Common use of Indemnification Payments to Ventas Clause in Contracts

Indemnification Payments to Ventas. (i) With respect to any period in which Ventas 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 Ventas Group pursuant to Section 4.3 or 4.4 or any indemnification payments to be made to any member of the Ventas Group pursuant to any Ancillary Agreement (a “Ventas Indemnity Payment”) for any calendar year shall not exceed the sum of (1) the amount that is determined will not be gross income of Ventas for purposes of the requirements of Sections 856(c)(2) and (3) of the Code for any period in which Ventas 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 Ventas, which opinion shall be reasonably satisfactory to Ventas, plus (2) such additional amount that is estimated can be paid to Ventas in such taxable year without causing Ventas 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 Qualifying Income and (y) by taking into account any other payments to Ventas (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 Ventas, and (B) submitted to and approved by Ventas’s outside tax counsel, and (3) in the event that Ventas receives a ruling from the IRS to the effect that the receipt of the additional amount of Ventas Indemnity Payments otherwise required to be paid, either would constitute Qualifying Income or would be excluded from gross income of Ventas for purposes of the Specified REIT Requirements, the aggregate Ventas Indemnity Payments otherwise required to be made (determined without regard to this Section 4.11(b)) less the amount otherwise previously paid under clauses (1) and (2) above. (ii) SpinCo shall place (or cause to be placed) the full amount of any Ventas 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 SpinCo or the applicable member of the SpinCo Group, unless it is released from such escrow account to any Ventas Indemnified Party, (2) all income earned upon the amount in the escrow account shall be treated as the property of SpinCo or the applicable member of the SpinCo 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 SpinCo or the applicable member of the SpinCo 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 SpinCo in its sole discretion, and (4) any portion thereof shall not be released to any Ventas Indemnified Party unless and until SpinCo receives any of the following: (A) a letter from Ventas’s independent tax accountants indicating the amount that it is estimated can be paid at that time to the Ventas Indemnified Parties without causing Ventas 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 Ventas, such opinion to be reasonably satisfactory to Ventas, 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 Ventas Indemnity Payments otherwise required to be paid either would be excluded from gross income of Ventas 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 Ventas Indemnified Parties in an amount equal to the lesser of the unpaid Ventas Indemnity Payments due and owing (determined without regard to this Section 4.11(b)) 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(b)(ii) for five (5) years shall be released from such escrow to be used as determined by SpinCo in its sole and absolute discretion. (iv) Ventas shall bear all costs and expenses with respect to the escrow. (v) SpinCo shall cooperate in good faith to amend this Section 4.11(b) at the reasonable request of Ventas in order to (1) maximize the portion of the payments that may be made to the Ventas Indemnified Parties hereunder without causing Ventas to fail to meet the Specified REIT Requirements, (2) improve Ventas’s chances of securing a favorable ruling described in this Section 4.11(b) or (3) assist Ventas in obtaining a favorable opinion from its outside tax counsel or determination from its tax accountants as described in this Section 4.11(b). Ventas shall reimburse SpinCo for all reasonable costs and expenses of such cooperation.