INTERIM LOAN AND GUARANTY AGREEMENT

Exhibit 10.1

EXECUTION COPY

 

$530.0 MILLION

INTERIM LOAN AND GUARANTY AGREEMENT

Dated as of April 26, 2007

among

VENTAS REALTY, LIMITED PARTNERSHIP,

as Borrower,

THE GUARANTORS REFERRED TO HEREIN,

THE LENDERS REFERRED TO HEREIN

and

MERRILL LYNCH CAPITAL CORPORATION,

as Administrative Agent,

CITIGROUP GLOBAL MARKETS INC.,

as Syndication Agent,

and

MERRILL LYNCH & CO.,

MERRILL LYNCH, PIERCE, FENNER & SMITH INCORPORATED,

and

CITIGROUP GLOBAL MARKETS INC.,

as Joint Lead Arrangers and Joint Book Runners

Cahill Gordon & Reindel LLP

80 Pine Street

New York, New York 10005

 

TABLE OF CONTENTS

 

 

-i-

 

-ii-

 

-iii-

 

-iv-

 

-v-

INTERIM LOAN AND GUARANTY AGREEMENT, dated as of April 26, 2007 (as amended, restated, extended, supplemented, renewed, replaced or otherwise modified from time to time, this “ Credit Agreement ”), among VENTAS REALTY, LIMITED PARTNERSHIP, a Delaware limited partnership (the “ Borrower ”), VENTAS, INC., a Delaware corporation (“ Ventas ”), and certain Subsidiaries of Ventas identified herein, as Guarantors, the Lenders identified herein, Merrill Lynch Capital Corporation, as Administrative Agent, Citigroup Global Markets Inc., as Syndication Agent, and Merrill Lynch & Co., Merrill Lynch, Pierce, Fenner & Smith Incorporated and Citigroup Global Markets Inc., as Joint Lead Arrangers and Joint Book Runners.

WHEREAS, the Borrower and certain of its Affiliates have entered into a purchase agreement (the “ Sunrise Purchase Agreement ”), dated as of January 14, 2007 with Sunrise Senior Living Real Estate Investment Trust, a trust established under the laws of the Province of Ontario (“ Sunrise REIT ”), Sunrise REIT Trust, a trust established under the laws of the Province of Ontario (the “ Sub Trust ”) and Sunrise REIT GP, Inc., a corporation existing under the laws of the Province of Ontario (the “ UPREIT ” and, collectively with Sunrise REIT and the Sub Trust, “ Sunrise ”), pursuant to which at the closing of the transactions contemplated by the Sunrise Purchase Agreement, Ventas shall acquire from Sunrise the Purchased REIT Property (as defined in the Sunrise Purchase Agreement) (the “ Sunrise Acquisition ”).

WHEREAS, on the Closing Date and in connection with the consummation of the Sunrise Acquisition, Sunrise REIT and it subsidiaries will repay (the “ Refinancing ”) all indebtedness for borrowed money and preferred stock then outstanding and terminate all commitments to make extensions of credit thereunder (together, the “ Existing Indebtedness ”) other than the indebtedness and commitments listed on Schedule A . ¹

WHEREAS, on the Closing Date and in connection with the consummation of the Sunrise Acquisition, Ventas will issue Senior Preferred Stock (as defined below) resulting in gross cash proceeds of not less than $700.0 million (the “ Senior Preferred Stock Offering ” and, together with the Sunrise Acquisition, the Refinancing, the entering into and borrowings under this Credit Agreement and the payment of associated fees, commissions and expenses, the “ Transactions ”).

WHEREAS, the Borrower has requested that the Lenders provide a interim loan facility, the net proceeds of which will be distributed on the Closing Date to Ventas to be used to finance, in part, the Sunrise Acquisition and the Refinancing and to pay transaction fees, commissions and expenses therewith, and the Lenders are willing to do so on the terms and conditions set forth herein.

WHEREAS, the Lenders have requested that the Borrower provide assurance for the repayment of the Loans hereunder and the other Obligations of the Credit Parties and

1	Note: Need to confirm amount to remain outstanding; if exceeds $330.0 million, commitments to be reduced per commitment letter p. 2.

 

accordingly, the Borrower will, among other things, provide or cause to be provided to the Administrative Agent, for the benefit of the holders of the Obligations so guaranteed, a guaranty of the Obligations by each of the Guarantors pursuant to Article IX .

WHEREAS, subject to the terms and conditions set forth herein, the Administrative Agent is willing to act as administrative agent for the Lenders.

NOW, THEREFORE, in consideration of the mutual covenants and agreements herein contained, the parties hereto covenant and agree as follows:

ARTICLE I

DEFINITIONS AND ACCOUNTING TERMS

SECTION 1.1. Definitions .

For the purposes hereof unless the context otherwise requires, all references to Articles and Sections, Exhibits and Schedules shall be deemed references to Articles and Sections of, and Exhibits and Schedules to, this Credit Agreement, and the following terms shall have the meanings indicated:

“ Acquisition ” by any Person, shall mean the purchase or acquisition by such Person of any Capital Stock in or any asset of another Person, whether or not involving a merger or consolidation with such other Person.

“ Adjusted Base Rate ” shall mean the Base Rate plus the Applicable Percentage.

“ Adjusted Eurodollar Rate ” shall mean the Eurodollar Rate plus the Applicable Percentage.

“ Administrative Agent ” shall mean Merrill Lynch Capital Corporation, in its capacity as administrative agent for the Lenders hereunder or such successor Administrative Agent as may be appointed pursuant to Section 11.8 .

“ Administrative Agent Fee Letter ” shall mean that certain letter agreement dated as of March 26, 2007 between the Borrower, Ventas and the Administrative Agent, relating to the payment of certain fees, as such letter agreement may be amended, modified or supplemented from time to time by written instrument executed by the parties thereto.

“ Administrative Agent’s Office ” shall mean the Administrative Agent’s address as set forth on Schedule 12.2 , or such other address as the Administrative Agent may from time to time change by notice thereof given to the Borrower and the Lenders in accordance with Section 12.2(d) .

 

-2-

“ Administrative Questionnaire ” shall mean an Administrative Questionnaire in a form supplied by the Administrative Agent.

“ Affiliate ” shall mean, with respect to any Person, another Person that directly, or indirectly through one or more intermediaries, Controls or is Controlled by or is under common Control with the Person specified.

“ Affiliated Group ” shall mean a group of Persons, each of which is an Affiliate of some other Person in the group.

“ Agent Parties ” shall have the meaning given to such term in Section 12.2(c) .

“ Applicable Percentage ” shall mean zero with respect to Base Rate Loans and 1.25% per annum with respect to Eurodollar Rate Loans; provided , however , that if the Loans are not repaid in full on the Initial Maturity Date, the Applicable Percentage shall increase to 1.00% per annum with respect to Base Rate Loans and 2.00% per annum with respect to Eurodollar Rate Loans on and after such date.

“ Approved Fund ” shall mean any Fund that is administered or managed by (a) a Lender, (b) an Affiliate of a Lender or (c) an entity or an Affiliate of an entity that administers or manages a Lender.

“ Assignee Group ” shall mean two (2) or more Eligible Assignees that are Affiliates of one another or two or more Approved Funds managed by the same investment advisor.

“ Assignment and Assumption ” shall mean an assignment and assumption entered into by a Lender and an assignee (with the consent of any party whose consent is required by Section 12.6(b)) , and accepted by the Administrative Agent, in substantially the form of Exhibit 12.6(b) or any other form approved by the Administrative Agent.

“ Authorized Officer ” shall mean, with respect to the Borrower or any Guarantor, the president, vice president, chief financial officer, controller or other chief accounting officer, secretary, treasurer or general counsel of the general partner or managing member of such entity or of such entity itself, as the case may be, and, solely for purposes of notices given pursuant to Article II , any other officer or employee of the Borrower so designated by any of the foregoing officers in a notice to the Administrative Agent.

“ Bankruptcy Code ” shall mean the Bankruptcy Reform Act of 1978, as heretofore and hereafter amended, as codified at 11 U.S.C. § 101 et seq ., and the rules and regulations promulgated thereunder, or any successor provision thereto.

“ BBA LIBOR ” shall have the meaning given to such term in the definition of “Eurodollar Base Rate”.

 

-3-

“ Base Rate ” shall mean a fluctuating rate per annum equal to the higher of (a) the Federal Funds Rate in effect for the relevant period plus one half of one percent (0.5%) and (b) the Prime Rate in effect for the relevant period.

“ Base Rate Loan ” shall mean a Loan that bears interest at a rate based on the Base Rate in accordance with the provisions of Article II .

“ Board ” shall mean the Board of Governors of the Federal Reserve System of the United States of America, or any successor thereto.

“ Board of Directors ” shall mean (a) with respect to a corporation, the Board of Directors of the corporation; (b) with respect to a partnership, the Board of Directors of the general partner of the partnership or the board or committee of the general partner of the partnership serving a similar function; and (c) with respect to any other Person, the board or committee of such Person serving a similar function.

“ Borrower ” shall have the meaning given to such term in the initial paragraph of this Credit Agreement, and its permitted successors.

“ Borrowing ” shall mean a group of Loans of a single Interest Rate Type and as to which a single Interest Period is in effect on a single day.

“ Brookdale ” shall mean any of Brookdale Senior Living, Inc. and its Subsidiaries and Affiliates.

“ Business Day ” shall mean any day other than a Saturday, Sunday or other day on which commercial banks in New York and London are authorized to close under the applicable Laws of, or are in fact closed in, the state where the Administrative Agent’s Office is located, provided that, when used in connection with a Eurodollar Rate Loan, the term “Business Day” shall also exclude any such day on which banks are not open for dealings in Dollar deposits conducted by and between banks in the London interbank eurodollar market.

“ Capital Stock ” shall mean (a) in the case of a corporation, capital stock, (b) in the case of an association or business entity, any and all shares, interests, participations, rights or other equivalents (however designated) of capital stock, (c) in the case of a partnership, partnership interests (whether general or limited), (d) in the case of a limited liability company, membership interests and (e) any other interest or participation that confers on a Person the right to receive a share of the profits and losses of, or distributions of assets of, the issuing Person.

“ Capitalization Rate ” shall mean (i) eight percent (8.0%) in the case of non-government reimbursed properties and assets and (ii) nine and three-quarters percent (9.75%) in the case of government reimbursed properties and assets.

 

-4-

“ Cash Collateral Account ” shall have the meaning given to such term in Section 10.1 .

“ Cash Collateral Bank ” shall have the meaning given to such term in Section 10.1 .

“ Cash Equivalents ” shall mean (a) securities issued or directly and fully guaranteed or insured by the United States or any agency or instrumentality thereof (provided that the full faith and credit of the United States is pledged in support thereof) having maturities of not more than twelve months from the date of acquisition, (b) interest bearing or discounted obligations of United States federal agencies and government-sponsored entities, or pools of such instruments offered by banks which have a long-term debt rating of AA or better by S&P or Aa2 by Moody’s, including, Federal Home Loan Mortgage Corporation participation sale certificates, Government National Mortgage Association modified pass through certificates, Federal National Mortgage Association bonds and notes and Federal Farm Credit System securities, (c) Eurodollar certificates of deposit, bankers acceptances, floating rate notes, other money market instruments and letters of credit each issued by banks which have a long-term debt rating of AA or better by S&P or Aa2 by Moody’s, (d) loan participations, each of which at the time of investment is rated at least AA by S&P, and/or Aa2 by Moody’s and/or unconditionally guaranteed by an entity having an AA rating by S&P, an Aa2 rating by Moody’s, or better rated credit, (e) real estate loan pool participations, guaranteed by an entity with an AA rating or better by S&P or an Aa2 rating or better by Moody’s and shares of any mutual fund that has its assets primarily invested in the types of investments referred to in clauses (a)  through (d)  above, (f) Dollar-denominated time deposits and certificates of deposit of (i) any Lender, (ii) any domestic commercial bank of recognized standing having capital and surplus in excess of $500,000,000 or (iii) any bank whose short-term commercial paper rating from S&P is at least A-1 or the equivalent thereof or from Moody’s is at least P-1 or the equivalent thereof, in each case with maturities of not more than one year from the date of acquisition, (g) commercial paper and variable or fixed rate notes issued by any bank referred to in clause (f)(iii) above (or by the parent company thereof) or any variable rate notes issued by, or guaranteed by, any domestic corporation rated A-1 (or the equivalent thereof) or better by S&P or P-1 (or the equivalent thereof) or better by Moody’s and maturing within one year of the date of acquisition, (h) repurchase agreements entered into by any Person with a bank or trust company (including any of the Lenders) or recognized securities dealer having capital and surplus in excess of $500,000,000 for direct obligations issued by or fully guaranteed by the United States in which such Person shall have a perfected first priority security interest (subject to no other Liens) and having, on the date of purchase thereof, a fair market value of at least 100% of the amount of the repurchase obligations and (i) Investments (classified in accordance with GAAP as current assets) in money market investment programs registered under the Investment Company Act of 1940 that are administered by reputable financial institutions having capital of at least $500,000,000 and the portfolios of which are limited to Investments of the character described in the foregoing subclauses hereof.

 

-5-

“ Change in Control ” shall mean either (a) a Person or an Affiliated Group shall acquire thirty-five percent (35%) or more of any class of the voting stock of Ventas, and the Borrower shall not have repaid all of the outstanding Obligations in full in cash, and terminated the Commitments within forty-five (45) days after such Person or Affiliated Group shall have acquired such percentage of such stock; or (b) Ventas shall cease to be the sole general partner of the Borrower; or (c) Ventas shall cease to own sixty percent (60%) or more of the partnership interests in the Borrower.

“ Change in Law ” shall mean the occurrence, after the date of this Credit Agreement, of any of the following: (a) the adoption or taking effect of any law, rule, regulation or treaty, (b) any change in any law, rule, regulation or treaty or in the administration, interpretation or application thereof by any Governmental Authority or (c) the making or issuance of any request, guideline or directive (having the force of law) by any Governmental Authority.

“ Closing Date ” shall mean the date on which the conditions precedent set forth in Section 5.1 have been satisfied or waived.

“ Code ” shall mean the Internal Revenue Code of 1986, as codified at 26 U.S.C. § 1 et seq ., and the rules and regulations promulgated thereunder, or any successor provision thereto.

“ Commitments ” shall have the meaning given to such term in Section 2.1(a) .

“ Commitment Percentage ” shall mean, for each Lender, a fraction (expressed as a percentage) the numerator of which is the Commitment or Loan of such Lender at such time and the denominator of which is the Total Committed Amount at such time. The initial Commitment Percentage of each Lender is set forth on Schedule 1.1 .

“ Compensation Period ” shall have the meaning given to such term in Section 2.13(b)(ii)(B) .

“ Compliance Certificate ” shall mean a certificate substantially in the form of Exhibit 6.2(a) .

“ Consolidated Adjusted Net Worth ” shall mean, as of any day for the Consolidated Group, the sum of (a) total stockholders’ equity or net worth plus (b) accumulated depreciation, in each case, determined on a consolidated basis in accordance with GAAP; but excluding, in any event, for purposes hereof, unrealized gains and losses on Interest Rate Protection Agreements, Currency Agreements or other interest rate derivatives reported on a consolidated balance sheet as accumulated other comprehensive income or loss.

“ Consolidated EBITDA ” shall mean, for any period for the Consolidated Group, the sum of Consolidated Net Income plus , without duplication, to the extent deducted in computing Consolidated Net Income, (a) amortization and depreciation expense, (b) other

 

-6-

non-cash charges as are reasonably acceptable to the Administrative Agent and the Required Lenders, (c) Consolidated Interest Expense and (d) provision for taxes, in each case determined on a consolidated basis in accordance with GAAP; but excluding, in any event, (i) extraordinary gains and losses and related tax effects thereon, (ii) non-cash impairment charges, (iii) non-cash stock or option based compensation and (iv) other non-cash gains and losses and related tax effects thereon as are reasonably acceptable to the Administrative Agent and the Required Lenders, and including, in any event, a pro rata share of the foregoing items and components attributable to interests in Joint Ventures. Except as otherwise expressly provided, the applicable period shall be the four (4) consecutive fiscal quarters ending as of the date of determination.

“ Consolidated Fixed Charge Coverage Ratio ” shall mean the ratio of Consolidated EBITDA to Consolidated Fixed Charges.

“ Consolidated Fixed Charges ” shall mean, for any period for the Consolidated Group, the sum of, without duplication, (a) Consolidated Interest Expense, plus (b) scheduled principal payments on Consolidated Funded Debt (excluding any balloon or final payment) during the applicable period, plus (c) dividends and distributions on preferred stock of Ventas, if any, in each case determined on a consolidated basis in accordance with GAAP; but excluding, in any event, (i) gains and losses from unwinding or break-funding Interest Rate Protection Agreements, (ii) write-offs of unamortized deferred financing fees, (iii) prepayment fees, premiums and penalties, and (iv) other unusual items as are reasonably acceptable to the Administrative Agent and the Required Lenders. Except as otherwise expressly provided, the applicable period shall be the four (4) consecutive fiscal quarters ending as of the date of determination.

“ Consolidated Funded Debt ” shall mean, as of any day, Funded Debt for the Consolidated Group, determined on a consolidated basis in accordance with GAAP, but including, in any event, a pro rata share of the foregoing items and components attributable to interests in Joint Ventures. For purposes of this Credit Agreement, “Consolidated Funded Debt” shall not include the Sunrise Debentures.

“ Consolidated Gross Asset Value ” shall mean, as of any day for the Consolidated Group, the sum of (a) unrestricted cash, restricted cash to the extent a corresponding liability is included in Consolidated Total Liabilities, restricted cash held by third party lenders as collateral for indebtedness, and Cash Equivalents, plus (b) an amount equal to the quotient of Consolidated EBITDA for the period of four (4) consecutive fiscal quarters most recently ended divided by the Capitalization Rate, plus (c) one hundred percent (100%) of the book value of all development in progress, including land, plus (d) one hundred percent (100%) of the book value of other non-real property assets other than goodwill and other intangible assets, in each case determined on a consolidated basis in accordance with GAAP, but including, in any event, a pro rata share of the foregoing items and components attributable to interests in Joint Ventures; provided , however , that for purposes of clause (b) , Acquisitions will be valued for the period of four (4) consecutive fiscal quarters following the

 

-7-

date of Acquisition at the greater of (i) 100% of the purchase price or Acquisition cost thereof, or (ii) the quotient of the portion of Consolidated EBITDA for a period of four (4) consecutive fiscal quarters attributed to the Acquisition on a Pro Forma Basis divided by the Capitalization Rate.

“ Consolidated Group ” shall mean Ventas and any of its Subsidiaries determined on a consolidated basis in accordance with GAAP.

“ Consolidated Interest Expense ” shall mean, for any period for the Consolidated Group, interest expense determined in accordance with GAAP, but including, in any event, (i) the interest component under capital leases and the implied interest component under securitization transactions and (ii) a pro rata share of the foregoing items and components attributable to interests in Joint Ventures, and excluding, in any event, amortization of deferred financing fees, amortization of debt discounts and swap breakage costs. Except as otherwise expressly provided, the applicable period shall be the four (4) consecutive fiscal quarters ending as of the date of determination.

“ Consolidated Net Income ” shall mean, for any period for the Consolidated Group, net income or loss determined on a consolidated basis in accordance with GAAP; but including, in any event, a pro rata share of the foregoing items and components attributable to interests in Joint Ventures, and excluding, in any event, (a) the income or loss of any Person that is not a member of the Consolidated Group in which any member of the Consolidated Group has an equity investment or comparable interest, except to the extent of the amount of dividends or other distributions actually paid to members of the Consolidated Group by such Person during such period, (b) the income or loss of any Person accrued prior to the date that it became a member of the Consolidated Group or that such Person’s assets were acquired by a member of the Consolidated Group (except as otherwise required in connection with Section 1.2 ), and (c) any net after tax gains or losses attributable to sales of non-current assets out of the ordinary course of business and write-downs of non-current assets in anticipation of losses to the extent they have decreased net income. Except as otherwise expressly provided, the applicable period shall be the four (4) consecutive fiscal quarters ending as of the date of determination.

“ Consolidated Secured Debt ” shall mean the aggregate principal amount of Consolidated Funded Debt that is secured by a mortgage, deed of trust, lien, pledge, encumbrance or other security interest on property owned or leased by a member of the Consolidated Group, but including, in any event, a pro rata share of the foregoing items and components attributable to interests in Joint Ventures.

“ Consolidated Secured Debt Leverage Ratio ” shall mean the ratio of Consolidated Secured Debt to Consolidated Gross Asset Value.

“ Consolidated Total Leverage Ratio ” shall mean the ratio of Consolidated Total Liabilities to Consolidated Gross Asset Value.

 

-8-

“ Consolidated Total Liabilities ” shall mean, as of any day for the Consolidated Group, all liabilities determined on a consolidated basis in accordance with GAAP (subject to the inclusions, exclusions and limitations set forth in the definition of “Funded Debt” hereunder), but including, in any event, (a) all Consolidated Funded Debt, (b) accounts payable arising in the ordinary course of business and payable in accordance with customary trade terms, (c) dividends which have been declared or accrued but not yet paid, and (d) a pro rata share of the foregoing items and components attributable to interests in Joint Ventures, and excluding, in any event, (i) deferred income taxes, (ii) liabilities arising from the unwinding or break-funding of Interest Rate Protection Agreements, Currency Agreements and all other liabilities related to interest rate hedges, Currency Agreements and other such derivatives except to the extent such liabilities become current and realizable, provided that regular scheduled quarterly or monthly settlement payments on such agreements and other derivatives shall not be considered current and realizable for purposes hereof), (iii) Covered Liabilities and (iv) security deposits, accrued liabilities and prepaid rents, each as defined in accordance with GAAP. For purposes of this Credit Agreement, “Consolidated Total Liabilities” shall not include the Sunrise Debentures.

“ Consolidated UAP Property Value ” shall mean an amount, determined as of the end of each calendar quarter, equal to the quotient of Consolidated Unencumbered NOI from UAP Properties divided by the Capitalization Rate.

“ Consolidated Unencumbered Assets ” shall mean, for the Consolidated Group, all real properties that are not encumbered by a mortgage, deed of trust, lien, pledge, encumbrance or other security interest to secure Funded Debt, but including, in any event, a pro rata share of the foregoing items and components attributable to interests in Joint Ventures.

“ Consolidated Unencumbered EBITDA ” shall mean, for any period for the Consolidated Group, the portion of Consolidated EBITDA that is generated by Consolidated Unencumbered Assets, but including, in any event, a pro rata share of the foregoing items and components attributable to interests in Joint Ventures.

“ Consolidated Unencumbered Interest Coverage Ratio ” shall mean the ratio of Consolidated Unencumbered EBITDA to Consolidated Unencumbered Interest Expense.

“ Consolidated Unencumbered Interest Expense ” shall mean, for any period for the Consolidated Group, the portion of Consolidated Interest Expense that is not attributable to Consolidated Secured Debt, but including, in any event, a pro rata share of the foregoing items and components attributable to interests in Joint Ventures.

“ Consolidated Unencumbered NOI from UAP Properties ” shall mean the portion of consolidated net operating income that is generated by the UAP Properties.

“ Consolidated Unsecured Debt ” shall mean, for the Consolidated Group, the portion of Consolidated Funded Debt that is not Consolidated Secured Debt.

 

-9-

“ Consolidated Unsecured Leverage Ratio ” shall mean the ratio of Consolidated Unsecured Debt to Consolidated UAP Property Value.

“ Contractual Obligation ” shall mean, as to any Person, any provision of any security issued by such Person or of any agreement, instrument or other undertaking to which such Person is a party or by which it or any of its property is bound.

“ Control ” shall mean the possession, directly or indirectly, of the power to direct or cause the direction of the management or policies of a Person, whether through the ability to exercise voting power, by contract or otherwise. “ Controlling ” and “ Controlled ” have meanings correlative thereto.

“ Covered Liabilities ” shall mean any obligation or liability of any Credit Party or other member of the Consolidated Group that (i) is secured by a letter of credit issued for the benefit of a Credit Party or other member of the Consolidated Group in form and substance and from a financial institution reasonably acceptable to the Administrative Agent, but only to the extent no Credit Party or other member of the Consolidated Group has liability therefor, (ii) any obligation (including obligations under so called “sandwich leases”) against which a third Party indemnifies any Credit Party, or guarantees all loss suffered by any Credit Party or other member of the Consolidated Group on account thereof, to the extent the indemnitor or guarantor has the financial wherewithal to satisfy its obligation, or (iii) is otherwise acceptable as a “Covered Liability” in the reasonable discretion of the Administrative Agent and the Required Lenders.

“ Credit Agreement ” shall have the meaning given to such term in the initial paragraph of this agreement.

“ Credit Party ” shall mean the Borrower and each of the Guarantors.

“ Credit Party Materials ” shall have the meaning given to such term in Section 6.2 .

“ Currency Agreement ” shall mean any foreign exchange contract, currency swap agreement, futures contract, option contract, synthetic cap or other similar agreement designed to protect a Credit Party or other member of the Consolidated Group against fluctuations in currency values or reduce the effect of any such fluctuations.

“ Debt Rating ” shall mean, as of any date of determination, the rating as determined by either S&P or Moody’s of the Borrower or the Borrower’s non-credit-enhanced, senior unsecured long-term debt.

“ Debtor Relief Laws ” shall mean the Bankruptcy Code and all other liquidation, conservatorship, bankruptcy, assignment for the benefit of creditors, moratorium, rearrangement, receivership, insolvency, reorganization, or similar debtor relief laws of the

 

-10-

United States of America or other applicable jurisdictions from time to time in effect affecting the rights of creditors generally.

“ Default ” shall mean any event, act or condition which with notice or lapse of time, or both, would constitute an Event of Default.

“ Defaulting Lender ” shall mean, at any time, any Lender which shall not have theretofore made available to the Administrative Agent, any amounts required to be made by such Lender hereunder or otherwise failed to pay any obligation owing by such Lender pursuant to this Credit Agreement.

“ Disposition ” or “ Dispose ” shall mean the sale, transfer, license, lease or other disposition (including any sale and leaseback transaction) of any Property by any Person, including any sale, assignment, transfer or other disposal, with or without recourse, of any notes or accounts receivable or any rights and claims associated therewith, but excluding, for purposes hereof, (a) Dispositions of obsolete or worn out Property, whether now owned or hereafter acquired, in the ordinary course of business; (b) Dispositions of inventory in the ordinary course of business; and (c) Dispositions of equipment or real Property to the extent that (i) such Property is exchanged for credit against the purchase price of similar replacement Property or (ii) the proceeds of such Disposition are reasonably promptly applied to the purchase price of such replacement Property.

“ Disqualified Stock ” shall mean, with respect to any entity, any Capital Stock of such entity which by the terms of such Capital Stock (or by the terms of any security into which it is convertible or for which it is exchangeable or exercisable), upon the happening of any event or otherwise (other than pursuant to a change of control provision not materially more favorable to the holder thereof than provided under this Credit Agreement), (a) matures or is mandatorily redeemable, pursuant to a sinking fund obligation or otherwise (other than Capital Stock which is redeemable solely in exchange for Capital Stock which is not Disqualified Stock or for subordinated debt), (b) is convertible into or exchangeable or exercisable for Indebtedness, other than subordinated Indebtedness or Disqualified Stock, or (c) is redeemable at the option of the holder thereof, in whole or in part (other than Capital Stock which is redeemable solely in exchange for Capital Stock which is not Disqualified Stock or for subordinated Indebtedness); in each case on or prior to the stated maturity of the Loans and Obligations under this Credit Agreement.

“ Dollars ” and “ $ ” shall mean lawful money of the United States of America.

“ Domestic Credit Party ” shall mean any Credit Party that is organized under the laws of any state of the United States or the District of Columbia.

“ Domestic Subsidiary ” shall mean any Subsidiary that is organized under the laws of any state of the United States or the District of Columbia.

 

-11-

“ Earnings from Operations ” shall mean, for any period for the Consolidated Group, consolidated net income without reduction for any minority interests, excluding gains and losses on sales of investments, extraordinary items (including, in any event, losses on extinguishment of debt), distributions on equity securities, property valuation losses, and the net income of any Person, other than a Subsidiary of Ventas (except to the extent of cash dividends or distributions paid to Ventas or any Subsidiary of Ventas) as reflected in the financial statements of the Consolidated Group for such period, determined on a consolidated basis in accordance with GAAP, and excluding the cumulative effect of changes in accounting principles.

“ Eligible Assignee ” shall mean any Person that meets the requirements to be an assignee under Section 12.6(b)(iii) , (v)  and (vi)  (subject to such consents, if any, as may be required under Section 12.6(b)(iii) ); provided that notwithstanding the foregoing, “Eligible Assignee” shall not include (A) the Borrower or any of the Borrower’s Affiliates or Subsidiaries, (B) Kindred or any other tenant under a Material Lease, (C) another prospective assignee or successor administrative agent (other than a Lender or an Affiliate of a Lender) which (1) is or has been an adverse party in litigation or other legal proceedings with, or has threatened, litigation or other legal proceedings against, Ventas or the Borrower or (2) is a REIT investing primarily in healthcare and/or senior assisted care living facilities or (D) an Affiliate of any of the foregoing entities listed in clauses (B)  or (C)  hereof.

“ Environment ” shall mean any surface or subsurface water, groundwater, water vapor, surface or subsurface land, air, fish, wildlife, microorganisms and all other natural resources.

“ Environmental Laws ” shall mean any and all applicable Laws relating to pollution and the protection of the Environment or the release of any materials into the Environment, including those related to hazardous substances or wastes, air emissions and discharges to waste or public systems.

“ Environmental Liability ” means any liability, contingent or otherwise (including any liability for damages, costs of environmental remediation, fines, penalties or indemnities), of the Borrower, any other Credit Party or any of their respective Subsidiaries directly or indirectly resulting from or based upon (a) violation of any Environmental Law, (b) the generation, use, handling, transportation, storage, treatment or disposal of any Hazardous Materials, (c) exposure to any Hazardous Materials, (d) the release or threatened release of any Hazardous Materials into the Environment or (e) any contract, agreement or other consensual arrangement pursuant to which liability is assumed or imposed with respect to any of the foregoing.

“ Environmental Permit ” shall mean any permits, licenses, approvals, consents or authorizations required by any Governmental Authority under or in connection with any Environmental Law and includes any and all orders, consent orders or binding agreements issued or entered into by a Governmental Authority under any applicable Environmental Law.

 

-12-

“ Equity Interest ” shall mean Capital Stock and all warrants, options or other rights to acquire Capital Stock (but excluding any debt security that is convertible into, or exchangeable for, Capital Stock).

“ Equity Transaction ” shall mean, with respect to the Consolidated Group, any issuance or sale of shares of its Capital Stock, other than an issuance (a) to any member of the Consolidated Group, (b) in connection with a conversion of debt securities to equity, (c) in connection with the Ventas Distribution Reinvestment and Stock Purchase Plan, the Ventas Directors Stock Purchase Plan or the Ventas Employee and Director Stock Purchase Plan, (d) to any present or former employee, officer or director of Ventas, or in connection with the exercise of options by a present or former employee, officer or director of such Person under a stock incentive plan, stock option plan or other equity-based compensation plan or arrangement, (e) in connection with the issuance of limited partnership units in the Borrower under so-called UPREIT transactions, (f) in connection with the conversion of any such UPREIT units into any Capital Stock of any member of the Consolidated Group, or (g) of operating units (whether or not exchangeable or convertible into common stock) under any incentive plan or director stock plan of Borrower or Ventas, Inc. or in connection with the conversion of any such operating units into common stock.

“ ERISA ” shall mean the Employee Retirement Income Security Act of 1974.

“ ERISA Affiliate ” shall mean any trade or business (whether or not incorporated) under common control with the Borrower within the meaning of Section 414(b) or (c) of the Code (and Sections 414(m) and (o) of the Code for purposes of provisions relating to Section 412 of the Code).

“ ERISA Event ” shall mean (a) a Reportable Event with respect to a Pension Plan; (b) a withdrawal by the Borrower or any ERISA Affiliate from a Pension Plan subject to Section 4063 of ERISA during a plan year in which it was a substantial employer (as defined in Section 4001(a)(2) of ERISA) or a cessation of operations that is treated as such a withdrawal under Section 4062(e) of ERISA; (c) a complete or partial withdrawal by the Borrower or any ERISA Affiliate from a Multiemployer Plan or notification that a Multiemployer Plan is in reorganization; (d) the filing of a notice of intent to terminate, the treatment of a Plan amendment as a termination under Section 4041 or 4041A of ERISA, or the commencement of proceedings by the PBGC to terminate a Pension Plan or Multiemployer Plan; (e) an event or condition which constitutes grounds under Section 4042 of ERISA for the termination of, or the appointment of a trustee to administer, any Pension Plan or Multiemployer Plan; or (f) the imposition of any liability under Title IV of ERISA, other than for PBGC premiums due but not delinquent under Section 4007 of ERISA, upon the Borrower or any ERISA Affiliate.

“ Eurodollar Base Rate ” shall have the meaning given to such term in the definition of Eurodollar Rate in accordance with the provisions of Article II .

 

-13-

“ Eurodollar Rate ” shall mean for any Interest Period with respect to a Eurodollar Rate Loan, a rate per annum determined by the Administrative Agent pursuant to the following formula:

Where,

 

“ Eurodollar Base Rate ” shall mean, for any Interest Period with respect to a Eurodollar Rate Loan, the rate per annum equal to the British Bankers Association LIBOR Rate (“ BBA LIBOR ”), as published by Reuters (or other commercially available source providing quotations of BBA LIBOR as designated by the Administrative Agent from time to time) at approximately 11:00 a.m., (London time) two (2) Business Days prior to the commencement of such Interest Period, for Dollar deposits (for delivery on the first day of such Interest Period) with a term equivalent to such Interest Period. If such rate is not available at such time for any reason, then the “Eurodollar Base Rate” for such Interest Period shall be the rate per annum (rounded upwards, if necessary, to the nearest 1/100 of 1%) appearing on Reuters Screen LIBO Page as the London interbank offered rate for deposits in U.S. dollars at approximately 11:00 a.m. (London time) two Business Days prior to the first day of such Interest Period for a term comparable to such Interest Period; provided , however , if more than one rate is specified on Reuters Screen LIBO Page, the applicable rate shall be the arithmetic mean of all such rates.

“ Eurodollar Rate Loan ” shall mean a Loan that bears interest at a rate based on the Eurodollar Rate in accordance with the provisions of Article II .

“ Eurodollar Reserve Percentage ” shall mean, for any day during any Interest Period, the reserve percentage (expressed as a decimal, carried out to five (5) decimal places) in effect on such day, whether or not applicable to any Lender, under regulations issued from time to time by the Board for determining the maximum reserve requirement (including any emergency, supplemental or other marginal reserve requirement) with respect to Eurodollar funding (currently referred to as “Eurocurrency liabilities”). The Eurodollar Rate for each outstanding Eurodollar Rate Loan shall be adjusted automatically as of the effective date of any change in the Eurodollar Reserve Percentage.

“ Event of Default ” shall have the meaning given to such term in Article VIII .

“ Excluded Indebtedness ” shall mean any and all monetary obligations (if any) relating to: (a) accounts payable arising in the ordinary course of business and payable in accordance with customary trade terms; (b) deferred income taxes; (c) dividends payable; (d) liabilities related to interest rate hedges, Currency Agreements and other such derivatives except to the extent such liabilities become current and realizable ( provided that the regular

 

-14-

scheduled quarterly or monthly settlement payments on interest rate protection agreements and other derivatives shall not be considered current and realizable for purposes hereof); and (e) Covered Liabilities.

“ Excluded Taxes ” shall mean with respect to the Administrative Agent, any Lender, or any other recipient of any payment to be made by or an account of any obligation of the Borrower, Ventas, or any other Credit Party hereunder, (a) taxes imposed on or measured by its overall net income (however denominated), branch profits or similar taxes, and franchise taxes imposed on it (in lieu of net income taxes), by the jurisdiction (or any political subdivision thereof) under the laws of which such recipient is organized or in which its principal office is located or, in the case of any Lender, in which its applicable Lending Office is located, and (b) in the case of a Foreign Lender (other than an assignee pursuant to a request by the Borrower, Ventas, or any other Credit Party under Section 12.14 ), any withholding tax that is imposed on amounts payable to such Foreign Lender at the time such Foreign Lender becomes a party hereto (or designates a new Lending Office) except to the extent that such Foreign Lender (or its assignor, if any) was entitled, at the time of designation of a new Lending Office (or assignment), to receive additional amounts from the Borrower, Ventas, or any other Credit Party with respect to such withholding tax pursuant to Section 3.1(a) , and (c) any withholding including any backup withholding tax resulting from a failure to provide any documentation that such recipient is legally entitled to provide and required to provide pursuant to Section 3.1(e).

“ Existing Credit Agreement ” shall mean the Credit Agreement dated as of April 26, 2006 between the Borrower, Ventas, the guarantors party thereto from time to time, the lenders party thereto from time to time and Bank of America, N.A., as Administrative Agent (as in effect on the date hereof).

“ Existing Indebtedness ” shall have the meaning given to such term in the Recitals to this Credit Agreement.

“ Extension of Credit ” shall mean, as to any Lender, the making of, or participation in, a Loan by such Lender (including continuations and conversions thereof).

“ Federal Funds Rate ” shall mean, for any applicable period, the rate per annum (rounded upwards, if necessary, to the nearest 1/100th of one percent (0.01%)) equal to the weighted average of the rates on overnight federal funds transactions with members of the Federal Reserve System arranged by federal funds brokers on such day, as published by the Federal Reserve Bank of New York on the Business Day next succeeding such day; provided that (a) if such day is not a Business Day, the Federal Funds Rate for such day shall be such rate on such transactions on the next preceding Business Day as so published on the next succeeding Business Day, and (b) if no such rate is so published on such next succeeding Business Day, the Federal Funds Rate for such day shall be the average rate charged to the Administrative Agent on such day on such transactions as determined by the Administrative Agent.

 

-15-

“ Fee Letter ” shall mean that certain letter agreement dated as of April 11, 2007 between the Borrower, Ventas, Merrill Lynch and Citigroup Global Markets Inc., relating to the payment of certain fees, as such letter agreement may be amended, modified or supplemented from time to time by a written instrument executed by the parties thereto.

“ Final Maturity Date ” shall mean April 26, 2008.

“ Foreign Lender ” shall mean any Lender that is organized under the laws of a jurisdiction other than that in which the Borrower is resident for tax purposes. For purposes of this definition, the United States, each state thereof and the District of Columbia shall be deemed to constitute a single jurisdiction.

“ Fund ” shall mean any Person (other than a natural person) that is engaged in making, purchasing, holding or otherwise investing in commercial loans and similar extensions of credit in the ordinary course of its business.

“ Fundamental Documents ” shall mean this Credit Agreement, any Note issued hereunder, any Loan Notice, the Fee Letter and any other documentation which is required to be or is otherwise executed by any Credit Party and delivered in connection with this Credit Agreement or any of the documents listed above.

“ Funded Debt ” shall mean (without duplication), at any time and with respect to any Person (a) indebtedness of such Person for borrowed money (whether by loan or the issuance and sale of debt securities) or for the deferred purchase price of property or services purchased (other than amounts constituting trade payables arising in the ordinary course of business and payable in accordance with customary trading terms in the ordinary course of business); (b) all indebtedness of such Person evidenced by a note, bond, debenture or similar instrument (whether or not disbursed in full in the case of a construction loan); (c) indebtedness of others secured by a Lien on assets of such Person, whether or not such Person shall have assumed such indebtedness ( provided , that if such Person has not assumed such indebtedness of such other Person, then the amount of indebtedness of such Person pursuant to this clause (c)  for purposes of this definition shall be equal to the lesser of the amount of the indebtedness of such other Person or the fair market value of the assets of such Person which secures such other indebtedness); (d) obligations of such Person in respect of letters of credit, acceptance facilities, drafts or similar instruments issued or accepted by banks and other financial institutions for the account of such Person; (e) any Support Obligations in connection with Funded Debt by such Person; (f) obligations of such Person under capital leases; (g) the attributed principal amount of securitization transactions, (h) the attributed principal amount of Synthetic Leases; (i) all preferred stock or comparable equity interests of such Person providing for mandatory redemption, sinking fund or other like payments; and (j) the Funded Debt of any partnership or joint venture or other similar entity in which such Person is a general partner or joint venturer and, as such, has personal liability for such obligations, but only if and to the extent there is recourse to such Person for payment thereof.

 

-16-

For purposes of this Credit Agreement, “Funded Debt” shall not include any Excluded Indebtedness or the Senior Preferred Stock.

“ Funds from Operations ” shall mean, for any period for the Consolidated Group, Earnings from Operations for such period plus amounts that have been deducted, and minus amounts that have been added, for the following (without duplication): (a) provision for taxes of the Consolidated Group based on income, (b) amortization of debt discount and deferred financing costs, (c) provisions for gains and losses on properties and property depreciation and amortization, (d) the effect of any non-cash charge resulting from a change in accounting principles in determining Earnings from Operations for such period, (e) amortization of deferred charges, and (f) provisions for gains and losses on account of any partial or total termination of any Hedging Agreement.

“ GAAP ” shall mean generally accepted accounting principles in the United States set forth in the opinions and pronouncements of the Accounting Principles Board and the American Institute of Certified Public Accountants and statements and pronouncements of the Financial Accounting Standards Board that are applicable to the circumstances as of the date of determination, consistently applied, subject, however, to the provisions of Section 1.2 .

“ Governmental Authority ” shall mean any federal, state, provincial, municipal or other governmental department, commission, board, bureau, agency or instrumentality, or any court, in each case whether of the United States or any foreign jurisdiction.

“ Guarantors ” shall mean (a) Ventas and (b) any Subsidiary of Ventas that guarantees the loans and obligations hereunder pursuant to the terms hereof, in each case with their successors and permitted assigns; provided , however , that any Person constituting a Guarantor as described above shall cease to constitute a Guarantor when its obligations hereunder are released in accordance with the terms of this Credit Agreement.

“ Guaranteed Obligations ” shall have the meaning given to such term in Section 9.1(a) .

“ Guaranty ” shall mean the guaranty of the Obligations by each of the Guarantors pursuant to Article IX .

“ Hazardous Materials ” shall mean petroleum, petroleum hydrocarbons or petroleum products, petroleum by-products, radioactive materials, asbestos or asbestos-containing materials, gasoline, diesel fuel, pesticides, radon, urea formaldehyde, lead or lead-containing materials, polychlorinated biphenyls; and any other chemicals, materials, substances or wastes in any amount or concentration which are now or hereafter become defined as or included in the definition of “hazardous substances”, “hazardous materials”, “hazardous wastes”, “extremely hazardous wastes”, “restricted hazardous wastes”, “toxic substances”, “toxic pollutants”, “pollutants”, “regulated substances”, “solid wastes”, or “contaminants” or words of similar import, under any Environmental Law, but excluding any

 

-17-

substance or material customarily located on and used in properties of like type that are stored and used in strict conformity with all applicable Laws.

“ Hedging Agreements ” shall mean any Interest Rate Protection Agreement or Currency Agreement entered into from time to time between a Lender or an Affiliate of a Lender and the Borrower as permitted by this Credit Agreement.

“ Hedging Banks ” shall mean any Lender or Affiliate of a Lender that has entered into a Hedging Agreement.

“ incur ” shall mean issue, create, assume, guarantee, incur or otherwise become liable for; provided , however , that any Indebtedness or Capital Stock of a Person existing at the time such Person becomes a Subsidiary (whether by merger, consolidation, acquisition or otherwise) shall be deemed to be incurred by such Subsidiary at the time it becomes a Subsidiary. Neither the accrual of interest nor the accretion of original issue discount shall be deemed to be an incurrence of Indebtedness. The term “incurrence” when used as a noun shall have a correlative meaning.

“ Indebtedness ” shall mean (without duplication), at any time and with respect to any Person, (a) all Funded Debt of such Person, (b) all obligations of such Person under take-or-pay or similar arrangements or under commodities agreements, (c) all obligations of such Person under any Interest Rate Protection Agreement or Currency Agreement, (d) Indebtedness of any partnership or joint venture or other similar entity in which such Person is a general partner or joint venturer and, as such, has personal liability for such obligations, but only if and to the extent there is recourse to such Person for payment thereof, (e) any Support Obligations of such Person of the Indebtedness of another and (f) Indebtedness of another Person secured by a Lien on any assets of such Person, whether or not such Person shall have assumed such Indebtedness ( provided , that if such Person has not assumed such Indebtedness of such other Person, then the amount of Indebtedness of such Person pursuant to this clause (f)  for purposes of this definition shall be equal to the lesser of the amount of the Indebtedness of such other Person or the fair market value of the assets of such Person which secures such other Indebtedness). The term “Indebtedness” shall not include any Excluded Indebtedness.

“ Indemnified Taxes ” shall mean Taxes other than Excluded Taxes.

“ Indemnitee ” shall have the meaning given to such term in Section 12.4(b) .

“ Initial Maturity Date ” shall mean October 2, 2007.

“ Interest Payment Date ” shall mean as to any Loan type, the first Business Day after the end of each month (beginning May 1, 2007) and the Maturity Date. If an Interest Payment Date falls on a date that is not a Business Day, such Interest Payment Date shall be deemed to be the next succeeding Business Day.

 

-18-

“ Interest Period ” shall mean, as to any Eurodollar Rate Loan, a period of one (1), two (2) or three (3) months, as the Borrower may elect, in each case commencing on the date of the Borrowing (including conversions, continuations and renewals); provided , however , (a) if any Interest Period would end on a day that is not a Business Day, such Interest Period shall be extended to the next succeeding Business Day (except in the case of Eurodollar Rate Loans where the next succeeding Business Day falls in the next succeeding calendar month, then such Interest Period shall end on the next preceding Business Day), and (b) in the case of Eurodollar Rate Loans, where an Interest Period begins on a day for which there is no numerically corresponding day in the calendar month in which the Interest Period is to end, such Interest Period shall end on the last day of such calendar month.

“ Interest Rate Protection Agreement ” shall mean any interest rate swap agreement, Currency Agreement, interest rate cap agreement, synthetic cap, collar or floor or other financial agreement or arrangement designed to protect a Credit Party against fluctuations in interest rates or to reduce the effect of any such fluctuations.

“ Interest Rate Type ” shall mean either Base Rate Loans or Eurodollar Rate Loans, as appropriate.

“ Investment ” shall mean, as to any Person, any direct or indirect acquisition or investment by such Person, whether by means of (a) the purchase or other acquisition of Capital Stock of another Person, (b) a loan, advance or capital contribution to, guaranty or assumption of debt of, or purchase or other acquisition of any other debt or equity participation or interest in, another Person, including any partnership or joint venture interest in such other Person and any arrangement pursuant to which the investor undertakes any Support Obligations with respect to Indebtedness of such other Person, or (c) the purchase or other acquisition (in one transaction or a series of transactions) of assets of another Person that constitute a business unit. For purposes of covenant compliance, the amount of any Investment shall be the amount actually invested, without adjustment for subsequent increases or decreases in the value of such Investment.

“ IRS ” shall mean the United States Internal Revenue Service.

“ Joinder Agreement ” shall mean a joinder agreement substantially in the form of Exhibit 6.12 executed and delivered in accordance with the provisions of Section 6.12 .

“ Joint Lead Arrangers ” shall mean Merrill Lynch and Citigroup Global Markets Inc. in their capacity as joint lead arrangers.

“ Joint Venture ” shall mean any Person in which any Credit Party or other member of the Consolidated Group directly or indirectly has an ownership interest but is not a Subsidiary.

 

-19-

“ Kindred ” shall mean (collectively or individually, as appropriate) Kindred Healthcare, Inc. (formerly Vencor, Inc.), a Delaware corporation, and Kindred Healthcare Operating, Inc., a Delaware corporation.

“ Laws ” shall mean, collectively, all international, foreign, federal, state, provincial and local statutes, treaties, rules, guidelines, regulations, ordinances, codes and administrative or judicial precedents or authorities, including the interpretation or administration thereof by any Governmental Authority charged with the enforcement, interpretation or administration thereof, and all applicable administrative orders, directed duties, requests, licenses, authorizations and permits of, and agreements with, any Governmental Authority, in each case having the force of law.

“ Lenders ” shall mean each of the Persons identified as a “Lender” on the signature pages hereto, and their successors and assigns.

“ Lending Office ” shall mean, with respect to any of the Lenders, the branch or branches (or affiliate or affiliates) from which such Lender’s Eurodollar Rate Loans or Base Rate Loans, as the case may be, are made or maintained and for the account of which all payments of principal of, and interest on, such Lender’s Eurodollar Rate Loans or Base Rate Loans are made, as notified to the Administrative Agent from time to time.

“ Lien ” shall mean any mortgage, pledge, hypothecation, assignment, deposit arrangement, encumbrance, lien (statutory or other), charge, or preference, priority or other security interest or preferential arrangement in the nature of a security interest of any kind or nature whatsoever (including any conditional sale or other title retention agreement, any easement, right of way or other encumbrance on title to real property and any financing lease having substantially the same economic effect as any of the foregoing).

“ Loan ” or “ Loans ” shall have the meaning given to such term in Section 2.1(a) .

“ Loan Notice ” shall mean a written loan notice in substantially the form of Exhibit 2.2 .

“ Loans Outstanding ” shall mean, with respect to Loans on any date, the aggregate outstanding principal amount thereof after giving effect to any borrowing and prepayments or repayments occurring on such date.

“ Margin Stock ” shall be as defined in Regulation U.

“ Material Adverse Effect ” shall mean any event or condition that (a) has a material adverse effect on the business, assets, properties, operations or financial condition of the Credit Parties taken as a whole or (b) materially impairs the ability of the Credit Parties as a whole to perform their material obligations under the Credit Agreement; provided , however , that any event or condition will be deemed to have a “Material Adverse Effect” if such event

 

-20-

or condition when taken together with all other events and conditions occurring or in existence at such time (including all other events and conditions which, but for the fact that a representation, warranty or covenant is subject to a “Material Adverse Effect” exception, would cause such representation or warranty contained herein to be untrue or such covenant to be breached) would result in a “Material Adverse Effect”, even though, individually, such event or condition would not do so.

“ Material Indebtedness ” shall mean any Indebtedness of any Credit Party (other than the Obligations) which, if recourse in nature, exceeds $25,000,000 in the aggregate, and, if non-recourse in nature, exceeds $50,000,000 in the aggregate.

“ Material Lease ” shall mean any lease in which any Credit Party is the landlord that individually or together with other such leases in which such Credit Party is the landlord, requires annual base rent to be paid to such Credit Party landlord in excess of $100,000,000.

“ Maturity Date ” shall mean the Initial Maturity Date, unless the Borrower extends the maturity of the Loans pursuant to Section 2.1(b) , in which case the Maturity Date shall mean the Final Maturity Date.

“ Maximum Rate ” shall have the meaning given to such term in Section 12.9 .

“ Merrill Lynch ” shall mean Merrill Lynch, Pierce, Fenner & Smith Incorporated.

“ Moody’s ” shall mean Moody’s Investors Service, Inc. and any successor thereto.

“ Multiemployer Plan ” shall mean any employee benefit plan of the type described in Section 4001(a)(3) of ERISA, to which the Borrower or any ERISA Affiliate makes or is obligated to make contributions, or during the preceding five plan years, has made or been obligated to make contributions.

“ Net Cash Proceeds ” shall mean the aggregate cash proceeds received by a Credit Party or any Subsidiary thereof (including, as applicable, all cash proceeds received by way of deferred payment of principal pursuant to a note or installment receivable or otherwise, but only as and when received), minus (without duplication) reasonable and customary brokerage commissions and other reasonable and customary fees and expenses related to such transaction (including reasonable and customary fees and expenses of counsel and investment bankers actually paid by the applicable Credit Party or Subsidiary in connection with the applicable transaction).

“ Net Payment Proceeds ” shall mean:

 

-21-

(a) with respect to any Take-Out Notes or other Indebtedness, the aggregate cash proceeds received by Ventas, the Borrower or any of the Guarantors, minus (without duplication) reasonable and customary brokerage commissions and other reasonable and customary fees and expenses related to such transaction (including reasonable and customary fees and expenses of counsel and investment bankers actually paid by the applicable Credit Party in connection with the applicable transaction); and

(b) with respect to any issuance of Capital Stock of Ventas (or any securities convertible into or exchangeable for Capital Stock or any warrants, rights or options to acquire Capital Stock) that constitutes an Equity Transaction, or any contribution to the capital of Ventas, the aggregate cash proceeds received by Ventas, minus (without duplication) (i) reasonable and customary brokerage commissions and other reasonable and customary fees and expenses related to such transaction (including reasonable and customary fees and expenses of counsel and investment bankers actually paid by Ventas or any of its Subsidiaries) and (ii) any proceeds thereof actually applied to redeem any Senior Preferred Stock having an aggregate liquidation preference not in excess of $700.0 million then outstanding in accordance with its terms.

“ Note ” or “ Notes ” shall mean any promissory notes in favor of any Lender evidencing such Lender’s Loans in substantially the form attached as Exhibit 1.1 , individually or collectively, as such promissory notes may be amended, modified, supplemented, extended, renewed or replaced from time to time.

“ Notice of Prepayment ” shall mean a written notice of prepayment in substantially the form of Exhibit 2.6(b) , as required by Section 2.6 or Section 2.7 .

“ Obligations ” shall mean (a) all obligations whether, direct or indirect, contingent or absolute, of every type or description and at any time existing, of the Borrower to make due and punctual payment of (i) principal of and all interest on the Loans, costs and attorneys’ fees and all other monetary obligations of the Borrower to the Administrative Agent or any Lender under or in respect of this Credit Agreement, any note evidencing any of the Loans hereunder or any other Fundamental Document and (ii) all obligations under Hedging Agreements (including interest accruing at the then applicable rate provided in this Credit Agreement after the maturity of any of the Loans, and interest accruing at the then applicable rate provided in this Credit Agreement after the filing of any petition in bankruptcy or the commencement of any insolvency, reorganization or like proceeding, relating to the Borrower or any other Credit Party, whether or not a claim for post-filing or post-petition interest is allowed in such proceeding), (b) all obligations under any Treasury Management Agreement between any Credit Party and any Lender or Affiliate of a Lender and (c) all other obligations of the Borrower or any other Credit Party pursuant to this Credit Agreement or any other Fundamental Document.

 

-22-

“ Operative Documents ” shall mean, collectively, (a) this Credit Agreement, (b) any Note issued hereunder and (c) any Joinder Agreement.

“ Organizational Documents ” shall mean (a) with respect to any corporation, the certificate or articles of incorporation and bylaws; (b) with respect to any limited liability company, the certificate or articles of formation and operating agreement; and (c) with respect to any partnership, joint venture or other form of business entity, the partnership agreement and any agreement, filing or notice with respect thereto filed with the secretary of state of the state of its formation (or other governing jurisdiction), in each case as amended from time to time.

“ Other Taxes ” shall mean all present or future stamp or documentary taxes or any other excise or property taxes, charges or similar levies arising from any payment made hereunder or under any other Fundamental Document or from the execution, delivery or enforcement of, or otherwise with respect to, this Credit Agreement or any other Fundamental Document (but excluding, for the avoidance of doubt Excluded Taxes).

“ Participant ” shall have the meaning given to such term in Section 12.6(d) .

“ Patriot Act ” shall have the meaning given to such term in Section 12.17 .

“ PBGC ” shall mean the Pension Benefit Guaranty Corporation.

“ Pension Plan ” shall mean any “employee pension benefit plan” (as such term is defined in Section 3(2) of ERISA), other than a Multiemployer Plan, that is subject to Title IV of ERISA and is sponsored or maintained by the Borrower or any ERISA Affiliate or to which the Borrower or any ERISA Affiliate contributes or has an obligation to contribute, or in the case of a multiple employer or other plan described in Section 4064(a) of ERISA, has made contributions at any time during the immediately preceding five plan years.

“ Permitted Liens ” shall mean (a) Liens securing Obligations, (b) Liens for taxes not yet due or Liens for taxes being contested in good faith by appropriate proceedings for which adequate reserves have been established, (c) Liens in respect of property imposed by law arising in the ordinary course of business such as materialmens’, mechanics’, warehousemens’, carriers’, landlords’ and other nonconsensual statutory Liens which are not yet overdue for more than 30 days or which are being contested in good faith by appropriate proceedings for which adequate reserves have been established; (d) easements, rights-of-way, restrictions (including zoning restrictions), covenants, conditions and restrictions, party wall agreements, structural support agreements, matters of plat, minor defects or irregularities in title and other similar charges or encumbrances not, in any material respect, impairing the use of the encumbered property for its intended purposes; (e) pledges or deposits in the ordinary course of business in connection with workers’ compensation, unemployment insurance and other social security legislation, other than any Lien imposed by ERISA; (f) deposit arrangements to secure the performance of construction or renovation, bids, trade contracts and leases (other than Funded Debt), statutory obligations, surety bonds (other than bonds

 

-23-

related to judgments or litigation), performance bonds and other obligations of a like nature incurred in the ordinary course of business, including, without limitation, in the course of development or renovation; and (g) assignments to a reverse Section 1031 exchange trust.

“ Person ” shall mean any natural person, corporation, partnership, limited liability partnership, limited liability company, trust, joint venture, association, company, estate, unincorporated organization or government or any agency or political subdivision thereof.

“ Plan ” shall mean any “employee benefit plan” (as such term is defined in Section 3(3) of ERISA) established by the Borrower or, with respect to any such plan that is subject to Section 412 of the Code or Title IV of ERISA, any ERISA Affiliate.

“ Platform ” shall have the meaning given to such term in Section 6.2 .

“ Premises ” shall mean any real property currently or formerly owned, leased or operated by any Credit Party or any Subsidiary of any Credit Party, including, but not limited to, all soil, surface water, or groundwater thereat.

“ Prepayment Date ” shall have the meaning given to such term in Section 2.7(e) .

“ Prime Rate ” shall mean, for any applicable period, the rate per annum in effect for such day quoted in “ The Wall Street Journal” , Money Rates Section as the “prime rate”, changing as and when such rate changes are so announced. Any change in such rate shall take effect at the opening of business on the day specified in the public announcement of such change.

“ Pro Forma Basis ” shall mean, for purposes of determining Consolidated EBITDA, Consolidated Gross Asset Value and any financial covenant hereunder, that the subject transaction shall be deemed to have occurred as of the first day of the period of four (4) consecutive fiscal quarters ending as of the end of the most recent fiscal quarter for which annual or quarterly financial statements shall have been delivered in accordance with the provisions of this Credit Agreement. Further, for purposes of making calculations on a “Pro Forma Basis” hereunder, (a) in the case of a Disposition, (i) income statement items (whether positive or negative) attributable to the property, entities or business units that are the subject of such Disposition shall be excluded to the extent relating to any period prior to the date of the subject transaction, and (ii) Indebtedness paid or retired in connection with the subject transaction shall be deemed to have been paid and retired as of the first day of the applicable period; (b) in the case of an Acquisition, (i) income statement items (whether positive or negative) attributable to the property, entities or business units that are the subject of such Acquisition shall be included to the extent relating to any period prior to the date of the subject transaction, and (ii) Indebtedness incurred in connection with the subject transaction shall be deemed to have been incurred as of the first day of the applicable period (and interest expense shall be imputed for the applicable period utilizing the actual interest rates thereunder

 

-24-

or, if actual rates are not ascertainable, assuming prevailing interest rates hereunder) and (c) in the case of the issuance or exercise of an Equity Interest, Indebtedness paid or retired in connection therewith shall be deemed to have been paid and retired as of the first day of the applicable period.

“ Property ” shall mean an interest of any kind in any property or asset, whether real, personal or mixed, and whether tangible or intangible.

“ pro rata share ” shall mean, with respect to interests in Joint Ventures by any member of the Consolidated Group, (i) in the case of income statement items and components, such as net income, EBITDA and interest expense, such member’s direct or indirect percentage ownership interest of the respective Joint Venture in such items and components, and (ii) in the case of Indebtedness, such member’s direct or indirect percentage ownership interest in the respective Joint Venture in such Indebtedness, unless the Indebtedness is expressly non-recourse to the members of the Consolidated Group.

“ Public Lender ” shall have the meaning given to such term in Section 6.2 .

“ Refinancing ” shall have the meaning given to such term in the Recitals to this Credit Agreement.

“ Register ” shall have the meaning given to such term in Section 12.6(c) .

“ Regulation U ” shall mean Regulation U of the Board as from time to time in effect and all official rulings and interpretations thereunder or thereof.

“ REIT ” shall mean a real estate investment trust as defined in Sections 856-860 of the Code.

“ Related Parties ” shall mean, with respect to any Person, such Person’s Affiliates and the partners, directors, officers, employees, agents and advisors of such Person and of such Person’s Affiliates.

“ Release ” shall mean any discharging, disposing, emitting, leaking, pumping, pouring, emptying, injecting, escaping, leaching, dumping or spilling of any Hazardous Material into the Environment.

“ Reportable Event ” shall mean any of the events set forth in Section 4043(c) of ERISA, other than events for which the thirty (30) day notice period has been waived.

“ Required Lenders ” shall mean, at any time, Lenders having in the aggregate more than fifty percent (50%) of the Loans Outstanding.

 

-25-

“ Requirements of Law ” shall mean, collectively, any and all requirements of any Governmental Authority including any and all laws, judgments, orders, decrees, ordinances, rules, regulations, statutes or case law.

“ Restricted Payments ” shall mean any dividend or other distribution (whether in cash, securities or other property) with respect to any Capital Stock of any member of the Consolidated Group or any payment (whether in cash, securities or other property), including any sinking fund or similar deposit, on account of the purchase, redemption, retirement, acquisition, cancellation or termination of any such Capital Stock or other Equity Interest, or on account of any return of capital to such member’s stockholders, partners or members (or the equivalent.

“ S&P ” shall mean Standard & Poor’s Ratings Services, a division of The McGraw-Hill Companies, Inc. and any successor thereto.

“ SEC ” shall mean the United States Securities and Exchange Commission, or any successor thereto.

“ Senior Preferred Stock ” shall mean the Series A Senior Preferred Stock of Ventas.

“ Senior Preferred Stock Offering ” shall have the meaning given to such term in the Recitals to this Credit Agreement.

“ Subordinated Indebtedness ” shall mean Indebtedness of the Borrower or any Guarantor that is by its terms subordinated in right of payment to the Obligations of the Borrower and such Guarantor, as applicable, including the Senior Subordinated Notes.

“ Subsidiary ” of a Person means a corporation, partnership, joint venture, limited liability company or other business entity the accounts of which are consolidated with the accounts of such Person in such Person’s consolidated financial statements prepared in accordance with GAAP. Unless otherwise specified, all references herein to a “Subsidiary” or to “Subsidiaries” shall refer to a Subsidiary or Subsidiaries of the Borrower.

“ Sub Trust ” shall have the meaning given to such term in the Recitals to this Credit Agreement.

“ Sunrise ” shall have the meaning given to such term in the Recitals to this Credit Agreement.

“ Sunrise Acquisition ” shall have the meaning given to such term in the Recitals to this Credit Agreement.

“ Sunrise Debentures ” shall mean the Cdn$50,000,000 aggregate principal amount of Sunrise REIT’s Series 2006-1 6.40% convertible unsecured subordinated

 

-26-

debentures due December 31, 2001 and the Cdn$88,000,000 aggregate principal amount of Sunrise REIT’s 2006-2 7.00% convertible extendible unsecured subordinated debentures due December 31, 2011, in each case as in effect on the date hereof.

“ Sunrise Purchase Agreement ” shall have the meaning given to such term in the Recitals to this Credit Agreement.

“ Sunrise REIT ” shall have the meaning given to such term in the Recitals to this Credit Agreement.

“ Support Obligations ” shall mean, as to any Person, any direct or indirect obligation of such Person guaranteeing or intending to guarantee, or otherwise providing credit support for, any Indebtedness, capital lease, dividend or other monetary obligation (a “ primary obligation ”) of any other Person (the “ primary obligor ”) in any manner, whether directly or indirectly, by contract, as a general partner or otherwise, including any obligation of such Person, whether or not contingent, (a) to purchase any such primary obligation or any property constituting direct or indirect security therefor, (b) to advance or supply funds (i) for the purchase or payment of any such primary obligation or (ii) to maintain working capital or equity capital of the primary obligor or otherwise to maintain the net worth or solvency of the primary obligor, or (c) to purchase property, securities or services from the primary obligor or other Person, in each case, primarily for the purpose of assuring the performance of the primary obligor of any such primary obligation or assuring the owner of any such primary obligation of the repayment of such primary obligation. The amount of any Support Obligation shall be deemed to be an amount equal to (x) the stated or determinable amount of the primary obligation in respect of which such Support Obligation is made (or, if the amount of such primary obligation is not stated or determinable, the maximum reasonably anticipated liability in respect thereof (assuming such Person is required to perform thereunder)) or (y) the stated maximum liability under such Support Obligation, whichever is less. The term “Support Obligations” shall not include any Excluded Indebtedness.

“ Syndication Agent ” shall mean Citigroup Global Markets Inc. in its capacity as syndication agent.

“ Synthetic Lease ” shall mean any synthetic lease, tax retention operating lease, off-balance sheet loan or similar off-balance sheet financing product where such transaction is considered borrowed money indebtedness for tax purposes but is classified as an operating lease under GAAP.

“ Take-Out Notes ” shall mean unsecured notes or debentures of the Borrower, that may be issued by the Borrower after the Closing Date to refinance Indebtedness outstanding under this Credit Agreement.

“ Taxes ” shall mean all present or future taxes, levies, imposts, duties, deductions, withholdings, assessments, fees or other charges imposed by any Governmental Authority, including any interest, additions to tax or penalties applicable thereto.

 

-27-

“ Total Committed Amount ” shall mean the aggregate amount of Commitments and Loans set forth on Schedule 1.1 , as such amount may be reduced from time to time in accordance with the terms hereof.

“ Transactions ” shall have the meaning given to such term in the Recitals to this Credit Agreement.

“ Treasury Management Agreement ” shall mean any agreement governing the provision of treasury or cash management services, including deposit accounts, funds transfer, automated clearinghouse, zero balance accounts, returned check concentration, controlled disbursement, lockbox, account reconciliation and reporting and trade finance services.

“ UAP Property ” shall mean any real property asset located in the United States owned or leased by a Domestic Credit Party:

(a) that constitutes or is used as a skilled nursing home center, hospital, personal healthcare facility, assisted living facility, independent living facility, medical office building, continuum of care facility, life care facility, sheltered care facility, seniors housing, seniors living facility or other property customarily constituting an asset of a REIT specializing in healthcare or seniors housing property;

(b) that is more than ninety percent (90%) owned by a Credit Party which ownership is either (i) fee simple or (ii) a long-term ground leasehold approved by the Administrative Agent such approval not to be unreasonably withheld;

(c) that is free from material environmental problems as represented in Section 4.14 (without the need for environmental reports or other related information except upon request by the Administrative Agent), or, in the alternative, such environmental problems are the subject of environmental indemnities from a credit-worthy party in form and amount reasonably acceptable to the Administrative Agent such approval not to be unreasonably withheld or is otherwise a Covered Liability;

(d) that is (i) leased to or managed by Kindred, Brookdale or any other tenant or operator of any Property owned or leased by a Credit Party as of April 26, 2006, (ii) leased to or managed by another acceptable third party operator or tenant on market terms or otherwise acceptable to the Administrative Agent, or (iii) operated by a member of the Consolidated Group;

(e) with respect to which no base rent payments owing in respect thereof are more than sixty (60) days past due; and

(f) that is not encumbered by any mortgage, deed of trust, lien, pledge, encumbrance or other security interest to secure Funded Debt (other than any Permitted Lien that does not secure Funded Debt).

 

-28-

“ UCC ” shall mean the Uniform Commercial Code as in effect in the state of New York at the relevant time.

“ Unfunded Pension Liability ” shall mean the excess of a Pension Plan’s benefit liabilities under Section 4001(a)(16) of ERISA, over the current value of that Pension Plan’s assets, determined in accordance with the assumptions used for funding the Pension Plan pursuant to Section 412 of the Code for the applicable plan year.

“ UPREIT ” shall have the meaning given to such term in the Recitals to this Credit Agreement.

“ Ventas ” shall have the meaning given to such term in the initial paragraph of this Credit Agreement, and its permitted successors.

SECTION 1.2. Accounting Terms.

(a) Except as otherwise expressly provided herein, all accounting terms used herein shall be interpreted, and all financial statements and certificates and reports as to financial matters required to be delivered to the Lenders hereunder shall be prepared in accordance with GAAP. All calculations made for the purposes of determining compliance with this Credit Agreement shall (except as otherwise expressly provided herein) be made by application of GAAP on a basis consistent with the most recent annual or quarterly financial statements delivered pursuant to Section 6.1 (or, prior to the delivery of the first financial statements pursuant to Section 6.1, consistent with the annual audited financial statements referenced in Section 4.6 hereof); provided, however, if (i) the Borrower shall object to determining such compliance on such basis at the time of delivery of such financial statements due to any change in GAAP or the rules promulgated with respect thereto or (ii) the Administrative Agent or the Required Lenders shall so object in writing within sixty (60) days after delivery of such financial statements, then such calculations shall be made on a basis consistent with the most recent financial statements delivered by the Credit Parties to the Lenders as to which no such objection shall have been made. Any other prorations utilized by the Borrower in making any calculation under this Credit Agreement shall be subject to the approval of the Administrative Agent in its sole discretion.

(b) Determinations of (i) Consolidated EBITDA and Consolidated Gross Asset Value and (ii) compliance with the financial covenants hereunder shall be made on a Pro Forma Basis.

SECTION 1.3. [ Intentionally Omitted].

SECTION 1.4. Other Interpretive Provisions.

With reference to this Credit Agreement and each other Fundamental Document, unless otherwise specified herein or in such other Fundamental Document:

 

-29-

(a) The definitions of terms herein shall apply equally to the singular and plural forms of the terms defined. Whenever the context may require, any pronoun shall include the corresponding masculine, feminine and neuter forms. The words “ include ”, “ includes ” and “ including ” shall be deemed to be followed by the phrase “without limitation.” The word “ will ” shall be construed to have the same meaning and effect as the word “ shall ”. Unless the context requires otherwise, (i) any definition of or reference to any agreement, instrument or other document (including any Organizational Document) shall be construed as referring to such agreement, instrument or other document as from time to time amended, supplemented or otherwise modified (subject to any restrictions on such amendments, supplements or modifications set forth herein or in any other Fundamental Document), (ii) any reference herein to any Person shall be construed to include such Person’s successors and assigns, (iii) the words “ herein ”, “ hereof ” and “ hereunder ”, and words of similar import when used in any Fundamental Document, shall be construed to refer to such Fundamental Document in its entirety and not to any particular provision thereof, (iv) all references in a Fundamental Document to Articles, Sections, Exhibits and Schedules shall be construed to refer to Articles and Sections of, and Exhibits and Schedules to, the Fundamental Document in which such references appear, (v) any reference to any Law shall include all statutory and regulatory provisions consolidating, amending, replacing or interpreting such Law and any reference to any Law shall, unless otherwise specified, refer to such Law as amended, modified or supplemented from time to time, (vi) the words “ asset ” and “ property ” shall be construed to have the same meaning, and (vii) the words “ unreasonably withheld ” mean “ unreasonably withheld or delayed ”.

(b) In the computation of periods of time from a specified date to a later specified date, the word “ from ” means “ from and including ”; the words “ to ” and “ until ” each mean “ to but excluding ”; and the word “ through ” means “ to and including ”.

(c) Section headings herein and in the other Fundamental Documents are included for convenience of reference only and shall not affect the interpretation of this Credit Agreement or any other Fundamental Document.

ARTICLE II

THE LOANS

SECTION 2.1. Commitments and Loans.

(a) Loans . Subject to the terms and conditions of this Credit Agreement and in reliance upon the representations and warranties of the Borrower herein set forth, the Lenders hereby agree to lend to the Borrower on the Closing Date $530.0 million in the aggregate (together, the “ Loans ”), each such Lender severally committing to lend the amount set forth next to such Lender’s name on Schedule 2.1 . Each Lender’s commitments to make Loans to the Borrower pursuant to this Section 2.1 are herein called individually, a

 

-30-

“ Commitment ” and collectively, the “ Commitments ”. Such Loans (i) shall be made on the Closing Date, (ii) except as otherwise set forth herein, shall at the option of the Borrower be incurred and maintained as Eurodollar Rate Loans or Base Rate Loans, (iii) may and shall be repaid or prepaid in accordance with the provisions hereof, but once repaid or prepaid, may not be reborrowed, (iv) shall not exceed for any Lender the Commitment of such Lender and (v) shall not exceed in the aggregate the Total Committed Amount on the Closing Date.

(b) One-Time Extension of Maturity Date . The Borrower may, at its option, on a one-time basis elect to extend the date of maturity of the Loans from the Initial Maturity Date to the Final Maturity Date; provided that:

(i) the Borrower shall give written notice to the Administrative Agent of its election to extend the maturity of the Loans not less than 15 days prior to the Initial Maturity Date;

(ii) No Default or Event of Default then exists or is continuing; and

(iii) the Administrative Agent shall have received payment by the Borrower of an extension fee of twenty-five basis points (0.25%) on the aggregate amount of Loans for the ratable benefit of the Lenders.

SECTION 2.2. Method of Borrowing.

(a) Loans . All Borrowings shall be made on the Closing Date upon receipt of a Loan Notice given by the Borrower to the Administrative Agent not later than (i) 11:00 a.m. (New York City time) on the third Business Day prior to the Closing Date. The Loan Notice shall be irrevocable and shall specify (i) the date of the requested Borrowing (which shall be a Business Day), (ii) the aggregate principal amount to be borrowed, (iii) the account or accounts into which the proceeds of such Loans are to be deposited and (iv) whether the Borrowing shall be comprised of Base Rate Loans, Eurodollar Rate Loans or a combination thereof, and if Eurodollar Rate Loans are requested, the Interest Period(s) therefor; provided that if in connection with such request, the Borrower shall fail to specify (1) an applicable Interest Period in the case of a Eurodollar Rate Loan, the Borrower shall be deemed to have requested an Interest Period of one (1) month or (2) the Interest Rate Type, the Borrower shall be deemed to have requested a Base Rate Loan. The Administrative Agent shall give notice to each Lender promptly upon receipt of each Loan Notice pursuant to this Section 2.2(a) , the contents thereof and such Lender’s share of any Borrowing to be made pursuant thereto. Each Lender shall make the amount of its share of the Borrowing available to the Administrative Agent in immediately available funds at the Administrative Agent’s office by not later than 1:00 p.m. (New York City time) on the Business Day specified in the Loan Notice. Upon satisfaction of the conditions set forth in Section 5.1 , the Administrative Agent shall make all funds so received available to the Borrower in like funds as received by the Administrative Agent either by (i) crediting the account of the Borrower with the amount of such funds or (ii) wire transfer of such funds, in each case in accordance with wire

 

-31-

instructions provided to (and reasonably acceptable to) the Administrative Agent by the Borrower in the Loan Notice.

(b) Maximum Number of Eurodollar Rate Loans . Loans may be comprised of no more than five (5) Eurodollar Rate Loans outstanding at any time. For purposes hereof, Eurodollar Rate Loans with separate or different Interest Periods will be considered as separate Eurodollar Rate Loans even if their Interest Periods expire on the same date.

SECTION 2.3. Interest.

(a) Subject to subsection (c)  below, the Loans shall bear interest at a per annum rate, payable in arrears on each applicable Interest Payment Date (or at such other times as may be specified herein), as follows:

(i) Base Rate Loans . During such periods as the Loans shall be comprised of Base Rate Loans, the Adjusted Base Rate; and

(ii) Eurodollar Rate Loans . During such periods as the Loans shall be comprised of Eurodollar Rate Loans, the Adjusted Eurodollar Rate.

(b) Accrual of Interest . Interest in respect of any Loan hereunder shall accrue from and including the date of such Loan to but excluding the date on which such Loan is paid or, if applicable, converted to a Loan of a different Interest Rate Type.

(c) Legal Maximum . Anything in this Credit Agreement or in any Note to the contrary notwithstanding, the interest rate on the Loans shall in no event be in excess of the maximum rate permitted by applicable Laws.

(d) Computations of Interest and Fees . Except as expressly provided otherwise herein, all computations of interest and fees shall be made on the basis of the actual number of days elapsed over a year of three hundred sixty (360) days, except with respect to computation of interest on Base Rate Loans determined by reference to the Prime Rate, which shall be calculated based on a year of three hundred sixty-five (365) or three hundred sixty-six (366) days, as the case may be.

SECTION 2.4. Payments; Evidence of Indebtedness.

(a) Repayment of Loans . The Borrower shall repay to the Lenders on the Maturity Date, unless previously accelerated pursuant to Article VIII , the entire principal balance of all Loans, together with accrued but unpaid interest, fees and all other sums due with respect thereto.

(b) Evidence of Indebtedness . Each Lender shall maintain in accordance with its usual practice an account or accounts evidencing the Indebtedness of the Borrower to

 

-32-

such Lender resulting from each Loan made by such Lender, including the amounts of principal and interest payable and paid to such Lender from time to time hereunder.

(c) Register . The Administrative Agent shall maintain the Register in accordance with Section 12.6(c) , including a record of (i) the amount of each outstanding Loan hereunder, the Interest Rate Type thereof and the Interest Period applicable thereto, (ii) the amount of any principal or interest due and payable or to become due and payable from the Borrower to each Lender hereunder and (iii) the amount of any sum received by the Administrative Agent hereunder for the account of the Lenders and each Lender’s share thereof.

(d) No Effect on Obligations . The entries made in the accounts maintained pursuant to subsection (b)  or (c)  of this Section 2.4 shall be prima facie evidence of the existence and amounts of the Obligations recorded therein; provided , however , that the failure of any Lender or the Administrative Agent to maintain such accounts or any error therein shall not in any manner affect the obligation of the Borrower to repay the Loans and the other Obligations in accordance with the terms of this Credit Agreement.

(e) Notes . Upon request by any Lender, such Lender’s Loan shall be evidenced by a Note.

(f) Allocation of Payments After Event of Default . Notwithstanding any other provisions of this Credit Agreement to the contrary, after the occurrence and during the continuation of an Event of Default, all amounts collected or received on or in respect of the Obligations (or other amounts owing under the Fundamental Documents in connection therewith) shall be paid over or delivered as follows:

FIRST, to the payment of all unreimbursed costs and expenses (including reasonable attorneys’ fees and expenses, excluding the allocated cost of internal counsel) of the Administrative Agent which are payable by the Borrower or any of the other Credit Parties pursuant to this Credit Agreement and any fees owed to the Administrative Agent by the Borrower or any of the other Credit Parties pursuant to this Credit Agreement;

SECOND, to the payment of all unreimbursed costs and expenses of the Lenders which are payable by the Borrower or any of the other Credit Parties under the Fundamental Documents;

THIRD, to the payment of all fees owed to the Lenders by the Borrower or any of the other Credit Parties pursuant to this Credit Agreement;

FOURTH, to the payment of accrued but unpaid interest on the Loans;

FIFTH, to the payment of the principal outstanding balance of the Loans;

 

-33-

SIXTH, to the payment of the remainder of the Obligations or any other amounts then due and owing under this Credit Agreement or any other Fundamental Document; and

SEVENTH, to the payment of the surplus, if any, to the Borrower or to whoever else may be lawfully entitled to receive such surplus under any applicable court order.

In carrying out the foregoing, (i) amounts received shall be applied in the numerical order provided until exhausted prior to application to the next succeeding category; and (ii) except as otherwise provided, the Lenders shall receive amounts to be applied pursuant to clauses SECOND , THIRD , FOURTH and FIFTH above, ratably first , between the Lenders, in accordance with the relative proportion of Obligations outstanding and second , pro rata among the Lenders based on their respective Commitment Percentage.

SECTION 2.5. Administrative Fees.

The Borrower agrees to pay to the Administrative Agent any and all other fees not expressly covered hereunder on the dates and in the amounts set forth in the Administrative Agent Fee Letter.

SECTION 2.6. Termination of Commitments and Optional Prepayment of Loans.

(a) Commitment Termination . Unless previously terminated, the Commitments shall terminate at the Closing Date.

(b) Optional Prepayment of Loans . Subject to the terms of Section 3.5 , the Borrower shall have the right at its option at any time and from time to time to prepay any of the Loans hereunder in whole or in part, without premium or penalty; provided that (i) any such prepayment of a Base Rate Loan, in whole or in part, shall be (A) received not later than 11:00 a.m. (New York City time) on the Business Day that is the date of such prepayment, (B) in the principal amount of $500,000 or such greater amount which is an integral multiple of $250,000 if prepaid in part, and (C) accompanied by a Notice of Prepayment, and (ii) any such prepayment of a Eurodollar Rate Loan, in whole or in part, shall be (A) received not later than 11:00 a.m. (New York City time) on the Business Day that is the date of such prepayment, (B) in the principal amount of $1,000,000 or such greater amount which is an integral multiple of $100,000 if prepaid in part, and (C) accompanied by a Notice of Prepayment. Each Notice of Prepayment shall specify the prepayment date, each Loan to be prepaid and the principal amount thereof, shall be irrevocable and shall commit the Borrower to prepay each such Loan in the amount and on the date stated therein.

(c) Any prepayments pursuant to this Section 2.6 not otherwise specifically provided for in this Section 2.6 , shall be applied as provided in Section 2.4(f) .

 

-34-

(d) All prepayments of Loans under this Section 2.6 shall, as regards Interest Rate Type, be applied first to Base Rate Loans, and then to Eurodollar Rate Loans in the order of the scheduled expiry of Interest Periods with respect thereto ( i.e. , those Eurodollar Rate Loans with Interest Periods which end sooner would be paid before those with Interest Periods which end later).

(e) All prepayments under this Section 2.6 shall be accompanied by accrued but unpaid interest on the principal amount being prepaid to (but not including) the date of prepayment.

SECTION 2.7. Mandatory Prepayments of Loans.

(a) If at any time Ventas, the Borrower or any of the Guarantors shall issue any Take-Out Notes or otherwise incur any Indebtedness for borrowed money in excess of $10,000,000 (other than (i) Indebtedness incurred under the Existing Credit Agreement for working capital purposes and (ii) Indebtedness the proceeds of which are applied within three Business Days to refinance Indebtedness for borrowed money in excess of $10,000,000 and maturing prior to the Initial Maturity Date, or if the date of maturity of the Loans is extended pursuant to Section 2.1(b) , prior to the Final Maturity Date), then 100% of the Net Prepayment Proceeds thereof shall be applied in accordance with subsections (c) , (d)  and (e)  to the repayment of the Loans within one Business Day of the receipt of such Net Prepayment Proceeds.

(b) If at any time Ventas shall issue any Capital Stock (or any securities convertible into or exchangeable for Capital Stock or any warrants, rights or options to acquire Capital Stock) in an Equity Transaction, or if Ventas receives a capital contribution in excess of $10,000,000, then 100% of the Net Prepayment Proceeds thereof shall be applied in accordance with subsections (c) , (d)  and (e)  to the repayment of the Loans within one Business Day of the receipt of such Net Prepayment Proceeds.

(c) The Borrower shall deliver a Notice of Prepayment to the Administrative Agent by telephone (confirmed by telecopy) of any prepayment hereunder (i) in the case of prepayment of a Eurodollar Loan, not later than 12:00 p.m., New York City time, three Business Days before the date of prepayment, or (ii) in the case of prepayment of a Base Rate Loan, not later than 12:00 p.m., New York City time, one Business Day before the date of prepayment. Each such notice shall be irrevocable and shall specify the prepayment date, the principal amount of each Borrowing or portion thereof to be prepaid and, in the case of a mandatory prepayment, a reasonably detailed calculation of the amount of such prepayment, provided that a notice may state that such notice is conditional upon the effectiveness of other credit facilities or the receipt of the proceeds from the issuance of other Indebtedness, in which case such notice of prepayment may be revoked by the Borrower (by notice to the Administrative Agent on or prior to 12:00 noon New York City time, on the specified date) if such condition is not satisfied. Promptly following receipt of any such notice, the Administrative Agent shall advise the Lenders of the contents thereof. Each

 

-35-

prepayment of a Borrowing shall be applied ratably to the Loans included in the prepaid Borrowing. Prepayments shall be accompanied by accrued interest to the extent required by Section 2.13, except in the case of partial prepayment of Base Rate Loans, which interest shall be payable on the next scheduled interest payment date.

(d) Prior to any optional or mandatory prepayment of Borrowings hereunder, the Borrower shall select the Borrowing or Borrowings to be prepaid and shall specify such selection in the relevant Notice of Prepayment pursuant to paragraph (c) of this Section.

(e) If on any day on which Loans would otherwise be required to be prepaid pursuant to this Section 2.7 , but for the operation of this Section 2.7(e) (each, a “ Prepayment Date ”), the amount of such required prepayment exceeds the then outstanding aggregate principal amount of Base Rate Loans which are of the type required to be prepaid, and no Default or Event of Default exists or is continuing, then on such Prepayment Date, (i) the Borrower may at, its option, deposit Dollars into the Cash Collateral Account in an amount equal to such excess, and only the outstanding Base Rate Loans which are of the type required to be prepaid shall be required to be prepaid on such Prepayment Date and (ii) on the last day of each Interest Period after such Prepayment Date in effect with respect to a Eurodollar Rate Loan which is of the type required to be prepaid, the Administrative Agent is irrevocably authorized and directed to apply funds from the Cash Collateral Account (and liquidate investments held in the Cash Collateral Account, as necessary) to prepay such Eurodollar Rate Loans for which the Interest Period is then ending to the extent funds are available in the Cash Collateral Account; provided that the Borrower may at any time direct that the funds from the Cash Collateral Account be applied to make the associated payment required by Section 2.7.

SECTION 2.8. Default Interest.

(a) In the event that, and for so long as, any Event of Default shall have occurred and be continuing, the Borrower shall on demand from time to time pay interest, to the extent permitted by applicable Laws, on all Loans and overdue amounts outstanding up to (but not including) the date of actual payment of such Loan or overdue amount (after as well as before judgment) (i) for the remainder of the then current Interest Period for each Eurodollar Rate Loan, at two percent (2%) in excess of the rate then in effect for each such Eurodollar Rate Loan (it being understood by the parties hereto that no Eurodollar Rate Loan may be continued into a subsequent Interest Period and no Base Rate Loan may be converted to a Eurodollar Rate Loan, at any time when an Event of Default shall have occurred and then be continuing unless the Administrative Agent and the Required Lenders otherwise consent), (ii) for all periods subsequent to the then current Interest Period for each Eurodollar Rate Loan and for all Base Rate Loans, at two percent (2%) in excess of the rate then in effect for Base Rate Loans of the same type and (iii) for all other overdue amounts hereunder, at two percent (2%) in excess of the rate then in effect for Base Rate Loans; provided , however , that if an Event of Default is waived by the applicable Lenders in accordance with the terms of

 

-36-

this Credit Agreement, then the provisions of this Section 2.8(a) shall also be deemed waived from and after the effective date of the applicable waiver.

(b) In the event, and on each occasion, that on or before the day on which the Eurodollar Rate for a Eurodollar Rate Loan is to be determined as set forth herein, (i) the Administrative Agent shall have received notice from any Lender of such Lender’s determination (which determination, absent manifest error, shall be conclusive) that Dollar deposits in an amount equal to the principal amount of such Lender’s Eurodollar Rate Loan are not generally available in the London interbank market or that the rate at which such Dollar deposits are being offered will not adequately and fairly reflect the cost to such Lender of making or maintaining the principal amount of such Lender’s Eurodollar Rate Loan during the applicable Interest Period or (ii) the Administrative Agent shall have determined that reasonable means do not exist for ascertaining the applicable Eurodollar Rate, the Administrative Agent shall, as soon as practicable thereafter, give written or facsimile notice of such determination by such Lender or the Administrative Agent to the Borrower and the Lenders and any request by the Borrower for a Eurodollar Rate Loan pursuant to Section 2.2 or conversion to or continuation as a Eurodollar Rate Loan pursuant to Section 2.9 , made after receipt of such notice and until the circumstances giving rise to such notice no longer exist, shall be deemed to be a request for a Base Rate Loan; provided , however , that in the circumstances described in clause (i)  above, such deemed request shall only apply to the affected Lender’s portion thereof.

SECTION 2.9. Continuation and Conversion of Loans.

The Borrower shall have the right, at any time, (i) to convert any Eurodollar Rate Loan or portion thereof to a Base Rate Loan, (ii) to continue any Eurodollar Rate Loan for a successive Interest Period, or (iii) to convert any Base Rate Loan or portion thereof to a Eurodollar Rate Loan, subject to the following:

(a) at least three (3) Business Days prior to any conversion or continuation hereunder, the Borrower shall deliver to the Administrative Agent written notice with respect thereto in the form of a Loan Notice (or by telephonic notice promptly confirmed in writing); such notice shall be irrevocable and to be effective, must be received by the Administrative Agent on the day required not later than 11:00 a.m. (New York City time);

(b) unless the Administrative Agent and the Required Lenders otherwise consent, no Default or Event of Default shall have occurred and be continuing at the time of any conversion to a Eurodollar Rate Loan or continuation of a Eurodollar Rate Loan into a subsequent Interest Period;

(c) the aggregate principal amount of Loans continued as, or converted to, Eurodollar Rate Loans as part of the same continuation or conversion, shall be in a

 

-37-

minimum amount of $1,000,000 or in such greater amount which is an integral multiple of $100,000;

(d) if fewer than all Loans of a particular type at the time outstanding shall be continued or converted, such continuation or conversion shall be made pro rata among the applicable Lenders in accordance with the respective principal amount of such Loans held by the applicable Lenders immediately prior to such continuation or conversion;

(e) no Base Rate Loan (or portion thereof) may be converted to a Eurodollar Rate Loan and no Eurodollar Rate Loan may be continued as a Eurodollar Rate Loan if, after such conversion or continuation, and after giving effect to any concurrent prepayment of Loans, an aggregate of more than five (5) separate Eurodollar Rate Loans would be outstanding hereunder with respect to a Lender (for purposes of determining the number of such Loans outstanding, Loans with different Interest Periods shall be counted as different Eurodollar Rate Loans even if made on the same date);

(f) the Interest Period with respect to a new Eurodollar Rate Loan effected by a continuation or conversion shall commence on the date of such continuation or conversion;

(g) if a Eurodollar Rate Loan is converted to a Base Rate Loan other than on the last day of the Interest Period with respect thereto, the amounts required by Section 3.5 shall be paid upon such conversion; and

(h) each request for a continuation as, or conversion to, a Eurodollar Rate Loan which fails to state an applicable Interest Period shall be deemed to be a request for an Interest Period of one (1) month.

Subject to the foregoing, in the event that the Borrower shall not give notice to continue or convert any Eurodollar Rate Loan as provided above, such Loan (unless repaid) shall automatically be converted to a Base Rate Loan at the expiration of the then current Interest Period. The Administrative Agent shall, after it receives notice from the Borrower, promptly give the Lenders notice of any continuation or conversion.

SECTION 2.10. Payments Generally; Administrative Agent’s Clawback.

(a) General . All payments to be made by the Borrower shall be made without condition or deduction for any counterclaim, defense, recoupment or setoff. Except as otherwise expressly provided herein, all payments by the Borrower hereunder shall be made to the Administrative Agent, for the account of the respective Lenders to which such payment is owed, at the Administrative Agent’s Office in Dollars and in immediately available funds not later than 3:00 p.m. (New York City time) on the date specified herein. The Administrative Agent will promptly distribute to each Lender its Commitment Percentage

 

-38-

(or other applicable share as provided herein) of such payment in like funds as received by wire transfer to such Lender’s Lending Office. All payments received by the Administrative Agent after 3:00 p.m. (New York City time) shall be deemed received on the next succeeding Business Day and any applicable interest or fee shall continue to accrue. If any payment to be made by the Borrower shall come due on a day other than a Business Day, payment shall be made on the next following Business Day, and such extension of time shall be reflected in computing interest or fees, as the case may be.

(b) (i) Funding by Lenders; Presumption by Administrative Agent . Unless the Administrative Agent shall have received notice from a Lender prior to the proposed date of any Borrowing of Eurodollar Rate Loans (or, in the case of any Borrowing of Base Rate Loans, prior to 11:00 a.m. (New York City time) on the date of such Borrowing) that such Lender will not make available to the Administrative Agent such Lender’s share of such Borrowing, the Administrative Agent may assume that such Lender has made such share available on such date in accordance with Section 2.2 (or, in the case of a Borrowing of Base Rate Loans, that such Lender has made such share available in accordance with and at the time required by Section 2.2 ) and may, in reliance upon such assumption, make available to the Borrower a corresponding amount. In such event, if a Lender has not in fact made its share of the applicable Borrowing available to the Administrative Agent, then the applicable Lender and the Borrower severally agree to pay to the Administrative Agent forthwith on demand such corresponding amount in immediately available funds with interest thereon, for each day from and including the date such amount is made available to the Borrower to but excluding the date of payment to the Administrative Agent, at (A) in the case of a payment to be made by such Lender, the greater of the Federal Funds Rate and a rate determined by the Administrative Agent in accordance with banking industry rules on interbank compensation and (B) in the case of a payment to be made by the Borrower, the interest rate applicable to Base Rate Loans. If the Borrower and such Lender shall pay such interest to the Administrative Agent for the same or an overlapping period, the Administrative Agent shall promptly remit to the Borrower the amount of such interest paid by the Borrower for such period. If such Lender pays its share of the applicable Borrowing to the Administrative Agent, then the amount so paid shall constitute such Lender’s Loan included in such Borrowing. Any payment by the Borrower shall be without prejudice to any claim the Borrower may have against a Lender that shall have failed to make such payment to the Administrative Agent.

(ii) Payments by Borrower; Presumptions by Administrative Agent . Unless the Administrative Agent shall have received notice from the Borrower prior to 2:00 p.m. (New York City time) on the date on which any payment is due to the Administrative Agent for the account of the Lenders hereunder that the Borrower will not make such payment, the Administrative Agent may assume that the Borrower has made such payment on such date in accordance herewith and may, in reliance upon such assumption, distribute to the Lenders, as the case may be, the amount due. In such event, if the Borrower has not in fact made such payment, then each of the Lenders, as the case may be, severally agrees to repay to the Administrative Agent forthwith on demand the amount so distributed to such Lender, in

 

-39-

immediately available funds with interest thereon, for each day from and including the date such amount is distributed to it to but excluding the date of payment to the Administrative Agent, at the greater of the Federal Funds Rate and a rate determined by the Administrative Agent in accordance with banking industry rules on interbank compensation.

A notice of the Administrative Agent to any Lender or the Borrower with respect to any amount owing under this subsection (b)  shall be conclusive, absent manifest error.

(c) Failure to Satisfy Conditions Precedent . If any Lender makes available to the Administrative Agent funds for any Loan to be made by such Lender as provided in the foregoing provisions of this Article II , and such funds are not made available to the Borrower by the Administrative Agent because the conditions to the applicable Extension of Credit set forth in Article V are not satisfied or waived in accordance with the terms hereof, the Administrative Agent shall return such funds (in like funds as received from such Lender) to such Lender, without interest.

(d) Obligations of Lenders Several . The obligations of the Lenders hereunder to make Loans and to make payments pursuant to Section 12.4(c) are several and not joint. The failure of any Lender to make any Loan or to make any payment under Section 12.4(c) on any date required hereunder shall not relieve any other Lender of its corresponding obligation to do so on such date, and no Lender shall be responsible for the failure of any other Lender to so make its Loan or to make its payment under Section 12.4(c) .

(e) Funding Source . Nothing herein shall be deemed to obligate any Lender to obtain the funds for any Loan in any particular place or manner or to constitute a representation by any Lender that it has obtained or will obtain the funds for any Loan in any particular place or manner.

SECTION 2.11. [Intentionally Omitted].

SECTION 2.12. [Intentionally Omitted].

SECTION 2.13. Pro Rata Treatment.

Except to the extent otherwise provided herein:

(a) Loans . Each payment or prepayment of the principal of the Loans, each reduction of the Loans Outstanding and each continuation or conversion of Loans shall be allocated pro rata among the Lenders according to their respective Commitment Percentage; and

(b) Advances.

 

-40-

(i) No Lender shall be responsible for the failure or delay by any other Lender in its obligation to make its ratable share of a Borrowing hereunder; provided , however , that the failure of any Lender to fulfill its obligations hereunder shall not relieve any other Lender of its obligations hereunder.

(ii) Unless the Borrower or any Lender has notified the Administrative Agent prior to the date any payment is required to be made by it to the Administrative Agent hereunder, that the Borrower or such Lender, as the case may be, will not make such payment, the Administrative Agent may assume that the Borrower or such Lender, as the case may be, has timely made such payment and may (but shall not be so req