As Filed Pursuant to Rule 424(b)(5)
Registration No. 333-65642
PROSPECTUS
[VENTAS LOGO]
VENTAS, INC.
DISTRIBUTION REINVESTMENT AND STOCK PURCHASE PLAN
25,000,000 Shares of Common Stock, par value $0.25 per share
We are pleased to offer you the opportunity to participate in a
simple and convenient Distribution Reinvestment and Stock Purchase Plan
available for existing stockholders to increase their holdings of our common
stock and for new investors to make an initial investment in our common stock.
If you are an existing stockholder, you may elect to have your cash
distributions automatically invested in additional shares of common stock. If
you are either an existing stockholder or a new investor, you may purchase
shares of common stock on a monthly basis with optional cash payments at the
market price of common stock less a discount ranging between 0% and 5%. All
purchases under the Plan are subject to certain dollar limitations described in
this prospectus. The price of shares purchased with reinvested dividends will be
based on whether shares are purchased directly from us or through open market
purchases. If shares are purchased directly from us, the price will be 100%
(subject to change) of the average of the high and low sales prices of the
shares of common stock on the New York Stock Exchange on the investment date. If
the shares are purchased through open market purchases, the price will be the
weighted average of the actual prices paid for all of the shares of common stock
purchased with all participants' reinvested distributions for that particular
distribution minus brokerage commissions. See question 12 for further
information regarding purchase prices.
This prospectus relates to 25,000,000 shares of common stock, par
value $0.25 per share, to be offered for purchase under the Plan. Our common
stock is listed on the New York Stock Exchange under the trading symbol "VTR".
The closing price of the common stock on December 20, 2001 was $11.85 per share.
If you are eligible, you may begin participating in the Plan by
completing the enclosed authorization form and returning it to the Plan
Administrator in the envelope provided. Brokers and nominees may reinvest
distributions and make optional cash payments on behalf of beneficial owners.
Enrollment in the Plan is entirely voluntary and you may terminate your
participation at any time. If you do not wish to participate in the Plan, you do
not need to take any action, and you will continue to receive your cash
distributions, if and when declared, as usual.
Under the Plan, we will receive proceeds from the sale of newly
issued common stock but will not receive any proceeds from open market sales.
Investing in our common stock involves a high degree of risk,
including the possible loss of all of your investment. YOU SHOULD CONSIDER
CAREFULLY THE RISK FACTORS BEGINNING ON PAGE 5 OF THIS PROSPECTUS BEFORE
ENROLLING IN THE PLAN.
Our principal executive offices are located at 4360 Brownsboro
Road, Suite 115, Louisville, Kentucky 40207, telephone: (502) 357-9000.
Neither the Securities and Exchange Commission nor any state securities
commission has approved or disapproved the securities to be issued under this
prospectus or determined if this prospectus is accurate or adequate. Any
representation to the contrary is a criminal offense.
___________________________
The date of this prospectus is January 23, 2002.
You should rely only on the information contained or incorporated by reference
in this prospectus. We have not authorized anyone to provide you with any other
information. We are not making an offer of securities in any place where the
offer is not permitted. You should not assume that the information in this
prospectus is accurate as of any date other than the date on the front of this
document.
TABLE OF CONTENTS
Page
----
Summary..................................................................... 1
Risk Factors................................................................ 5
Forward-Looking Statements.................................................. 13
The Company................................................................. 15
The Plan.................................................................... 15
Purpose..................................................................... 15
Options Available to You.................................................... 16
Benefits and Disadvantages.................................................. 16
Administration.............................................................. 17
Participation............................................................... 18
Purchases and Prices of Shares.............................................. 21
Reports to You.............................................................. 26
Distributions on Fractions.................................................. 27
Certificates for Shares of Common Stock..................................... 27
Withdrawals and Termination................................................. 27
Other Information........................................................... 28
Federal Income Tax Considerations........................................... 31
Use of Proceeds............................................................. 35
Plan of Distribution........................................................ 35
Description of Shares of Common Stock....................................... 36
Where You Can Find More Information......................................... 37
Legal Opinions.............................................................. 38
Experts..................................................................... 38
Schedule A.................................................................. 39
-i-
SUMMARY
The following summary description of our Distribution Reinvestment and
Stock Purchase Plan is qualified by reference to the full text of the Plan which
appears elsewhere in this prospectus. Capitalized terms have the meanings given
to them in the Plan.
THE COMPANY ............. Ventas, Inc. is a Delaware corporation which
elected to be taxed as a real estate investment
trust or REIT, under the Internal Revenue Code of
1986, as amended, beginning with the tax year
ending December 31, 1999. We own hospitals,
nursing facilities and personal care facilities
and lease them to third party health care
operators. We conduct substantially all of our
business through a wholly owned operating
partnership, Ventas Realty, Limited Partnership.
PURPOSE OF PLAN ......... The purpose of the Plan is to provide our existing
stockholders and interested new investors with a
convenient and less costly method of purchasing
shares of our common stock and investing all or a
portion of their cash distributions in additional
shares of our common stock. The Plan can also
provide us with a means of raising additional
capital through the direct sale of our common
stock.
SOURCE OF PURCHASE OF
SHARES .................. Shares of common stock purchased through the Plan
will be purchased either directly from us as newly
issued shares or Treasury shares or on the open
market, or by a combination of purchases from us
and open market purchases, at our option,
determined at least three business days prior to
each applicable record date. We anticipate that
initially purchases of shares under the Plan will
be effected through open market transactions.
INVESTMENT OPTIONS ...... You may choose from the following options:
Full Distribution Reinvestment: The Plan
------------------------------
Administrator will apply all cash distributions
relating to all shares of common stock registered
in your name and all cash distributions on all
shares distributed to you under the Plan together
with optional cash payments, toward the purchase
of additional shares of our common stock. Cash
distributions in excess of $25,000 may be
reinvested only with our permission.
Partial Distribution Reinvestment: The Plan
---------------------------------
Administrator will apply the cash distributions on
a number of common shares registered in your name
specified by you to purchase additional shares of
our common stock. The Plan Administrator will pay
the distributions relating to the remaining shares
of common stock to you in cash. Cash distributions
in excess of $25,000 may be reinvested only with
our permission.
Optional Cash Payments Only: You will continue to
---------------------------
receive cash distributions on shares of common
stock registered in your name in the usual manner.
You may make optional cash payments to invest in
additional shares of our common stock, subject to
monthly minimums and maximums.
You may change your investment options at any time
by requesting a new authorization form from the
Plan Administrator and returning it to the Plan
Administrator.
Distributions paid on all shares acquired under
and held in the Plan will be automatically
reinvested.
OPTIONAL CASH PAYMENTS .... Each optional cash payment is subject to a minimum
per month purchase limit of $250 and a maximum per
month purchase limit of $5,000. Optional cash
payments in excess of $5,000 require our prior
approval. We may establish for any pricing period
a threshold price applicable only to the
investment of optional cash payments that exceed
$5,000. A threshold price will only be established
when shares of common stock will be purchased in
connection with a new issuance of shares by us. A
pricing period is a period of twelve consecutive
trading days each month specified in advance by
us.
Each month, at least three business days prior to
the applicable record date, we may establish a
discount between 0% and 5% from the market price
applicable to optional cash payments. The discount
may vary each month but once established will
apply uniformly to all optional cash payments made
during that month. The discount applies only to
the issuance of new shares of common stock by us
under optional cash payments and does not apply to
open market purchases made with optional cash
payments or the reinvestment of distributions.
INVESTMENT DATE............ With respect to distribution reinvestment:
(x) the investment date for shares of common stock
newly issued by us will be the distribution
payment date; and
(y) the investment date for shares of common stock
purchased in the open market will be no later than
ten business days after the distribution payment
date.
With respect to optional cash payments:
(x) the investment date for new shares of common
stock issued by us and relating to optional cash
payments of $5,000 or less will be the last day of
a pricing period;
(y) the investment date for shares of common stock
newly issued by us and relating to an optional
cash payment of more than $5,000 that is made with
our approval will be each day in a pricing period
on which the New York Stock Exchange is open for
business. On each such day, 1/12 of your optional
cash payment in each month will be invested. When
the price on that date is less than the threshold
price, if any, the corresponding portion of your
optional cash payment will be returned to you; and
(z) the investment date for open market purchases
will be no later than 30 days from the applicable
record date for the month.
2
PRICE...................... For reinvested distributions:
(x) the price per share of common stock newly
issued by us will be 100% (subject to change) of
the average of the high and low sales prices,
computed to three decimal places, of the shares of
common stock traded on the New York Stock Exchange
on the investment date; and
(y) the price per share of common stock acquired
through open market purchases will be the weighted
average of the actual prices paid, computed to
three decimal places, for all of the shares of
common stock purchased by the Plan Administrator
with all participants' reinvested distributions
for the related quarter. Additionally, you will be
charged a pro rata portion of any brokerage
commissions or other fees or charges paid by the
Plan Administrator in connection with such open
market purchases.
For optional cash payments:
(x) the price per share of the common stock newly
issued by us will be 100% less the discount for
such month, if any, of the average of the daily
high and low sale prices, computed to three
decimal places, of the shares of common stock as
reported on the New York Stock Exchange for the
day on which trades in the shares of common stock
are reported on the New York Stock Exchange
relating to each investment date. For optional
cash payments in excess of $5,000 that we consent
to, if the threshold price is not met for a
trading day no investment will be made on that
trading day and the corresponding portion of the
optional cash payment will be returned to you; and
(y) the price per share of common stock acquired
through open market purchases will be 100%
(subject to change) of the weighted average of the
actual prices paid, computed to three decimal
places, for all of the shares of common stock
purchased by the Plan Administrator with all
participants' optional cash payments for the
related month. Additionally, you will be charged a
pro rata portion of any brokerage commissions or
other fees or charges paid by the Plan
Administrator in connection with such open market
purchases.
EXPENSES................... With respect to shares of common stock purchased
directly from us from reinvested distributions or
optional cash payments, we will pay expenses
incurred in connection with such purchases. With
respect to shares of common stock purchased on the
open market with reinvested distributions or
optional cash payments, you will have to pay
brokerage fees or commissions which will be first
deducted before determining the number of shares
to be purchased.
NO INTEREST PENDING
INVESTMENT................. No interest will be paid on cash distributions or
optional cash payments pending investment or
reinvestment under the terms of the Plan.
3
WITHDRAWAL ................. You may withdraw from the Plan with respect to all
or a portion of the shares held in your Plan
account at any time by notifying the Plan
Administrator in writing.
NUMBER OF SHARES OFFERED ... Initially, 25,000,000 shares of common stock are
authorized to be issued and registered under the
Securities Act for offering under the Plan.
Because we expect to continue the Plan
indefinitely, we expect to authorize for issuance
and register under the Securities Act additional
shares from time to time as necessary for purposes
of the Plan.
4
RISK FACTORS
Before you decide to participate in the Plan and invest in shares
of our common stock, you should be aware of the following material risks in
making such an investment. You should consider carefully these risk factors
together with all of the information included or incorporated by reference in
this prospectus before you decide to participate in the Plan and purchase shares
of common stock.
Risk Factors Related to an Investment in Us through the Plan
. You will not know the price at which you will be purchasing
shares under the Plan until several days after you have made an
investment decision.
. Between the time that you decide to purchase shares through the
Plan and the time of actual purchase, the price of our shares of
common stock may fluctuate, or other information may become
available to you that would affect your investment decision.
Accordingly, you bear the risk of buying shares through the Plan
at prices higher than you would otherwise be willing to pay, or
under circumstances in which you would otherwise not invest in
shares of our common stock.
. The price of the shares of common stock may decline between the
time you decide to sell shares of common stock in your Plan
account and the time that your shares are sold.
. If you decide to sell these shares, you may request the Plan
Administrator either to sell your shares or to issue a
certificate to you so that a broker may sell your shares which
may take several days. If the market price of shares of our
common stock declines during that time, you will have lost the
opportunity to sell your shares at such higher price.
. If you request the Plan Administrator to sell the shares held in
your Plan account, you will not be able to direct the time or
price at which your shares are sold. Although the Plan
Administrator will attempt in good-faith to obtain the best price
for you without delaying the sale of your shares, we cannot
assure you that the Plan Administrator will be able to sell your
shares at the highest possible price. Moreover, the Plan
Administrator may sell your shares at a price that is lower than
the price at which you would otherwise prefer to sell your
shares.
Risk Factors Related to an Investment in Us Generally
In addition to the risks relating to an investment in us through
the Plan, there are additional material risks related to an investment in us
generally. Those material risk factors are listed below.
BECAUSE KINDRED HEALTHCARE, INC. (WHICH WAS FORMERLY KNOWN AS VENCOR, INC.) IS
THE PRIMARY SOURCE OF OUR RENTAL REVENUES, KINDRED'S INABILITY OR UNWILLINGNESS
TO SATISFY ITS OBLIGATIONS UNDER THE FOUR AMENDED AND RESTATED LEASE AGREEMENTS
WOULD SIGNIFICANTLY HARM US AND OUR ABILITY TO SERVICE OUR INDEBTEDNESS AND
OTHER OBLIGATIONS AND TO MAKE DISTRIBUTIONS TO OUR STOCKHOLDERS AS REQUIRED TO
CONTINUE TO QUALIFY AS A REIT.
We lease substantially all our properties to Kindred and,
therefore, Kindred is the primary source of our rental revenues, accounting for
approximately 98.6% (98.4%, net of write-offs) of our rental revenues in 2000.
Kindred filed for protection under chapter 11 of title 11 of the United States
Code on September 13, 1999 and emerged from bankruptcy on April 20, 2001. Any
failure by Kindred to conduct its operations effectively could significantly
hurt us and our ability to service our indebtedness and other obligations and to
make distributions to our stockholders as required to continue to qualify as a
REIT. We cannot assure you that Kindred will have sufficient assets, income and
access to financing to enable it to satisfy its obligations under the four
amended and restated lease agreements dated April 20, 2001 between us and
Kindred or that Kindred will perform its obligations
5
under the amended master leases. One of Kindred's obligations under the amended
master leases is to obtain and maintain adequate insurance to cover the leased
properties. We believe that currently such leased properties are adequately
covered by insurance. However, we cannot assure you that Kindred will continue
to honor its obligations in connection with maintaining adequate insurance
coverage for the leased properties. Since the amended master leases are
structured as triple-net leases under which Kindred is responsible for all or
substantially all taxes, maintenance and improvements and repair expenses
required in connection with the leased properties, the inability or
unwillingness of Kindred to satisfy its obligations under the amended master
leases would significantly harm us and our ability to service our indebtedness
and other obligations and to make distributions to our stockholders as required
to continue to qualify as a REIT.
DUE TO OUR DEPENDENCE ON KINDRED'S RENTAL PAYMENTS AS THE PRIMARY SOURCE OF OUR
RENTAL REVENUES, WE MAY BE NEGATIVELY AFFECTED BY ENFORCING OUR RIGHTS UNDER THE
AMENDED MASTER LEASES OR BY TERMINATING AN AMENDED MASTER LEASE.
If Kindred fails to comply with the terms of an amended master
lease or to comply with applicable health care regulations and, in either case,
Kindred or its lenders fail to cure such default within the specified cure
period, we may have to find another lessee/operator for the properties covered
by one or all of the amended master leases. While we are attempting to locate
one or more lessee/operators there could be a decrease or cessation of rental
payments by Kindred. We cannot assure you that we will be able to locate another
suitable lessee/operator or that if we are successful in locating such an
operator, that the rental payments from the new operator would not be
significantly less than the existing rental payments. Our ability to locate
another suitable lessee/operator may be significantly delayed or limited by
various state licensing, receivership, certificate-of-need or other laws, as
well as by Medicare and Medicaid change of ownership rules.
KINDRED MAY NOT PERFORM THE OBLIGATIONS IT ASSUMED IN THE 1998 SPIN OFF RELATING
TO INDEMNIFICATION OF US AND THE ASSUMPTION OF THE DEFENSE OF CERTAIN CLAIMS.
In connection with our 1998 spin off when we separated into two
publicly held corporations, Kindred assumed and agreed to indemnify us for all
losses, including costs and expenses, resulting from future claims and all
liabilities that may arise out of the ownership or operation of the health care
operations either before or after the date of the 1998 spin off. At that time,
Kindred also agreed to assume the defense, on our behalf, of any claims that
were pending at the time of the 1998 spin off and that arose out of the
ownership or operation of the health care operations or were asserted after the
1998 spin off and that arise out of the ownership and operation of the health
care operations or any of the assets or liabilities transferred to Kindred in
connection with the 1998 spin off. Kindred also agreed to indemnify us for any
fees, costs, expenses and liabilities arising out of these operations. We cannot
assure you that Kindred will have sufficient assets, income and access to
financing to enable it to satisfy its obligations incurred in connection with
the 1998 spin off or that Kindred will continue to honor its obligations
incurred in connection with the 1998 spin off. If Kindred does not satisfy or
otherwise honor the obligations under these arrangements, then we may be liable
for the payment or performance of such obligations and may have to assume the
defense of such claims. The failure of Kindred to perform these obligations
could significantly harm us and our ability to service our indebtedness and
other obligations and to make distributions to our stockholders as required to
continue to qualify as a REIT.
ANY SIGNIFICANT DECREASE IN THE VALUE OF THE 1,415,200 SHARES OF KINDRED COMMON
STOCK THAT WE RECEIVED AS PART OF KINDRED'S FINAL PLAN OF REORGANIZATION, AS
WELL AS THE LIMITATIONS ON OUR ABILITY TO SELL, TRANSFER OR OTHERWISE DISPOSE OF
SUCH SHARES OF KINDRED STOCK, COULD SIGNIFICANTLY HARM US AND OUR ABILITY TO
SERVICE OUR INDEBTEDNESS AND OTHER OBLIGATIONS AND TO MAKE DISTRIBUTIONS TO OUR
STOCKHOLDERS AS REQUIRED TO CONTINUE TO QUALIFY AS A REIT.
For purposes of calculating 2001 taxable income, the value of the
Kindred stock on the date of receipt constitutes income. Under REIT rules, we
must distribute 95% (90% for the taxable years beginning after December 31,
2000) of our net taxable income in order to maintain our qualification as a
REIT. To the extent that the value of the stock decreases, a distribution of the
stock itself would not satisfy such distribution requirement and we would have
to find other consideration to satisfy the distribution requirement. In
addition, our ability to sell, transfer or otherwise dispose of the Kindred
stock is subject to compliance with the registration requirements of the
Securities Act and certain restrictions contained in the registration rights
agreement we entered into with Kindred
6
and certain other holders of Kindred's securities. To the extent such legal and
contractual restrictions limit our ability to sell, transfer or otherwise
dispose of the Kindred stock, we would have to find other consideration to
satisfy the distribution requirement. In either case, were we required to use
cash on hand, this may impact our ability to meet our debt service and other
obligations. For additional information on the risks of Kindred's stock, please
see our risk factors relating to (i) jeopardizing our REIT status due to the
value of our Kindred stock and (ii) not having sufficient cash to met the
distribution requirement.
WE ARE HIGHLY LEVERAGED, AND IN SOME CIRCUMSTANCES WE COULD BE REQUIRED TO
OBTAIN ADDITIONAL CREDIT OR RAISE EQUITY IN ORDER TO MEET OUR DEBT PAYMENTS AND
OBLIGATIONS UNDER THE SETTLEMENT WE ENTERED INTO WITH KINDRED AND THE UNITED
STATES DEPARTMENT OF JUSTICE. HOWEVER, WE CANNOT ASSURE YOU THAT WE WOULD BE
ABLE TO OBTAIN ADDITIONAL CREDIT OR RAISE EQUITY IN THE FIRST INSTANCE OR THAT
WE WOULD BE ABLE TO DO SO ON TERMS THAT WE FIND ACCEPTABLE.
We are highly leveraged and a substantial portion of our cash
flow from operations is dedicated to the payment of principal and interest on
indebtedness and the obligations under the settlement we entered into with
Kindred and the United States Department of Justice. We depend on lease payments
from Kindred to meet our interest expense and principal repayment obligations
under our current debt facility and our obligations under the United States
settlement. If our cash flow from operations is not sufficient to meet these
payments and obligations, we would be required to obtain additional borrowings
or raise equity to meet them. Our ability to incur additional indebtedness is
restricted by the terms of our credit facility. In addition, adverse economic
conditions could cause the terms on which we can obtain additional borrowings to
become unfavorable. In such circumstances, we may be required to raise equity in
the capital markets or liquidate one or more investments in properties at times
that may not permit realization of the maximum return on the investments and
that could result in adverse tax consequences to us. In addition, certain health
care regulations may constrain our ability to sell assets. We cannot assure you
that we will be able to meet our debt service obligations or our obligations
under the United States settlement and the failure to do so could significantly
harm us and our ability to service our indebtedness and other obligations to our
stockholders as required to continue to qualify as a REIT.
WE ARE DEPENDENT ON THE ABILITY OF KINDRED, AS TRIPLE-NET LESSEE UNDER THE
AMENDED MASTER LEASES, AND OUR OTHER TENANTS TO MANAGE AND MAINTAIN OUR LEASED
PROPERTIES.
We may be unable to take action if we believe Kindred or one of
our other lessees are operating one of our leased properties inefficiently or in
a manner adverse to our interests. The failure of Kindred to make three
consecutive rent payments will trigger an event of default under our credit
facility. If there is an event of default under an amended master lease and we
repossesses the property or property under an amended master lease is otherwise
returned to us, we would have to locate a suitable lessee/operator for the
property. We cannot assure you that we will be able to locate another suitable
lessee/operator or that if we are successful in locating such an operator, that
the rental payments from the new operator would not be significantly less than
the existing rental payments. In addition, our ability to locate another
suitable lessee/operator may be significantly delayed or limited by various
state licensing, receivership, certificate-of-need or other laws, as well as
Medicare and Medicaid change of ownership rules.
THE ABILITY OF KINDRED AND OUR OTHER TENANTS AND OPERATORS TO GENERATE PROFITS
AND PAY RENT UNDER THEIR LEASES MAY BE ADVERSELY AFFECTED BY THE RISKS
ASSOCIATED WITH THE HEAVILY REGULATED HEALTH CARE INDUSTRY.
The health care industry is subject to extensive federal, state
and local laws and regulations that affect the operators of our properties.
These include, but are not limited to, laws and regulations relating to
licensure, conduct of operations, ownership of facilities, addition of
facilities, services, prices for services and billing for services. These laws
authorize periodic inspections and investigations. If not corrected,
deficiencies can result in sanctions that include loss of licensure to operate
and loss of rights to participate in the Medicare and Medicaid programs. In the
ordinary course of their businesses, our operators are subject regularly to
inquiries, investigations and audits by federal and state agencies that oversee
these laws and regulations.
Kindred and our other lessees derive a substantial portion of
their net operating revenues from third-party payors, including the Medicare and
Medicaid programs. Such programs are highly regulated and subject to frequent
and substantial changes. The Balanced Budget Act of 1997 made extensive changes
in the Medicare and
7
Medicaid programs and is intended to reduce the projected amount of increase in
Medicare payments by $115.0 billion and reduce the projected amount of increase
in Medicaid payments by $13.0 billion from 1998 through 2002. Although there has
been some payment relief under the Balanced Budget Refinement Act of 1999 and
the Medicare, Medicaid and SCHIP Benefits Improvement and Protection Act of
2000, the reductions under the Budget Act will likely continue to result in
reduced reimbursement for the operators of our properties relative to the period
prior to the effective date of the Budget Act, thereby adversely impacting the
operators' ability to satisfy their obligations, including payment of rent,
under the leases with us. In addition, private payors, including managed care
payors, increasingly are demanding discounted fee structures and the assumption
by health care providers of all or a portion of the financial risk of operating
a health care facility. Efforts to impose greater discounts and more stringent
cost controls by private payors are expected to continue. We cannot assure you
that adequate reimbursement levels will continue to be available for services to
be provided by Kindred and our other tenants which are currently being
reimbursed by Medicare, Medicaid or private payors. Changes in the regulatory
framework, including significant limits on the scope of services reimbursed and
on reimbursement rates and fees could have a material adverse effect on the
liquidity, financial condition and results of operations of Kindred and our
other lessees and their ability to make rental payments to us, which, in turn,
could harm us and our ability to service our indebtedness and other obligations
to our stockholders as required to continue to qualify as a REIT.
In the event that any operator of our properties fails to make
rental payments to us or to comply with the applicable health care regulations
and, in either case, such operators or their lenders fail to cure the default
prior to the expiration of the applicable cure period, our ability to evict that
operator and substitute another operator or operators may be materially delayed
or limited by bankruptcy rules and by various state licensing, receivership, or
other laws, as well as by Medicare and Medicaid change-of-ownership rules. Such
delays and limitations could have a material adverse effect on our ability to
collect rent, to obtain possession of leased properties, or otherwise to
exercise remedies for tenant default. In addition, we may also incur substantial
additional expenses in connection with any such licensing, receivership or
change-of-ownership proceedings.
SIGNIFICANT LEGAL ACTIONS, PARTICULARLY IN THE STATE OF FLORIDA, COULD SUBJECT
KINDRED TO INCREASED OPERATING COSTS AND SUBSTANTIAL UNINSURED LIABILITIES,
WHICH COULD MATERIALLY AND ADVERSELY AFFECT KINDRED'S LIQUIDITY, FINANCIAL
CONDITION AND RESULTS OF OPERATION.
Kindred has experienced substantial increases in both the number
and size of patient care liability claims in recent years. In addition to large
compensatory claims, plaintiffs' attorneys increasingly are seeking significant
punitive damages and attorney's fees. In the State of Florida, where Kindred
operates 20 nursing centers and seven hospitals, general liability and
professional liability costs for the long-term care industry have become
increasingly expensive and difficult to estimate.
Kindred insures its professional liability risks primarily
through a wholly-owned, limited purpose insurance company. The limited purpose
insurance company insures initial losses up to specified coverage levels per
occurrence and in the aggregate. Coverage for losses in excess of those levels
are maintained through unaffiliated commercial insurance carriers. Effective,
November 30, 2000, the limited purpose insurance company insures all claims
arising in Florida up to a per occurrence limit without the benefit of any
aggregate coverage limit through unaffiliated commercial insurance carriers.
Kindred maintains general liability insurance and professional malpractice
liability insurance in amounts and with deductibles which Kindred management has
indicated that it believes are sufficient for its operations. However, its
insurance coverage might not cover all claims against Kindred or continue to be
available to Kindred at a reasonable cost. If Kindred is unable to maintain
adequate insurance coverage or are required to pay punitive damages, Kindred may
be exposed to substantial liabilities.
Kindred may also be sued under a federal whistleblower statute
designed to combat fraud and abuse in the health care industry. These lawsuits
can involve significant monetary and award bounties to private plaintiffs who
successfully bring these suits. These lawsuits brought against Kindred combined
with increased operating costs and substantial uninsured liabilities could have
a material adverse effect on the liquidity, financial condition and results of
operation of Kindred and its ability to make rental payments to us, which, in
turn, could harm us and our ability to service our indebtedness and other
obligations to our stockholders as required to continue to qualify as a REIT.
8
IF WE WERE TO IMPLEMENT OUR ORIGINAL BUSINESS STRATEGY, WE MAY ENCOUNTER CERTAIN
RISKS AND FINANCING CONSTRAINTS.
At the time of the 1998 spin off, our business strategy was to
diversify ourselves from our Kindred tenant concentration. However, past and
current conditions including the Kindred bankruptcy, have prevented us from
implementing this strategy. Also, the terms of our credit facility significantly
limit our ability to acquire or swap assets from or with a third party.
If we obtain the contractual ability to acquire or swap assets
under the terms of our credit facility, and provided Kindred's financial
condition remains stabilized, we intend to re-implement our original business
strategy, assuming we have the financial flexibility at that time to do so.
Accordingly, if we do begin to pursue acquisitions or development of additional
health care or other properties, we may encounter certain risks and financing
constraints. Acquisitions entail general investment risk associated with any
real estate investments, including risks that investments will fail to perform
in accordance with expectations, the estimates of the cost of improvements
necessary for acquired properties will prove inaccurate, and the inability of
the lessee/operator to meet performance expectations. We do not presently
contemplate any development projects, although if we were to pursue new
development projects, such projects would be subject to numerous risks,
including risks of construction delays or cost overruns that may increase
project costs, new project commencement risks such as receipt of zoning,
occupancy and other required governmental approvals and permits and the
incurrence of development costs in connection with projects that are not pursued
to completion. The fact that we must distribute 95% (90% for taxable years
beginning after December 31, 2000) of our net taxable income in order to
maintain our qualification as a REIT may limit our ability to rely upon rental
payments from our properties or subsequently acquired properties to finance
acquisitions or new developments. As a result, if debt or equity financing is
not available on acceptable terms, further acquisitions or development
activities might be curtailed or cash available for distribution would be
adversely impaired.
We would compete for investment opportunities with entities that
have substantially greater financial resources than we have. Our ability to
compete successfully for such opportunities is affected by many factors,
including the cost to us of obtaining debt and equity capital at rates
comparable to or better than our competitors. Competition generally may reduce
the number of suitable investment opportunities available to us and increase the
bargaining power of property owners seeking to sell, thereby impeding the
implementation of our business strategy.
WE MAY JEOPARDIZE OUR REIT STATUS IF WE VIOLATE THE 10% SECURITIES TEST OR THE
5% ASSET TEST BECAUSE OF THE VALUE OF OUR SHARES OF KINDRED COMMON STOCK.
We lease substantially all of our properties to Kindred and
Kindred is the primary source of our rental revenues. Under Kindred's final plan
of reorganization, we received 1,498,500 shares of Kindred common stock on April
20, 2001 as future rent. We sold 83,300 of those shares of Kindred common stock
on November 14, 2001 through an underwritten offering. Consequently, we
currently own 1,415,200 shares of Kindred common stock. If we violate the 10%
securities test described in our annual report on Form 10-K, Kindred would be a
related party tenant and consequently, the rents from Kindred would not qualify
as "rents from real property" under the Internal Revenue Code. As a result, we
would lose our REIT status because we likely would not be able to satisfy either
the 75% or the 95% gross income test described in our annual report on Form
10-K.
In addition, if the value of our shares of Kindred common stock
exceeds 5% of the value of our total assets at the end of the quarter in which
we receive Kindred common stock or at the end of any subsequent quarter (except
where such excess in subsequent quarters is caused by value fluctuations of our
various investments and not by our new acquisitions), we would violate the 5%
asset test described in our annual report on Form 10-K. Consequently, we would
lose our REIT status unless we timely cured the violation under the applicable
provisions of the Internal Revenue Code. We cannot assure you that relief for
such a violation would be available in all circumstances.
9
WE MAY NOT HAVE SUFFICIENT CASH OR OTHER LIQUID ASSETS TO MEET THE 95% (90% FOR
THE TAXABLE YEARS BEGINNING AFTER DECEMBER 31, 2000) DISTRIBUTION REQUIREMENT
BECAUSE OF TIMING ISSUES AND OTHER CASH NEEDS AND MAY THEREFORE NEED TO ENGAGE
IN SPECIFIC TRANSACTIONS IN ORDER TO MAINTAIN OUR REIT QUALIFICATION.
To comply with the 95% (90% for taxable years beginning after December
31, 2000) distribution requirement applicable to REITs and to avoid the
nondeductible excise tax, we must make distributions to our stockholders.
Although, we anticipate that we generally will have sufficient cash or
liquid assets to enable us to satisfy the distribution requirement, it is
possible that from time to time, we may not have sufficient cash or other liquid
assets to meet the 95% (90% for taxable years beginning after December 31, 2000)
distribution requirement or to distribute such greater amount as may be
necessary to avoid income and excise taxation. This may be due to the value of
our shares of Kindred common stock, which we have determined to be $18.2 million
and will be included in taxable income in the year we receive them. However, we
may not be able to distribute such shares in the absence of registration under
the Securities Act or if certain restrictions contained in the registration
rights agreement we entered into with Kindred and certain other holders of
Kindred's securities apply at the time we wish to distribute such shares and may
need to locate other sources of cash to pay the allocated distribution. Another
reason that we may not have sufficient cash or other liquid assets to meet our
distribution requirement relates to the timing differences between the actual
receipt of income and actual payment of deductible expenses on the one hand and
the inclusion of that income and deduction of those expenses in arriving at our
taxable income. In addition, nondeductible expenses such as principal
amortization or repayments or capital expenditures in excess of noncash
deductions may also cause us to fail to have sufficient cash or liquid assets to
enable us to satisfy the 95% (90% for taxable years beginning after December 31,
2000) distribution requirement.
In the event that timing differences or other cash needs occur, we may
find it necessary to borrow funds, issue equity securities (we cannot assure you
that we will be able to do so), pay taxable stock dividends if possible,
distribute other property or securities (including Kindred common stock) or
engage in a transaction intended to enable us to meet the REIT distribution
requirements. The terms of our credit facility restrict our ability to engage in
some of these transactions. In addition, any of these transactions would likely
require the consent of the required lenders under the credit facility. We cannot
assure you that we can obtain the consent of the required lenders. In addition,
the failure of Kindred to make rental payments under the amended master leases
would impair significantly our ability to make distributions. In addition,
registration requirements under the Securities Act, the rules and regulations of
the New York Stock Exchange and the Commission and other applicable laws, rules
and regulations restrict our ability to engage in some of these transactions.
Consequently, we cannot assure you that we will be able to make distributions at
the required distribution rate or any other rate. Although we currently intend
to continue to qualify as a REIT for the year ending December 31, 2001 and
subsequent years, it is possible that economic, market, legal, tax or other
considerations may cause us to fail or elect not to continue to qualify as a
REIT.
EVEN THOUGH ATRIA HAS ASSUMED AND AGREED TO REPAY INDEBTEDNESS EVIDENCED BY
BONDS THAT WE ISSUED UNDER OUR SPIN OFF OF OUR ASSISTED LIVING OPERATIONS, WE
MAY STILL BE LIABLE FOR THE INDEBTEDNESS IF ATRIA CANNOT OR DOES NOT HONOR ITS
OBLIGATIONS.
We have issued bonds to residents of an assisted living facility that
is owned by us, and leased to and operated by Atria, Inc. Proceeds from the
bonds are paid to and utilized by Atria. The obligation to repay the bonds is
secured by a mortgage and trust indenture that encumbers (among other property)
the assisted living facility. Currently, the bonds evidence an aggregate
principal amount of indebtedness of approximately $34.0 million. In connection
with our spin off of our assisted living operations and related assets and
liabilities to Atria in 1996, Atria assumed and agreed to repay the indebtedness
and has agreed to indemnify and hold us harmless from and against all amounts we
may be obligated to pay under the mortgage and trust indenture, including the
obligation to repay the bonds. We may remain the primary obligor under the bonds
and the mortgage and trust indenture. If Atria is unable to or does not satisfy
these obligations, we may be liable for these obligations. We cannot assure you
that Atria will have sufficient means to enable it to satisfy its obligations or
will continue to honor those obligations under the mortgage and trust indenture
and the bonds. However, we believe that Atria's failure to satisfy its
obligations would allow us to terminate the lease between Atria and us,
repossess the property, and exercise all other available remedies under the
lease between Atria and us. Our payment or performance of these obligations
could
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significantly harm us and our ability to service our indebtedness and other
obligations to our stockholders as required to continue to qualify as a REIT. We
are currently engaged in efforts to have ourselves released from the liability
under the bonds and the mortgage and trust indenture, or to cause Atria to
provide additional collateral to secure Atria's obligations regarding the bonds.
We cannot assure you that we will be successful in our attempts to either be
released from this liability or to procure such additional security.
AN UNPAID CREDITOR OR REPRESENTATIVE OF CREDITORS COULD BRING A LAWSUIT AGAINST
US ALLEGING FRAUDULENT CONVEYANCE OR AN UNLAWFUL DIVIDEND REGARDING THE 1998
SPIN OFF AND A COURT COULD RULE THAT WE HAD VIOLATED FRAUDULENT CONVEYANCE LAWS.
Our 1998 spin off into two publicly held corporations, including the
simultaneous distribution of the Kindred common stock to our stockholders, could
be subject to review under various federal and state laws and could lead to
claims being asserted against us, directly or indirectly, alleging that the 1998
spin off involved a fraudulent conveyance, an unlawful dividend,
misrepresentation or other conduct giving rise to liability on the part of the
Company. If a court were to conclude that the 1998 spin off was improper or
otherwise violated applicable law, it could, among other things, order that the
holders of the stock return the value of the stock and any dividends paid
thereon and invalidate, in whole or in part, the 1998 spin off. We believe that
we and each of our subsidiaries were generally solvent at the time of the 1998
spin off, were able to repay our debts as they matured following the 1998 spin
off and had sufficient capital to carry on our respective businesses. We also
believe that the 1998 spin off was consummated entirely in compliance with
Delaware law. We cannot be certain that a court would reach the same
conclusions.
WE MAY STILL BE SUBJECT TO CORPORATE LEVEL TAXES.
Following our REIT election, we are considered to be a former C
corporation for income tax purposes. Therefore, we potentially remain subject to
corporate level taxes for any asset dispositions occurring between January 1,
1999 and December 31, 2008. The Internal Revenue Service is currently reviewing
our federal income tax returns for tax years ended December 31, 1997 and 1998
(which we then operated under the name Vencor) and may also review our federal
income tax returns for subsequent years. We cannot assure you as to the ultimate
outcome of these matters or whether that outcome will significantly harm us and
our ability to service our indebtedness and other obligations and to make
distributions to our stockholders as required to continue to qualify as a REIT.
However, if there are any resulting tax liabilities for the tax years
ended December 31, 1997 and 1998, we intend to use the net operating loss
carryforwards, if any, (including the NOL carryforwards that were utilized to
offset our federal income tax liability for 1999 and 2000) to satisfy those tax
liabilities. If the tax liabilities exceed the amount of NOL carryforwards, then
we will use the escrowed amounts under the tax refund escrow agreement and first
amendment to tax allocation agreement dated April 20, 2001 to satisfy the
remaining tax liabilities. To the extent that NOL carryforwards and escrowed
amounts are not sufficient to satisfy the tax liabilities, Kindred has
indemnified us for specific tax liabilities and Kindred has assumed these
obligations under the tax refund escrow agreement. We cannot assure you that the
NOL carryforwards and the escrowed amounts will be sufficient to satisfy these
liabilities, that Kindred has any obligation to indemnify us for particular tax
liabilities, that Kindred will have sufficient financial means to enable it to
satisfy its indemnity obligations under the tax refund escrow agreement or that
Kindred will continue to honor its indemnification obligations.
OUR RENTAL REVENUES MAY DECREASE IF THE TERMS OF THE LEASES ON OUR FACILITIES
EXPIRE AND WE ARE UNABLE EITHER TO LOCATE A SATISFACTORY TENANT OR TO RELET THE
FACILITIES ON THE SAME OR BETTER TERMS.
When the term of the leases on our facilities expire, if the then
current tenants do not renew the lease or a renewal term does not exist, then we
will have to relet the facility to the tenant or locate a substitute tenant.
There can be no assurance that we will be able to locate a satisfactory tenant
for the facilities or that we will be able to relet the facilities upon the same
or better terms. If we are unable to locate satisfactory tenants for our
facilities as our leases expire or if we are unable to lease the facilities on
the same or better terms, then our rental revenues from the affected facilities
will decrease.
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OUR INTEREST RATE SWAP AGREEMENT MAY OBLIGATE US TO POST COLLATERAL WHICH COULD
NEGATIVELY IMPACT OUR LIQUIDITY AND ACCESS TO FINANCING.
The terms of our interest rate swap agreement require that we make a
cash payment or otherwise post collateral to the other party to the agreement if
the fair value loss to us exceeds specified threshold levels. Under the interest
rate swap agreement, if collateral must be posted, the amount of that collateral
must equal the difference between the fair value unrealized loss of the interest
rate swap agreement at the time of such determination and the threshold amount.
Our posting of collateral under the interest rate swap agreement, could
negatively impact our liquidity and access to financing. We cannot assure you
that we will have sufficient assets, income and access to financing to enable us
to post collateral if required to do so under the interest rate swap agreement.
Our failure to post collateral under the terms of the interest rate swap
agreement could significantly harm us and our ability to service our
indebtedness and other obligations to our stockholders as required to continue
to qualify as a REIT.
ANTI-TAKEOVER PROVISIONS COULD LIMIT OUR SHARE PRICE AND DELAY A CHANGE OF
MANAGEMENT.
Our Certificate of Incorporation and By-laws contain provisions that
could make it more difficult or even prevent a third party from acquiring us
without the approval of our incumbent Board of Directors. These provisions,
among other things:
. limit the right of stockholders to call special meetings of
stockholders;
. limit the right of stockholders to present proposals or nominate
directors for election at annual meetings of stockholders; and
. authorize our Board of Directors to issue preferred stock in one or
more series without any action on the part of stockholders.
If we experience a change in control, we could be required under the
terms of our credit facility to repurchase or repay the debt outstanding under
that facility.
These provisions could limit the price that investors might be willing
to pay in the future for shares of our common stock and significantly impede the
ability of the holders of the common stock to change management. In addition, we
have adopted a "poison pill" rights plan, which has anti-takeover effects. The
rights plan, if triggered, will cause substantial dilution to a person or group
that attempts to acquire us on terms not approved by the Board of Directors.
Provisions and agreements that inhibit or discourage takeover attempts could
reduce the market value of the common stock.
SALES OF A LARGE NUMBER OF SHARES OF OUR COMMON STOCK COULD DEPRESS OUR STOCK
PRICE.
The market price of our common stock could drop as a result of sales
of a large number of shares of common stock by us in the public market. The
perception that such sales may occur could have the same results. A drop in the
market price could adversely affect holders of the common stock and could also
harm our ability to raise additional capital by selling equity securities. We
have registered for public sale in the registration statement of which this
prospectus is a part 25,000,000 shares of common stock, and as of December 20,
2001, we had outstanding approximately 68,885,223 shares of common stock.
THE TRADING VALUE OF OUR COMMON STOCK MAY FLUCTUATE SIGNIFICANTLY.
Since our common stock has been publicly traded, the market price has
fluctuated significantly and may continue to do so in the future. Significant
fluctuations in the market price of the common stock may occur in response to
various factors and events, including, among other things:
12
. the ability and willingness of Kindred to continue to meet and honor
its obligations under the agreements that we and Kindred entered into
at the time of our 1998 spin off into two publicly held corporations;
. the ability and willingness of Kindred to continue to meet and honor
its obligations under the four amended and restated lease agreements;
. our ability to pay or refinance our debt as it matures or comes due;
. our ability to maintain our qualification as a REIT;
. the results of the Internal Revenue Service audit for the tax years
ended December 31, 1997 and 1998;
. the depth and liquidity of the trading market for the common stock;
. quarterly variations in actual or anticipated operating results of us
and of Kindred;
. changes in estimates by securities analysts;
. market conditions in the health care industry;
. change in the Medicaid or Medicare reimbursement rates;
. changes in interest rates;
. announcements and performance by competitors;
. regulatory actions; and
. general economic conditions.
FORWARD-LOOKING STATEMENTS
This prospectus includes forward-looking statements. All statements
regarding our and our subsidiaries' expected future financial position, results
of operations, cash flows, funds from operations, dividends and dividend plans,
financing plans, business strategy, budgets, projected costs, capital
expenditures, competitive positions, growth opportunities, expected lease
income, continued qualification as a real estate investment trust, plans and
objectives of management for future operations and statements that include words
such as "if", "anticipate," "believe," "plan," "estimate," "expect," "intend,"
"may," "could," "should," "will," and other similar expressions are
forward-looking statements. Such forward-looking statements are inherently
uncertain, and you should recognize that actual results may differ from our
expectations. We do not undertake any duty to update such forward-looking
statements.
Actual future results and trends for us may differ significantly
depending on a variety of factors discussed in this prospectus and elsewhere in
our filings with the Commission. Factors that may affect our plans or results
include, without limitation:
. the ability and willingness of Kindred to continue to meet and honor
its obligations under the spin agreements, including, without
limitation, the obligation to indemnify and defend us for all
litigation and other claims relating to the health care operations and
other assets and liabilities transferred to Kindred in our 1998 spin
off when we separated into two publicly held corporations;
13
. the ability of Kindred and our other operators to maintain the
financial strength and liquidity necessary to satisfy their respective
obligations and duties under the leases and other agreements with us,
and our existing credit agreements;
. our success in implementing our business strategy;
. the nature and extent of future competition;
. the extent of future health care reform and regulation, including cost
containment measures and changes in reimbursement policies and
procedures;
. increases in the cost of borrowing for us;
. the ability of our operators to deliver high quality care and to
attract patients;
. the results of litigation affecting us;
. changes in general economic conditions or economic conditions in the
markets in which we may, from time to time, compete;
. our ability to pay down, refinance, restructure, and extend our
indebtedness as it becomes due;
. the movement of interest rates and the resulting impact on the value
of our interest rate swap agreement and our ability to satisfy our
obligation to post cash collateral if required to do so under the
interest rate swap agreement;
. the ability and willingness of Atria Inc. to continue to meet and
honor its contractual arrangements with us and Ventas Realty entered
into in connection with our spin off of our assisted living facility
and related assets and liabilities to Atria in August 1996;
. our ability and willingness to maintain our qualification as a REIT
due to economic, market, legal, tax or other considerations;
. the outcome of the audit being conducted by the Internal Revenue
Service for the tax years ended December 31, 1997 and 1998;
. the final determination of our net taxable income for the tax year
ended December 31, 2001;
. the ability and willingness of our tenants to renew their leases with
us as the terms expire and our ability to relet our facilities on the
same or better terms if the leases are not renewed; and
. the value of our Kindred common stock and the limitations on our
ability to sell, transfer or otherwise dispose of the Kindred stock
arising out of the securities laws and the registration rights
agreement we entered into with Kindred and certain of the holders of
Kindred securities.
Many of such factors are beyond our control and our management's control. For a
discussion of these factors, see "Risk Factors" and our Annual Report on Form
10-K for the year ended December 31, 2000 filed with the Commission on April 16,
2001 and subsequent filings.
14
THE COMPANY
General
We are a Delaware corporation that elected to be taxed as a real
estate investment trust or REIT under the Internal Revenue Code of 1986, as
amended, beginning with the tax year ended December 31, 1999. We own or lease a
geographically diverse portfolio of health care related facilities, including
hospitals, nursing facilities and personal care facilities whose principal
tenants are health care related companies. We conduct substantially all of our
business through a wholly owned operating partnership, Ventas Realty, Limited
Partnership.
We were incorporated in Kentucky in 1983 as Vencare, Inc. and
commenced operations in 1985. We changed our name to Vencor Incorporated in 1989
and to Vencor, Inc. in 1993. From 1985 through April 30, 1998, we were engaged
in the business of owning, operating and acquiring health care facilities and
companies engaged in providing health care services. In May 1998, we effected a
spin off pursuant to which we were separated into two publicly held
corporations. A new corporation, subsequently named Vencor, Inc., which has
since been renamed Kindred Healthcare, Inc., was formed to operate the hospital,
nursing facility and ancillary services businesses. Under the terms of the spin
off, we distributed shares of common stock of Kindred to our stockholders of
record as of April 27, 1998. At such time, we also changed our name to Ventas,
Inc.
On September 13, 1999, Kindred filed for protection under chapter 11
of title 11 of the United States Code with the United States Bankruptcy Court
for the District of Delaware. On December 14, 2000, Kindred filed its fourth
amended plan of reorganization with the Bankruptcy Court (the "Fourth Amended
Plan"). We voted to accept the Fourth Amended Plan on March 1, 2001. A hearing
on the confirmation of the Fourth Amended Plan was held before the Bankruptcy
Court on March 1, 2001 (the "Confirmation Hearing"). The Fourth Amended Plan,
which was modified on the record of the Confirmation Hearing, was confirmed (as
confirmed, the "Final Plan") by an order of the Bankruptcy Court, which order
was entered on the docket on March 16, 2001. The Final Plan became effective on
April 20, 2001 and Kindred emerged from bankruptcy on that date.
Unless otherwise mentioned or unless the context requires otherwise,
all references in this prospectus to "we", "us", "our" or similar references of
the "Company" or "Ventas" mean Ventas, Inc. and its subsidiaries.
THE PLAN
The following questions and answers explain and constitute the Plan.
Stockholders who do not participate in the Plan will receive cash distributions,
as declared, and paid in the usual manner.
PURPOSE
1. What is the purpose of the Plan?
The primary purpose of the Plan is to provide eligible holders of
shares of common stock and interested new investors with a convenient and simple
method of increasing their investment in us by investing cash distributions
and/or optional cash payments in additional shares of common stock without
payment of any brokerage commission or service charge, to the extent shares are
purchased directly from us. See Question 5 for a description of the holders who
are eligible to participate in the Plan. We may also use the Plan to raise
additional capital through the sale each month of a portion of the shares
available for issuance under the Plan to owners of shares and interested new
investors (including brokers or dealers) who, in connection with any resales of
such shares, may be deemed to be underwriters. Our ability to waive limitations
applicable to the amounts which participants may invest pursuant to the Plan's
optional cash payment feature will allow for these sales.
15
See Question 17 for information concerning limitations applicable to
optional cash payments and certain of the factors that we consider when granting
waivers. Under the Plan, if you purchase shares directly from us, the net
proceeds of the sale of those shares will be used to repay indebtedness under
the terms of our Amended and Restated Credit Security Guaranty and Pledge
Agreement dated January 31, 2000 between us and the lenders party thereto, for
the repayment of any other indebtedness and for general corporate purposes. The
Plan is intended for the benefit of our investors and not for individuals or
investors who engage in transactions which may cause aberrations in the price or
trading volume of shares of common stock. From time to time, financial
intermediaries may engage in positioning transactions in order to benefit from
the discount from the market price of the shares of common stock acquired
through the reinvestment of distributions or optional cash payments under the
Plan. Those transactions may cause fluctuations in the price or trading volume
of the shares of common stock. We reserve the right to modify, suspend or
terminate participation in the Plan by otherwise eligible holders of shares of
common stock or interested new investors in order to eliminate practices which
are, in our sole discretion, not consistent with the purposes or operation of
the Plan or which adversely affect the price of the shares of common stock.
OPTIONS AVAILABLE TO YOU
2. What options are available under the Plan?
Eligible holders of common stock and other interested investors may
elect to participate in the Plan. You may have cash distributions paid on all or
a portion of your shares automatically reinvested in additional shares of common
stock. However, distributions in excess of $25,000 may be reinvested only with
our permission. Subject to the availability of shares of common stock registered
for issuance under the Plan, there is no minimum limitation on the amount of
distributions you may reinvest under the distribution reinvestment feature of
the Plan.
Each month, you may also elect to invest optional cash payments in
additional shares of common stock, subject to a minimum per month purchase limit
of $250 and a maximum per month purchase limit of $5,000, subject to waiver. See
Question 17 for information concerning limitations applicable to optional cash
payments and the availability of waivers with respect to such limitations. You
may make optional cash payments each month even if you do not reinvest
distributions.
BENEFITS AND DISADVANTAGES
3. What are the benefits and disadvantages of the Plan?
Benefits:
. The Plan provides you with the opportunity to automatically
reinvest cash distributions paid on all or a portion of your
common stock in additional shares of common stock without payment
of any brokerage commission or service charge, but only to the
extent shares are purchased directly from us.
. Whether you are an eligible stockholder or a new investor, the
Plan provides you with the opportunity to make monthly
investments of optional cash payments, subject to minimum and
maximum amounts, for the purchase of additional shares of common
stock. If you purchase the shares of common stock directly from
us, you will not pay any brokerage commission or service charge.
At our discretion, purchases of shares directly from us may be
made at a discount to the market price.
. For distributions in excess of $25,000, all cash distributions
paid on your shares can be fully invested in additional shares of
common stock, subject to the availability of shares of common
stock registered for issuance under the Plan and our written
permission. Distributions paid on all full and fractional shares
held in the Plan account will be automatically reinvested.
. The Plan Administrator, at no charge to you, provides for the
safekeeping of shares of common stock credited to your Plan
account.
16
. Periodic statements reflecting all current activity, including
purchases, sales and latest balances, will simplify your record
keeping. See Question 22 for information concerning reports to
you.
Disadvantages:
. The availability of a market discount is at our discretion, as
determined from time to time. Therefore, you may not be able to
depend on the availability of a market discount regarding shares
acquired under the Plan. The granting of a discount for one month
will not insure the availability of a discount or the same
discount in future months. Each month, we may lower or eliminate
the discount without prior notice to you. We may also, without
prior notice to you, change our determination as to whether
common stock will be purchased by the Plan Administrator directly
from us or in the open market.
. Neither we nor the Plan Administrator will pay interest on
distributions or optional cash payments held pending reinvestment
or investment. See Question 11. In addition, for optional cash
payments in excess of $5,000, if the threshold price, if any, is
not met for any trading day during the related pricing period,
those optional cash payments in excess of $5,000 may be subject
to return to you without interest. See Question 17.
. With respect to optional cash payments, the actual number of
shares to be issued to your Plan account will not be determined
until after the end of the relevant pricing period. Therefore,
during the pricing period you will not know the actual number of
shares you have purchased.
. With respect to optional cash payments, the market price may
exceed the price at which shares are trading on the investment
date when the shares are issued.
. Because optional cash payments must be received by the Plan
Administrator prior to the related pricing period, such payments
may be exposed to changes in market conditions for a longer
period of time than in the case of typical secondary market
transactions. In addition, optional cash payments once received
by the Plan Administrator will not be returned to you unless you
send a written request to the Plan Administrator at least five
business days prior to the record date for the investment date
with respect to that payment. See Questions 18 and 20.
. There is a nominal fee per transaction, a brokerage commission
and applicable share transfer taxes on resales that you may be
required to pay to the Plan Administrator if you request that the
Plan Administrator sell some or all of your shares of common
stock credited to your Plan account. See Questions 21 and 27.
. If you choose to reinvest cash distributions, you will be treated
for federal income tax purposes as having received a distribution
in cash on the distribution payment date. You will have to use
other funds (or sell a portion of the common stock received) to
fund the resulting tax liability.
. Prospective investors should carefully consider the matters
described in the Risk Factors section of this prospectus prior to
making an investment in the shares of common stock.
ADMINISTRATION
4. Who administers the Plan?
We have retained National City Bank as plan administrator (the "Plan
Administrator"), to administer the Plan, keep records of your accounts, send
statements of account activity to you and perform certain other duties relating
to the Plan. See Question 22 for information concerning reports to you. Shares
purchased for you under the Plan and held by the Plan Administrator will be
registered in the Plan Administrator's name or the
17
name of its nominee on your behalf. The Plan Administrator also acts as
distribution disbursing agent, transfer agent and registrar for the common
stock. In the event that the Plan Administrator resigns or otherwise ceases to
act as the plan administrator, we will appoint a new plan administrator.
Correspondence with the Plan Administrator should be sent to:
NATIONAL CITY BANK
REINVESTMENT SERVICES DEPARTMENT
P.O. BOX 94946
CLEVELAND, OHIO 44101-4946
TELEPHONE: (800) 622-6757
FACSIMILE: (216) 257-8367
Please mention Ventas, Inc. and this Plan in all correspondence.
PARTICIPATION
5. Who is eligible to participate?
A "record owner" (which means a stockholder who owns shares of common
stock in his or her own name) or a "beneficial owner" (which means a stockholder
who beneficially owns shares of common stock that are registered in a name other
than his or her own name, for example, in the name of a broker, bank or other
nominee) may participate in the Plan. A record owner may participate directly in
the Plan. A beneficial owner must either become a record owner by having one or
more shares transferred into his or her own name or coordinating with his or her
broker, bank or other nominee to participate in the Plan on his or her behalf. A
broker, bank or other nominee acting on behalf of a beneficial owner must have a
separate account for each beneficial owner who is a participant in the Plan and
for whom it acts as the broker, bank or other nominee. In addition, interested
investors who are not stockholders may participate in the Plan through the
optional cash payment feature. See Question 6.
We may terminate, by written notice, at any time any participant's
individual participation in the Plan if that participation would be in violation
of the restrictions contained in our Certificate of Incorporation or By-laws.
Those restrictions prohibit any person or group of persons, other than existing
holders whose limitations are subject to certain provisions in the Certificate
of Incorporation, from acquiring or holding, directly or indirectly, beneficial
ownership of a number of our shares of beneficial interest of common stock or
preferred stock in excess of 9.0% of the number or value of the outstanding
shares of common stock and 9.9% of the number or value of the outstanding shares
of preferred stock. The meanings given to the terms "group" and "beneficial
ownership" may cause a person who individually owns less than 9.0% of the shares
of common stock outstanding or 9.9% of the shares of preferred stock outstanding
to be deemed to be holding shares in excess of the foregoing limitation. The
Certificate of Incorporation provides that in the event a person acquires shares
of beneficial interest in excess of the foregoing limitation, the excess shares
will be transferred to a trustee for the benefit of a beneficiary designated by
our Board of Directors. Under the Certificate of Incorporation, certain
transfers or attempted transfers that would jeopardize our qualification as a
real estate investment trust for tax purposes may be void to the fullest extent
permitted by law.
6. How does an eligible stockholder or interested new investor
participate?
Record owners and interested new investors may join the Plan by
completing and signing the authorization form included with the Plan and
returning it to the Plan Administrator at the address set forth in Question 4. A
postage-paid envelope is provided for this purpose. Authorization forms may be
obtained at any time by written request to National City Bank or by telephoning
the Plan Administrator at (800) 622-6757.
Beneficial owners must instruct their brokers, banks or other nominees
to complete and sign the authorization form. If a broker, bank or other nominee
holds shares of beneficial owners through a securities depository, that broker,
bank or other nominee may also be required to provide a Broker and Nominee Form
to the Plan Administrator in order to participate in the optional cash payment
feature of the Plan. The broker, bank or other nominee will forward the
completed authorization form to its securities depository and the securities
18
depository will provide the Plan Administrator with the information necessary to
allow the beneficial owner to participate in the Plan. See Question 8 for a
discussion of the Broker and Nominee Form, which is required to be used for
optional cash payments of a beneficial owner whose broker, bank or other nominee
holds the beneficial owner's shares in the name of a major securities
depository. See also Question 16.
If a record owner or the broker, bank or other nominee on behalf of a
beneficial owner submits a properly executed authorization form without electing
an investment option, such authorization form will be deemed to indicate the
intention of such record owner or beneficial owner, as the case may be, to apply
all cash distributions and optional cash payments, if applicable, toward the
purchase of additional shares of common stock. See Question 7 for investment
options.
7. What does the authorization form provide?
The authorization form appoints the Plan Administrator as your agent
and directs us to pay to the Plan Administrator your cash distributions on all
or a specified number of shares of common stock that you own on the applicable
record date, as well as on all whole and fractional shares of common stock
credited to your Plan account. The authorization form directs the Plan
Administrator to purchase on the investment date (as defined in Question 11)
additional shares of common stock with those distributions and optional cash
payments, if any, made by you. See Question 8 for a discussion of the Broker and
Nominee Form that the broker, bank or other nominee uses for optional cash
payments of a beneficial owner if the broker, bank or other nominee holds the
beneficial owner's shares in the name of a major securities depository. The
authorization form also directs the Plan Administrator to reinvest automatically
all subsequent distributions with respect to shares of common stock credited to
your Plan account. Distributions will continue to be reinvested on the number of
shares of common stock that you own on the applicable record date and on all
shares of common stock credited to your Plan account until you withdraw from the
Plan (see Questions 26 and 27), or we terminate the Plan. See Question 6 for
additional information about the authorization form.
Subject to our permission for the reinvestment of distributions in
excess of $25,000, the authorization form provides for the purchase of
additional shares of common stock through the following investment options:
(1) If you elect "Full Distribution Reinvestment", the Plan
Administrator will apply all cash distributions on all shares of common stock
then or subsequently registered in your name, and all cash distributions on all
shares of common stock credited to your Plan account, together with any optional
cash payments, toward the purchase of additional shares of common stock;
provided that cash distributions in excess of $25,000 may be reinvested only
with our permission.
(2) If you elect "Partial Distribution Reinvestment", the Plan
Administrator will apply all cash distributions on a specified number of shares
of common stock that you own on the applicable record date registered in your
name and specified on the authorization form and all cash distributions on all
shares of common stock credited to your Plan account, together with any optional
cash payments, toward the purchase of additional shares of common stock;
provided that cash distributions in excess of $25,000 may be reinvested only
with our permission. The Plan Administrator will pay cash distributions on the
remaining shares of common stock directly to you.
(3) If you elect "Optional Cash Payments Only", you will continue to
receive cash distributions on shares of common stock registered in your name, if
any, in the usual manner. However, the Plan Administrator will apply all cash
distributions on all shares of common stock credited to your Plan account,
together with any optional cash payments that it receives from you, toward the
purchase of additional shares of common stock. See Question 8 for a discussion
of the Broker and Nominee Form that the broker, bank or other nominee uses for
optional cash payments of a beneficial owner if the broker, bank or other
nominee holds the beneficial owner's shares in the name of a major securities
depository.
You may select any one of these three options. In each case, the Plan
Administrator will reinvest distributions on all shares of common stock credited
to your Plan account, including distributions on shares of common stock
purchased with any optional cash payments, until you withdraw from the Plan
altogether, or until we
19
terminate the Plan. If you would prefer to receive cash payments of
distributions paid on shares of common stock credited to your Plan account
rather than reinvest such distributions, you must withdraw those shares from the
Plan by written notification to the Plan Administrator. See Questions 26 and 27
regarding withdrawal of shares of common stock credited to your Plan account.
You may change your investment options at any time by requesting a new
authorization form and returning it to the Plan Administrator at the address set
forth in Question 4. See Question 11 for the effective date for any change in
investment options.
8. What does the Broker and Nominee Form provide?
The Broker and Nominee Form provides the only means by which a broker,
bank or other nominee holding shares of a beneficial owner in the name of a
major securities depository may invest optional cash payments on behalf of that
beneficial owner. A Broker and Nominee Form must be delivered to the Plan
Administrator each time such broker, bank or other nominee transmits optional
cash payments on behalf of a beneficial owner. Broker and Nominee Forms will be
furnished upon request to the Plan Administrator at the address or telephone
number specified in Question 4.
Prior to submitting the Broker and Nominee Form, the broker, bank or
other nominee for a beneficial owner must submit a completed authorization form
on behalf of the beneficial owner. See Questions 6 and 7.
THE PLAN ADMINISTRATOR MUST RECEIVE THE BROKER AND NOMINEE FORM AND
APPROPRIATE INSTRUCTIONS BY NOT LATER THAN THE APPLICABLE RECORD DATE OR THE
PLAN ADMINISTRATOR WILL NOT INVEST THE OPTIONAL CASH PAYMENT UNTIL THE FOLLOWING
INVESTMENT DATE.
9. Is partial participation possible under the Plan?
Yes. Record owners or the broker, bank or other nominee for beneficial
owners may designate on the authorization form a number of shares for which
distributions are to be reinvested, subject to our permission for reinvestment
of distributions in excess of $25,000. Distributions will thereafter be
reinvested only on the number of shares specified, and the record owner or
beneficial owner, as the case may be, will continue to receive cash
distributions on the remainder of the shares.
10. When may an eligible stockholder or interested new investor join the
Plan?
A record owner, beneficial owner or interested new investor may join
the Plan at any time. Once in the Plan, you remain in the Plan until you
withdraw from the Plan, we or the Plan Administrator terminates your
participation in the Plan or we terminate the Plan. See Question 27 regarding
withdrawal from the Plan.
11. When will distributions be reinvested and optional cash payments be
invested?
When shares are purchased from us, the Plan Administrator will make
those purchases on the investment date in each month or quarter, as the case may
be. The investment date with respect to a distribution reinvestment will be
either the distribution payment date for shares of common stock acquired
directly from us, or, in the case of open market purchases, typically the
distribution payment date, but no later than ten business days following the
distribution payment date. The investment date with respect to shares of common
stock acquired directly from us and relating to optional cash payments of $5,000
or less will be the last day (or pricing period conclusion date) of a pricing
period (as defined below). The investment date with respect to shares of common
stock acquired directly from us and relating to an optional cash payment of
greater than $5,000 made pursuant to a request for waiver will be on each day on
which the New York Stock Exchange is open for business in a pricing period, on
which date 1/12 of your optional cash payment in each month will be invested.
The investment date with respect to shares of common stock purchased on the open
market and relating to optional cash payments will be no later than 30 days from
the corresponding record date. With respect to all optional cash payments,
regardless of the amount being invested, the period encompassing the twelve
consecutive investment dates in each month constitutes the
20
relevant "pricing period." See Schedule A attached hereto for a list of the
expected pricing period commencement dates and conclusion dates (with the
pricing period conclusion date being the investment date for optional cash
payments of $5,000 or less).
When the Plan Administrator makes open market purchases, those
purchases may be made on any securities exchange where the shares are traded, in
the over-the-counter market or in negotiated transactions, and may be subject to
such terms with respect to price, delivery and other matters as agreed to by the
Plan Administrator. Neither we nor you will have any authorization or power to
direct the time or price at which the Plan Administrator purchases shares or the
selection of the broker or dealer through or from whom the Plan Administrator
makes purchases. However, when the Plan Administrator makes open market
purchases, the Plan Administrator is required to use its reasonable best efforts
to purchase the shares at the lowest possible price.
If the Plan Administrator receives the authorization form prior to the
record date for a distribution payment, the election to reinvest distributions
will begin with that distribution payment. If the Plan Administrator receives
the authorization form on or after any such record date, reinvestment of
distributions will begin on the distribution payment date following the next
record date if you are still a stockholder of record. Record dates for payment
of distributions normally precede payment dates by approximately ten days.
See Question 17 for information concerning limitations on the minimum
and maximum amounts of optional cash payments that you may make each month and
Question 18 for information as to when the Plan Administrator must receive
optional cash payments in order to be invested on each investment date.
The Plan Administrator will allocate shares and credit shares,
computed to three decimal places, to your account as follows: (1) shares
purchased from us will be allocated and credited as of the appropriate
investment date; and (2) shares purchased in market transactions will be
allocated and credited as of the date on which the Plan Administrator completes
the purchases of the aggregate number of shares to be purchased on behalf of all
participants with distributions to be reinvested or optional cash payments, as
the case may be, during the month.
NO INTEREST WILL BE PAID ON CASH DISTRIBUTIONS OR OPTIONAL CASH
PAYMENTS PENDING INVESTMENT OR REINVESTMENT UNDER THE TERMS OF THE PLAN. SINCE
NO INTEREST IS PAID ON CASH HELD BY THE PLAN ADMINISTRATOR, IT NORMALLY WILL BE
IN YOUR BEST INTEREST TO DEFER OPTIONAL CASH PAYMENTS UNTIL SHORTLY BEFORE
COMMENCEMENT OF THE PRICING PERIOD.
PURCHASES AND PRICES OF SHARES
12. What will be the price to participants of shares purchased under the
Plan?
With respect to reinvested distributions, the price per share of
common stock acquired directly from us will be 100% (subject to change) of the
average of the high and low sales prices, computed to three decimal places, of
the shares of common stock on the New York Stock Exchange on the investment date
(as defined in Question 11), or if no trading occurs in the shares of common
stock on the investment date, the average of the high and low sales prices for
the first trading day immediately preceding the investment date for which trades
are reported.
The price per share of common stock acquired through open market
purchases with reinvested distributions will be the weighted average of the
actual prices paid, computed to three decimal places, for all of the shares of
common stock that the Plan Administrator purchases with all participants'
reinvested distributions for that particular distribution by us. Additionally,
you will be charged a pro rata portion of any brokerage commissions or other
fees or charges that the Plan Administrator pays in connection with the open
market purchases. (If you desire to opt out of the distribution reinvestment
feature of the Plan when the shares of common stock relating to distribution
reinvestments will be purchased in the open market, you must notify the Plan
Administrator prior to the close of business on the first business day preceding
the record date for the related distribution payment date. For information as to
the source of the shares of common stock to be purchased under the Plan see
Question 15.)
21
With respect to optional cash payments, the price per share of the
common stock acquired directly from us will be 100% of the average of the daily
high and low sale prices, computed to three decimal places, of the shares of
common stock as reported on the New York Stock Exchange for the trading day
relating to each investment date (as defined in Question 11 above) or, if no
trading occurs in the shares of common stock on such trading day, for the
trading day immediately preceding such investment date for which trades are
reported, less the applicable discount, if any. A "trading day" means a day on
which trades in the shares of common stock are reported on the New York Stock
Exchange.
Each month, at least three business days prior to the applicable
record date (as defined in Question 18), we may establish the discount from the
market price applicable to optional cash payments and will notify the Plan
Administrator of the same. The discount may be between 0% and 5% of the market
price and may vary each month, but once established will apply uniformly to all
optional cash payments made during that month. The discount will be established
in our sole discretion after a review of current market conditions, the level of
participation in the Plan, and our current and projected capital needs. The
discount applies only to optional cash payments. Neither we nor the Plan
Administrator will be required to provide any written notice to you as to the
discount, but current information regarding the discount applicable to the next
pricing period may be obtained by contacting our general counsel, T. Richard
Riney, at (502) 357-9000. Setting a discount for an investment date will not
affect the setting of a discount for any subsequent investment date. The
discount feature discussed above applies only to the issuance of shares of
common stock by us pursuant to optional cash payments and does not apply to open
market purchases made with optional cash payments or the reinvestment of
distributions.
The price per common share acquired through open market purchases with
optional cash payments will be 100% (subject to change) of the weighted average
of the actual prices paid, computed to three decimal places, for all of the
shares of common stock that the Plan Administrator purchases with all
participants' optional cash payments for the related month. Additionally, you
will be charged a pro rata portion of any brokerage commissions or other fees or
charges that the Plan Administrator pays in connection with the open market
purchases.
Neither we nor you will have any authorization or power to direct the
time or price at which the Plan Administrator purchases shares or the selection
of the broker or dealer through or from whom the Plan Administrator makes the
purchases. However, when open market purchases are made by the Plan
Administrator, the Plan Administrator is required to use its best efforts to
purchase the shares at the lowest possible price.
All references in the Plan to the "market price" when it relates to
distribution reinvestments which will be reinvested in shares of common stock
acquired directly from us will mean the average of the high and low sales
prices, computed to three decimal places, of the shares of common stock on the
New York Stock Exchange on the investment date, or if no trading occurs in the
shares of common stock on the investment date, the average of the high and low
sales prices for the first trading day immediately preceding the investment date
for which trades are reported. With respect to distribution reinvestments which
will be reinvested in shares of common stock purchased in the open market,
"market price" will mean the weighted average of the actual prices paid, net of
commissions, computed to three decimal places, for all of the shares of common
stock that the Plan Administrator purchases with all participants' reinvested
distributions for the related distribution. Additionally, you will be charged a
pro rata portion of any brokerage commissions or other fees or charges that the
Plan Administrator pays in connection with the open market purchases. All
references in the Plan to the "market price" for optional cash payments which
will be invested in shares of common stock acquired directly from us will mean
the average of the daily high and low sales prices of the shares of common stock
as reported on the New York Stock Exchange on the trading day relating to each
investment date or, if no trading occurs in the shares of common stock on that
investment date, for the first trading day immediately preceding that investment
date for which trades are reported. With respect to optional cash payments which
will be invested in shares of common stock purchased in the open market, "market
price" will mean the weighted average of the actual prices paid, computed to
three decimal places, for all of the shares of common stock that the Plan
Administrator purchases with all participants' optional cash payments for the
related month. Additionally, you will be charged a pro rata portion of any
brokerage commissions or other fees or charges that the Plan Administrator pays
in connection with the open market purchases.
22
13. What are the record dates and investment dates for distribution
reinvestment?
For the reinvestment of distributions, the "record date" is the record
date declared by the Board of Directors for that distribution. Likewise, the
distribution payment date declared by the Board of Directors constitutes the
investment date applicable to the reinvestment of that distribution with respect
to shares of common stock acquired directly from us, except that if any such
date is not a business day, the first business day immediately following such
date will be the investment date. The investment date with respect to shares of
common stock that the Plan Administrator purchases in open market transactions
will typically be made on the distribution payment date, but will be no later
than ten business days following the distribution payment date. Distributions
will be reinvested on the investment date using the applicable market price (as
defined in Question 12), subject to our permission for reinvestment of
distributions in excess of $25,000. Distributions in excess of $25,000 not
approved for reinvestment by us will be paid in cash. Generally, record dates
for quarterly distributions on the shares of common stock will precede the
distribution payment dates by approximately ten days. See Schedule A for a list
of the future distribution record dates and payment dates. Please refer to
Question 18 for a discussion of the record dates and investment dates applicable
to optional cash payments.
14. How will the number of shares purchased for you be determined?
Your Plan account will be credited with the number of shares,
including fractions computed to three decimal places, equal to the total amount
to be invested on your behalf divided by the purchase price per share as
calculated pursuant to the methods described in Question 12, as applicable. The
total amount to be invested will depend on the amount of any distributions paid
on the number of shares of common stock that you own on the applicable record
date and shares of common stock credited to your Plan account and available for
investment on the related investment date, or the amount of any optional cash
payments made by you and available for investment on the related investment
date. Subject to the availability of shares of common stock registered for
issuance under the Plan and permission from us for reinvestment of distributions
in excess of $25,000, there is no total maximum number of shares available for
issuance pursuant to the reinvestment of distributions.
15. What is the source of shares of common stock purchased under the Plan?
Shares of common stock credited to your Plan account will be purchased
either directly from us, in which event such shares will be authorized but
unissued shares or treasury shares, or on the open market, or by a combination
of the foregoing, at our option, after a review of current market conditions and
our current and projected capital needs. We will determine the source of the
shares of common stock to be purchased under the Plan at least three business
days prior to the relevant record date, and will notify the Plan Administrator
of the same. Neither we nor the Plan Administrator will be required to provide
any written notice to you as to the source of the shares of common stock to be
purchased under the Plan, but current information regarding the source of the
shares of common stock may be obtained by contacting our general counsel, T.
Richard Riney, at (502) 357-9000. We anticipate that initially purchases of
shares under the Plan will be effected through open market transactions.
16. How does the optional cash payment feature of the Plan work?
All record owners and interested new investors who have timely
submitted signed authorization forms indicating their intention to participate
in the optional cash payment feature, and all beneficial owners whose brokers,
banks or other nominees have timely submitted signed authorization forms
indicating their intention to participate in the optional cash payment feature
(except for beneficial owners whose brokers, banks or other nominees hold the
shares of the beneficial owners in the name of a major securities depository),
are eligible to make optional cash payments during any month, whether or not a
distribution is declared. If a broker, bank or other nominee holds shares of a
beneficial owner in the name of a major securities depository, optional cash
payments must be made through the use of the Broker and Nominee Form. See
Question 8. Optional cash payments must be accompanied by an authorization form
or a Broker and Nominee Form, as applicable. Each month the Plan Administrator
will apply any optional cash payment received from you no later than one
business day prior to the commencement of that month's pricing period (as
defined in Question 12) to the purchase of additional shares of common stock for
your account on the following investment date (as defined in Question 11).
23
17. What limitations apply to optional cash payments?
Each optional cash payment is subject to a minimum per month purchase
limit of $250 and a maximum per month purchase limit of $5,000. For purposes of
these limitations, all Plan accounts under your common control or management
(which will be determined at our sole discretion) will be aggregated. Generally,
optional cash payments of less than $250 and that portion of any optional cash
payment which exceeds the maximum monthly purchase limit of $5,000, unless such
limit has been waived by us, will be returned to you without interest at the end
of the relevant pricing period.
You may make optional cash payments of up to $5,000 each month without
our prior approval, subject to our right to modify, suspend or terminate
participation in the Plan by otherwise eligible holders of shares of common
stock or interested new investors in order to eliminate practices which are, in
our sole discretion, not consistent with the purposes or operation of the Plan
or which adversely affect the price of the shares of common stock. Optional cash
payments in excess of $5,000 may be made by you only upon our acceptance of a
completed request for waiver form from you and the Plan Administrator's receipt
of that form. There is no pre-established maximum limit applicable to optional
cash payments that may be made pursuant to accepted requests for waiver. A
request for waiver form must be received each month by us and the Plan
Administrator and accepted by us and notice of our acceptance must have been
received by the Plan Administrator no later than the record date (as defined in
Question 18) for the applicable investment date. Request for waiver forms will
be furnished at any time upon request to the Plan Administrator at the address
or telephone number specified in Question 4. Waivers will be accepted only with
respect to actual record owners and not for the benefit of beneficial owners or
multiple participants. If you are interested in obtaining further information
about a request for waiver, you should contact our general counsel, T. Richard
Riney, at (502) 357-9000 or the Plan Administrator at (800) 622-6757.
Waivers will be considered on the basis of a variety of factors, which
may include our current and projected capital needs, the alternatives available
to us to meet those needs, prevailing market prices for shares of common stock
and our other securities, general economic and market conditions, expected
aberrations in the price or trading volume of the shares of common stock, the
potential disruption of the price of the shares of common stock by a financial
intermediary, the number of shares of common stock that you hold, your past
actions under the Plan, the aggregate amount of optional cash payments for which
such waivers have been submitted and the administrative constraints associated
with granting such waivers. Grants of waivers will be made in our absolute
discretion.
YOU ARE NOT OBLIGATED TO PARTICIPATE IN THE OPTIONAL CASH PAYMENT
FEATURE OF THE PLAN AT ANY TIME. OPTIONAL CASH PAYMENTS NEED NOT BE IN THE SAME
AMOUNT EACH MONTH.
Unless we waive our right to do so, we may establish for any pricing
period a minimum threshold price applicable only to the investment of optional
cash payments that exceed $5,000 and that are made pursuant to requests for
waiver, in order to provide us with the ability to set a minimum price at which
shares of common stock will be sold under the Plan each month pursuant to such
requests. A threshold price will only be established when shares of common stock
will be purchased directly from us on the applicable investment date. We will,
at least three business days prior to each record date (as defined in Question
18), determine whether to establish a threshold price and, if a threshold price
is established, its amount and so notify the Plan Administrator. The
determination whether to establish a threshold price and, if a threshold price
is established, its amount will be made by us at our discretion after a review
of current market conditions, the level of participation in the Plan and our
current and projected capital needs. Neither we nor the Plan Administrator will
be required to provide any written notice to you as to whether a threshold price
has been established for any pricing period, but current information regarding
the threshold price may be obtained by contacting our general counsel, T.
Richard Riney at (502) 357-9000 or the Plan Administrator at (800) 622-6757.
The threshold price for optional cash payments made through requests
for waiver, if established for any pricing period, will be a stated dollar
amount that the average of the high and low sale prices of the shares of common
stock on the New York Stock Exchange for each trading day of the relevant
pricing period must equal or exceed. In the event that the threshold price is
not satisfied for a trading day in the pricing period, then that trading day
will be excluded from that pricing period and no investment will occur on the
corresponding investment date. For each trading day on which the threshold price
is not satisfied, 1/12 of each optional cash payment made by you pursuant to a
request for waiver will be returned to you, without interest, as soon as
practicable after the end of the
24
applicable pricing period. Thus, for example, if the threshold price is not
satisfied for three of the twelve trading days in a pricing period, 3/12 of your
optional cash payment made pursuant to a request for waiver will be returned to
you by check, without interest, as soon as practicable after the end of the
applicable pricing period. The Plan Administrator expects to mail such checks
within five to ten business days from the end of the applicable pricing period.
This return procedure will only apply when shares are purchased directly from us
for optional cash payments made through requests for waiver and we have set a
threshold price with respect to the relevant pricing period. See Question 15.
Setting a threshold price for a pricing period will not affect
the setting of a threshold price for any subsequent pricing period. The
threshold price concept and return procedure discussed above apply only to
optional cash payments made through requests for waiver.
For any pricing period, we may waive our right to set a threshold
price for optional cash payments made through requests for waiver. You may
ascertain whether the threshold price applicable to a given pricing period has
been set or waived, as applicable, by contacting our general counsel, T. Richard
Riney, at (502) 357-9000 or the Plan Administrator at (800) 622-6757.
For a list of expected dates by which the threshold price will be
set in 2002, see Schedule A.
Each month, at least three business days prior to the applicable
record date (as defined in Question 18), we may establish the discount from the
market price applicable to optional cash payments during the corresponding
pricing period and will notify the Plan Administrator of the same. The discount
may be between 0% and 5% of the market price and may vary each month, but once
established will apply uniformly to all optional cash payments made during that
month. The discount will be established in our sole discretion after a review of
current market conditions, the level of participation in the Plan, and our
current and projected capital needs. The discount applies only to optional cash
payments. Neither we nor the Plan Administrator will be required to provide any
written notice to you as to the discount, but current information regarding the
discount applicable to the next pricing period may be obtained by contacting our
general counsel, T. Richard Riney, at (502) 357-9000 or the Plan Administrator
at (800) 622-6757. Setting a discount for a pricing period will not affect the
setting of a discount for any subsequent pricing period. The discount feature
discussed above applies only to the issuance of shares of common stock by us
through optional cash payments and does not apply to open market purchases made
with optional cash payments or the reinvestment of distributions.
THE THRESHOLD PRICE CONCEPT AND RETURN PROCEDURE DISCUSSED ABOVE
APPLY ONLY TO OPTIONAL CASH PAYMENTS MADE PURSUANT TO REQUESTS FOR WAIVER WHEN
SHARES OF COMMON STOCK ARE TO BE PURCHASED FROM US ON THE APPLICABLE INVESTMENT
DATE. ALL OTHER OPTIONAL CASH PAYMENTS WILL BE MADE AT THE MARKET PRICE (SUBJECT
TO CHANGE) LESS THE DISCOUNT, IF ANY, WITHOUT REGARD TO ANY THRESHOLD PRICE.
18. What are the record dates and investment dates for optional cash
payments?
Optional cash payments will be invested every month as of the
related investment date. The "record date" for optional cash payments is one
business day prior to the commencement of the related pricing period and the
"investment date" for optional cash payments of $5,000 or less is the last day
of the pricing period (or pricing period conclusion date), and for optional cash
payments of greater than $5,000 made through requests for waivers, the
"investment date" is each day on which the New York Stock Exchange is open for
business in a pricing period.
Optional cash payments that the Plan Administrator receives by
the record date will be applied to the purchase of shares of common stock on the
investment dates which relate to that pricing period. No interest will be paid
by us or the Plan Administrator on optional cash payments held pending
investment. Generally, optional cash payments received after the record date
will be returned to you without interest at the end of the pricing period; you
may resubmit those optional cash payments prior to the commencement of the next
or a later pricing period.
For a schedule of expected record dates and pricing period
commencement dates and conclusion dates in 2002, see Schedule A.
25
19. When must the Plan Administrator receive optional cash payments?
Each month the Plan Administrator will apply any optional cash
payment for which good funds are timely received to the purchase of shares of
common stock for your account during the next pricing period. See Question 18.
In order for funds to be invested during the next pricing period, the Plan
Administrator must have received a check, money order or wire transfer by the
end of the business day immediately preceding the first trading day of the
ensuing pricing period and that check, money order or wire transfer must have
cleared on or before the first investment date in such pricing period. Wire
transfers may be used only if the Plan Administrator approves it verbally in
advance. Checks and money orders are accepted subject to timely collection as
good funds and verification of compliance with the terms of the Plan. Checks or
money orders should be made payable to National City Bank and submitted together
with, initially, the authorization form or, subsequently, the form for
additional investments attached to your statements. Checks returned for any
reason will not be resubmitted for collection.
NO INTEREST WILL BE PAID BY US OR THE PLAN ADMINISTRATOR ON
OPTIONAL CASH PAYMENTS HELD PENDING INVESTMENT. SINCE NO INTEREST IS PAID ON
CASH HELD BY THE PLAN ADMINISTRATOR, IT NORMALLY WILL BE IN YOUR BEST INTEREST
TO DEFER OPTIONAL CASH PAYMENTS UNTIL SHORTLY BEFORE COMMENCEMENT OF THE PRICING
PERIOD.
In order for payments to be invested on the first investment date
in a pricing period, in addition to the receipt of good funds by the first
investment date in a pricing period, the Plan Administrator must be in receipt
of an authorization form or a Broker and Nominee Form, as appropriate, as of the
same date. See Questions 6 and 8.
20. May optional cash payments be returned?
Upon telephone or written request to the Plan Administrator
received at least five business days prior to the record date for the investment
date with respect to which optional cash payments have been delivered to the
Plan Administrator, such optional cash payments will be returned to you as soon
as practicable. Requests received less than five business days prior to such
date will not be returned but instead will be invested on the next related
investment date. Additionally, a portion of each optional cash payment will be
returned by check, without interest, as soon as practicable after the end of the
pricing period for each trading day that does not meet the threshold price, if
any, applicable to optional cash payments made pursuant to requests for waiver.
See Question 17. Also, each optional cash payment, to the extent that it does
not either conform to the limitations described in Question 18 or clear within
the time limit described in Question 19, will be subject to return to you as
soon as practicable.
21. Are there any expenses to you in connection with your
participation under the Plan?
You will have to pay brokerage fees or commissions on shares of
common stock purchased with reinvested distributions or optional cash payments
on the open market which will be first deducted before determining the number of
shares to be purchased. You will incur no brokerage commissions or service
charges in connection with the reinvestment of distributions or optional cash
payments when shares of common stock are acquired directly from us. We will pay
all other costs of administration of the Plan. However, if you request that the
Plan Administrator sell all or any portion of your shares (see Question 27), you
will incur prorated brokerage commissions and service charges of the Plan
Administrator. All costs of the sale will be deducted from the proceeds paid to
you.
REPORTS TO YOU
22. What kind of reports will be sent to you?
You will receive a statement of your account following each
purchase or sale transaction and following any withdrawal of shares. These
statements are your continuing record of the cost of your purchases and should
be retained for income tax purposes. In addition, you will receive copies of
other communications sent to holders of the shares of common stock, including
our annual report to stockholders, the notice of annual meeting and
26
proxy statement in connection with our annual meeting of stockholders and
Internal Revenue Service information for reporting distributions paid.
DISTRIBUTIONS ON FRACTIONS
23. Will you be credited with distributions on fractions of shares?
Yes.
CERTIFICATES FOR SHARES OF COMMON STOCK
24. Will certificates be issued for shares purchased?
No. Shares of common stock purchased for you will be held in the
name of the Plan Administrator or its nominee. No certificates will be issued to
you for shares in the Plan unless you submit a written request to the Plan
Administrator or until participation in the Plan is terminated. At any time, you
may request that the Plan Administrator send you a certificate for some or all
of the whole shares credited to your account. You should mail this request to
the Plan Administrator at the address set forth in the answer to Question 4. Any
remaining whole shares and any fractions of shares will remain credited to your
Plan account. Certificates for fractional shares will not be issued under any
circumstances.
25. In whose name will certificates be registered when issued?
Your Plan account is maintained in the name in which your
certificates were registered at the time of your enrollment in the Plan. Share
certificates for whole shares purchased under the Plan will be similarly
registered when issued upon your request. If you are a beneficial owner, you
should place the request through your banker, broker or other nominee. See
Question 6. If you wish to pledge shares credited to your Plan account, you must
first withdraw those shares from the Plan account. If you wish to withdraw your
shares and have any or all of the full shares held in their Plan account issued
and delivered to you in physical form, you may do so by sending a written
instruction to the Plan Administrator. Registration of withdrawn shares in a
name other than yours will require the guaranty of your signature by a member
firm of a Medallion Signature Guaranty Program.
WITHDRAWALS AND TERMINATION
26. When may you withdraw from the Plan?
You may withdraw from the Plan with respect to all or a portion
of the shares held in your Plan account at any time. If the request to withdraw
is received prior to a distribution record date set by the Board of Directors
for determining stockholders of record entitled to receive a distribution, the
request will be processed on the day following the Plan Administrator's receipt
of the request.
If the Plan Administrator receives your request to withdraw on or
after a distribution record date, but before payment date, the Plan
Administrator, in its sole discretion, may either pay such distribution in cash
or reinvest it in shares for your account. The request for withdrawal will then
be processed as promptly as possible following such distribution payment date.
All distributions subsequent to such distribution payment date or investment
date will be paid in cash unless you re-enroll in the Plan, which may be done at
any time.
Any optional cash payments which have been sent to the Plan
Administrator prior to a request for withdrawal will also be invested on the
next investment date unless you expressly request return of that payment in the
request for withdrawal, and the Plan Administrator receives the request for
withdrawal at least five business days prior to the record date for the
investment date with respect to which optional cash payments have been delivered
to the Plan Administrator.
27
27. How do you withdraw from the Plan?
If you wish to withdraw from the Plan with respect to all or a
portion of the shares held in your Plan account, you must notify the Plan
Administrator in writing at its address set forth in the answer to Question 4.
Upon your withdrawal from the Plan or termination of the Plan by us,
certificates for the appropriate number of whole shares credited to your account
under the Plan will be issued. Registration of withdrawn shares in a name other
than yours will require the guaranty of your signature by a member firm of a
Medallion Signature Guaranty Program.
Upon withdrawal from the Plan, you may also request in writing
that the Plan Administrator sell all or part of the shares credited to your Plan
account. The Plan Administrator will sell the shares as requested within ten
business days after processing the request for withdrawal. The timing and price
of the sale are at the sole discretion of the Plan Administrator. The Plan
Administrator will send a check for the proceeds of the sale, less any brokerage
commissions and service charges paid to the Plan Administrator and any
applicable share transfer taxes, generally within five business days of the
sale.
Cash will be paid in lieu of any fraction of a share, based on
the prevailing market price. Such cash will be reported as taxable proceeds.
28. Are there any automatic termination provisions?
Participation in the Plan will be terminated if the Plan
Administrator receives written notice of the death or adjudicated incompetence
of a participant, together with satisfactory supporting documentation of the
appointment of a legal representative, at least five business days before the
next record date for purchases made through the reinvestment of distributions or
optional cash payments, as applicable. In the event written notice of death or
adjudicated incompetence and such supporting documentation is received by the
Plan Administrator less than five business days before the next record date for
purchases made through the reinvestment of distributions or optional cash
payments, as applicable, shares will be purchased for the participant with the
related cash distribution or optional cash payment and participation in the Plan
will not terminate until after such distribution or payment has been reinvested.
Thereafter, no additional purchase of shares will be made for the participant's
account and the participant's shares and any cash distributions paid thereon
will be forwarded to the participant's legal representative.
Participation in the Plan may be terminated if all whole shares
have been disbursed from your stockholder account and your Plan account, leaving
only a fraction of a share.
WE RESERVE THE RIGHT TO MODIFY, SUSPEND OR TERMINATE
PARTICIPATION IN THE PLAN BY OTHERWISE ELIGIBLE HOLDERS OF SHARES OF COMMON
STOCK OR INTERESTED NEW INVESTORS IN ORDER TO ELIMINATE PRACTICES WHICH ARE, IN
OUR SOLE DISCRETION, NOT CONSISTENT WITH THE PURPOSES OR OPERATION OF THE PLAN
OR WHICH ADVERSELY AFFECT THE PRICE OF THE SHARES OF COMMON STOCK.
OTHER INFORMATION
29. What happens if you sell or transfer all of the shares registered
in your name?
If you dispose of all shares registered in your name and all
shares held in your Plan account, and are not shown as a record owner on a
distribution record date, you may be terminated from the Plan as of that date
and the termination treated as though a withdrawal notice had been received
prior to the record date.
30. What happens if we declare a distribution payable in shares or
declare a share split?
Any distribution payable in shares and any additional shares
distributed by us in connection with a share split in respect of shares credited
to your Plan account will be added to that account. Share distributions or split
shares which are attributable to shares registered in your own name and not in
your Plan account will be mailed directly to you as in the case of stockholders
not participating in the Plan.
28
31. How will shares held by the Plan Administrator be voted at
meetings of stockholders?
If you are a record owner, you will receive a proxy card covering
both directly held shares and shares held in the Plan. If you are a beneficial
owner, you will receive a proxy covering shares held in the Plan through your
broker, bank or other nominee.
If a proxy is returned properly signed (unless returned
electronically) and marked for voting, all the shares covered by the proxy will
be voted as marked. If a proxy is returned properly signed (unless returned
electronically) but no voting instructions are given, all of your shares will be
voted in accordance with recommendations of our Board of Directors, unless
applicable laws require otherwise. If the proxy is not returned, or if it is
returned unexecuted or improperly executed (unless returned electronically) or
improperly completed, shares registered in your name may be voted only by you in
person; neither we nor the Plan Administrator will vote such shares.
32. What are our responsibilities and the Plan Administrator's
responsibilities under the Plan?
We and the Plan Administrator will not be liable in administering
the Plan for any act done in good faith or required by applicable law or for any
good faith omission to act including, without limitation, any claim of liability
arising out of failure to terminate a participant's account upon his or her
death, with respect to the prices at which shares are purchased and/or the times
when such purchases are made or with respect to any fluctuation in the market
value before or after purchase or sale of shares. Notwithstanding the foregoing,
nothing contained in the Plan limits our liability with respect to alleged
violations of federal securities laws.
We and the Plan Administrator will be entitled to rely on
completed forms and the proof of due authority to participate in the Plan,
without further responsibility of investigation or inquiry.
33. May the Plan be changed or discontinued?
Yes. We may suspend, terminate, or amend the Plan at any time.
Notice will be sent to you of any suspension or termination, or of any amendment
that alters the Plan terms and conditions, as soon as practicable after such
action by us.
We may appoint a successor administrator or agent in place of the
Plan Administrator at any time. You will be promptly informed of any such
appointment.
Any questions of interpretation arising under the Plan will be
determined by us, in our sole discretion, and any such determination will be
final.
34. What are the federal income tax consequences of participation in
the Plan?
The following summarizes certain federal income tax
considerations to current stockholders who participate in the Plan. New
investors and current stockholders should consult the discussion herein under
the caption "Federal Income Tax Considerations" for a summary of federal income
tax considerations related to the ownership of shares of common stock.
The following summary is based upon an interpretation of current
federal tax law. You should consult your own tax advisors to determine
particular tax consequences, including state income tax (and non-income tax,
such as share transfer tax) consequences, which vary from state to state and
which may result from participation in the Plan and the subsequent disposition
of shares of common stock acquired pursuant to the Plan. Income tax consequences
to participants residing outside the United States will vary from jurisdiction
to jurisdiction.
Current Stockholders
--------------------
Willkie Farr & Gallagher has rendered an opinion that the
following are the material federal income tax consequences of participating in
the Plan. However, opinions of counsel are not binding on the Internal
29
Revenue Service or on the courts, and no assurance can be given that the
conclusions reached by Willkie Farr & Gallagher would be sustained in court.
In the case of shares of common stock purchased by the Plan
Administrator pursuant to the reinvestment feature of the Plan, whether
purchased from us or in the open market, you will be treated for federal income
tax purposes as having received, on the distribution payment date, a
distribution in an amount equal to the amount of the cash distribution that was
reinvested.
Such distribution will be taxable as a dividend to the extent of
our current or accumulated earnings and profits. To the extent the distribution
is in excess of our current or accumulated earnings and profits, the
distribution will be treated first as a tax-free return of capital, reducing the
tax basis in your shares, and the distribution in excess of your tax basis will
be taxable as gain realized from the sale of our shares.
If you are a current stockholder and you purchase common shares
from us at a discount pursuant to the optional cash purchase feature of the
Plan, you will be treated for federal income tax purposes as having received a
distribution from us in an amount equal to the excess, if any, of the fair
market value (determined as the average of the high and low trading prices) of
the common shares on the investment date less the amount of the optional cash
payment, and that all or a portion of such distribution will be treated as a
taxable dividend.
In the case of shares of common stock purchased by the Plan
Administrator on the open market pursuant to the optional cash payment feature
of the Plan, you will not be treated for federal income tax purposes as having
received a distribution from us.
General
-------
Your holding period for shares of common stock acquired pursuant
to the Plan will begin on the day following the investment date. You will have a
tax basis in the shares of common stock equal to the amount of cash used to
purchase the shares of common stock.
You will not realize any taxable income upon receipt of
certificates for whole shares of common stock credited to your account, either
upon your request for certain of those shares of common stock or upon your
termination of participation in the Plan. You will recognize gain or loss upon
the sale or exchange of shares of common stock acquired under the Plan. You will
also recognize gain or loss upon receipt, following termination of participation
in the Plan, of a cash payment for any fractional share equivalent credited to
your account. The amount of any such gain or loss will be the difference between
the amount that you received for the shares of common stock or fractional share
equivalent and the tax basis thereof.
35. How are income tax withholding provisions applied to you?
If you fail to provide certain federal income tax certifications
in the manner required by law, distributions on shares of common stock, proceeds
from the sale of fractional shares and proceeds from the sale of shares of
common stock held for your account will be subject to federal income tax backup
withholding imposed at the fourth lowest tax rate applicable to unmarried
individuals, or the then current rate. If withholding is required for any
reason, the appropriate amount of tax will be withheld. Certain stockholders
(including most corporations) are, however, exempt from the above withholding
requirements.
If you are a foreign stockholder you need to provide the required
federal income certifications to establish your status as a foreign stockholder
in order for the above backup withholding imposed at the fourth lowest tax rate
applicable to unmarried individuals not to apply to you. You also need to
provide the required certifications if you wish to claim the benefit of
exemptions from federal income tax withholding or reduced withholding rates
under a treaty or convention entered into between the United States and your
country of residence. Generally, distributions to a foreign stockholder are
subject to federal income tax withholding at 30% (or a lower treaty rate), but
may be as much as 35% for certain types of income. Certain distributions or
portion of a distribution to a foreign stockholder may still be subject to
federal income tax withholding even when the distribution or that portion of the
distribution is not treated as dividend under federal income tax laws. If you
are a foreign stockholder whose
30
distributions are subject to federal income tax withholding, the appropriate
amount will be withheld and the balance will be credited to your account to
purchase shares of common stock.
36. Who bears the risk of market fluctuations in our shares of common
stock?
Your investment in shares held in the Plan account is no
different from your investment in directly held shares. You bear the risk of any
loss and enjoy the benefits of any gain from market price changes with respect
to those shares.
37. How is the Plan interpreted?
Any question of interpretation arising under the Plan will be
determined by us and any such determination will be final. We may adopt
additional terms and conditions of the Plan and its operation will be governed
by the laws of the State of Delaware.
38. What are some of your responsibilities under the Plan?
Shares of common stock credited to your Plan account are subject
to escheat to the state in which you reside in the event that such shares are
deemed, under such state's laws, to have been abandoned by you. You, therefore,
should notify the Plan Administrator promptly in writing of any change of
address. Account statements and other communications to you will be addressed to
you at the last address of record that you provide to the Plan Administrator.
You will have no right to draw checks or drafts against your Plan
account or to instruct the Plan Administrator with respect to any shares of
common stock or cash held by the Plan Administrator except as expressly provided
in the Plan.
FEDERAL INCOME TAX CONSIDERATIONS
General
The following discussion summarizes certain material federal
income tax considerations to a holder of shares of common stock. Willkie Farr &
Gallagher has provided us with an opinion that the discussion herein is an
accurate general summary of material federal income tax considerations. However,
you are reminded again that opinions of counsel are not binding on the Internal
Revenue Service or on the courts, and no assurance can be given that the
conclusions reached by Willkie Farr & Gallagher would be sustained in court. The
following discussion, which is not exhaustive of all possible tax
considerations, does not give a detailed discussion of any state, local or
foreign tax considerations. Nor does it discuss all of the aspects of federal
income taxation that may be relevant to a prospective stockholder in light of
his or her particular circumstances or to certain types of stockholders
(including insurance companies, tax-exempt entities, financial institutions or
broker-dealers, foreign corporations and persons who are not citizens or
residents of the United States) who are subject to special treatment under the
federal income tax laws.
EACH PROSPECTIVE PURCHASER OF SHARES OF COMMON STOCK IS ADVISED
TO CONSULT WITH HIS OR HER OWN TAX ADVISOR REGARDING THE SPECIFIC TAX
CONSEQUENCES TO HIM OR HER, IN LIGHT OF HIS OR HER SPECIFIC OR UNIQUE
CIRCUMSTANCES, OF THE PURCHASE, OWNERSHIP AND SALE OF SHARES OF COMMON STOCK IN
AN ENTITY ELECTING TO BE TAXED AS A REIT, INCLUDING THE FEDERAL, STATE, LOCAL,
FOREIGN AND OTHER TAX CONSEQUENCES OF SUCH PURCHASE, OWNERSHIP, SALE AND
ELECTION AND OF POTENTIAL CHANGES IN APPLICABLE TAX LAWS.
Our Taxation
We elected REIT status commencing with our taxable year ending
December 31, 1999. In any taxable year in which we qualify as a REIT, we
generally will not be subject to federal income tax on that portion of our REIT
taxable income or capital gain which we distribute to stockholders. This
treatment substantially eliminates the "double taxation" (at both the corporate
and stockholder levels) that generally results from the use of corporate
31
investment vehicles. However, we will be subject to federal income tax at
regular corporate rates upon any of our annual REIT taxable income or net
capital gain which is not distributed to our stockholders by the end of the tax
year. We also may be subject to the corporate "alternative minimum tax" on
certain preference and adjustment items. In addition, we will be subject to a 4%
excise tax if we do not satisfy certain distribution requirements. We may also
be subject to taxes in certain situations and on certain transactions not
presently contemplated.
If we fail to qualify for taxation as a REIT in any taxable year,
we will be subject to tax (including any applicable alternative minimum tax) on
our taxable income at regular corporate rates. As a result, our failure to
qualify as a REIT would significantly reduce the cash available for distribution
by us to our stockholders. Unless entitled to relief under the specific
statutory provisions, we also will be disqualified from taxation as a REIT for
the four taxable years following the year during which qualification was lost.
It is not possible to state whether in all circumstances we would be entitled to
such statutory relief.
Our qualification and taxation as a REIT depend upon our ability
to satisfy on a continuing basis, through actual annual operating and other
results, various requirements under the Internal Revenue Code, with regard to,
among other things, the sources of our gross income, the composition of our
assets, the level of our dividends to stockholders, and the diversity of our
share ownership. The purpose of these requirements is to allow the tax benefit
of REIT status only to companies that primarily own, and primarily derive income
from, real estate-related assets and certain other assets which are passive in
nature, and that distribute 95% (90% after December 31, 2000) of taxable income
(computed without regard to our net capital gain) to stockholders. We believe
that we have qualified as a REIT for all of our taxable years commencing with
our taxable year ended December 31, 1999, and that our current structure and
method of operation is such that we will continue to qualify as a REIT.
Willkie Farr & Gallagher, our special tax counsel, has provided
an opinion to the effect that we were organized and have operated in conformity
with the requirements for qualification and taxation as a REIT under the
Internal Revenue Code for our taxable years ended December 31, 1999 and December
31, 2000, and our current organization and method of operation should enable us
to continue to meet the requirements for qualification and taxation as a REIT.
It must be emphasized that this opinion is based on various assumptions and
factual representations made by us relating to the organization, prior and our
expected operation and all of the various partnerships, limited liability
companies and corporate entities in which we presently have an ownership
interest, or in which we had an ownership interest in the past. Willkie Farr &
Gallagher will not review our compliance with these requirements on a continuing
basis. No assurance can be given that the actual results of our operations, and
the subsidiary entities, the sources of their gross income, the composition of
their assets, the level of our dividends to stockholders and the diversity of
our share ownership for any given taxable year will satisfy the requirements
under the Internal Revenue Code for qualification and taxation as a REIT.
Taxation of Taxable Domestic Shareholders
General. So long as we qualify as a REIT, distributions made to
our taxable domestic stockholders, with respect to their shares of common stock
out of current or accumulated earnings and profits (and not designated as
capital gain dividends) will be taken into account by them as ordinary income
and will not be eligible for the dividends received deduction for stockholders
that are corporations. For purposes of determining whether distributions on the
shares of common stock are out of current or accumulated earnings and profits,
our earnings and profits will be allocated first to any of our preferred stock
and second to our shares of common stock. Dividends that are designated as
capital gain dividends will be taxed as long-term capital gains (to the extent
that they do not exceed our actual net capital gain for the taxable year)
without regard to the period for which the stockholder has held its shares of
common stock. However, corporate stockholders may be required to treat up to 20%
of certain capital gain dividends as ordinary income. If, for any taxable year,
we elect to designate as "capital gain dividends" (as defined in Section 857 of
the Internal Revenue Code) any portion (the "Capital Gains Amount") of the
dividends (within the meaning of the Internal Revenue Code) paid or made
available for the year to holders of all classes of shares of beneficial
interest (the "Total Dividends"), then the portion of the Capital Gains Amount
that will be allocable to the holders of shares of common stock will be the
Capital Gains Amount multiplied by a fraction, the numerator of which will be
the total dividends (within the meaning of the Internal Revenue Code) paid or
made available to the holders of the shares of common stock for the year and the
denominator of which will be the Total Dividends. To the extent that we make
distributions in excess of current and accumulated earnings and profits, these
distributions are treated first as a tax-free return of capital to the
stockholder, reducing the tax basis of
32
a stockholder's shares of common stock by the amount of such distribution (but
not below zero), with distributions in excess of the stockholder's tax basis
taxable as capital gains (if the shares of common stock are held as a capital
asset). In addition, any dividend declared by us in October, November or
December of any year and payable to a stockholder of record on a specific date
in any such month will be treated as both paid by us and received by the
stockholder on December 31 of such year, provided that the dividend is actually
paid by us during January of the following calendar year. Stockholders may not
include in their individual income tax returns any of our net operating losses
or capital losses.
In general, any loss upon a sale or exchange of shares of common stock
by a stockholder who has held such shares of common stock for six months or less
(after applying certain holding period rules) will be treated as a long-term
capital loss, to the extent distributions from us received by such stockholder
are required to be treated by such stockholder as long-term capital gains.
Pursuant to the Taxpayer Relief Act of 1997, we may elect to require
holders of shares of common stock to include our undistributed net capital gains
in their income. If we make such an election, holders of shares of common stock
will (i) include in their income as long-term capital gains their proportionate
share of such undistributed capital gains and (ii) be deemed to have paid their
proportionate share of the tax paid by us on such undistributed capital gains
and thereby receive a credit or refund for such amount. A holder of shares of
common stock will increase the basis in its shares of common stock by the
difference between the amount of capital gain included in its income and the
amount of the tax it is deemed to have paid. Our earnings and profits will be
adjusted appropriately. The Taxpayer Relief Act Act, however, did not change the
4% excise tax imposed on us upon a failure to make certain required
distributions.
Subject to certain exceptions, for individuals, trusts and estates,
the maximum rate of tax on the net capital gain from sale or exchange of a
capital asset held for more than 12 months is 20% (10% for taxpayers in the 15%
tax bracket). This maximum rate has been reduced to 18% for capital assets
acquired after December 31, 2000 and held for more than five years. The maximum
rate for net capital gains attributable to the sale of depreciable real property
held for more than 12 months is 25% to the extent of the unrecaptured section
1250 gain. Long term capital gains from sale or exchange of certain collectibles
and gains from sale or exchange of qualified small business stock is taxed at a
maximum rate of 28%. The is no capital gains rate preference for corporations.
Taxation of Tax-Exempt Stockholders
Most tax-exempt employees' pension trusts are not subject to federal
income tax except to the extent of their receipt of "unrelated business taxable
income" as defined in Section 512(a) of the Internal Revenue Code ("UBTI").
Distributions by us to a stockholder that is a tax-exempt entity should not
constitute UBTI, provided that the tax-exempt entity has not financed the
acquisition of its shares of common stock with "acquisition indebtedness" within
the meaning of Section 514 of the Internal Revenue Code and the shares of common
stock are not otherwise used in an unrelated trade or business of the tax-exempt
entity. In addition, for taxable years beginning on or after January 1, 1994,
certain pension trusts that own more than 10% of a "pension- held REIT" must
report a portion of the distribution that they receive from such a REIT as UBTI.
We have not been and do not expect to be treated as a pension-held REIT for
purposes of this rule.
Taxation of Foreign Shareholders
The following is a discussion of certain anticipated U.S. federal
income tax consequences of the ownership and disposition of shares of common
stock applicable to Non-U.S. Holders of such shares of common stock. A "Non-U.S.
Holder" is any person other than (i) a citizen or resident of the United States,
(ii) a corporation or partnership created or organized in the United States or
under the laws of the United States or of any state thereof, or (iii) an estate
or trust whose income is includable in gross income for U.S. federal income tax
purposes regardless of its source. The discussion is based on current law and is
for general information only.
Distributions From Us. 1. Ordinary Dividends. The portion of dividends
received by Non-U.S. Holders payable out of our earnings and profits which are
not attributable to our capital gains and which are not effectively connected
with a U.S. trade or business of the Non-U.S. Holder will be subject to U.S.
withholding tax at the rate of 30% (unless reduced by an applicable treaty). In
general, Non-U.S. Holders will not be considered
33
engaged in a U.S. trade or business solely as a result of their ownership of
shares of common stock. In cases where the dividend income from a Non-U.S.
Holder's investment in shares of common stock is (or is treated as) effectively
connected with the Non-U.S. Holder's conduct of a U.S. trade or business, the
Non-U.S. Holder generally will be subject to U.S. tax at graduated rates, in the
same manner as U.S. stockholders are taxed with respect to such dividends (and
may also be subject to the 30% branch profits tax in the case of a Non-U.S
Holder that is a foreign corporation).
2. Non-Dividend Distributions. Distributions in excess of our current
or accumulated earnings and profits will not be taxable to a Non-U.S. Holder to
the extent that they do not exceed the adjusted basis of the stockholder's
shares of common stock, but rather will reduce the adjusted basis of such shares
of common stock. To the extent that such distributions exceed the adjusted basis
of a Non-U.S. Holder's shares of common stock, they will give rise to gain from
the sale or exchange of its shares of common stock, the tax treatment of which
is described below. If we are or have been a United States Real property holding
corporation, defined in section 897(c)(2) of the Internal Revenue Code, we will
be required to withhold 10% of any distribution in excess of our current and
accumulated earnings and profits. We believe that we have been and expect to
continue to be a United States real property holding corporation. Consequently,
although we intend to withhold at a rate of 30% on the entire amount of any
distribution (or a lower applicable treaty rate), to the extent that we do not
do so, any portion of a distribution not subject to withholding at a rate of 30%
(or a lower applicable treaty rate) will be subject to withholding at a rate of
10%. However, the Non-U.S. Holder may seek a refund of such amounts from the
Service if it is subsequently determined that such distribution was, in fact, in
excess of our current or accumulated earnings and profits, and the amount
withheld exceeded the Non-U.S. Holder's United States tax liability, if any,
with respect to the distribution.
3. Capital Gain Dividends. Under the Foreign Investment in Real
Property Tax Act of 1980 ("FIRPTA"), a distribution made by us to a Non-U.S.
Holder, to the extent attributable to gains from dispositions of United States
Real Property Interests ("USRPIs") such as the properties beneficially owned by
us ("USRPI Capital Gains"), will be considered effectively connected with a U.S.
trade or business of the Non-U.S. Holder and subject to U.S. income tax at the
rate applicable to U.S. individuals or corporations, without regard to whether
such distribution is designated as a capital gain dividend. In addition, we will
be required to withhold tax equal to 35% of the amount of dividends to the
extent such dividends constitute USRPI Capital Gains. Distributions subject to
FIRPTA may also be subject to a 30% branch profits tax in the hands of a foreign
corporate stockholder that is not entitled to treaty exemption.
Dispositions of shares of common stock. Unless shares of common stock
constitute a USRPI, a sale of shares of common stock by a Non-U.S. Holder
generally will not be subject to U.S. taxation under FIRPTA. The shares of
common stock will not constitute a USRPI if we are a "domestically controlled
REIT." A domestically controlled REIT is a REIT in which, at all times during a
specified testing period, less than 50% in value of its shares of common stock
is held directly or indirectly by Non-U.S. Holders. We believe that we have been
and anticipate that we will continue to be a domestically controlled REIT, and
therefore that the sale of shares of common stock will not be subject to
taxation under FIRPTA. Because the shares of common stock will be publicly
traded, however, no assurance can be given we will continue to be a domestically
controlled REIT. If we do not constitute a domestically controlled REIT, a
Non-U.S. Holder's sale of our shares of beneficial interest generally will still
not be subject to tax under FIRPTA as a sale of a USRPI provided that (i) such
shares are "regularly traded" (as defined by applicable Treasury regulations) on
an established securities market and (ii) the selling Non-U.S. Holder does not
hold more than 5% of the value of the series and class of our outstanding shares
being sold, at all times during a specified testing period.
If gain on the sale of shares of common stock were subject to taxation
under FIRPTA, the Non-U.S. Holder would be subject to the same treatment as a
U.S. stockholder with respect to such gain (subject to applicable alternative
minimum tax and a special alternative minimum tax in the case of nonresident
alien individuals) and the purchaser of shares of common stock could be required
to withhold 10% of the purchase price and remit such amount to the IRS. Capital
gains not subject to FIRPTA will nonetheless be taxable in the United States to
a Non-U.S. Holder in two cases: (i) if the Non-U.S. Holder's investment in
shares of common stock is effectively connected with a U.S. trade or business
conducted by such Non-U.S. Holder, the Non-U.S. Holder will be subject to the
same treatment as a U.S. stockholder with respect to such gain, or (ii) if the
Non-U.S. Holder is a nonresident alien individual who was present in the United
States for 183 days or more during the taxable year and
34
has a "tax home" in the United States, the nonresident alien individual will be
subject to a 30% tax on the individual's capital gain.
Other Tax Considerations
State and Local Taxes. We and our stockholders may be subject to state
or local taxation in various jurisdictions, including those in which we or they
transact business or reside. The state and local tax treatment of us and our
stockholders may not conform to the federal income tax consequences discussed
above. Consequently, prospective stockholders should consult their own tax
advisors regarding the effect of state and local tax laws on an investment in
our shares of beneficial interest.
USE OF PROCEEDS
We do not know either the number of shares of common stock that will
be ultimately sold pursuant to the Plan or the prices at which such shares will
be sold. We will receive proceeds from the purchase of shares of common stock
through the Plan only to the extent that such purchases are made directly from
us and not from open market purchases by the Plan Administrator. We propose to
use the net proceeds from the sale of newly issued shares of common stock to
repay indebtedness under the terms of the Amended And Restated Credit, Security
Guaranty and Pledge Agreement dated January 31, 2000 between us and the lenders
party thereto, the repayment of any other indebtedness and for general corporate
purposes. The principal amount outstanding as of September 30, 2001, the
interest rate and maturity date of the indebtedness under the Credit Agreement
are: Tranche A -- $97,075,549, LIBOR plus 2.75% (currently 5.42 %), maturing on
December 31, 2002; Tranche B -- $279,572,064, LIBOR plus 3.75% (currently
6.38%), maturing on December 31, 2005 (included in the $279,572,064 Tranche B
debt, are two sinking fund payments of $50,000,000 each due on December 30, 2003
and December 30, 2004); and Tranche C -- $473,367,900, LIBOR plus 4.25%
(currently 6.85%) and maturing on December 31, 2007.
PLAN OF DISTRIBUTION
Except to the extent the Plan Administrator purchases shares of common
stock in open market transactions, the shares of common stock acquired under the
Plan will be sold directly by us through the Plan. We may sell shares of common
stock to owners of shares (including brokers or dealers) who, in connection with
any resales of such shares, may be deemed to be underwriters. In connection with
any such transaction, compliance with Regulation M under the Exchange Act would
be required. Such shares, including shares acquired pursuant to waivers granted
with respect to the optional cash payment feature of the Plan, may be resold in
market transactions (including coverage of short positions) on any national
securities exchange on which shares of common stock trade or in privately
negotiated transactions. The shares of common stock are currently listed on the
New York Stock Exchange. Under certain circumstances, it is expected that a
portion of the shares of common stock available for issuance under the Plan will
be issued pursuant to such waivers. The difference between the price such owners
pay to us for shares of common stock acquired under the Plan, after deduction of
the applicable discount from the market price, and the price at which such
shares are resold, may be deemed to constitute underwriting commissions received
by such owners in connection with such transactions. Any such underwriter
involved in the offer and sale of the shares of common stock will be named in an
applicable prospectus supplement. Any underwriting compensation paid by us to
underwriters or agents in connection with the offering of the shares of common
stock, and any discounts, concessions or commissions allowed by underwriters to
participating dealers, will be set forth in an applicable prospectus supplement.
Subject to the availability of shares of common stock registered for
issuance under the Plan and our permission, there is no total maximum number of
shares that can be issued pursuant to the reinvestment of distributions.
Except with respect to open market purchases of shares of common stock
relating to reinvested distributions or optional cash payments, we will pay any
and all brokerage commissions and related expenses incurred in connection with
purchases of shares of common stock under the Plan. With respect to open market
purchases of shares of common stock, at the time the Plan is initially offered,
brokerage commissions are charged at a rate typically around $.06 to $.08 per
share. However, for certain odd-lot transactions, the commissions could be
higher, up to a maximum of $8.00 for any single odd-lot transaction. Such
commissions are subject to change from
35
time to time. Upon withdrawal by you from the Plan by the sale of shares of
common stock held under the Plan, you will receive the proceeds of such sale
less any brokerage commissions and service charges paid to the Plan
Administrator (if such resale is made by the Plan Administrator at your
request), and any applicable transfer taxes. We anticipate that we will incur
approximately $311,843.75 of expenses, which include legal, accounting, printing
and registration fees, in connection with the distribution.
Shares of common stock may not be available under the Plan in all
states. This prospectus does not constitute an offer to sell, or a solicitation
of an offer to buy, any shares of common stock or other securities in any state
or any other jurisdiction to any person to whom it is unlawful to make such
offer in such jurisdiction.
DESCRIPTION OF SHARES OF COMMON STOCK
The summary of the terms of the shares of common stock set forth below
does not purport to be complete and is subject to and qualified in its entirety
by reference to our Certificate of Incorporation, as amended from time to time,
and our Third Amended and Restated Bylaws, as amended and/or restated from time
to time, each of which is incorporated herein by reference.
Our Certificate of Incorporation provides that we may issue up to
190,000,000 shares of stock, consisting of 180,000,000 shares of common stock
and 10,000,000 shares of preferred stock. As of December 20, 2001, 68,885,223
shares of common stock and no preferred shares were issued and outstanding.
All shares of common stock offered hereby will be duly authorized,
fully paid and nonassessable. Subject to the preferential rights of any other
shares of beneficial interest and to certain provisions of our Certificate of
Incorporation, holders of shares of common stock are entitled to receive
distributions if, as and when authorized and declared by the Board of Directors
out of assets legally available therefor and to share ratably in our assets
legally available for distribution to our stockholders in the event of our
liquidation, dissolution or winding-up after payment of, or adequate provision
for, all of our known debts and liabilities. We currently expect to make
quarterly distributions, and from time to time we may make additional
distributions.
Holders of shares of common stock have no conversion, sinking fund,
redemption or preemptive rights to subscribe for any of our securities. Subject
to certain provisions of our Certificate of Incorporation, shares of common
stock have equal distribution, liquidation and other rights.
In order to preserve our ability to maintain REIT status, our
Certificate of Incorporation provides that if a person acquires beneficial
ownership of greater than 9% of our outstanding stock, the shares that are
beneficially owned in excess of such 9% limit are considered to be "excess
shares". Excess shares are automatically deemed transferred to a trust for the
benefit of a charitable institution or other qualifying organization selected by
our Board of Directors. The trust is entitled to all dividends with respect to
the excess shares and the trustee may exercise all voting power over the excess
shares. We have the right to buy the excess shares for a purchase price equal to
the lesser of (1) the price per share in the transaction that created the
shares, or (2) the market price on the date we buy the shares. We may defer
payment of the purchase price for the excess shares for up to five years. If we
do not purchase the excess shares, the trustee of the trust is required to
transfer the excess shares at the direction of the Board of Directors. The owner
of the excess shares is entitled to receive the lesser of the proceeds from the
sale of the excess shares or the original purchase price for such excess shares;
any additional amounts are payable to the beneficiary of the trust. Certain
holders who owned common stock in excess of the foregoing limits on the date of
the 1998 spin off, are not subject to the general ownership limits applicable to
other stockholders. Such holders are generally permitted to own up to the same
percentage of common stock that was owned on the date of the 1998 spin off,
provided such ownership does not jeopardize our status as a REIT. The Board of
Directors may grant waivers from the excess share limitations.
We have issued Preferred Stock Purchase Rights (the "Rights") under a
Rights Agreement, dated July 20, 1993, as amended, with National City Bank as
the Rights Agent. The Rights have certain anti-takeover effects and are intended
to cause substantial dilution to a person or group that attempts to acquire us
without the approval of our Board of Directors. For more information on the
Rights, see Note 12 of the Notes to the Consolidated Financial Statements in our
Annual Report on Form 10-K for the year ended December 31, 2000.
36
WHERE YOU CAN FIND MORE INFORMATION
We file annual, quarterly and current reports, proxy statements and
other information with the Commission. Our Commission filings are available on
the Commission's Web site at www.sec.gov. You also may read and copy any
documents we file at the Commission's Public Reference Room at 450 Fifth Street,
N.W., Washington, D.C., 20549. Please call the Commission at 1-800- SEC-0330 for
further information about its Public Reference Room, including copy charges. You
can also obtain information about us from the New York Stock Exchange at 20
Broad Street, New York, New York 10005.
The Commission allows us to "incorporate by reference" the information
we file with them, which means that we can disclose important information to you
by referring to those documents. The information incorporated by reference is an
important part of this prospectus, and information that we file later with the
Commission will automatically update and supersede information in this
prospectus and in our other filings with the Commission. We incorporate by
reference the documents listed below. We also specifically incorporate by
reference any such filings made after the date of the initial registration
statement.
(1) our Annual Report on Form 10-K for the year ended on December 31,
2000, filed with the Commission on April 16, 2001;
(2) our Definitive Proxy Statement, filed on April 20, 2001;
(3) our Quarterly Report on Form 10-Q for the quarter ended September
30, 2001 filed with the Commission on November 13, 2001;
(4) our Quarterly Report on Form 10-Q for the quarter ended June 30,
2001 filed with the Commission on August 10, 2001;
(5) our Quarterly Report on Form 10-Q for the quarter ended March 31,
2001 filed with the Commission on May 14, 2001;
(6) our Current Report on Form 8-K filed with the Commission on
December 10, 2001; our Current Report on Form 8-K filed with the
Commission on September 17, 2001; our Current Report on Form 8-K
filed with the Commission on July 25, 2001; our Current Report on
Form 8-K filed with the Commission on July 5, 2001; and our
Current Report on Form 8-K/A filed with the Commission on April
24, 2001;
(7) the description of our shares of common stock in our Registration
Statement on Form 8-A, as amended, filed on May 24, 2000; and
(8) any future filings we make with the Commission under Section
13(a), 13(c), 14, or 15(d) of the Securities Exchange Act of 1934
after the date of the initial filing of the registration
statement and until we sell all of the shares of common stock
offered by this prospectus.
37
You may request a copy of these filings at no cost, by writing or
calling us at the following address:
Ventas, Inc.
4360 Brownsboro Road, Suite 115
Louisville, Kentucky 40207-1642
(502) 357-9000
Attention: T. Richard Riney
General Counsel
You should rely only on the information contained in, or incorporated
by reference into, this prospectus. We have not authorized anyone to provide you
with additional or different information. You should not assume that the
information in this prospectus or any document incorporated by reference is
accurate as of any date other than the date of those documents. You may also
obtain from the Commission a copy of the registration statement and exhibits
that we filed with the Commission when we registered the shares. The
registration statement may contain additional information that may be important
to you.
LEGAL OPINIONS
The legality of the shares of common stock offered pursuant to the
Ventas, Inc. Distribution Reinvestment and Stock Purchase Plan will be passed
upon by T. Richard Riney, our Executive Vice President and General Counsel. Mr.
Riney owns a number of shares of common stock and holds options to purchase
additional shares of common stock. Certain federal income tax matters will be
passed upon for us by Willkie Farr & Gallagher, New York, New York. Willkie Farr
& Gallagher from time to time provides services to us and our affiliates.
EXPERTS
The consolidated financial statements and schedule of Ventas, Inc. at
December 31, 2000 and 1999, and for the years then ended and the period May 1,
1998 through December 31, 1998, incorporated by reference in this prospectus and
elsewhere in the registration statement, have been audited by Ernst & Young LLP,
independent auditors, as indicated in their report thereon, and are incorporated
in reliance upon such report given on the authority of such firm as experts in
accounting and auditing.
38
SCHEDULE A
OPTIONAL CASH PAYMENTS
----------------------
RECORD DATE AND
THRESHOLD PRICE OPTIONAL CASH PRICING PERIOD PRICING PERIOD
AND PAYMENT COMMENCEMENT CONCLUSION
DISCOUNT SET DATE DUE DATE DATE DATE
------------------- ----------------- ---------------- -----------------
March 1, 2002 March 6, 2002 March 7, 2002 March 22, 2002
April 1, 2002 April 4, 2002 April 5, 2002 April 22, 2002
May 1, 2002 May 6, 2002 May 7, 2002 May 22, 2002
June 3, 2002 June 6, 2002 June 7, 2002 June 24, 2002
July 1, 2002 July 5, 2002 July 8, 2002 July 23, 2002
August 1, 2002 August 6, 2002 August 7, 2002 August 22, 2002
September 3, 2002 September 6, 2002 September 9, 2002 September 24, 2002
October 1, 2002 October 4, 2002 October 7, 2002 October 22, 2002
November 1, 2002 November 6, 2002 November 7, 2002 November 22, 2002
December 2, 2002 December 5, 2002 December 6, 2002 December 23, 2002
COMMON SHARE DISTRIBUTION REINVESTMENTS (1)
-------------------------------------------
RECORD DATE INVESTMENT DATE (2)
------------- -------------------
February 22, 2002 March 4, 2002
May 24, 2002 June 4, 2002
August 26, 2002 September 6, 2002
November 25, 2002 December 5, 2002
-----------------
(1) The dates indicated are those expected to be applicable under the Plan with
respect to future distributions, if and when declared by the Board of
Directors. The actual record and payment dates will be determined by the
Board of Directors.
(2) The investment date relating to distributions is also the pricing date with
respect to shares of common stock acquired directly from us with such
distributions. See Question 12.
39
NEW YORK STOCK EXCHANGE HOLIDAYS
2002
----------
New Year's Day January 1
Martin Luther King, Jr. Day January 21
Washington's Day February 18
Good Friday March 29
Memorial Day May 27
Independence Day July 4
Labor Day September 2
Thanksgiving Day November 28
Christmas Day December 25
40
================================================================================
25,000,000 Shares
[VENTAS LOGO]
Distribution Reinvestment
and
Stock Purchase Plan
----------------
PROSPECTUS
----------------
January 23, 2002
================================================================================