EXHIBIT 1.1
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VENTAS, INC.
(a Delaware corporation)
2,000,000 Shares of Common Stock
PURCHASE AGREEMENT
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Dated: March 10, 2004
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Table of Contents
Page
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SECTION 1. Representations and Warranties....................................2
(a) Representations and Warranties by the Company.....................2
(i) Compliance with Registration Requirements................2
(ii) Capitalization...........................................3
(iii) Authorization and Description of Securities..............4
(iv) Good Standing of the Company and its Subsidiaries........4
(v) Authorization of Agreement...............................4
(vi) Absence of Defaults and Conflicts........................4
(vii) Absence of Defaults and Conflicts Upon Consummation
of Offering..............................................5
(viii) Absence of Proceedings...................................5
(ix) Absence of Further Requirements..........................6
(x) Absence of Labor Dispute.................................6
(xi) Environmental Laws.......................................6
(xii) Possession of Licenses and Permits.......................6
(xiii) Title to Property........................................7
(xiv) Authorization, etc. of Leases............................7
(xv) Qualification as a REIT..................................8
(xvi) Possession of Intellectual Property......................8
(xvii) Tax Returns and Payment of Taxes.........................8
(xviii) Certain ERISA matters....................................8
(xix) Investment Company Act...................................9
(xx) Insurance for Leased Properties..........................9
(xxi) Accounting and Other Controls............................9
(xxii) No Material Adverse Change in Business...................9
(xxiii) Independent Accountants and Financial Statements........10
(xxiv) Incorporated Documents..................................10
(xxv) Accuracy of Exhibits....................................10
(xxvi) No Stabilization or Manipulation........................10
(xxvii) Underwriting............................................10
(xxviii) Statistical and Other Data..............................11
(xxix) Sarbanes-Oxley Compliance...............................11
(b) Officer's Certificates...........................................11
SECTION 2. Sale and Delivery to Merrill Lynch; Closing......................11
(a) Securities.......................................................11
(b) Payment..........................................................11
(c) Denominations; Registration......................................11
SECTION 3. Covenants of the Company.........................................12
(a) Compliance with Securities Regulations and
Commission Requests..............................................12
(b) Filing of Amendments.............................................12
(c) Delivery of Registration Statement...............................12
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(d) Delivery of Prospectus...........................................12
(e) Continued Compliance with Securities Laws........................13
(f) Blue Sky Qualifications..........................................13
(g) Rule 158.........................................................13
(h) Use of Proceeds..................................................13
(i) Listing..........................................................13
(j) Restriction on Sale of Securities................................13
(k) Reporting Requirements...........................................14
SECTION 4. Payment of Expenses..............................................14
(a) Expenses.........................................................14
(b) Termination of Agreement.........................................14
SECTION 5. Conditions of Merrill Lynch's Obligations........................14
(a) Effectiveness of Registration Statement..........................15
(b) Opinion of Counsel for Company...................................15
(c) Opinion of Counsel for Merrill Lynch.............................15
(d) Officers' Certificate............................................15
(e) Accountant's Comfort Letter......................................16
(f) Bring-down Comfort Letter........................................16
(g) Approval of Listing..............................................16
(h) Lock-up Agreements...............................................16
(i) Additional Documents.............................................16
(j) Termination of Agreement.........................................16
SECTION 6. Indemnification..................................................16
(a) Indemnification of Merrill Lynch by the Company
and Ventas Realty................................................16
(b) Indemnification of Company, Directors and Officers...............17
(c) Actions against Parties; Notification............................18
(d) Settlement without Consent if Failure to Reimburse...............18
(e) Other Agreements With Respect to Indemnification.................18
SECTION 7. Contribution.....................................................18
SECTION 8. Representations, Warranties and Agreements
to Survive Delivery..............................................20
SECTION 9. Termination of Agreement.........................................20
(a) Termination; General.............................................20
(b) Liabilities......................................................20
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SECTION 10. Default by the Company...........................................20
SECTION 11. Notices..........................................................21
SECTION 12. Parties..........................................................21
SECTION 13. GOVERNING LAW AND TIME...........................................21
SECTION 14. Effect of Headings...............................................21
SCHEDULES
Schedule A - Pricing Information.................................Sch A-1
Schedule B - List of Subsidiaries................................Sch B-1
Schedule C List of Persons Subject to Lock-up..................Sch C-1
EXHIBITS
Exhibit A-1 - Form of Opinion of Company's General Counsel............A-1
Exhibit A-2 - Form of Opinion of Willkie Farr & Gallagher LLP
as special counsel to the Company.......................A-2
Exhibit A-3 - Form of Opinion of Willkie Farr & Gallagher LLP
as special tax counsel to the Company's.................A-3
Exhibit A-4 - Form of Opinion of Company's Regulatory Counsel.........A-4
Exhibit B Form of Lock-up Letter..................................B-1
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VENTAS, INC.
(a Delaware corporation)
2,000,000 Shares of Common Stock
(Par Value $.25 Per Share)
PURCHASE AGREEMENT
------------------
March 10, 2004
MERRILL LYNCH & CO.
Merrill Lynch, Pierce, Fenner & Smith
Incorporated
Ladies and Gentlemen:
Ventas, Inc., a Delaware corporation (the "Company") and Ventas Realty,
Limited Partnership, a Delaware limited partnership ("Ventas Realty") confirm
their respective agreements with Merrill Lynch & Co., Merrill Lynch, Pierce,
Fenner & Smith Incorporated ("Merrill Lynch"), with respect to the issue and
sale by the Company and the purchase by Merrill Lynch of 2,000,000 shares of
Common Stock, par value $.25 per share, of the Company (the "Common Stock"). The
aforesaid 2,000,000 shares of Common Stock to be purchased by Merrill Lynch are
hereinafter called the "Securities".
The Company and Ventas Realty understand that Merrill Lynch proposes to
make a public offering of the Securities as soon as Merrill Lynch deems it
advisable after this Agreement has been executed and delivered.
The Company and Ventas Capital Corporation, Ventas LP Realty, L.L.C. and
Ventas Realty, Limited Partnership, Ventas Healthcare Properties Inc. and Ventas
TRS LLC (collectively, the "Co-Registrants") have filed with the Securities and
Exchange Commission (the "Commission") a registration statement on Form S-3 (No.
333-107942) and pre-effective amendment no. 1 thereto for the registration of
the Securities under the Securities Act of 1933, as amended (the "1933 Act"),
and the offering thereof from time to time in accordance with Rule 415 of the
rules and regulations of the Commission under the 1933 Act (the "1933 Act
Regulations"). Such registration statement has been declared effective by the
Commission and the Company has filed such post-effective amendments thereto as
may be required prior to the execution of this Agreement and each such
post-effective amendment has been declared effective by the Commission. Promptly
after the execution and delivery of this Agreement, the Company will prepare and
file a prospectus together with a prospectus supplement in accordance with the
provisions of paragraph (b) of Rule 424 ("Rule 424(b)") of the 1933 Act
Regulations. Such registration statement, including the exhibits thereto,
schedules thereto, if any, and the documents incorporated by reference therein
pursuant to Item 12 of Form S-3 under the 1933 Act, at the time it became
effective is herein referred to together as, the "Registration Statement." Any
registration statement filed pursuant to Rule 462(b) of the 1933 Act Regulations
is herein
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referred to as the "Rule 462(b) Registration Statement," and after such filing
the term "Registration Statement" shall include the Rule 462(b) Registration
Statement. The final prospectus and the final prospectus supplement, including
the documents incorporated by reference therein pursuant to Item 12 of Form S-3
under the 1933 Act, in the form first furnished to Merrill Lynch for use in
connection with the offering of the Securities are herein collectively called
the "Prospectus." For purposes of this Agreement, all references to the
Registration Statement or the Prospectus or any amendment or supplement to any
of the foregoing shall be deemed to include the copy filed with the Commission
pursuant to its Electronic Data Gathering, Analysis and Retrieval system
("EDGAR"). For purposes of this Agreement, references to amendments to the
Registration Statement shall be deemed to include registration statements
containing combined prospectuses pursuant to Rule 429 of the 1933 Act
Regulations that include securities registered pursuant to the 1933 Act and
amendments thereto.
All references in this Agreement to financial statements and schedules and
other information which is "contained," "included" or "stated" in the
Registration Statement or the Prospectus (or other references of like import)
shall be deemed to mean and include all such financial statements and schedules
and other information which is incorporated by reference in the Registration
Statement or the Prospectus, as the case may be; and all references in this
Agreement to amendments or supplements to the Registration Statement or the
Prospectus shall be deemed to mean and include the filing of any document under
the Securities Exchange Act of 1934 (the "1934 Act") which is incorporated by
reference in the Registration Statement or the Prospectus, as the case may be.
SECTION 1. Representations and Warranties.
(a) Representations and Warranties by the Company. The Company and Ventas
Realty represent and warrant to Merrill Lynch as of the date hereof, as of the
Closing Time referred to in Section 2(b) hereof and agree with Merrill Lynch, as
follows:
(i) Compliance with Registration Requirements. The Company and
the Co-Registrants meet the requirements for use of Form S-3 under the 1933
Act. The Registration Statement and any Rule 462(b) Registration Statement
has become effective under the 1933 Act and no stop order suspending the
effectiveness of the Registration Statement or any Rule 462(b) Registration
Statement has been issued under the 1933 Act and no proceedings for that
purpose have been instituted or are pending or, to the knowledge of the
Company, are contemplated by the Commission, and any request on the part of
the Commission for additional information has been complied with.
At the time the Registration Statement, any Rule 462(b) Registration
Statement and any post-effective amendments thereto became effective and at
the Closing Time, the Registration Statement, the Rule 462(b) Registration
Statement and any amendments and supplements thereto complied and will
comply in all material respects with the requirements of the 1933 Act and
the 1933 Act Regulations and did not and will not contain an untrue
statement of a material fact or omit to state a material fact required to
be stated therein or necessary to make the statements therein not
misleading. Neither the Prospectus nor any amendments or supplements
thereto, at the time the Prospectus or any such amendment or supplement was
issued and at the Closing Time, included or will
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include an untrue statement of a material fact or omitted or will omit to
state a material fact necessary in order to make the statements therein, in
the light of the circumstances under which they were made, not misleading.
The representations and warranties in this subsection shall not apply to
statements in or omissions from the Registration Statement or Prospectus
made in reliance upon and in conformity with information furnished to the
Company in writing by Merrill Lynch expressly for use in the Registration
Statement or Prospectus.
The prospectus filed as part of the Registration Statement as
originally filed or as part of any amendment thereto, or filed pursuant to
Rule 424 under the 1933 Act, complied when so filed in all material
respects with the 1933 Act Regulations and the Prospectus delivered to
Merrill Lynch for use in connection with this offering was identical to the
electronically transmitted copies thereof filed with the Commission
pursuant to EDGAR, except to the extent permitted by Regulation S-T.
(ii) Capitalization. As of December 31, 2003 the Company had an
authorized capitalization as set forth in the Prospectus in the column
entitled "Actual" in the row labeled "Common Stock" under the caption
"Capitalization." All of the issued and outstanding shares of capital stock
or other equity interests of the Company (other than the failure to
authorize the issuance of shares in uncertificated form) have been duly
authorized and validly issued, are fully paid and nonassessable and were
not issued in violation of any preemptive or similar right; provided that
the Company shall, prior to the Closing Time, authorize and approve the
issuance of shares in uncertificated form. Attached as Schedule B is a true
and complete list identifying each subsidiary (as defined in the 1933 Act)
of the Company, its jurisdiction of incorporation or formation, its direct
or indirect percentage equity ownership by the Company (all such entities,
the "Subsidiaries"). All of the issued and outstanding shares of capital
stock or other equity interests of each of the Subsidiaries have been duly
and validly authorized and issued, are fully paid and (except in the case
of general partnership interests) nonassessable, were not issued in
violation of any preemptive or similar right and, except as set forth in
the Prospectus or on Schedule B, are owned by the Company, directly or
indirectly through one or more Subsidiaries, free and clear of all Liens
other than Liens (i) that will be discharged on or prior to the Closing
Date or (ii) that are described in the Prospectus and secure indebtedness
described in the Prospectus. Except as set forth on Schedule B, there are
no outstanding options, warrants or other rights to acquire or purchase, or
instruments convertible into or exchangeable for, any shares of capital
stock of any of the Subsidiaries. No holder of any securities of the
Company or any of the Subsidiaries is entitled to have such securities
registered (i) under the Registration Statement that have not been so
registered or waived, or (ii) subsequent to the date hereof pursuant to any
agreement not described in the Registration Statement or the Prospectus,
except as disclosed in writing to Merrill Lynch. "Lien" means, with respect
to any asset, any mortgage, lien, pledge, charge, security interest or
encumbrance of any kind in respect of such asset, whether or not filed,
recorded or otherwise perfected under applicable law, including any
conditional sale or other title retention agreement, any lease in the
nature thereof, any option or other agreement to sell or give a security
interest in and any filing of or agreement to give any financing statement
under the Uniform Commercial Code (or equivalent statutes) of any
jurisdiction.
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(iii) Authorization and Description of Securities. The Securities
to be purchased by Merrill Lynch from the Company have been duly authorized
for issuance and sale to Merrill Lynch pursuant to this Agreement and, when
issued and delivered by the Company pursuant to this Agreement against
payment of the consideration set forth herein, will be validly issued,
fully paid and non-assessable; the Common Stock conforms in all material
respects to all statements relating thereto contained in the Prospectus and
such description conforms in all material respects to the rights set forth
in the instruments defining the same; no holder of the Securities will be
subject to personal liability by reason of being such a holder; and the
issuance of the Securities is not subject to the preemptive or other
similar rights of any securityholder of the Company.
(iv) Good Standing of the Company and its Subsidiaries. Each of
the Company and its Subsidiaries (a) is a corporation, partnership or
limited liability company duly organized and validly existing under the
laws of the jurisdiction of its organization, (b) has all requisite
corporate, partnership or limited liability company power and authority,
and has all governmental licenses, authorizations, consents and approvals,
necessary to own its property and carry on its business as now being
conducted, except where the failure to obtain any such license,
authorization, consent and approval is not reasonably likely, individually
or in the aggregate, to have a Material Adverse Effect (as defined below)
and (c) is qualified to do business and is in good standing in all
jurisdictions in which the nature of the business conducted by it makes
such qualification necessary except where failure to be so qualified and in
good standing is not reasonably likely, individually or in the aggregate,
to have a Material Adverse Effect (as defined below). Each of the Company
and Ventas Realty has all requisite corporate or partnership power and
authority to execute, deliver and perform all of its obligations under this
Agreement and to consummate the transactions contemplated hereby. A
"Material Adverse Effect" means any material adverse effect on the
business, condition (financial or other), results of operations,
performance or properties of Ventas and the Subsidiaries, taken as a whole.
(v) Authorization of Agreement. This Agreement has been duly and
validly authorized, executed and delivered by the Company and Ventas
Realty.
(vi) Absence of Defaults and Conflicts. Neither the Company nor
any Subsidiary is in violation of its charter, bylaws or other constitutive
documents. Except as described in the Registration Statement and the
Prospectus, neither the Company nor any Subsidiary is (A) in default (or,
with notice or lapse of time or both, would be in default) in the
performance or observance of any obligation, agreement, covenant or
condition contained in any bond, debenture, note, indenture, mortgage, deed
of trust, loan or credit agreement, lease, license, franchise agreement,
authorization, permit, certificate or other agreement or instrument to
which any of them is a party or by which any of them is bound or to which
any of their assets or properties is subject (collectively, "Agreements and
Instruments") or (B) in violation of any law, statute, rule, regulation,
judgment, order or decree of any domestic or foreign court with
jurisdiction over any of them or any of their assets or properties or other
governmental or regulatory authority, agency or other body, which, in the
case of clauses (A) and (B), individually or in the aggregate, is
reasonably likely to have a Material Adverse Effect. There exists no
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condition that, with notice, the passage of time or otherwise, would
constitute a default by the Company or any Subsidiary under any such
document or instrument or result in the imposition of any penalty or the
acceleration of any indebtedness, other than penalties, defaults or
conditions that, individually or in the aggregate, are not reasonably
likely to have a Material Adverse Effect.
(vii) Absence of Defaults and Conflicts Upon Consummation of
Offering. None of the issuance, offer and sale of the Securities by the
Company, the execution, delivery and performance of the Purchase Agreement
by the Company or Ventas Realty or the consummation by the Company or
Ventas Realty of the transactions contemplated herein and in the
Registration Statement and the Prospectus violate or will violate, conflict
with or constitute a breach of any of the terms or provisions of or a
default under (or an event that with notice or the lapse of time, or both,
would constitute a default), or require consent under, or result in the
creation or imposition of a lien, charge, or encumbrance on any property or
assets of the Company or any Subsidiary pursuant to, (i) the charter,
bylaws or other constitutive documents of the Company or any Subsidiary,
(ii) any law, statute, rule or regulation applicable to the Company or any
Subsidiary or their respective assets or properties, (iii) any judgment,
order or decree of any domestic or foreign court or governmental agency or
authority having jurisdiction over the Company or any Subsidiary or their
respective assets or properties or (iv) any Agreements or Instruments and
except in the case of clauses (ii) and (iv), for such violations,
conflicts, breaches, defaults, consents, liens, charges or encumbrances
that, individually or in the aggregate, are not reasonably likely to have a
Material Adverse Effect. No consents or waivers from any other person or
entity are required for the execution, delivery and performance of this
Agreement or the consummation of the issuance and sale of the Securities,
other than such consents and waivers as have been obtained or will be
obtained prior to the Closing Date and will be in full force and effect.
(viii) Absence of Proceedings. Except as set forth in the
Registration Statement and Prospectus, there is no action, suit or
proceeding before or by any court, arbitrator or governmental agency, body
or official, domestic or foreign, now pending or, to the knowledge of the
Company or Ventas Realty, threatened or contemplated, to which the Company
or any Subsidiary is or may be a party or to which the business, assets or
property of such person is or may be subject, that is, (i) individually or
in the aggregate, reasonably likely (a) to have a Material Adverse Effect,
or (b) to interfere with or adversely affect the issuance of the Securities
in any jurisdiction or adversely affect the consummation of the
transactions contemplated by this Agreement and the Registration Statement,
or (ii) that is otherwise required to be disclosed in the Registration
Statement. Except as set forth in the Registration Statement and
Prospectus, there is (A) no statute, rule, regulation or order that has
been enacted, adopted or issued or, to the knowledge of the Company or
Ventas Realty, that has been proposed by any governmental body or agency,
domestic or foreign or (B) no injunction, restraining order or order of any
nature by a federal or state court or foreign court of competent
jurisdiction to which the Company or any Subsidiary is or may be subject
that (a) is required to be disclosed in the Registration Statement or (b)
in the case of clauses (A) and (B) is, individually or in the aggregate,
reasonably likely (1) to have a Material Adverse Effect, (2) to interfere
with or adversely affect the issuance of the Securities in any jurisdiction
or adversely affect the
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consummation of the transactions contemplated by this Agreement. Every
request of any securities authority or agency of any jurisdiction for
additional information with respect to the Securities that has been
received by the Company or any Subsidiary or their counsel prior to the
date hereof has been, or will prior to the closing date be, complied with
in all material respects.
(ix) Absence of Further Requirements. No filing with, or
authorization, approval, consent, license, order, registration,
qualification or decree of, any court or governmental authority or agency
is necessary or required for the performance by the Company or Ventas
Realty of their obligations hereunder, in connection with the offering,
issuance or sale of the Securities hereunder or the consummation of the
transactions contemplated by this Agreement, except such as have been
already obtained or as may be required under the 1933 Act or the 1933 Act
Regulations or state securities laws.
(x) Absence of Labor Dispute. Except as is not reasonably likely
to have a Material Adverse Effect, no labor disturbance by the employees of
the Company or any Subsidiary exists or, to the knowledge of the Company or
Ventas Realty, is imminent. The Company is not aware of any existing or
imminent labor disturbance by the employees of Kindred Healthcare, Inc.,
which may reasonably be expected to result in a Material Adverse Effect.
(xi) Environmental Laws. Except as described in the Registration
Statement and the Prospectus, the Company and each Subsidiary (A) is in
compliance with, or not subject to costs or liabilities under, laws,
regulations, rules of common law, orders and decrees, as in effect as of
the date hereof, and any present judgments and injunctions issued or
promulgated thereunder relating to pollution or protection of public and
employee health and safety, the environment or hazardous or toxic
substances or wastes, pollutants or contaminants applicable to it or its
business or operations or ownership or use of its property ("Environmental
Laws"), other than noncompliance or such costs or liabilities that,
individually or in the aggregate, is not reasonably likely to have a
Material Adverse Effect, and (B) possesses all permits, licenses or other
approvals required under applicable Environmental Laws, except where the
failure to possess any such permit, license or other approval is not
reasonably likely to have, either individually or in the aggregate, a
Material Adverse Effect. All currently pending and, to the knowledge of the
Company and Ventas Realty, threatened proceedings, notices of violation,
demands, notices of potential responsibility or liability, suits and
existing environmental conditions by any governmental authority to which
any of the Company or Ventas Realty is subject that are reasonably likely
to result in a Material Adverse Effect are fully and accurately described
in all material respects in the Registration Statement and the Prospectus.
(xii) Possession of Licenses and Permits. The Company and each
Subsidiary has (A) all licenses, certificates, permits, authorizations,
approvals, franchises and other rights from, and has made all declarations
and filings with, all applicable authorities, all self-regulatory
authorities and all courts and other tribunals (each, an "Authorization")
necessary to engage in the business conducted by it in the, manner
described in the Registration Statement and Prospectus, except where
failure to hold such Authorizations
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is not, individually or in the aggregate, reasonably likely to have a
Material Adverse Effect and (B) no knowledge that any governmental body or
agency, domestic or foreign, is considering limiting, suspending or
revoking any such Authorization, except where any such limitations,
suspensions or revocations is not, individually or in the aggregate,
reasonably likely to have a Material Adverse Effect. All such
Authorizations are valid and in full force and effect, and the Company and
each Subsidiary is in compliance with the terms and conditions of all such
Authorizations and with the rules and regulations of the regulatory
authorities having jurisdiction with respect to such Authorizations, except
for any invalidity, failure to be in full force and effect or noncompliance
with any Authorization that is not, individually or in the aggregate,
reasonably likely to have a Material Adverse Effect.
(xiii) Title to Property. The Company and each Subsidiary has good
and marketable title in fee simple or a ground leasehold interest in all
items of real property and good and marketable title to all personal
property owned by each of them, in each case free and clear of all Liens,
except (i) for Liens described in the Registration Statement and Prospectus
and (ii) to the extent that the failure to have such title or the presence
of such Liens is not, individually or in the aggregate, reasonably likely
to result in a Material Adverse Effect. Any real property and buildings
held under lease by the Company or any Subsidiary are held under valid,
subsisting and enforceable leases, except to the extent that the failure to
so hold such real property and buildings is not, individually or in the
aggregate, reasonably likely to result in a Material Adverse Effect.
(xiv) Authorization, etc. of Leases. Each of the Company's and its
Subsidiaries' leases, including the Master Leases (as defined below) and
the master lease agreement, dated as of November 1, 2002, between Ventas
Realty and certain entities related to Trans Healthcare, Inc., has been
duly authorized by one or more of the Company and its Subsidiaries, as
applicable, and is a valid and binding agreement of the Company and/or any
such Subsidiary, and, to the knowledge of the Company and/or any such
Subsidiary, each other party thereto, enforceable in accordance with its
terms, except as enforcement thereof may be limited by bankruptcy,
insolvency, reorganization, fraudulent conveyance, moratorium or similar
laws affecting the enforcement of creditors' rights generally and by
general principles of equity and the discretion of the court before which
any proceedings therefor may be brought. To the knowledge of the Company
and Ventas Realty, no lessee or sublessee of any portion of any of the
properties owned or leased by the Company and/or any Subsidiary is in
default under its respective lease and there is no event which, but for the
passage of time or the giving of notice or both, would constitute a default
under any such lease, except as described in the Registration Statement and
Prospectus and except for such defaults that are not, individually or in
the aggregate, reasonably likely to have a Material Adverse Effect. The
term "Master Leases" refers to (i) the four amended and restated master
lease agreements, dated as of April 20, 2001, between Ventas Realty and
Kindred Healthcare Inc. and Kindred Healthcare Operating, Inc., and (ii)
the master lease agreement, dated as of December 12, 2001, between Ventas
Finance I, LLC (successor by assignment to Ventas Realty) and Kindred
Healthcare Inc. and Kindred Healthcare Operating, Inc.
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(xv) Qualification as a REIT. The Company meets the requirements
for qualification and taxation as a real estate investment trust ("REIT")
under the Internal Revenue Code of 1986 (the "Code").
(xvi) Possession of Intellectual Property. The Company and each
Subsidiary owns, possesses or has the right to employ all patents, patent
rights, licenses, inventions, copyrights, know-how, trademarks, service
marks, trade names and other intellectual property (collectively, the
"Intellectual Property") necessary to conduct the businesses operated by
them as described in the Registration Statement, except where the failure
to own, possess or have the right to employ such Intellectual Property is
not reasonably likely to have a Material Adverse Effect. Neither the
Company nor any Subsidiary has received any notice of infringement of or
conflict with (and neither knows of any such infringement or a conflict
with) asserted rights of others with respect to any of the foregoing that,
if such assertion of infringement or conflict were sustained, is reasonably
likely to have a Material Adverse Effect. To the knowledge of the Company
and Ventas Realty, the use of the Intellectual Property in connection with
the business and operations of the Company and the Subsidiaries does not
infringe on the rights of any person, except for such infringement as is
not reasonably likely to have a Material Adverse Effect, and neither the
Company nor any Subsidiary has received any notice of, and otherwise has no
knowledge of, any threatened or existing action, suit, proceeding or claim
by any person challenging use of the Intellectual Property by the Company
and the Subsidiaries.
(xvii) Tax Returns and Payment of Taxes. All tax returns required to
be filed by the Company and each Subsidiary have been filed in all
jurisdictions where such returns are required to be filed; and all taxes,
including withholding taxes, value added and franchise taxes, penalties and
interest, assessments, fees and other charges due or claimed to be due from
such entities or that are due and payable have been paid, other than those
being contested in good faith and for which reserves have been provided in
accordance with generally accepted accounting principles or those currently
payable without penalty or interest and except where the failure to make
such required filings or payments is not, individually or in the aggregate,
reasonably likely to have a Material Adverse Effect. Except as described in
the Registration Statement and the Prospectus, neither the Company nor any
Subsidiary has knowledge of any material proposed additional tax
assessments against the Company or any of the Subsidiaries or their assets
or property.
(xviii) Certain ERISA matters. Neither the Company nor any of the
Subsidiaries has any liability for any prohibited transaction or
accumulated funding deficiency (within the meaning of Section 412 of the
Code) or any complete or partial withdrawal liability with respect to any
pension, profit sharing or other plan which is subject to the Employee
Retirement Income Security Act of 1974, as amended ("ERISA"), to which the
Company or any Subsidiary makes or ever has made a contribution and in
which any employee of the Company or any Subsidiary is or has ever been a
participant. With respect to such plans, the Company and each Subsidiary is
in compliance in all material respects with all applicable provisions of
ERISA.
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(xix) Investment Company Act. Neither the Company nor any
Subsidiary is, nor upon the issuance and sale of the Securities as herein
contemplated and the application of the net proceeds therefrom as described
in the Prospectus will be, an "investment company" or a company
"controlled" by an "investment company" as such terms are defined in the
Investment Company Act of 1940, as amended (the "1940 Act").
(xx) Insurance for Leased Properties. The Company and each
Subsidiary maintains or causes to be maintained by the lessee under the
leases for its properties insurance covering its properties (including
title to its properties), assets, operations, personnel and businesses, and
such insurance is of such type and in such amounts in accordance with
customary industry practice and in the Company's reasonable judgment
sufficient to protect the Company and the Subsidiaries and their
businesses.
(xxi) Accounting and Other Controls. The Company and each
Subsidiary maintains a system of internal accounting controls sufficient to
provide reasonable assurance that: (A) transactions are executed in
accordance with management's general or specific authorizations; (B)
transactions are recorded as necessary to permit preparation of its
financial statements in conformity with generally accepted accounting
principles and to maintain accountability for assets; (C) access to assets
is permitted only in accordance with management's general or specific
authorization; and (D) the recorded accountability for assets is compared
with the existing assets at reasonable intervals and appropriate action is
taken with respect to any differences.
(xxii) No Material Adverse Change in Business. As of December 31,
2003, neither the Company nor any subsidiary (as defined in the 1933 Act)
of the Company at December 31, 2003 had any material liabilities or
obligations, direct or contingent, that were not set forth in the Company's
consolidated balance sheet as of such date, or in the notes thereto, set
forth in the Registration Statement and the Prospectus, or otherwise
described therein, other than the performance by the Company of its
obligations under ordinary course executory contracts that are not in
default, that could not reasonably be expected to have a Material Adverse
Effect and that are not required by GAAP, as modified by the 1933 Act, the
1933 Act Regulations, the Securities Exchange Act of 1934 Act (the "1934
Act") and the rules and regulations of the Commission thereunder (the "1934
Act Regulations"), to be disclosed on a regularly prepared balance sheet or
in the notes thereto. Since the respective dates as of which information is
given in the Registration Statement and the Prospectus, except as otherwise
stated therein, (a) neither the Company nor any Subsidiary has (1) incurred
any liabilities or obligations, direct or contingent, that is, individually
or in the aggregate, reasonably likely to have a Material Adverse Effect,
or (2) entered into any material transaction not in the ordinary course of
business, (b) there has not been any event or development in respect of the
business or condition (financial or other) of the Company and the
Subsidiaries that, individually or in the aggregate, is reasonably likely
to have a Material Adverse Effect and (c) there has not been any change in
the long-term debt of the Company (other than as a result of transactions
disclosed under the caption "Use of Proceeds" in the Prospectus) or any of
the Subsidiaries or in the authorized capitalization of the Company.
9
(xxiii) Independent Accountants and Financial Statements. Ernst &
Young LLP is an independent public accountant as required by the 1933 Act
and the 1933 Act Regulations. The historical financial statements, together
with the related financial schedules and notes thereto, included in the
Registration Statement and the Prospectus present fairly in all material
respects the consolidated financial position and results of operations of
the Company and its subsidiaries at the respective dates and for the
respective periods indicated. Such financial statements have been prepared
in accordance with generally accepted accounting principles applied on a
consistent basis throughout the periods presented (except as disclosed in
the Registration Statement and the Prospectus). The supporting schedules,
if any, included in the Registration Statement present fairly in accordance
with GAAP the information required to be stated therein. The summary
selected financial information included in the Registration Statement and
the Prospectus present fairly the information shown therein and have been
compiled on a basis consistent with that of the audited financial
statements included in the Registration Statement. The other financial and
statistical information and data included in the Prospectus are accurately
presented in all material respects and prepared on a basis consistent with
the financial statements and the books and records of the Company and the
Subsidiaries. There are no financial statements (historical or pro forma)
that are required to be included in the Registration Statement or the
Prospectus that are not so included as required.
(xxiv) Incorporated Documents. The documents incorporated or deemed
to be incorporated by reference in the Registration Statement and the
Prospectus, when they became effective or at the time they were or
hereafter are filed with the Commission, complied and will comply in all
material respects with the requirements of the 1933 Act and the 1933 Act
Regulations or the 1934 Act and 1934 Act Regulations, as applicable, and,
when read together with the other information in the Prospectus, at the
time the Registration Statement became effective, at the time the
Prospectus was issued and at the Closing Time, did not and will not contain
an untrue statement of a material fact or omit to state a material fact
required to be stated therein or necessary to make the statements therein
not misleading.
(xxv) Accuracy of Exhibits. There are no contracts or documents
which are required to be described in the Registration Statement, the
Prospectus or the documents incorporated by reference therein or to be
filed as exhibits thereto which have not been so described and filed as
required and such descriptions are correct in all material respects.
(xxvi) No Stabilization or Manipulation. None of the Company or any
Subsidiary or, to the best of their knowledge, any of their directors,
officers or affiliates has taken or will take, directly or indirectly, any
action designed to, or that could be reasonably expected to, cause or
result in stabilization or manipulation of the price of the Securities in
violation of Regulation M under the 1934 Act.
(xxvii) Underwriting. Except as described in the section of the
Prospectus entitled "Plan of Distribution," there are no contracts,
agreements or understandings between the Company or any Subsidiary and any
other person that would give rise to a valid claim against the Company, any
Subsidiary or Merrill Lynch for a brokerage
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commission, finder's fee or like payment in connection with the issuance,
purchase and sale of the Securities.
(xxviii) Statistical and Other Data. All (A) statistical and
market-related data and (B) data (including financial information) with
respect to Kindred Healthcare Inc. included in the Registration Statement
and the Prospectus are based on or derived from sources that the Company
and Ventas Realty reasonably believe to be accurate in all material
respects or represent the Company's and Ventas Realty's good faith
estimates that are made on the basis of data derived from sources the
Company and Ventas Realty reasonably believe to be reliable and accurate in
all material respects.
(xxix) Sarbanes-Oxley Compliance. The Company is in compliance in
all material respects with the applicable provisions of the Sarbanes-Oxley
Act of 2002 that are effective and is actively taking steps to provide that
it will be in compliance with other applicable provisions of the
Sarbanes-Oxley Act of 2002 upon the effectiveness of such provisions.
(b) Officer's Certificates. Any certificate signed by any officer of the
Company, Ventas Realty or any Subsidiary addressed and delivered to Merrill
Lynch or to counsel for Merrill Lynch shall be deemed a representation and
warranty by the Company to Merrill Lynch as to the matters covered thereby.
SECTION 2. Sale and Delivery to Merrill Lynch; Closing.
(a) Securities. On the basis of the representations and warranties herein
contained and subject to the terms and conditions herein set forth, the Company
agrees to sell to Merrill Lynch, and Merrill Lynch agrees to purchase from the
Company, at the price per share set forth in Schedule A, the Securities.
(b) Payment. Payment of the purchase price for, and delivery of
certificates for, the Securities shall be made at the offices of Debevoise &
Plimpton LLP, 919 Third Avenue, New York, New York 10022, or at such other place
as shall be agreed upon by Merrill Lynch and the Company, at 9:00 A.M. (Eastern
time) on the third business day after the date hereof or such other time not
later than ten business days after such date as shall be agreed upon by Merrill
Lynch and the Company (such time and date of payment and delivery being herein
called "Closing Time").
Payment shall be made to the Company by wire transfer of immediately
available funds to a bank account designated by the Company, against delivery to
Merrill Lynch of certificates for the Securities to be purchased by it.
(c) Denominations; Registration. Certificates for the Securities shall be
in such denominations and registered in such names as Merrill Lynch may request
in writing at least one full business day before the Closing Time. The
certificates for the Securities will be made available for examination and
packaging by Merrill Lynch in The City of New York not later than 10:00 A.M.
(Eastern time) on the business day prior to the Closing Time.
11
SECTION 3. Covenants of the Company. The Company and Ventas Realty,
jointly and severally, covenant with Merrill Lynch as follows:
(a) Compliance with Securities Regulations and Commission Requests. During
the period when the Prospectus is required to be delivered under the 1933 Act or
the 1934 Act, the Company, subject to Section 3(b), will notify Merrill Lynch
immediately, and confirm the notice in writing, (i) when any post-effective
amendment to the Registration Statement shall become effective, or any
supplement to the Prospectus or any amended Prospectus shall have been filed,
(ii) of the receipt of any comments from the Commission, (iii) of any request by
the Commission for any amendment to the Registration Statement or any amendment
or supplement to the Prospectus or for additional information, and (iv) of the
issuance by the Commission of any stop order suspending the effectiveness of the
Registration Statement, or of the suspension of the qualification of the
Securities for offering or sale in any jurisdiction, or of the initiation or
threatening of any proceedings for any of such purposes. The Company will
promptly effect the filings necessary pursuant to Rule 424(b) and will take such
steps as it deems necessary to ascertain promptly whether the form of prospectus
transmitted for filing under Rule 424(b) was received for filing by the
Commission and, in the event that it was not, it will promptly file such
prospectus. The Company will make every reasonable effort to prevent the
issuance of any stop order and, if any stop order is issued, to obtain the
lifting thereof at the earliest possible moment.
(b) Filing of Amendments. During the period when the Prospectus is
required to be delivered under the 1933 Act or the 1934 Act, the Company will
give Merrill Lynch notice of its intention to file or prepare any amendment to
the Registration Statement (including any filing under Rule 462(b)), or any
amendment, supplement or revision to either the prospectus included in the
Registration Statement at the time it became effective or to the Prospectus,
whether pursuant to the 1933 Act, the 1934 Act or otherwise, will furnish
Merrill Lynch with copies of any such documents a reasonable amount of time
prior to such proposed filing or use, as the case may be, and will not file or
use any such document to which Merrill Lynch or counsel for Merrill Lynch shall
reasonably object.
(c) Delivery of Registration Statement. The Company has furnished or will
deliver upon request, which may be oral, to Merrill Lynch and counsel for
Merrill Lynch, without charge, signed copies of the Registration Statement as
originally filed and of each amendment thereto (including exhibits filed
therewith or incorporated by reference therein and documents incorporated or
deemed to be incorporated by reference therein) and signed copies of all
consents and certificates of experts, and will also deliver to Merrill Lynch,
without charge, a conformed copy of the Registration Statement as originally
filed and of each amendment thereto (without exhibits). The copy of the
Registration Statement and each amendment thereto furnished to Merrill Lynch
will be identical to the electronically transmitted copies thereof filed with
the Commission pursuant to EDGAR, except to the extent permitted by Regulation
S-T.
(d) Delivery of Prospectus. The Company will furnish to Merrill Lynch,
without charge, during the period when the Prospectus is required to be
delivered under the 1933 Act or the 1934 Act, such number of copies of the
Prospectus (as amended or supplemented) as Merrill Lynch may reasonably request.
The Prospectus and any amendments or supplements thereto furnished to Merrill
Lynch will be identical to the electronically transmitted copies thereof filed
with the Commission pursuant to EDGAR, except to the extent permitted by
Regulation S-T.
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(e) Continued Compliance with Securities Laws. The Company will comply
with the 1933 Act and the 1933 Act Regulations and the 1934 Act and the 1934 Act
Regulations so as to permit the completion of the distribution of the Securities
as contemplated in this Agreement and in the Prospectus. If at any time when a
prospectus is required by the 1933 Act to be delivered in connection with sales
of the Securities, any event shall occur or condition shall exist as a result of
which it is necessary, in the opinion of counsel for Merrill Lynch or for the
Company, to amend the Registration Statement or amend or supplement the
Prospectus in order that the Prospectus will not include any untrue statements
of a material fact or omit to state a material fact necessary in order to make
the statements therein not misleading in the light of the circumstances existing
at the time it is delivered to a purchaser, or if it shall be necessary, in the
opinion of such counsel, at any such time to amend the Registration Statement or
amend or supplement the Prospectus in order to comply with the requirements of
the 1933 Act or the 1933 Act Regulations, the Company will promptly prepare and
file with the Commission, subject to Section 3(b), such amendment or supplement
as may be necessary to correct such statement or omission or to make the
Registration Statement or the Prospectus comply with such requirements, and the
Company will furnish to Merrill Lynch such number of copies of such amendment or
supplement as Merrill Lynch may reasonably request.
(f) Blue Sky Qualifications. The Company will use its best efforts, in
cooperation with Merrill Lynch, to qualify the Securities for offering and sale
under the applicable securities laws of such states and other jurisdictions
(domestic or foreign) as Merrill Lynch may designate and to maintain such
qualifications in effect for a period of not less than one year from the later
of the effective date of the Registration Statement and any Rule 462(b)
Registration Statement; provided, however, that the Company shall not be
obligated to file any general consent to service of process or to qualify as a
foreign corporation or as a dealer in securities in any jurisdiction in which it
is not so qualified or to subject itself to taxation in respect of doing
business in any jurisdiction in which it is not otherwise so subject. In each
jurisdiction in which the Securities have been so qualified, the Company will
file such statements and reports as may be required by the laws of such
jurisdiction to continue such qualification in effect for a period of not less
than one year from the effective date of the Registration Statement and any Rule
462(b) Registration Statement.
(g) Rule 158. The Company will timely file such reports pursuant to the
1934 Act as are necessary in order to make generally available to its
securityholders as soon as practicable an earnings statement for the purposes
of, and to provide the benefits contemplated by, the last paragraph of Section
11(a) of the 1933 Act.
(h) Use of Proceeds. The Company will use the net proceeds received by it
from the sale of the Securities in the manner described in the Prospectus under
"Use of Proceeds".
(i) Listing. The Company will use its best efforts to effect and maintain
the listing of the Securities on the New York Stock Exchange.
(j) Restriction on Sale of Securities. During a period of 60 days from the
date of the Prospectus, the Company will not, without the prior written consent
of Merrill Lynch, (i) directly or indirectly, offer, pledge, sell, contract to
sell, sell any option or contract to purchase, purchase any option or contract
to sell, grant any option, right or warrant to purchase or otherwise transfer
13
or dispose of any share of Common Stock or any securities convertible into or
exercisable or exchangeable for Common Stock or file any registration statement
under the 1933 Act with respect to any of the foregoing or (ii) enter into any
swap or any other agreement or any transaction that transfers, in whole or in
part, directly or indirectly, the economic consequence of ownership of the
Common Stock, whether any such swap or transaction described in clause (i) or
(ii) above is to be settled by delivery of Common Stock or such other
securities, in cash or otherwise. The foregoing sentence shall not apply to (A)
the Securities to be sold hereunder, (B) any shares of Common Stock issued by
the Company upon the exercise of an option or warrant or the conversion of a
security outstanding on the date hereof and referred to in the Prospectus, (C)
any shares of Common Stock issued or options to purchase Common Stock granted
pursuant to existing employee benefit plans of the Company referred to in the
Prospectus or (D) any shares of Common Stock issued pursuant to any non-employee
director stock plan or dividend reinvestment plan.
(k) Reporting Requirements. The Company, during the period when the
Prospectus is required to be delivered under the 1933 Act or the 1934 Act, will
file all documents required to be filed with the Commission pursuant to the 1934
Act within the time periods required by the 1934 Act and the 1934 Act
Regulations.
SECTION 4. Payment of Expenses.
(a) Expenses. The Company will pay all expenses incident to the
performance of its obligations under this Agreement, including (i) the
preparation, printing and filing of the Registration Statement (including
financial statements and exhibits) as originally filed and of each amendment
thereto, (ii) the printing and delivery to Merrill Lynch of this Agreement and
such other documents as may be reasonably required in connection with the
offering, purchase, sale, issuance or delivery of the Securities, (iii) the
preparation, issuance and delivery of the certificates for the Securities to
Merrill Lynch, including any stock or other transfer taxes and any stamp or
other duties payable upon the sale, issuance or delivery of the Securities to
Merrill Lynch, (iv) the fees and disbursements of the Company's counsel,
accountants and other advisors, (v) the qualification of the Securities under
securities laws in accordance with the provisions of Section 3(f) hereof,
including filing fees and the reasonable fees and disbursements of counsel for
Merrill Lynch in connection therewith and in connection with the preparation of
the Blue Sky Survey and any supplement thereto, (vi) the printing and delivery
to Merrill Lynch of copies of the Prospectus and any amendments or supplements
thereto, (vii) the preparation, printing and delivery to Merrill Lynch of a
reasonable number of copies of the Blue Sky Survey and any supplement thereto,
(viii) the fees and expenses of any transfer agent or registrar for the
Securities and (ix) the fees and expenses incurred in connection with the
listing of the Securities on the New York Stock Exchange.
(b) Termination of Agreement. If this Agreement is terminated by Merrill
Lynch in accordance with the provisions of Section 5 or Section 9(a)(i) hereof,
the Company and Ventas Realty shall reimburse Merrill Lynch for all of their
reasonable out-of-pocket expenses, including the reasonable fees and
disbursements of counsel for Merrill Lynch.
SECTION 5. Conditions of Merrill Lynch's Obligations. The obligations of
Merrill Lynch hereunder are subject to the accuracy of the representations and
warranties of the
14
Company and Ventas Realty contained in Section 1 hereof or in certificates of
any officer of the Company, Ventas Realty or any Subsidiary delivered pursuant
to the provisions hereof, to the performance by the Company and Ventas Realty of
their covenants and other obligations hereunder, and to the following further
conditions:
(a) Effectiveness of Registration Statement. The Registration Statement,
including any Rule 462(b) Registration Statement, has become effective and at
Closing Time no stop order suspending the effectiveness of the Registration
Statement shall have been issued under the 1933 Act or proceedings therefor
initiated or threatened by the Commission, and any request on the part of the
Commission for additional information shall have been complied with to the
reasonable satisfaction of counsel to Merrill Lynch. A prospectus, together with
a prospectus supplement shall have been filed with the Commission in accordance
with Rule 424(b).
(b) Opinion of Counsel for Company. At Closing Time, Merrill Lynch shall
have received the favorable opinion, dated as of Closing Time, of:
(i) T. Richard Riney, general counsel for the Company, in form and
substance reasonably satisfactory to counsel for Merrill Lynch to the
effect set forth in Exhibit A-1 hereto and to such further effect as
counsel to Merrill Lynch may reasonably request;
(ii) Willkie Farr & Gallagher LLP, as counsel for the Company, in
form and substance reasonably satisfactory to counsel for Merrill Lynch to
the effect set forth in Exhibit A-2 hereto and to such further effect as
counsel to Merrill Lynch may reasonably request;
(iii) Willkie Farr & Gallagher LLP, as tax counsel for the Company, in
form and substance reasonably satisfactory to counsel for Merrill Lynch to
the effect set forth in Exhibit A-3 hereto and to such further effect as
counsel to Merrill Lynch may reasonably request; and
(iv) Greenberg Traurig, LLP, as regulatory counsel for the Company,
in form and substance reasonably satisfactory to counsel for Merrill Lynch
to the effect set forth in Exhibit A-4 hereto and to such further effect as
counsel to Merrill Lynch may reasonably request.
(c) Opinion of Counsel for Merrill Lynch. At Closing Time, Merrill Lynch
shall have received the favorable opinion, dated as of Closing Time, of
Debevoise & Plimpton LLP, counsel for Merrill Lynch in form and substance
reasonably satisfactory to Merrill Lynch.
(d) Officers' Certificate. At Closing Time, there shall not have been,
since the date hereof or since the respective dates as of which information is
given in the Prospectus, any material adverse change in the business, condition,
financial or otherwise, results of operations, performance or properties of the
Company and the Subsidiaries considered as one enterprise, whether or not
arising in the ordinary course of business, and Merrill Lynch shall have
received a certificate of the Chief Executive Officer and President of the
Company, the Chief Financial Officer of the Company and the Chief Accounting
Officer of the Company, dated as of Closing Time, to the effect that (i) there
has been no such material adverse change, (ii) the representations and
warranties in Section 1(a) hereof are true and correct with the same force and
15
effect as though expressly made at and as of Closing Time, (iii) the Company and
Ventas Realty have complied with all agreements and satisfied all conditions on
their part to be performed or satisfied at or prior to Closing Time, and (iv) no
stop order suspending the effectiveness of the Registration Statement has been
issued and no proceedings for that purpose have been instituted or are pending
or to the knowledge of such officer are contemplated by the Commission.
(e) Accountant's Comfort Letter. At the time of the execution of this
Agreement, Merrill Lynch shall have received from Ernst & Young LLP a letter,
dated such date, in form and substance reasonably satisfactory to Merrill Lynch
containing statements and information of the type ordinarily included in
accountants' "comfort letters" to underwriters with respect to the financial
statements and certain financial information contained in the Registration
Statement and the Prospectus.
(f) Bring-down Comfort Letter. At Closing Time, Merrill Lynch shall have
received from Ernst & Young LLP a letter, dated as of Closing Time, to the
effect that they reaffirm the statements made in the letter furnished pursuant
to subsection (e) of this Section, except that the specified date referred to
shall be a date not more than three business days prior to Closing Time.
(g) Approval of Listing. At Closing Time, the Securities shall have been
approved for listing on the New York Stock Exchange, subject only to official
notice of issuance.
(h) Lock-up Agreements. At the date of this Agreement, Merrill Lynch shall
have received an agreement substantially in the form of Exhibit B hereto signed
by the persons listed on Schedule C hereto.
(i) Additional Documents. At Closing Time, counsel for Merrill Lynch shall
have been furnished with such documents and opinions as they may reasonably
require for the purpose of enabling them to pass upon the issuance and sale of
the Securities as herein contemplated, or in order to evidence the accuracy of
any of the representations or warranties, or the fulfillment of any of the
conditions, herein contained; and all proceedings taken by the Company in
connection with the issuance and sale of the Securities as herein contemplated
shall be reasonably satisfactory in form and substance to Merrill Lynch and
counsel for Merrill Lynch.
(j) Termination of Agreement. If any condition specified in this Section
shall not have been fulfilled when and as required to be fulfilled, this
Agreement may be terminated by Merrill Lynch by notice to the Company at any
time at or prior to Closing Time, and such termination shall be without
liability of any party to any other party except as provided in Section 4 and
except that Sections 1, 6, 7 and 8 shall survive any such termination and remain
in full force and effect.
SECTION 6. Indemnification.
(a) Indemnification of Merrill Lynch by the Company and Ventas Realty. The
Company and Ventas Realty, jointly and severally, agree to indemnify and hold
harmless Merrill Lynch and each person, if any, who controls Merrill Lynch
within the meaning of Section 15 of the 1933 Act or Section 20 of the 1934 Act,
the agents, employees, officers and directors of Merrill Lynch and the agents,
employees, officers and directors of any such controlling person as follows:
16
(i) against any and all loss, liability, claim, damage and expense
whatsoever, as incurred, arising out of any untrue statement or alleged
untrue statement of a material fact contained in the Registration Statement
(or any amendment thereto), or the omission or alleged omission therefrom
of a material fact required to be stated therein or necessary to make the
statements therein not misleading or arising out of any untrue statement or
alleged untrue statement of a material fact included in the Prospectus (or
any amendment or supplement thereto), or the omission or alleged omission
therefrom of a material fact necessary in order to make the statements
therein, in the light of the circumstances under which they were made, not
misleading;
(ii) against any and all loss, liability, claim, damage and expense
whatsoever, as incurred, to the extent of the aggregate amount paid in
settlement of any litigation, or any investigation or proceeding by any
governmental agency or body, commenced or threatened, or of any claim
whatsoever based upon any such untrue statement or omission, or any such
alleged untrue statement or omission; provided that (subject to Section
6(d) below) any such settlement is effected with the written consent of the
Company; and
(iii) against any and all expense whatsoever, as incurred (including
the fees and disbursements of counsel chosen by Merrill Lynch), reasonably
incurred in investigating, preparing or defending against any litigation,
or any investigation or proceeding by any governmental agency or body,
commenced or threatened, or any claim whatsoever based upon any such untrue
statement or omission, or any such alleged untrue statement or omission, to
the extent that any such expense is not paid under (i) or (ii) above;
provided, however, that this indemnity agreement shall not apply to any loss,
liability, claim, damage or expense to the extent arising out of any untrue
statement or omission or alleged untrue statement or omission made therein in
reliance upon and in conformity with written information furnished to the
Company by Merrill Lynch expressly for use in the Registration Statement (or any
amendment thereto), or the Prospectus (or any amendment or supplement thereto).
This indemnity agreement will be in addition to any liability that the Company
or Ventas Realty may otherwise have, including, but not limited to, liability
under this Agreement.
(b) Indemnification of Company, Directors and Officers. Merrill Lynch
agrees to indemnify and hold harmless the Company, Ventas Realty, each of their
directors, each of their officers who signed the Registration Statement, and
each person, if any, who controls the Company or Ventas Realty within the
meaning of Section 15 of the 1933 Act or Section 20 of the 1934 Act and each of
their respective agents, employees, officers and directors and the agents,
employees, officers and directors of any such controlling person against any and
all loss, liability, claim, damage and expense described in the indemnity
contained in subsection (a) of this Section, as incurred, but only with respect
to untrue statements or omissions, or alleged untrue statements or omissions
relating to Merrill Lynch, made in the Registration Statement (or any amendment
thereto), or the Prospectus (or any amendment or supplement thereto) in reliance
upon and in conformity with written information relating to Merrill Lynch
furnished to the Company or Ventas Realty by Merrill Lynch expressly for use in
the Registration Statement (or any amendment thereto) or the Prospectus (or any
amendment or supplement thereto).
17
(c) Actions against Parties; Notification. Each indemnified party shall
give notice as promptly as reasonably practicable to each indemnifying party of
any action commenced against it in respect of which indemnity may be sought
hereunder, but failure to so notify an indemnifying party shall not relieve such
indemnifying party from any liability hereunder, except to the extent it is
materially prejudiced as a result thereof and in any event shall not relieve it
from any liability which it may have otherwise than on account of this indemnity
agreement. In the case of parties indemnified pursuant to Section 6(a) above,
counsel to the indemnified parties shall be selected by Merrill Lynch, subject
to the reasonable approval of the indemnifying party, and, in the case of
parties indemnified pursuant to Section 6(b) above, counsel to the indemnified
parties shall be selected by the Company. An indemnifying party may participate
at its own expense in the defense of any such action; provided, however, that
counsel to the indemnifying party shall not (except with the consent of the
indemnified party) also be counsel to the indemnified party. In no event shall
the indemnifying parties be liable for fees and expenses of more than one
counsel (in addition to any local counsel) separate from their own counsel for
all indemnified parties in connection with any one action or separate but
similar or related actions in the same jurisdiction arising out of the same
general allegations or circumstances. No indemnifying party shall, without the
prior written consent of the indemnified parties, settle or compromise or
consent to the entry of any judgment with respect to any litigation, or any
investigation or proceeding by any governmental agency or body, commenced or
threatened, or any claim whatsoever in respect of which indemnification or
contribution could reasonably be sought under this Section 6 or Section 7 hereof
(whether or not the indemnified parties are actual or potential parties
thereto), unless such settlement, compromise or consent (i) includes an
unconditional release of each indemnified party from all liability arising out
of such litigation, investigation, proceeding or claim and (ii) does not include
a statement as to or an admission of fault, culpability or a failure to act by
or on behalf of any indemnified party.
(d) Settlement without Consent if Failure to Reimburse. If at any time an
indemnified party shall have requested an indemnifying party to reimburse the
indemnified party for fees and expenses of counsel, such indemnifying party
agrees that it shall be liable for any settlement of the nature contemplated by
Section 6(a)(ii) effected without its written consent if (i) such settlement is
entered into more than 45 days after receipt by such indemnifying party of the
aforesaid request, (ii) such indemnifying party shall have received notice of
the terms of such settlement at least 30 days prior to such settlement being
entered into and (iii) such indemnifying party shall not have reimbursed such
indemnified party in accordance with such request prior to the date of such
settlement; provided, that an indemnifying party shall not be liable for any
such settlement effected without its consent if such indemnifying party (1)
reimburses such indemnified party in accordance with such request to the extent
it considers such request to be reasonable and (2) provides written notice to
the indemnified party substantiating the unpaid balance as unreasonable, in each
case prior to the date of such settlement.
(e) Other Agreements With Respect to Indemnification. The provisions of
this Section shall not affect any agreement between the Company and Ventas
Realty with respect to indemnification.
SECTION 7. Contribution. If the indemnification provided for in Section 6
hereof is for any reason unavailable to or insufficient to hold harmless an
indemnified party in respect of any losses, liabilities, claims, damages or
expenses referred to therein, then each indemnifying party
18
shall contribute to the aggregate amount of such losses, liabilities, claims,
damages and expenses incurred by such indemnified party, as incurred, (i) in
such proportion as is appropriate to reflect the relative benefits received by
the Company and Ventas Realty on the one hand and Merrill Lynch on the other
hand from the offering of the Securities pursuant to this Agreement or (ii) if
the allocation provided by clause (i) is not permitted by applicable law, in
such proportion as is appropriate to reflect not only the relative benefits
referred to in clause (i) above but also the relative fault of the Company and
Ventas Realty on the one hand and of Merrill Lynch on the other hand in
connection with the statements or omissions which resulted in such losses,
liabilities, claims, damages or expenses, as well as any other relevant
equitable considerations.
The relative benefits received by the Company and Ventas Realty on the one
hand and Merrill Lynch on the other hand in connection with the offering of the
Securities pursuant to this Agreement shall be deemed to be in the same
respective proportions as the total net proceeds from the offering of the
Securities pursuant to this Agreement (before deducting expenses) received by
the Company and the total underwriting discount received by Merrill Lynch, in
each case as set forth on the cover of the Prospectus, bear to the aggregate
initial public offering price of the Securities as set forth on such cover.
The relative fault of the Company and Ventas Realty, on the one hand and
Merrill Lynch on the other hand shall be determined by reference to, among other
things, whether any such untrue or alleged untrue statement of a material fact
or omission or alleged omission to state a material fact relates to information
supplied by the Company or by Merrill Lynch and the parties' relative intent,
knowledge, access to information and opportunity to correct or prevent such
statement or omission.
The Company, Ventas Realty and Merrill Lynch agree that it would not be
just and equitable if contribution pursuant to this Section 7 were determined by
pro rata allocation or by any other method of allocation which does not take
account of the equitable considerations referred to above in this Section 7. The
aggregate amount of losses, liabilities, claims, damages and expenses incurred
by an indemnified party and referred to above in this Section 7 shall be deemed
to include any legal or other expenses reasonably incurred by such indemnified
party in investigating, preparing or defending against any litigation, or any
investigation or proceeding by any governmental agency or body, commenced or
threatened, or any claim whatsoever based upon any such untrue or alleged untrue
statement or omission or alleged omission.
Notwithstanding the provisions of this Section 7, Merrill Lynch shall not
be required to contribute any amount in excess of the amount by which the total
price at which the Securities underwritten by it and distributed to the public
were offered to the public exceeds the amount of any damages which Merrill Lynch
has otherwise been required to pay by reason of any such untrue or alleged
untrue statement or omission or alleged omission.
No person guilty of fraudulent misrepresentation (within the meaning of
Section 11(f) of the 1933 Act) shall be entitled to contribution from any person
who was not guilty of such fraudulent misrepresentation.
For purposes of this Section 7, each person, if any, who controls Merrill
Lynch within the meaning of Section 15 of the 1933 Act or Section 20 of the 1934
Act shall have the same rights
19
to contribution as Merrill Lynch, and each director of the Company, Ventas
Realty, each officer of the Company who signed the Registration Statement, and
each person, if any, who controls the Company within the meaning of Section 15
of the 1933 Act or Section 20 of the 1934 Act shall have the same rights to
contribution as the Company or Ventas Realty, as the case may be
The provisions of this Section shall not affect any agreement among the
Company and Ventas Realty with respect to contribution.
SECTION 8. Representations, Warranties and Agreements to Survive Delivery.
All representations, warranties and agreements contained in this Agreement or in
certificates of officers of the Company, Ventas Realty, any of the Company's
Subsidiaries submitted pursuant hereto, shall remain operative and in full force
and effect, regardless of any investigation made by or on behalf of Merrill
Lynch or controlling person, or by or on behalf of the Company, and shall
survive delivery of the Securities to Merrill Lynch.
SECTION 9. Termination of Agreement.
(a) Termination; General. Merrill Lynch may terminate this Agreement, by
notice to the Company, at any time at or prior to Closing Time (i) if there has
been, since the time of execution of this Agreement or since the respective
dates as of which information is given in the Prospectus (exclusive of any
supplement thereto), any material adverse change in the business, condition,
financial or otherwise, results of operations, performance, properties or
business prospects of the Company and the Subsidiaries considered as one
enterprise, whether or not arising in the ordinary course of business, or (ii)
if there has occurred any material adverse change in the financial markets in
the United States or in the international financial markets, any outbreak of
hostilities or escalation thereof or other calamity or crisis or any change or
development involving a prospective change in national or international
political, financial or economic conditions, in each case the effect of which is
such as to make it, in the judgment of Merrill Lynch, impracticable or
inadvisable to market the Securities or to enforce contracts for the sale of the
Securities, or (iii) if trading in any securities of the Company has been
suspended or materially limited by the Commission or the New York Stock
Exchange, or if trading generally on the American Stock Exchange or the New York
Stock Exchange or in the Nasdaq National Market has been suspended or materially
limited, or minimum or maximum prices for trading have been fixed, or maximum
ranges for prices have been required, by any of said exchanges or by such system
or by order of the Commission, the National Association of Securities Dealers,
Inc. or any other governmental authority, or a material disruption has occurred
in commercial banking or securities settlement or clearance services in the
United States, or (iv) if a banking moratorium has been declared by either
Federal or New York authorities.
(b) Liabilities. If this Agreement is terminated pursuant to this Section,
such termination shall be without liability of any party to any other party
except as provided in Section 4 hereof, and provided further that Sections 1, 6,
7 and 8 shall survive such termination and remain in full force and effect.
SECTION 10. Default by the Company. If the Company shall fail at Closing
Time to sell the number of Securities that it is obligated to sell hereunder,
then this Agreement shall
20
terminate without any liability on the part of any nondefaulting party;
provided, however, that the provisions of Sections 1, 4, 6, 7 and 8 shall remain
in full force and effect. No action taken pursuant to this Section shall relieve
the Company from liability, if any, in respect of such default.
SECTION 11. Notices. All notices and other communications hereunder shall
be in writing and shall be deemed to have been duly given if mailed or
transmitted by any standard form of telecommunication. Notices to Merrill Lynch
shall be directed to Merrill Lynch at North Tower, 4 World Financial Center, New
York, New York 10080, attention of Syndicate Operations, with a copy to
Debevoise & Plimpton LLP, 919 Third Avenue, New York, New York 10022, attention
of Michael W. Blair and Steven J. Slutzky; and notices to the Company and Ventas
Realty shall be directed to it at 10350 Ormsby Park Place, Suite 300,
Louisville, Kentucky 40273, attention of T. Richard Riney, General Counsel, with
a copy to Willkie Farr & Gallagher LLP, 787 Seventh Avenue, New York, NY 10019,
attention of Thomas M. Cerabino and Robert B. Stebbins.
SECTION 12. Parties. This Agreement shall each inure to the benefit of and
be binding upon Merrill Lynch and the Company and their respective successors.
Nothing expressed or mentioned in this Agreement is intended or shall be
construed to give any person, firm or corporation, other than Merrill Lynch and
the Company and their respective successors and the controlling persons and
officers and directors referred to in Sections 6 and 7 and their heirs and legal
representatives, any legal or equitable right, remedy or claim under or in
respect of this Agreement or any provision herein contained. This Agreement and
all conditions and provisions hereof are intended to be for the sole and
exclusive benefit of Merrill Lynch and the Company and their respective
successors, and said controlling persons and officers and directors and their
heirs and legal representatives, and for the benefit of no other person, firm or
corporation. No purchaser of Securities from Merrill Lynch shall be deemed to be
a successor by reason merely of such purchase.
SECTION 13. GOVERNING LAW AND TIME. THIS AGREEMENT SHALL BE GOVERNED BY AND
CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK WITHOUT GIVING
EFFECT TO CONFLICTS OF LAW PRINCIPLES THEREOF. EXCEPT AS OTHERWISE SET FORTH
HEREIN, SPECIFIED TIMES OF DAY REFER TO NEW YORK CITY TIME.
SECTION 14. Effect of Headings. The Article and Section headings herein and
the Table of Contents are for convenience only and shall not affect the
construction hereof.
21
If the foregoing is in accordance with your understanding of our agreement,
please sign and return to the Company a counterpart hereof, whereupon this
instrument, along with all counterparts, will become a binding agreement between
Merrill Lynch and the Company in accordance with its terms.
Very truly yours,
VENTAS, INC.
By /s/ T. Richard Riney
-------------------------------------
Name: T. Richard Riney
Title: Executive Vice President and
General Counsel
VENTAS REALTY, LIMITED PARTNERSHIP
By: Ventas, Inc., its General Partner
By /s/ T. Richard Riney
-------------------------------------
Name: T. Richard Riney
Title: Executive Vice President and
General Counsel
22
CONFIRMED AND ACCEPTED,
as of the date first above written:
MERRILL LYNCH & CO.
MERRILL LYNCH, PIERCE, FENNER & SMITH
INCORPORATED
By /s/ Sam Thong
-------------------------------------
Authorized Signatory
23
SCHEDULE A
Ventas, Inc.
2,000,000 Shares of Common Stock
(Par Value $.25 Per Share)
The purchase price per share for the Securities to be paid by Merrill Lynch
shall be $25.69.
Sch A-1
SCHEDULE B
% Owned
Directly or
Jurisdiction of Indirectly by
Subsidiary Incorporation Ventas, Inc.
- ------------------------------------------------------------------------------
Ventas Realty, Limited Partnership Delaware 100%
Ventas LP Realty, LLC Delaware 100%
Ventas Finance I, LLC Delaware 100%
Ventas Finance I, Inc. Delaware 100%
Ventas Specialty I, LLC Delaware 100%
Ventas Specialty I, Inc. Delaware 100%
Ventas Capital Corporation Delaware 100%
Ventas TRS, LLC Delaware 100%
Ventas Healthcare Properties, Inc. Delaware 100%
Ventas Kansas City I, LLC Delaware 100%
Ventas Belleville, LLC Delaware 100%
Ventas Springfield/Findlay, LLC Delaware 100%
ElderTrust Maryland 100%
ElderTrust Operating Limited Partnership Delaware 99.6%*
ET Capital Corp. Delaware 100%
ET GENPAR, L.L.C. Delaware 99.6%*
ET Sub-Belvedere Limited Partnership, L.L.P. Virginia 99.6%*
ET Belvedere Finance, L.L.C. Delaware 99.6%*
ET Belvedere Finance, Inc. Delaware 100%
ET Sub-Berkshire Limited Partnership Delaware 99.6%*
ET Berkshire, L.L.C. Delaware 99.6%*
ET Sub-Cabot Park, L.L.C. Delaware 99.6%*
Cabot ALF, LLC Delaware 99.6%*
ET Sub-Cleveland Circle, L.L.C. Delaware 99.6%*
Cleveland ALF, L.L.C. Delaware 99.6%*
ET Sub-DCMH Limited Partnership L.L.P. Virginia 99.6%*
Sch B-1
ET DCMH Finance, LLC Delaware 99.6%*
ET DCMH Finance, Inc. Delaware 100%
ET Sub-Heritage Andover, L.L.C. Delaware 99.6%*
ET Heritage Andover Finance, Inc. Delaware 100%
ET Sub-Heritage Woods, L.L.C. Delaware 99.6%*
ET Sub-Highgate, L.P. Pennsylvania 99.6%*
ET Sub-Lacey I, L.L.C. Delaware 99.6%*
ET Sub-Lehigh Limited Partnership Delaware 99.6%*
ET Lehigh, L.L.C. Delaware 99.6%*
ET Sub-Lopatcong, L.L.C. Delaware 99.6%*
ET Sub-Pennsburg Manor Limited Partnership,
L.L.P. Virginia 99.6%*
ET Pennsburg Finance, L.L.C. Delaware 99.6%*
ET Sub-Phillipsburg I, L.L.C. Delaware 99.6%*
ET Sub-Pleasant View, L.L.C. Delaware 99.6%*
ET Sub-POB I Limited Partnership, L.L.P. Virginia 99.6%*
ET POBI Finance, L.L.C. Delaware 99.6%*
ET POBI Finance, Inc. Delaware 100%
ET Sub-Rittenhouse Limited Partnership, L.L.P. Virginia 99.6%*
ET Sub-Riverview Ridge Limited Partnership,
L.L.P. Virginia 99.6%*
ET Sub-Sanatoga Limited Partnership Delaware 99.6%*
ET Sanatoga, L.L.C. Delaware 99.6%*
ET Sub-SMOB, L.L.C. Delaware 99.6%*
ET Sub-Vernon Court, L.L.C. Delaware 99.6%*
Vernon ALF, L.L.C. Delaware 99.6%*
ET Sub-Wayne I, Limited Partnership, L.L.P. Virginia 99.6%*
ET Wayne Finance, L.L.C. Delaware 99.6%*
ET Wayne Finance, Inc. Delaware 100%
ET Sub-Willowbrook Limited Partnership, L.L.P. Virginia 99.6%*
ET Sub-Woodbridge, L.P. Pennsylvania 99.6%*
Sch B-2
*Certain unaffiliated third parties own approximately .4% of the limited
partnership interests in ElderTrust Operating Partnership ("ETOP") in the form
of Class C Units and as a result indirectly own .4% of all direct or indirect
subsidiaries of ETOP. The Series C Units are redeemable, and the redemption
price thereof may be paid in the form of securities of the Company or a
Subsidiary.
Sch B-3
SCHEDULE C
Debra A. Cafaro
Raymond J. Lewis
T. Richard Riney
Richard A. Schweinhart
Mary L. Smith
Sch C-1