Common use of Indemnification Payments to SpinCo Clause in Contracts

Indemnification Payments to SpinCo. (i) With respect to any period in which SpinCo has made or will make an election to be taxed as a REIT, notwithstanding any other provisions in this Agreement or any Ancillary Agreement, any indemnification payments to be made to any member of the SpinCo Group pursuant to Section 4.3 or 4.4 or any indemnification payments to be made to any member of the SpinCo Group pursuant to any Ancillary Agreement (a “SpinCo Indemnity Payment”) for any calendar year shall not exceed the sum of (1) the amount that is determined will not be gross income of SpinCo for purposes of the requirements of Sections 856(c)(2) and (3) of the Code for any period in which SpinCo has made any election to be taxed as a REIT, with such determination to be set forth in an opinion of outside tax counsel selected by SpinCo, which opinion shall be reasonably satisfactory to SpinCo, plus (2) such additional amount that is estimated can be paid to SpinCo in such taxable year without causing SpinCo to fail to meet the requirements of Sections 856(c)(2) and (3) of the Code, determined (x) as if the payment of such amount did not constitute income described in Sections 856(c)(2)(A) through (I) and 856(c)(3)(A) through (I) of the Code (“Qualifying Income”) and (y) by taking into account any other payments to SpinCo (and any other relevant member of the SpinCo Group) during such taxable year that do not constitute Qualifying Income, which determination shall be (A) made by independent tax accountants to SpinCo, and (B) submitted to and approved by SpinCo’s outside tax counsel, and (3) in the event that SpinCo receives a ruling from the IRS to the effect that the receipt of the additional amount of SpinCo Indemnity Payments otherwise required to be paid either would constitute Qualifying Income or would be excluded from gross income of SpinCo for purposes of Sections 856(c)(2) and (3) of the Code (the “Specified REIT Requirements”), the aggregate SpinCo Indemnity Payments otherwise required to be made (determined without regard to this Section 4.11(a)), less the amount otherwise previously paid under clauses (1) and (2) above. (ii) Ventas shall place (or cause to be placed) the full amount of any SpinCo Indemnity Payments otherwise required to be made in a mutually agreed escrow account upon mutually acceptable terms, which shall provide that (1) the amount in the escrow account shall be treated as the property of Ventas or the applicable member of the Ventas Group, unless it is released from such escrow account to any SpinCo Indemnified Party, (2) all income earned upon the amount in the escrow account shall be treated as the property of Ventas or the applicable member of the Ventas Group and reported, as and to the extent required by applicable Law, by the escrow agent to the IRS, or any other taxing authority, on IRS Form 1099 or 1042S (or other appropriate form) as income earned by Ventas or the applicable member of the Ventas Group whether or not said income has been distributed during such taxable year, (3) the amount in the escrow account shall be invested only as determined by Ventas in its sole discretion and (4) any portion thereof shall not be released to any SpinCo Indemnified Party unless and until Ventas receives any of the following: (A) a letter from SpinCo’s independent tax accountants indicating the amount that it is estimated can be paid at that time to the SpinCo Indemnified Parties without causing SpinCo to fail to meet the Specified REIT Requirements for the taxable year in which the payment would be made, which determination shall be made by such independent tax accountants or (B) an opinion of outside tax counsel selected by SpinCo, such opinion to be reasonably satisfactory to SpinCo, to the effect that, based upon a change in applicable Law after the date on which payment was first deferred hereunder or a ruling from the IRS, receipt of the additional amount of SpinCo Indemnification Payments otherwise required to be paid either would be excluded from gross income of SpinCo for purposes of the Specified REIT Requirements or would constitute Qualifying Income, in either of which events amounts shall be released from the escrow account to the applicable SpinCo Indemnified Parties in an amount equal to the lesser of the unpaid SpinCo Indemnification Payments due and owing (determined without regard to this Section 4.11(a)) or the maximum amount stated in the letter referred to in clause (4)(A) above. (iii) Any amount held in escrow pursuant to Section 4.11(a)(ii) for five (5) years shall be released from such escrow to be used as determined by Ventas in its sole and absolute discretion. (iv) SpinCo shall bear all costs and expenses with respect to the escrow. (v) Ventas shall cooperate in good faith to amend this Section 4.11(a) at the reasonable request of SpinCo in order to (1) maximize the portion of the payments that may be made to the SpinCo Indemnified Parties hereunder without causing SpinCo to fail to meet the Specified REIT Requirements, (2) improve SpinCo’s chances of securing a favorable ruling described in this Section 4.11(a) or (3) assist SpinCo in obtaining a favorable opinion from its outside tax counsel or determination from its tax accountants as described in this Section 4.11(a). SpinCo shall reimburse Ventas for all reasonable costs and expenses of such cooperation.

Indemnification Payments to SpinCo. (i) With respect to any period in which SpinCo has made or will make an election to be taxed as a REIT, notwithstanding any other provisions in this Agreement or any Ancillary Agreement, any indemnification payments to be made to any member of the SpinCo Group pursuant to Section 4.3 or Section 4.4 or otherwise pursuant to this Agreement or any indemnification payments to be made to any member of the SpinCo Group pursuant to any Ancillary Agreement (a “SpinCo Indemnity Payment”) for any calendar year shall not exceed the sum of (1) the amount that is determined will not be gross income of SpinCo for purposes of the requirements of Sections 856(c)(2) and (3) of the Code (the “Specified REIT Requirements”) for any period in which SpinCo has made any election to be taxed as a REIT, with such determination to be set forth in an opinion of outside tax counsel selected by SpinCo, which opinion shall be reasonably satisfactory to SpinCo, plus (2) such additional amount that is estimated can be paid to SpinCo in such taxable year without causing SpinCo to fail to meet the requirements of Sections 856(c)(2) and (3) of the CodeSpecified REIT Requirements, determined (x) as if the payment of such amount did not constitute income described in Sections 856(c)(2)(A) through (I) and 856(c)(3)(A) through (I) of the Code (“Qualifying Income”) and (y) by taking into account any other payments to SpinCo (and any other relevant member of the SpinCo Group) during such taxable year that do not constitute Qualifying Income, which determination shall be (A) made by independent tax accountants to SpinCo, and (B) submitted to and approved by SpinCo’s outside tax counsel, and and, (3) in the event that SpinCo receives a ruling from the IRS or an opinion of SpinCo’s outside tax counsel to the effect that the receipt of the additional amount of SpinCo Indemnity Payments otherwise required to be paid in excess of the amounts paid under clause (1) and (2) above either would constitute Qualifying Income or would be excluded from gross income of SpinCo for purposes of Sections 856(c)(2) and (3) of the Code (the “Specified REIT Requirements”), the aggregate SpinCo Indemnity Payments otherwise required to be made (determined without regard to this Section 4.11(a)), less the amount otherwise previously paid under clauses (1) and (2) above. (ii) Ventas To the extent that SpinCo Indemnity Payments owed in any calendar year exceed the amount that may be paid pursuant to Section 4.11(a)(i), Parent shall place (or cause to be placed) the full amount of any remaining SpinCo Indemnity Payments otherwise required to be made in a mutually agreed escrow account upon mutually acceptable terms, which shall provide that (1) the amount amounts in the escrow account shall be treated as the property of Ventas Parent or the applicable member of the Ventas Parent Group, unless it is until such amounts are released from such escrow account to any SpinCo Indemnified PartyIndemnitee, (2) all income earned upon the amount amounts in the escrow account shall be treated as the property of Ventas Parent or the applicable member of the Ventas Parent Group and reported, as and to the extent required by applicable Law, by the escrow agent to the IRS, or any other taxing authority, on IRS Form 1099 or 1042S (or other appropriate form) as income earned by Ventas Parent or the applicable member of the Ventas Parent Group whether or not said income has been distributed to Parent or a member of the Parent Group during such taxable year, (3) the amount amounts in the escrow account shall be invested only as determined by Ventas Parent in its sole discretion discretion, and (4) any portion thereof shall not be released to any SpinCo Indemnified Party Indemnitee unless and until Ventas Parent receives any of the following: (A) a letter from SpinCo’s independent tax accountants indicating the amount that it is estimated can be paid at that time to the SpinCo Indemnified Parties Indemnitee without causing SpinCo to fail to meet the Specified REIT Requirements for the taxable year in which the payment would be made, which determination shall be (1) made by such independent tax accountants or and (2) submitted to and approved by SpinCo’s outside tax counsel, (B) an opinion of outside tax counsel selected by SpinCo, such opinion to be reasonably satisfactory to SpinCo, to the effect that, based upon a change in applicable Law after the date on which payment was first deferred hereunder or a ruling from the IRS, receipt of the additional amount of SpinCo Indemnification Indemnity Payments otherwise required to be paid either would be excluded from gross income of SpinCo for purposes of the Specified REIT Requirements or would constitute Qualifying Income, in either of which events amounts shall be released from the escrow account to the applicable SpinCo Indemnified Parties Indemnitee in an amount equal to the lesser of the unpaid SpinCo Indemnification Indemnity Payments due and owing (determined without regard to this Section 4.11(a)) or the maximum amount stated in the letter referred to in clause (4)(A3)(A) aboveabove or (C) a letter from SpinCo designating a Taxable REIT Subsidiary of SpinCo as the recipient of the SpinCo Indemnity Payment, in which case the escrow agent shall release the remainder of the SpinCo Indemnity Payment to SpinCo or its designee. (iii) Any amount held in escrow pursuant to Section 4.11(a)(ii) for five (5) years after the date on which Parent’s obligation to pay the SpinCo Indemnity Payment arose shall be released from such escrow to be used as determined by Ventas Parent in its sole and absolute discretion. (iv) SpinCo shall bear all costs and expenses with respect to the escrow. (v) Ventas Parent shall reasonably cooperate in good faith to amend this Section 4.11(a) at the reasonable request of SpinCo in order to (1) maximize the portion of the payments that may be made to the SpinCo Indemnified Parties Indemnitees hereunder without causing SpinCo to fail to meet the Specified REIT Requirements, (2) improve SpinCo’s chances of securing a favorable ruling described in this Section 4.11(a) ), or (3) assist SpinCo in obtaining a favorable opinion from its outside tax counsel or determination from its tax accountants as described in this Section 4.11(a). SpinCo shall reimburse Ventas for all reasonable costs and expenses of such cooperation.