would have been payable if such redemption or payment had been made on January 15, 2023, in the case of the 2023 Notes, and April 1, 2027, in the case of the 2027 Notes, over

 

(2)           the aggregate principal amount of the Notes being redeemed or paid.

 

5

 

“Notes” has the meaning stated in Section 1.01 hereof.

 

“Obligations” means any principal, interest, penalties, fees, indemnifications, reimbursements, damages and other liabilities payable under the documentation governing any Debt.

 

“Property EBITDA” means, for any property owned by Ventas, Inc. or any of its Subsidiaries as of the date of determination, for any period of time (without duplication), the net income (loss) derived from such property for such period, before deductions for:

 

(1)           Interest Expense;

 

(2)           taxes;

 

(3)           depreciation, amortization and all other non-cash items, as determined reasonably and in good faith by Ventas, Inc., deducted in arriving at net income (loss);

 

(4)           general and administrative expenses that are not allocated by management to a property segment, as reflected in Ventas, Inc.’s Consolidated Financial Statements available for the four (4) consecutive fiscal quarters ending with the Latest Completed Quarter;

 

(5)           extraordinary items;

 

(6)           non-recurring items or other unusual items, as determined reasonably and in good faith by Ventas, Inc. (including, without limitation, all prepayment penalties and all costs or fees incurred in connection with any debt financing or amendment thereto, acquisition, disposition, recapitalization or similar transaction (regardless of whether such transaction is completed));

 

(7)           noncontrolling interests;

 

(8)           income or expense attributable to transactions involving derivative instruments that do not qualify for hedge accounting in accordance with GAAP; and

 

(9)           property valuation losses and impairment charges;

 

in each case attributable to such property.

 

For purposes of calculating Property EBITDA, all amounts shall be determined reasonably and in good faith by Ventas, Inc. and in accordance with GAAP except to the extent that GAAP is not applicable with respect to the determination of all non-cash and non-recurring items.

 

Property EBITDA shall be adjusted (without duplication) to give pro forma effect:

 

6

 

(x)           in the case of any assets having been placed-in-service or removed from service since the first day of the period to the date of determination, to include or exclude, as the case may be, any Property EBITDA earned or eliminated as a result of the placement of such assets in service or removal of such assets from service as if the placement of such assets in service or removal of such assets from service occurred as of the first day of the period; and

 

(y)           in the case of any acquisition or disposition of any asset or group of assets since the first day of the period to the date of determination, including, without limitation, by merger, or stock or asset purchase or sale, to include or exclude, as the case may be, any Property EBITDA earned or eliminated as a result of the acquisition or disposition of those assets as if the acquisition or disposition occurred as of the first day of the period.

 

“Reinvestment Rate” means 0.200%, in the case of the 2023 Notes, and 0.250%, in the case of the 2027 Notes, plus, in each case,  the arithmetic mean of the yields under the respective heading Week Ending published in the most recent Statistical Release under Treasury Constant Maturities for the maturity (rounded to the nearest month) corresponding to the remaining life to maturity of the principal of the applicable series of Notes being redeemed or paid as of such redemption or payment date, which maturity shall be deemed to be January 15, 2023, in the case of the 2023 Notes, and April 1, 2027, in the case of the 2027 Notes.  If no maturity exactly corresponds to such deemed maturity, yields for the two published maturities most closely corresponding to such maturity shall be calculated pursuant to the immediately preceding sentence and the Reinvestment Rate in respect of the Notes of such series shall be interpolated or extrapolated from such yields on a straight-line basis, rounding in each of such relevant periods to the nearest month.  For the purpose of calculating the Reinvestment Rate in respect of the Notes of a series, the most recent Statistical Release published prior to the date of determination of the Make-Whole Amount shall be used.

 

“Secured Debt” means, as of any date, that portion of the aggregate principal amount of all outstanding Debt of Ventas, Inc. and its Subsidiaries as of that date that is secured by a Lien on properties or other assets of Ventas, Inc. or any of its Subsidiaries.

 

“Stabilized Development Asset” means, as of any date, a new construction or development Real Estate Asset at such date that, following the first four (4) consecutive fiscal quarters occurring after substantial completion of construction or development, either (i) an additional six (6) consecutive fiscal quarters have occurred or (ii) such Real Estate Asset is at least 90% leased, whichever shall first occur.

 

“Statistical Release” means that statistical release that is published weekly by the Federal Reserve System and that establishes annual yields on actively traded United States government securities adjusted to constant maturities, or, if such statistical release is not published at the time of any determination under the Indenture, then such other reasonably comparable index the Issuer designates.

 

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“Subsidiary” means, with respect to any Person, a corporation, partnership association, joint venture, trust, limited liability company or other business entity which is required to be consolidated with such Person in accordance with GAAP.

 

“Total Assets” means, as of any date, in each case as determined reasonably and in good faith by Ventas, Inc., the sum of (without duplication):

 

(1)           with respect to Real Estate Assets that were owned by Ventas, Inc. and its Subsidiaries as of April 17, 2002 and that continue to be owned as of the date of determination, the annualized rental revenues specified for such Real Estate Assets on Schedule 1 attached to this Fourth Supplemental Indenture, divided by 0.0900, plus any annualized incremental rental revenue generated by such Real Estate Assets as a result of, arising out of or in connection with annual rent escalations or rent reset rights of Ventas, Inc. and its Subsidiaries with respect to such Real Estate Assets (whether by agreement or exercise of such right or otherwise), divided by 0.0900; for the purpose of this clause (1), “annualized incremental rental revenue” in respect of a Real Estate Asset shall mean the increase in daily rental revenue generated by such Real Estate Asset as a result of, arising out of or in connection with such annual rent escalations or rent reset rights over the daily rental revenue generated by such Real Estate Asset immediately prior to the effective date of such increase, annualized by multiplying such daily increase by 365;

 

(2)           with respect to all other Real Estate Assets owned by Ventas, Inc. and its Subsidiaries as of the date of determination (except as set forth in clause (3) below), the cost (original cost plus capital improvements before depreciation and amortization) thereof, determined in accordance with GAAP;

 

(3)           with respect to Stabilized Development Assets owned by Ventas, Inc. and its Subsidiaries as of the date of determination, the aggregate sum of all Property EBITDA for such Stabilized Development Assets for the four (4) consecutive fiscal quarters ending with the Latest Completed Quarter divided by (i) 0.0900, in the case of a government reimbursed property and (ii) 0.0700 in all other cases; provided, however, that if the value of a particular Stabilized Development Asset calculated pursuant to this clause (3) is less than the cost (original cost plus capital improvements before depreciation and amortization) of such Real Estate Asset, as determined in accordance with GAAP, such cost shall be used in lieu thereof with respect to such Real Estate Asset;

 

(4)           the proceeds of the Debt, or the assets to be acquired in exchange for such proceeds, as the case may be, incurred since the end of the Latest Completed Quarter;

 

(5)           mortgages and other notes receivable of Ventas, Inc. and its Subsidiaries, determined in accordance with GAAP;

 

(6)           cash, cash equivalents and marketable securities of Ventas, Inc. and its Subsidiaries but excluding all cash, cash equivalents and marketable securities securing, or applied to defease or discharge, in each case as of that date, any indebtedness,

 

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including mortgages and other notes payable (including cash deposited with a trustee with respect to third party indebtedness), all determined in accordance with GAAP; and

 

(7)           all other assets of Ventas, Inc. and its Subsidiaries (excluding goodwill), determined in accordance with GAAP.

 

“Unencumbered Assets” means, as of any date, in each case as determined reasonably and in good faith by Ventas, Inc., the sum of (without duplication):

 

(1)           with respect to Real Estate Assets that were owned by Ventas, Inc. and its Subsidiaries as of April 17, 2002 and that continue to be owned as of the date of determination, but excluding any such Real Estate Assets that are serving as collateral for Secured Debt, the annualized rental revenues specified for such Real Estate Assets on Schedule 1 attached to this Fourth Supplemental Indenture, divided by 0.0900, plus any annualized incremental rental revenue generated by such Real Estate Assets as a result of, arising out of or in connection with annual rent escalations or rent reset rights of Ventas, Inc. and its Subsidiaries with respect to such Real Estate Assets (whether by agreement or exercise of such right or otherwise), divided by 0.0900; for the purpose of this clause (1), “annualized incremental rental revenue” in respect of a Real Estate Asset shall mean the increase in daily rental revenue generated by such Real Estate Asset as a result of, arising out of or in connection with such annual rent escalations or rent reset rights over the daily rental revenue generated by such Real Estate Asset immediately prior to the effective date of such increase, annualized by multiplying such daily increase by 365;

 

(2)           with respect to all other Real Estate Assets owned by Ventas, Inc. and its Subsidiaries as of the date of determination (except as set forth in clause (3) below), but excluding any such Real Estate Assets that are serving as collateral for Secured Debt, the cost (original cost plus capital improvements before depreciation and amortization) thereof, determined in accordance with GAAP;

 

(3)           with respect to Stabilized Development Assets owned by Ventas, Inc. and its Subsidiaries as of the date of determination, excluding any such Stabilized Development Assets that are serving as collateral for Secured Debt, the aggregate sum of all Property EBITDA for such Stabilized Development Assets for the four (4) consecutive fiscal quarters ending with the Latest Completed Quarter divided by (i) 0.0900, in the case of a government reimbursed property and (ii) 0.0700 in all other cases; provided, however, that if the value of a particular Stabilized Development Asset calculated pursuant to this clause (3) is less than the cost (original cost plus capital improvements before depreciation and amortization) of such Real Estate Asset, as determined in accordance with GAAP, such cost shall be used in lieu thereof with respect to such Real Estate Asset;

 

(4)           the proceeds of the Debt, or the assets to be acquired in exchange for such proceeds, as the case may be, incurred since the end of the Latest Completed Quarter;

 

9

 

(5)           mortgages and other notes receivable of Ventas, Inc. and its Subsidiaries, except any mortgages or other notes receivable that are serving as collateral for Secured Debt, determined in accordance with GAAP;

 

(6)           cash, cash equivalents and marketable securities of Ventas, Inc. and its Subsidiaries but excluding all cash, cash equivalents and marketable securities securing, or applied to defease or discharge, in each case as of that date, any indebtedness, including mortgages and other notes payable (including cash deposited with a trustee with respect to third party indebtedness), all determined in accordance with GAAP; and

 

(7)           all other assets of Ventas, Inc. and its Subsidiaries (excluding goodwill), other than assets pledged to secure Debt, determined in accordance with GAAP; provided, however, that Unencumbered Assets shall not include net real estate investments in unconsolidated joint ventures of Ventas, Inc. and its Subsidiaries.

 

For the avoidance of doubt, cash held by a “qualified intermediary” in connection with proposed like-kind exchanges pursuant to Section 1031 of the Internal Revenue Code of 1986, as amended, which may be classified as “restricted” for GAAP purposes shall nonetheless be included in clause (6) above, so long as Ventas, Inc. or any of its Subsidiaries has the right to (i) direct the qualified intermediary to return such cash to Ventas, Inc. or such Subsidiary if and when Ventas, Inc. or such Subsidiary fails to identify or acquire the proposed like-kind property or at the end of the 180-day replacement period or (ii) direct the qualified intermediary to use such cash to acquire like-kind property.

 

“Unsecured Debt” means, as of any date, that portion of the aggregate principal amount of all outstanding Debt of Ventas, Inc. and its Subsidiaries as of that date that is neither Secured Debt nor Contingent Liabilities of Ventas, Inc. and its Subsidiaries.

 

“Ventas Capital” means Ventas Capital Corporation, a Delaware corporation.

 

ARTICLE II

  REDEMPTION

 

Section 2.01          Amendment to Article 3.  Pursuant to Sections 2.02(7) and 2.02(8) of the Base Indenture, Article 3 of the Base Indenture is hereby amended with respect to the Notes by adding to the end the following new Sections 3.09 and 3.10, in each case to read as follows:

 

“Section 3.09  Optional Redemption.

 

(a)           The Issuer may, at its option, redeem the 2023 Notes or the 2027 Notes at any time prior to maturity, in whole or from time to time in part.

 

(b)           The redemption price for any redemption of the 2023 Notes before December 15, 2022 shall be equal to the sum of (1) the principal amount of the Notes being redeemed, (2) accrued and unpaid interest thereon, if any, to (but excluding) the redemption date and (3) the Make-Whole Amount, if any (subject to

 

10

 

the right of holders of record on the relevant Record Date to receive interest due on the relevant Interest Payment Date).  The calculation of the Make-Whole Amount shall be the responsibility of the Issuer or such other party appointed by the Issuer.  The redemption price for any redemption of the 2023 Notes on or after December 15, 2022 shall be equal to the sum of (1) the principal amount of the Notes being redeemed and (2) accrued and unpaid interest thereon, if any, to (but excluding) the redemption date.

 

(c)                                  The redemption price for any redemption of the 2027 Notes before January 1, 2027 shall be equal to the sum of (1) the principal amount of the Notes being redeemed, (2) accrued and unpaid interest thereon, if any, to (but excluding) the redemption date and (3) the Make-Whole Amount, if any (subject to the right of holders of record on the relevant Record Date to receive interest due on the relevant Interest Payment Date).  The calculation of the Make-Whole Amount shall be the responsibility of the Issuer or such other party appointed by the Issuer.  The redemption price for any redemption of the Notes on or after January 1, 2027 shall be equal to the sum of (1) the principal amount of the Notes being redeemed and (2) accrued and unpaid interest thereon, if any, to (but excluding) the redemption date.

 

(d)                                 Any redemption pursuant to this Section 3.09 shall be made pursuant to the provisions of Sections 3.01 through 3.07 of the Indenture.

 

Section 3.10  Mandatory Redemption.  The Issuer is not required to make mandatory redemption payments with respect to the Notes.”

 

ARTICLE III

  COVENANTS

 

Section 3.01                             Amendments to Article 4.

 

(a)                                 Pursuant to Section 2.02(14) of the Base Indenture, Section 4.03 of the Base Indenture is hereby amended with respect to the Notes by deleting the text thereof in its entirety and inserting in its place the following:

 

“Section 4.03  Reports.  Whether or not required by the Commission, so long as any Notes are outstanding, Ventas, Inc. shall file with the Trustee, within 15 days after it files the same with the Commission (or if not subject to the periodic reporting requirements of the Exchange Act, within 15 days after it would have been required to file the same with the Commission had it been so subject):

 

(1)                                 all quarterly and annual financial information that is required to be contained in filings with the Commission on Forms 10-Q and 10-K, including a “Management’s Discussion and Analysis of Financial Condition and Results of Operations” and, with respect to the annual information only, a report on the

 

11

 

annual financial statements by Ventas, Inc.’s certified independent accountants; and

 

(2)                                 all current reports that are required to be filed with the Commission on Form 8-K.

 

For so long as any Notes remain Outstanding, if at any time Ventas, Inc. is not required to file with the Commission the reports required by the preceding paragraph of this Section 4.03, Ventas, Inc. shall furnish to the Holders and to securities analysts and prospective investors, upon their request, the information required to be delivered pursuant to Rule 144A(d)(4) under the Securities Act.

 

The availability of the foregoing materials on the Commission’s website or on Ventas, Inc.’s website shall be deemed to satisfy the foregoing delivery obligations.  In the event that the rules and regulations of the Commission permit Ventas, Inc. and any direct or indirect parent of Ventas, Inc. to report at such parent entity’s level on a consolidated basis, consolidating reporting at the parent entity’s level in a manner consistent with that described in this Section 4.03 for Ventas, Inc. will satisfy this Section 4.03, and the obligations in this Section 4.03 with respect to financial information relating to Ventas, Inc. shall be deemed to be satisfied by furnishing financial information relating to such direct or indirect parent; provided that such financial information is accompanied by consolidating information that explains in reasonable detail the differences between the information relating to such direct or indirect parent and any of its Subsidiaries other than Ventas, Inc. and its Subsidiaries, on the one hand, and the information relating to Ventas, Inc. and its Subsidiaries on a standalone basis, on the other hand.”

 

(b)                                 Pursuant to Section 2.02(14) of the Base Indenture, Section 4.04 of the Base Indenture is hereby amended with respect to the Notes by deleting the text thereof in its entirety and inserting in its place the following:

 

“Section 4.04  Compliance Certificate.  “Ventas, Inc. shall deliver to the Trustee, within 120 days after the end of each fiscal year, an Officers’ Certificate stating that a review of the activities of Ventas, Inc. and its Subsidiaries during the preceding fiscal year has been made under the supervision of the signing Officers with a view to determining whether Ventas, Inc. has kept, observed, performed and fulfilled its obligations under the Indenture, and further stating, as to each such Officer signing such certificate, that to the best of his or her knowledge, Ventas, Inc. has kept, observed, performed and fulfilled each and every covenant contained in the Indenture and is not in default in the performance or observance of any of the terms, provisions and conditions of the Indenture (or, if a Default or Event of Default has occurred, describing all such Defaults or Events of Default of which he or she may have knowledge and what action Ventas, Inc. is taking or proposes to take with respect thereto) and that to the best of his or her knowledge, no event has occurred and remains in existence by reason of which payments on account of the principal of or interest, if any, on the Securities of any series is prohibited or if such

 

12

 

event has occurred, a description of the event and what action Ventas, Inc. is taking or proposes to take with respect thereto.  For purposes of this Section 4.04, such compliance shall be determined without regard to any period of grace or requirement of notice under the Indenture.”

 

(c)                                  Pursuant to Section 2.02(14) of the Base Indenture, Section 4.06 of the Base Indenture is hereby amended with respect to the Notes by deleting the text thereof in its entirety and inserting in its place the following:

 

“Section 4.06  Corporate Existence.  Except as permitted by Article 5 and Section 10.04, Ventas, Inc. and the Issuer shall do all things necessary to preserve and keep their existence, rights and franchises; provided that neither Ventas, Inc. nor the Issuer shall be required to preserve any such right or franchise if Ventas, Inc. or the Issuer, as applicable, shall determine reasonably and in good faith that the preservation thereof is no longer desirable in the conduct of its business.”

 

(d)                                 Pursuant to Section 2.02(14) of the Base Indenture, Article 4 of the Base Indenture is hereby amended with respect to the Notes by adding to the end the following new Sections 4.07 through 4.11, in each case to read as follows:

 

“Section 4.07  Taxes.  Ventas, Inc. will pay, and will cause each of its Subsidiaries to pay, prior to delinquency, all material taxes, assessments and governmental levies except such as are contested in good faith and by appropriate proceedings or where the failure to effect such payment is not adverse in any material respect to the Holders of the Notes.

 

Section 4.08  Stay, Extension and Usury Laws.  Each of Ventas, Inc. and the Issuer covenants (to the extent that it may lawfully do so) that it will not (1) at any time insist upon, plead or in any manner whatsoever claim or take the benefit or advantage of, any stay, extension or usury law wherever enacted, now or at any time hereafter in force, that may affect the covenants or the performance of the Indenture, and expressly waives all benefit or advantage of any such law, or (2) by resort to any such law, hinder, delay or impede the execution of any power herein granted to the Trustee, but will suffer and permit the execution of every such power as though no such law has been enacted.

 

Section 4.09  Restrictions on Activities of Ventas Capital.  Each of Ventas, Inc. and the Issuer shall not permit Ventas Capital to hold any material assets, become liable for any material obligations or engage in any significant business activities, except that Ventas Capital may be a co-obligor with respect to Debt if the Issuer is a primary obligor of such Debt and the net proceeds of such Debt are received by the Issuer or one or more of its Subsidiaries other than Ventas Capital.

 

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Section 4.10  Limitations on Incurrence of Debt.

 

(a)                                 Ventas, Inc. shall not, and shall not permit any of its Subsidiaries to, Incur any Debt if, immediately after giving effect to the Incurrence of such additional Debt and any other Debt Incurred since the end of the Latest Completed Quarter and the application of the net proceeds therefrom, the aggregate principal amount of all outstanding Debt would exceed 60% of the sum of (without duplication) (i) Total Assets as of the end of the Latest Completed Quarter and (ii) the purchase price of any Real Estate Assets or mortgages receivable acquired, and the amount of any securities offering proceeds received (to the extent such proceeds were not used to acquire Real Estate Assets or mortgages receivable or to reduce Debt), since the end of the Latest Completed Quarter.

 

(b)                                 Ventas, Inc. shall not, and shall not permit any of its Subsidiaries to, Incur any Secured Debt if, immediately after giving effect to the Incurrence of such additional Secured Debt and any other Secured Debt Incurred since the end of the Latest Completed Quarter and the application of the net proceeds therefrom, the aggregate principal amount of all outstanding Secured Debt would exceed 50% of the sum of (without duplication) (i) Total Assets as of the end of the Latest Completed Quarter and (ii) the purchase price of any Real Estate Assets or mortgages receivable acquired, and the amount of any securities offering proceeds received (to the extent such proceeds were not used to acquire Real Estate Assets or mortgages receivable or to reduce Debt), since the end of the Latest Completed Quarter.

 

(c)                                  Ventas, Inc. shall not, and shall not permit any of its Subsidiaries to, Incur any Debt if, immediately after giving effect to the Incurrence of such additional Debt and any other Debt Incurred since the end of the Latest Completed Quarter and the application of the net proceeds therefrom, the ratio of Consolidated EBITDA to Interest Expense for the four (4) consecutive fiscal quarters ending with the Latest Completed Quarter would be less than 1.50 to 1.00 on a pro forma basis and calculated on the assumption (without duplication) that:

 

(i)                                     the additional Debt and any other Debt Incurred by Ventas, Inc. or any of its Subsidiaries since the first day of such four-quarter period to the date of determination, which was outstanding at the date of determination, had been Incurred at the beginning of that period and continued to be outstanding throughout that period, and the application of the net proceeds of such Debt, including to refinance other Debt, had occurred at the beginning of such period, except that in determining the amount of Debt so Incurred, the amount of Debt under any revolving credit facility shall be computed based upon the average daily balance of such Debt during such period;

 

(ii)                                  the repayment or retirement of any other Debt repaid or retired by Ventas, Inc. or any of its Subsidiaries since the first day of such

 

14

 

four-quarter period to the date of determination had occurred at the beginning of that period, except that in determining the amount of Debt so repaid or retired, the amount of Debt under any revolving credit facility shall be computed based upon the average daily balance of such Debt during such period; and

 

(iii)                               in the case of any acquisition or disposition of any asset or group of assets (including, without limitation, by merger, or stock or asset purchase or sale) or the placement of any assets in service or removal of any assets from service by Ventas, Inc. or any of its Subsidiaries since the first day of such four-quarter period to the date of determination, the acquisition, disposition, placement in service or removal from service and any related repayment or refinancing of Debt had occurred as of the first day of such period, with the appropriate adjustments to Consolidated EBITDA and Interest Expense with respect to the acquisition, disposition, placement in service or removal from service being included in that pro forma calculation.

 

Section 4.11  Maintenance of Unencumbered Assets.  Ventas, Inc. and its Subsidiaries shall maintain at all times Unencumbered Assets of not less than 150% of the aggregate principal amount of all outstanding Unsecured Debt.”

 

ARTICLE IV

  SUCCESSORS

 

Section 4.01                             Amendments to Article 5.

 

(a)                                 Pursuant to Section 2.02(23) of the Base Indenture, Section 5.01 of the Base Indenture is hereby amended with respect to the Notes by deleting the text thereof in its entirety and inserting in its place the following:

 

“Section 5.01                      Merger, Consolidation, or Sale of Assets.

 

Ventas, Inc. may not, directly or indirectly: (a) consolidate or merge with or into another Person (whether or not Ventas, Inc. is the surviving corporation); or (b) sell, assign, transfer, convey, lease (other than to an unaffiliated operator in the ordinary course of business) or otherwise dispose of all or substantially all of the properties or assets of Ventas, Inc. and its Subsidiaries taken as a whole, in one or more related transactions, to another Person, unless:

 

(1)                                 either:

 

(i)                                     Ventas, Inc. is the surviving corporation; or

 

(ii)                                  the Person formed by or surviving any such consolidation or merger (if other than Ventas, Inc.) or to which such sale, assignment,

 

15

 

transfer, conveyance or other disposition has been made is a corporation organized or existing under the laws of the United States, any state of the United States or the District of Columbia;

 

(2)                                 the Person formed by or surviving any such consolidation or merger (if other than Ventas, Inc.) or the Person to which such sale, assignment, transfer, conveyance or other disposition has been made assumes all of Ventas, Inc.’s obligations under the Notes and the Indenture pursuant to agreements reasonably satisfactory to the Trustee; and

 

(3)                                   immediately after such transaction, on a pro forma basis giving effect to such transaction or series of transactions (and treating any obligation of Ventas, Inc. or any of its Subsidiaries incurred in connection with or as a result of such transaction or series of transactions as having been incurred at the time of such transaction), no Default or Event of Default exists under the Indenture.

 

Notwithstanding anything to the contrary in this Section 5.01, the Guarantor may consolidate or merge with or into the Issuer, or sell and/or transfer to the Issuer all or substantially all of its assets, in each case, without compliance with any of the requirements set forth in this Article 5.”

 

(b)                                 Pursuant to Sections 2.02(23) of the Base Indenture, Article 5 of the Base Indenture is hereby amended with respect to the Notes by adding to the end the following new Sections 5.03 and 5.04, in each case to read as follows:

 

“Section 5.03                      Assumption by the Guarantor.

 

The Guarantor, or a Subsidiary thereof that is organized and existing under the laws of the United States, any State of the United States or the District of Columbia, may directly assume, by an indenture supplemental hereto, executed and delivered to the Trustee, in form reasonably satisfactory to the Trustee, the due and punctual payment of the principal of and interest on all the Notes and the performance of every covenant of the Indenture on the part of the Issuer to be performed or observed.  Upon any such assumption, the Guarantor or such Subsidiary shall succeed to, and be substituted for and may exercise every right and power of, the Issuer under the Indenture with the same effect as if the Guarantor or such Subsidiary had been named as the Issuer herein and the Issuer shall be released from liability as obligor on the Notes.

 

Section 5.04                            Termination of the Guarantee.

 

The obligations of the Guarantor under the Indenture shall terminate at such time the Guarantor merges or consolidates with the Issuer or at such other time as the Guarantor acquires all of the assets and partnership interests of the Issuer.”

 

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ARTICLE V

  DEFAULTS AND REMEDIES

 

Section 5.01                             Amendments to Article 6.

 

(a)                                 Pursuant to Section 2.02(14) of the Base Indenture, Section 6.01 of the Base Indenture is hereby amended with respect to the Notes by deleting the text thereof in its entirety and inserting in its place the following:

 

“Section 6.01.  Events of Default.

 

Each of the following is an “Event of Default”:

 

(1)                                 Ventas, Inc. or the Issuer does not pay the principal or any premium on any Note when due and payable;

 

(2)                                 Ventas, Inc. or the Issuer does not pay interest on any Note within 30 days after the applicable due date;

 

(3)                                 Ventas, Inc. or any of its Subsidiaries remain in breach of any other term of the Indenture for 90 days after they receive a notice of Default stating they are in breach.  Either the Trustee or the Holders of more than 25% in aggregate principal amount of the Notes then Outstanding may send the notice;

 

(4)                                 except as permitted by the Indenture and the Notes, the Securities Guarantee by the Guarantor shall cease to be in full force and effect or the Guarantor shall deny or disaffirm its obligations with respect thereto;

 

(5)                                 the Issuer, Ventas, Inc. or any of its Significant Subsidiaries default under any of their indebtedness (including a default with respect to Securities of any series issued under the Base Indenture other than the Notes) in an aggregate principal amount exceeding $50.0 million after the expiration of any applicable grace period, which default results in the acceleration of the maturity of such indebtedness.  Such default is not an Event of Default if the other indebtedness is discharged, or the acceleration is rescinded or annulled, within a period of 30 days after the Issuer, Ventas, Inc. or any such Significant Subsidiary, as the case may be, receives notice specifying the default and requiring that they discharge the other indebtedness or cause the acceleration to be rescinded or annulled.  Either the Trustee or the Holders of more than 25% in aggregate principal amount of the Notes then Outstanding may send the notice;

 

(6)                                 the Issuer, Ventas, Inc. or any of its Significant Subsidiaries, or any group of Subsidiaries that, taken as a whole, would constitute a Significant Subsidiary:

 

(i)                                     commence a voluntary case;

 

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(ii)                                  consent to the entry of an order for relief against them in an involuntary case;

 

(iii)                               consent to the appointment of a custodian of them or for all or substantially all of their property;

 

(iv)                              make a general assignment for the benefit of their creditors; or

 

(v)                                 generally are not paying their debts as they become due; or

 

(7)                                 a court of competent jurisdiction enters an order or decree under any Bankruptcy Law that:

 

(i)                                     is for relief against the Issuer, Ventas, Inc. or any of its Significant Subsidiaries, or any group of Subsidiaries that, taken as a whole, would constitute a Significant Subsidiary, in an involuntary case;

 

(ii)                                  appoints a custodian of the Issuer, Ventas, Inc. or any of its Significant Subsidiaries, or any group of Subsidiaries that, taken as a whole, would constitute a Significant Subsidiary, or for all or substantially all of the property of the Issuer, Ventas, Inc. or any of its Significant Subsidiaries, or any group of Subsidiaries that, taken as a whole, would constitute a Significant Subsidiary; or

 

(iii)                               orders the liquidation of the Issuer, Ventas, Inc. or any of its Significant Subsidiaries, or any group of Subsidiaries that, taken as a whole, would constitute a Significant Subsidiary;

 

and the order or decree remains unstayed and in effect for 60 consecutive days.”

 

(b)                                 Pursuant to Section 2.02(14) of the Base Indenture, Section 6.02 of the Base Indenture is hereby amended with respect to the Notes by deleting the first sentence thereof in its entirety and inserting in its place the following:

 

“In the case of an Event of Default specified in clause (6) or (7) of Section 6.01, with respect to the Issuer, Ventas, Inc. or any of its Significant Subsidiaries or any group of Subsidiaries that, taken as a whole, would constitute a Significant Subsidiary, all Outstanding Notes will become due and payable immediately without further action or notice.”

 

(c)                                  Pursuant to Section 2.02(14) of the Base Indenture, Section 6.02 of the Base Indenture is hereby amended with respect to the Notes by adding to the end of Section 6.02 the following:

 

“Notwithstanding anything to the contrary contained in the Indenture, the sole remedy for an Event of Default relating to a failure to comply with any of the provisions of Section 4.03 hereof shall consist exclusively of the right to receive additional interest on the Notes at an annual rate equal to 0.25% of the outstanding

 

18

 

principal amount of the Notes.  This additional interest will be payable in the same manner and on the same dates as the stated interest payable on the Notes and will accrue on all Outstanding Notes from and including the date on which such Event of Default first occurs to, but not including, the date on which such Event of Default shall have been cured or waived.”

 

(d)                                 Pursuant to Section 2.02(14) of the Base Indenture, Section 6.08 of the Base Indenture is hereby amended with respect to the Notes by deleting from the first line thereof the reference to clause (3) of Section 6.01 of the Base Indenture.

 

ARTICLE VI

  TRUSTEE

 

Section 6.01                             Amendments to Article 7.  Pursuant to Section 2.02(14) of the Base Indenture, Section 7.07(e) of the Base Indenture is hereby amended with respect to the Notes by changing the references to Section 6.01(7) or (8) therein to Section 6.01(6) or (7).

 

ARTICLE VII

 

Section 7.01                             Amendments to Article 9.

 

(a)                                 Pursuant to Section 2.02(23) of the Base Indenture, Section 9.01 of the Base Indenture is hereby amended with respect to the Notes by deleting the text of Section 9.01(6) in its entirety and inserting in its place the following:

 

“(6) to add to, change or eliminate any of the provisions of this Indenture so long as any such addition not otherwise permitted under this Indenture shall (i) neither apply to any Securities of any series created prior to the execution of such amendment or supplement and entitled to the benefit of such provision nor modify the rights of the Holders of any such Security with respect to the benefit of such provision or (ii) become effective only when there is no such Security outstanding.”

 

(b)                                 Pursuant to Section 2.02(23) of the Base Indenture, Section 9.01 of the Base Indenture is hereby amended with respect to the Notes by adding to the end of Section 9.01 the following new Sections 9.01(15) and 9.01(16), in each case to read as follows:

 

“(15)                    with respect to any series of Securities, to conform the text of such series of Securities or the indenture applicable thereto to any provision of the section “Description of the Notes,” “Description of Notes” or “Description of Debt Securities” in the offering memorandum, prospectus supplement or other like offering document relating to the initial offering of such series of Securities that is intended to be a verbatim recitation of the terms of such series of Securities or the indenture applicable thereto; or

 

(16) to provide for the issuance of additional Securities as permitted by this Indenture.”

 

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(c)                                  Pursuant to Section 2.02(23) of the Base Indenture, Section 9.02 of the Base Indenture is hereby amended with respect to the Notes by deleting the text of Section 9.02(2) in its entirety and inserting in its place the following:

 

“(2) reduce the principal amount, or change the fixed maturity, of any Note, or alter the provisions in Article 3 hereof with respect to redemption of the Securities (excluding, for the avoidance of doubt, the number of days before a redemption date that a notice of redemption may be mailed to the Holders, which may be amended with the written consent of the Holders of at least a majority in principal amount of the then Outstanding Securities).”

 

(d)                                 Pursuant to Section 2.02(23) of the Base Indenture, Section 9.02 of the Base Indenture is hereby amended with respect to the Notes by deleting the text of Section 9.02(7) in its entirety and inserting in its place the following:

 

“(7) waive a redemption payment with respect to any Security; or”

 

ARTICLE VIII

  LEGAL DEFEASANCE AND COVENANT DEFEASANCE

 

Section 8.01                             Applicability of Defeasance Provisions.  Pursuant to Sections 2.02(17) and 8.01 of the Base Indenture, so long as any of the Notes are Outstanding, Sections 8.02 and 8.03 of the Base Indenture shall be applicable to the Notes.

 

Section 8.02                             Determinations Under Section 8.03.  For the purposes of Sections 2.02(17) and 8.03 of the Base Indenture, Section 8.03 of the Base Indenture shall apply to Sections 4.09 through 4.11, inclusive.

 

Section 8.03                             Determination Under Section 8.07.  For the purposes of Sections 8.07 and 11.02 of the Base Indenture, the provisions of Section 8.07 of the Base Indenture shall apply to the Notes.

 

Section 8.04                             Amendments to Article 8.

 

(a)                                 Pursuant to Section 2.02(17) of the Base Indenture, the last sentence of Section 8.03 of the Base Indenture is hereby amended with respect to the Notes by changing the references to Sections 6.01(4) through 6.01(6) therein to Sections 6.01(3) through 6.01(5).

 

ARTICLE IX

  GUARANTEES

 

Section 9.01                             Applicability of Guarantee Provisions.

 

(a)                                 Pursuant to Sections 2.02(1) and 10.01 of the Base Indenture, so long as any of the Notes are Outstanding, Article 10 shall be applicable to the Notes.

 

20

 

(b)           Pursuant to Section 2.02(23) of the Base Indenture, Section 10.03 of the Base Indenture is hereby amended with respect to the Notes by deleting the text thereof in its entirety and inserting in its place the following:

 

“To evidence its Securities Guarantee set forth in Section 10.01 in respect of the Notes, an Officer of the Guarantor shall execute the Indenture on behalf of such Guarantor, and the Guarantor hereby agrees that such Securities Guarantee shall become effective upon such execution and shall remain in full force and effect thereafter, subject to the terms of the Indenture.

 

If an Officer whose signature is on this Indenture no longer holds that office at the time the Trustee authenticates the Note of that series, such Securities Guarantee will be valid nevertheless.

 

The delivery of any Note by the Trustee, after the authentication thereof hereunder, will constitute due delivery of the Securities Guarantee set forth in this Indenture on behalf of the Guarantor.”

 

ARTICLE X

  MISCELLANEOUS

 

Section 10.01       Determination Under Section 13.10.  For the purposes of Section 13.10 of the Base Indenture, the agreements of the Guarantor will bind its successors except as otherwise provided in Article 10 of the Base Indenture.

 

Section 10.02       Application of Fourth Supplemental Indenture; Ratification.

 

(a)           Each and every term and condition contained in this Fourth Supplemental Indenture that modifies, amends or supplements the terms and conditions of the Base Indenture shall apply only to the Notes created hereby and not to any future series of Securities established under the Indenture.

 

(b)           The Base Indenture, as supplemented and amended by this Fourth Supplemental Indenture, is in all respects ratified and confirmed, and the Base Indenture and this Fourth Supplemental Indenture shall be read, taken and construed as the same instrument.

 

(c)           In the event of any conflict between this Fourth Supplemental Indenture and the Base Indenture, the provisions of this Fourth Supplemental Indenture shall prevail.

 

Section 10.03       Benefits of Fourth Supplemental Indenture.  Nothing contained in this Fourth Supplemental Indenture shall or shall be construed to confer upon any Person other than a Holder of the Notes, the Issuer, the Guarantor or the Trustee any right or interest to avail itself of any benefit under any provision of the Base Indenture or this Fourth Supplemental Indenture.

 

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Section 10.04       Effective Date.  This Fourth Supplemental Indenture shall be effective as of the date first above written and upon the execution and delivery hereof by each of the parties hereto.

 

Section 10.05       Governing Law.  This Fourth Supplemental Indenture shall be governed by, and construed in accordance with, the laws of the State of New York, without regard to conflicts of laws principles thereof.

 

Section 10.06       Counterparts.  This Fourth Supplemental Indenture may be executed in any number of counterparts, each of which so executed shall be deemed to be an original, but all such counterparts shall together constitute but one and the same instrument.

 

[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK]

 

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IN WITNESS WHEREOF, the parties hereto have caused this Fourth Supplemental Indenture to be duly executed by their respective officers hereunto duly authorized, all as of the day and year first above written.

 

	
 
    	
ISSUER
    
	
 
    	
 
    
	
 
    	
VENTAS   REALTY, LIMITED PARTNERSHIP
    
	
 
    	
 
    
	
 
    	
By:
    	
Ventas, Inc.
    
	
 
    	
Its:
    	
General   Partner
    
	
 
    	
 
    	
 
    
	
 
    	
By:
    	
/s/   Robert F. Probst
    
	
 
    	
Name:
    	
Robert   F. Probst
    
	
 
    	
Title:
    	
Executive   Vice President and 
    
	
 
    	
 
    	
Chief   Financial Officer
    
	
 
    	
 
    	
 
    
	
 
    	
GUARANTOR
    
	
 
    	
 
    
	
 
    	
VENTAS, INC.
    
	
 
    	
 
    	
 
    
	
 
    	
By:
    	
/s/   Robert F. Probst
    
	
 
    	
Name:
    	
Robert   F. Probst
    
	
 
    	
Title:
    	
Executive   Vice President and 
    
	
 
    	
 
    	
Chief   Financial Officer
    

 

[Signature Page to Fourth Supplemental Indenture]

 

 

	
 
    	
TRUSTEE
    
	
 
    	
 
    
	
 
    	
U.S.   BANK NATIONAL ASSOCIATION
    
	
 
    	
 
    
	
 
    	
By:
    	
/s/   Daniel Boyers
    
	
 
    	
Name:
    	
Daniel   Boyers
    
	
 
    	
Title:
    	
Vice   President
    

 

[Signature Page to Fourth Supplemental Indenture]

 

 

 

SCHEDULE 1

 

See Attached.

 

1-1

 

EXHIBIT A

 

FORM OF 2023 NOTE

 

[Face of Note]

 

CUSIP # 92277G AK3

 

3.100% Senior Note due 2023

 

	
No.
    	
$
    

 

 

VENTAS REALTY, LIMITED PARTNERSHIP

 

promises to pay to CEDE & CO. or registered assigns, the principal sum of                  Dollars on January 15, 2023.

 

Interest Payment Dates:  July 15 and January 15

 

Record Dates:  July 1 and January 1

 

Dated:               , 20       

 

THIS GLOBAL SECURITY IS HELD BY THE DEPOSITARY (AS DEFINED IN THE INDENTURE GOVERNING THIS SECURITY) OR ITS NOMINEE IN CUSTODY FOR THE BENEFIT OF THE BENEFICIAL OWNERS HEREOF, AND IS NOT TRANSFERABLE TO ANY PERSON UNDER ANY CIRCUMSTANCES EXCEPT THAT (1) THE TRUSTEE MAY MAKE SUCH NOTATIONS HEREON AS MAY BE REQUIRED PURSUANT TO SECTION 2.07 OF THE INDENTURE, (2) THIS GLOBAL SECURITY MAY BE EXCHANGED IN WHOLE BUT NOT IN PART PURSUANT TO SECTION 2.07(a) OF THE INDENTURE, (3) THIS GLOBAL SECURITY MAY BE DELIVERED TO THE TRUSTEE FOR CANCELLATION PURSUANT TO SECTION 2.12 OF THE INDENTURE AND (4) THIS GLOBAL SECURITY MAY BE TRANSFERRED TO A SUCCESSOR DEPOSITARY WITH THE PRIOR WRITTEN CONSENT OF THE ISSUER.

 

UNLESS AND UNTIL IT IS EXCHANGED IN WHOLE OR IN PART FOR SECURITIES IN DEFINITIVE FORM, THIS SECURITY MAY NOT BE TRANSFERRED EXCEPT AS A WHOLE BY THE DEPOSITARY TO A NOMINEE OF THE DEPOSITARY OR BY A NOMINEE OF THE DEPOSITARY TO THE DEPOSITARY OR ANOTHER NOMINEE OF THE DEPOSITARY OR BY THE DEPOSITARY OR ANY SUCH NOMINEE TO A

 

A-1

 

SUCCESSOR DEPOSITARY OR A NOMINEE OF SUCH SUCCESSOR DEPOSITARY.  UNLESS THIS CERTIFICATE IS PRESENTED BY AN AUTHORIZED REPRESENTATIVE OF THE DEPOSITORY TRUST COMPANY (55 WATER STREET, NEW YORK, NEW YORK) (“DTC”), TO THE ISSUER OR ITS AGENT FOR REGISTRATION OF TRANSFER, EXCHANGE OR PAYMENT, AND ANY CERTIFICATE ISSUED IS REGISTERED IN THE NAME OF CEDE & CO. OR SUCH OTHER NAME AS MAY BE REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF DTC (AND ANY PAYMENT IS MADE TO CEDE & CO. OR SUCH OTHER ENTITY AS MAY BE REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF DTC), ANY TRANSFER, PLEDGE OR OTHER USE HEREOF FOR VALUE OR OTHERWISE BY OR TO ANY PERSON IS WRONGFUL INASMUCH AS THE REGISTERED OWNER HEREOF, CEDE & CO., HAS AN INTEREST HEREIN.

 

A-2

 

	
 
    	
VENTAS   REALTY, LIMITED PARTNERSHIP
    
	
 
    	
 
    
	
 
    	
By:
    	
Ventas, Inc.
    
	
 
    	
Its:
    	
General   Partner
    
	
 
    	
 
    
	
 
    	
 
    
	
 
    	
By:
    	
 
    
	
 
    	
Name:
    	
 
    
	
 
    	
Title:
    	
 
    
	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    
	
 
    	
By:
    	
 
    
	
 
    	
Name:
    	
 
    
	
 
    	
Title:
    	
 
    

 

A-3

 

This is one of the Securities of the

series designated therein referred to
 in the within-mentioned Indenture:

 

	
U.S.   BANK NATIONAL ASSOCIATION,
    	
 
    
	
as   Trustee
    	
 
    
	
 
    	
 
    
	
By:
    	
 
    	
 
    
	
 
    	
Authorized   Signatory
    	
 
    

 

A-4

 

[Back of Note]

 

3.100% Senior Notes due 2023

 

Capitalized terms used herein have the meanings assigned to them in the Indenture referred to below unless otherwise indicated.

 

(1)                                 Interest.  Ventas Realty, Limited Partnership (the “Issuer”) promises to pay interest on the principal amount of this 2023 Note at 3.100% per annum from March 29, 2017 until maturity.  The Issuer will pay interest semi-annually in arrears on January 15 and July 15 of each year, or if any such day is not a Business Day, on the next succeeding Business Day (each, an “Interest Payment Date”).  Interest on the 2023 Notes will accrue from the most recent date to which interest has been paid or, if no interest has been paid, from March 29, 2017; provided, that if there is no existing Default in the payment of interest, and if this 2023 Note is authenticated between a record date referred to on the face hereof and the next succeeding Interest Payment Date, interest shall accrue from such next succeeding Interest Payment Date; provided, further, that the first Interest Payment Date shall be January 15, 2018.  The Issuer will pay interest (including post-petition interest in any proceeding under any Bankruptcy Law) on overdue principal and premium, if any, from time to time on demand at a rate that is 1% per annum in excess of the rate then in effect; the Issuer will pay interest (including post-petition interest in any proceeding under any Bankruptcy Law) on overdue installments of interest (without regard to any applicable grace periods) from time to time on demand at the same rate to the extent lawful.  Interest will be computed on the basis of a 360-day year of twelve 30-day months.

 

(2)                                 Method of Payment.  The Issuer will pay interest on the 2023 Notes (except defaulted interest) to the Persons who are registered Holders of 2023 Notes at the close of business on the January 1 or July 1 (each, a “Record Date”) preceding the next Interest Payment Date, even if such 2023 Notes are canceled after such record date and on or before such Interest Payment Date, except as provided in Section 2.13 of the Indenture with respect to defaulted interest.  The 2023 Notes will be payable as to principal, premium, if any, and interest at the office or agency of the Issuer maintained for such purpose within or without the City and State of New York, or, at the option of the Issuer, payment of interest may be made by check mailed to the Holders at their addresses set forth in the register of Holders; provided, that payment by wire transfer of immediately available funds will be required with respect to principal of and interest and premium, if any, on all Global 2023 Notes and all other 2023 Notes the Holders of which will have provided wire transfer instructions to the Issuer or the Paying Agent.  Such payment will be in such coin or currency of the United States of America as at the time of payment is legal tender for payment of public and private debts.

 

(3)                                 Paying Agent and Registrar.  Initially, U.S. Bank National Association, the Trustee under the Indenture, will act as Paying Agent and Registrar.  The Issuer may

 

A-5

 

change any Paying Agent or Registrar without notice to any Holder.  The Issuer or any of its Subsidiaries may act in any such capacity.

 

(4)                                 Indenture.  The Issuer issued the 2023 Notes under an indenture, dated as of July 16, 2015 (the “Base Indenture”), as amended by the Fourth Supplemental Indenture, dated as of March 29, 2017 (the “Fourth Supplemental Indenture” and, together with the Base Indenture, the “Indenture”), among the Issuer, the Guarantor named therein and the Trustee.  The terms of the 2023 Notes include those stated in the Indenture and those made part of the Indenture by reference to the Trust Indenture Act of 1939, as amended (15 U.S. Code §§ 77aaa-77bbbb).  The 2023 Notes are subject to all such terms, and Holders are referred to the Indenture and such Act for a statement of such terms.  To the extent any provision of this 2023 Note conflicts with the express provisions of the Indenture, the provisions of the Indenture shall govern and be controlling.  The 2023 Notes are unsecured obligations of the Issuer.

 

(5)                                 Optional Redemption.  (a) The Issuer may, at its option, redeem the 2023 Notes at any time prior to maturity, in whole or from time to time in part.

 

(b)                                 The redemption price for any redemption of the 2023 Notes before December 15, 2022 shall be equal to the sum of (i) the principal amount of the 2023 Notes being redeemed, (ii) accrued and unpaid interest thereon, if any, to (but excluding) the redemption date, and (iii) the Make-Whole Amount, if any (subject to the right of holders of record on the relevant Record Date to receive interest due on the relevant Interest Payment Date).  The redemption price for any redemption of the 2023 Notes on or after December 15, 2022 shall be equal to the sum of (i) the principal amount of the 2023 Notes being redeemed and (ii) accrued and unpaid interest thereon, if any, to (but excluding) the redemption date.

 

(c)                                  Any redemption of the 2023 Notes shall be made pursuant to the provisions of Sections 3.01 through 3.07 of the Indenture.

 

(6)                                 Mandatory Redemption.  The Issuer will not be required to make mandatory redemption payments with respect to the 2023 Notes.

 

(7)                                 Notice of Redemption.  Notice of redemption will be mailed at least 30 days but not more than 60 days before the redemption date to each Holder whose 2023 Notes are to be redeemed at its registered address.  2023 Notes in denominations larger than $2,000 may be redeemed in part but only in whole multiples of $1,000, unless all of the 2023 Notes held by a Holder are to be redeemed.  On and after the redemption date interest ceases to accrue on 2023 Notes or portions thereof called for redemption.

 

(8)                                 Denominations, Transfer, Exchange.  The 2023 Notes are in registered form without coupons in denominations of $2,000 and integral multiples of $1,000.  The transfer of 2023 Notes may be registered and 2023 Notes may be exchanged as provided in the Indenture.  The Registrar and the Trustee may require a Holder, among other things, to furnish appropriate endorsements and transfer documents and the Issuer may require a Holder to pay any taxes and fees required by law or permitted by the Indenture.

 

A-6

 

The Issuer need not exchange or register the transfer of any 2023 Note or portion of a 2023 Note selected for redemption, except for the unredeemed portion of any 2023 Note being redeemed in part.  Also, the Issuer need not exchange or register the transfer of any 2023 Notes for a period of 15 days before a selection of 2023 Notes to be redeemed or during the period between a Record Date and the corresponding Interest Payment Date.

 

(9)                                 Persons Deemed Owners.  The registered Holder of a 2023 Note may be treated as its owner for all purposes.

 

(10)                          Amendment, Supplement and Waiver.  Subject to certain exceptions, the Indenture, the Securities Guarantee or the 2023 Notes may be amended or supplemented with the consent of the Holders of at least a majority in principal amount of the then Outstanding Securities affected by such amendment or supplemental indenture voting as a single class, and any existing Default or Event of Default or compliance with any provision of the Indenture, the Securities Guarantee or the 2023 Notes may be waived with the consent of the Holders of a majority in principal amount of the then Outstanding Securities affected thereby voting as a single class.  Without the consent of any Holder of a 2023 Note, the Indenture, the Securities Guarantee or the 2023 Notes may be amended or supplemented to, among other things, cure any ambiguity, defect or inconsistency; to provide for uncertificated 2023 Notes in addition to or in place of certificated 2023 Notes; to provide for the assumption of the Issuer’s obligations to Holders of 2023 Notes in the case of a merger or consolidation or sale of all or substantially all of the Issuer’s assets; add additional Guarantees with respect to the 2023 Notes; secure the 2023 Notes; to make any other change that would provide any additional rights or benefits to the Holders of 2023 Notes or that does not adversely affect the legal rights under the Indenture of any such Holder; or to comply with requirements of the Commission in order to effect or maintain the qualification of the applicable Indenture under the Trust Indenture Act.

 

(11)                          Defaults and Remedies.  Events of Default with respect to the 2023 Notes include:  (i) default in the payment of principal or any premium on the 2023 Notes when due and payable; (ii) default in the payment of interest on the 2023 Notes within 30 days after the applicable due date; (iii) breach of any other term of the Indenture for 90 days after receipt of a notice of Default stating the Issuer is in breach; (iv) default under any of certain Debt of the Issuer, Ventas, Inc. and its Significant Subsidiaries, which default results in the acceleration of the maturity of such indebtedness, unless such other Debt is discharged, or the acceleration is rescinded or annulled, within 30 days after the Issuer, Ventas, Inc. or any of its Significant Subsidiaries, as applicable, receive notice of the default; and (v) certain events in bankruptcy, insolvency or reorganization occur with respect to the Issuer, Ventas, Inc. or any of its Significant Subsidiaries or any group of Subsidiaries that, taken as a whole, would constitute a Significant Subsidiary.  If any Event of Default occurs and is continuing, the Trustee or the Holders of at least 25% in principal amount of the then Outstanding 2023 Notes may declare the entire principal amount of the 2023 Notes to be due and payable; provided, that the sole remedy for an Event of Default relating to a failure to comply with any of the provisions of Section 4.03 of the Indenture shall consist exclusively of the right to receive additional interest on the

 

A-7

 

2023 Notes in accordance with the terms set forth in the Indenture.  Notwithstanding the foregoing, in the case of an Event of Default arising from certain events of bankruptcy or insolvency, all Outstanding 2023 Notes will become due and payable without further action or notice.  Holders may not enforce the Indenture or the 2023 Notes except as provided in the Indenture.  Subject to certain limitations, the Holders of a majority in principal amount of the then Outstanding 2023 Notes may direct the Trustee in its exercise of any trust or power.  The Trustee may withhold from Holders of the 2023 Notes notice of any continuing Default or Event of Default (except a Default or Event of Default in the payment of principal, premium, if any, or interest) if and so long as it determines that withholding notice is in the interest of the Holders of the 2023 Notes.  Subject to certain exceptions, the Holders of a majority in aggregate principal amount of the then Outstanding 2023 Notes by notice to the Trustee may on behalf of the Holders of all of the 2023 Notes waive any existing Default or Event of Default and its consequences under the Indenture except a continuing Default or Event of Default in the payment of principal of, premium, if any, or interest on the 2023 Notes.  The Issuer is required to deliver to the Trustee annually a statement regarding compliance with the Indenture.

 

(12)                          Trustee Dealings with Issuer.  The Trustee, in its individual or any other capacity, may make loans to, accept deposits from and perform services for the Issuer or its Affiliates, and may otherwise deal with the Issuer or its Affiliates as if it were not the Trustee.

 

(13)                          No Recourse Against Others.  No director, officer, employee or stockholder of Ventas, Inc. or any of its Subsidiaries, as such, will have any liability for any obligations of Ventas, Inc. or any of its Subsidiaries under the 2023 Notes or the Indenture based on, in respect of, or by reason of such obligations or their creation.  Each Holder by accepting a 2023 Note waives and releases all such liability.  The foregoing waiver and release are an integral part of the consideration for the issuance of the 2023 Notes.

 

(14)                          Authentication.  This 2023 Note will not be valid until authenticated by the manual signature of the Trustee or an authenticating agent.

 

(15)                          Abbreviations.  Customary abbreviations may be used in the name of a Holder or an assignee, such as:  TEN COM (= tenants in common), TEN ENT (= tenants by the entireties), JT TEN (= joint tenants with right of survivorship and not as tenants in common), CUST (= Custodian), and U/G/M/A (= Uniform Gifts to Minors Act).

 

(16)                          CUSIP Numbers.  Pursuant to a recommendation promulgated by the Committee on Uniform Security Identification Procedures, the Issuer has caused CUSIP numbers to be printed on the 2023 Notes and the Trustee may use CUSIP numbers in notices of redemption as a convenience to Holders.  No representation is made as to the accuracy of such numbers either as printed on the 2023 Notes or as contained in any notice of redemption and reliance may be placed only on the other identification numbers placed thereon.

 

A-8

 

(17)                          The due and punctual payment of principal and interest and premium, if any, on the 2023 Notes is unconditionally guaranteed on an unsecured senior basis by the Guarantor to the extent set forth in, and subject to the provisions of, the Indenture.

 

A-9

 

The Issuer will furnish to any Holder upon written request and without charge a copy of the Indenture.  Requests may be made to:

 

Ventas Realty, Limited Partnership
 c/o Ventas, Inc.
 10350 Ormsby Park Place, Suite 300
 Louisville, Kentucky 40223
 Attention:  General Counsel

 

A-10

 

Assignment Form

 

To assign this Note, fill in the form below:

 

	
(I) or   (we) assign and transfer this Note to:
    	
 
    
	
 
    	
(Insert assignee’s legal name)
    
	
 
    	
 
    
	
(Insert assignee’s Soc. Sec. or Tax I.D. No.)

    
	
 
    
	
 
    
	
 
    
	
(Print or type assignee’s name, address and zip code)
    
	
 
    	
 
    
	
and   irrevocably appoint
    	
 
    
	
to   transfer this Note on the books of the Issuer. The agent may substitute   another to act for him.
    
			

 

	
Date:
    	
 
    	
 
    	
 
    
	
 
    	
 
    
	
 
    	
Your   Signature:
    	
 
    
	
 
    	
(Sign   exactly as your name appears on the face 
    
	
 
    	
of   this Note)
    
	
 
    	
 
    
	
Signature   Guarantee*:
    	
 
    	
 
    	
 
    
						

 

*                 Participant in a recognized Signature Guarantee Medallion Program (or other signature guarantor acceptable to the Trustee).

 

A-11

 

SCHEDULE OF EXCHANGES OF INTERESTS IN THE GLOBAL NOTE

 

The following exchanges of a part of this Global Note for an interest in another Global Note or for a Definitive Note, or exchanges of a part of another Global Note or Definitive Note for an interest in this Global Note, have been made:

 

	
Date of Exchange
    	
 
    	
Amount of
   decrease in
   Principal Amount
   of this Global
   Note
    	
 
    	
Amount of increase
   in Principal
   Amount of this
   Global Note
    	
 
    	
Principal Amount
   of this Global
   Note following
   such decrease
   (or increase)
    	
 
    	
Signature of
   authorized
   officer of Trustee
   or Custodian
    
	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    

 

A-12

 

EXHIBIT B

 

FORM OF 2027 NOTE

 

[Face of Note]

 

CUSIP # 92277G AL1

 

3.850% Senior Note due 2027

 

	
No.    
    	
 
    	
$           
    

 

VENTAS REALTY, LIMITED PARTNERSHIP

 

promises to pay to CEDE & CO. or registered assigns, the principal sum of                  Dollars on April 1, 2027.

 

Interest Payment Dates:  October 1 and April 1

 

Record Dates:  September 15 and March 15

 

Dated:               , 20            

 

THIS GLOBAL SECURITY IS HELD BY THE DEPOSITARY (AS DEFINED IN THE INDENTURE GOVERNING THIS SECURITY) OR ITS NOMINEE IN CUSTODY FOR THE BENEFIT OF THE BENEFICIAL OWNERS HEREOF, AND IS NOT TRANSFERABLE TO ANY PERSON UNDER ANY CIRCUMSTANCES EXCEPT THAT (1) THE TRUSTEE MAY MAKE SUCH NOTATIONS HEREON AS MAY BE REQUIRED PURSUANT TO SECTION 2.07 OF THE INDENTURE, (2) THIS GLOBAL SECURITY MAY BE EXCHANGED IN WHOLE BUT NOT IN PART PURSUANT TO SECTION 2.07(a) OF THE INDENTURE, (3) THIS GLOBAL SECURITY MAY BE DELIVERED TO THE TRUSTEE FOR CANCELLATION PURSUANT TO SECTION 2.12 OF THE INDENTURE AND (4) THIS GLOBAL SECURITY MAY BE TRANSFERRED TO A SUCCESSOR DEPOSITARY WITH THE PRIOR WRITTEN CONSENT OF THE ISSUER.

 

UNLESS AND UNTIL IT IS EXCHANGED IN WHOLE OR IN PART FOR SECURITIES IN DEFINITIVE FORM, THIS SECURITY MAY NOT BE TRANSFERRED EXCEPT AS A WHOLE BY THE DEPOSITARY TO A NOMINEE OF THE DEPOSITARY OR BY A NOMINEE OF THE DEPOSITARY TO THE DEPOSITARY OR ANOTHER NOMINEE OF THE DEPOSITARY OR BY THE DEPOSITARY OR ANY SUCH NOMINEE TO A

 

B-1

 

SUCCESSOR DEPOSITARY OR A NOMINEE OF SUCH SUCCESSOR DEPOSITARY.  UNLESS THIS CERTIFICATE IS PRESENTED BY AN AUTHORIZED REPRESENTATIVE OF THE DEPOSITORY TRUST COMPANY (55 WATER STREET, NEW YORK, NEW YORK) (“DTC”), TO THE ISSUER OR ITS AGENT FOR REGISTRATION OF TRANSFER, EXCHANGE OR PAYMENT, AND ANY CERTIFICATE ISSUED IS REGISTERED IN THE NAME OF CEDE & CO. OR SUCH OTHER NAME AS MAY BE REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF DTC (AND ANY PAYMENT IS MADE TO CEDE & CO. OR SUCH OTHER ENTITY AS MAY BE REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF DTC), ANY TRANSFER, PLEDGE OR OTHER USE HEREOF FOR VALUE OR OTHERWISE BY OR TO ANY PERSON IS WRONGFUL INASMUCH AS THE REGISTERED OWNER HEREOF, CEDE & CO., HAS AN INTEREST HEREIN.

 

B-2

 

	
 
    	
VENTAS   REALTY, LIMITED PARTNERSHIP
    
	
 
    	
 
    
	
 
    	
By:
    	
Ventas, Inc.
    
	
 
    	
Its:
    	
General   Partner
    
	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    
	
 
    	
By:
    	
 
    
	
 
    	
Name:
    	
 
    
	
 
    	
Title:
    	
 
    
	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    
	
 
    	
By:
    	
 
    
	
 
    	
Name:
    	
 
    
	
 
    	
Title:
    	
 
    

 

B-3

 

This is one of the Securities of the
  series designated therein referred to
 in the within-mentioned Indenture:

 

	
U.S.   BANK NATIONAL ASSOCIATION,
    	
 
    
	
as   Trustee
    	
 
    
	
 
    	
 
    
	
By:
    	
 
    	
 
    
	
 
    	
Authorized   Signatory
    	
 
    

 

B-4

 

[Back of 2027 Note]

 

3.850% Senior Notes due 2027

 

Capitalized terms used herein have the meanings assigned to them in the Indenture referred to below unless otherwise indicated.

 

(1)                                 Interest.  Ventas Realty, Limited Partnership (the “Issuer”) promises to pay interest on the principal amount of this 2027 Note at 3.850% per annum from March 29, 2017 until maturity.  The Issuer will pay interest semi-annually in arrears on October 1 and April 1 of each year, or if any such day is not a Business Day, on the next succeeding Business Day (each, an “Interest Payment Date”).  Interest on the 2027 Notes will accrue from the most recent date to which interest has been paid or, if no interest has been paid, from March 29, 2017; provided, that if there is no existing Default in the payment of interest, and if this 2027 Note is authenticated between a record date referred to on the face hereof and the next succeeding Interest Payment Date, interest shall accrue from such next succeeding Interest Payment Date; provided, further, that the first Interest Payment Date shall be October 1, 2017.  The Issuer will pay interest (including post-petition interest in any proceeding under any Bankruptcy Law) on overdue principal and premium, if any, from time to time on demand at a rate that is 1% per annum in excess of the rate then in effect; the Issuer will pay interest (including post-petition interest in any proceeding under any Bankruptcy Law) on overdue installments of interest (without regard to any applicable grace periods) from time to time on demand at the same rate to the extent lawful.  Interest will be computed on the basis of a 360-day year of twelve 30-day months.

 

(2)                                 Method of Payment.  The Issuer will pay interest on the 2027 Notes (except defaulted interest) to the Persons who are registered Holders of 2027 Notes at the close of business on the March 15 or September 15 (each, a “Record Date”) preceding the next Interest Payment Date, even if such 2027 Notes are canceled after such record date and on or before such Interest Payment Date, except as provided in Section 2.13 of the Indenture with respect to defaulted interest.  The 2027 Notes will be payable as to principal, premium, if any, and interest at the office or agency of the Issuer maintained for such purpose within or without the City and State of New York, or, at the option of the Issuer, payment of interest may be made by check mailed to the Holders at their addresses set forth in the register of Holders; provided, that payment by wire transfer of immediately available funds will be required with respect to principal of and interest and premium, if any, on all Global 2027 Notes and all other 2027 Notes the Holders of which will have provided wire transfer instructions to the Issuer or the Paying Agent.  Such payment will be in such coin or currency of the United States of America as at the time of payment is legal tender for payment of public and private debts.

 

(3)                                 Paying Agent and Registrar.  Initially, U.S. Bank National Association, the Trustee under the Indenture, will act as Paying Agent and Registrar.  The Issuer may

 

B-5

 

change any Paying Agent or Registrar without notice to any Holder.  The Issuer or any of its Subsidiaries may act in any such capacity.

 

(4)                                 Indenture.  The Issuer issued the 2027 Notes under an indenture, dated as of July 16, 2015 (the “Base Indenture”), as amended by the Fourth Supplemental Indenture, dated as of March 29, 2017 (the “Fourth Supplemental Indenture” and, together with the Base Indenture and as the Base Indenture and the Fourth Supplemental Indenture may be further amended and supplemented from time to time, the “Indenture”), among the Issuer, the Guarantor named therein and the Trustee.  The terms of the 2027 Notes include those stated in the Indenture and those made part of the Indenture by reference to the Trust Indenture Act of 1939, as amended (15 U.S. Code §§ 77aaa-77bbbb).  The 2027 Notes are subject to all such terms, and Holders are referred to the Indenture and such Act for a statement of such terms.  To the extent any provision of this 2027 Note conflicts with the express provisions of the Indenture, the provisions of the Indenture shall govern and be controlling.  The 2027 Notes are unsecured obligations of the Issuer.

 

(5)                                 Optional Redemption.  (a) The Issuer may, at its option, redeem the 2027 Notes at any time prior to maturity, in whole or from time to time in part.

 

(b)                                 The redemption price for any redemption of the 2027 Notes before January 1, 2027 shall be equal to the sum of (i) the principal amount of the 2027 Notes being redeemed, (ii) accrued and unpaid interest thereon, if any, to (but excluding) the redemption date, and (iii) the Make-Whole Amount, if any (subject to the right of holders of record on the relevant Record Date to receive interest due on the relevant Interest Payment Date).  The redemption price for any redemption of the 2027 Notes on or after January 1, 2027 shall be equal to the sum of (i) the principal amount of the 2027 Notes being redeemed and (ii) accrued and unpaid interest thereon, if any, to (but excluding) the redemption date.

 

(c)                                  Any redemption of the 2027 Notes shall be made pursuant to the provisions of Sections 3.01 through 3.07 of the Indenture.

 

(6)                                 Mandatory Redemption.  The Issuer will not be required to make mandatory redemption payments with respect to the 2027 Notes.

 

(7)                                 Notice of Redemption.  Notice of redemption will be mailed at least 30 days but not more than 60 days before the redemption date to each Holder whose 2027 Notes are to be redeemed at its registered address.  2027 Notes in denominations larger than $2,000 may be redeemed in part but only in whole multiples of $1,000, unless all of the 2027 Notes held by a Holder are to be redeemed.  On and after the redemption date interest ceases to accrue on 2027 Notes or portions thereof called for redemption.

 

(8)                                 Denominations, Transfer, Exchange.  The 2027 Notes are in registered form without coupons in denominations of $2,000 and integral multiples of $1,000.  The transfer of 2027 Notes may be registered and 2027 Notes may be exchanged as provided in the Indenture.  The Registrar and the Trustee may require a Holder, among other

 

B-6

 

things, to furnish appropriate endorsements and transfer documents and the Issuer may require a Holder to pay any taxes and fees required by law or permitted by the Indenture.  The Issuer need not exchange or register the transfer of any 2027 Note or portion of a 2027 Note selected for redemption, except for the unredeemed portion of any 2027 Note being redeemed in part.  Also, the Issuer need not exchange or register the transfer of any 2027 Notes for a period of 15 days before a selection of 2027 Notes to be redeemed or during the period between a Record Date and the corresponding Interest Payment Date.

 

(9)                                 Persons Deemed Owners.  The registered Holder of a 2027 Note may be treated as its owner for all purposes.

 

(10)                          Amendment, Supplement and Waiver.  Subject to certain exceptions, the Indenture, the Securities Guarantee or the 2027 Notes may be amended or supplemented with the consent of the Holders of at least a majority in principal amount of the then Outstanding Securities affected by such amendment or supplemental indenture voting as a single class, and any existing Default or Event of Default or compliance with any provision of the Indenture, the Securities Guarantee or the 2027 Notes may be waived with the consent of the Holders of a majority in principal amount of the then Outstanding Securities affected thereby voting as a single class.  Without the consent of any Holder of a 2027 Note, the Indenture, the Securities Guarantee or the 2027 Notes may be amended or supplemented to, among other things, cure any ambiguity, defect or inconsistency; to provide for uncertificated 2027 Notes in addition to or in place of certificated 2027 Notes; to provide for the assumption of the Issuer’s obligations to Holders of 2027 Notes in the case of a merger or consolidation or sale of all or substantially all of the Issuer’s assets; add additional Guarantees with respect to the 2027 Notes; secure the 2027 Notes; to make any other change that would provide any additional rights or benefits to the Holders of 2027 Notes or that does not adversely affect the legal rights under the Indenture of any such Holder; or to comply with requirements of the Commission in order to effect or maintain the qualification of the applicable Indenture under the Trust Indenture Act.

 

(11)                          Defaults and Remedies.  Events of Default with respect to the 2027 Notes include:  (i) default in the payment of principal or any premium on the 2027 Notes when due and payable; (ii) default in the payment of interest on the 2027 Notes within 30 days after the applicable due date; (iii) breach of any other term of the Indenture for 90 days after receipt of a notice of Default stating the Issuer is in breach; (iv) default under any of certain Debt of the Issuer, Ventas, Inc. and its Significant Subsidiaries, which default results in the acceleration of the maturity of such indebtedness, unless such other Debt is discharged, or the acceleration is rescinded or annulled, within 30 days after the Issuer, Ventas, Inc. or any of its Significant Subsidiaries, as applicable, receive notice of the default; and (v) certain events in bankruptcy, insolvency or reorganization occur with respect to the Issuer, Ventas, Inc. or any of its Significant Subsidiaries or any group of Subsidiaries that, taken as a whole, would constitute a Significant Subsidiary.  If any Event of Default occurs and is continuing, the Trustee or the Holders of at least 25% in principal amount of the then Outstanding 2027 Notes may declare the entire principal amount of the 2027 Notes to be due and payable; provided, that the sole remedy for an

 

B-7

 

Event of Default relating to a failure to comply with any of the provisions of Section 4.03 of the Indenture shall consist exclusively of the right to receive additional interest on the 2027 Notes in accordance with the terms set forth in the Indenture.  Notwithstanding the foregoing, in the case of an Event of Default arising from certain events of bankruptcy or insolvency, all Outstanding 2027 Notes will become due and payable without further action or notice.  Holders may not enforce the Indenture or the 2027 Notes except as provided in the Indenture.  Subject to certain limitations, the Holders of a majority in principal amount of the then Outstanding 2027 Notes may direct the Trustee in its exercise of any trust or power.  The Trustee may withhold from Holders of the 2027 Notes notice of any continuing Default or Event of Default (except a Default or Event of Default in the payment of principal, premium, if any, or interest) if and so long as it determines that withholding notice is in the interest of the Holders of the 2027 Notes.  Subject to certain exceptions, the Holders of a majority in aggregate principal amount of the then Outstanding 2027 Notes by notice to the Trustee may on behalf of the Holders of all of the 2027 Notes waive any existing Default or Event of Default and its consequences under the Indenture except a continuing Default or Event of Default in the payment of principal of, premium, if any, or interest on the 2027 Notes.  The Issuer is required to deliver to the Trustee annually a statement regarding compliance with the Indenture.

 

(12)                          Trustee Dealings with Issuer.  The Trustee, in its individual or any other capacity, may make loans to, accept deposits from, and perform services for the Issuer or its Affiliates, and may otherwise deal with the Issuer or its Affiliates as if it were not the Trustee.

 

(13)                          No Recourse Against Others.  No director, officer, employee or stockholder of Ventas, Inc. or any of its Subsidiaries, as such, will have any liability for any obligations of Ventas, Inc. or any of its Subsidiaries under the 2027 Notes or the Indenture based on, in respect of, or by reason of such obligations or their creation.  Each Holder by accepting a 2027 Note waives and releases all such liability.  The foregoing waiver and release are an integral part of the consideration for the issuance of the 2027 Notes.

 

(14)                          Authentication.  This 2027 Note will not be valid until authenticated by the manual signature of the Trustee or an authenticating agent.

 

(15)                          Abbreviations.  Customary abbreviations may be used in the name of a Holder or an assignee, such as:  TEN COM (= tenants in common), TEN ENT (= tenants by the entireties), JT TEN (= joint tenants with right of survivorship and not as tenants in common), CUST (= Custodian), and U/G/M/A (= Uniform Gifts to Minors Act).

 

(16)                          CUSIP Numbers.  Pursuant to a recommendation promulgated by the Committee on Uniform Security Identification Procedures, the Issuer has caused CUSIP numbers to be printed on the 2027 Notes and the Trustee may use CUSIP numbers in notices of redemption as a convenience to Holders.  No representation is made as to the accuracy of such numbers either as printed on the 2027 Notes or as contained in any

 

B-8

 

notice of redemption and reliance may be placed only on the other identification numbers placed thereon.

 

(17)                          The due and punctual payment of principal and interest and premium, if any, on the 2027 Notes is unconditionally guaranteed on an unsecured senior basis by the Guarantor to the extent set forth in, and subject to the provisions of, the Indenture.

 

B-9

 

The Issuer will furnish to any Holder upon written request and without charge a copy of the Indenture.  Requests may be made to:

 

Ventas Realty, Limited Partnership
 c/o Ventas, Inc.
 10350 Ormsby Park Place, Suite 300
 Louisville, Kentucky 40223
 Attention:  General Counsel

 

B-10

 

Assignment Form

 

To assign this Note, fill in the form below:

 

	
(I) or (we) assign   and transfer this Note to:
    	
 
    	
 
    
	
 
    	
 
    	
(Insert   assignee’s legal name)
    
	
 
    	
 
    	
 
    
	
 
    
	
(Insert assignee’s Soc. Sec. or Tax I.D. No.)
    
	
 
    
	
 
    
	
 
    
	
 
    
	
 
    
	
 
    
	
 
    
	
 
    
	
(Print or type assignee’s name, address and zip   code)
    
	
 
    
	
and   irrevocably appoint                                                                                                                    
    
	
to   transfer this Note on the books of the Issuer. The agent may substitute   another to act for him.
    
	
 
    
	
Date:
    	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    
	
 
    	
 
    	
Your Signature:
    	
 
    
	
 
    	
 
    	
(Sign exactly as your   name appears on the face of this Note)
    
	
 
    	
 
    
	
 
    	
 
    	
 
    
	
Signature Guarantee*:
    	
 
    	
 
    	
 
    
						

 

*                 Participant in a recognized Signature Guarantee Medallion Program (or other signature guarantor acceptable to the Trustee).

 

B-11

 

SCHEDULE OF EXCHANGES OF INTERESTS IN THE GLOBAL NOTE

 

The following exchanges of a part of this Global Note for an interest in another Global Note or for a Definitive Note, or exchanges of a part of another Global Note or Definitive Note for an interest in this Global Note, have been made:

 

	
Date of Exchange
    	
 
    	
Amount of
   decrease in
   Principal Amount
   of this Global
   Note
    	
 
    	
Amount of increase
   in Principal
   Amount of this
   Global Note
    	
 
    	
Principal Amount
   of this Global
   Note following
   such decrease
   (or increase)
    	
 
    	
Signature of
   authorized
   officer of Trustee
   or Custodian
    
	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    

 

B-12

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